British Shipbuilders

HC Deb 27 June 1984 vol 62 cc1093-113 10.12 pm

The Minister of State, Department of Trade and Industry (Mr. Norman Lamont)

I beg to move, That the draft British Shipbuilders Borrowing Powers (Increase of Limit) Order 1984, which was laid before this House on 11th June, be approved. The subject of the draft order before the House tonight is the borrowing limit of British Shipbuilders. That limit is the ceiling on the funds that British Shipbuilders may acquire from the Government or elsewhere. The principal element of these funds is public dividend capital voted by Parliament. Payments under the intervention fund and the shipbuilding redundancy payments scheme do not count against this limit.

The limit currently stands at £1,000 million. It was raised to that level from £800 million by the British Shipbuilders (Borrowing Powers) Act 1963 which gave the Secretary of State power to increase the limit further by order subject to affirmative resolution of the House, to £1,200 million. That would be done in single steps of no more than £100 million.

The order before us is the first to be introduced since the Act came into force. Its effect is to raise the borrowing limit by £100 million to £1,100 million. Of course, this is a permissive measure; it merely raises the potential limit. At the moment we are not voting the funds to be provided. That is a separate matter for Parliament, dealt with in the normal way through the Estimates procedure.

The reasons why we have laid the order now will be obvious. British Shipbuilders' borrowing at 31 March 1984 stood at £869 million. As the House knows, we have set the corporation an external financing limit for 1984–85 at £217 million. Of that amount, £170 million is public dividend capital that counts against the limit. The corporation's borrowing has already reached £869 million against the present limit of £1 billion, so, if it is to receive the support that we intend this year, the borrowing limit will have to be increased to accommodate it. We could have incorporated a higher limit in the legislation last year, but we felt that it was right that the House should have the opportunity to examine the finances of British Shipbuilders and debate orders such as this.

I hope that Opposition Members will not ignore the fact that the order provides scope for substantial increases in support for British Shipbuilders. I hope that we shall not have the usual argument that somehow the Government have failed to provide the United Kingdom shipbuilding industry with the support that it needs because the fact is that no less than £1,094 million has been provided for British Shipbuilders since 1979, over £1 billion in the form of public dividend capital, intervention fund money and the shipbuilding redundancy payments scheme, which have all helped to carry the industry through a very difficult period, in depressed markets, and to sustain it through fierce competition from the far east and elsewhere.

The House last discussed the borrowing of British Shipbuilders in November 1983. Since then there has been a difficult and eventful period. In the recent past there were the unhappy events at Scott Lithgow. I say "unhappy", but, given the circumstances, the outcome was remarkable. The yard had lost the confidence of its customers and was unlikely to gain further orders, but there is now every reason to believe that it will have a better future under new management in the private sector, with a fresh start. The change has also had the benefit of removing from the purview of British Shipbuilders the biggest loss-maker in the corporation.

Dr. Norman A. Godman (Greenock and Port Glasgow)

The Minister referred to Scott Lithgow. Will he acknowledge that the improvements that have taken place have involved the very real efforts of that work force, which was so crassly and badly maligned by the Minister and his colleagues in the recent past?

Mr. Lamont

I have been careful always not to attribute blame specifically or exclusively to the work force for the problems at Scott Lithgow. However, it would be a waste of this brief debate to go over those events again. Surely both sides of the House can agree that, now that the yard has been transferred to the private sector, we must wish it well. Having wiped the slate clean, with the Government's assistance, there is every reason to be more optimistic about it than one could have been a few months ago.

Radical changes have occurred in other areas. The strategy of British Shipbuilders has been to concentrate resources on its mainstream business. It has long been accepted by the present chairman and the chairman before that that ship repairing was not an appropriate activity for a nationalised corporation such as British Shipbuilders. I am glad that at last the corporation is getting on with its declared objective of getting out of ship repairing. I am glad that it has led not to closures, but to a new future. Readheads is now owned by its employees. Tyne Shiprepair and Grangemouth have been the subject of management buy-outs. I have visited Readheads. I have met the management of Tyne Shiprepair. I have been told that there have been dramatic changes in attitude as a result of the transfer. There are more flexible working practices and considerably increased productivity.

Ship repairing used to be the biggest loss-maker per head in British Shipbuilders. Now, Tyne Shiprepair anticipates making a modest profit. Four weeks after it was returned to the private sector, it secured work for some 27 ships, valued at some £3 million. Not all the problems have been solved, but the improved situation goes a long a long way towards justifying our view, which is also the view of the management of British Shipbuilders, that ship repair should be transferred to the private sector. We intend to implement that policy with regard to Falmouth and Vosper Thornycroft as well. Ship repairing faces a difficult future, but it will be far better equipped to face that future in the private sector.

Mr. Robin Maxwell-Hyslop (Tiverton)

Will my hon. Friend consider whether it is reasonable that the authentic private sector should be asked to compete with the privatised sector—the sector which is supplied with interest-free loans? The authentic private sector has to pay current rates of interest on the money that it borrows. How can it be expected to compete with firms which get interest-free capital?

Mr. Lamont

The Government and British Shipbuilders were anxious that when the yards were set up in private ownership they should be given a chance to get off the ground. If we had not given them that chance, we should have lost 1,000 jobs instead of saving some 500 jobs. The yards receive no operating subsidy, as has been alleged.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

I accept that there is a major difference between shipbuilding and ship repair as industrial sectors. My understanding is that British Shipbuilders' corporate plan, which the Minister will have received, states that in the short-term or medium-term future—which is as far as one can forecast—no yard closures are in prospect. Can the Minister confirm that view, or does he believe that there will be major yard closures in the immediate future?

Mr. Lamont

We received only recently the corporate plan. It is not normal Government practice to discuss the corporate plan with the House. When we have studied the plan and reached our conclusions, we will make a statement to the House, and an edited version of the plan will be made available to the House.

We wish to see as much of the merchant shipbuilding industry as possible surviving in this country as can survive with some basis of viability. Support is essential, but support must be reconciled with considerations of what we can afford. That is the framework within which we will approach the corporate plan.

Mr. Brown

Can the Minister assure the House that there is no major shipyard closure in the offing?

Mr. Lamont

No major shipyard closure is contemplated at the moment. I know of no such proposal. The hon. Gentleman has made such allegations again and again, although I have written to him in the past. I do not know why the hon. Gentleman is anxious to undermine confidence and fan worry in his own area. He will drive away customers from his own yards.

Mr. Christopher Chope (Southampton, Itchen)

Will my hon. Friend be more specific about Vosper Shiprepairers? Can he give a more detailed time scale for the privatisation?

Mr. Lamont

No, I cannot give more detail about the time scale. It is our intention that Vosper will be returned to the private sector. No specific date is in mind and there will have to be discussions with potential buyers. Things are at an early stage. As my hon. Friend will know, British Shipbuilders wanted a recent and important contract to be completed there before moving on to this stage.

There are now 13,000 fewer jobs in British Shipbuilders than there were six months ago. Job losses on that scale in any industry are regrettable, even if, as with shipbuilding, redundancies have been met voluntarily. I must observe, however, that as many as 4,000 of those jobs have not disappeared but rather have moved to the private sector. Apart from the shiprepair yards, some of the peripheral engineering companies have been sold and 3,000 jobs were kept with the disposal of Scott Lithgow. It is to be welcomed that, even in a period of contraction, some jobs have been moved to the private sector.

Faced with the continuing slump in the market for merchant ships, the corporation has had to close some of its loss-making operations. Three small yards—Clelands, Goole and Henry Robb—have had to close. I believe that the Henry Robb site has now been bought, although not as a shipbuilding facility. Of course we regret the closure of those yards and the impact that closure has had and still has on Leith, Wallsend and Humberside. The closures underline the grim reality of the extremely—

Mr. Nicholas Brown

rose—

Mr. Lamont

This is a short debate. Many hon. Members wish to speak, and I have already given way twice to the hon. Gentleman. the closures underline the depressed market that the corporation faces. All of these developments mean that British Shipbuilders' organisation is changing rapidly, as hon. Members will notice when the accounts are published for the year. Instead of the five divisions that we had in the past, British Shipbuilders now operates under two—merchant, and composite and warship building. British Shipbuilders is cutting its Newcastle headqarters by 20 per cent. That will produce savings of £1.5 million which will be deployed towards product development.

I am also able to report that, with two notable exceptions — Vosper Shiprepairers and Vosper Thornycroft — all groups of workers at British Shipbuilders' yards have signed the productivity deal. That is welcome news, but now the corporation must press on with implementing the agreement, which is a key stage in getting British Shipbuilders' productivity up to the level of its European competitors. We are still often below those levels.

The development that I have described is encouraging, but it will take time to work through to the results of the corporation. Results for the year to 31 March are likely to show large losses again. For 1984–85, especially as a result of the removal of Scott Lithgow, it is expected that the losses will be less. One of the effects of last year's loss of £117 million was that the cash which was intended for much needed investment had to be used for funding losses. Investment rose to £49 million but was still below the target that the Government and the corporation envisaged.

British Shipbuilders' new orders, at 117,000 compensated gross registered tonnage, were its lowest ever. It was the same story in the EEC as a whole—1983 was the worst ever year for new orders. The world market, at 15 million CGRT, was up on the previous year, but a large part of that was accounted for by orders for Japanese-owned bulkers with far eastern yards. In so far as stronger world demand existed, it was not in evidence in western Europe.

Some new orders have been taken by British Shipbuilders since our previous debate. Sunderland Shipbuilders obtained the order from Stena for two diving support vessels. In January, Hall Russell received orders from the Ministry of Defence for three salvage vessels. In May, the Central Electricity Generating Board placed a major order with Govan for three colliers and a further order for an ash disposal barge with Ferguson Brothers. British Shipbuilders has said that, for the current year, it plans to secure new orders worth 200,000 CGRT. If that is achieved, it will not be far short of double the level that was achieved last year. By the end of the first quarter of this financial year, British Shipbuilders anticipates that it will have new orders that total about 60,000 CGRT, subject to the finalisation of contractual and financing details.

British Shipbuilders has been developing a fresh product strategy which is to contribute to securing new orders. Briefly, this strategy involves the reduction of direct competition with far east price leaders and aims for increased value added areas of the market. It is exemplified by the sort of specialised diving support vessels being built by Stena.

BS is currently talking to potential owners in Hong Kong, Mexico, Ethiopia and West Germany. In order to achieve the target, BS needs to secure 75 per cent. of the orders that are currently under discussion. Achieving a "hit rate" of this size is a formidable task, but I know that Graham Day and his team with Government encouragement, are going all out to secure it. If this level of new ordes is achieved, BS will, as I have said, be operating at a much reduced level relative to past order books.

Mr. Jonathan Sayeed (Bristol, East)

Will my hon. Friend give us the breakdown of the new orders between warships and merchantmen?

Mr. Lamont

The orders are entirely for merchant shipbuilding.

Mr. Nicholas Brown

rose—

Mr. Lamont

I shall not give way, because I should like to make progress.

In line with the lower level of merchant activity, BS is proposing to reduce its enginebuilding activity. BS has lost considerable sums on enginebuilding in recent years. A determined effort is now being made to contain engine costs and to move to a position where our marine engines are competitive with the rest of Europe.

The Government have just received the corporate plan, which we are considering. A statement will be made when we have come to conclusions on it. I emphasise that the Government recognise the difficult position that is faced by the industry, and the considerable efforts that are being made from the top to the bottom of BS to pull back what has been lost and to restore credibility, which has been missing in merchant shipbuilding. We are well aware that the cost-price gap faced by BS, as with all western European shipbuilders who are generally competing with the far east, is growing. We have therefore notified the European Commission of our intention to increase the level of price support we offer under the Intervention Fund. We, and increasingly our European partners, believe that the present arrangements are no longer sufficient to secure an adequate workload for the United Kingdom.

Mr. Nicholas Brown

How much?

Mr. Lamont

The hon. Gentleman should think about his question because it is almost as stupid and idiotic as his last intervention. It is almost deliberately calculated to embarrass the Government, and to make it more difficult for the Government to safeguard capacity in his constituency.

The House will wish to know how matters stand on our notification. We are currently in the process of negotiation with Brussels. Since we are seeking a substantial rise, these proposals are not easy to accommodate within existing Community rules and they create difficulties for the Commission and other member states. We need to satisfy them that what we are seeking will not prejudice their interests, just as they need to satisfy us when their proposed aid regimes come up for examination.

I can tell the House that our notification has now proceeded to the point where the Commission has opened an Article 93 procedure. This is the standard mechanism used to enable the Commission to collect the information necessary to come to a decision on our proposals. The Government are absolutely clear that a subsantial increase in intervention fund is essential to the future of our industry. Graham Day put his case personally to Commissioner Andriessen yesterday. We shall go on pressing hard for a rapid and favourable decision, but, as I have emphasised, the interests of a number of countries are involved.

In the meantime, I urge potential buyers from United Kingdom yards to pursue their negotiations with United Kingdom builders rather than await the outcome of the Commission's deliberations. There is no reason to delay. As I have made absolutely clear before now we are ready to consider prospective orders on their individual merits on a case-by-case basis within the international rules.

While British Shipbuilders is pushing ahead with its difficult task on the merchant shipbuilding side, we are porposing to move towards the disposal of the profitable warship yards. Opposition Members do not like that policy, but their view is not the one that I always meet when I visit the yards. When I was in Vosper Thornycroft not so long ago I was told, "You should really get on with privatisation. If you get on with privatisation we could have our wages raised; we could increase productivity and lower prices, and we would have a far better chance of obtaining orders in the export market." We intend to give them that chance.

I have made it clear tonight that the thrust of our strategy towards the industry is to concentrate upon its mainstream businesses—merchant ships and engines. The order is designed mainly to enable greater support to be made available to merchant shipbuilding.

We recognise the difficulties merchant shipbuilding faces, and I outlined, if the hon. Member for Newcastle upon Tyne, East (Mr. Brown) had been listening, the far-reaching measures that are being taken by the corporation and the Government to help the industry to regain something of its markets.

Opposition Members always say that not enough money is being provided. They say that on every occasion that we have these orders and inject money into the industry. This year the industry will take £217 million of taxpayers' money to survive, and that is after the profits of warship building. That is a huge subsidy for a relatively small industry, employing about 12,000 people. That is a level of support that many other industries must envy.

Subsidy by itself cannot secure the industry's future. British Shipbuilders has a difficult task, but I am confident that the new chairman and the management are providing leadership and a sense of direction and that they will do everything that can be done to secure the future of the industry.

I urge the House to approve the order.

10.37 pm

Mr. Harry Ewing (Falkirk, East)

Almost inevitably these orders increasing borrowing power limits lead to a wider discussion about the problems faced by the industry under consideration.

Tonight is no exception, because the Opposition welcome the opportunity to debate, in some detail, the future of British Shipbuilders and shipbuilding. Characteristically, the Minister, like his colleagues, almost always refers to the amount of taxpayers' money going into an industry, measuring it against the number of employees in the industry. A great many more employees were involved in shipbuilding when he assumed responsibility for it than there are now.

Most Opposition Members and many people in shipbuilding would hold the Minister responsible for that position rather than the taxpayer or anyone else. It does the Minister's case no good to argue that because 12,000 of British Shipbuilders' employees are taking £217 million of what he described as taxpayers' money—as if those who work in British Shipbuilders are not taxpayers—they are some kind of poor beggars who should be eternally grateful for these handouts. The men and women who work in shipbuilding are probably more interested in restructuring and rebuilding the industry into its former greatness than the Minister appears to be. Like his right hon. Friend the Secretary of State for Trade and Industry, the Minister said that the Government have only just received the corporate plan. In fact, they received it in October 1983—

Mr. Lamont

indicated dissent.

Mr. Ewing

There is no point the Minister shaking his head, because we know that for a fact.

They then asked British Shipbuilders to provide a strategy statement, because they did not agree with the market projection assessments contained in the corporate plan. What has just been received is not the corporate plan but the strategy statement for which the Government asked.

The Minister should be able to tell the House that there is fairly wide disagreement between British Shipbuilders' assessment of the merchant shipping market and the Government's assessment of that market. That stands between the Government and British Shipbuilders, and between the Government and the House, regarding a statement to the House on the corporate plan submitted in October last year.

Indeed, if my information is correct, the Government have gone back to British Shipbuilders and asked for a further refinement of the strategy statement. I doubt whether this is a possibility before the House rises for the summer recess, but as soon as we return I hope that the Government will by then have considered the corporate plan, the strategy statement and the up-to-date information for which they have asked so that they can make a comprehensive statement to remove some of the uncertainties that at present prevail in the shipbuilding industry.

It was noticeable that the Minister did not mention the problems in the constituency of my hon. Friend the Member for Birkenhead (Mr. Field) relating to Cammell Laird. The loss of the Sun Oil oil rig contract in that yard was a serious blow.

My hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) asked about the possibility of realising the 75 per cent. target arising from the discussions with shipowners who are likely to place orders. It was particularly unfortunate for the Minister to say that British Shipbuilders is having discussions with a number of companies throughout the world but that to meet the target which has been set—I do not know whether it was set by the Government or by British Shipbuilders—it would need to achieve a 75 per cent. strike rate.

One can almost hear the Minister, come October or November, saying that British Shipbuilders had not met that target and that therefore the consequences were A, B, C and D. That is what leads my hon. Friend the Member for Newcastle upon Tyne, East so forcefully to express his understandable concern and worry about the shipyards on Tyneside.

The Minister dwelt at length on ship repairing. Looking around the House—I exclude the hon. Member for Tiverton (Mr. Maxwell-Hyslop) who played a leading part in the Aircraft and Shipbuilding Industries Act 1977—I see that precious few Conservative Members present appreciate that ship repairing was not part of the Labour Government's Bill. The ship repair sector asked to be taken into the nationalised shipbuilding sector. The Minister eulogises about returning ship repairing to the private sector, as if somehow or other the Labour Government wrested it from the private sector against its will. In fact the ship repair sector came to the Government and asked us to take it over.

The Minister is keen on quoting the amount of taxpayers' money that b as been poured into public sector industries. Substantial sums of taxpayers' money have been poured into ship repairing, but the taxpayer will get no benefit from it. The Minister mentioned the Grangemouth ship repairing company in my constituency. He should know that that company has always been profitable. I do not have any criticism of the management and those who have bought out of the company.

Conservative Members regard themselves as the guardians of the public purse, and they should understand who will now get the benefit of the taxpayers' investment in ship repairing since 1977 and whenever the privatisation takes place. I understand that the Government's time scale is up to March 1986. They want the warship division transferred to private ownership and ship repairing returned to private ownership before then.

In the meantime, substantial sums of money have been invested in both sectors. The private companies will get the benefit of all that public money. The Minister knows, too, that that investment will not be reflected in the selling price of either the wars up division or the ship repairing sector.

If he catches your eye, Mr. Deputy Speaker, my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) will be saying something about Scott Lithgow, and we all learned a lesson from the story of that. We did not give the highly skilled work force sufficient time to change its skills from building vessels to building the most advanced technology in oil rig drilling equipment. There is no doubt that the semi-submersible rigs being built at Scott Lithgow are the most advanced of any of their kind in the world.

A lot of money was lost on that contract, mostly because the work force was not given time to change its skills. I hope that that will be taken into account when concluding contracts. It was not the work force that signed the contract for the BP rig, but the management, under Sir Robert Atkinson. The shop stewards were not involved, and did not put pen to paper, but they and the work force have been held responsible. Any consequences that flow from the management decision to sign that contract, which everyone knows had terms that could not be met, will be borne by the work force. The Secretary of State for Scotland went around Scotland describing them as workers in a paddy field. He is not here tonight.

None of us should be too proud to learn that when it comes to the transition to the high technology rig building from the ordinary shipbuilding, we must give the workers the new skills, techniques and technology that are involved. The offshore oil industry is a very different industry from that of merchant shipping.

The Minister did not mention the need for a link between a shipbuilding policy and a maritime policy, and I hope that he will develop this in detail on another occasion. It is astonishing to me that we are a trading nation, yet no one has even begun to consider the necessity to link maritime policy and the requirements of merchant shipping to the shipbuilding industry in this country. It is tragic, because we are light years behind our competitors in this regard. Anybody who reads the material that comes from Norway, Germany, Japan and many of our fiercest competitors will realise that there is a clear link between merchant shipping requirements, maritime policy and shipbuilding. Unless we get down to establishing such a link in this country, I am afraid that we will go on staggering from crisis to crisis in the shipbuilding industry.

It will be obvious already, if it was not obvious earlier, that the Opposition will not vote against the order. I wish to put down our marker that, when the Minister of State or his right hon. Friend the Secretary of State makes a statement on the corporate plan, the updated strategy statement and the many implications that that will have for British Shipbuilders, we will want a full day's debate in Government time. That statement will probably decide the future of the British shipbuilding industry in this country until the end of the century, not just for five, six or seven years. The Minister of State knows that investment programmes in shipbuilding extend far beyond five or six years.

When that statement is made and the strategy is laid out, it will decide the future of the British shipbuilding industry in this country for the next 20, 30 or 40 years. It is therefore vital that the House has an opportunity to pass judgment on the Government's policy. In my view, it will be the Government's policy rather than the policy of British Shipbuilders. This divergence of view can already be seen between British Shipbuilders and the Government on the question of the available market, in particular with regard to the merchant fleet and the maritime side of shipping.

Having put down that marker, I repeat that we will not vote against the order, but I hope that the Minister of State will take on board some of the things that I have said and the warnings that I have given, because we will want to return to the matter at greater length in the not-too-distant future.

10.51 pm

Mr. Don Dixon (Jarrow)

The order gives the Opposition the opportunity to make what we consider to be important points because of our concern and alarm at the systematic rundown of the shipbuilding industry. I agree with my hon. Friend the Member for Falkirk, East (Mr. Ewing). The order deals with the borrowing power of British Shipbuilders, and, as a maritime nation, we cannot divorce shipbuilding from shipping. It is inconceivable that an island such as this, almost totally dependent on shipping for defence, food, fuel and trade, can allow the maritime industry to disappear.

Each section of the industry has different problems. The shipowner is faced with fierce competition and with low freight rates because of the world recession. The shipbuilding industry has few orders, and suffers from ruthless competition from the far east, and from hidden subsidies in almost every country involved in shipbuilding. Marine engineering has to scour the world for orders.

Shipping and shipbuilding is not a dying industry. According to the experts, by the year 2000 the world population will have increased by 50 per cent., and there will be another two billion people to feed. Therefore, by the end of the century, shipping will be a growth industry.

The number of merchant ships in the country registered and owned by United Kingdom companies has dropped from 1,200 to 780 in the period 1979 to 1983, a loss of 420 merchant ships and 15 million deadweight tonnage. According to the General Council of British Shipping, on present trends, it is forecast that by the end of 1985 there will be under 600 vessels owned and registered in the United Kingdom. The council also forecasts that the number of United Kingdom seafarers will have dropped from 80,000 in 1979 to fewer than 30,000 by the end of 1985. That is a loss of 50,000 seafarers to a maritime nation. Indeed, the Minister should read the very good document produced by the National Union of Seamen and the Amalgamated Union of Engineering Workers, Technical, Administrative and Supervisory Section.

The importance of shipbuilding and marine engineering to areas such as Clydeside, Merseyside and Tyne and Wear cannot be underestimated, as the work force there is totally dependent on heavy engineering. If a shipyard, a ship repair yard or a marine engineering company closes in those areas, there is little chance of alternative work. Indeed, in the Tyne and Wear area, 25 per cent. of manual workers depend on heavy engineering compared with 8 per cent. in the rest of the country. That gives hon. Members some idea of how important the industry is to areas such as Tyne and Wear.

Indeed, on British Shipbuilders' present plans, for the first time in living memory there will not be any shipbuilding berths on the south side of the river Tyne. Hon. Members should make no mistake about it, the Government's policy to privatise the warship yards will be disastrous for the British shipbuilding industry. The most recent shipbuilding Bill only gave the Minister enabling powers, and we hope that he will not use them. The Minister talks about taxpayers' money being used to subsidise shipyard workers, but does not he realise that if the warship yards are privatised, taxpayers' money will be going into the profits of private owners?

It is vital that this country should retain a merchant fleet and shipbuilding capacity, because in 1983, the industry earned £1.5 billion in net balance of payments. Shipping, shipbuilding and engineering employ 290,000 people, most of whom live in areas that are totally dependent on heavy engineering. By weight, nearly 100 per cent. of our imports and exports are still carried by ships. Meeting our essential defence requirements, such as the carriage of strategic materials to and from the United Kingdom, and operations such as the defence of the Falkland islands would not be possible if the industry perished. If this country is to remain a successful maritime power, it is essential that we should have a merchant fleet, a shipbuilding industry and a marine engineering industry.

I shall be brief, as many of my hon. Friends want to make constituency points. The Government should have a maritime policy, as recommended by the Select Committee on Trade and Industry some years ago. That is one of the recommendations that the Minister has never mentioned. During all our debates on shipbuilding, the Minister has never once suggested the recommendation of that Select Committee. We should have a Minister of shipping who is responsible for, and speaks for the maritime industry. We would even accept the Minister who opened this debate.

The industry should have political and financial support during the current world recession. A positive and coordinated Government policy is urgently required. We also require a scrap and build scheme. For years we have heard talk of such a scheme. In 1977, the EEC had a policy on scrap and build. It was brought back in 1979. It has now disappeared again. I believe that West Germany or one of the other European nations is against such a scheme. We cannot afford to wait until the EEC comes up with such a policy. It is essential that we, as a maritime nation, should determine our own scrap and build scheme if we are to have a shipbuilding and marine engineering industry.

10.59 pm

Mr. Frank Field (Birkenhead)

The Minister knows that we shall be supporting him tonight on the order. But he is wrong tonight, as he has been wrong on other occasions, to say that the united response from the Opposition Benches means that the Government are not putting forward enough money for the industry. I say tonight, as I have said on other occasions, that there is no way that we can judge whether the sum is adequate, too little or too much. Since I became a Member of the House in 1979 we have never had a debate about the borrowing and financial requirements of the industry and with that a debate on the corporate plan. Until we know what the Government see as the structure of the industry we cannot sensibly discuss the financial needs of that industry.

We shall be supporting the Government in the Lobbies tonight if it comes to a vote, for the simple reason that we know that without this financial support many more jobs would be at risk than have currently disappeared over the past year. In the absence of that corporate plan we look to Government statements on the future of the industry. We are told that there is one guiding principle—that some yards will survive and some may not. Those that do will be those that compete successfully for orders. I suggest that either the Government, or forces elsewhere, are now beginning to undermine that policy. I do so in respect of Cammell Laird in my constituency.

I need not tell the Minister or any other hon. Member how worried we are, as a town, about the future of that industry. I do not make a plea just for the work force; I would willingly do that. I do not make a plea for those industries, and the jobs of workers in them, which supply Cammell Laird; I would willingly do that. If Cammell Laird does close, the Government will be shutting us off from a long-term industrial future because Cammell Laird is the only centre in the area where people are trained in any great number.

Let me look at one particular order. Information has been leaked to me about the tender for the BP SWOPS tanker—the single well oil production system. Hon. Members are making noises behind me, but Members are often given information and they have to judge whether the source is reliable. I am happy to stand by my track record over 10 years. As I understand it, BP invited 11 yards to tender. Laird was one of those yards. Those 11 tenders went to the BP board. It published a short list of four. Laird was not on that short list although Harland and Wolff was. I have no wish to attack Harland and Wolff, but why, when Laird's tender was better than Harland and Wolff's on delivery time and price, and when BP staff judged that Laird's technical competence for that order was greater than Harland and Wolff's, Harland and Wolff was on the short list and Laird was not?

I want to ask the Minister three questions. It appears to some in Birkenhead that pressure was applied to the BP board. The Minister shakes his head and answers the first question, but I hope that be will put that on the record. If that is so, did he apply that pressure? Secondly, if he did not, did any officials in his Department? If not, does he he know of anyone in British Shipbuilders who applied pressure to the BP board to take Laird off the short list?

From my town, Birkenhead, it looks as though some people in Government or elsewhere are trying to rubbish our yard. I use the word ' rubbish". It is used not just by those in the yard, but by people who represent the area around the yard. That is what appears to be going on. I shall be grateful if the Minister will answer those three points.

It is important for the Government to know about local opinion. Two weeks ago the county council called a meeting of industrialists, trade unionists, church people, ship workers, and management—people interested in the future of Cammell Laird. The view of that meeting—and there was no disagreement, whether from the CBI or leading Conservatives from the Wirrall—was that the Goverment can save Cammell Laird if they wish to do so. The orders are there. If anything happens to Cammell Laird, there will be agreement across parties and interests in our area that it has been the Government's wish to close the yard.

I shall not take up mo t time in the debate, because there are other yards which are threatened with potential closure. I shall be grateful if the Minister will answer the three specific points that I have put to him in the debate.

11.5 pm

Mr. Christopher Chope (Southampton, Itchen)

I wish to make some points about Vosper Thornycroft and to refute utterly the attack made by the hon. Member for Jarrow (Mr. Dixon) on the principle of privatisation of the warship yards. What my hon. Friend the Minister said about the attitude of the work force in Vosper Thornycroft is correct. The work force think that they have nothing to lose and a lot to gain by privatisation, and that is why I support the policy.

Mr. Nicholas Brown

rose—

Mr. Chope

I will not give way to the hon. Member because I have only a short point to make and I want to be brief.

The work force are enthusiastic about privatisation, but will the Minister say what is to happen about the order for the type 22 frigates, which has been outstanding for the Ministry of Defence for many months now? Much anxiety is being caused in Vosper Thornycroft and in other yards about the outcome. The longer the decision is delayed, the less likely there is to be work that might otherwise be available.

The work force at Vosper Thornycroft, as my hon. Friend has said, have not yet signed the productivity deal. I do not think that it is because of any unfair attitude on their part; they are very concerned that for years they have contributed to the profits of British Shipbuilders and they are worried about whether the productivity deal is in their best interests. I shall be grateful if my hon. Friend can say something firm this evening to let the work force know whether the future and the outcome of the tendering for the type 22 frigates is likely to depend upon their signing the productivity deal, or whether it will be dealt with independently. Obviously, that is a very relevant consideration for the work force in that yard.

I shall be grateful if my hon. Friend can say what the time scale is for the privatisation of the warship yards, because the delay is causing much uncertainty among the work force. It is essential that there shold be an improvement in the morale of the people who work for British Shipbuilders.

11.8 pm

Mr. Malcolm Bruce (Gordon)

Some months ago the Minister, in a written reply to me, when I had asked him what the Government would do to put right the deficit on trade and manufactured goods, said that he was not going to do anything about it because we enjoyed a surplus in oil and invisible earnings. I have repeated that reply on several occasions, and audiences have been genuinely shocked at the implications behind it.

The relevance to this debate is that as a trading nation, as has already been said, it is vital that we maintain a strong maritime capability and a strong merchant fleet. It is clear that we are not doing that; in fact, the tonnage and the number of ships are falling drastically. Even leaving out commercial reasons, there is known to be concern within NATO at the strategic implications that a country such as ours cannot actually call on merchant marine backing in any kind of emergency. As has been said before in this House, it is doubtful whether we could mount a task force to the Falklands now because of the decline in our merchant fleet.

If we are to have a merchant fleet, we should have a capability to build that fleet. We should be able to secure orders for our own domestic yards.

I do not think that there is anyone in the House who does not recognise that, regardless of the political complexion of the Government, there are problems in British Shipbuilders that need to be addressed, but it is clear that the Government are addressing them in a one-sided way. They are not yet producing a clear indication of how the corporation is to develop in a constructive way. Indeed, one sometimes gets the feeling that the Government regard these traditional basic industries as some kind of obsolescent, decaying Victorian relic that should just be allowed to fade away or to be stamped out as soon as possible. There is no way in which we can keep a balanced economy and our position as a trading nation if we do not maintain those industries.

I acknowledge that British Shipbuilders needs to be more competitive. It needs stronger management than has been demonstrated to date, and I hope that something is being done to achieve that. British Shipbuilders certainly needs to go for modern and flexible working methods, but I suggest the provision of better pay and conditions as part of the deal to secure flexible working. The Minister must acknowledge—he certainly has advocated this to the House — the merits of what has happened in Scott Lithgow. One of the consequences of privatisation has been a dramatic increase in rates of pay within that yard — not after the orders have been completed and the profit has been made but to ensure the completion of those orders and to motivate a work force for which, whatever the Minister may say now, he and his colleagues showed little respect when the problems faced Scott Lithgow. Clearly, the new management put more value on those workers than the hon. Gentleman and his colleagues did at the time of the crisis.

I should have thought that we are moving towards a position where the Government in their purest monetarism occasionally say, "If you cannot compete today, you must accept closure", without seeming to recognise that our competitors are operating on the basis of anything other than free market economics.

I refer to the Japanese, although, to some extent, they have been overtaken. Sometimes Conservative Members hold up the Japanese example as the shining light with which Britain must deal, and certainly we must compete with them. If anyone can suggest to me that the Japanese economy is run on free market, free enterprise economics, he is living in cloud-cuckoo-land. I suggest that the best description of the Japanese method of running the economy is planned capitalism. That is something that the Japanese have been able to develop as a unique philosophy which has been very successful for them. The net result is that the Japanese have put investment into and commitment behind, their industry and have ensured that they have a specialist capability. We in Britain are in danger of losing such a capability.

A small yard in Aberdeen, Hall Russell, has been relatively successful and has secured orders. It will need more orders, but it needs investment and more technology as well. That yard has submitted applications to British Shipbuilders for a new fabrication facility and for investment in new technology and equipment. I hope that that investment will be forthcoming, because too often when the Minister has cited the figures of losses suffered by British Shipbuilders they have simply been losses, and he has masqueraded them as though they were investment. In many areas, investment has not been forthcoming. The problem of British Shipbuilders is that it has been overtaken and overwhelmed by losses in the present recession and has been unable to carry out a level of investment that will enable it to compete and to achieve the 75 per cent. success rate that the Minister told us is essential if the corporation is to survive.

I shall address myself to the issue of selling off the yards that are building ships for the military and navy sector. It is somewhat immoral to sell off yards that will thereafter be fundamentally dependant on Government contracts for goods which are built to a high specification and that effectively will be dependent for their profits on the taxpayer.

Mr. Norman Lamont

Is the hon. Gentleman therefore in favour of nationalising all defence contractors?

Mr. Bruce

I am certainly not in favour of nationalising all defence contractors. I am against denationalising yards in the British shipbuilding sector when that sector needs the underpinning that those yards can provide.

Mr. Lamont

The hon. Gentleman has just said that it is "immoral" for people to make profits out of contracts placed by the Government.

Mr. Bruce

I said that it was almost immoral to sell off yards at a time when British shipbuilders is fighting for its survival. That action would undermine its technical capability and its ability to obtain orders and to secure revenue. That revenue is essential to the industry's future. The hon. Gentleman knows that that is true. He is weakening British Shipbuilders and the shipbuilding industry by pursuing the matter.

Moreover, he is sidetracking management into having to cope with privatisation when it already has more than enough on its plate.

Mr. Chope

Does the hon. Gentleman think it fair that the people now working in the warship yards should have their pay increases held back because they have to subsidise the loss-making yards?

Mr. Bruce

I can well understand why workers in the yard in the hon. Gentleman's constituency want privatisation. As I have said, that yard will get Government contracts, so it will be secure. The workers there are trying to look after themselves, and I do not blame them for doing so in the middle of a recession, but the national shipbuilding interest requires broader vision than that.

Mr. Nicholas Brown

Is there actually enough in the domestic ordering programme for the Ministry of Defence to provide work for all the yards now building warships? Are Conservative Members' constituents entirely justified in their rejoicing?

Mr. Bruce

No doubt the Minister will tell us that Governments all over the world are queuing up to place orders with British yards, but I am not so confident. I will believe that when I see it.

The Government have not yet produced a coherent plan for the industry. They continue to be obsessed with ideological considerations and they are not doing enough to face the need for a proper maritime policy and a proper shipbuilding capability to meet our requirements as a trading nation. Therefore, although we shall support the order we regard it merely as an interim measure until we can get the industry into better shape. We certainly have no confidence that the Government's strategy is moving in that direction.

11.16 pm

Mr. Ernie Ross (Dundee, West)

I know that many of my hon. Friends wish to take part in the debate, so I shall be brief. The Minister's statement today must be one of the weakest that he has ever made from the Dispatch Box and his performance showed his real fear. My hon. Friend the Member for Falkirk, East (Mr. Ewing) said that the Minister would be a great deal less confident when the financial strategy—not the corporate plan—was finally exposed, and the Minister was extremely unconfident today.

As my hon. Friend the Member for Birkenhead (Mr. Field) has said, we shall not vote against the order. But that does not mean that we support the Minister. Hon. Members on this side including the hon. Member for Gordon (Mr. Bruce), are conscious of our responsibility to the shipbuilding industry. We must make it clear that we are not supporting a Minister who does not even know what the industry is about but has to have his PPS running up and down bringing hill bits of information so as to make things look a bit baler when he sums up the debate.

Meanwhile, what is happening with our competitors? If the Minister had studied Lloyd's List before coming to the debate he would know that the Japanese had seen the need to treble Government aid to shipbuilding. Can the Minister say that aid to British Shipbuilders has trebled during his period of responsibility? All he can say is that he has decided once again to extend the borrowing limits. He is not tackling the problems that Opposition Members have to cope with, as is shown by the very small number of Conservative Member; seeking to take part in the debate and to argue for their areas. They know that the Government are not concerned about an industry which is absolutely basic for an island nation.

My hon. Friend the Member for Jarrow (Mr. Dixon) said that the National Union of Seamen and my own union, AUEW, TASS, had produced several statements on shipbuilding. The Minister should read the most recent one and take account of the arguments in it. If he did so, he wold accept one or two of the things that we have been saying from Opposition Benches for many years about the need to have a national maritime policy and a Cabinet committee concerned with a basic industry involving not only shipping but various aspects of it, such as the marine engineering industry. Not just AUEW, TASS and the NUS are saying that. Recently a committee formed by the Institute of Marine Engineers—hardly people who one would expect to vote La 3our locally and nationally—came out with its own ideas for the shipping industry, which is vital to this country. I wonder why the Minister did not refer to the committee's plan. I am sure that he has read it. He has received a copy. I am sure that he is aware of the contents—

Mr. William McKelvey (Kilmarnock and Loudoun)

He is not.

Mr. Ross

A quick read of Lloyd's List of the past few weeks would explain that that committee is saying the same as Opposition Members. There is a need for a maritime policy and a corporate policy for shipbuilding. There is a need for the industry to understand that, as an island nation, we require an integrated shipping industry. We require shipowners to order ships from British yards. We require those ships to be powered by British engines. However, what we have heard from the Minister is a weak argument about why the Government should not address themselves to those problems. The Minister failed to convince the Opposition that he understands that this is an island, that we need ships and a shipping industry and that those ships, if we are to compete, have to be built in British yards—

Mr. Ian Lloyd (Havant)

Will the hon. Gentleman give way?

Mr. Ross

No. The hon. Gentleman should understand that Opposition Members have spent some time in the Chamber hoping to catch Mr. Deputy Speaker's eye. With great respect to the hon. Ge itleman, my hon. Friends have constituency points to make once I have finished.

I hope that when the Minister replies he will address himself to some of the points made by the Institute of Marine Engineers.

Recently my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) and I travelled to Aberdeen to meet the offshore oil trade unions. We discussed the serious concern in the offshore oil industry. If the Minister was concerned about British Shipbuilders, he could promote the concept of our supply vessels supporting the oil industry. The Minister must know that the supply vessels that are being used by the companies that have won the orders to supply the oil rigs are not suitable for that industry. If our vessels had been used, that would have saved the three yards that the Minister mentioned. He quickly passed over that and said that he was disturbed that they had to be closed down. Goole would have been saved if it had built the supply vessels that are urgently required to properly service to offshore industry.

This is a mini debate on the way towards the day, as my hon. Friend the Member for Falkirk, East said when we shall discuss the financial strategy that is an adaptation of the corporate plan that British Shipbuilders and the Government produced for the industry over several years. I hope that my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) catches your eye, Mr. Deputy Speaker, because it is clear that his points will further highlight the Government's determination not even to support our oil industry. Scott Lithgow failed because the Government did not understand that the new technology involved in building rigs such as Scott Lithgow were asked to build did not exist in this country, and that that expertise would have to be learnt. The Government were determined to exploit our oil as quickly as possible. They bought the necessary technology from the Americans and we have lost out in terms of jobs and of technology that we could have exported. That is one of the reasons why Scott Lithgow had difficulties. My hon. Friend the Member for Greenock and Port Glasgow will be able to explain that to the House if, Mr. Deputy Speaker, he catches your eye.

Mr. Frank Field

We have heard about the technological problems of producing rigs. The rig that Cammell Laird built has been in operation now since Easter, and only six hours have been lost. Technical problems are not the whole picture.

Mr. Ross

My hon. Friend is right.

There were only two yards. We have lost one yard and we may be well on the way to losing the other. The Minister has said nothing to convince us that the Government are determined to ensure that we shall have yards that are capable of exploiting the expertise that we have gained in the North Sea.

Many of my hon. Friends hope to catch your eye, Mr. Deputy Speaker. This mini-debate takes us closer to the day when the Minister will admit that he does not have a corporate plan, that he does not know what the industry needs and that he does not understand the industry or know how to handle it. The Minister tried, in his speech, to suggest that the Government are concerned about British Shipbuilders. In fact, the Government do not understand what shipbuilding is. They have no concept of the people who work in shipbuilding and they are not determined to fight aggressively to ensure that British shipbuilding succeeds.

11.27 pm

Mr. Bob Clay (Sunderland, North)

I want to refer briefly to the proposed closure of British Shipbuilders (Engineering and Technical Services) Ltd. in my constituency. It angers and saddens me that the Minister referred to the engineering reorganisation—the savaging of marine engineering in British Shipbuilders—without paying any regard to the fact that if the reorganisation goes through and the closure of BS(ETS) goes ahead, there will be an end to marine engineering on the Wear—an end to a standard of marine engineering recognised around the world for decades, and to a historic tradition. It is a sympton of the Government's cavalier and callous attitude to the industry that the Minister, in his statement, did not even recognise that fact.

BS(ETS) has achieved productivity on a scale that hon. Members have told us will be the salvation of the industry. Before the national enabling agreement, the new crankshaft facilities and component facilities had an agreement on inter-flexibility that surpassed what had been asked for in that enabling agreement. The reward is to be closure.

BS(ETS) was told to diversify. It is working flat out. There is overtime, and there has been no short-time working since 1979. It has diversified into general engineering, power stations and orders from ICI as well as the trade in marine engineering spares. The reward is to be closure.

The fate of BS(ETS) is a microcosm of the fate of the industry. Only 206 jobs are involved, but Sunderland, with its high unemployment rate, cannot afford to lose a single job. This is a demonstration in miniature of the Government's attitude to the whole of the shipbuilding industry.

We should be investing money to develop a new marine engine. That is what the crankshaft facility was installed for, less than one year ago. It is incredible that, when we talk of borrowing limits and the amount of money that is being put into BS, £4.5 million was invested less than 12 months ago and the facility is now to be mothballed because of the insane policies that BS is carrying out at the Government's behest. It would cost even more to transfer the facilities at BS (ETS) as cost would be incurred by the transfer and the learning curve in a new location.

This policy of destruction of marine engineering reflects the general destruction of shipbuilding. That is not just the opinion of Opposition Members. It is worth putting on record the opinion of Sir Robert Atkinson, the former chairman of BS. Last week he told Newcastle's The Journal: The Government states its policy is to support and ensure the viability of the shipbuilding industry and yet there has been no action taken so far to indicate that they intend to fulfil that expression. They talk about productivity and the importance of it and practically remove the means by which productivity can be achieved. Talking of the closure of BS(ETS) in Sunderland he said: When they start to kill a project like that, they will start to kill British shipbuilding. The only thing that he got wrong was that they have not started; but they are well on their way. He concluded: I am shocked, sad and broken-hearted that a fine facility like this and all the thought, investment and national skill that has gone into it is going to be wasted. It just makes my heart bleed. Those are the words of the chairman of less than one year ago. Such comments are an extraordinary indictment of the Government.

Finally, I should like to mention the attacks that the Secretary of State and, tonight, the Minister of State have made on my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) and on me in regard to what we have said about the possible closure of Austin and Pickersgill. I bitterly resent those attacks, which imply that, by raising the possibility of closure, hon. Members are scaring away orders. Orders are not achieved because of the Government's policy and the lack of financial support. When Graham Day went to meet Mr. Ohlendorf last week about the apparently possible order for Austin and Pickersgill, he said that there is a big price gap. I do not imagine that the Germans told him that they were worried whether the yard would stay open. I imagine that they wanted to talk about the price gap and what the Government were prepared to do about it. It is no good saying that we are not talking about closure. It is like the captain, standing on the deck of a manifestly sinking ship, saying, "It is not sinking because we are not talking about it sinking."

Unless it gets orders, that yard will go under. As the Minister knows, it is running out of work. Publicly being worried has no bearing on that. The Minister should be concerned not with attacking hon. Members who are worried, but with ensuring that BS is able to propose a financial package to secure immediately the orders that are available to the yard.

11.33 pm

Mr. Nicholas Brown (Newcastle upon Tyne, East)

As I am conscious of the lack of time, I shall make five concise points.

First, the Minister, when outlining the problems of the world market, mistook my nodding for assent. He then said that I and others who challenged him on merchant shipbuilding orders were somehow preventing them from coming to Britain, as my hon. Friend the Member for Sunderland, North (Mr. Clay) said. I am not asking the Minister to reveal in detail what subsidy the Government are prepared to offer a potential major merchant shipbuilding customer. I am asking him to assure the House that the subsidy that Government are prepared to give to ensure that Britain gets another major merchant shipbuilding order will be sufficient to breach the cost price gap between western Europe and the subsidised markets of Japan and South Korea. There is a price gap of about 33.3 per cent. and I trust that the gap will be bridged when the next major shipbuilding order is received by BS. The Minister has assured us that that order is destined for Austin and Pickersgill Ltd., but there is some disbelief about that.

Secondly, I ask the Minister to give us an assurance that, in line with what I understand to be BS's corporate plan, no closure of a major shipbuilding yard is contemplated by BS or the Minister. I am fairly certain that it is not contemplated by BS, but I am not so sure about the Minister, and that is rather more germane.

Thirdly, I ask the Minister to make a statement on the future of warship yards. Graham Day has said that he plans to privatise three of the yards but on the same day, 27 May, in a written answer to a question from me, the Minister said that there were no such plans. It should be noted that Graham Day said that he was taking on bankers and lawyers to advise him on the privatisation. Whatever the Minister's plans for the industry, will he give me an assurance that there is some future for Swan Hunter Shipbuilders Ltd.?

Fourthly and fifthly, will he address himself to the determination of the Japanese to dominate every market sector in the world economy, including those that are making short-term losses? Finally, if he attempts to close a major yard in Tyne and Wear, the entire community will fight him all the way.

11.37 pm

Dr. Norman A. Codman (Greenock and Port Glasgow)

I promise that my contribution will be the briefest of all those made in the debate. Almost everyone who has contributed to the debate has mentioned Scott Lithgow. Perhaps the Minister will regard this as gratuitous advice, but Scott Lithgow is contained entirely within my constituency. That being so, I am closer to the company than any other Member. Morale is high in the yard and, without wishing to sound condescending, with some assistance from he Minister I have received assurances from the new owners on recruitment and selection from the local community, training, strategic decision making and product range. I am glad to see that the Under-Secretary of State for Defence Procurement is on the Government Front Bench because I wish him to hear me express the hope that the product range will be widened somewhat to include the refit of submarines.

I ask the Minister two questions, one of which he might consider to be academic. Frirst, has the Touche Ross report been consigned to the archives? Secondly, what assistance to marine engineering does he envisage from the intervention fund?

11.38 pm

Mr. Norman Lamont

In the four minutes that are left to me to reply to the debase I wish, first, to thank the hon. Member for Greenock and Port Glasgow (Dr. Godman) for saying that morale at Scott Lithgow is high. I am grateful for the fact that he takes a positive attitude to its transfer to the private sector. It was unfortunate that the hon. Member for Falkirk, East (Mr. Ewing), who spoke from the Opposition Front Bench, responded so strongly to the transfer. There is no point in repeatedly considering who is at fault. I do not accept that the Government and British Shipbuilders have not been patient. About £50 million are likely to be lost on the rig order. Bygones must be bygones. The important thing is that there is now a new future, which the hon. Member for Greenock and Port Glasgow confirmed.

The hon. Member for Birkenhead (Mr. Field) asked me three specific questions, the answers to all of which are no. I think that they are no and not yes, but they are the answers that he wanted.

My hon. Friend the Member for Southampton, Itchen (Mr. Chope) asked me to say something about the Type 22 frigate orders. I cannot tell him what the timetable is. It will not be long delayed, but it is a matter for the Secretary of State for Defence. My hon. Friend also asked about the productivity deal, and whether it would endanger the chances of Vosper Thornycroft winning the order. If the productivity deal is not signed, it is less likely that the yard will win the order. I am grateful to my hon. Friend for confirming my impression from my visit there that many people are in favour of privatisation because they think that they will earn higher wages in the private sector when they operate commercially on their own and when the large loss-making business of British Shipbuilders is not incumbent on them.

The hon. Member for Gordon (Mr. Bruce) said that that was selfish. He said that those people were in favour of privatisation only because they would get higher wages, but when he talked about Scott Lithgow he rebuked BS for not having paid the wages that Scott Lithgow is now able to pay in the private sector. That shows the usual Social Democratic party attempt to have all things all ways.

I am delighted to hear that I feature in the rotary club speech of the hon. Member for Gordon, but he went all over the shop from monetarism to planned capitalism in Japan. It is all very well to talk about a maritime policy and a shipbuilding policy, but he did not attempt to define what they were. He has the usual Social Democratic party belief that if one finds a phrase, one finds a policy. That is as far as that party goes.

The hon. Member for Sunderland, North (Mr. Clay) asked a serious question about the Pallion engine facility. I appreciate the feelings of his constituents and of those in the area about the decision, which was not made by the Government, but which was a commercial decision by BS. He must know that the original investment decision was made on the assumptions of a far higher throughput of merchant shipbuilding orders and engine orders than has unfortunately been the case.

Question put and agreed to.

Resolved, That the draft British Shipbuilders Borrowing Powers (Increase of Limit) Order 1984, which was laid before this House on 11th June, be approved.