HC Deb 28 March 1984 vol 57 cc289-94 3.32 pm
Mrs. Anna McCurley (Renfrew, West and Inverclyde)

(by private notice) asked the Secretary of State for Trade and Industry if he will make a statement on Scott Lithgow.

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

As the House knows, discussions have taken place with a number of companies interested in taking over Scott Lithgow. The Government have been concerned throughout to minimise any further cost to the taxpayer, who has already put a huge amount of cash into Scott Lithgow.

My right hon. Friend the Secretary of State for Trade and Industry today gave his formal consent to the sale of Scott Lithgow to Trafalgar House.

Under the new ownership, Scott Lithgow will now complete the Britoil contract, as well as the other work in the yard, and seek new work. The costs of this deal for British Shipbuilders are broadly the same as those which would have arisen if the Britoil contract had been lost and the yard run down and closed. However, there are wider benefits arising from the maintenance of jobs at Scott Lithgow. Instead of the severe blow to Greenock of closure of the yard, this deal holds out a prospect of a substantial operation continuing and, I hope, expanding. It also means the acquisition of the yard by an experienced United Kingdom offshore operator, which has vast financial, managerial and technical resources and the retention of hard-won and valuable experience in the forefront of offshore technology.

I am sure that the House will join me in welcoming this transfer of Scott Lithgow to the private sector. It offers a real hope for the people of Greenock and for the future of shipbuilding on the lower Clyde.

Mrs. McCurley

I congratulate my hon. Friend the Minister of State and my right hon. Friend the Secretary of State for Scotland on the successful and expeditious way in which the deal has been concluded. What are the terms of the deal and what will be the consequences for British Shipbuilders?

Mr. Lamont

The Scott Lithgow company will be reconstructed to enable it to meet its existing liabilities, part of which will be repaid and the remainder written off. Substantial liabilities would, of course, have had to have been met whether the yard was sold, closed or retained by British Shipbuilders. Trafalgar House will buy the shares of the company for £12 million, £3 million to be paid immediately and the rest over three years with a commercial rate of interest applied to those deferred payments. The effect will be that Trafalgar House will buy for £12 million the currently bankrupt Scott Lithgow, reconstructed so as to be able to meet its existing liabilities and the cost of essential rationalisation. The net cost of the deal, after taking account of the purchase price and some deferred loans which form part of the transaction, is £71 million. This is broadly equal to the cost of the closure of the yard.

As regards the consequences for British Shipbuilders, the EFL of £158 million was set before the problems at Scott Lithgow had become apparent and at a time when British Shipbuilders expected a number of new orders. The disposal of Scott Lithgow gives rise to costs of £88 million this year. In addition, the continued recession in merchant shipbuilding has led to a fall on that side and a further increase of £22 million in British Shipbuilders' financial requirements. The result is that a total of £268 million will be required this year. But I emphasise to my hon. Friend that the costs of this deal are broadly the same as they would have been if closure of the yard had occurred.

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

Naturally, I am absolutely delighted that the threat of closure of Scott Lithgow has been lifted. It has been, of course, of deep concern to me ever since I became a Member of the House. In fact, a shop steward at John G. Kincaid said to me recently, "You are not the Member for Greenock and Port Glasgow; you are the Member for Scott Lithgow." Does the Minister agree that, in spite of the ill-founded criticism of the work force and management at Scott Lithgow, Scott Lithgow now forms part of a first class offshore engineering industry? Will he give his support to his ministerial colleagues at the Department of Energy in bringing home that fact to those who operate and those who seek to operate the offshore oil and gas industry? Will he seek to avoid a repetition of the decision made by Sun Oil to dishonour its obligations to this country in placing an order with a Swedish company?

Mr. Lamont

My right hon. Friend the Minister of State, Department of Energy, has already made clear the Government's views on the Sun Oil contract and our regret at the outcome of that decision. I am grateful for the way in which the hon. Gentleman has responded to today's announcement. I might add that there is a possibility of Howard Doris's still being involved. It will be giving technical support — that is the precise form of its involvement. I agree with the hon. Gentleman that this should be a winning team and a new start.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Is my hon. Friend aware that today's news will be widely welcomed in Scotland, not least by the many small businesses which are suppliers of Scott Lithgow? Will he take this opportunity of reminding the Scottish people, the Scottish media and, indeed, the Opposition that it was a Conservative Government and Conservative Ministers who made the resources available to bring about the rescue of this enterprise and the promotion of the joint venture by Trafalgar House and Howard Doris in Greenock? Does my hon. Friend agree with me that the verdict on this issue is that state control has been ruinously disastrous for Scott Lithgow?

Mr. Lamont

I am grateful to my hon. Friend. I would only add that I believe that there is no industry in which privatisation can do more good than in shipbuilding.

Mr. Gordon Wilson (Dundee, East)

Will the Minister accept the thanks of my right hon. Friend the Member for Western Isles (Mr. Stewart) and myself for his willingness to change his original verdict on this yard, which was one of closure, and to enter into the negotiations which have proved to be so successful? In view of the valuable real estate along the dockside and Trafalgar House's interest in property development, how much weight have the Government placed upon the long-term future of the yard in seeking further orders? Since one of the problems of the yard in the past was long-distance management, will the hon. Gentleman say what steps have been taken to ensure that there will be good, strong, locally based management with power to take decisions?

Mr. Lamont

The hon. Gentleman must not misrepresent the position. We have not altered our verdict, as he put it. We felt that the taxpayer could not be expected to inject further sums of money on top of the huge sums that had already been put into Scott Lithgow. That position has been maintained, because no extra costs to the Government are involved as a result of this deal compared with the option of closure.

The hon. Gentleman referred to Trafalgar House and its property activities. He will be aware that Trafalgar House is the largest metal fabricator in western Europe. It has substantial offshore interests and it is already heavily involved in the North sea. There is no reason to doubt its immense management capability in this field, and it is taking on a very difficult task.

Mr. John Corrie (Cunninghame, North)

May I thank my hon. Friend for his statement, particularly on behalf of those in the west of Scotland? Does he know whether all the land will be required for the new company or whether there is any likelihood that land could be released for new industry to come into the area? One of the major problems is that very little land is being made available.

Mr. Lamont

There could well be some surplus land. Discussions are taking place with the Scottish Development Agency about how that land might be made available for other uses.

Mr. Bruce Millan (Glasgow, Govan)

I very much welcome the fact that work is to continue at Scott Lithgow, but is it not clear from the figures that the Minister has given that it is an expensive takeover? The real comparison is not with the cost of closure, but with the renegotiated contract between Britoil and British Shipbuilders. If Ministers had exerted themselves in good time, we would have not only a continuation of work at Scott Lithgow and at British Shipbuilders, but much less cost to the taxpayer.

Mr. Lamont

What have been skyscrapingly expensive are the losses incurred in the past by Scott Lithgow. We have followed the advice of British Shipbuilders that it would have been wrong and much more expensive to renegotiate the original contract and bail out the yard. This is the best deal for the taxpayer and for employment on the Clyde.

Mr. Michael Forsyth (Stirling)

Does my hon. Friend agree that this is one in the eye for Labour Members who saw nothing but further state spending for the future of Scott Lithgow? The fact that 2,500 jobs have been saved, that there is an end to the haemorrhaging of taxpayers' money and that the future looks bright, show that this is a triumph of privatisation in practice.

Mr. Lamont

I entirely agree with my hon. Friend. If I had been told some months ago that Scott Lithgow would be the first part of British Shipbuilders to be privatised, I would scarcely have believed it. This is the working of market forces, and the solution is in the interests of our taxpayers and our industry.

Mr. Malcolm Bruce (Gordon)

Will the Minister accept that my colleagues and I very much welcome the fact that the yard has been saved from possible closure? However, as other hon. Members have said, some points of concern arise. It appears that the contribution by the consortium led by Trafalgar House is to be £12 million spread over three years, but the taxpayer has to pay £268 million in one year.

The Minister referred to the possibility of the Scottish Development Agency taking an interest in the land. Are we to assume that Trafalgar House, which has more of a reputation as a property company than as a manufacturer of sophisticated offshore equipment, will be able to make a profit from the sale of real estate to the SDA?

Mr. Lamont

The hon. Gentleman misses the point. The costs to the Government are unavoidable. Because of past losses, the Government unfortunately have no alternative but to pay a large bill. But the deal is a good one and the best available for the taxpayer. I have already said that Trafalgar House is interested in the deal because of its interest in the operations of the offshore industry. It is not interested in the arrangement as a property deal. The SDA will be handling the development of surplus land.

Mr. Gerald Malone (Aberdeen, South)

Does my hon. Friend agree that one of the most important aspects of the arrangement is that the yard now has some credibility? Does he also agree that, at a time when there is to be exploration in wilder waters off the west coast of Scotland, it is important that we have a lead in the high technology involved? Is it not absurd that there still appear to be some Labour Members who think that Scott Lithgow had any credibility left?

Mr. Lamont

My hon. Friend is obviously right. In addition to Howard Doris giving technical support, the Swedish company, Gotaverken Arendal, will be involved. Between them, the three companies have immense resources and experience and have achieved great success. That must give hope for the future.

Several Hon. Members


Mr. Speaker

Order. I remind the House that a private notice question is an extension of Question Time.

Mr. Harry Ewing (Falkirk, West)

Does the Minister accept that it is particularly appropriate that he should be forced to make a statement today because of his uncompromising and hard speech in the debate on Scott Lithgow, when he said that he would do nothing to help the yard? It is appropriate that he should be made to eat his words today.

Is the Minister aware that we strongly deprecate the way in which this matter has been handled today, with the planting of a private notice question by the hon. Member for Renfrew, West and Inverclyde (Mrs. McCurley), who does not represent Scott Lithgow, and who did not even have the good manners to tell my hon. Friend the Member for Greenock and Port Glasgow(Dr. Godman) that she had tabled this question?

Will the Minister accept that we regret—I want to make this clear—the loss to the public sector of this yard, which was involved in the most advanced technology in the construction of semi-submersible rigs? However, we welcome the fact that the yard is to be saved. Far from that being a victory for the Minister or his right hon. Friends, it is a famous victory for the people of Greenock and Port Glasgow and for the work force of Scott Lithgow. Will the hon. Gentleman join me in paying tribute to my hon. Friend the Member for Greenock and Port Glasgow, who has worked tirelessly on this matter and has at long last removed the stigma from the work force in Scott Lithgow which was placed upon it by the Secretary of State for Scotland when he described the workers as no better than coolies from the Korean rice fields?

Will the Minister also join in a tribute to the churches, to the community and everyone involved in this campaign? Does he agree that this is a lesson to every community in Britain that when its industrial livelihood is threatened it should fight the Government to save its industry?

Mr. Lamont

The hon. Gentleman congratulated everyone under the sun and wanted me to congratulate them as well. The only thing that he was not prepared to say a good word about was Trafalgar House, which is prepared to take on the yard at great risk.

The hon. Gentleman said that I had said that I would do nothing to help the yard. He confuses doing something with spending more money. We said that we would not be prepared, with a yard with such a damaging record of huge losses, to go on pouring in taxpayers' money; we had come to the end of the road. Despite not having to put in more money, we have managed to salvage something out of the wreckage and to create an entity that will, we believe, be a strong company in the offshore industry.

Mr. Hugh Brown (Glasgow, Provan)

On a point of order, Mr. Speaker. I wish to raise a question about the practice relating to private notice questions. I am aware that it is in your discretion to decide whether the subject is a matter of urgency or national importance. However, it seems to me that it places you, and therefore the House, in an impossible position when a request is made to you that is legitimate—never mind whether it is from the appropriate Member or not—but it is obvious from the interest in the House that the subject merited a statement. In the interests of the House, this is a legitimate question. Can you confirm that there was no request from the Government to make a statement? I understand that the Government decide whether there will be a statement. In the light of what has happened today, will you, Mr. Speaker, deprecate any attempt to use the private notice question procedure for something that has been connived at by the Government?

Mr. Speaker

Order. I know nothing about the last point. I can confirm that no application was made by the Government to make a statement on this matter, although a statement is to be made by the Foreign Secretary shortly. I applied the same criteria to this application as I apply to every other. I hope that the House will agree that the interest that has been shown fully justified my judgment.

Mr. Bill Walker (Tayside, North)

On a point of order, Mr. Speaker. I seek your guidance. Is it in order for an hon. Member to put forward a private notice question that is of substantial constituency interest and of national interest, as is the case with Scott Lithgow—

Mr. Speaker

Order. It is in order for any hon. Member to put forward a private notice question. I apply the same rules to every private notice question, irrespective of from which side of the House it comes, whether it is of constituency interest or not.

Mr. Harry Ewing

Further to that point of order, Mr. Speaker. In this instance, Scott Lithgow lies wholly within the constituency represented by my hon. Friend the Member for Greenock and Port Glasgow Dr. Godman). My hon. Friend the Member for Greenock and Port Glasgow has led the fight to save Scott Lithgow. The hon. Member for Renfrew, West and Inverclyde>(Mrs. McCurley) has no direct constituency interest in Scott Lithgow. Many hon. Members representing the west of Scotland have constituents who work in Scott Lithgow, but the establishment is wholly within the constituency represented by my hon. Friend the Member for Greenock and Port Glasgow. I made the point that the hon. Lady did not have the good manners to give my hon. Friend notice that she had tabled a question.

Would you, Mr. Speaker, give the House guidance about the practice of an hon. Member tabling a private notice question that concerns the constituencies of other hon. Members and not having the manners to inform those hon. Members that such a question has been tabled?

Mr. Speaker

Order. It is a well-known convention of the House that, if hon. Members table questions concerning other hon. Members' constituencies, they should so inform those hon. Members. As to the hon. Member for Renfrew West and Inverclyde (Mrs. McCurley), the House will be well aware that I keep careful note of hon. Members who are interested in any particular subject, and I know well, from the many occasions on which questions on this matter have been tabled that she has always risen to ask a question.