§ The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon)
With permission, Mr. Speaker, I should like to make a statement.
I have today given my consent to the sale of Vickers Shipbuilding and Engineering Limited to the VSEL Employee Consortium plc. Its offer consists of a downpayment of £60 million, together with a profit-sharing arrangement for the period 1986 to1992, which could provide British Shipbuilders with further payments of up to £40 million in 1992 and 1993. The consortium has undertaken to complete and fund the remainder of the work on the submarine facilities project, which will modernise the production facilities at VSEL and enable the company to complete the Trident submarine programme in accordance with the Ministry of Defence's requirements.
As far as the Trident submarine programme is concerned, the consortium on Wednesday gave the Ministry of Defence an undertaking that it would negotiate a contract for the first Trident submarine on terms, price, programme and conditions which represent a significant improvement to the Ministry of Defence on the terms previously offered by VSEL while it remained under the control of British Shipbuilders.
The House will be aware that the consortium's bid was not the only one for VSEL. The commercial terms of the other bid were judged by British Shipbuilders and its financial advisers, in so far as they affected British Shipbuilders, to be superior to those of the consortium's bid. But there is a further term in the other bid, which I am bound not to disclose without the bidder's permission, which I found very difficult to accept. British Shipbuilders, moreover, acknowledged that other interests beyond the remit of British Shipbuilders to consider are involved in the sale. I agree with this. I have therefore decided that the consortium's bid is to be preferred. I wish the consortium well.
§ Mr. Alan Williams (Swansea, West)
I strongly object to the right hon. Gentleman's grave discourtesy. He was aware that the Opposition had asked that the statement should be deferred until Monday, and not only did the Government persist in going ahead with it today, but they ensured that I received a copy of the statement only at 10.53—seven minutes before the House was due to break into the morning business. As the Government were able yesterday to indicate to The London Standard that they planned to make some form of statement today, how on earth can the Secretary of State justify the discourtesy to the Opposition?
I also object to this furtive device of slipping such an important announcement through on a Friday. It is not only that it has taken up rare private Members' time—though that is an important consideration for hon. Members. It has also denied many hon. Members with a deep interest in this major policy decision a chance to ask questions on this important statement. Why was the matter so urgent that the statement had to be made this morning?
Does not the whole saga reveal the tensions and disagreements that exist between the Ministry of Defence 595 and the Department of Trade and Industry? Have we not clearly heard over the last two weeks the squelch of firm government? First, we had the extended deadline; then, within hours, the extension was cancelled; then the Government were to take the bids without first settling the contract for Trident; then, after Tuesday's deadline, according to The Guardian, the Government demanded theoretical terms for the Trident contract. I note from the statement that there are still no firm terms. When can we expect them to be finally negotiated?
How realistic was it to expect either of the parties to end months of haggling within a couple of days and give the Secretary of State a firm price? If, as The Guardian says and as the right hon. Gentleman's statement reveals, the terms in relation to Trident are purely theoretical and are only an indication of good will, how was the Secretary of State able to decide between the merits of the two bids? How was he able to decide whether the valuation was soundly based? What was the basis on which he eventually decided? I note that the right hon. Gentleman said that there is an element of confidentiality, but the House is entitled to more information about what led him to choose the hid which he says was the less commercial. Is it true, as has been suggested, that Trafalgar House was allowed to submit its bid after the deadline?
Hon. Members will want to know what assurances are given in the bid that has been accepted about the future of Cammell Laird and about the security of employment of those who will be affected by the decision. Is it not the ultimate absurdity that the Government are selling into private hands our only yard which is capable of producing nuclear submarines? Is it not an abuse of public funds to do that after £200 million of public money has been invested in the yard?
§ Mr. Channon
I am a little surprised at the terms of the right hon. Gentleman's question. The last thing that I expected to be told this morning was that our decision was an abuse of public funds. However, I apologise to the right hon. Gentleman and to the House for the fact that the statement has to be made this morning. I know that that is inconvenient—
§ Mr. Channon
I am occasionally here. The House surely understands that once I had come to a decision it would have been quite wrong for me not to disclose it to the House at the earliest opportunity. To do otherwise would be a very serious mistake. I am sorry if the right hon. Gentleman and his colleagues have been inconvenienced, but I fear that there was no alternative.
I cannot accept what the right hon. Gentleman says about disagreements between my right hon. Friend the Secretary of State for Defence and myself. We have worked in complete harmony. I made clear in my statement the reasons why we have come to this decision, which I am sure will be welcomed by some Members.
§ Mr. Cecil Franks (Barrow and Furness)
On behalf of the management, employees, local communities and the whole of the north-west, may I express deep gratitude and pleasure at my right hon. Friend's announcement? I am sure he will agree with me that the decision ably and amply demonstrates the Government's confidence in the north-west and their firm commitment to the principle of wider 596 share ownership, with the opportunity for employees to share in the fruits of their labour. I assure my right hon. Friend that the premier submarine builder of the nation can look forward with great confidence to the 21st century and continue to serve the nation as it has for the past century.
§ Mr. Gregor MacKenzie (Glasgow, Rutherglen)
During the discussions that the Secretary of State arid his colleagues had leading up to the statement, was there any discussion about the apportionment of the submarine programme? The right hon. Gentleman will be conscious of the fact that we on Clydeside felt that we got a shabby deal on that matter, and, on behalf of my colleagues in the west of Scotland, I should like to know whether there is to be a reapportionment of the substantial submarine programme and whether we on Clydeside are to get a share of it.
§ Mr. Channon
With respect to the right hon. Gentleman, that question raises different issues from those with which I am dealing. However, I am told by my hon. Friend the Minister of State that the answer to his question is no.
§ Sir Antony Buck (Colchester, North)
Is my right hon. friend aware that his statement will be widely welcomed on the Government Benches, particularly as he was courteous enough to apologise to the House for making a statement on a Friday, which, as a general rule, is inconvenient? Will my right hon. Friend confirm that his solution provides the best chances of the Royal Navy getting its ships and submarines on time and on cost?
§ Mr. Frank Field (Birkenhead)
I thank the Secretary of State for his statement and express the relief that will be felt in Cammell Laird this morning about the decision that he has made. Before the right hon. Gentleman finally ties up the deal, will he see Wirral Members, so that we can ensure that Cammell Laird is effectively represented on the board that will run the new company?
§ Mr. Channon
I am extremely grateful to the hon. Gentleman for his support. I note the views in the latter part of his question. I am not sure that that is a matter for me, but I shall certainly study what he has said. I am, of course, always available to see hon. Members who wish to see me.
§ Mr. Peter Thurnham (Bolton, North East)
I join my hon. Friend the Member for Barrow and Furness (Mr. Franks) in congratulating the Government on deciding to privatise the yard. I am sure that all hon. Members from the north-west will join me in congratulating the Government on taking such an important decision for the largest engineering complex in the country and on their commitment to wider share ownership. I am sure that the committed work force led by Sir David Nicolson and Rodney Leach, will be successful in world markets as well as in satisfying all the requirements for defence in this country.
§ Mr. John McWilliam (Blaydon)
Will the Secretary of State accept that his statement is not acceptable because 597 it is incomplete without the clause which he seems to suggest is commercially in confidence? Will the right hon. Gentleman tell us what was worrying him about that aspect, because I am sure that we would all like to know? Will the right hon. Gentleman also tell the House how many jobs he expects to remain in British shipbuilding after the management buy-out?
§ Mr. Channon
No, Sir. I made it clear in my statement to the House that I am bound not to disclose the terms of the other bid without the permission of the bidders. Therefore, I have nothing to add to what I said earlier. As to the second part of the right hon. Gentleman's question, that is a matter for the consortium.
§ Mr. Christopher Chope (Southampton, Itchen)
I congratulate my right hon. Friend on the wise counsels that have prevailed in this instance. May I ask him to confirm that 38 per cent. of the work force confirmed, when asked the question, that their principal reason for being in favour of the management buy-out and privatisation was that it would give them an incentive to work harder? Is my right hon. Friend also able to say whether the terms on which this agreement has been negotiated will not be such as to mean that Vosper Thornycroft will be unfairly hindered in its efforts to compete freely and openly in bids for merchant and Royal Navy ships?
§ Mr. Channon
I am sure that it can compete, and I am grateful to my hon. Friend for his support. I note what he said in the earlier part of his supplementary question.
§ Mr. Robert Maclennan (Caithness and Sutherland)
As a Member of Parliament whose constituency has for many years enjoyed a close relationship with Vickers through it subcontracting work, may I say that, of the options before the Minister, it appears that he has chosen the better one? However, it would be helpful if he could say more than he has done in answer to the questions that were put to him by the right hon. Member for Swansea, West (Mr. Williams). Is he able to say whether the arrangement includes the initial proposal that shares in the consortium should be offered for purchase by members of the local communities surrounding the shipyard?
§ Mr. Channon
I am grateful to the hon. Gentleman for his support. I understand that the answer to the latter part of his supplementary question is yes.
§ Mr. Cyril D. Townsend (Bexleyheath)
Is my right hon. Friend aware that his decision is likely to be widely welcomed in the defence establishment as sound and sensible? Will he comment on his discussions with the two bidders about the theoretical cancellation of the Trident programme in the event of a Labour Government being returned to power at the next general election, and say what guarantees, if any, were given to the two bidders about that possibility?
§ Mr. Channon
I am grateful to my hon. Friend for what he said in the first part of his supplementary question. However, any discussions with the bidders must remain confidential.
§ Mr. Eric Forth (Mid-Worcestershire)
Will my right hon. Friend accept that this is an excellent example of a policy which is of the greatest benefit to taxpayers, employees and all those involved with the industry? Does 598 he agree that there is nothing to be feared from the provision of vital defence supplies by the private sector, as this has been done very successfully in the United States for many decades?
§ Mr. Don Dixon (Jarrow)
Obviously we welcome the fact that the Secretary of State has accepted this bid rather than the Trafalgar House bid. However, does he realise that what he has said today sounds the death knell for British Shipbuilders? By selling off its profitable warship yards the Secretary of State has virtually killed off British Shipbuilders. When Mr. Day goes to British Leyland, we must hope that he will not have the same effect upon our car industry as he has had upon our British shipbuilding industry.
§ Mr. Channon
With respect to the hon. Gentleman, I think that uncharacteristically he is being a little unfair.