HC Deb 14 May 1986 vol 97 cc705-18 3.30 pm
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.

As the House will know, British Shipbuilders won only 23,000 compensated gross tonnes of orders last year. This was little more than a tenth of the amount forecast in its corporate plan. This was not for lack of Government support. The financial support for individual orders is not the problem. The problem is that orders are simply not there to be won. In Sweden, for example, which a few years ago had one of the most modern merchant shipbuilding industries in the world, the entire industry is closing down. This reflects the latest downturn in the shipbuilding market, which has resulted in capacity reductions and redundancies across the world. Despite Government support of over £1,400 million since 1979 and the recent increase in the level of support for new orders, it has proved impossible for British Shipbuilders to maintain its current capacity in the absence of new orders.

British Shipbuilders has, therefore, today announced measures which deal with this over-capacity. They include a decision to close by the end of the year, Smith's Dock, the Troon shipyard of Ferguson-Ailsa, and the Wallsend site of Clark Kincaid. In addition, British Shipbuilders has, as part of its wage negotiations, proposed a two-year deal which will seek to match manpower and capacity more closely to demand. The Government regret that these necessary measures will lead to total redundancies of some 3,500 people by March 1987. British Shipbuilders hopes that a substantial number of these will be achieved by voluntary redundancy.

The Government propose to provide British Shipbuilders with immediate support of up to £5 million in the current financial year to enable it to set up a new subsidiary, British Shipbuilders Enterprise Ltd. This will provide expert and practical services for those facing redundancy. It will ensure that they have at their workplace counsellors with the skills and resources to guide them towards retraining and redeployment opportunities, and to provide financial support to take advantage of those opportunities. It will also offer financial help and advice to those wishing to take the initiative of setting up their own businesses.

In addition, my right hon. Friend the Secretary of State for Employment has asked the Manpower Services Commission to provide a further £1 million specifically for the retraining of redundant employees of British Shipbuilders in direct co-operation with the new enterprise corporation. He will also make available £1 million via the City Action Team for job creation measures and to stimulate enterprise in the north-east.

The community programme is already being expanded in the north-east from its present level of 22,000 jobs to 29,000 jobs at an extra cost of some £30 million. My right hon. Friend has asked the Manpower Services Commission to explore urgently new ways in which the resources of the community programme and the enterprise allowance scheme can be used in order to lead to permanent jobs in the north-east.

In addition to these measures, my right hon. Friend the Secretary of State for the Environment has reviewed the derelict land reclamation and urban programmes in the areas affected—[Interruption.] I had thought that this matter was of some interest to the north-east.

At £13 million, the reclamation programme in the north-east region this year is already substantial, but it will be increased by a further £1 million. My right hon. Friend the Secretary of State also proposes to allocate an extra £2 million under the urban programme, adding to the region's £35 million programme this year. British Shipbuilders Enterprise Ltd. will also operate in Scotland. My right hon. and learned Friend the Secretary of State for Scotland will consider urgently additional measures to help the areas affected by the redundancies announced today.

The measures that I have outlined will be in addition to the existing regional aid programmes, including assistance via English Industrial Estates for which the areas concerned are already eligible.

Mr. John Smith (Monklands, East)

Is the Secretary of State aware that the chilling and desperate news contained in that statement will cause not only dismay but deep anger throughout the shipbuilding areas? Is he not ashamed to come to the House to announce 3,500 redundancies? Why did he not tell us about redundancies in particular yards—[Interruption.] Conservative Members may not like it, but they will have to listen to it. Why did the Secretary of State not tell the House that there would be 495 redundancies at Govan Shipbuilders? Why did he not tell us that there would be more than 900 redundancies at Austin and Pickersgill, and Sunderland Shipbuilders? Why was that information not given to the House? Was he ashamed to give the details?

Is the Secretary of State aware that the collection of small sums which he has offered to the House in a desperate passing of the hat around Government Departments amounts to no more than putting tiny pieces of sticking plaster over gaping wounds? Is he aware that that money is just a pittance compared with the tens of millions of pounds taken away from those areas by the halving of regional development grants in the past few years? Does the right hon. Gentleman not now think that the decision to hive off and sell the naval shipyards, thus breaking up the integrated nature of the British shipbuilding industry, was, as a former chairman declared this morning, a "national disgrace"?

The Secretary of State spoke about the Government having helped, but why did they not intervene to ensure that British Nuclear Fuels plc, in whose company they were the majority shareholder, ordered the fifth nuclear carrier from British shipyards just like the previous four had been ordered, instead of allowing the order to go to Japan? Why do the Government not have a programme of bringing forward public sector orders to ensure that ships that will need to be built some day are built now, while our shipbuiding industry is still capable of building them? Why do the Government not urgently reassess the systems and packages of support so that British Shipbuilders has as good a package of support as any other shipbuilding firm in the world?

Why do the Government not set up a special task force, charged with the job of ensuring that our British shipbuilding industry survives? It is clear that in 1986 British merchant shipbuilding will either survive or disappear. On the evidence so far, the Government are completely indifferent as to which.

Mr. Channon

The right hon. and learned Gentleman is wrong on almost all points. I do not think that British shipbuilding is on the verge of disappearing. It is important that we should try to take the necessary steps to keep merchant shipbuilding going in this country. The right hon. and learned Gentleman asked about public sector orders. Some are expected soon, including a fisheries protection vessel and two small ferries for Scotland, for which both British Shipbuilders and other British private sector yards are tendering.

The House must understand that further public sector orders cannot be conjured out of thin air if there is no need for them. The right hon. and learned Gentleman is misleading the House and the country if he imagines that there is some pool of public sector orders that are desperately needed and that can easily be brought forward. That is not the case. He would also mislead the House if he were to give the impression that this is a British problem; it is a worldwide problem. If the House wants details of the redundancy figures I gave, I can simplify them, but I have already told the House the unfortunate total of redundancies.

s As to our subsidies being competitive, as a whole, subsidies available to British Shipbuilders match those available elsewhere. It is quite misleading to make comparisons of the credit available without comparing direct production subsidies. It is essential that we do our best to help the industry. It is not good enough for the right hon. and learned Gentleman to misrepresent the position that exists all over the world.

Mr. Neville Trotter (Tynemouth)

Does my right hon. Friend agree that it is not a money problem but a worldwide problem? There is throughout a lack of shipbuilding orders caused by the calamitous state of the shipping industry worldwide. I welcome the palliatives which my right hon. Friend has announced and offer my congratulations regarding the British Shipbuilders enterprise corporation. Does my right hon. Friend accept that it is essential that this country continues to have a merchant shipping capability? We must continue to have some fundamental level of shipbuilding capability. Will my right hon. Friend confirm that we must maintain research and development facilities in British Shipbuilders, because the future lies in specialist and complicated vessels?

Mr. Channon

Yes, I agree. As my hon. Friend said in the second part of his question, it is important that facilities for research and the appropriate technology are both available. My hon. Friend said that it is a worldwide problem. I have already cited the example of Sweden. I shall cite also the example of Japan. For nearly 10 years, the Japanese have had to cut capacity. They are now considering reductions of one third in the larger yards. They have already laid off 10,000 people. To give the impression that it is solely a British problem is wholly misleading.

Mr. Bruce Millan (Glasgow, Govan)

Is the Minister aware that there are orders available in the world, that 13 million tons of orders were placed worldwide last year, and that we won orders for only 20,000 CGT? The orders are there and we are not getting them. [HON . MEMBERS: Why not?] Why do not the Government spend money on helping us to get orders instead of spending it to pick up the pieces of unemployment? Is the Minister aware that Govan Shipbuilders, which has suffered 500 redundancies today, is interested in orders from China for container ships and in a ferry order? However, it can get those orders only if there is a sufficient package of Government support. That is what we are asking for today.

Mr. Channon

The right hon. Gentleman's point about Chinese container ships is entirely right. We are prepared to offer the appropriate amount of mixed credit to make that possible. The House must understand that, in trying to get orders, it is not just a question of subsidy. There is a desperate shortage of orders worldwide. The United Kingdom is offering the same sort of credit as other countries offer—fully competitive packages. British Shipbuilders is doing its best to win the orders. One does it a disservice by demeaning what it is trying to do.

Mr. Tony Speller (Devon, North)

I refer my right hon. Friend to the Appledore shipyard in north Devon, which is in the constituency of my hon. Friend the Member for Torridge and Devon, West (Sir P. Mills), who is absent today due to sickness. Workers at that shipyard live both in my hon. Friend's constituency and in my constituency of Devon, North. Although 650 workers may seem a small number, their redundancies will be a huge, catastrophic occurrence for our area. On the subject of reviewing the boundaries of regional aid and access to European funds, does my right hon. Friend agree that the time to take action is now rather than delay further while matters get worse?

Mr. Channon

I shall certainly consider what my hon. Friend has said, although the question of where the boundaries should be drawn raises difficult problems. I hope that the effect in Appledore will not be too severe.

Mr. Ian Wrigglesworth (Stockton, South)

Does the Secretary of State accept that we are seeing a decimation of our shipbuilding industry? If it is a worldwide problem, why has the Conservative party, since it came to office in 1979, done little to work with other Governments to stimulate world trade and to increase the demand for shipping? If the industry has been facing massive problems, why have the Government deflected it from the major market, construction and manufacturing problems facing it with the re-organisation and the privatisation programme?

As for the north, especially in the Cleveland area where Smith's Dock is to be closed, will the right hon. Gentleman give an assurance, in addition to the ad hoc measures which he has mentioned, that he will support financially the proposal by the Northern CBI, the Northern TUC and others for a northern development company?

Mr. Channon

I shall of course consider the hon. Gentleman's last point. He must face up to the fact that this is a problem of the shipbuilding industry not only in Britain but all over the world. The hon. Gentleman implied that the Government had neglected shipbuilding. I have already told the House that, since 1979, there has been Government support of more than £1.4 billion. If that is neglect, I should like to know what is not.

Mr. James Tinn (Redcar)

Is the right hon. Gentleman aware that, in the 20-odd. years in which I have been a Member, I have watched with admiration the first-class work of the men and management at Smith's Dock in my constituency? Their achievements were confirmed as recently as last November in a letter from Graham Day, the then chairman of British Shipbuilders, in which he discounted rumours of future closures. Does the right hon. Gentleman agree that this announcement is a shabby return for all their sterling work? Does he agree that the ameliorative measures which have been announced amount to little more than a contribution to the funeral expenses of an important sector of the British shipbuilding industry? If reports that the Cubans are looking for four or five vessels—depending on the finance available—are correct, will the right hon. Gentleman see to it that British yards are able successfully to tender for them?

Mr. Channon

I understand and sympathise very much with the hon. Gentleman's comments. I recognise his understandable feelings at this difficult time. I do not think that any Cuban orders have yet been won. Negotiations are taking place, but I do not want to be drawn into the details. It would obviously be a great help to British Shipbuilders and yards in the United Kingdom if they won the Cuban orders. I shall certainly bear in mind the hon. Gentleman's points.

Mr. Piers Merchant (Newcastle upon Tyne, Central)

Does my right hon. Friend agree that this problem has been brought about not because of Government dereliction but because of the world crisis in shipbuilding—a crisis which he has faced up to with positive courage? Does my right hon. Friend agree that his package of nearly £10 million of extra aid will be widely welcomed in the northeast? Will he consider appointing a Minister to oversee the way in which that money is spent so that it does not fall into the hands of unaccountable and unelected organisations?

Mr. Channon

I am grateful for my hon. Friend's comments about the assistance that the Government hope to give in the affected areas. It is not for me to appoint a Minister to undertake that task. However, I am sure that we shall have to devise effective ways of ensuring that the money is spent in the best possible way to help in this difficult situation.

Mr. James Callaghan (Cardiff, South and Penarth)

Does the Minister appreciate that many of us believe that it is an act of folly for an island—not Sweden—which imports and exports 90 per cent. of its trade to allow its shipbuilding industry to be almost destroyed? Whether or not orders are there to be won—the right hon. Gentleman says that they are not and, of course, we must accept that—do the Government believe that it is essential to preserve a viable shipbuilding industry of considerable size? If it is necessary to adopt a scrap-and-build policy, as was done earlier, to meet the needs of a temporary problem, why not do that? What are the right hon. Gentleman's comments on the national position of our shipbuilding industry?

Mr. Channon

I understand, and to some extent share, the right hon. Gentleman's view. It is extremely important that we have a merchant shipbuilding industry. I think that the right hon. Gentleman will pay me credit for trying to achieve a situation in which the industry is viable.

I am afraid that if British Shipbuilders keeps everything open the industry's financial position will worsen, not improve.

I believe that the merchant shipbuilding industry is in a position to survive and will survive. I do not believe that the scrap-and-build process that the right hon. Gentleman has advocated was a success, but obviously we are considering every step that can be taken.

Sir Hector Monro (Dumfries)

Does my right hon. Friend agree that this lack of orders has caused a serious situation in Scotland, especially at Govan Shipbuilders and the Ferguson-Ailsa yard at Troon? Will he say a little more about how the British Shipbuilders enterprise corporation money will be shared out? Will there be adequate allocations for Scotland? Will there be discussions with the Scottish Development Agency, taking into account the successful work of the British steel industry in similar circumstances, which has brought many valuable jobs to the west of Scotland?

Mr. Channon

I think that I can give all those assurances to my hon. Friend. The British Shipbuilders enterprise corporation will operate in Scotland. My right hon. and learned Friend the Secretary of State for Scotland is considering additional measures, and I shall ensure that everything that my hon. Friend has said is drawn to his attention.

Mr. Frank Field (Birkenhead)

Does the Secretary of State accept that the House will be perplexed that not one of the new initiatives announced today will save shipbuilding jobs? Does he accept that merchant shipbuilding is on the point of collapse? If so, what new measures does he intend to announce today?

Mr. Channon

I do not accept that it is on the verge of collapse. It is an extremely difficult situation, which is why these measures have to be taken. Further yards remain, and I very much hope that they will survive.

Sir David Price (Eastleigh)

Does my right hon. Friend accept that his depressing statement is a logical consequence of the very rapid decline in the British merchant fleet, about which the Government have been warned consistently from both sides of the House, especially by my right hon. Friend the Member for Taunton (Sir E. du Cann) and myself? Even at this late hour, will my right hon. Friend and the Government take some of the measures taken by other countries to support their merchant navies? If we support the merchant navy we may get some orders for our shipbuilders.

Mr. Channon

I certainly take note of my hon. Friend's point. I shall discuss it with my right hon. Friend the Secretary of State for Transport.

Mr. Don Dixon (Jarrow)

Does the Secretary of State realise that what he has just announced means 3,500 highly skilled men going on the streets? A few community jobs and derelict land schemes will not save the valuable skills of this maritime nation. When will the Minister take some notice of what has been said by the Oppositon since 1979 about the decline in merchant shipping and the British shipbuilding industry? When will he come forward with something constructive? What he has announced today will do nothing for the British shipbuilding industry.

Mr. Channon

I have been trying to announce steps that will help the difficult position faced by the House and the shipbuilding industry. It is a serious situation, as the hon. Gentleman knows better than anybody. He also knows better than anybody that the problems facing the shipbuilding industry are worldwide and not confined to Britain. Such problems are faced by many countries and they have taken similar steps. It is foolish, misleading and unfair to suggest that we could take steps to get out of this position when other countries have not been able to.

Mr. Richard Holt (Langbaurgh)

Although I accept that today's announcement is the accumulation of years of neglect and the lack of orders, does my right hon. Friend accept that the closure of Smith's Dock in Langbaurgh, with the current high level of unemployment, will be much worse than anywhere else in the country? Therefore, will he take whatever steps he can, and say whether the £5 million he has announced is a limited figure or whether, once that has been used, further moneys will be made available? What steps will be taken to assist those people who would like to relocate to areas where work is available from an area where the house prices are the lowest in the country? Any form of help will be most welcome to my constituents.

Mr. Channon

I understand my hon. Friend's views. I hope that the amount of money announced today will be sufficient, but, of course, we shall keep the matter continually under review.

Mr. David Lambie (Cunninghame, South)

Is the Minister aware that the decision by British Shipbuilders to close the Ferguson-Ailsa yard at Troon, making 350 people redundant in this already high unemployment black spot, will increase male unemployment to nearly 40 per cent. and will put the final nail in the political coffin of the Secretary of State for Defence, who represents that area? Will the Minister consult the Secretary of State for Scotland to see whether the present orders for two ferries for the Scottish sea routes and one replacement vessel for the fisheries protection fleet that the Minister spoke of today can be directed to Ferguson-Ailsa in order to keep the yard open and ensure the future of the Port Glasgow and Troon shipyards?

Mr. Channon

I shall not comment on what the hon. Gentleman said in the first half of his question. As to the second half, the orders will have to go out to tender and competition in the normal way. A great many yards would like to have those orders.

Mr. Teddy Taylor (Southend, East)

As shipbuilding is a cyclical industry, will the Minister take steps to preserve the facilities at Smith's Dock and Ferguson-Ailsa for a possible recovery? Can he understand the feelings of those who work in shipbuilding, as I did before coming to the House, who are just a bit sick when we see that the total amount of cash provided for next year is equivalent to what we are paying every four days to subsidise agriculture and produce items that nobody wants because there is acute world over-capacity?

Mr. Channon

That may well be so, but surely my hon. Friend agrees that this is not so much a cash as an orders problem. There is a lack of orders for ships all over the world, including this country. That is well understood.

Mr. Taylor

Who wants to buy agriculture?

Mr. Channon

My hon. Friend talks about this being a cyclical industry. All the forecasts that I have seen remain extremely gloomy about the industry for a long time.

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

In the light of the decision to close the Troon yard of Ferguson-Ailsa, may I point out to the Secretary of State that it is absolutely crucial that the fisheries protection vessel to be ordered by the Department of Agriculture and Fisheries for Scotland and the Caledonian MacBrayne passenger ferry come to Ferguson-Ailsa in Port Glasgow, or the firm will disappear altogether? Has the right hon. Gentleman's Department informed the Associated Container Line that assistance can be obtained for the enlargement of its four vessels by way of the home credit scheme? There are orders there if the right hon. Gentleman's Department gets to its feet and helps British Shipbuilders to look for them.

Mr. Channon

On the hon. Gentleman's final point, that is well known, but I shall have to have that matter specially looked at. On his first point about the fisheries protection vessel and the ferries, it will be extremely important which yards those orders go to. British Shipbuilders and other yards are tendering for them now. I think that the only fair thing is for them to go out to tender in the normal way.

Mr. Jonathan Sayeed (Bristol, East)

Is it not the depressing reality that there are too many modern ships chasing too little cargo and that, consequently, freight rates are at an historic low? That means that there is too little money to invest in new ships and too little incentive to do so. Is my right hon. Friend aware that many ships that are being built now will be laid up as soon as they emerge from the yards?

Mr. Channon

My hon. Friend shows graphically the real problems that face shipping and the shipbuilding industry—[Interruption.]

Mr. Speaker

Order. I must say to the hon. Member for Bolsover (Mr. Skinner) that none of what he is saying is going into Hansard, so it does not help us.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

Why did the Secretary of State fail to announce in his statement any support for the present shipbuilding industry? Is he aware that it would take four Nissans in the north-east of England to make up for the shortfall of jobs that he announced today? Why cannot our community have the protection that the Government seem so willing to afford Harland and Wolff in Northern Ireland?

Mr. Channon

The hon. Gentleman is being unfair. I have said that there has been Government support of more than £1,400 million since 1979. The problem now is a lack of orders all over the world. In that difficult situation, I hope that the package that I have announced will create jobs, and be of help in the north-east and in Scotland.

Mr. Ralph Howell (Norfolk, North)

Is my right hon. Friend aware that public expenditure in South Korea accounts for 20 per cent. of GDP and that in this country it is 45 per cent.? South Korea has a thriving shipbuilding industry while ours is in a shambles. Will my right hon. Friend make that point to those of his right hon. Friends who want to increase public expenditure?

Mr. Channon

Yes, I will certainly make that point to my right hon. and hon. Friends. My hon. Friend must also be aware that the Korean industry is by no means in as good a shape as it was.

Mr. Robert C. Brown (Newcastle upon Tyne, North)

Is the Minister aware that it is not true to say that there are no orders? The problem lies in the fact that for every 700,000 tonnes of world orders last year, the British industry received only 1,000 tonnes. There must be a message in that for the Minister who is responsible for the industry. The right hon. Gentleman has been less than truthful with the House and has told only half the truth. He has not mentioned the other half of the British shipbuilding industry, which is in private hands. He did not mention, for instance, that the 3,500 job losses that he has announced today will be further increased by 2,000 losses when Swan Hunter announces redundancies on the Tyne as a direct result of the Government's failure to give a shipbuilding order.

The former hon. Member for Tynemouth, the late Dame Irene Ward, must be turning in her grave after hearing the contribution of her successor today. Like her successor, the hon. Member for Tynemouth (Mr. Trotter), we can also afford to ignore the hon. Member for Newcastle upon Tyne, Central (Mr. Merchant) because he will be a goner at the next election.

Mr. Channon

I think that the House will know that special steps have been taken in an attempt to help Swan Hunter in relation to the auxiliary oiler replenishment vessel. I am acutely aware of the problem faced by Swan Hunter. Of course, there are some orders available, and the hon. Gentleman was correct about that. However, there are many fewer orders than there were, and I believe that every shipbuilding industry in the world is cutting back.

Mr. Richard Page (Hertfordshire, South-West)

Does my right hon. Friend accept that I know that he and the House regret the necessity of having to make this statement? Does he have any idea how much money would be needed, in addition to the £1.5 billion already given, to secure the shrinking world orders that are available? Is he also aware that National Coal Board (Enterprise) Ltd., which was so denigrated by the Opposition, has created thousands of jobs and would he agree that British Shipbuilders Enterprise Ltd. will do the same?

Mr. Channon

I entirely agree with my hon. Friend. The coal and steel enterprise companies have created thousands of jobs and I very much hope that British Shipbuilders Enterprise Ltd. will receive a welcome from both sides of the House and will be successful. I suspect, as I have told the House, that it is not a question of money, Government support or more subsidy. Such assistance would make little difference to British shipbuilders. There are very few orders available and those that are will not be given away. The House is misleading itself if it imagines that there is a simple solution.

Mr. Bob Clay (Sunderland, North)

Is the Minister aware that workers at Austin and Pickersgill, the Sunderland shipbuilders, will take it as a sign of the Minister's indifference to their position that he could not be bothered to mention in his statement the 925 redundancies that were announced in Newcastle this morning? Is it not true that, unless the Minister changes his careless and complacent attitude, he will be back before the summer recess to announce that another one third of the industry has gone under? Is it not also true that the whole industry will disappear by the end of this year or early next year? Does the Minister accept that it is not true that there are no orders? Hon. Members have referred to orders from China and Cuba, and Yugoslavia is tendering for 23 ships abroad. Is Britain incapable of getting even five or six of these ships? It would appear that we are incapable under this Government. Will the Minister not tear up the appalling and shameful statement and get off his backside and do what Opposition Members have for long enough requested him to do?

Mr. Channon

I have already explained the position in relation to the China and Cuba orders. We are doing our utmost to win them, and the Government are helping to the maximum extent—[HON. MEMBERS: "What is the right hon. Gentleman doing?"] We are helping through the aid and trade provisions in terms of the China order, and talks are continuing about the Cuban orders.

On the hon. Gentleman's specific point about Sunderland, the figure that the hon. Gentleman referred to was included in the total number of redundancies that I announced in my statement.

Sir Kenneth Lewis (Stamford and Spalding)

Is my right hon. Friend aware that only a year or two ago—in the lifetime of this and the previous Administration—manufacturing industry was going out at a rate of knots? There is now an upturn in the demand for manufacturing goods and we do not have the capacity to provide for the market. Will my right hon. Friend therefore accept that I am more optimistic than he that in a year or two from now there might be a demand for shipping if world trade improves? Will he ensure that he keeps some of the units available and does not close them altogether so that they can be used again when there is an increase in shipping demand?

Mr. Channon

In general, my hon. Friend is right about the opportunities and prospects for British industry in the coming year. Some industries are still facing serious problems, and the shipbuilding industry is perhaps suffering most. I wish I could be as optimistic as my hon. Friend about the prospects for the shipbuilding industry worldwide, but I will certainly consider his remarks.

Mr. Robert Litherland (Manchester, Central)

Does the Minister agree with the former chairman of British Shipbuilders that the position now is so serious that the Prime Minister should intervene? Will she do that?

Mr. Channon

I heard what the former chairman said, but I agreed with very little of it.

Mr. Charles Wardle (Bexhill and Battle)

Did my right hon. Friend see a report that was published last month which revealed that there is surplus capacity worldwide of 60 million tonnes in the bulk carrier market and 100 million tonnes in the tanker market? Against such a background is it any wonder that there is no demand for new ships?

Mr. Channon

My hon. Friend is quite right and the House must consider the points that he made. There is a worldwide problem and it would be foolish to imagine that any Government can take steps in isolation to cure the problem. If the Opposition were responsible, they would not take the line that they are adopting now.

Mr. James Wallace (Orkney and Shetland)

Does the Secretary of State really believe that the Government's dogmatic obsession with reorganisation and privatisation has been helpful to the shipbuilding industry? At such a critical time the Government should have been concentrating their efforts on marketing and chasing orders. Rather than coming to the House to announce a rather puny welfare package, does the Secretary of State not accept that the communities in the north-east and in Scotland are looking for a package for industrial regeneration?

Mr. Channon

I do not agree that the privatisation of the warship yards has had an effect on the position. The orders required by both sets of yards are quite different. That is not to say that there are not serious problems in warship yards as well.

Mr. Tam Dalyell (Linlithgow)

When my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) raised the question of scrap and build, the Minister said that he had some sympathy with that. If so, will he consider orders for the four much-needed ocean survey ships which will he successors to the clapped out Heckla and Hecate? Will he consider successors to the Uganda? The Uganda was used during the Falklands war, and there is now no educational cruise ship available. Would it not be sensible to consider a viable scheme involving educational cruise ships? Such a scheme worked properly until the Uganda was taken over to be used as a hospital ship. If the need ever rose again, where would we find a hospital ship for an operation similar to the Falklands campaign?

Mr. Channon

I have some sympathy with the remarks of the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan), although he was not referring specifically to scrap and build. Ship scrapping was tried in the 1930s and I, like most people, believe that that scheme was riot a success. It is unlikely that it would be a success in the present climate.

Mr. John Ryman (Blyth Valley)

The Minister has referred to a worldwide shortage of orders. What steps, if any, have he or the Government taken to influence orders and so stop them from going abroad? Is he aware, for example, that P and O placed a mammoth order with Norway quite recently, which should have gone to British Shipbuilders? If he is destroying the British shipbuilding industry today—and that will be greeted with horror and disgust in the north-east—what will happen if there is a worldwide revival of the industry and the work-force has been broken up and the yards have been closed?

Mr. Channon

On the specific point which the hon. Gentleman raised about getting British shipowners to buy in British yards, our recent record is similar to that of most other European countries. I have examined the figures and they are more or less the same for all the countries concerned. It is in the interests of British shipowners to place orders in British yards if the terms are right. In the case of P and O, a ship is being built at the present time.

Mr. Stuart Bell (Middlesbrough)

In relation to the Secretary of State's last statement, will he accept that all the statements that Labour Members have show that we have the worst record in the EEC on placing orders for ships in domestic yards? Will he also note that in the House today anger turns to sadness and sadness turns to shame at his exposition of our shipbuilding industry and what the Government propose to do about it? He has not referred to the 1,350 jobs at Smith's Dock. He has not said that the £1,400 million was essentially to cover deficits and was not new investment, and that it went to the naval industry as well as the merchant yards. He has not said a word in praise of the shipyard workers in Smith's Dock who have rendered a signal service to our local economy and have delivered on time ships of the highest quality. He has mentioned Cuba and China, but he has not said whether, if those orders transpire, the yards that he has mentioned today for closure will stay open. Will he now give the House the commitment that, if those orders transpire between now and the end of the year those yards, including Smith's Dock, will stay open?

Mr. Channon

If an adequate number of orders can be found to keep those yards open, that will be highly desirable and something that I would welcome. But it would be wrong of me and misleading to those concerned if I were to stand at this Dispatch Box this afternoon and say I thought that that was at all likely. That would be raising false hopes, and I would be misleading people. That would not be doing them a service. Only about a third of the orders by British shipowners have been placed outside the United Kingdom, and that is about the average for the rest of Europe.

Mr. Harry Ewing (Falkirk, East)

Is the Secretary of State aware that his response to the constructive proposals put by my right hon. and hon. Friends displays a lack of willingness to try to rescue the difficult situation in British Shipbuilders? Why, when Ministers come to the Dispatch Box and willingly put thousands of people on the scrapheap of unemployment, do they always look for the worst example in the world, in this case Sweden, and seek to emulate that worst example? Have the Conservative Government now lost any willingness to try to do just a little hit better than the worst for the people of Britain? Does the Minister realise that the Government established BSC (Industry) Ltd because they decimated the British steel industry, that they established NCB (Enterprise) Ltd. because they decimated the coal industry, and that they will now establish British Shipbuilders Enterprise Ltd. because they are decimating British shipbuilding?

Mr. Channon

The hon. Gentleman is being unfair. I have already told the House of the Government's support of £1,400 million since 1979. It is unreasonable for the hon. Gentleman not to accept that and to say that the Government have not supported the industry. He says that I have quoted only the Swedish industry. I give him the example of the Dutch, the Japanese, the Koreans, the Germans and the French whose industries are also cutting back, some in a major way.

Mr. Christopher Chope (Southampton, Itchen)

What has been achieved since 1979 by spending £1,400 million of taxpayers' money other than to delay the evil and sad day that we are now experiencing?

Mr. Channon

It was right to spend that money and to support British Shipbuilders in the way that I have described. The situation that I have described today is unavoidable and is happening in many other countries.

Mr. Dennis Skinner (Bolsover)

Has not the Minister got a cheek to talk about shipbuilding being viable when in the past few years the Government have had double standards about viability in parts of the British economy? Why, if everything is tested by viability, was Johnson Matthey bank provided with £100 million of taxpayers' money in 1984 even though it was bankrupt and had run out of reserves? Why cannot shipbuilders' families be treated in the same way as people in the casino economy? What about the viability of the Common Market, which received £250 million of British taxpayers' money because it went bankrupt last year? What about the Export Credits Guarantee Department. Last year, £250 million went down the Swanee and the Government bailed it out? That was not viable. Is the House of Lords viable? Is this place viable? [HON MEMBERS: "Are you viable?"] It seems to me that the Government are concerned only with their own people. They would rather throw people on the scrap heap—the dole queue—than keep them in jobs. It is like the fellow in Bolsover told me the other day—this Minister is educated beyond his intelligence. Come on, answer.

Mr. John Smith

Does the Secretary of State realise that through all the wearisome recital of platitudes and ministerial hand-wringing to which we have been subjected this afternoon, he did not announce one new initiative to help the British shipbuilding industry to survive? Does he realise that the cost to the taxpayer of the unemployment that has been announced, with a spin-off in other industries, will probably amount to £80 million a year? Should not that be taken into account in assessing the public expenditure consequences? Those people in the industry who have not been subject to redundancy announcements today desperately need reassurance. Can he tell us that he will not be back at that Dispatch Box before the end of 1986 announcing more redundancies if he is so confident that merchant shipbuilding is not at stake?

Mr. Channon

The future of merchant shipbuilding in this and every other country will be determined by the orders that are won and the work that can be found. British shipbuilders and the Government will try to ensure that they are. No one can be sure that that will happen, but that is our aim. Indeed, as the right hon. Member for Manchester, Gorton (Mr. Kaufman) said when he had responsibility for this industry, Shipbuilding industries all over the world from Japan to Sweden are accepting the inevitability of contraction, and Britain cannot be insulated from this world trend."—[Official Report, 24 February 1977; Vol. 926, c. 1653] That is the truth of the matter and it is hypocritical to pretend otherwise.

Hon. Members


Mr. Speaker

Mrs. Lynda Chalker.

Mr. Andrew Faulds (Warley, East)

On a point of order, Mr. Speaker. It is to do with these exchanges, Sir. Will you promise to reprimand me on future occasions, as you have recently reprimanded that dreadful and persistent drip, the hon. Member for Bolsover (Mr. Skinner), because if you were to do that, that would ensure that my frequently more witty observations would be engraved on those tablets of stone, the Official Report?

Mr. Speaker

The words which go into Hansard are those spoken when a Member is called to speak by the Chair, not those made from a sedentary position.

Mr. Faulds


Mr. Speaker

I shall do what the hon. Gentleman originally asked.

Mr. Faulds

But further to that point of order, Mr. Speaker. It was you who changed the ruling. In the very old days when I first came into the House witty interventions from a sedentary position were recorded in the Official Report, and it frequently lightened the exchanges.

Mr. Speaker

Maybe, if they were witty.