Shipbuilding Industry

HC Deb 21 May 1986 vol 98 cc412-56

Mr. Deputy Speaker (Mr. Ernest Armstrong)

We now come to the debate on the shipbuilding industry. Mr. Speaker has selected the amendment. I should also inform the House that 18 hon. Members, apart from the Front Benchers, have already intimated that they would like to catch my eye. The debate will end at 10 o'clock, and I therefore ask for brevity.

7.13 pm

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon)

I beg to move, That this House notes the massive slump in demand for merchant ships which has led to cutbacks in shipyards throughout the world; regrets that this has inevitably led to contraction in the United Kingdom's own merchant shipbuilding industry despite the Government's extensive and continued support for British Shipbuilders (including over £1,400 million since 1979); and welcomes the Government's package of measures to provide special assistance to those affected. In view of what you have said, Mr. Deputy Speaker, I shall try not to detain the House for too long, although this is a very important topic.

The crisis in the shipbuilding industry has been with us since the mid-1970s. It began when world demand fell in the wake of the first oil price shock just as massive and efficient new capacity was coming on stream. In 1973 the world order book stood at 129 million gross tonnes. At the end of 1985 it stood at only 26 million gross tonnes. The latest estimate suggests that there is about 30 per cent. excess capacity in shipping world wide, despite a record rate of scrapping last year.

After a number of years during which orders for new ships had remained at low levels—some 12 million to 13 million compensated gross tonnes—new order levels fell last year to less than 11 million cgt, with a distinct worsening between the first and second halves of the year. In the first six months of 1985 new orders world wide amounted to 5.8 million cgt, and in the second six months the figure was 4.9 million cgt.

First estimates suggest that the situation was no better in the first quarter of 1986. The only firm figures that we have are for January of this year, which have been given in a written answer. Although we should not take one month's figures too seriously, they nevertheless show all too clearly how difficult the market has now become. We took only 6,000 cgt, the French 1,000 and the Germans 9,000. These figures speak for themselves.

The House must face the fact that the outlook is bleak. No one believes that an upturn is in prospect before 1990. Indeed, many people believe that the recovery will be well beyond that date. It is not only British Shipbuilders which has had to cut back in these circumstances. The Germans have cut capacity, the French are cutting capacity, and the Swedes have effectively abandoned merchant shipbuilding, despite having some of the most modern facilities in Europe. The Dutch have refused to support their industry in building the sister ship to the large North sea ferry won by Govan. The Japanese are having to adjust and have cut 10,000 jobs since the beginning of this year. Another 20,000 could go — perhaps 30,000 in all. Even the Koreans have lost jobs and have cut back plans for new capacity.

Therefore, British Shipbuilders is not alone. The bulk of British Shipbuilders' present order book was won in the first half of 1985, when BS secured orders for some 160,000 cgt. BS has won very little since because, with few exceptions, the orders have not been available. That is not a question of lack of Government support, and I emphasise that. The Government have given support to British Shipbuilders on a quite unprecedented scale since 1979 — more than £1,100 million by way of public dividend capital to cover the corporation's general operations, and more than £230 million by way of intervention fund support for individual merchant orders. BS orders have also been supported by the home credit scheme to the tune of welt in excess of £100 million.

The House must recognise that very considerable support has been given, and of course we are anxious to do all that we can from now on. The House recently agreed a Bill, which is now in another place, which will enable the borrowing powers of BS to be increased by a further £200 million.

Because of the world situation, BS has had to make very painful decisions. The corporation looked at a variety of options. Its aim was to take the option that would in these difficult circumstances provide the best chance for merchant shipbuilding in this country. It chose an option which, as the House knows, unfortunately involved closures and redundancies, because British Shipbuilders simply did not believe that it made commercial sense to retain more capacity than orders could be found for.

BS recommended this option to me, and I accepted it as offering the best prospect for the business as a whole. The changes that BS plans over the months ahead will make it fitter to face the future, but the future depends on new orders, and the House may be assured that we shall do all that we can to ensure that those orders are won.

BS has announced a fall in employment from 10,000 to 6,500 by next March, but by no stretch of the imagination is this the end of merchant shipbuilding in this country, as some hon. Members have suggested. The House should not forget that about 2,000 people are also employed in private sector merchant shipbuilding in Great Britain. This sector has largely maintained jobs over the years by supplying such ships as small coasters, fishing vessels and so on. There are also more than 4,000 people employed at Harland and Wolff, and about 27,000 in the newly privatised warship yards.

I now come to the whole question of public sector orders. Some people suggest that these should be brought forward, and others seem to believe that such orders can be conjured from thin air. Over the past year the Ministry of Defence has placed a number of very important orders. In 1985 and the first quarter of 1986, ship and submarine orders to the value of £1.86 billion have been placed. This includes the three Upholder class submarines from Calumet' Laird, two type 22 frigates — one for Cammells and for Swan Hunter — the first AOR for Harland and Wolff, three mine counter-measure vessels, and a nuclear fleet submarine and the first Trident submarine, both from Vickers at Barrow. That is an impressive list, which will be augmented by type 23 frigate orders and by the second AOR order, for which Swan Hunter has been given a favourable opportunity to bid.

The recently privatised warship yards have also had successes beyond the Ministry of Defence orders for the Royal Navy to which I have just referred. For example, Brooke Marine at Lowestoft is in the advanced stages of negotiation of four separate contracts worth some £14 million, which will keep its labour force of over 500 employed for the next year. It is also pursuing a number of other contracts. Vosper Thornycroft UK Limited has recently won a further contract from Oman for a fast strike craft of the Province class worth well over £30 million. It is also negotiating a major naval contract in Pakistan with the support of the Government. I hope that that will he successful.

On the purely merchant side, there are orders coming shortly for a fisheries protection vessel and two ferries for the Scottish islands. I am delighted to announce that the Government intend to finance from the aid programme a newly built ship to provide adequate services for St. Helena. That ship will be built in a United Kingdom yard. Tenders for a replacement ship for Tuvalu, also financed as aid, will go to our yards in the next two to three months. This is good news. It is quite unrealistic to invent orders, or to build ships simply for the sake of building ships. There is no sense in that.

I have heard it suggested by some hon. Members that our support for the industry is less competitive than the support in other countries. It is not always easy to make direct comparisons between the support given by different countries. It is certainly misleading to focus on just one aspect of support given in one country — say, credit terms—and to compare that element, either favourably or unfavourably, with the credit terms available here, without also considering how other elements of support compare.

In the United Kingdom our main method of support is the shipbuilding intervention fund—a direct production subsidy. By agreement with the Commission, under the Community fifth directive on aids to shipbuilding, we have the ability to offer support at up to 20.5 per cent. of contract price to help BS or private sector yards match far east prices.

In addition, favourable credit terms are available under the home credit scheme. These conform to the terms of the OECD understanding on credit for ships. We are able to offer credit on 80 per cent. of the ship price at 7.5 per cent. interest for eight and a half years. These match the terms generally available elsewhere, though some countries which offer less or no direct production aid compensate by offering more favourable credit terms. Finally, we are ready by use of the aid and trade provision to offer considerably better credit terms in appropriate cases to match competition from other countries. I am anxious that we should do so.

Within the Community, state aids to shipbuilding are currently covered by the fifth directive, which expires at the end of the year. Although discussions have begun on a new Community regime, no proposals have yet come forward from the Commission. We are therefore pressing the Commission to table proposals which take full account of all the aids currently available, both direct and indirect including tax incentives, to shipowners and to investors in new ships, as well as aids to shipbuilders. We are determined that the new Community aid regime should be fair and should allow shipbuilders in this country to compete on equal terms with their European rivals.

Mr. James Tinn (Redcar)

In the negotiations, will the Secretary of State try to ensure that intervention fund assistance does not carry with it the requirement that British Shipbuilders must break even on every contract? Private and foreign competitors are not subjected to that requirement. It is not easy to see why British Shipbuilders should have to meet it. Will the Secretary of State do something about that?

Mr. Channon

I shall examine the point that the hon. Gentleman has made. I cannot unilaterally make a change in the rules of the European Commission. The Commission has not yet put forward proposals to the Community for the next stage. The point that the hon. Gentleman has made is very important, and we shall bear it in mind during the negotiations.

Now I want to turn to the measures that I announced last week to help deal with the redundancies resulting from the contraction of British Shipbuilders. In regard to the support of up to £5 million to enable it to set up a new subsidiary, British Shipbuilders Enterprise Ltd., I can now tell the House that the new company will be in operation in July.

In the steel industry areas, 30,000 jobs have been created by BSC Industries, and 20,000 more are forecast to follow. In coal, NCB (Enterprises) Ltd. has already created 6,000 jobs in 18 months of operation. BS employees facing redundancy will know that skills and resources are available on hand to help. There will be money to help take advantage of retraining and redeployment opportunities, and money and advice for those wishing to take the initiative of setting up their own businesses. British Shipbuilders is pressing ahead with the arrangements.

The head office, with the chief executive, will be based in Middlesbrough. There will also be regional directors for the north-east on the Wear, and for Scotland at Strathclyde. BS Enterprise will therefore be particularly well placed to help the men of Smiths dock and their families, as well as those at other yards, including Troon. In addition, I explained last week that 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 BS redundant employees, in direct co-operation with the new enterprise corporation.

I can well understand the feelings of hon. Members, particularly those from the north-east, at the latest news. The north-east of England continues to receive large sums in support of the regional economy there, and that is right. In that area, 97 per cent. of the working population are within assisted areas eligible for schemes of regional aid. More than £800 million has been spent on regional assistance since 1979 in the form of regional development grants and regional selective assistance. This massive injection of funds has helped to create or safeguard 79,000 jobs.

Over the same period, the Manpower Services Commission has spent £300 million, and the Department of the Environment has funded economic, social and environmental projects to the value of £300 million.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

May I draw the Minister back to shipbuilding? Yesterday, in answer to a question from my hon. Friend the Member for Wallsend (Mr. Garrett), the Prime Minister said: There are not many public orders to be brought forward, apart from the naval shipyard orders that are coming forward." —[Official Report, 20 May 1986: Vol. 98, c. 178.] Is that a commitment by the Government to bring forward the naval shipbuilding programme?

Mr. Channon

I have already described the naval shipbuilding orders that are coming forward and that have come forward in the past few months; for example, the second AOR that we have talked about for Swan Hunter and, I hope, the type 23 frigate.

As the House knows from the announcement last week, new measures to help cope with the shipbuilding crisis also include an extra £1 million for the city action team, £ 1 million for the reclamation of derelict land and a further £2 million to be added to the urban programme allocation for the region.

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

On the question of the involvement of the Manpower Services Commission, may I point out to the Secretary of State that community enterprises in my constituency find the MSC less than helpful when they make applications for help to create jobs for unemployed shipyard workers? Will he ask his right hon. Friend to look into that?

Mr. Channon

I shall certainly put that to my right hon. Friend, with whom I have already discussed the problem. He is anxious that such problems should be resolved and that we should have a flexible system between all Departments of Government that are involved in the exercise, so as to ensure that there are no difficulties such as the one the hon. Gentleman mentioned.

I have already tried to describe to the House the position on orders, not only in the United Kingdom, but throughout the world.

The Manpower Services Commission will work closely with British Shipbuilders Enterprise Ltd. — [Interruption.] I should have thought that the House would be interested in learning this. [Interruption.] I have already told the House the position on orders throughout the world. The House may find it unpalatable, but it is the truth. British industry is in exactly the same position as industry throughout the world, and we are blinding ourselves if we imagine that that is not the case.

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

I am sure that the Minister does not want to mislead the House or the country. What about the three Ministry of Defence orders a year that we want? If British Shipbuilders Enterprise Ltd. was 10 times as successful as NCB (Enterprise) Ltd., it would still be a disaster for the shipbuilding areas.

Mr. Channon

I am telling the House of the measures which I believe will be of substantial help to the north-east. I hope that that will prove to be the case. I have already described the position on orders that have been made and are coming, including Ministry of Defence orders and merchant orders. I have already announced two further orders. [Interruption.] I announced them a few moments ago. I cannot invent orders for which there is no demand. I can tell the House where orders are, and of orders which are coming.

The Manpower Services Commission is important and will work closely with British Shipbuilders Enterprise Ltd. to ensure the effective retraining of redundant BS employees. With regard to the extra sums for reclamation and the urban programme, the Departments concerned are writing to local authorities in the area concerned — Tyneside, Wearside, and Teesside — asking for bids against this allocation. Preference will be given to projects which are directly job-creative or supportive.

Mr. Tony Speller (Devon, North)

While we are on the subject of assistance for those made unemployed, may I bring my right hon. Friend back to his point about development area status? Appledore, which is the first name on British Shipbuilders' programme, does not enjoy that status. Similarly, the numbers being reduced there are so relatively small that the cost of various aid programmes may outweigh the so-called value in the savings. May I point out that the smallest order of any size ship would be a substantial salmon in our part of the world. but a mere minnow up country? Will my right hon. Friend bear that in mind when the minnow orders come through?

Mr. Channon

I understand what my hon. Friend says. At present Appledore is building two dredgers, and I understand that there are good prospects for a third dredger from a new customer to the yard. I hope that that order is won. I recognise the force of my hon. Friend's comments. It is extremely difficult to alter the map, and once I start doing that there will be a great many arguments in different areas.

Mr. John Smith (Monklands, East)

Answer the question.

Mr. Channon

I have already answered my hon. Friend's question and I think that he is satisfied with it. [Interruption.] Let him speak for himself.

BS Enterprise Ltd. will also operate in Scotland. My right hon. and learned Friend the Secretary of State for Scotland is urgently considering additional help for the areas affected north of the border. [Interruption.] I have already explained to the House the measures that I am proposing in the north-east, and my right hon. and learned Friend is proposing similar measures for Scotland.

I disagree strongly with the Opposition's amendment that conditions in merchant shipbuilding are the result of Government neglect. I have explained that this is a worldwide crisis from which we cannot be immune. Opposition Members who are complaining must face the fact that an injection of £1,500 million during the past seven years is a curious definition of neglect.

Mr. John Smith

That figure has been used constantly. It is normally a figure of £1,400 million, but the Secretary of State has added £1 million to it. As we are debating merchant shipbuilding, will the Secretary of State tell us how much of that sum was investment in merchant shipping?

Mr. Channon

About £230 million was spent on the intervention programme, and the other £1,100 million is the main part of Government help for BS during the past seven years. [Interruption.] Let me tell the House the exact position. BS has received nearly £1.5 billion from the Government since 1979. Public dividend capital of more than £1,100 million has funded BS's general operations. Intervention fund money amounting to £236 million has been spent as a subsidy on contract prices to help BS win orders against far east competition. [Interruption.] I have already told the House the figures for BS as a whole.

Mr. John Smith

Will the Secretary of State give way?

Mr. Channon

I must press on. I have given the House the figures, and they relate to BS operations since 1979.

If the House challenges me on them, and I shall be surprised if it does, I can tell it that that is a great deal more than was spent under the Labour Government.

Mr. Smith

The Secretary of State was asked a precise question: how much of the much-quoted figure was investment in merchant shipbuilding yards? If he does not know the answer, will he please tell us?

Mr. Channon

I have told the House the answer perfectly clearly. Incidentally, the total support for shipbuilding under the Labour Government was £130 million. [Interruption.] Members may well laugh. It is because they feel guilty. We have invested 10 times that sum and more.

As I have told the House, during the past seven years support for BS has been nearly £1.5 billion, which is 10 times as much as in the past. Anyone who says that that is neglect is completely misreading the position. I am determined to support BS.

Mr. Bob Clay (Sunderland, North)

Will the Minister give way?

Mr. Channon

No, I must continue.

We are prepared to spend a great deal of money supporting BS, and we are keen to support the business.

Mr. Tony Marlow (Northampton, North)

The taxpayers are.

Mr. Channon

Indeed, the taxpayers are. We are keen to inspire the confidence of owners in the industry's ability to compete, build and deliver on time. The House knows how vulnerable confidence in a business can be in these circumstances. It will not help if hon. Members in any part of the House—I make no allegation of this—talk down the industry at present. [Interruption.] The House has a clear choice this evening. I say that the British merchant shipbuilding industry will survive, and I hope that no hon. Member will challenge that. I believe that the orders on which BS depends can be won.

The Opposition have asked for a task force. My hon. Friends the Ministers at the Department of Trade and Industry and, indeed, all Ministers, including myself, will miss no opportunity to support BS in its efforts to secure the orders that it needs. That is the right approach. The Opposition talk about a maritime strategy. As the House well knows, the problem is that there is massive over-capacity in shipping world wide. There are many cheap and modern secondhand ships available at all-too-attractive prices to meet most needs. General investment incentives to British shipowners do not seem to be the answer to the problem. Making ships ever cheaper risks exacerbating the difficulties in the shipping market, which can only delay the upturn in shipbuilding itself.

In these difficult circumstances, I believe that no sensible alternative could have been devised. This is widely appreciated in informed circles outside the House, and I suspect that it is widely understood inside the House, whatever hon. Members may say. I ask the House to support the Motion.

7.38 pm

Mr. John Smith (Monklands, East)

I beg to move. to leave out from "House" to the end of the Question and to add instead thereof: deplores the crisis facing the British merchant shipbuilding industry and the closures and redundancies caused by Government neglect and indifference; notes with dismay the disastrous contraction in the British merchant fleet since 1979 with its consequent adverse effect on shipbuilding; believes that an island nation requires a strong shipbuilding industry for its trade and defence; and calls upon the Government as a matter of urgency to establish a task force to secure sufficient public and private sector orders at home and abroad to maintain as a minimum the existing capacity and workforce of the industry.". Few people would have thought it possible that after recent announcements a Secretary of State for Trade and Industry could make a speech in the House which did not mention even one of the three yards which is scheduled for closure. I hope that it was, perhaps, a sense of shame which held him back from reminding us that Smith's Dock, the Ferguson-Ailsa yard at Troon and Clark Kincaid at Wallsend must close completely. It is incredible that they were not even touched on in his speech.

Let me remind the Secretary of State of the facts of merchant shipbuilding. When the Government came to power in 1979, 30,000 people were employed in merchant shipbuilding—few enough. The number declined, until, prior to the present announcements only 10,000 were working in merchant shipbuilding. As a result of these announcements, the work force will be cut to 6,500. In one naval yard, Vickers at Barrow, far more people are employed than in the whole of the British merchant shipbuilding industry, so shrunk has it become.

The Secretary of State keeps telling us about new measures in the wake of shipbuilding closures. I remind him that some of the areas that will be affected by these announcements already have the British Steel Corporation (Enterprises) Ltd, the NCB (Enterprise) Ltd. and the recently announced British Rail (Enterprise) Ltd. Now they will have the British Shipbuilders Enterprise Ltd. If the Government would give half the attention that they give to such schemes to saving jobs in existing industries, they would not have to bother running around creating enterprise schemes as a result of every closure that flows from their policies.

I shall try to speak briefly, because many hon. Members representing British merchant shipbuilding areas will want to catch your eye, Mr. Speaker. The point of the debate is that the Government must reach a clear political determination that they will maintain a merchant shipbuilding industry. I did not discern any sense of purpose or dynamism from the Secretary of State's approach to this matter. He was rather laid back and said that it was sad that orders had declined, but he was not sure whether many more were coming, although he would do what he could. He added that he hoped that the industry would survive and that Labour Members would not cause a loss of confidence in the industry.

The Government should show some confidence in the industry. It was their folly, in splitting off the naval yards from the merchant yards, that put the latter at the heart of this crisis. The former chairman, Sir Robert Atkinson, and not just hon. Members, described that as a national disaster. The Secretary of State referred to the naval shipbuilding yards. I do not know what message he was seeking to give us, but he knows quite well that the type 23 frigates and possibly the single-role minehunters could be put back into the ordering programme.

I am not sure what the right hon. Gentleman meant when he said that these orders were coming forward. Does he mean that the ordering time has been brought forward? "Coming forward" is an ambiguous phrase. I hope that he is not misleading us, because the naval yards are deeply concerned about the timing of the programme. The Secretary of State should know from the defence review in the White Paper that, because of the cost of Trident, all the rest of the naval ordering programme is put in difficulty. It is likely that there will be substantial delays and perhaps workers will be laid off only to be brought back after some time, with a consequent need for further training, together with the disruption to their lives in the meantime.

At the same time as the crisis in the shipbuilding industry there is that in merchant shipping. I remind the House of the numbers of ships that were British owned and registered in 1979 —1,194. Now, in 1986, there are 617. Half the ships in the British Merchant Navy have disappeared since 1979. The figure is paralleled in the number of million tonnes deadweight. There were 36.6 million in 1979, but it is now down to less than half that figure, at 15.5 million tonnes. We have lost half our merchant shipping fleet, so it is no surprise that we have a crisis in the merchant shipbuilding industry.

To lose half our merchant fleet and to put at risk the very existence of merchant shipbuilding is a folly in an industrial trading nation. The Government must resolve to do something about it, and then take action.

The action proposed in our amendment, which was put forcefully to the Secretary of State by Labour Members earlier this week, is that we should establish a task force. It should incorporate all the relevant Departments —Trade and Industry, Defence, Transport and Overseas Development. If the Prime Minister would say that it was the Government's priority that this work should be done, the task force might produce some action to get the necessary orders. The Secretary of State was interviewed on radio on Monday and asked about this idea, as to have such a task force would require a clear aim. That is true, but the Government do not have a clear aim. They should find one.

A task force should tackle three urgent priorities. The first is the bringing forward of public sector orders. The Secretary of State raises his hands and says that public sector orders are not there, but if they were there they would solve the problem. We know that it was this negligent Government that let the Trinity House lightship order go abroad and be built in a foreign yard. It was this negligent Government that allowed the Pacific nuclear carriers, the majority shareholder in which is a publicly owned industry—British Nuclear Fuels Ltd. —to go to Japan, which had only a minority interest in the company. These are two orders that should have gone from the public sector to help British shipbuilding yards.

There is no energy, action or initiative in the Government in seeking out public sector orders, for say, survey ships, fishery protection vessels and fleet auxiliary vessels. An imaginative Government could have brought forward orders for these ships, even though they might not be needed at the end of this year, the middle of next year or even the year after that. They could be used to meet the crisis in British merchant shipbuilding.

Secondly, the Government should improve the packages of support. The Secretary of State says that it is difficult to compare the packages of support as between one country and another. That makes it easier for the Government to claim that they are meeting the international average. Our industry is fighting for its survival, and the Government should have the best packages of support in a fiercely competitive world. It is unthinkable that British Shipbuilders should go in to bat for the Chinese shallow draught containers or the Cuban refrigerated vessels and, because of a slight difference in loan or credit provision, lose these substantial orders, with the result that even more shipyards go out of business. The Government should resolve, whatever the international competition, to beat it in terms of support for loans and credits.

If I heard the Secretary of State say something like that at the Dispatch Box, I would begin to have some confidence in the Government's handling of the industry. If he wants to see confidence return to the British shipbuilding industry, let him do something about it. Let him make a statement such as that, which would give confidence not only in the industry but in those who place the orders.

Thirdly, the Government must urgently examine ways of bringing forward orders from British shipowners to be placed in British shipyards. The Government know, because they have been told by British shipowners, of the effect on the industry of some of the changes in taxation. The point has been made clear time after time, and occasionally Conservative Members have reminded the Government about this. Time is urgent and the Government should examine ways in which extensions can be given and orders brought forward to be placed in British yards. Unfortunately, in the past, too few orders have gone to British yards, but this is a crisis that should be met with an adequate response.

Today, workers have come from all over the merchant shipbuilding industry to lobby Members of Parliament. They have come from Devon. the Clyde, Teesside and Wearside. I have had the pleasure of meeting many of them today and I knew many of them before. To look at the faces of these people, whose lives and families are dependent on there being a merchant shipbuilding industry in this country, is, for me at least, a humbling experience. To know that generations of crafts, skills and training and dedication are represented by families whose lives are dependent on the merchant shipbuilding industry is also humbling. It is for their sake that we ask the Government to take urgent action.

Our case goes well beyond what some might call, although I would not, the narrow interest of those who live in our merchant shipbuilding communities and who have faced so much travail in recent years. The whole of the nation will be diminished significantly if we lose our merchant shipbuilding capacity, or if it is brought down so low that it cannot maintain the essential research, design and engineering capability and a dedicated work force and management.

What is more, our strategic interests which, as an island nation, have always depended on a strong merchant fleet to protect our trading groups will be diminished. The case for urgent action by the Government is overwhelming. I am sorry to say that the Secretary of State's response was thoroughly inadequate. I call on Parliament and the people to make the Government change their mind.

7.49 pm

Sir Edward du Cann (Taunton)

Before I comment in detail on what the right hon. and learned Member for Monklands, East (Mr. Smith) said, perhaps I may make a general comment. This is the ninth and probably the last Parliament in which I shall serve as a Member of this House. That is nothing in terms of service by comparison with the Father of the House, the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan), whom it is good to see this evening. However long one serves here, one reflects upon the history that one has seen. During my time in the House I have watched the decline of many manufacturing industries and the extinction of others—motor cycles, television, radio, optical instruments, motor cars and so on. Too many have declined and too many have gone. We choose many fancy words to describe the process—and rationalisation is one. To me, it has been a history of industrial disaster.

Sometimes the circumstances have been bitter, as when the great Sheffield company producing engineering steels, of which I was chairman for a time, was smashed into oblivion by unfair competition from its British state-subsidised competitor. That was unforgivable. Today a parallel exists with British shipbuilders fighting off unfair foreign competition. Future generations will never forgive us if we do not say that this process of attrition in British manufacturing industry has gone far enough. It is time to cry halt.

Perhaps some problems for many of Britain's industries were inevitable in the highly competitive world market. Perhaps there were too many complacent managements. Perhaps the entrepreneur and manager have not had and still do not have a sufficiently honoured place in society. Socialism has not helped here, nor for that matter has our education system. Perhaps the Conservative party has not been constructive enough in outflanking a hitherto recalcitrant trade union leadership by advancing ideas of industrial co-partnership—perhaps many things, but all that lies in the past.

British shipyard workers have been steadily putting their house in order and becoming more competitive. There have been huge advances in productivity, which is up 15 per cent. in the last two years. The absurdities of demarcation are largely a thing of the past. Nowadays there is almost interchangeability of crafts. As the right hon. and learned Member for Monklands, East said. these fine, skilled men who work in the shipyards deserve our support. Once their skills are lost, they will be lost for ever.

I am sure that the House appreciated the assurances and the obvious good will of my right hon. Friend the Secretary of State. What was surprising—I put it no higher than that—was how little he could say about how shipbuilding might be helped. What depressed me in recent exchanges in the House, when my right hon. Friend the Secretary of State was obliged to make his announcement last Wednesday —he is not responsible for the position in the shipyards, but he has to account for it—when the Prime Minister answered my question last Thursday, and even more when I listened to the shipyard workers from Middlesbrough and Wallsend speaking on the radio, was the mood of apparent fatalism. I challenge that. Indeed, I repudiate it. We can mitigate the current trends and perhaps arrest or even reverse them. We must make the attempt.

If I have a quarrel with the Government—in general, I am a strong supporter of the Government's economic policy, not least the medium-term financial strategy, arid I applaud the successes and realism that it has brought — it is because I see some of my senior colleagues failing to offer a clear perception of what strategy we should adopt in respect of Britain's maritime affairs. The Government are failing to offer constructive overall support to our maritime industries, and failing to set an example of determination to conquer their problems. God knows, the problems are large, but the Government could attempt to conquer them and to project what our nation so urgently longs for—a sympathetic leadership.

It is our duty to give our people hope. What is to be done? We all know the causes of the problem. My right hon. Friend the Secretary of State described them succinctly and accurately. World trade has increased eight times since the end of the war. The world's trading fleet is twice the size needed to carry it. Too many ships are chasing too few cargoes. There is no disagreement about the analysis of the problem.

The right hon. and learned Member for Monklands, East spelt out the appalling decline in the British merchant fleet, which in 1965 was the largest in the world. I wish to complete the scenario that he was painting as he did not project the figures ahead. If the decline continues at the present rate, in 10 years' time there will be only 200 to 300 ships on the British register. One distant water trawling fleet has already been decimated. Fewer than 50 per cent. of the offshore supply vessels servicing British rigs are British.

I can put in a sentence what we should be advocating. More orders for British ships to be built in British yards will not be obtained until ship owning in Britain becomes more profitable. The first thing that we must do is to make ship owning in Britain profitable.

A vast range of marine industries are providing employment and earning wealth for our nation. They include shipbuilding, ship repairing, finance, insurance, ship broking, chartering, marine engineering, electronics and a host of others. Those industries depend for a large part of their prosperity on a thriving and substantial British merchant fleet. The premier requirement to achieve full export potential in any industry is, and always has been, a strong home base. That we could and must provide.

Responsibility for maritime affairs spans a dozen Departments of state. Here I part company with the Opposition amendment. The Departments responsible for maritime affairs span transport, energy, agriculture and fisheries, defence, the Foreign Office, trade and industry and even education. Nations such as Japan, France and others co-ordinate their approach to maritime affairs, and so should we. Why is this not done?

The Government should not create a task force. That may be a step in the right direction, but it would be better if one Minister of Cabinet rank had supreme responsibility for maritime affairs. Working through the Cabinet Committee system there would be three main areas for his effort. The Father of the House took a step in this direction at the end of his premiership. I am sorry that it was not followed up.

The first of the three main areas of the Cabinet Minister's efforts would be domestic—to bring together and co-ordinate the maritime research effort. That is vital, because the new ships which may be sold in the future will be sold only if they are the most modern. The Minister could ensure a benevolent fiscal regime for shipowners. In 1984, it was sheer folly to remove the only fiscal advantage existing for shipowners in Britain. Why not give incentives to British owners who place orders in British shipyards?

If it is true that well over 95 per cent. of all our trade goes by sea, and if it is true, as alas it is, that 75 per cent. of our exports are transported in foreign-owned ships, we face an emergency. The problem is not only economic. It applies to the defence aspects of the matter. So emergency measures are necessary. Let us place advance orders. Let us ensure that our credit facilities, about which my right hon. Friend the Secretary of State spoke, are not merely available on a scale to match competitors, but are better than those of our competitors. Why should we not go better?

As the right hon. and learned Member for Monklands, East said, it is a disgrace that we should allow orders to go to foreign yards on the instructions of Ministers.

If we do not take action, ultimately we shall have no yards at all. Much taxpayers' money will be lost, compared with the theoretical savings, comparatively speaking, of a few pounds which we might have gained in placing the Trinity House order in Korea rather than in the United Kingdom. Men of the world know very well that sometimes people must invest a little more to protect what they have already risked.

It should be the duty of the senior Minister to get the United Kingdom a fair deal in Europe. My hon. Friend the Member for Eastleigh (Sir D. Price) has spoken many times in the House with prescience and good sense about the way in which cabotage arrangements in Europe are wholly unsatisfactory from the point of view of the United Kingdom. That is a scandal which must be ended promptly. The Minister should also see that substandard ships are kept out of European harbours. Why should we have to compete against those who do not put the same premium on safety as we do in Europe?

The House has already debated the transport papers which were prepared by the European Commission. I do not think that we need repeat that debate. I thought that the papers were weak and inward looking. However, they were a start. Strong European Community policy is crucial. What is the point of belonging to the Community if we do not use the powers that that alliance of nations should confer? After all, the European Community does 25 per cent. of the world's trade. It ships from its ports more than twice the volume that is shipped from the ports of the United States and more than three times that of Japan. We have great clout in the Community. That is supposed to be the great advantage of being a member. However, we do not use that strength anything like as constructively in international affairs as we might.

There is another area where I would wish to see Britain taking a stronger lead in the world. In the 1950s, Britain was the largest mechant shipbuilder in the world. Since 1961, Japan has dominated the world's shipbuilding industry. Japan built over half the world's ships in 1984–85. In 1985, yards in the far east—Japan, Korea and other countries—accounted for 70 per cent. of the world's shipbuilding. Europe accounted for only 16 per cent., and the United Kingdom for less than 1 per cent.

Shipyards in the far east have built and are building ships without regard for the genuine needs of world shipping. They are the real villains of the piece. This folly must be brought to an end, and promptly. If it is not, our shipbuilding industry is doomed. That is an unacceptable prospect. However, it is not inevitable. We must take the lead with Europe and the United States to rationalise the world's shipbuilding industry and to increase the rate of scrapping, by legal means or by giving financial incentives. Speculative shipbuilding must be penalised. We must be ready to retaliate against those nations which do not co-operate. If the Japanese or the Koreans will not co-operate, let us stop buying their motor cars, radios and televisions.

Those are long-term aims. Until the supply of ships available to trade is brought back into balance with the volume of cargoes to be carried and there is equality of opportunity, shipowning will never be fully profitable. We should start work on those aims today. I long to hear my right hon. Friend say that that is precisely what we will do.

I am not prepared to accept— I am sure that our Government and country are not prepared to accept—as an immutable law of the free market the crisis that affects our maritime industries, including shipbuilding. If present trends continue, our merchant fleet will decline to almost nothing. Our shipbuilding industry, except for some highly specialised functions, will disappear, and so probably will shipbuilding throughout the whole of Europe. As the right hon. and learned Member for Monklands, East said—I agree wholeheartedly with him — a substantial and prosperous merchant fleet is indispensable, strategically and economically, to the United Kingdom and the European Community. There has been too much hand wringing and too little determination and imagination in policy regarding the maritime industries. The time for action is now.

8.5 pm

Mr. James Callaghan (Cardiff, South and Penarth)

The right hon. Member for Taunton (Sir E. du Cann) said that he could not vote with the Opposition tonight because we would lose in any case. I hope that hon. Members who are not present will forgive the right hon. Gentleman if he continues to make speeches like the one that he has just made. Over the past few years he has consistently made every effort, with considerable criticism, to draw the attention of the Government to the position into which we have fallen.

I know that my hon. Friends who represent shipbuilding constituencies are anxious to leap at the Secretary of State for Trade and Industry. I shall not stand in the way of them getting at their prey. However, I wish to say a few words. I hope that my hon. Friends will forgive me, and I promise that I shall not speak for long.

The only conclusion that I could draw from the Minister's speech was that he has given up the ghost. The Government's policy—I do not know whether that is the right way to describe it — is limp, lethargic and whingeing. The air of defeatism that pervades the Government Front Bench over shipbuilding shows that it has no conception of the nature of the problem and the magnitude of the disaster that will befall this country.

The average life of a merchant ship is 20 years. The world's fleet turns over, on average, every 20 years. Therefore, the majority of the ships that will be carrying the trade of the world at the beginning of the 21st century, in 14 years' time, have not been built. They are still to be built. We do not know what their ownership will be, we do not know who will finance them, we do not know in which yards they will be built, and we do not know under which flag they will sail. That presents the Government with an opportunity. There is no reason for defeatism.

Why should we not have a substantial slice of building those unbuilt ships? I put the proposition the other way round. We must have a substantial slice of those ships. Millions of tonnes will be built in the next 20 years. If only I could inject into the Minister some energy, some atmosphere of understanding of what is required, perhaps we could have more hope, as the right hon. Member for Taunton said, about the future.

It is claimed that 50 per cent. of the running costs of any ship are absorbed by capital charges. If that is the case, here is an obvious means of helping shipbuilding. Yet, as the right hon. Gentleman and my right hon. and learned Friend the Member for Monklands, East (Mr. Smith), pointed out, the Chancellor took away the 100 per cent. depreciation allowance. That measure was especially favourable to British shipowners because they were allowed to take it in any year. The measure was deliberately destroyed in 1984. If the two cases that I have given are correct, surely there is an opportunity for this country to play a full part again?

What should we do in the meantime? People have rubbished my proposal about returning to a scrap-and-build programme, similar to that of 1935. I shall illustrate what happened at that time. The industry was in a similar position. There was a tremendous surplus of ships. Ships were laid up and rusting in ports. I remember that, and some of my hon. Friends and hon. Members will have read about it. Shipowners were given a capital subsidy, or a loan at a cheap interest rate, for a new ship provided that they destroyed two tonnes for every tonne they built. That was the scheme. It resulted in many old ships being destroyed and replaced with a new, young fleet, and we reaped a considerable benefit from it. In fact, 186,000 gross tonnes were built under that scheme. Does the Secretary of State know the gross tonnage ordered last year from British yards? It was 8,600 tonnes, but under the much criticised scrap-and-build scheme, 186,000 tonnes were ordered.

Of course the scrap-and-build scheme is not a remedy, but is it not a palliative? Would not such a proposition be put forward by any active Government to lessen the magnitude of the disaster that will overtake us? I do not know why the proposal has been rubbished. The shipbuilding industry may offer different proposals. Any assistant principal in the Department of Trade and Industry could produce, within a couple of hours, a dozen different proposals by which the Government could subsidise and offer incentives to shipowners and the shipbuilding industry. There has been a total failure to use any imagination in dealing with the problem.

The Secretary of State tells us that the Navy has brought forward orders, but what about the orders that it withdrew? The Minister is a pretty fair controversialist, but I challenge him to answer this question: was not the invitation to re-tender for the three type 23s merely a delaying device to ensure that the Navy did not overrun its budget in the financial year? We know that it was. It was done deliberately for that purpose. When that happens, how can we believe that the Government are in earnest or that they are trying to match the size of the problem with what is required?

I should like to re-emphasise the comments of my right hon. and learned Friend the Member for Monklands. East on the Navy. It is not just a matter of asking the shipbuilders to resubmit tenders. The Navy could expand the hydrographic service and build a guard ship for Gibraltar. Coastal protection is inadequate. There could be a new class of frigate. We could re-invent the corvette, which did such wonderful service 45 years ago. They were cheap and there were many of them. What is more, the new ships would require crews. The Navy would be assured of manpower. On the naval and on the merchant side, plenty could be done, and one job in the shipyards supports three outside.

Why do the Government seem to be so myopic about the present position? I do not want to disturb those Conservative Members who may support some of my comments, but I must ask whether the trouble is the fact that the Government are relying on market forces. This seems to shine through everything that the Secretary of State says, such as, "It is a great shame the world market is too big. The ships are there and there is nothing we can do about it."

I urge those Conservative Members who are listening to me to wake up the Government, at least on this issue if not on others. The Government must wake up to the fact that if market forces are allowed to operate unchecked —I recognise that some help has been given—they will destroy our merchant shipping fleet and, in due course, our shipping industry. The House is beginning to say to the Government, "We have had enough. We shall not stand for your supine attitude to this problem. You must get off your backside and do something about it." Action could be taken, if only the Government would take it.

If there is one mistake that the Government make in this and other matters, it is that they are trying to present a false choice between running down our manufacturing industry and applying high technology. I beg Ministers to believe that that is a false choice. High technology is necessary, but it will be successful only if it is built on the back of a successful manufacturing industry. High technology does not replace manufacturing industry—it is designed to bring manufacturing industry into the 21st century. It should be applied to shipbuilding.

The Government should knock together the heads of the shipowners and the shipbuilding industry. The shipowners are no angels. They always want to have their cake and eat it at the same time. I agree with the right hon. Member for Taunton that there must be profits in that industry but the shipowners must contribute something.

I agree with the idea of my right hon. and learned Friend the Member for Monklands, East for an integrated task force to bring shipowners and the industry together. Conditions should be established under which both can profit satisfactorily.

If the House will take the Government by the scruff of the neck, we will begin to sound the tocsin and make them recognise the value to this country of a shipbuilding industry, and also recognise that the shipping industry and the Royal Navy are vital to our future prosperity and welfare.

Several Hon. Members

rose——

Mr. Deputy Speaker

Order. I am grateful to the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) for his brevity. I hope that his example will be followed, because many hon. Members are desperately anxious to address the House.

8.15 pm

Mr. Piers Merchant (Newcastle upon Tyne, Central)

My concern first and last in this matter is for the ordinary shipyard worker and his family. He is a tradesman with pride in his work and skill in his fingertips and his expertise has produced the finest ships that sail the seven seas. The quality of his work is unquestioned, his breadth of skill undiminished and the depth of his pride unfathomable. Anyone who has seen at close quarters the launch of a locally built ship, a destroyer or merchantman, cannot escape sharing in that pride.

Therefore, I want as much as any hon. Member to see the yards humming with activity, new ships being built, British shipowners ordering new British ships from British yards because they are the best and dozens of foreign orders being placed because of our worthy reputation and competitive prices. That has been done in the past, and there is no reason why it cannot be done in the future.

It would be the cruellest of delusions to pretend that that can happen at this time, if the facts clearly speak otherwise. It is right that Government policy should be directed fundamentally to the interest of the people in the yards, and that interest requires, first, that people are told the truth. It is the ultimate deception to keep thousands of men frozen in employment in an industry on false promises of future expectations. It is an insult to their skills to expect them to continue to build ships that no one wants at prices that no one is prepared to pay. It would be fatally demoralising to build for stocks when we all know the extent of world over-capacity. To perpetrate such a deception would be a final betrayal, and not an act of kindness, for the men in those yards. Better to know the truth and face the unpalatable today than to live on illusions now and face a far worse collapse when it inevitably comes.

The best interest of the shipyard worker surely lies in a healthy economy. A healthy economy is a flexible one which can adapt swiftly and effectively to changing world conditions, demand and markets. However sentimental it may be, it does no good to preserve merely for the sake of preservation or artificially to delay change knowing that it must come sooner or later.

But to say that is not to preach against state aid. I am not against money being made available for a period to tide over a cycle in demand. That has been done, and rightly so, since before 1979, with £1.5 billion being made available, as my right hon. Friend the Secretary of State said. However, if there is no prospect of recovery in the foreseeable future, one cannot expect profitable industry for —it is from there that the money comes—elsewhere in Britain to jeopardise its future and employment prospects by carrying for ever the enormous and growing burden of continuing subsidies in another sector.

That there is no prospect of a clear upswing is evident from example after example. The world surplus in shipping vessels which has been quoted in the House today —and it is massive in bulk carriers, for example—is proof enough. So is the parlous state of the order book, not to mention the heavy over-capacity in production facilities and the difficulty of competing with the cheap labour options of Third world countries.

The reaction of other countries to their shipbuilding industries is also indicative. Catastrophic cutbacks in shipyard employment have been made elsewhere. In Japan, for example, Hitachi Zosen is to reduce its work force by a third—5,000—by March 1987. I am tempted to say that, if the Japanese are having to do that, what hope is there for other countries? The Japanese shipbuilding industry as a whole expects to cut back by 18,000 jobs. In Korea, redundancies and restructuring are on the cards. It is interesting to note that Korea, which to a large extent was responsible for stealing the orders that might otherwise have come to British yards, is talking, because its economy is so flexible, of restructuring its shipbuilding industry and moving its capital and its work force into other sectors of heavy industry.

Mr. Stuart Bell (Middlesborough)

The hon. Gentleman referred to the cutback in numbers in the Japanese and South Korean shipbuilding industries. However, does he accept that Japan and South Korea have captured 65 per cent. of the world's shipbuilding market and that our share of the world market is less than 1 per cent.? Therefore, is not the cutback in our work force more significant than the cutback in South Korea and Japan?

Mr. Merchant

I agree with the hon. Gentleman, but what is most significant of all is the position in which we find ourselves today because of our failure in the late 1950s and in the 1960s and 1970s to grab and to maintain our share of what was then a very large market. We have allowed the Japanese and the South Koreans to establish that leadership. We are now paying the price for our dereliction of duty.

In Spain, 17,000 jobs are likely to be lost in the near future. In the United States, 50,000 jobs have been lost in the last few years. I make no mention of the tens of thousands of other jobs that have been lost throughout Europe. I quote those figures to show that this is not just a British problem. It is a severe, world-wide problem. This is not the time to talk about throwing further huge sums of money into the industry when it is clear that other countries have come to the conclusion that the only way to deal with the crisis is by retrenchment.

It is also absurd and wrong to pretend that the situation will be otherwise in the near future, or to mislead people by pretending that everything will suddenly change for the better. The reality has to be faced by the Government and by the industry, just as the previous Labour Government faced the beginning of this crisis in the 1970s when, as has already been mentioned, it oversaw the loss of 20,000 jobs in the industry.

It is also pretty futile to try to cast blame on the Government for the present crisis. Much of the change of fortune in British yards has been due to circumstances beyond our control: to Third world labour costs, massive new investment abroad and tough competition which previously did not exist. In the 1950s, many of these other yards did not exist, and could not therefore provide any competition.

However, we can still learn two lessons. First, much of the management in our yards was antiquated, slow to invest, bad at marketing and offhand to the point of being Victorian in its industrial relations. Secondly, the unions in the yards were equally backward-looking and inflexible, unwilling to change their work practices and imposing senseless demarcation lines. They were suspicious about promoting a new partnership in the industry, and in dispute after dispute they were aggressive to the point of destruction.

I am glad that in the past few years—but it is only in the past few years — much of this has dramatically improved. However, the situation has not been entirely remedied, and it is wise, therefore, to bear that in mind. A recent study that I carried out in Tyne and Wear revealed that in the past 30 months there have been 14 recorded disputes that led to strikes, walk-outs or overtime bans and, therefore, to the loss of orders. It goes without saying that partnership rather than confrontation in the 1960s. and 1970s would have led to far fewer redundancies, greater competitiveness and healthier yards in the 1980s. It is too late to salvage many of the jobs that have been lost, but it is not too late to learn and to preserve something for the future. I believe that that is what this Government are doing.

Mr. Bob Clay (Sunderland, North)

Will the hon. Gentleman explain how it is possible that disputes have led to the loss of orders when, according to the Secretary of State, there are no orders to be had?

Mr. Merchant

I was referring to the past when many orders were available. Surely the hon. Gentleman appreciates that, if a yard goes on strike and damages its reputation, those who place orders are unlikely to place them with that yard. Furthermore, if by destructive disputes a yard becomes uncompetitive in cash terms, or in terms of meeting deadlines, foreign buyers will not place orders with those yards. I was pointing to the past when there were many such examples.

I began by saying that, first and last, we should consider the plight of the shipyard worker. He is now facing the imminent prospect of life without work, income or prospects after possibly years of stable and productive employment. Therefore, it is right that we should do all that we can to find new work and alternative prospects for him.

I welcome the Government's initiative in making available a special aid package of about £10 million to help to cater for this problem. It has been far too easily brushed aside as insignificant. This package is generous and it will achieve a great deal. Palliative action is necessary, and much of the funding will be for that. But there is more, too. A good deal of this funding will go towards providing new work, new jobs and new enterprise.

I repeat my earlier request, which was made at the time of the statement. I ask my right hon. Friend to look very carefully at the application of this funding in order to ensure that it is used most effectively. I repeat also my request that he should consider giving the overall responsibility of emergency economic aid and relief in these areas to a nominated Minister. It is important for the Government to demonstrate their real interest in the problem by such an appointment. It would also enable the Government to effect easily and constructively a coordination of roles in the north-east, for example. At present, that is sadly absent.

There is more that can be done. I do not ask for a heavy increase in regional aid or subsidy. However, I think that there is a case for the selective concentration of aid and incentives in specific areas that have been hit by such industrial restructuring. The rich farming areas of Northumberland do not need special status, but the narrow strip of industrial dereliction along the banks of the Tyne, for example, needs help.

I think that my right hon. Friend could help by directing his policy in the north-east less to the region as a whole, in so far as it has a clear definition in any case—and different people define it differently—and more to the specific problem areas that are clearly identifiable. An enhanced package of enterprise zone incentives and reliefs, coupled with direct investment aid, marketing, and Government schemes, could transform an area relatively swiftly which otherwise will be tainted for years by an ill wind which has made an industry vanish almost as fatally as the Marie Celeste.

8.28 pm

Mr. James Tinn (Redcar)

I am tempted to refer to what has already been said by a number of right hon. and hon. Members, particularly Conservative Members, who are concerned about the future of two great industries. However, in deference to those hon. Members who have particular constituency responsibilities, I shall refrain from doing so.

Those of us who went to see the Secretary of State last Monday were grateful to him for his courtesy, though not for his message. On many occasions in the past, together with other anxious colleagues, I have been to that Department on similar errands, but I have to say, without any touch of exaggeration, that I can remember no time when we met with a more negative response.

I pointed yet again, as I had done the previous Wednesday, to the remarkable record of survival of the Smith's Dock on Teesside and to the fact that right up to the time of the closure announcement an energetic and enterprising management was chasing the few orders that were available. I believe that the managing director was in Cuba at the time. So often in the past, with remarkably astonishing results, the yard has fought back from near disaster to survival. Only last November the then chairman of British Shipbuilders wrote to me accepting and agreeing with similar words of praise to mine for the achievement of everyone at the yard. In that letter the only criticism that he had was of one or two loose words that had got into the press, hinting that there might be some problems for the yard in future, which he said was nonsense.

Therefore, it seemed reasonable to ask the Minister whether such a yard would be allowed to take up any orders that it might be able to obtain even at this late stage and even with this notice of execution hanging over it. Three times I asked the Minister, because I did not want in any way to misunderstand or misquote him, and each time he said that there was no hope, or words to that effect. I am sorry to say that that was confirmed to me last night by the chairman of British Shipbuilders. He told me that if, against the odds, the yard was able yet again to obtain orders to enable it to carry on, they would be passed to other yards — presumably assuming that the customer would accept that—and the execution would proceed as planned. Smith's Dock, the largest of the yards to close, is the soft option chosen by the Government and by British Shipbuilders.

Nevertheless, I tried to get some comfort for the future, even if there is none to be had for the present. Bearing in mind the cyclical nature of the shipbuilding industry, which means that today's over-capacity is likely to be tomorrow's much-needed and highly profitable plant, I asked the Secretary of State about the fate of the equipment in the yards after they had been closed. I asked whether it would be mothballed. It seemed that the one positive moment in our talks came when he assured me—I am sure in good faith—that it would be kept available on a care and maintenance basis. That, at least, held out a glimmer of hope for the men of Smith's Dock and Troon and for their youngsters who hoped to follow them. It was at least a crumb of comfort, but, sadly, even that disappeared when I talked to the chairman of British Shipbuilders last night.

There is no prospect of the yard being maintained. The most useful and attractive pieces of equipment will be transferred to other yards and the rest will be sold off—grassed over like the Consett iron works where I used to work many years ago; grassed over like a graveyard without gravestones. The last lingering hope of a shipbuilding presence on the Tees, the country's third largest port, will disappear. I cannot help wondering why the Minister was not told, because I am sure that he did not know when he spoke to me the day before.

The early reactions on Teeside were excellently expressed in an editorial in our local Evening Gazette yesterday. First, it referred to my anger and warning earlier in the week to the Minister of possible consequences in terms of civil unrest on Teeside. It pointed out, as I did, that compared with others, such as Liverpool and Belfast, which have had Government benefits heaped upon them whenever they have stepped violently out of line, Teeside's reputation for calm and constructive acceptance of industrial decline has invited only further body blows.

The paper describes how Teessiders have learned to live with the contraction of their basic industries, even some of their post-war modern industries, and how, for instance, steel on Teesside is breaking records with output, productivity and quality. Meanwhile, displaced workers set up businesses and scour the world for work because there is none here at home. There are few construction or industrial sites in the middle east, for instance, without a sizeable contingent of Teessiders separated from homes and families.

Yet, as yesterday's editorial went on to say, since the Government came to power, and almost with their first breath, one of their first actions was to cancel the Property Services Agency development in Middlesbrough. The editor said: It has squeezed Teesside until the blood ran"— a justifiable figure of speech only, until now. The Minister's assurance that British Shipbuilders Enterprise Ltd. will be set up in Middlesbrough is little more than an offer to open up a branch of undertakers to help the bereaved.

I understand that the Minister is to come to Teesside tomorrow and, instead of merely driving past the yard, as had been intended, he is to stop for half an hour. He will not stop at the yard itself, but at least he will meet one or two representatives. Half an hour for 1,400 men who have lost their jobs is perhaps some measure of his priorities in his busy day. A two-minutes silence might have been more apt.

I make no apology for talking almost exclusively about my area. It is my responsibility. I am conscious of the number of other deeply worried hon. Members waiting to speak. However, the Government have a wider responsibility, and that is to listen to the House. They should listen to the voices on both sides, to their own supporters, such as the hon. Member for Eastleigh (Sir D. Price) and the right hon. Member for Taunton (Sir E. du Cann), as well as to my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan).

Will the Minister listen to the British Maritime League, of which many of us are supporters? Will the Prime Minister recognise the interdependence of shipbuilding and shipping and so reorganise areas of Government responsibility that our vital strategic needs as a maritime nation can be better protected than under the present system of fragmented responsibility between Departments? Above all, if the Government really cannot do anything to protect and redevelop those vital national interests, will the Prime Minister render just one last service, still well within her power, and go? The people of Teesside have had enough. The Minister said that he supports shipbuilding, presumably in the same way as a hearse supports the coffin on the way to the grave.

8.37 pm

Sir David Price (Eastleigh)

I am sure that the House listened to the hon. Member for Redcar (Mr. Tinn) with great interest and sympathy. He and other hon. Members who represent the north-east will know that I used to have a working connection with Teesside in the days when I played a more constructive role, helping to develop the sites at Wilton and Billingham. As the hon. Gentleman knows, I also had experience in the 1960s as a Minister at the Board of Trade and I can honestly say that we brought new industry to the north-east. Therefore, I listened to the hon. Gentleman with great affection.

I want once again to place on record the fact that I have a constituency interest in shipbuilding and in shipping. I also have a personal interest. I should tell the House that the shipping companies with which I have a connection were the only British shipping companies, as far as I know, to take delivery of new ships from British yards last year. I want to place that on the record. Therefore, I am speaking about what I am doing.

I think that the House knows that I have a deep interest in the future of the British maritime industries, as does my right hon. Friend the Member for Taunton (Sir E. du Cann) and the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan). I care about it passionately. I use the word "care". It is not just a matter of calculation but something that one feels deep down inside. I say that as someone who served in the Army rather than the Navy, so I picked up that feeling later.

There is no doubt that the problem facing British merchant shipping stems in the first instance from the decline in the British merchant marine. When my right hon. Friend the Secretary of State made his statement on this subject I intervened to make that point. Indeed, I do not think that it is controversial. But my right hon. Friend is correct to say that it is the excess capacity in shipping and shipbuilding worldwide which is largely responsible for the crisis in British merchant shipbuilding.

However, the degree of unfair competition involved is not sufficiently understood. That competition comes from Japan and Korea. During the past 10 years, Japan has never dropped below 46 per cent. of new deliveries of all world ships. Its yards produced 53 per cent. of the total world output in 1984–85. Together, the yards of Japan, Taiwan, South Korea and China accounted for almost 70 per cent. last year. By contrast, the whole of Europe produced only just over 16 per cent., and the United Kingdom produced less than one per cent.

Many of the far eastern prices are lower than the cost of materials in Britain. One does not need to be a sophisticated lawyer or economist to know that that is dumping and unfair competition. It is obvious that shipbuilding cannot survive unless ships are built. But as a result of that far eastern competition, both the British and the European industries are near to closure. People may ask whether that matters. The answer is that it does. in both the short and long term. We must retain a minimum shipbuilding capacity in Britain and in the other European countries. We can argue among ourselves as to what that minimum should be, but we must take action against Japanese dumping, and such action would he more effective if we took it in conjunction with our European colleagues. That would be in the national interest.

In the European context, we sometimes criticise our officials for being purer than the pure. We say, "Let's play to French rules." In this instance, we should play to Japanese rules. They consist of going to great international forums, signing the most impeccable treaties of free trade, entertaining world leaders, burning joss sticks before the altar of Adam Smith and then proceeding to run a thoroughly mercantile policy. It is in our interest and in that of our European partners to take action against the Japanese. I come from a generation who do not view the Japanese with the total objectivity with which the younger generation may do. If it was witihin the rules of order, I would use a precise description of the Japanese which we soldiers used.

It is essential that we in Europe take countervailing action against the Japanese and Koreans. Other measures might be useful, but that action would go to the guts of the whole thing. I invite hon. Members to join me and to take the consequences. Given Japan's trade policy and the way in which it treats our exports, I believe that we could easily take that risk. As my right hon. Friend the Member for Taunton and the right hon. Member for Cardiff, South and Penarth said, there are palliatives that are not as fundamental but that can and should be taken now. They are the classic measures of placing orders for Government vessels, warships and auxiliaries in home yards, facilitating orders for export, such as the five container ships projected for China, the matching of credit terms for legitimate orders, and the retaining of orders over which the Government have control in this country. However, I accept that the latter are limited.

Last year, the Trinity House lightship went to South Korea— [HON. MEMBERS: "Shame.") Was that really necessary? I know that Trinity House did not want to place the order there, but it had no support from the Government. We could take those measures now, although they would not go to the guts of the problem, which is unfair competition from the far east. That must be dealt with.

We have been talking about merchant shipping, but I must declare a constituency interest because of my shipyard of Vosper Thornycroft, which is dedicated to naval orders. I beg the Government not to put back the present naval ordering programme. We have a particular set of orders on the single-role minehunter. We have got the lead vessel, but if we do not get the follow-up orders, as agreed with the Royal Navy, we will be in trouble. Whatever the constraints on the Ministry of Defence's finances, I beg it not to cut back on the agreed ordering programme.

We must retain our industrial capability. I speak as an industrial engineer and as one who will, tomorrow, have served the House for 31 years. I warn the House to beware of the Treasury argument. The Treasury does not change, regardless of who is in government. It argues that the cheapest is best. At times I suspect that the yard that the Treasury sneakingly prefers is not the shipyard but the graveyard. That is a future which I reject.

8.47 pm

Mr. Bruce Millan (Glasgow, Govan)

I am pleased to speak after the hon. Member for Eastleigh (Sir D. Price). Indeed, in shipping and shipbuilding debates I often speak after him. He has a keen interest in the industry and a commitment to the health of the shipping and shipbuilding industries. He is one of the few Conservative Members of whom that can be said—more is the pity. I agreed with everything that he said.

The Minister gave the impression that the Japanese industry was in crisis. Some crisis! It has a total order book of 9.7 million tonnes. It has 4 million tonnes that it has not even started to build. The South Koreans have 4.7 million tonnes on the order book, and 2 million tonnes that they have not yet started to build. British Shipbuilders does not have a single ship in its order book that is not already being built. By spring next year, every one of them will be completed. Some of the yards that are being retained will run out of work long before then. That is how grave the crisis is.

It is not just the Government's defeatism that depresses me, but the fact that we are going over familiar ground. Only three weeks ago we pointed out the impending crisis in the industry. On 28 April, we warned the Government what would happen because of the parlous state of British order books. A month or two ago the right hon. Member for Taunton (Sir E. du Cann) spoke in a debate on the European Commission's proposals for shipping, and attention was drawn to the fact that a lack of a maritime policy in this country was disastrous for economic, industrial and strategic reasons.

The Government have not listened. We met the Secretary of State for Trade and Industry on Monday and he said that shipping policy was nothing to do with him. That is the problem. A Minister responsible for shipping did not believe in shipping. I wonder whether his successor will be any better. The Government have had no shipping or maritime policy and they have not tried to bring together the shipping and shipbuilding interests.

As my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) said, British shipowners bear a responsibility for the present situation. They have been adept at producing schemes for financial assistance for shipping, but they have never been willing for those orders to be tied to British yards. Any assistance scheme for British shipping should be tied to ordering in British yards.

Not a single Japanese ship ordered over the last 10 years or more has been built in other than a Japanese yard. We have not had that home base for the industry. I do not want to burden the House with statistics, but they demonstrate that the British shipping industry has the poorest record for home ordering in Europe. It does not compare with what has happened in Japan and a number of other countries.

We want what happens in Japan to happen here. British shipping orders—there have been few recently—should, except in exceptional circumstances, be filled in British yards. That would give us a base for our shipbuilding industry. Ways of achieving that have been described repeatedly, but they have been ignored. The Minister said the other day that scrap and build had been tried but had failed. That was an example of abysmal ignorance. The scheme was tried first in the 1930s. Only a year or two ago in shipbuilding debates did Ministers state that the scheme was worth pursuing in the Common Market. Protracted discussions took place within the Community on the scrap-and-build policy. Some of us urged that if the discussions could not be brought to a successful conclusion we should introduce the policy unilaterally. At that time the Government responded a little, but nothing happened. Today the policy is dismissed out of hand, as are the task force and public sector orders. All that we hear from the Minister is a catalogue of reasons why we should do nothing to help the shipbuilding industry in what could be a terminal crisis.

Much could be done about public sector orders. The Ailsa yard at Troon is not clapped out. It is modern, and has had much money spent on it. It is small, but for its size it has excellent facilities and it has been the subject of much capital expenditure. It is faced with closure, but surely it is not impossible for it to gain public sector orders, if not others, so that it can be saved for the sake of the community and of the shipbuilding industry.

The intervention fund policy until recently allocated money, but it was never spent because the restrictions were such that the orders could never be obtained. It looked good for all that money to be available, but it was never spent. The last figure was £25 million. The Government talk about £1.5 billion as if all that went into merchant shipbuilding, but it also involves naval yards and capital investment. In the last year £25 million has been spent in intervention fund assistance. There is flexibility now, but it has come too late.

The Minister mentioned the aid and trade provision. One would have thought that that was an initiative which had been part of Government policy for years, but it was announced only in November 1985. The damage had already been done. Limited action by the Government always comes too late and it is always ineffective in dealing with the crisis. The crisis is far worse than it has ever been, even for an industry which has suffered cyclical trends, with boom periods and times of great difficulty.

The orders are there to be won. Govan is an excellent yard with first-class facilities, excellent management and a work force which has co-operated in terms of delivery and industrial relations and which has done well in recent years. We are desperately anxious to obtain the order for the Chinese container ships. The order would go partly to Govan and partly to the north-east. We need an absolute Government commitment. We are talking not about a private enterprise company, but about a state-owned company supported by the Chinese Government. We are talking about a Government-to-Government negotiation. The Chinese will drive a hard bargain, but the order can be won. I hope that it will be won and that we shall have an absolute commitment from the Government to ensure that we get that order.

The Govan yard is also tendering for the Brittany Ferries order from France. I know enough about the French Government to know that they will do everything possible to ensure that the order stays in France and does not come to Britain. A number of other yards outside Britain are also interested. We shall achieve that order only if the British Government make a commitment which is at least equal to the commitment that the French and Japanese Governments make to shipbuilding and other industries. Almost every industrial country makes commitments to its basic industries. The idea of leaving everything to the free market and free competition and then we shall somehow survive is absurd.

When the Government announcement was made last week they thought that the problem would go away; that it was a seven-day wonder and that no one would care. Ministers said on television that we must look to the future, and that the industry was clapped out and out of date. [Interruption.]

It is no use the Secretary of State shaking his head because the Secretary of State who was supposed to be in charge of employment said that on television. I think that the Government believed that the problem would go away and that there would be no reaction, but the crisis has struck a chord in the public's mind. People are worried about our shipbuilding industry and about our future as a maritime nation.

The General Assembly of the Church of Scotland, at its meeting in Edinburgh today, passed a resolution asking for a maritime policy. It was full of good sense. It demanded a response from the Government. Tonight we are demanding that response— before it is too late—to save the merchant shipbuilding industry.

8.58 pm

Mr. Neville Trotter (Tynemouth)

It was interesting while preparing for this debate to dig out from the archives the report on British shipbuilding by Booz-Allen which came out in 1972. I believe that it was the first document I perused when I first took an interest in the industry. The report refers, at a time before either the world recession or the emergence of the Korean shipyards, to the problems of increasing competition, over-capacity and the fact that Government support alone could not ensure a long-term market for our industry. As far as I can remember, Korea in fact was not mentioned at all in the report.

When I first went there in 1975 the Koreans were just starting to build ships. They had not built any ships before 1974, and now that little country on the other side of the world has more capacity than the whole of Europe put together. They pay such low wage rates and work such long hours in those yards, and in the steelworks which supply the yards, that they have an advantage of about four to one in labour costs when compared with European yards. That is a formidable problem of competition for all the western European shipbuilding countries.

When the Booz-Allen report was produced 14 years ago there was much criticism of the lack of efficiency and organisation in the British shipbuilding industry. Of course, it was well justified and well documented. I should, however, like to pay tribute tonight to the efficiency that we now see in the British yards.

The right hon. Member for Glasgow, Govan (Mr. Millan) referred to the Govan shipyard. I remember my first visit to that yard not long after 1972, and I remember wondering whether James Onedin had just ordered his first steamboat there. The yard was very archaic in every way. Its equipment was that of the previous century. Govan is now a modern yard, and I pay tribute to what has been achieved there and at the other yards. I do not think that efficiency is any longer one of the problems facing us. To the credit of all those involved, we now have an efficient and modern shipbuilding industry.

Why are we in the serious predicament that we are debating tonight? It is due not to a lack of efficiency but firstly to the competition I have referred to, especially from Korea. The Koreans have a completely different type of life. There is no welfare state and no resulting overhead for their yards to carry. They work hours which are twice those worked in this country and pay half of what we would regard as reasonable.

Another fundamental reason for the problem is the collapse in the demand for ships. Sir Adrian Swire, chairman of the International Chamber of Shipping, referred to this as being the worst depression ever seen in shipping—a full 10 years of constant bad news, with almost every sector depressed and suffering from chronic oversupply of tonnage. He referred to the "short-lived new dawn" and "hopes of optimism" which had at times been current, but these hopes were always dashed. He wisely pointed out the effect and influence of the banks on the present ordering position with their massive loans to shipowners in recent years. The banks, he points out, finally realised that they could not buy themselves out of trouble. Therefore, they have now cut off funds for new building. Banks around the world are owed enormous sums of money by shipowning companies that are in great difficulties.

Sir Adrian drew the rather depressing conclusion that it was "frustrating, and profoundly sobering", that one must conclude that the over-tonnaging problem was intractable and that the interests of governments, of shipbuilders, of shipowners and of banks, who collectively have a common interest in improving their economic well-being, are individually too divergent to develop any successful common initiative. That is the nub of the problem. How do we obtain the co-ordination that we need to tackle the problem when there are so many different interests involved? Shipowners and shipbuilders by no means necessarily have the same interests. In fact, their interests are often in conflict. The East is in conflict with the West and the countries of Europe are in conflict with one another. If there is one industry above all others which is international, t is the shipping industry and that makes it very difficult to deal with the problems we are discussing.

I believe that there must be more international co-ordination in tackling the problem and the Common Market must be the first place where one logically looks for a start to be made. My hon. Friend the Member for Eastleigh (Sir D. Price), who speaks with such knowledge and wisdom on these matters, has already drawn our attention to the need for co-operation in dealing with the problem. I believe that I am right in saying that it is Britain's turn to preside at the Council of Ministers later this year. This will provide a great opportunity for us to take the initiative in dealing with this problem.

When will the depression end? There are estimates that it will end by the 1990s and that we shall then see a significant upturn in orders although there have been false dawns and false hopes before. At the moment the freight rates in the general tramp market are less that they were 10 years ago. They have been as much as three and a half times as high as they are today. There are ships on the oceans of the world where even the operating costs are not covered by the income they are earning. As we have heard tonight, there are vast numbers of ships laid up around the world and they equate to several years' capacity of the world's shipyards.

I have numerous cuttings pointing out the international nature of the problem. I shall not delay other speakers by reading from too many. However, there are headlines, such as Dutch yard in bankruptcy and 10,000 jobs at risk in West German yards They also refer to how the Swedish shipyards lost their battle for survival. I visited the Swedish industry in 1974. At that time it was bigger than any other in the world, except Japan. Yet the Swedish industry has now disappeared and all the yards have closed. There is not one major shipyard left in Sweden. I could quote numerous other examples from other shipbuilding countries.

It is no comfort for the people on Teesside or the engine builders on Tyneside to realise that their competitors in other western countries face the same problems. We have a unique opportunity in this country to take action. We still have a major Merchant Navy. We cannot influence buyers or owners in the rest of the world, but surely we should be able to influence our own Merchant Navy. It is not a question of going to British shipowners and just asking them to buy. Repeated attempts have been made to do that. The information that I have is that, in the present state of the world shipping market, the immediate answer from the British shipowners is that they do not want to know. They do not want to buy any ships in the present climate.

Something must be done to stimulate our shipowners. Something must be done through the tax regime to make it worth while once again for them to buy ships. At one time Britain was a tax haven for shipowners. That is perhaps hard to believe. Yet many foreign shipowners found it worth while to trade under the British flag. Why can we not try to recreate such conditions? That must prove to be a good investment. I know that the Treasury would claim that it would lose income by doing that. However, in the long run it would surely be to our advantage to recreate that state of affairs, and I would suggest that the benefit would not in fact be long in coming.

The problems do not simply lie with those employed in the shipyards. The right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) referred to the statistic of 3:1 behind the shipyards. That ratio is probably higher today because the marine equipment industry has been successful in exporting. That industry has therefore not yet suffered as much as the shipbuilding industry. The proportion of jobs in the manufacture of parts is thus probably higher now than it used to be.

Industries like the marine equipment industry must retain a home market. If there is no home market, these firms will go down the plughole as well. We should be concerned about the jobs not only in the shipyards but in the marine equipment industry throughout the country which are also at risk.

I have mentioned the efficiency that now exists in our yards, and I have spoken about the need to ensure fair competition, which we can achieve only through international action. I have said that we must stimulate orders, especially through our own Merchant Navy.

I believe that the Government's record on financial aid is commendable. The Government have given a great deal of money to the industry. I believe that we should include Harland and Wolff in our consideration of financial aid.

That large yard in Belfast, which was recently the source of such concern to the people of Tyneside through its entering the order for the fleet auxiliaries, does not come under the same Department and thus is usually omitted from the quoted figures for aid. I believe that in fact Harland and Wolff should come under the same Department as the rest of the British shipbuilding industry. We should certainly take into account its finances.

I calculate that, including the money that has gone to Harland and Wolff, on each working day over the past seven years some £1 million of taxpayers' money has gone to the shipbuilding industry. The Government cannot be faulted on the amount of money that has been provided. Whether all that money has been wisely spent is another matter.

Reference has been made to the fact that not all the available intervention fund money has been used. That is most unfortunate. I know that that is not the fault or the wish of the Government. They have sought to be allowed to give a higher intervention fund percentage. I believe that the Government tried to obtain from the EEC permission to pay 35 per cent., but the EEC would not go beyond the present 22.5 per cent. As a result, there have been cases where the subsidy has been insufficient to obtain orders, and the lack of orders has meant that the total money available has not been spent. Our presidency of the Council of Ministers may allow us to correct that position.

I do not believe a lack of money is the cause of the problems in the industry. Indeed, those at the head of British Shipbuilders have told me that money is not the basic problem. It is a problem not of lack of finance, but of lack of orders.

Aid must certainly continue to be available if we are to obtain future orders. I am sure that it will continue, and I have not heard any suggestion at all that it will not be available. We must also match the soft credit that is offered at times, against the rules, by our competitors. I am not sure that we have always kept to the rules, but we will not debate that tonight.

I have observed a change in attitude over the years to countering our competitors' terms. At one time, when one referred to the competition offering better terms, one was told, "We are British and we play by the rules." After a while, one heard that only if there was written evidence that the other side had broken the rules—almost if one could get a sworn statement from the other Government —perhaps then the British Government would help to match them. That was not much good. Then there was a stage when, at the eleventh hour, if a yard was desperate, with an order on the verge of being lost some help might be considered. By that time it was usually too late. I am glad to say that there is now a much more realistic assessment of the important role of soft credit in obtaining the few orders that are available.

The future of the merchant side of the industry depends on our success in attracting orders for specialist and sophisticated ships. Research and development are therefore extremely important. I hope that we shall soon embark on the construction of an "efficient" ship—that is the name given by British Shipbuilders to a forward-looking project for a very modern ship, especially economic to operate, on the design of which considerable money has been spent, but the ship itself has still to be built. Such ships can provide the key to the future success of the industry.

Our shipbuilding industry must not be allowed to disappear. I know that the Government do not desire or intend that it should disappear. We are, as we have always been, a maritime nation. Not merely our history, but our future requires us to have a minimum size for the industry, and we have surely now reached that size.

Several Hon. Members

rose ——

Mr. Speaker

Order. It may be of assistance to the House if I say that the Front-Bench spokesmen will seek to rise at 20 minutes to 10. A large number of hon. Members still wish to speak.

9.11 pm

Mr. Ian Wrigglesworth (Stockton, South)

I shall try to help other hon. Members to take part in this important debate, which has not given us the time to rehearse all the important arguments.

I hope that the message has got through loud and clear to the Government from both sides of the House. The right hon. Members for Taunton (Sir E. du Cann) and for Cardiff, South and Penarth (Mr. Callaghan) and the hon. Member for Eastleigh (Sir D. Price) have made the facts plain and made the solutions plain. It is clear that we are debating the extermination of the shipbuilding industry and whether the Government have the political will to keep the industry in being.

I hope that the message getting through to Ministers is that both sides of the House wish to ensure that, by the methods suggested, the industry is maintained. I support all the suggestions made about action in the European Community and strengthening the support given to the industry through credit and about support through the intervention fund, public sector orders and scrap and build. There are many ways in which the Government can ensure the survival of the industry, if they have the will.

As the hon. Member for Redcar (Mr. Tinn) said, Teesside has suffered a devastating blow. We have the highest unemployment—at 22 per cent. —of any county in the United Kingdom. In inner town wards it is 30 or 40 per cent. and the county council estimates that, if the shipyard is closed, unemployment in at least one ward on Teesside will be 60 per cent. That is an unacceptable and untenable situation for any part of the country.

I hope that on his visit to the area tomorrow the Secretary of State will make an announcement at least to give some hope that the action taken by local authorities, the enterprise agency and the new body that is being established will be drawn together. Various Government Departments, local authorities and other bodies are trying to help, and all that action needs to be brought together.

I hope that when the right hon. Gentleman sees the situation on Teesside for himself he will speak to his colleagues in the Department of the Environment, the Department of Employment and other Government Departments to ensure that help is co-ordinated and focused in a much better way. The Government have had suggestions from hon. Members and from the industry about how they can help the industry to survive. I hope that the loud, clear and unanimous message coming from the House will make Ministers act.

9.15 pm

Mr. Richard Ottaway (Nottingham, North)

I shall endeavour to be brief. Many Opposition Members are closer to the action than I am, although there are many suppliers of maritime equipment in the Nottingham area.

It is common ground that the root of the problem faced by the shipping industry is worldwide over-capacity. As I told the House before, in Elefsis bay just outside Athens there are 1,000 ships laid up. Hundreds of ships are laid up in the fjords of Norway, and the Burmah Endeavour lying in Southampton dockyard is a harsh reminder of the over-capacity. We read of cancelled orders by the Hong Kong fleet and the closure of the Wartsila yard in Finland. All that comes as no surprise when we bear in mind that the world has twice the number of ships that it needs.

The problem is not confined to Europe, because in Japan last year the enormous Sanko fleet went into liquidation. That is an illustration of the ludicrous policy of ordering ships for which there is no work. The situation is worsening. Last year was bad, but this year is even worse. In the port of London last week was the Maersk Mariner, one of the most revolutionary and technologically up-to-date vessel that the world has seen. There is no employment for it at all, and it came into service only three weeks ago. Because of the collapse of the American tourist industry, at least two cruise lines are likely to go to the wall in the next few weeks.

In shipping, freight rates are depressed. That is nice for consumers, but the shipowner can compete only by flagging out, and it is estimated that about £350,000 a year can be saved per ship by flagging out. Leaving aside the defence issue, do we actually need any more British ships? It makes no difference whether a vessel coming up Southampton water is flying the red duster or the Panamanian flag. There is no shortage of ships to bring in the nation's raw materials and basic commodities.

What is happening is widespread throughout Europe. [Interruption.] The hon. Gentleman jumps to conclusions. I am trying to outline the position and say which policies should be adopted. All the fleets in Europe are suffering from the same cause. Some 25 per cent. of the world's cargo movements are in and out of Europe. That is twice the number of cargo movements in the United States.

It is essential that we maintain some sort of fleet in Europe, and that fleet should preferably be built in European yards. That illustrates the importance of the emerging European maritime transport policy. I returned from Brussels this afternoon with members of the Bow group. We had been considering making an input to the European maritime transport policy. That policy is important because it is a first step towards a concerted European maritime policy. The dilemma about that policy is the direction that it will take.

On the one hand, we could adopt protectionism and, on the other hand, we could have a protective policy. The seamen's unions want protectionism because that means more jobs, but protectionism costs a lot of money and if we opt for Community cabotage the result will be high prices. We then have to ask ourselves, who will pay those high prices? If we go down the road of protectionism, the United States will interpret that in an obvious way and retaliate, most likely by extending the Jones Act to the cross trades. The excellent report by the Select Committee of the House of Lords on European maritime transport policy says in paragraph 51: If the world became more protectionist, it would be increasingly difficult to compete in the cross trades, and that would lead to further reductions in the United Kingdom's fleet". We do not want further reductions in the United Kingdom fleet and we must take steps to ensure that there are no such reductions. Protectionism would result in nothing gained and possibly everything lost.

If we adopt a protective policy, the first thing we must do is to create a genuine open market. We must take the full proposals currently before the Commission on which we are now close to consensus. I urge the Government not to treat regulations 1, 2 and 3 without doing a deal on regulation 4 at the same time, because we will never get the French and the Germans to agree about a proper system of cabotage if we lose what little leverage we have by proceeding on the other three regulations.

We must also protect ourselves against unfair competition from, say, the Russian fleet. That is why regulation 1 is so important, because it will give Europe the power to respond to the unfair Russian competition that we are currently experiencing. [HON. MEMBERS: "What about shipbuilding?"] I am coming to that, but one cannot look at shipbuilding on its own. The two are totally interrelated but distinct problems, and we must deal with one before dealing with the other. However, whichever route one takes, there will be a decline in shipbuilding. The harsh choice that the Government must face is that either we have no ships or we have protectionism.

At the end of the day, the Government are faced with the inevitable fact that there must be some form of subsidy. But how does one subsidise shipping? We should continue the soft loans which have been available and which many other hon. Members have discussed. We should have a "use British ships" policy. I am dismayed that Government cargoes are carried on foreign flag vessels, and the Government's freight agents should be instructed to show more flexibility in the fixing of ships. If there are such enormous subsidies for shipbuilding, why cannot there be subsidies for ship operators as well?

As the right hon. and learned Member for Monklands, East (Mr. Smith) said, why cannot we have tax concessions to British flag vessels? There is no reason whatever why capital allowances that were taken away from British shipowners should not be restored. In fact, there would be nothing to lose by making the British flag a tax-free zone. As has already been said, this could result in Britain becoming a tax haven, and when that was done in Greece there was a dramatic expansion in the size of the Greek fleet.

We must also concentrate our efforts on special projects. It is a little known fact among Opposition Members that, while, sadly, there are closures, in the last few weeks an office has been opened in Middlesbrough by Cenargo, which at present is the only growing British company. It will be formally opened tomorrow. That company makes special products and enterprises. We must also look at defence, which many hon. Members have already mentioned and on which I shall not dwell.

It is a sad but self-evident fact that we do not need an official shipbuilding industry to have an efficient fleet. If hon. Members do not believe me, they need only look at the aircraft industry to appreciate that. That has been accepted by Australia and Canada, which have completely abandoned having their own fleets and shipbuilding industries and which now charter vessels as and when required.

We are in a mess as a result of over-capacity, and that is the fault of shipbuilding policy. To be frank, loans have been too easy to come by in recent years, and that applies throughout the world. The United States lines, which run a non-stop container service, could get their hands on 12 vessels without paying a penny, and that results in a constant over-supply and consequently a reduction in freight rates. That has crippled British shipowners.

Opposition Members will remember the subsidies for Polish ships in the mid-1970s, and while they welcomed the jobs that that created, they should also bear in mind that it put a British shipping company into liquidation. [HON. MEMBERS: "Stop filibustering."] I am not filibustering. Every word that I am saying is solid stuff.

I wish to put forward four aspects of policy. First, we should embark on a scrapping policy and should not build at the same time. Over the last decade, the subsidies to the British ship industry would have allowed us to buy every surplus tanker in the world and to scrap them. That is the kind of subsidy that has gone into British shipbuilding, and that is a way in which money could be made available.

We should concentrate on building up the defence of the country and, where possible, we should bring forward orders. I understand that there is an internal dispute about whether the extra funds for such a policy should be in the Defence budget or in the Trade and Industry budget. I urge upon the Front Bench that the defence of the country should not suffer as a result of the policies needed to deal with the social problems faced in the shipbuilding industry.

We should have a European shipping policy. When we have the Presidency of the Council of Ministers, the Commission should be instructed to examine the concept of a European shipbuilding policy. When the Prime Minister talks about the advantages of a worldwide summit, shipbuilding should go on the agenda of such a summit. The Government must be positive. They should be like the company that is opening up in Middlesbrough; they should think positively and they should be positive.

9.25 pm

Mr. Gordon A. T. Bagier (Sunderland, South)

I hope the hon. Member for Nottingham, North (Mr. Ottaway) will forgive me if I suggest that he has shown almost atrocious cheek in lecturing us from his position as a representative of Nottingham Slipway. It ill becomes him to lecture us. His was the second discordant speech today. The first was by the Secretary of State. Every other speech, from both sides of the House, attempted to make a positive contribution to the discussion.

This has been a heck of a week. Along with some others, I came down on Monday morning hoping to get some light from the Secretary of State. Some of us had left home very early in the morning. When we went in to see the Secretary of State we were a little despondent about the position, but we came out devastated. The Secretary of State could not give us any hope about the long-term future of shipbuilding. He hoped something would happen, he believed that something might happen, but we heard nothing from him about Government policy or about how he saw the future of British shipbuilding.

Again this evening he has talked about how much money has been put into shipbuilding by his Government since 1979. He did not give the other part of the equation —the reduction of the work force from 55,000 to just under 6,000.

On Tuesday my hon. Friend the Member for Sunderland, North (Mr. Clay), local authority members from Wearside and I went to see Phillip Hares, the chairman of British Shipbuilders. I believe that he and his team are doing everything that they can to bring orders to British shipyards. I am not saying that he blames the Government for what is happening. I do not believe for one moment that he wants to be made redundant. I believe that he genuinely wants to help and that he is fully aware of the difficulties.

We need a political move from the Secretary of State. We want to hear clearly and unequivocally that the policy of Her Majesty's Government is to maintain a shipbuilding capacity in the United Kingdom. The Secretary of State has dodged that question. He dodged it three times on Monday morning, and he has not yet said anything constructive about Government policy.

One could almost say that all hon. Members who have spoken in the debate have been unanimous about how far the Government should go in helping British shipyards. I shall not rehearse the arguments that have been put forward eloquently by all my colleagues. The Secretary of State should consider deeply what is happening in the areas where massive redundancies will take place. Over the weekend and at the beginning of the week it was even suggested that we would have no shipbuilding industry.

In Sunderland we will lose 925 jobs. What will that mean? In the local context, those 925 men will join 20,918 others who are already on the dole. So the palliative of £10 million for all the areas will have to be spread over that additional number. The hon. Member for Tynemouth (Mr. Trotter) said that for every one shipyard job there were three outside. That will mean that we will have 22,000 men on the dole in Sunderland.

The local authority has done its utmost to help. For example, it has provided rate relief for shipyard buildings in Sunderland, at a cost of £127,500 per annum. It has done river dredging, at a cost of approximately £200,000 per annum, for which it has not charged the shipbuilding industry a penny. It is providing £3,000 and space for BS to go to the Stavanger offshore oil exhibition. Even more important, for the youngsters it is providing the cash for 23 apprentices to start work in the yard and learn the craft, which it hopes they will be able to use in future.

It is very important tonight to have a message of hope from the Government, and an unequivocal statement that British Shipbuilding has a future in the United Kingdom, and that the Government will work along the lines suggested by all my colleagues. If they can give that assurance, BS has some chance of capturing orders, because it will be backed by a Government dedicated to maintaining shipbuilding. At present we are not sure if that is so. That is the answer that we want from the Secretary of State.

9.30 pm

Mr. Richard Holt (Langbaurgh)

Until a short while ago few people would have heard of Chernobyl. Until the terrible disaster at Aberfan, few people would have heard of Aberfan. Langbaurgh is not particularly well known among my colleagues in the House. When I go to the bar and people ask me the name of my constituency, I discover few have heard of it. Few have heard of the district council area in which Smith's Dock is situated.

The closure of Smith's Dock will devastate the area. It comes on top of other closures along the river during the past six years. The number of jobs at British Steel has decreased from 22,821 in April 1980 to today's 7,607—a net loss of 15,214 jobs. The number at ICI has dropped from 12,500 to 7,300. Now Smith's Dock, which lies between the two on the river, is about to be closed.

Tonight we can make only short speeches, but I wish to emphasise the fact that the River Tees is not the River Tyne, that the Wear is in between, and that they are all north of Watford. It is time that some members of the Government spent time living in the north-east, not merely visiting it, in order to understand the impact of their policies on the region.

This evening I have listened to a litany of ideas. I would be less than fair to the Government if I did not think that they had thought of all of them, investigated them, arid concluded that there was something wrong with all of them, but I cannot believe that. The Government should be taking on board all the points that have been made by hon. Members on both sides of the House.

A little while ago the Government floated an idea about British Leyland, and found themselves with a meal that they could not digest. They have now produced a menu which, again, they will have difficulty in digesting The British shipbuilding industry is not the British car industry. It is far more fundamental and important to our future, and we cannot allow it to decline until it becomes like the refrigeration industry, in which I once worked, or the motor-cycle industry, both of which have gone.

Langbaurgh does not have a great deal of history, and will not have a future if present events continue. We produced one of the greatest seamen in the world in Captain Cook. If he had looked at the future as the Government are doing, wrung his hands and said, "My goodness, there is nothing I can do about this," we would never have found Australia, let alone New Zealand.

There are ideas that should be pursued. Some of them may be zany and not worth a great deal of consideration. I shall throw one in: why not build a ship at Smith's Dock with NHS funds, and fill it will all the people who need sea voyages for their health? That would create employment, maintain the industry, fulfil an NHS need, and stimulate the sort of thinking in which my Front Bench should be engaged.

9.34 pm

Mr. Ted Garrett (Wallsend)

We study history and from that we try to learn lessons. If ever there were an example of none of the lessons being learnt, it is the shipbuilding industry. Successive Governments have stated the nature of the problem and commissioned reports, such as the Swallow and the Geddes reports, but every move towards reforming the industry has faltered for the reason mentioned by the hon. Member for Eastleigh (Sir D. Price)—the Treasury. All efforts have collapsed because of Treasury stubborness. I blame no particular Minister or Chancellor of the Exchequer. They are all guilty.

This is the final episode for British shipbuilding. If a rescue operation is not planned now, and if the Government do not interfere in British Shipbuilders' plans for closure, the position will spell ultimate doom, as many hon. Members have pointed out. Having said that. I do not want it spread around that I am saying that the industry will collapse completely. However, I make it clear that such a fate is damned close, and the problem could be terminal. Wallsend has been battered to the point where the blackness and apathy have to be seen to be believed. The coal industry has gone, the merchant shipbuilding industry has gone, general engineering is going and so is the marine engineering industry unless something happens.

The Secretary of State spoke about the vast sums of money that have been put into the infrastructure of the region by this and previous Governments. What is the good of putting in the infrastructure if no balance for the taxpayer comes out of it? We have spent thousands of millions of pounds that are a loss to the British taxpayer. If I were a taxpayer living in the more affluent areas, I would be asking my Member of Parliament why something could not be done to redress the balance so that the losses could be recouped for the general kitty.

It is no use having good roads and schools if nothing is done to get maximum advantage. If this situation continues, we might as well close the polytechnics, because there will be no requirement for technical education, and we might as well close the universities because there will be no places for naval architects. If I am accused of giving the Government ideas, I apologise. I hope that the more enlightened members of the Government think that I am being facetious, although the underlying purpose is serious.

Money has been put into various funds. I should like the Government to collaborate with British Shipbuilders and the unions in considering redundancy schemes for the industry. If the worst comes to the worst, the men will be unemployed for many years. About 890 men from Clark Kincaid in my constituency will be paid off this year. It might surprise the House to know that the 20 to 24 age group will be the worst affected. They will receive the least redundancy payments because the scheme is based on age and length of service. Therefore, the redundancy payment scheme must be examined, and the Government must try to squeeze something from the Treasury to enhance the value of the scheme.

9.38 pm

Mr. David Lambie (Cunninghame, South)

In the short time left before the Front-Bench spokesmen rise to speak, I cannot deliver the speech that I have prepared on behalf of the shipyard workers at the Ailsa yard in Troon —one of the yards faced with closure. Like many right hon. and hon. Members, I am bitter and angry at the attitude of the Government, and especially this Secretary of State, towards shipbuilding in the United Kingdom. Last week, at the Tory party conference in Perth, the Prime Minister spoke of a caring Prime Minister and a caring Tory Government. The Minister whom I met last Monday was like a dead fish. He showed no compassion and no care for anyone. He was not interested in the future of our constituents, especially those in the Troon and Ayrshire area. If the Minister cannot solve the problems of the shipbuilding and shipping industry he should get out and allow someone else to move in and put forward a proposition that will at least help us.

I have had experience of enterprise trusts, such as BSC (Industry) Ltd, NCB (Enterprise) Ltd and British Shipbuilders Enterprise Ltd, which was a local enterprise trust. Despite all the cosmetic attempts to assist in Cunninghame, one man in every four is unemployed. Coalminers and other workers are still unemployed. If the Government do not get rid of those who are unable to deal with the problems and replace them, even with other Tories, such as those right hon. and hon. Members who have spoken tonight, we shall see the end of Britain as a manufacturing country. We shall see the end of the communities of hon. Members on both sides of the House. Tonight we make a plea on behalf of those communities.

9.41 pm

Mr. Gordon Brown (Dunfermline, East)

As my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan) emphasised, the debate is about whether this island trading nation, with more than 1,000 years of maritime traditions, will continue to have a strategic capacity to build merchant ships.

The Minister's speech was completely devoid of any proposal or fresh initiative to save the industry. He said that he wanted to save the industry. What we want from the Government is a commitment to implement measures that will save the industry. The Minister said that the closures and the cuts would make the industry leaner and, therefore, fitter. How much fitter can a skeleton become? Has the Minister looked at the statement by the man he praised only last week, Mr. Graham Day, who said of cuts such as these: The industry will not be leaner and more fit. It will not be here."? There is a leanness beyond which life is not sustainable.

I ask the House whether, at any previous point in the 700-year history of Parliament, until the seven years of this Government, the prospect of the disappearance of our entire merchant shipbuilding industry could have been imaginable, far less seriously contemplated. On any previous occasion, could any Government, of any political colour, have attracted even their most ardent and enthusiastic supporters into their Lobby to defend such a policy?

Britain, the biggest island state in Europe, survives by a seagoing trade. Ninety per cent. of our trade arrives and departs by sea. Our merchant fleet is the fourth arm of our defence. Should we face, with resignation, the prospect of the shipbuilding industry reaching such a point of collapse? The only future that the Minister can put before us is that we conduct our trade and protect our defences in ships bought in Japan, repaired and refitted in Korea or Taiwan, crewed in Panama and flying the flag of Liberia. This is the Government who claimed that they would make Britain great again.

Tonight we have heard from Members who represent Middlesbrough, Govan, Ayrshire and Sunderland about the desolation in our shipbuilding communities. Those. communities and work forces have done everything that the Government have asked of them. In the areas of productivity, flexibility, wage negotiations and industrial relations they have made sacrifices to help the Government's industrial strategy. They are now asked to sacrifice their jobs because of the Government's spending strategy. They are the mass casualties in the Government's economic war of attrition. They are told from the comfort of Whitehall that things are getting better, that we are in the sixth year of growth and that there is no crisis, but there is despair in the communities that Ministers refuse to visit, and desolation in the faces that they never see.

Tonight we have heard also from some Conservative Members. They are perhaps isolated voices in the Conservative party, but I believe that they are representative of a Conservative tradition. The right hon. Member for Taunton (Sir E. du Cann) and the hon. Member for Eastleigh (Sir D. Price) did more in a few short minutes to speak up for the Conservative party's maritime traditions than any Minister has done in the seven long years under this Administration.

The Government's proposition is that Britain is suffering because the world is suffering, that the British shipbuilding industry is in crisis because the world's shipbuilding industry is in crisis, as though we have borne an equal burden of the cuts and closures. If there has been an equal sacrifice, why, since 1979, have the French, Germans and Italians—far less the Japanese and the Koreans—lost 5,000, 6,000, 7,000 or 8,000 workers in their merchant shipbuilding industry, while Britain has lost 25,000 workers, and the number is increasing? Why has their capacity been cut by a third or a half, while our capacity has been cut by two thirds? Why has the share of world orders of those countries remained relatively stable, while Britain's share, which used to be 50 per cent., is now less than I per cent.? Why is it that other countries with the least to gain do most to protect their industries, while this country, with the most to gain, does least?

The proposition of the Secretary of State is that there is no shortage of support for the industry, only a shortage of orders, and that if contracts were there the cash would be there to support them. If that is so, why did we lose the British Nuclear Fuels contract to Japan? Why did the Trinity House contract go to Korea? Why did the right hon. Gentleman's officials have to say to a Committee in the other place that for years we have been beaten hands down by our competitors in France and Germany? Why did the chairman of British Shipbuilders have to say last week, when he announced redundancies, that one of the major problems he faced was not orders but how to survive within the financial limits set by the Government?

If Government support is not the problem, why do the Government not advance the public sector orders about which hon. Members have talked—Ministry of Defence, coastal protection and fishery protection orders? There are plenty of projects which, if the Secretary of State put his mind to it, could be brought forward to save the shipbuilding yards. If support is not the problem, why does the Secretary of State not accept the recommendations of the Committee in another place and of the General Council of British Shipping that we take measures to persuade British shipowners to buy British, to repair British and to fly the British flag? If the right hon. Gentleman is serious about saving the shipbuilding industry, he will bring forward such proposals.

Is the Secretary of State not simply giving the same reassurances that were given in public in 1983 and 1984 —that he is doing what he can and doing his best? Sir Robert Atkinson, the chairman of British Shipbuilders at the time, said that although those statements were being made in public, in private the Government were hell-bent on sabotaging the industry. He said that the Government never talked about developments, new research and the industry's future. In the most telling phrase of all, he said that when the Government talked about closures and redundancies a gleam came into their eyes.

Throughout the last week and during this debate we have had no more than hand-wringing apologies and the supine defence of the mistaken policies of failed Ministers in a discredited Government who are pursuing a bankrupt ideological solution that relies upon free market forces that will not work. The Government tell us that they are creating real and lasting jobs in new areas and new industries, whereas we have heard tonight that they are creating real and lasting unemployment in new areas and new industries.

Before the Minister of State ends his speech this evening, I should like him to answer three questions. We know that 10 million tonnes of world orders are available this year. Will the Minister set up a task force to ensure that many' of these orders come to Britain? We know that it is within the Minister's power, through public sector orders, to save yards and prevent closures. Will he ensure that, throughout the public services and the public sector, a search is made and that decisions are made to advance orders? If the Japanese say that as long as there is an ocean to sail there will be a Japanese shipbuilding industry to build for it, why do we not say the same? If this Government will not fight for the industry, we shall, and we shall have the country behind us.

9.51 pm

The Minister of State, Department of Trade and Industry (Mr. Peter Morrison)

The right hon. Member for Glasgow, Govan (Mr. Millan) said that people are concerned about our shipbuilding industry. I agree with him. Those who work in the shipbuilding industry live in closely knit communities, and in many cases they live in areas of high unemployment. The shipbuilding industry is part of our industrial heritage and became very successful in the market place. Today it is operating neither in the international market place nor in the domestic and European market place.

The Father of the House, the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) and my right hon. Friend the Member for Taunton (Sir E. du Cann) reminded the House of the importance of the manufacturing sector to this country. I agree with them. The right hon. Gentleman said that high tech is very important to this country, but that the traditional industries are also very important. I agree with him. High tech makes the traditional industries as competitive as they can possibly be.

All right hon. and hon. Members acknowledge that during the last 10 years British Shipbuilders has undergone a massive change. Last week's announcement was a further step towards rationalisation. I accept immediately that that does not make it any the less painful, but the fact remains that there is a world surplus of both ships and shipyards. I agree with the hon. Member for Dunfermline, East (Mr. Brown) that this country needs orders. That is what this debate is about.

When, in 1977, the right hon. Member for Manchester, Gorton (Mr. Kaufman) held the position that I hold now, he said that shipbuilding industries all over the world, from Japan to Sweden, were accepting the inevitability of contraction and that Britain could not be insulated from this trend. I agree with him. This Government are in a precisely similar position to that in which he found himself then.

Perfectly reasonably, certain strands have run through the debate. The right hon. and learned Member for Monklands, East (Mr. Smith) and other Opposition Members have asked whether the Government are committed to British Shipbuilders. The answer to that, as the right hon. and learned Gentleman has heard me say twice during the proceedings on what is now the British Shipbuilders (Borrowing Powers) Act 1983, is yes. I say it again. We are, otherwise we would not have introduced that measure. The right hon. Member for Cardiff, South and Penarth, the Father of the House, suggested that we had given up the ghost. I assure him that that is not the case.

Perfectly reasonably, right hon. and hon. Members asked whether we are doing everything possible by way of support. My answer to that, as I told the right hon. and learned Member for Monklands, East and his hon. Friends during proceedings on the British Shipbuilders (Borrowing Powers) Act, is also yes.

I listened carefully to what hon. Members had to say, but they did not propose any specific changes in terms of support that we could make. If they have specific points to make, I am happy that they should do so. Opposition Members also asked whether we are doing everything that we can to secure orders. I assure all hon. Members that we are doing precisely that.

The hon. Member for Redcar (Mr. Tinn) asked about the follow-on from the fifth directive. That will cease to operate at the end of this year, and I give him an undertaking that, if I understood him correctly, we shall be going down precisely the route that he would like us to go. That is to say that we would wish to see that we are on an equal footing with all our European counterparts. My hon. Friend the Member for Tynemouth (Mr. Trotter) pointed out that we shall have an opportunity to secure that as President of the Council during the latter half of this year, and that will be an opportunity that we shall want to grab.

The right hon. and learned Member for Monklands, East tended, as did some of his hon. Friends, to mock British Shipbuilders Enterprise Ltd. The right hon. and learned Gentleman has steel communities close to his constituency, and I hope he will agree that BSC (Industry) Ltd. has had impressive achievements, although he may want such achievements to go further.

The right hon. and learned Gentleman also asked why we have not referred to the yards—Smith's Dock, Clark Kincaid and Ferguson-Ailsa. The simple answer is that in each case decisions have to be made for commercial industrial purposes. If it were not Smith's dock it would have to be another yard. As hon. Members will appreciate, the matter is ultimately for decision by British Shipbuilders. However, if that is the way that the right hon. and learned Gentleman wants us to proceed, it would be robbing Peter to pay Paul.

The right hon. and learned Gentleman talked about losing our merchant fleet. That, I accept, is correct, but my right hon. Friend the Member for Taunton pointed out that shipping, like any other business, has to be profitable, and it is no doubt for that reasons principally that the position is as it is.

The right hon. and learned Gentleman and the hon. Member for Dunfermline, East suggested a task force. The three specific points that they wish us to look into—bringing forward public orders, improving the package of support and looking at what can be done for British shipowners — are all matters that are currently under review.

The hon. Member for Sunderland, South (Mr. Bagier) asked me about the long-term future of British shipbuilding. I conclude by saying that as far as I am concerned it will get all the backing from us that is possible.

Question put, That the amendment be made:—

The House divided: Ayes 205, Noes 277.

Division No. 192]	[10 pm
AYES
Adams, Allen (Paisley N)	Fatchett, Derek
Alton, David	Faulds, Andrew
Anderson, Donald	Fields, T. (L'pool Broad Gn)
Archer, Rt Hon Peter	Fisher, Mark
Ashdown, Paddy	Flannery, Martin
Ashley, Rt Hon Jack	Foot, Rt Hon Michael
Ashton, Joe	Forrester, John
Atkinson, N. (Tottenham)	Foster, Derek
Bagier, Gordon A. T.	Foulkes, George
Banks, Tony (Newham NW)	Fraser, J. (Norwood)
Barnett, Guy	Freeson, Rt Hon Reginald
Barron, Kevin	Garrett, W. E.
Beckett, Mrs Margaret	George, Bruce
Beith, A. J.	Godman, Dr Norman
Bell, Stuart	Gould, Bryan
Benn, Rt Hon Tony	Gourlay, Harry
Bennett, A. (Dent'n & Red'sh)	Hamilton, James (M'well N)
Bermingham, Gerald	Hamilton, W. W. (Fife Central)
Bidwell, Sydney	Hancock, Michael
Blair, Anthony	Harrison, Rt Hon Walter
Boothroyd, Miss Betty	Hattersley, Rt Hon Roy
Boyes, Roland	Healey, Rt Hon Denis
Brown, Gordon (D'f'mline E)	Heffer, Eric S.
Brown, Hugh D. (Provan)	Hogg, N. (C'nauld & Kilsyth)
Brown, N. (N'c'tle-u-Tyne E)	Holland, Stuart (Vauxhall)
Brown, R. (N'c'tle-u-Tyne N)	Home Robertson, John
Brown, Ron (E'burgh, Leith)	Howells, Geraint
Bruce, Malcolm	Hoyle, Douglas
Buchan, Norman	Hughes, Dr Mark (Durham)
Caborn, Richard	Hughes, Robert (Aberdeen N)
Callaghan, Rt Hon J.	Hughes, Roy (Newport East)
Callaghan, Jim (Heyw'd & M)	Hughes, Simon (Southward)
Campbell, Ian	Janner, Hon Greville
Campbell-Savours, Dale	Jenkins, Rt Hon Roy (Hillh'd)
Canavan, Dennis	John, Brynmor
Carlile, Alexander (Montg'y)	Johnston, Sir Russell
Cartwright, John	Jones, Barry (Alyn & Deeside)
Clark, Dr David (S Shields)	Kaufman, Rt Hon Gerald
Clarke, Thomas	Kennedy, Charles
Clay, Robert	Kilroy-Silk, Robert
Clelland, David Gordon	Kinnock, Rt Hon Neil
Clwyd, Mrs Ann	Kirkwood, Archy
Cocks, Rt Hon M. (Bristol S)	Lambie, David
Cohen, Harry	Lamond, James
Coleman, Donald	Leadbitter, Ted
Conlan, Bernard	Leighton, Ronald
Cook, Frank (Stockton North)	Lewis, Ron (Carlisle)
Cook, Robin F. (Livingston)	Lewis, Terence (Worsley)
Corbyn, Jeremy	Litherland, Robert
Cox, Thomas (Tooting)	Livsey, Richard
Craigen, J. M.	Lloyd, Tony (Stretford)
Crowther, Stan	McCartney, Hugh
Cunliffe, Lawrence	McDonald, Dr Oonagh
Cunningham, Dr John	McKay, Allen (Penistone)
Dalyell, Tarn	McKelvey, William
Davies, Rt Hon Denzil (L'lli)	MacKenzie, Rt Hon Gregor
Davies, Ronald (Caerphilly)	Maclennan, Robert
Davis, Terry (B'ham, H'ge H'l)	McNamara, Kevin
Deakins, Eric	McWilliam, John
Dewar, Donald	Madden, Max
Dobson, Frank	Marek, Dr John
Dormand, Jack	Marshall, David (Shettleston)
Douglas, Dick	Martin, Michael
Dubs, Alfred	Mason, Rt Hon Roy
Duffy, A. E. P.	Maxton, John
Dunwoody, Hon Mrs G.	Maynard, Miss Joan
Eadie, Alex	Meacher, Michael
Eastham, Ken	Meadowcroft, Michael
Edwards, Bob (W'h'mpt'n SE)	Michie, William
Evans, John (St. Helens N)	Mikardo, Ian
Ewing, Harry	Millan, Rt Hon Bruce

Mitchell, Austin (G't Grimsby)	Short, Ms Clare (Ladywood)
Morris, Rt Hon A. (W'shawe)	Short, Mrs R.(W'hampt'n NE)
Morris, Rt Hon J. (Aberavon)	Silkin, Rt Hon J.
Nellist, David	Skinner, Dennis
O'Brien, William	Smith, C.(lsl'ton S & F'bury)
O'Neill, Martin	Smith, Rt Hon J. (M'ds E)
Orme, Rt Hon Stanley	Soley, Clive
Owen, Rt Hon Dr David	Spearing, Nigel
Park, George	Steel, Rt Hon David
Parry, Robert	Stewart, Rt Hon D. (W Isles)
Patchett, Terry	Stott, Roger
Pavitt, Laurie	Strang, Gavin
Pendry, Tom	Straw, Jack
Pike, Peter	Thomas, Dafydd (Merioneth)
Powell, Raymond (Ogmore)	Thomas, Dr R. (Carmarthen)
Prescott, John	Thompson, J. (Wansbeck)
Radice, Giles	Tinn, James
Randall; Stuart	Wallace, James
Raynsford, Nick	Wardell, Gareth (Gower)
Redmond, Martin	Wareing, Robert
Rees, Rt Hon M. (Leeds S)	Weetch, Ken
Richardson, Ms Jo	Welsh, Michael
Roberts, Ernest (Hackney N)	White, James
Robertson, George	Williams, Rt Hon A.
Robinson, G. (Coventry NW)	Wilson, Gordon
Rogers, Allan	Winnick, David
Rooker, J. W.	Woodall, Alec
Ross, Ernest (Dundee W)	Wrigglesworth, Ian
Ross, Stephen (Isle of Wight)	Young, David (Bolton SE)
Ryman, John
Sedgemore, Brian	Tellers for the Ayes:
Sheerman, Barry	Mr. Don Dixon and Mr. Frank Haynes.
Sheldon, Rt Hon R.
Shields, Mrs Elizabeth

NOES
Adley, Robert	Channon, Rt Hon Paul
Aitken, Jonathan	Chapman, Sydney
Alexander, Richard	Chope, Christopher
Alison, Rt Hon Michael	Clark, Dr Michael (Rochford)
Ancram, Michael	Clark, Sir W. (Croydon S)
Arnold, Tom	Clarke, Rt Hon K. (Rushcliffe)
Ashby, David	Clegg, Sir Walter
Atkins, Rt Hon Sir H.	Cockeram, Eric
Atkinson, David (B'm'th E)	Colvin, Michael
Baker, Rt Hon K. (Mole Vall'y)	Coombs, Simon
Baker, Nicholas (Dorset N)	Cope, John
Baldry, Tony	Cormack, Patrick
Banks, Robert (Harrogate)	Couchman, James
Batiste, Spencer	Cranborne, Viscount
Bellingham, Henry	Critchley, Julian
Bendall, Vivian	Crouch, David
Best, Keith	Currie, Mrs Edwina
Bevan, David Gilroy	Dickens, Geoffrey
Biffen, Rt Hon John	Dicks, Terry
Blackburn, John	Dorrell, Stephen
Blaker. Rt Hon Sir Peter	Douglas-Hamilton, Lord J.
Body, Sir Richard	Dover, Den
Bonsor, Sir Nicholas	Durant, Tony
Bottomley, Peter	Edwards, Rt Hon N. (P'broke)
Bottomley, Mrs Virginia	Eggar, Tim
Bowden, A. (Brighton K'to'n)	Emery, Sir Peter
Bowden, Gerald (Dulwich)	Evennett, David
Braine, Rt Hon Sir Bernard	Eyre, Sir Reginald
Brandon-Bravo, Martin	Fallon, Michael
Brinton, Tim	Farr, Sir John
Brittan, Rt Hon Leon	Favell, Anthony
Brown, M. (Brigg & Cl'thpes)	Fenner, Mrs Peggy
Bruinvels, Peter	Fletcher, Alexander
Buchanan-Smith, Rt Hon A.	Fookes, Miss Janet
Buck, Sir Antony	Forman, Nigel
Budgen, Nick	Forsyth, Michael (Stirling)
Bulmer, Esmond	Forth, Eric
Burt, Alistair	Fowler, Rt Hon Norman
Butcher, John	Fox, Marcus
Butler, Rt Hon Sir Adam	Franks, Cecil
Carlisle, Kenneth (Lincoln)	Fraser, Peter (Angus East)
Carlisle, Rt Hon M. (W'ton S)	Freeman, Roger
Carttiss, Michael	Fry, Peter
Cash, William	Gale, Roger

Galley, Roy	MacGregor, Rt Hon John
Gardiner, George (Reigate)	MacKay, Andrew (Berkshire)
Gardner, Sir Edward (Fylde)	MacKay, John (Argyll & Bute)
Garel-Jones, Tristan	Maclean, David John
Gilmour, Rt Hon Sir Ian	McLoughlin, Patrick
Glyn, Dr Alan	McNair-Wilson, M. (N'bury)
Gorst, John	McNair-Wilson, P. (New F'st)
Gow, Ian	McQuarrie, Albert
Gower, Sir Raymond	Madel, David
Grant, Sir Anthony	Major, John
Greenway, Harry	Malins, Humfrey
Gregory, Conal	Malone, Gerald
Griffiths, Peter (Portsm'th N)	Maples, John
Grist, Ian	Marland, Paul
Ground, Patrick	Marlow, Antony
Grylls, Michael	Marshall, Michael (Arundel)
Hamilton, Hon A. (Epsom)	Mates, Michael
Hamilton, Neil (Tatton)	Mather, Carol
Hampson, Dr Keith	Maxwell-Hyslop, Robin
Hanley, Jeremy	Mayhew, Sir Patrick
Hannam, John	Merchant, Piers
Hargreaves, Kenneth	Meyer, Sir Anthony
Harris, David	Miller, Hal (B'grove)
Harvey, Robert	Mills, lain (Meriden)
Havers, Rt Hon Sir Michael	Miscampbell, Norman
Hawkins, C. (High Peak)	Moate, Roger
Hawkins, Sir Paul (N'folk SW)	Monro, Sir Hector
Hawksley, Warren	Moore, Rt Hon John
Hayes, J.	Morris, M. (N'hampton S)
Hayhoe, Rt Hon Barney	Morrison, Hon C. (Devizes)
Heathcoat-Amory, David	Morrison, Hon P. (Chester)
Heddle, John	Moynihan, Hon C.
Heseltine, Rt Hon Michael	Murphy, Christopher
Hickmet, Richard	Neale, Gerrard
Hicks, Robert	Nelson, Anthony
Higgins, Rt Hon Terence L.	Neubert, Michael
Hill, James	Newton, Tony
Hind, Kenneth	Nicholls, Patrick
Hirst, Michael	Norris, Steven
Hogg, Hon Douglas (Gr'th'm)	Onslow, Cranley
Holland, Sir Philip (Gedling)	Oppenheim, Phillip
Holt, Richard	Ottaway, Richard
Hordern, Sir Peter	Page, Sir John (Harrow W)
Howard, Michael	Page, Richard (Herts SW)
Howarth, Alan (Stratf'd-on-A)	Patten, Christopher (Bath)
Howell, Rt Hon D, (G'ldford)	Patten, J. (Oxf W & Abgdn)
Howell, Ralph (Norfolk, N)	Pattie, Geoffrey
Hubbard-Miles, Peter	Pawsey, James
Hunt, David (Wirral W)	Percival, Rt Hon Sir Ian
Hunt, John (Ravensbourne)	Pollock, Alexander
Hunter, Andrew	Porter, Barry
Jackson, Robert	Portillo, Michael
Jessel, Toby	Powell, William (Corby)
Johnson Smith, Sir Geoffrey	Powley, John
Jones, Gwilym (Cardiff N)	Prentice, Rt Hon Reg
Jones, Robert (Herts W)	Price, Sir David
Kellett-Bowman, Mrs Elaine	Proctor, K. Harvey
Kershaw, Sir Anthony	Raffan, Keith
Key, Robert	Raison, Rt Hon Timothy
King, Roger (B'ham N'field)	Rees, Rt Hon Peter (Dover)
King, Rt Hon Tom	Rhodes James, Robert
Knight, Greg (Derby N)	Rhys Williams, Sir Brandon
Knight, Dame Jill (Edgbaston)	Rost, Peter
Knowles, Michael	Rowe, Andrew
Knox, David	Sainsbury, Hon Timothy
Lang, Ian	Shaw, Giles (Pudsey)
Lawler, Geoffrey	Shaw, Sir Michael (Scarb')
Lawrence, Ivan	Shepherd, Colin (Hereford)
Lee, John (Pendle)	Silvester, Fred
Leigh, Edward (Gainsbor'gh)	Sims, Roger
Lennox-Boyd, Hon Mark	Skeet, Sir Trevor
Lester, Jim	Smith, Sir Dudley (Warwick)
Lightbown, David	Smith, Tim (Beaconsfield)
Lilley, Peter	Soames, Hon Nicholas
Lloyd, Ian (Havant)	Spencer, Derek
Lord, Michael	Spicer, Michael (S Worcs)
Lyell, Nicholas	Stanbrook, Ivor
McCrindle, Robert	Stevens, Lewis (Nuneaton)
McCurley, Mrs Anna	Stewart, Allan (Eastwood)
Macfarlane, Neil	Stewart, Andrew (Sherwood)

Stradling Thomas, Sir John	Viggers, Peter
Tapsell, Sir Peter	Wakeham, Rt Hon John
Taylor, John (Solihull)	Waldegrave, Hon William
Taylor, Teddy (S'end E)	Walker, Rt Hon P. (W'cester)
Terlezki, Stefan	Wall, Sir Patrick
Thompson, Donald (Calder V)	Waller, Gary
Thompson, Patrick (N'ich N)	Ward, John
Thome, Neil (llford S)	Watson, John
Thumham, Peter	Wells, Sir John (Maidstone)
Townsend, Cyril D. (B'heath)	Wheeler, John
Trippier, David	Wiggin, Jerry
Trotter, Neville	Wilkinson, John
Twinn, Dr Ian	Wolfson, Mark
Vaughan, Sir Gerard	Wood, Timothy

Yeo, Tim	Mr. Peter Lloyd and Mr. Francis Maude.
Tellers for the Noes:

Question accordingly negatived.

Main Question put and agreed to.

Resolved, That this House notes the massive slump in demand for merchant ships which has led to cutbacks in shipyards throughout the world; regrets that this has inevitably led to contraction in the United Kingdom's own merchant shipbuilding industry despite the Government's extensive and continued support for British Shipbuilders (including over £1,400 million since 1979); and welcomes the Government's package of measures to provide special assistance to those affected.