HC Deb 18 April 1988 vol 131 cc556-67 3.49 pm
The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)

British Shipbuilders has been approached about the disposal of a number of its facilities, notably at Govan on the Clyde and Appledore in Devon. Those approaches are being considered in line with our policy of returning as much of the corporation as possible to the private sector.

As regards Govan, BS has today received a letter of intent to purchase the yard from Kvaerner Industries, a Norwegian company at the forefront of international gas ship technology, which operates an important fleet of its own. Kvaerner Industries is a respected company with expertise in gas-carrying ships which it would propose to build in future on the Clyde. I regard this as a very welcome proposal. I hope that the negotiations succeed.

Should it acquire Govan, Kvaerner intends to transfer its gas ship technology to the United Kingdom via the yard by giving project support and assistance for gas ships built at Govan. Thereafter, Kvaerner plans to develop Govan into its centre for gas ship technology in support of worldwide activities in this sphere.

Kvaerner would want to attach certain conditions to an agreement in Govan. The company says that some restructuring would be inevitable to ensure that the yard is fully competitive in the international market place. As an important part of the agreement, Kvaerner would undertake to place an order for two medium-sized LPG carriers to be built at Govan for delivery in 1990 and 1991.

I also have to tell the House that the chairman of British Shipbuilders has told me about contractual difficulties with the ferry programme at North East Shipbuilders at Sunderland. Naturally, I hope these difficulties can be overcome and I am keeping closely in touch with developments. I shall keep the House closely informed and make a further statement if necessary in due course.

Mr. Bryan Gould (Dagenham)

Is the Minister aware that his statement not only places major question marks over the future of the Govan yard, but poses even more worrying questions about the viability of what will be left of British Shipbuilders? With regard to Govan, is this not a further example of the Government's readiness to sell off to foreign interests an investment in a strategic British industry which the Government themselves are not prepared to sustain? If Govan is an attractive prospect to a Norwegian company, why can it not be supported in the national interest by the British Government?

If the Norwegians have work to place with Govan, which is in itself very welcome, why must that be accompanied by giving away the yard? What assurances can the Minister give the work force at Govan and the House about jobs and pension rights? What write-offs of taxpayers' money will be made? What price will the taxpayer receive for the substantial investment that has been made?

Is this death by one thousand cuts not the inevitable consequence of the policy of dismembering British shipbuilding, upon which the Government embarked four years ago? What is the future of those yards in the north-east and the south-west? Will the Minister now amplify his cryptic remarks about Appledore and North East Shipbuilders? Can he categorically assure the House that his statement is not the forerunner of a decision, reported in many quarters, to cut British Shipbuilders' lifeline by withdrawing Government support later this year?

Would it not be ironic—though all too typical—if the Government destroyed our merchant shipbuilding industry just at the time when that industry has become technologically advanced and is therefore well placed to take advantage of the increased demand for world shipping? Is the Minister aware that he will not be forgiven if he allows a historic and vital British industry to expire, with all the damage that that will do to jobs, to the regions and to the national strategic interest? I invite the Minister to tell the House that his statement will not be, and is not intended to be, the death knell of British shipbuilding.

Mr. Clarke

What I have announced today is very good news for a part of British shipbuilding on the Clyde, at Govan. The Norwegian company involved is an operator of gas-carrying ships. It has been constructing them, putting its technology under licence, at various yards throughout the world. The company wishes to acquire a yard of its own where that technology can be developed. It has given up shipbuilding in Norway because it is too expensive. It believes that Govan can be turned into such a yard and that it can be the base for the company's activities. It has work to place. That is good news for Govan, where they are building two Chinese container ships which are likely to be completed in the fairly near future.

I cannot give the House details of the basis on which we might dispose of the yard. What I have announced today is that British Shipbuilders has received a letter of intent and that negotiations are now to take place. A purchase of the yard would involve taking over employees. They would be transferred to the new company with their accrued pension benefits intact.

As for Appledore, we have a number of expressions of interest, but they are all commercially confidential at the moment. It would be most unwise of me to run the risk of prejudicing discussions about the future of Appledore by giving further details to the House now.

At North East Shipbuilders, as people in that part of the world know, there are certain contractual difficulties at the moment between British Shipbuilders and the purchaser of the ferries built there. There are six very good ferries in the water in the Wear, and British Shipbuilders is negotiating with its customer how to resolve the contractual difficulties. I hope that those discussions are successful. I am keeping steadily in touch and I shall keep the House informed if I have anything to report.

Mr. Bruce Millan (Glasgow, Govan)

Is the right hon. and learned Gentleman aware that nobody is more anxious than I am to get additional work placed at the Govan yard? I would warmly welcome orders for ships from Norway or anywhere else. What we object to is the disposal, or, more accurately, the give-away, of the yard. The Minister has produced absolutely no justification for that. Why can there not be an ordinary commercial contract? There might even be a joint venture between the Norwegian company and British Shipbuilders. Why is the yard being disposed of, bearing in mind the long-term implications, to say nothing of those for the rest of British shipbuilders?

What we want for Govan are long-term assurances for the future, not short-term relief. We are talking of an international company which operates abroad. It is closing its own yard in Norway, despite vehement protests from the trade unions involved. There are to be 600 job losses. We are apprehensive about the fact that the same could happen to Govan in a comparatively short time.

Mr. Clarke

Kvaerner prefers to buy the yard. We cannot force it to place orders in a yard on any terms other than those in which it is interested. This is an attractive proposition. At the moment Kvaerner places orders for ships in various yards around the world, using its own technology under licence. It wants to acquire a yard where it can develop that technology and use it as the basis for future developments. That is extremely good news.

While the Govan yard is owned by British Shipbuilders, it is completing work on two Chinese container ships. The right hon. Member for Glasgow, Govan (Mr. Millan) knows that that work will be completed in the reasonably near future. Lay-offs will begin this year if no other work is forthcoming and, unless other orders are found, the yard will have to close by next year. What I have described today is the most encouraging development that we have seen in regard to Govan for a long time. I hope that the negotiations succeed and that everybody who is interested, as the right hon. Gentleman says he is—I am sure that he is—in the long-term future of the yard will welcome the development, trust that the negotiations will succeed and encourage people to do everything possible to bring them to a successful conclusion.

Mr. Tony Speller (Devon, North)

May I press my right hon. and learned Friend, not for any commercially confidential information, but to bear in mind when he mentions the Appledore shipyard en passant the fact that it is one of the smaller but more efficient and highly productive yards and is a vital cog in the north Devon and Torridge economy? When he speaks of the yard, will he bear in mind, despite the yard's relative smallness, its great importance to north Devon and north Cornwall?

Mr. Clarke

I realise the importance of the yard to he economy of Devon, as it is the major engineering employer in the area. It has had some success in attracting orders for dredgers, which are a speciality of the yard. It is encouraging—I hope my hon. Friend agrees—that a number of people have expressed an interest in acquiring the yard and running it as a going business. We will enter such a deal only if we are convinced that it is in the best interests of the yard and of the economy of the surrounding area.

Mr. Bob Clay (Sunderland, North)

Will the Minister confirm that the contractual difficulties at NESL to which he referred are not in any way the responsibility of either the management or the work force at NESL but lie with the purchaser, and that the programme for the delivery of those ships is on time?

Does the Minister also accept that his statement today, with the background of press rumours that have been continuing for some days, strikes great fear into the hearts of everyone who is committed to the future of British merchant shipbuilding? The previous chairman, Mr. Graham Day, who butchered the industry enough, always said that one could not sink below the present level of facilities and that any further reduction in capacity would make the industry unviable.

The Minister has given no assurance about the future of NESL and the very uncertainty reflected in this statement, with the further division of the industry and what is happening at Govan, makes it virtually impossible at present for NESL or any of the other subsidiaries to obtain the few orders that are around in the world at present. I believe that the Minister knows that. He should underwrite the future of the industry now. He should stop the rumours and the nonsense. He should keep British Shipbuilders together and enable it to obtain the significant orders that are available at present, rather than sabotage them, as the statement does.

Mr. Clarke

I regret the uncertainty that surrounds the future of the industry, and I understand the demoralising effect of that uncertainty. For that reason, when I was in Sunderland last Friday, I had a meeting with the hon. Gentleman and the trade union—

Mr. Clay

The Minister said nothing about it then.

Mr. Clarke

It was probably a good thing that I did not enter into more detail, because had I done so I would have fed the uncertainty and might have run the risk of prejudicing the negotiations with Kvaerner, about which I could not tell the hon. Gentleman. They have been leaked to the press and have caused some excitement in Scotland. I hope that I have been able to calm fears in Scotland, because it is good news for Scotland.

Meanwhile, it is not helpful for me to enter into the merits of any dispute that may develop between British Shipbuilders and the purchaser of the Danish ferries. I am keeping in touch with the discussions between the chairman of British Shipbuilders and his colleagues and the customer and, as I have said, I hope that those discussions will come to a satisfactory conclusion. If they do not, we may face a serious situation, because the only orders in Sunderland at present are for the Danish ferries. However, if a serious situation arises, we shall face it then and certainly do whatever we can to ensure that the well-being of Sunderland is sustained.

Mr. Robin Maxwell-Hyslop (Tiverton)

Is not the truth of the matter that there is a vast tonnage of very new general merchandise carriers laid up and that there is a vast number of shipyards throughout the world in competition for the available demand? Should we not therefore welcome the opportunity to bring the focus of specialist skills for specialised markets to shipyards of our own that have no other prospects?

Mr. Clarke

I agree with my hon. Friend. As he has shrewdly said, this is a buyers' market, where there is a huge excess of would-be builders of ships compared with would-be purchasers. That is why it is so foolish for Scottish Members to say, "We prefer the industry to remain nationalised, come what may," and wait for the purchasers to come along. That is no guarantee that any purchasers will come along.

A good Norwegian company wants to make Clydeside the basis for its particular strength in the market place in gas technology. That should be welcomed by all Scottish Members.

Mr. Chris Mullin (Sunderland, South)

Is the Minister aware that in the past few weeks there have been repeated reports that the Government plan to pull the plug on what remains of the entire British shipbuilding industry, by cutting all further Government aid? Will he say now whether there is any truth in that, and will he recognise that the possible deal with Govan spells ruin for thousands of people in Sunderland?

Mr. Clarke

It makes no sense for one Member of Parliament for Sunderland to complain about the rumours and uncertainty, and for the other Member for Parliament for Sunderland to say, "I have just heard another rumour. Would the Minister like to comment on it?"

As I said to the hon. Member for Sunderland, North (Mr. Clay) last Friday, on the last occasion that I met him, the Government have taken no new decisions on British shipbuilding since we had a protracted debate on the subject in the House last summer. As hon. Members will gather, this is a fast-moving scene and I am keeping in close touch with events in all the yards. We have to keep the future of the yards under review because the Government have already lost £1.5 billion in those yards over the last nine years. We are putting substantial amounts of money into the yard, but the situation is so serious that one must keep in close touch with it and deal properly with events as they come up, sometimes week by week, as is now the case in Govan.

Mr. Neville Trotter (Tynemouth)

Does my right hon. and learned Friend accept that this will be seen as good news in Scotland, with a future assured for Govan? However, does he also accept that there will be great concern in the north-east about the future of the industry there? Will he give an assurance that the Government remain committed to intervention fund assistance for all shipbuilders in this country, and, in particular, will seek every possible order for Sunderland shipbuilders, bearing in mind the difficulties in respect of the Danish ferries?

Mr. Clarke

Fortunately, the yard closest to my hon. Friend's constituency, Swan Hunter, is at present in a good state, has an order book and is doing well in its newly privatised condition.

As I have said, the Government have given substantial support for orders throughout the past eight or nine years and British Shipbuilders has also incurred substantial losses on top of that intervention fund support. If orders come alone, the Government have to consider what is proposed and see what the costs are and whether they are justified to continue maintaining the yard for that particular order. However, at present, I know of no orders in prospect for Sunderland after the completion of the Danish ferry contract.

Mrs. Ray Michie (Argyll and Bute)

Why is the Minister allowing British Shipbuilders to take that course, when he knows that the privatisation of Scott Lithgow was really a rip-off? I still do not understand why the Norwegians' buying Govan shipyard will make all the difference. I do not understand why Govan shipyard should not be able to build those gas-carrying ships itself.

I should also like to know what consultations the Minister has had with the Secretary of State for Scotland and the Scottish Office on the question of selling off what is known as the jewel in the crown of British shipbuilding, Govan shipyard?

Mr. Clarke

I am not quite sure on what basis the hon. Lady says that the sale of Scott Lithgow was a rip-off. I do not know what she believes British Shipbuilders would be building in the yard if it still owned it. As she knows, that yard has unfortunately not been able to maintain its order book for the oil rig business that it thought it was going into.

I have already tried to explain the basis upon which the Norwegian company is approaching Govan. It is not looking just to place more orders under licence in the cheapest yard in the world. There is no guarantee that Govan would be the cheapest place to go to, if that was the basis upon which the company was operating. This Norwegian company is looking for a base where it can continue to develop its considerable technological skills in this respect. If it acquires a suitable base at Govan, it will immediately start building two ships there, and will also no doubt look to the long-term future there as it develops its technology.

Mr. Allan Stewart (Eastwood)

Has my right hon. and learned Friend had an opportunity to see the comment by the convenor of the shop stewards at Govan, who said that, at the end of the day, they want work in Govan? Is that not much more sensible than some of the comments that we have heard from Opposition Members? Does my right hon. and learned Friend agree that his announcement is a tribute to Govan, not a threat to it? Govan needs orders, and additional technology would be a great help for its long-term future. Will my right hon. and learned Friend confirm that it is important that the work force is given the maximum amount of detailed information at the earliest possible opportunity?

Mr. Clarke

I entirely agree with my hon. Friend. We have had sufficient recent experience of the trade union and labour movement driving away prospective jobs in Scotland because of its political views. Many people who work in Govan shipyard, who were worried last week because they could not see where any more work was to come from when the container ships were completed, will now he considerably relieved to hear that a good Norwegian company is seriously interested in maintaining shipbuilding there with these specialised vessels. I am sure that the company will want to give the maximum amount of information to the work force. It is obviously important for the company, if an agreement is reached, to have a satisfactory understanding with the work force and to ensure that it motivates the work force in the right way, so as to achieve success in the future.

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

I am sure that when the Prime Minister visited my constituency she was told of the importance to it of marine engineering and shipbuilding. The Minister referred to Appledore. I remind him that the correct title of that firm is Appledore Ferguson. One yard is in Devon and the other is in Port Glasgow in my constituency. It employs 400 people. What assurance can the Minister give on the continuation of that yard? On the matter of Govan, the two engines for the two Chinese orders are being built at Clark Kincaid in Greenock, and one of the engines was test-run this morning. What assurance can he give the work force at Ferguson in Port Glasgow and Clark Kincaid in East Hamilton street, Greenock?

Mr. Clarke

Those shipbuilding facilities have work now and we are always looking to their future, as is British Shipbuilders. For the reasons put succinctly by my hon. Friend the Member for Tiverton, (Mr. Maxwell-Hyslop), it is always difficult to guarantee any sort of future for those facilities, and we shall have to continue to look for future work prospects and future expressions of interest in acquiring those companies. In the case of Clark Kincaid, it is possible that a restatement such as I have made today of the Government's interest in receiving worthwhile approaches for the purchase of the facilities will lead to renewed expressions of interest. There is every prospect that that company could have an assured future.

Mr. Richard Holt (Langbaurgh)

Will my right hon. and learned Friend accept, that if he is able to press ahead with the sale of NESL to an overseas buyer who can guarantee orders at Govan, that may well be the best thing that could happen in the north-east? It would be like Nissan, also in the north-east. In that way we could do away with the bad industrial relations in the Sunderland area which have been detrimental to obtaining orders for the area. Instead of losing £1 million a week, we might be able to use that £1 million in the National Health Service.

Mr. Clarke

Neither the chairman of British Shipbuilders nor I have had an approach from anybody interested in buying North East Shipbuilders. I should make it clear that British Shipbuilders and the Government would welcome any serious approach from interested parties. As my hon. Friend is probably aware, some Japanese companies with an interest in technological co-operation recently visited the yard. We shall have to see where that goes. Otherwise, I agree that we have to look to the future in the economy of the north-east. One has to place the concerns being expressed in Sunderland against the fact that Nissan is expanding its facilities rapidly in Washington new town which is in the same borough. It is good to see how successful a company can be in that part of the world, anticipating as it is a huge increase in employment in Washington new town in the early 1990s.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

The remarks of the hon. Member for Langbaurgh (Mr. Holt) will be repudiated in the north-east of England, and the patronising statements from the Minister will find no welcome in that area. The statement tells us nothing about the future for the headquarters of British Shipbuilder, which is in my constituency, except that a nationalised industry will be closed by the Government. I notice that the Minister did not make any statement about future intentions regarding intervention funding. Why does he not come clean with the House and say that today's statement is the death knell of the nationalised shipbuilding industry in this country?

Mr. Clarke

I spent quite a proportion of last week in the north-east, in Newcastle, as well as in Stockton, Sunderland and Middlesbrough. It is obvious to visitors and the majority of inhabitants in the north-east that the economy is reviving rapidly. There is a huge increase in manufacturing investment. Indeed, the principal complaint that I faced as I went around the north-east was that there is now a shortage of modern, larger factory space to accommodate all those who wish to invest in the region. That shows how rapidly the economy is reviving and expanding. I cannot understand why Labour Members from the north-east insist on leaping in to talk about the death and destruction of the local economy, thereby undermining the efforts of such bodies as the Northern Development Company, which is beginning to talk about and advertise the substantial successes that the region is now achieving.

Mr. Quentin Davies (Stamford and Spalding)

Does my right hon. and learned Friend agree that it is a considerable compliment to the country, and a tribute to the industrial climate that exists, that Kvaerner Industries, which is a highly sophisticated group, has decided to get out of shipbuilding in its own native land of Norway and decided to develop that activity in, of all places, the United Kingdom? Surely that is a much greater compliment than a mere order for ships could possibly be. Is it not about time that the Opposition Front Bench woke up to what is going on in this country?

Mr. Clarke

I agree with my hon. Friend that most Scotsmen should react by being proud, and to a certain extent relieved, that an important company such as Kvaerner is prepared to commit itself and its future to a shipbuilding facility on the Clyde. A large proportion of the Labour party is so wedded to nationalisation that it would rather see the yard nationalised but dead, than privatised with a future.

Ms. Joyce Quin (Gateshead, East)

Will the Minister take the opportunity at the earliest possible moment to say to his European colleagues that he is not prepared to see British merchant shipbuilding capacity reduced any further, particularly since we have already reduced capacity more than virtually every other EEC country?

Mr. Clarke

I do not think that the European Community has much to do with future capacity in this country, except that we are committed by the sixth directive, which is an attempt to limit the amazing level of state aid that all European countries, including ourselves, have been providing for shipbuilding in recent years. It is a company from western Europe, admittedly not from the Community, but a Norwegian company, that is stepping in and proposing to develop the yard and give it a future. Therefore, I do not think that there is much room for anti-European sentiment on this occasion.

Mr. Michael Fallon (Darlington)

Is my right hon. and learned Friend not to be congratulated by Scottish and English taxpayers on facilitating this approach from a Scandinavian white knight? Which does he think will bring the greatest relief in Govan today: the fact that such an attractive purchaser has appeared from the private sector, or that Mr. Ron Todd will not be able to veto it?

Mr. Clarke

My hon. Friend does us a service by reminding us of the taxpayers' interest. On the occasion on which we debated British Shipbuilders in the House, I announced an increase in its external financing limit which amounted to £30,000 per head of those employed in the industry. That was the increase alone. The fact that we now have the prospect of an important yard going into private hands with a company that sees it as having a good commercial future is good news. Some Scotsmen will hear echoes of the views of Ron Todd and his reaction to foreign investment in Dundee on terms that he found unacceptable in the reactions from some Opposition Members today about a Norwegian company coming along to buy Govan and build its ships there.

Mr. Ernie Ross (Dundee, West)

Will the House and the Minister accept that the shipyard workers in Scotland are neither simplistic nor naive enough to believe that if there is a future for that yard it cannot just as easily be secured inside British Shipbuilders itself? That is what caused the fury in the yard. The hon. Member for Eastwood (Mr. Stewart) sells the convenor of Govan short by suggesting that that is all that he said. The shipyard workers in Scotland want to see a future for British shipbuilding. They see that that could be achieved just as easily by the Government taking a greater interest in shipbuilding and perhaps forming a joint venture with the company, rather than by simply selling off their birthright.

Mr. Clarke

I do not believe that shipyard workers in Glasgow will take that view. It sounds as if the hon. Gentleman is encouraging them to turn away the prospect and say, "No, we do not want to have anything to do with Norwegians unless they just place orders." As I have explained, the company will not do that. It wants to buy the yard to have a base from which to develop its own technology. The hon. Gentleman is saying that the shipbuilding workers would prefer to carry on as they are, finishing work on the only two ships that they have to build—the container ships for China—and wait to take their chance on what the world market might offer in the way of more orders in the future. That would be a reckless gamble for them to take. The hon. Gentleman knows that lay-offs will start later this year once the work on cutting the steel for the ships for China is concluded. To adopt the approach suggested by the hon. Gentleman would be to talk Govan into unemployment rather than into the future than Kvaerner appears likely to offer.

Miss Emma Nicholson (Torridge and Devon, West)

I am delighted to remind my right hon. and learned Friend that we have a full order book in the yard in Bideford and continuing orders on the horizon because of the speciality that the yard has developed in building small dredgers. With regard to my right hon. and learned Friend's statement, which I heartily welcome, may I assume that the Opposition would forbid outward investment from us into non-European countries and, in particular, into Norway?

Mr. Clarke

I rather think that they would forbid such investment, but that is not a matter for me. On past form, I think that they would be wholly opposed to us moving too much investment abroad. I agree with my hon. Friend that at present the Appledore yard has a full order book. It plays a specialist role in the industry, as it builds a different type of ship from those built by the remainder of British Shipbuilders. The Government's policy is to welcome any interest in acquiring one of these yards by someone who is interested in offering it a secure commercial future. I am sure that my hon. Friend will be glad to hear that we have had not one but several expressions of interest in the acquisition of that yard.

Mr. Dick Douglas (Dunfermline, West)

Will the Minister acknowledge that one of the matters that bemuses those who have some knowledge of shipbuilding is that 18 years ago Mr. Graham Day pulled out of LPG technology when he was chairman of Cammell Laird? The technology proposed for Govan is not new. How can we guarantee the enterprising economy about which the Secretary of State for Scotland spoke when a Norwegian company is giving up shipbuilding in Norway and moving to Govan, ostensibly to suit its own interests, and when no British consortium is capable of developing long-established technology and building ships that the world desires at the Govan yard under public or private ownership?

Mr. Clarke

LPG technology has moved on quite a lot in the past 10 years. I know that the Scottish Labour party does not want to acknowledge that anything has moved on in the past 10 years, certainly in industry. We are talking about one of the industry's most successful companies wanting to make the Clyde its construction base. The hon. Gentleman might prefer to carry on with nationalised shipyards, to return to LPG technology and start competing again, but I know what option I would prefer if my future lay in the yard.

Mr. John Marshall (Hendon, South)

Does my right hon. and learned Friend agree that the only long-term assurance that the yard at Govan and yards elsewhere can be given is for them to produce ships that the market wants at prices that it is prepared to pay? Does he agree that British Shipbuilders has singularly failed in that objective and that this announcement is the only hope for the yard at Govan? Will he remind the House of the money that has been spent propping up British Shipbuilders since nationalisation, and does he agree with many of us who consider that that money has not been well spent?

Mr. Clarke

The total lost since British Shipbuilders was nationalised runs to well over £2 billion, but I shall give the exact figure to my hon. Friend later. Since the Government took office, £1.6 billion has followed the money that was previously lost. Everybody realises that there is no long-term future in doing that. When I visited Sunderland, trade unionists accepted that they were not entitled to timeless subsidies or to have endless losses supported. It is a welcome new phase for Govan to be faced with the prospect of a privately owned Norwegian company, which is very successful in its market, saying that it can make a going business of the yard by building the right product in the right way at a price that the market can accommodate.

Several Hon. Members


Mr. Speaker

Order. I shall call the five hon. Members who have been rising to ask questions, but I ask them to be very brief.

Mr. Alex Salmond (Banff and Buchan)

Will the Chancellor of the Duchy of Lancaster offer the House an insight into what "some restructuring" means in the context of his statement about Govan? Will he say what level of foreign ownership he considers to be beneficial to the wider Scottish economy? Furthermore, has he bothered to ask Kvaerner what "some restructuring" will mean for Govan?

Mr. Clarke

The answers to those questions will emerge at a later stage if the negotiations are successful. [Interruption.] I am quoting Kvaerner when I say that some restructuring will be inevitable, and I think that that will probably lead to some restructuring of the work force. However, it is far too soon to speculate on what form that restructuring might take. As I said earlier, there will be a dramatic reduction in the work force once the Chinese ships order is completed, unless something comes along or these negotiations are successful.

I trust that the understandable concerns of the work force and others will be answered when discussions take place between the work force and the company contemplating purchase and as negotiations, which I hope will be successful, move to a conclusion. I cannot understand why the Scottish National party should think that an optimum level can be determined for foreign ownership in Scottish industry. Perhaps the hon. Gentleman will be cheered by the fact that it will not involve English ownership.

Mr. Roger Knapman (Stroud)

I welcome my right hon. and learned Friend's statement, but will he assure the House that British companies will be given an opportunity to bid for the whole of the industry or any individual yard?

Mr. Clarke

I am grateful to my hon. Friend for giving me the opportunity to make it clear that we are preparing to entertain other reasonable approaches for Govan or the other yeards. We have not entered into an exclusive negotiation with Kvaerner.

Mr. Tam Dalyell (Linlithgow)

Given my constituency interest in firms at the North British Steel Foundry, have the Norwegians given any undertakings about whether they will place orders with industry located in the north of England or Scotland?

Mr. Clarke

So far as I am aware they have not, but the nearby foundries are best placed to provide the necessary equipment and steel to the Govan shipyard if it is to have a secure future under Kvaerner. I expect that the hon. Gentleman will raise that question with the company if the negotiations are successful. I suggest to Scottish Members that it is hopeless, when someone is contemplating investing in or securing jobs in Scotland, to confront them with a list of conditions before they have the honour of providing new jobs or keeping jobs in Scotland. We should be welcoming jobs and overseas interests, not behaving in such a manner as to turn them away.

Dr. John Reid (Motherwell, North)

I welcome anything that saves jobs but, speaking as one of those Scottish Members who occasionally find the profundity of the Chancellor's Anglican thoughts beyond my meagre intellectual grasp, perhaps I can ask him to answer one simple question. If, as the right hon. and learned Gentleman said, the company must move from Norway to Scotland because production costs in Norway are too expensive, why are we thinking of giving the yard away to it? Are production costs in Scotland far too cheap for our tastes?

Mr. Clarke

I think that the company stopped building ships in Norway about two years ago—[Interruption.]—because it was too expensive—another fundamental truth on which the Labour party would do well to reflect. Since then the company has been contemplating buying ships abroad and using its own technology under licence. It is now contemplating acquiring a yard so that it does not have to licence its technology and so that it can develop its technology at a particular base. It has decided to consider seriously the possibility of making Clydeside that base. As I have tried to assure hon. Members for quite long enough, that is good news for Clydeside and I trust that that will be appreciated when the negotiations come to the successful conclusion for which we are hoping.

Mr. Bob Cryer (Bradford, South)

The Minister keeps talking about good news in the same breath as restructuring. Is not the truth of that euphemism and this statement that restructuring means putting people on the dole? Why should Scottish shipyard workers, or any other shipyard workers, trust this Norwegian company when it has just sacked 700 of its workers? Does that not suggest that the future, beneath all the Minister's PR talk, is very bleak for all the shipyard workers who will be affected by this statement?

Mr. Clarke

Scottish shipyard workers know only too well that they have a job building ships only when there is an order for ships and when someone who has placed an order is prepared to pay for it and guarantee a continuing future for the yard. There is no way in which I could guarantee continuing employment at Govan, within a nationalised British shipbuilding industry, beyond the two Chinese ferries. That is the very serious possibility that we shall face if these negotiations fall through.