HC Deb 07 December 1988 vol 143 cc315-30 3.30 pm
The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Tony Newton)

With permission, Mr. Speaker, I wish to make a further statement about British Shipbuilders.

In my previous statement on 14 November, I was able to report good progress towards a successful sale of most of the remaining elements of British Shipbuilders, following that of Govan earlier in the year. That progress has continued. Agreement is now close for the sale of Clark Kincaid in Greenock and of the Appledore yard in north Devon, and negotiations for the sale of the Ferguson yard at Port Glasgow are under way.

I can additionally report today that I have accepted British Shipbuilders' advice that the preferred bidder for Marine Design Consultants should be the team led by the managing director. Subject to securing further new orders, its bid envisages work being continued in both its Sunderland and Dundee offices. I have asked British Shipbuilders to press ahead with detailed negotiations.

As I said on 14 November, the yards and other facilities that I have mentioned account for five of the six owned by BS, and nearly two thirds of those employed by them, when the process of seeking private sector purchasers was started by my predecessor last April.

The remaining undertaking is, of course, North East Shipbuilders Ltd. at Sunderland.

On 14 November I told the House that, although none of the original bids for NESL had proved acceptable, BS had received three new expressions of interest. To allow time for those to be explored, I was therefore giving until the end of November to establish whether proposals could be developed that gave a firm basis for negotiation. That would entail a clear statement of the work envisaged for the yards, evidence of the technical and financial capacity of the bidder, and the prospect of arrangements likely to be compatible with the European Community sixth directive concerning state support for shipbuilding.

In the event, two of those who had expressed interest prior to 14 November did not submit proposals. The third did so, and two other new proposals also came forward. All three have been carefully considered by British Shipbuilders and its independent financial advisers, against the criteria that I set out.

As a result of that examination, British Shipbuilders' clear advice to me is that none of these proposals could form the basis of a viable future for merchant shipbuilding in the Sunderland yards. None provides evidence of sufficient financial resources, given the major uncertainties of the shipbuilding market. None gives evidence of sufficient work for the future.

Mr. Bob Clay (Sunderland, North)


Mr. Newton

All would entail levels of subsidy which, in one case in particular, could have faced difficulties under the sixth directive.

Mr. Clay

This is an utter disgrace.

Mr. Newton

Reluctantly, and with great regret, I therefore—[Interruption.]

Mr. Speaker


Mr. Bob Cryer (Bradford, South)

The right hon. Gentleman is sacking people. How can we remain silent?

Mr. Speaker


Mr. Newton

Reluctantly, and with great regret, I therefore have to tell the House that I see no further realistic prospect of maintaining NESL in its present form, and its shipbuilding yards will therefore progressively close as the current work load runs out. [Interruption.]

There remain possibilities, which I have asked—[Interruption.]

Mr. Speaker

Order. Those hon. Gentlemen who have points to make may make them from a standing position when they are called.

Mr. Newton

There remain possibilities, which I have asked BS to make every effort to explore, of selling Sunderland Forge Services, which currently employs nearly 400 people, and interest has also been expressed in one of the yards for purposes other than shipbuilding. Both my predecessors and I have made it clear that, should it not prove possible for shipbuilding to continue on Wearside, we would bring forward a range of measures to assist those affected and to promote alternative employment in the town.

There will be three main elements. First, we propose a new enterprise zone for Sunderland. [Interruption.]

Mr. Speaker

Order. Let us have the details.

Mr. Newton

As with existing zones, this would mean relief from rates for 10 years for all new developments, a simplified planning regime to help speed up such developments, and 100 per cent. capital allowances on new industrial and commercial development. My right hon. Friend the Secretary of State for the Environment is urgently undertaking the necessary consultations with the European Commission and will give details as soon as possible.

Secondly, I have asked English Estates to start work immediately towards the early provision of over £7 million of advance factory space, over and above its existing commitments in the north-east. This will provide around 220,000 sq ft of high quality factory space for new or expanding businesses.

Thirdly, some £10 million will be made available over the next three years for a programme of measures to encourage new enterprise and employment opportunities in Sunderland. About half will be used to give financial support to new or expanding businesses. The other half will be used to assist the present employees of NESL to develop new skills and find new jobs. My right hon. Friend the Secretary of State for Employment will provide services on the shipyard site to advise the work force on opportunities for jobs and training, including help for those who wish to apply for immediate retraining.

Taken together, the measures that I have announced have a total cost of some £45 million. They will significantly reinforce what is already being done to promote economic development in the area through the enterprise initiative, regional assistance, and the work of the Tyne and Wear urban development corporation, which will itself be announcing a number of new projects shortly as a result of the additional funding of £11 million announced on 25 November. I hope that they will also further support and encourage the private sector initiatives that are under way or being considered.

The House will share my regret that, despite every effort, it has not proved possible to find a way forward for NESL. But it must now be right to concentrate on securing a new industrial future for the town, and I believe that we shall have the support of the House in what I have announced to that end.

Mr. John Garrett (Norwich, South)

The Minister may talk about the failure of bids for NESL, but the fact is that he has just announced a devastating closure. Is the Minister aware that, for no reason other than dogma, he has just announced the destruction of the Sunderland economy and the death of British merchant shipbuilding? What does he think of his Government's Christmas present for families in Sunderland?

Does the Minister accept that this announcement is humiliating evidence of his failure to reverse the policies of his boss? Does he understand that this act of industrial vandalism not only brings to an end 600 years of shipbuilding on the Wear but destroys an essential British industry with a major contribution to make to our industrial and trading future?

Why has privatisation been given priority over the urgent practical need to secure vital orders? Why have months been wasted in finding private owners when all efforts should have been concentrated on obtaining the orders that would have safeguarded the yard's future? Why is the Government's obsession with the dogma of private ownership so much more important than the thousands of jobs on Wearside and the survival of a great British industry?

Why has the Minister ignored the incontrovertible evidence of an upturn in world shipping demand? Why has he chosen this moment to deliver the fatal blow, just when orders are becoming available and this modern and efficient yard is well placed to take advantage of the upturn?

Does the right hon. Gentleman agree—he did not mention this—that a Cuban order worth at least £110 million is available now and that it would secure the future of the yard? Does he further agree that Britain has already sacrificed more shipbuilding capacity than any other EEC country? Does he agree also that this will mean a total loss of about 5,000 jobs in an area of 20 per cent. unemployment and the loss of skills and experience that are essential to the Sunderland community and the nation?

As for the proposed grants, why is the right hon. Gentleman making unemployment worse before doing something about it? Does this event not add to the record of DTI incompetence? Is it not yet another example of a privatisation bungle, along with that of Girobank and the National Engineering Laboratory? Will he even now think again, swallow his prejudices—or rather, those of his master in another place—and concentrate on providing a future for Wearside and British merchant shipbuilding?

Will the Chancellor also reflect on the contrast between the Prime Minister's warm concern for the threatened workers at the Gdansk shipyard and the callous treatment of Sunderland—or does that explain his prevarication? Will he tell the noble Lord from us that this closure is a wilful act of destruction?

Mr. Newton

Far from dogmatically pursuing a particular policy, we have sought to overcome the problems left behind by a period in which British Shipbuilders, as a nationalised concern, has cost the taxpayer almost £2 billion, including losses of about £650 million, of which at least £100 million was lost by NESL in the past three years merely by fulfilling contracts to build ships.

Against that background, it was clear to my predecessor and to me that a solid future for the yards depended on finding new owners who could run them in a viable way. We are on the verge of succeeding in doing that, as I said in my statement, for five out of the six undertakings owned by British Shipbuilders at the outset of the process, covering about two thirds of the work force.

It is a great and genuine regret to me that we have not managed to find a comparable solution for NESL, and it would be manifestly unfair to the people of Sunderland to pretend that proposals that are manifestly not viable, are viable. I am not prepared to bank on hopes of an upturn in world shipbuilding, which are constantly being revised downwards and which have been further revised downwards in the past few months by the Association of West European Shipbuilders, which suggests that any real upturn will come at best in the latter half of the 1990s, not in the first half as it predicted before.

No one can dispute the fact that if £l2 billion had been spent in the past 10 years on providing alternative employment rather than on propping up this industry to make losses we should now be in a better position. I have decided that the right thing to do is to end the uncertainty with the statement I have made this afternoon, and to get on with the job of building a new future for Sunderland.

Mr. Michael Grylls (Surrey, North-West)

Does my right hon. Friend accept that his statement detailing the successful privatisation of five of the six remaining yards will bring comfort to those five yards, which will have a more secure future in the private sector? Obviously, for NESL this is a sad day, but will my right hon. Friend remind the company that Corby also had a sad day when the steelworks closed? Today, it is a thriving town with many different firms, large and small. British Steel Corporation (Industry) Ltd. the subsidiary of the then state-owned British Steel, made great efforts to bring new firms to Corby. What was done in Corby can be done in Sunderland, and I am sure that it can be with the help of the measures that my right hon. Friend has announced.

Mr. Newton

My hon. Friend speaks about what has happened in Corby. Consett is another example of a place where comparable proposals have been brought forward to seek to create secure employment for the future. They have met with immense success in recent years and I am determined that we shall have a similar success in Sunderland.

Mr. Chris Mullin (Sunderland, South)

Sunderland has been murdered today, in the same way as Jarrow was murdered by a predecessor Government in 1934. Before today's announcement, male unemployment in Sunderland was running at over 20 per cent. There are whole streets where almost no one is working and generations of children are growing up who may never work. This closure was not inevitable. Orders could have been obtained—the Cuban order, for example—but no serious effort was made to obtain them. Will the Minister tell the House why the yard could not be permitted to remain under the existing ownership and management, and why a serious attempt could not be made to obtain the work that we know is available? What will happen to the assets? This is one of the most modern shipyards in Europe. Will its assets be looted, or mothballed against the day when, perhaps, it is possible to revive shipbuilding on the Wear?

Mr. Newton

As I said in my statement, apart from the possibility, which will be pursued vigorously, of selling Sunderland Forge Services, which accounts for about 15 per cent. of the work force at Sunderland, interest has been expressed in at least one of the yards for purposes other than shipbuilding. That, too, will be explored. When those possibilities have been explored, we shall have to consider the future of the yard if it does not prove possible to find such an alternative use.

We were not prepared to do what the hon. Gentleman suggests in the second part of his question. That was because, against the background that I have described of record and persistent heavy losses on almost all shipbuilding contracts made by the yard over many years, we did not think it sensible to continue to proceed with the present structure and management.

May I also say to the hon. Gentleman, without, I hope, too much aggression, that he is doing no service to the people whom he seeks to represent by using the kind of language that he used at the outset of his question. It is no more true that my statement has, to use his words, "murdered Sunderland" than it would be true to say that the arrival of Nissan in Sunderland suddenly overcame all problems. However, it is clear from the arrival of Nissan and other firms that the prospects in the north-east are good. It is worth noting that Nissan alone expects to create 1,900 new jobs in Sunderland in the next few years.

Mr. Neville Trotter (Tynemouth)

Does my right hon. Friend agree that the people who have murdered shipyards in Europe are the Koreans? They set the world prices for ships and are under-cutting the European yards by 40 per cent. While it is of little comfort to Sunderland, the same thing has happened, and is happening, all over western Europe. It is a matter of deep regret that the sincere and lengthy attempt by my right hon. Friend to save this yard and provide it with a viable future has not been successful. May I ask him for an assurance that there will be speedy action to provide alternative employment in other industries and that further funds will be made available if the initial allocation is insufficient?

Mr. Newton

I assure my hon. Friend that we shall take speedy action and keep the measures that we are taking under constant review to ensure that they are achieving the results that we want. I am grateful to my hon. Friend for what he said about what I have sought to do in the past two or three months, albeit, as things have turned out, I was unsuccessful.

I acknowledge what my hon. Friend said about Korean industry. The arrangements for subsidising European shipbuilding, which have been agreed in the Community, are in part directed at that problem. The difficulty with NESL and, more widely, with British Shipbuilders is that, even with subsidies extending up to 28 per cent. of the cost of a ship, they have still made losses over and above that permitted level of subsidy.

Mr. Clay

Is the Minister aware that four years ago, at a previous time of difficulty, one of his predecessors told shop stewards from NESL and myself that it was not his fault, but the Government's? Sadly, today's announcement is a tragedy as well as a farce. The Minister knows that the Cubans are anxious to place an order with Sunderland yards for 10 mixed-cargo ships and 10,000 containers. They are offering the yard a five-year co-operation deal to plan other work with it. How can the Minister say that no work is immediately available? The truth is that the privatisation on which the Government insisted has turned out to be a shambles.

Does the Minister recognise that it would be logical to allow the yard to take the available order, thereby securing jobs, not murdering them, tearing the heart out of the town and wrecking and frustrating any possible future for British merchant shipbuilding? He has destroyed the work of the past 600 years and any possible future for Sunderland. Shipbrokers and builders know that there will be an upturn in the market. Will he stop the murder of the yard, which is on the point of benefiting from that upturn, and prevent the murder of the town?

Mr. Newton

As to one or two of the hon. Gentleman's latter points, I cannot add to what I said earlier, except that I am told that the Japanese share our view about the diminution in the immediate prospects for an upturn in shipbuilding—a view that I reported as being held by the Association of West European Shipbuilders, which confirmed my doubts.

I hope that the hon. Gentleman will allow me to say that I have the greatest repect for the efforts that he has made in recent weeks to bring forward a package that would enable us to secure a future for the yard, which we both wanted. It is as much a matter of sadness to me as it is to him that I have not felt able to judge that the proposals that the consortium with which he was associated put forward constituted a viable basis for the future of the yards.

Part of that judgment—apart from doubts about its financial strength, based on advice that I received—rested on two facts about the Cuban order. First, there could be no certainty that the order could be secured in the face of international competition. Secondly, such indications as we had about the price that the Cubans would be likely to want to pay for those ships left it doubtful, to put it mildly, that anyone could build the ships without incurring losses. That is not a sensible basis on which to proceed.

Miss Emma Nicholson (Torridge and Devon, West)

I thank my right hon. Friend for the successful conclusion of the Appledore sale. I know that that must be small comfort to Opposition Members, but to my constituents it means much. I join my right hon. Friend in what I know to be sincere sadness and regret at the failure to sell NESL. Anyone who knows and loves the north-east must regret it deeply, and anyone who knows or has worked with my right hon. Friend must know that his regret is genuine and sincere.

Does my right hon. Friend agree that it is wrong to narrow the working futures of our young men and women to declining, huge industries that are rapidly becoming more difficult to continue? We need, most honestly, to offer proper training, proper new work and fresh working horizons, or those young men and women will not only not thank the Government, but will most sincerely not thank Her Majesty's Opposition.

Mr. Newton

I am grateful to my hon. Friend for her remarks. I share her pleasure at the prospect of a successful sale of the Appledore yard. I agree that we would be doing no service to anyone by pretending that something provides a future for employment when, in our judgment, it does not.

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

Speaking as a former shipwright and, more important, as a Member who represents what was once a famous shipbuilding constituency, may I say how deeply sorry I am for the people of Sunderland. Will not the effects of this closure be felt far beyond that town's confines, as much of the equipment and materials used in the construction of a new ship are produced far away from the shipbuilding community?

To be parochial for a moment, will the Minister give the House an assurance that the Government will continue to support British Shipbuilders' bid for a ferry for Mauritius, irrespective of the negotiations on the takeover of Ferguson in Port Glasgow? Many people will regard the Minister's words vis-a-vis an enterprise zone with deep suspicion, given what has happened to my community following the closure of Scott Lithgow and the sleekit words offered in so-called condolence by his predecessor.

Mr. Newton

On the last point, I cannot add to the emphasis that I have given. The number of extensions of the period for the bids to be considered, and so on, shows clearly how concerned I was to explore every realistic possibility of selling those yards successfully.

On the hon. Gentleman's more specific points, the position with Ferguson is that the bid is not dependent on our obtaining the Mauritius ferry order, but, as I made clear to the Mauritius Government when I was in Mauritius six or eight weeks ago, we would very much like to secure the contract for that ferry. Again, as with the Cubans, there is no doubt that there is intense international competition for that order, as with any other shipbuilding order, and I can make no promises that it will be secured.

Mr. Neil Hamilton (Tatton)

Does my right hon. Friend accept that the Opposition do no service to the people of Wearside by trying to keep a hopelessly unviable enterprise going, any more than the right hon. Member for Chesterfield (Mr. Benn) did the workers of the Meriden motorcycle co-operative a service in trying to keep it going in the 1970s? The only result was that jobs were not secured and many workers lost a lot of money. Is it not far better to concentrate on getting jobs in the industries of the future than to be wedded to those of the past?

Mr. Newton

Over quite a period in Britain, the attempt to prop up industries that were unable to sell their products at a price which other people were prepared to pay and which guaranteed a profit has proved counter-productive to the interests of employment of many of our people. I accept that it is right now to concentrate on building secure jobs for the future, and that is what we are concentrating on.

Mr. John McAllion (Dundee, East)

The Minister said that the preferred bid for Marine Design Consultants was to that by Sunderland-based management-led buy-out. The right hon. Gentleman and I know that that will eventually lead to closure of the Dundee operation. The right hon. Gentleman knows also that a buy-out plan from the Dundee workers was recently modified following discussions with British Shipbuilders and a proposal by British Shipbuilders to the workers in Dundee. That plan has been submitted to the Minister's Department. Why is he not backing it? Why is he refusing to back the workers in Dundee in trying to keep their jobs and future in the city? Is the right hon. Gentleman content to sell Dundee and Sunderland in the same afternoon?

Mr. Newton

I have agreed with the advice that I was offered by British Shipbuilders, following consultation with its advisers, Lazards, that what I have named as the preferred bidder for Marine Design Consultants offers the best prospect for the future of the operation as a whole. The alternatives appear to have been three interlinked bids, over one of which at least there was considerable doubt about finance. I accepted the advice which I was offered, which seems to make sense as the best way of securing a future for MDC.

Mr. Bowen Wells (Hertford and Stortford)

Although this was obviously a painful and difficult decision for my right hon. Friend to take, may I congratulate him on concentrating first on those in Sunderland, and their families, who will lose work? Will he either go himself or send one of his colleagues to Sunderland to explain to those people the future which he hopes will be bright and will provide employment and opportunity for them and their children?

Mr. Newton

I can assure my hon. Friend that, quite apart from the visit that I specifically paid to the yards early on in assuming these responsibilities, and the more recent visit only last month to the north-east, I intend to visit the area at an appropriate time when we have had the opportunity to do the further work that will be required on the details of the package that I have announced today.

I have no doubt that we had no real alternative to what I have announced today, but, equally, I have no doubt of our determination to carry through the task of ensuring a good industrial future for Sunderland.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Further to the question put by the hon. Member for Greenock and Port Glasgow (Dr. Godman), may I confirm to the Minister that Ross-shire is another example of an area where a massive closure has been followed by the creation of an enterprise zone? What proportion of the £45 million package that he has announced for Sunderland is represented by that enterprise zone? Is he aware that the lesson of other enterprise zones, certainly that at Invergordon, is that if too much time and money are devoted to set-up costs, inevitable damage is done to attracting new business? Is the right hon. Gentleman further aware that the economic experience of enterprise zones, particularly in the wake of a closure such as this, which tears the economic base out of a community, is that there is a much more substantial case for them when the local economy is flourishing than when it has suffered the hammer blow that the right hon. Gentleman has announced today?

Mr. Newton

The hon. Gentleman raises two points. First, that part of the £45 million to which I referred, which is represented by the estimated costs of the enterprise zone, is about £25 million spread over a number of years.

On his final point, he second-guessed what I was going to say in reply to him when I had heard only half of his question. Surely the point about the position in the north-east now—I believe this is incontrovertible and would be understood by anyone who has been there recently, as I have on a number of occasions—is that there is already a degree of economic expansion and a greater degree of confidence and optimism, on which the enterprise zone and the other measures that I have announced today will build.

Mr. Phillip Openheim (Amber Valley)

Although no one can have anything but the deepest sympathy for the people of Sunderland because of the situation that they face, have not a large number of jobs in the shipbuilding industry been lost over a number of years and under a series of different Governments? Is it not true that, even in Japan, shipyards are closing because of the situation in the industry? Is it not further true that it is not in the long-term interests, either of the local economy in Sunderland or of our economy nationally, to keep open unviable and unprofitable industries and to try to compete with producers in the far east, who have proved that they can do the job better than we can?

Mr. Newton

My hon. Friend makes an important point in saying that these problems are by no means confined to Britiain or, indeed, to Europe. Employment in shipbuilding in Japan has fallen by very nearly half in the past 10 years, and in the past four or five years it has fallen faster in a number of European countries than in this country.

Mr. Ted Leadbitter (Hartlepool)

The Minister will recognise that, after 41 years' public service in the northern region, I have some experience of what the closure of a shipbuilding yard does to a town: it literally murders it. Does he understand that, for the very first time in many years, I have come here with a real sense of anger at this calculated statement? It is convenient after the visit of the Prime Minister to Poland and Gdansk—we know the calculation.

Is the Minister aware that the £45 million package to which he referred would go a long way towards keeping the heart and soul of Sunderland alive, rather than using it to implement this deviating exercise that he has put before the House today? Does he understand that the cost of closure, or the loss of assets and the loss of labour, is sufficient for me to say to him now that if he had the will to keep this yard open he would have done it?

Mr. Newton

I have already said that far more than the £45 million to which I have referred today has been put into North East Shipbuilders, and that ten times that amount has been put into British Shipbuilders as a whole over the past 10 years without producing a situation in which ships could be profitably built and sold. Many people in the House will share my view that, with hindsight, it might have been better if some of that money had been applied to creating alternative employment much earlier.

Mr. John Marshall (Hendon, South)

How does the £2,000 million that has been poured into the bottomless pit of British Shipbuilders compare with the cost of attracting Nissan to Sunderland? Will my right hon. Friend confirm that Nissan will produce, both directly and indirectly, well over 10,000 jobs? Is it not more important to attract sunrise industries than to prop up industries on which the sun set many years ago? Will he also confirm that jobs are safeguarded, not by the Government, but by industry producing the right goods, at the right time, at the right price?

Mr. Newton

I generally agree with my hon. Friend's remarks and, as I have said on several occasions. we are determined that that is precisely what will happen in Sunderland. We shall build on the north-east's success in attracting major inward investment, not only from Nissan, to ensure that jobs in the north-east and in Sunderland in particular will last and produce the goods that people want to buy, at the price they want to pay, and thus give real employment in the long term to the people whom we want to help.

Mr. Roy Beggs (Antrim, East)

My sympathies go today to the work force and families in Sunderland. I must criticise the Government for the insensitive way in which they have made this announcement, two weeks before Christmas. It is absolutely ridiculous. The same thing happens time and again. The Government should set an example and give a little thought to people's feelings, especially at this time of year.

Has Sunderland been sacrificed to secure the already privatised yards? May I have an assurance that the reasons outlined for the closure of the Sunderland yard will not be parroted off within the next few days to justify the closure of Harland and Wolff in Belfast?

Mr. Newton

The hon. Gentleman will know that my right hon. Friend the Secretary of State for Northern Ireland is making every effort to secure a future for Harland and Wolff. I can certainly assure him that there is no question of the proposition that he put in his question being the case or of Sunderland somehow being sacrificed for the other privatised yards. The reason for my making the announcement today, rather than at an earlier date, as some had pressed upon me, is simply that we gave a considerable extension of time because of our determination to try every possibility.

Sir Giles Shaw (Pudsey)

Does my hon. Friend accept that, although I welcome the progress in the disposal of the other assets of British Shipbuilders, no one can possibly welcome the decision that he has announced in respect of NESL? I know some of the facts of the case, and I know that he has made prodigious efforts, including extending the period, not only for the offers and the statement, but to enable late-running offers to be considered, and has given every possible consideration to finding a favourable outcome.

Does my right hon. Friend accept that the consequences of the loss of NESL will be felt throughout the north-east and in Yorkshire, including Darlington and towns in the West Riding, many of which are suppliers, and that this will greatly concern many of us? Does he also accept the general feeling that, although the closure is a catastrophe, it is due to world forces very much beyond the control of the Government and has forced the Government to make a £45 million investment to diversify an economy in an area that sorely needs diversification to survive in the future?

Mr. Newton

I agree with my hon. Friend's concluding remaks and I am grateful to him for what he said at the outset of his question. The point that he made in the middle of his question echoed the remarks of an Opposition Member in an earlier question. I hope that Opposition Members and my hon. Friends will not exaggerate the effects of what I have had to announce today on other firms throughout the country. The work that is now going on at NESL will be sufficient in a few weeks to employ only about 100 to 150 people. It follows from that that many of the effects on other suppliers throughout the country will have been felt already.

Ms. Joyce Quin (Gateshead, East)

Is the Minister aware that only this morning it was confirmed to me by the responsible official in the European Commission that the Government never reached the stage of making a final and formal presentation in support of any of the bids to keep the yards open, or in support of any rescue plan for them? Given that fact, is it not the case that the Government have failed to explore every avenue to keep the yards open, and have failed signally in the EEC to stand up for British merchant shipbuilding?

Mr. Newton

No, it is not. It would be necessary to obtain the agreement of the European Commission, under the sixth directive, to any proposal, but the first essential is to have a proposal to put to it that we believe provides a viable future for the yards. We have no such proposal, and that is what I have had to tell the House today.

Mr. Barry Field (Isle of Wight)

It is not true that Conservative Members do not understand the import of my right hon. Friend's statement. When Samuel White yard shut in Cowes, 5,000 jobs went down the road. We on the Government Benches understand these matters. I understand that yesterday, despite the high level of unemployment in my constituency, at least one of the yards within it was endeavouring to recruit shipbuilding skills in the north-east. Will my right hon. Friend liaise with the Department of Employment to set up a temporary special unit to identify the shipbuilding shortage skills in yards with heavy order books and put them in touch with the men in Sunderland?

Mr. Newton

As part of the arrangements that I announced in my statement, we shall explore any means of finding alternative employment, whether in shipbuilding or in any other industries, for those who, unhappily, will become redundant at Sunderland.

Mr. Frank Doran (Aberdeen, South)

It will be small comfort for workers and others in Sunderland, who will be devastated by today's news, but I am pleased to say that Hall Russell of Aberdeen received a lifeline today in the form of a short-term agreement between the yard's receiver and the Overseas Development Administration. I say to the Minister and to Conservative Members such as the hon. Member for Torridge and Devon, West (Miss Nicholson), who welcome the prospect of privatisation of the yards in their constituencies, that the history of the Hall Russell yard since privatisation has been one of lurching from crisis to crisis.

The yard has a history that goes back 125 years, the last 20 of which showed substantial profitability. It is believed in Aberdeen that the Government wish to wash their hands of shipbuilding. Will the Minister tell us which of our indigenous industries are safe and will obtain Government support? It is difficult to believe that any industry will receive support from the so-called Department of enterprise.

Mr. Newton

I note the hon. Gentleman's remarks about the latest news at Hall Russell. I share his pleasure at what he has reported. The rest of his remarks bore little relation to reality. The Government have made huge subsidies available to the shipbuilding industry and have maintained the position in which help is available under the intervention fund within the terms currently agreed. There is no suggestion that that help should be withdrawn. We want to see industries and firms, whether old or new, that can provide secure employment. That is what my statement is directed towards.

Mr. James Cran (Beverley)

Does my right hon. Friend agree that his decision and the results of it will be ameliorated by the package of measures which he has announced, on which I congratulate him, and by the existence of the Northern Development Company, which is the job-attracting agency for the north of England? If Opposition Members examine the facts, they will find that the company is funded to greater extent than most of the other job-attracting agencies in the other regions of the United Kingdom. They will find also that it has been immensely successful in attracting jobs to the north of England. I want to hear my right hon. Friend say that its work will continue after the closure.

Mr. Newton

Yes. I met representatives of the Northern Development Company when I was in Newcastle last week. I discussed some of these matters with them and assured them that the Government would continue to be as helpful as they could be in respect of their activities. From what they said, I doubt whether they will share the overstated pessimism that has been expressed in some questions today. They know how much success has been achieved in attracting new jobs to the north-east in recent years and months. With their efforts, and those of others to which I have referred, I believe that there is no reason, in the longer run, for the pessimism that some Opposition Members have expressed.

Mr. Frank Cook (Stockton, North)

I should be able to accept the Minister's protestations of concern and anxiety if I could see more than one of the eight Tory Members who represent north-east constituencies in their places ready to question him on his statement. I know what happens to a community when a shipyard closes. I was living in Hartlepool—it is my home town—when the Sir William Gray yard closed. The effect of that closure was drastic, but the platers, welders, burners, boilersmiths, shipwrights, electricians and fitters were able to go to the Tees. They went to Furness and Smith's dock. Since then, Furness has closed. We are awash with shipyard trades in that area. Following that, Smith's dock closed. Those closures were followed by others. Where will all the trades go? It is no good the hon. Member for Isle of Wight (Mr. Field) telling us that someone from the Isle of Wight is trying to recruit among the trades that are represented at Sunderland. Where will the 2,000 men go? It is no good giving us promises. Give us reality.

Mr. Newton

I hope that the hon. Gentleman will refer back to what I said in my statement about the efforts that will be made to seek alternative employment where that is available and, perhaps more to the point, to offer retraining and training to assist those with particular skills to acquire new skills if their existing skills are not wanted in the future. We are aware of their considerable abilities. No one would pretend—I would not pretend to the hon. Gentleman—that the closure of the yards presents other than a significant problem. That is not to say, as he rather implied in his question, that pretending that the problem is not there is an answer in the longer run for the men who are involved. As I have said, our aim is to provide them with good and secure employment for the future.

Mr. Kenneth Hind (Lancashire, West)

Does my right hon. Friend agree that this is clearly a sad day? Will he accept that many of his hon. Friends believe that no one could have tried as hard as he has to restore the yard? My right hon. Friend will no doubt agree that Conservative Members such as myself have faced similar problems to those that are now being experienced by Sunderland Members. Under the Labour Government, Dunlop, Thorn EMI and Courtauld closed in Skelmersdale, with the loss of over 7,000 jobs. We have now recovered, and as a consequence of guidelines similar to those that he is offering Sunderland, there is not an empty factory in Skelmersdale. The town is booming.

Mr. Newton

Yes. It has been an inescapable fact for many Members on both sides of the House that the decline of some older industries has presented comparable problems in many other parts of the country. The experience of many places, some of which have been mentioned this afternoon, is that of the creation of new jobs and an entirely different feeling after a relatively short time from what was understandably felt at the time when the change occurred.

Mr. Jim Cousins (Newcastle upon Tyne, Central)

Will the Minister accept that what will cause continuing controversy after his statement is the fact that alternative bids which people, industry, capital and labour in the north worked hard to put together were available? It is simply not true for the Minister to say that there were no alternatives. The north has produced alternative bids for running these yards. It is the Minister's judgment of those bids that has caused the closure. Will he tell us whether the interest rate rises caused by the Chancellor of the Exchequer over the past six months have proved to be a fatal extra element in the evaluation of those bids? Will he also tell us whether the public expenditure costs of those bids were greater, or smaller, than the £45 million of public expenditure for enterprise zones and the other proposals that he has announced this afternoon?

Mr. Newton

The question whether the cost of any particular proposition is greater or smaller than £45 million does not arise in circumstances in which we did not judge that any of the bids would provide a viable future for the yards.

I have no reason to suppose that the factors that the hon. Gentleman mentioned were a significant factor in what has happened—and it is not merely a question of my judgment. I considered the advice that was given by British Shipbuilders, on the basis of independent financial advice that it had received, and it seemed clear that the proposals that had been put forward were not sufficiently strong financially to provide a secure future for NESL. There was even some doubt about where the money that was to be paid for the yards was to be found.

Mr. Peter Thurnham (Bolton, North-East)

There is a long tradition of shipbuilding on the Wear. Will my right hon. Friend confirm that, if there is any prospect of its profitable continuation, there is nothing to stop a new enterprise being formed to bid for the £48 million of maintenance which he has just announced? Should the people of the north-east not take heart from the outstanding achievements of British Steel in Cleveland, which was the winner yesterday of the Institution of Mechanical Engineers Willis Faber prize for manufacturing efficiency?

Mr. Newton

In general, the turnaround in many of the areas that have been affected in previous years by substantial steel closures is certainly an encouragement to those who, understandably, will feel depressed by today's announcement.

Mr. Bill Michie (Sheffield, Heeley)

May I first express my sympathy to the workers in Sunderland? I say that because I spent my working life in Sheffield in steel and engineering and saw the trauma and misery created by the demise of the steel industry there. I listened to the Minister this afternoon saying that other enterprises will come forward, other investments will take place and people will be retrained. We had skills in Sheffield and Sunderland. We shall finish up with opportunities to man turnstiles at football stadiums and to sell ice cream in the summer. The young, who should have had skilled jobs, will operate in Macdonald's, selling hamburgers. How can the Government justify the youth training scheme on the grounds that there is a shortage of skills, when the skills are there now in Sunderland? The will is there and the power is there, but the problem is that the Government do not have the guts to fight international pressure.

Mr. Newton

I do not believe that the hon. Gentleman would have put his question in that way if he had recently been to the north-east, seen the new factories going up, spoken to the people who are undergoing training for the new jobs and talked to those in the Northern Development Company or the urban development corporations, or to those who are concerned with the Newcastle initiative. They can see the effects of their efforts on the ground.

Ms. Hilary Armstrong (Durham, North-West)

Many of us have personal knowledge of the skills, the development of those skills, the learning of those skills and the practice of those skills by many workers in the yards. The town of Consett is in my constituency, and it suffered a similarly devastating blow. The Minister knows that the jobs that have been created in Consett—welcome though they are—have not replaced or redeveloped a skill base, and have therefore not given the town and its surrounding area the confidence that there is skilled and productive work for the next generation. That is what the people of the north-east want and what the people of the north-east deserve. They have given their all to build this country. [Interruption.] The hon. Member for Stockton, South (Mr. Devlin) may not think that they have given their all, but I know that they have and that they have the work and the skills to be proud of. What will the Government do to ensure that we receive such development? Throwing money is not enough. Proper planning and development and Government orders to that region are needed.

Mr. Newton

The hon. Lady is obviously right to say that the mix of jobs that comes in the wake of changes of this kind, and the mix of skills that they require, will not be precisely the same as those of the jobs that they have replaced. That is an inescapable part of the process of change. I do not believe that the general point that she sought to make stands up against the background of experience of the north-east in attracting new industries, such as motor cars, electronics and many others. They may not be the old skills of shipbuilding, for example, but they are the skills and products that will be in demand in the future.

Mr. Elliot Morley (Glanford and Scunthorpe)

Whatever new industries may be attracted, the closure of the Sunderland yard strikes at the very bedrock of our manufacturing industry and the impact goes much further than Sunderland. Towns such as mine that have steel plate mills will be affected. Now that the steel industry has been privatised, the Government appear to have washed their hands of its future role but what surprises me is that the Government can write off billions of pounds in privatisation programmes—£5 billion for British Steel alone—yet cannot find the money to protect the jobs in the important industry of shipbuilding in Sunderland.

Mr. Newton

Perhaps it tells one something about some of the economic difficulties that this country experienced, especially during the 1970s, that the hon. Gentleman can describe as the bedrock of the economy, of this or any other area, an undertaking that has persistently lost money, to the extent of hundreds of millions of pounds overall, and £100 million at NESL alone, in a short time. That is no basis for employment in an area.

Mr. Roland Boyes (Houghton and Washington)

Will the Minister accept that his disgraceful statement today is a devastating blow to Sunderland? Conservative Members have demonstrated that the Government simply do not care. Several Conservative Members have made me angry by talking about it being a sad day for Sunderland. For between 2,000 and 5,000 workers, it may be a sad lifetime. Many of them will never work again.

The Minister said that a number of jobs would be created. I ask him to investigate that. Every pit in my constituency has been closed—two quite recently. How many jobs have been created in the Houghton end of my constituency by British Coal Enterprise Ltd. to absorb the jobs of people who have been made redundant and who are on the dole queue? Has the Minister any idea of the magnitude of youth unemployment in the borough of Sunderland? Month after month, 6,000 or more youngsters have no proper jobs and the three unemployment offices have had between 40 and 50 vacancies. What will happen to children in Sunderland? Where will they obtain jobs when another 2,000 jobs have been taken away?

I never expected to hear the Minister's statement today. I wrote him a letter about the matter recently. I pay tribute to my hon. Friends who have shipyards in their constituencies for their efforts in trying to retain them. They have swallowed a lot in accepting some form of privatisation, yet the Minister declares the death of the yards in Sunderland. That is unacceptable, and the Minister should be ashamed of himself.

Mr. Newton

The main thrust of the hon. Gentleman's question was about the prospect of future jobs. The best thing that I can do is to repeat that the Nissan investment alone has already created well over 1,000 jobs, with nearly 2,000 more expected during the next few years, which is roughly the number of people employed in NESL, excluding Sunderland Forge Services. I do not suggest that there is a neat equation for the people involved, but it is a good illustration of the scope for new jobs and it is only one example of the current growth in the north-east.