§ Mr. James Molyneaux (Lagan Valley)First, I note with appreciation the presence on the Treasury Bench of the Secretary of State for Northern Ireland and the Under-Secretary, the hon. Member for Gosport (Mr. Viggers), who has responsibilities for economic development. Their attendance shows that they realise that the future of the two major engineering industries are crucial to Northern Ireland in terms of jobs. They are important to the employees of the two undertakings and to those who are employed in factories in Great Britain. I trust that the presence of the Secretary of State and the Under-Secretary of State means that they are willing to listen, and having done so perhaps to grant a stay of execution.
It can be said that there is widespread recognition of the facts of life in this context by those who occupy the Opposition Front Bench, and by others elsewhere in the House. Up to that point in our consideration, there is common ground. Unfortunately, from then on there is divergence. Earlier today at Question Time, the Under-Secretary of State asserted that privatisation had been good for 17 major undertakings in Great Britain. It might have been an underestimate. My research suggests that about 28 undertakings have been privatised, but I shall not quarrel with the Minister about that.
I am sure that it will be accepted that the majority on the list could be classified as coming within what we might call the service sector. These undertakings have an advantage because they have, in effect, a captive market. Included in this category are Associated British Ports, the British Airports Authority, British Airways, British Gas and British Petroleum. These undertakings have a multitude of customers, but by the nature of their products Short Brothers and Harland and Wolff have lists of potential customers that reach single figures only.
Of the other privatised companies to which I have not referred, some may fail. If they do so, their skilled employees will be mopped up by other industries. Unfortunately, that could not and would not happen in Northern Ireland. If I might borrow a phrase from the Prime Minister, there is no alternative. That is why the Government must be ultra-careful in making their decisions.
Earlier today, my hon. Friend the Member for Antrim, East (Mr. Beggs), who is my party's spokesman on trade and industry, told the House that we in the Ulster Unionist 611 party have no particular hang-ups in the arguments over the merits of privatisation. We have always preferred to judge each case on its merits. Perhaps I have already implied that in service industries great benefits probably accrue from a reduction in bureaucracy. There is much to be said for making a service-type industry more responsive to its customers.
A geographically isolated shipyard and aircraft factory do not fall into that category. In Belfast, Harland and Wolff and Short Brothers plc provide the main industrial base. The stark fact is that there is no substitute or replacement to be found for either or both in Northern Ireland. It is fair to say that the Labour Government of the 1970s recognised that. For that reason they resisted all pressures to include Harland and Wolff in British Shipbuilders and Short Brothers in British Aerospace. The then Government's fear was that, when order books became slim, the two Belfast limbs would be the first to get the chop.
The memoirs of the right hon. Member for Morley and Leeds, South (Mr. Rees) recount the discussions on this issue. The right hon. Gentleman concluded that, if Shorts had then been included in British Aerospace, the Belfast works would probably have been closed years ago. The right hon. Gentleman's successor, who is now Lord Mason, took a similarly robust view of the shipyard and the aircraft factory. They were both ably and strongly supported by the right hon. Member for Salford, East (Mr. Orme), who had direct responsibilities and who withstood all the pressures throughout the controversy, many of which were coming from his right hon. and hon. Friends.
I do not suggest or imply that the present Secretary of State is any less robust than his predecessors. I hope that he will be equally realistic. Ten or 12 years later, who can say that the Ministers of the 1970s were mistaken? In the interval, we have seen free enterprise multinationals such as ICI, Courtaulds and British Enkalon amputate their Northern Ireland limbs when confronted with a shrinkage in world markets. In those years there was an ugly and sinister tendency on the part of national and multinational companies to close down their Ulster factory. They did so because it was in competition with other of their factories nearer to their central base and not because it was unprofitable. It would be less than truthful to suggest that such sharp practices have been snuffed out or discontinued. Like it or not, they will recur.
In the light of the bitter experience of the past 12 years, how could the Under-Secretary of State say:
there is no future for a company that is supported by Government. The future lies in the private sector, where there is enterprise and the opportunity of growth."—[Official Report,21 July 1988; Vol. 137, c. 1304.]If the Government's approach to Shorts is based on that philosophy, there can only be disaster ahead. If Shorts is to be expected to stand on its own feet, it is being singled out for the chop.At Question Time today, when my hon. Friend the Member for Belfast, North (Mr. Walker) asked whether it was not true that all other aircraft manufacturers in the world were dependent on Government subsidies in one form or another, the Minister—perhaps misunderstanding the question—was unable to give a very convincing answer. I have a clear duty to repeat my hon. Friend's question to the Secretary of State and his ministerial team: do they know of any major aeroplane maker anywhere in the world that is not propped up by the state in which it is 612 situated? Do they know, for that matter, of any aircraft that has made a profit for its makers? I make an earnest plea to the Secretary of State and his colleagues to rid themselves of the notion that Shorts alone in the world, unlike all its rivals, can stand up to state-subsidised competition elsewhere.
Common sense dictates that such an experiment will fail, simply because the whole judgment is flawed. I cannot believe that the present Secretary of State would knowingly put his hand to an instrument of economic destruction that will undoubtedly bring ruin and misery to an entire community.
§ Mr. John Hume (Foyle)The three industries under discussion—Shorts, Harland and Wolff and the Northern Ireland electricity service—have not endeared themselves to my constituents by their employment practices. But we are not interested in the doctrine of "an eye for an eye", because that leaves everyone blind. The skills and technology that those three industries represent are essential to the future of all the people of Northern Ireland, and I wish to support and protect the maintenance and development of that technology and those skills.
The Government have repeatedly sought to achieve agreement between the parties in Northern Ireland, and I support them in that endeavour: this is one issue on which we are entirely agreed. I therefore ask the Government to encourage such agreement by rewarding it.
§ Mr. James Kilfedder (North Down)I wish to suport what has already been said by the right hon. Member for Lagan Valley (Mr. Molyneaux), and to echo what has been said by the hon. Member for Londonderry——
§ The Secretary of State for Northern Ireland (Mr. Tom King)Not Strangford.
§ Mr. KilfedderYes, I recall that Mr. Speaker mistook the hon. Member for Foyle (Mr. Hume) for the right hon. Member for Strangford (Mr. Taylor) during Question Time.
I wish briefly to urge the Government to abandon their plan to privatise Shorts. This company has contributed enormously to technology in Northern Ireland, and if the plan goes ahead to sell it, in whole or in part, it will imperil the company's future. When the sale was announced last week, it was clear that if it went ahead the industrial vultures would descend on this company that has contributed so much, pick the bones bare and then depart. The Government say that they will protect the company because they will sell it if possible to a single buyer, but we have experience of such speculators in other parts of the United Kingdom. A buyer will come along, but he will sell what is not profitable and keep what is. I fear that, at the end of the day, despite the Government's grand words, the company and the work force will suffer.
Shorts employs 7,500 people. That is a colossal number of jobs, vital to Northern Ireland. To those jobs can be added the jobs of all those working in other companies directly linked to Shorts. There are also the jobs of people who work in shops that supply goods to the families of Shorts' workers, and there are the families themselves.
613 It was nauseating to hear the unctuous words of the Minister when he made the announcement, pretending that the firm and its large work force would benefit from privatisation. I cannot see how all that work force will be maintained by a speculator who will come along to make a quick profit. As a consequence, Northern Ireland will lose the high technology that Shorts generates. Its excellent design team will be at risk. The Ulster economy, as we all know—it has been repeated often enough in the Chamber —is fragile, and such a blow will have lasting unfortunate consequences for our part of the United Kingdom.
Those unfortunate consequences, however, will not be confined to Northern Ireland. Hon. Members from Great Britain should remember that Shorts provides benefits for this part of the United Kingdom as well. The reduction in the size of the company and its work force will affect engineering firms in England that are engaged on contract for Shorts.
It has been argued that privatisation has been a success in England. That may be so, and I would not argue otherwise, but there is no comparison between the economic position in Britain—certainly in the south-east of England, where all the wealth seems to accumulate— and that in Ulster. I am not a slave to ideology, and I have no political objection to privatisation. My argument is against the privatisation of Shorts at this time and in the foreseeable future, especially in view of the vile campaign of terror being waged by the IRA.
For 20 years the IRA has sought to destroy the Northern Ireland economy, just as it sought to destroy lives and to mutilate members of the population. It has undoubtedly frightened away many potential investors, and perhaps, I regret to say, some of those who formerly provided employment in the Province. In my constituency, a building contractor—part of a worldwide concern, with its headquarters in Great Britain—abandoned work on which it was engaged in Palace barracks, Holywood, as a result of IRA threats.
I fear that the Government's announcement will appear to be a capitulation to the IRA campaign. It certainly helps the propaganda campaign—I want to emphasise that— which has been skilfully and persistently waged by the IRA and its sympathisers, particularly in the United States, against Shorts and other companies in Northern Ireland. They would love to see Northern Ireland's economy undermined, because they would then be well on their way to the destruction of that part of the United Kingdom.
Bearing in mind the courage, fortitude and restraint of the hard-working and conscientious people of Northern Ireland, the Government should have told them that they will stand shoulder to shoulder with them; that, no matter what they say and do politically in the rest of the United Kingdom, they will make sure that they in no way endanger Northern Ireland's economy and put at risk everything that has been done to build up and maintain that fragile economy. Sadly, the Government prefer to force on the people of Northern Ireland, at a bad and dangerous time, their privatisation policy, which will unfortunately have bitter consequences.
The propaganda campaign waged by the IRA against Shorts has also been waged against the Belfast shipyard. I and my colleagues in the House have paid tribute to the work force. It is composed of hard-working and dedicated 614 people. It is my duty, and that of my colleagues, to fight for them, their jobs and the rights of their families. It is tragic that the Government also wish to privatise Harland and Wolff now.
I want to make a plea to the Government—although I am sad to say that it will probably be rejected out of hand by Ministers whose commitment is not to Northern Ireland jobs, as it should be. I plead with them to ensure that Shorts and Harland and Wolff, two great and major firms, remain within the public sector. I know that in making that plea I have the support of all people in Northern Ireland, regardless of religion and political beliefs.
The hon. Member for Foyle, referred to the work force in those two companies. I have already said that I and my colleagues are prepared to go to the United States with the hon. Gentleman and his colleagues to fight for jobs, not just for Shorts, and not just in Loyalist but in Nationalist areas. Our concern is to ensure that prosperity is restored to Northern Ireland and that the terrorists do not succeed in their vile and obscene campaign.
§ 8.3 pm
§ Mr. A. Cecil Walker (Belfast, North)There are times when the rights of the people must take precedence over all other considerations. The time has now arrived when the Government must take stock of their privatisation policy in Northern Ireland and examine the social consequences of such policies on the small regional economy of the Province.
It is highly irresponsible at this time for the Government to announce privatisation plans for Shorts and Harland and Wolff. Such announcements are perceived by the population as further evidence of the Government's intention to withdraw from Northern Ireland, which can do nothing for political and economic stability and will only fuel the fires of insurrection. In addition, such decisions would be disastrous from a social and humanitarian point of view.
It is a matter of record and public disquiet that such expansion as has occurred recently has been confined to the south-east of England. But, as every hon. Member knows, there has been little sign of any significant improvement elsewhere within the United Kingdom. The recent depressing trade figures point to the folly of following policies which favour one part of the kingdom at the expense of the others.
The Government cannot stand aloof and opt out of their responsibilities to Northern Ireland, which is considered to be one of the most deprived areas in the United Kingdom.
In taking my stand tonight specifically in defence of Shorts, I ask the Government to re-examine, logically and objectively, their decision to privatise that most dynamic company in the aircraft construction and allied industries.
Shorts contributed greatly to the defeat of Nazi Germany by its superhuman efforts in the production of battle line aircraft which were renowned throughout the world for their performance and reliability in destroying strategic targets in enemy territory.
The contribution of Shorts to the commercial side of the aviation industry is also exemplary, going as far back as 1909, when a Short biplane won the Daily Mail award for the first British aircraft to fly a circular mile. The big flying boats produced for Imperial Airways opened up the 615 air routes to Australia and the far east. Today we have the renowned Skyvan and the 360, which has been adopted by more than 30 carriers worldwide.
Selling that most valuable public asset will be seen as a betrayal of the skill and innovation of the aerospace and engineering industry in Northern Ireland. The effects on the engineering industry and the local economy will be catastrophic. It will also affect many parts of the United Kingdom where engineering companies engage in contract work for Shorts.
The Government say that they wish to privatise Shorts because of financial losses, but the level of loss is not as great as the Government are making out. Last year there was a loss of £47 million, but £25 million of that was simply the repayment of loans. Because of those debts the interest charges will inevitably increase each year, and that will be exacerbated by the higher interest rates charged by outside agencies compared with the cost of Government grants or low interest loans.
It must also be appreciated that substantial losses were in part due to underfunding and cuts in Ministry of Defence expenditure. I would respectfully point out to the Government that most aircraft manufacturers throughout the world are in receipt of visible or invisible Government subsidies. It is generally recognised that high technology products require high investment to make them profitable. That is borne out by the Dutch Government supporting Fokker and America supporting Boeing.
What is needed now is a commitment from the Government to Shorts, since there is no way in which investment from within or outside the Province could compensate for the large-scale reduction in employment that would occur if the company were privatised.
We particularly need a commitment to the aircraft manufacturing sector and support for the new FJX aircraft as a worthy replacement for the SD3. It is absolutely essential that that project is fully supported if Shorts is to continue as a design/engineering aircraft manufacturer, particularly as the company has the highest concentration of research and design skills in Northern Ireland and has trained the largest number of skilled apprentices.
Contract work has provided thousands of additional jobs in other parts of the United Kingdom and other unemployment blackspots in the Province. Privatisation would deal a blow to the equal opportunities programme which Shorts has embarked upon. Such a programme cannot be successful if jobs are at a premium under privatisation.
I contend that privatisation is totally unsuitable to a small, deprived economy such as that in Northern Ireland, which is already suffering from perhaps the worst unemployment in the United Kingdom. No amount of small, transnational operations on green field sites can replace Shorts at the heart of the engineering industry. The survival of Shorts is essential to the survival of the Northern Ireland economy. Without it, we shall become an industrial wasteland, and any small, modest recovery already achieved will be wiped out and reversed.
§ Mr. Harry Barnes (Derbyshire, North-East)The Government are convinced of the correctness of their policies and believe that they should press ahead with them despite our opposition, but they must accept that their 616 policies are divisive. They may think that in the end they will be able to overcome that, and people will see the good that they believe they are doing. But their policies are hated by working-class people in my constituency. Applying those policies to Northern Ireland, which has a divided society and sectarian battles and clashes, is an utter disgrace. The Government should respond to the market in which they seek to operate their policies. If there is a case for sticking with or returning to some past consensus or moving towards some improvement, that case is within Northern Ireland.
Different policies need to be directed to the Irish question than to England, Wales and Scotland. Although I oppose them in a more traditional battle, the only good that can result from the Government's policies of privatising electricity, Short Brothers and Harland and Wolff is that it will bind together some of the different factions in Northern Ireland. As I have said, they may be able to produce some unity among the different parties and individuals who represent constituencies in Northern Ireland, and the political parties not represented in the House. People are being directed to fighting class politics in which working-class interests are dominant.
I recall a delegation that came over from Strabane and included representatives of Sinn Fein, the SDLP, the Ulster Unionists, Independents and others. They were here because of the flood damage in Strabane and they wanted the Government to provide funds to deal with it. Problems of that nature overcome the sectarian divide because key economic and social questions have to be faced. I ask the Government to back off from the policies they are using and to do something about uniting Northern Ireland.
§ Mr. Jim Marshall (Leicester, South)I congratulate the right hon. Member for Lagan Valley (Mr. Molyneaux) on drawing first place in the ballot for debates on the Consolidated Fund. I am sure that we all agree that it is the best position in the list. I thank the Secretary of State for Northern Ireland for being present on the Government Front Bench to reply to this short debate. It shows that he considers of paramount importance the economy of Ireland and the possible privatisation of the three industries that have been discussed. If he is to solve his other problems in the Province, the economy and the growth in the economy in Northern Ireland must be tackled successfully.
It is significant that, despite the geographical differences between my hon. Friend the Member for Foyle (Mr. Hume) and the right hon. Member for Lagan Valley, they are at one on the need to maintain Shorts within the public sector and on the need to protect jobs. Perhaps that is the first sign of the agreement between party leaders that the Secretary of State has been trying to achieve during the past few years. Perhaps he should seize the first small fruit of consent and build upon it so that that agreement can be used to build agreement in other aspects of political and economic life in Northern Ireland.
The official Opposition, together with other Opposition parties, met representatives of the work force of Short Brothers who made absolutely clear their opposition to privatisation. They will fight the proposals to privatise the company and they feel that if the company is privatised, rather than providing the guarantees of job security, to which the Under-Secretary of State referred on previous 617 occasions, privatisation will be the thin end of the wedge and the Government will shed responsibility not only for the companies but for the economy of the Province, and closure and redundancy will inevitably result. They are strongly opposed to privatisation and certainly the Opposition have pledged their wholehearted support to them in their opposition to privatisation.
It would be churlish of me not to have due regard to the comparative improvement in the economy of Northern Ireland during the past 18 months or two years. As the Secretary of State and the Under-Secretary of State have told us on previous occasions, during 1987–88 unemployment fell, and it continues to fall. Congratulations are due to them for that. I also give due respect and credit to the enterprise schemes which are being operated in Northern Ireland and the encouragement which the Government continue to give to inward investment in the Province. We all agree that there is a desperate need not only to sustain existing jobs, but to attract new jobs into Northern Ireland. We welcome without hesitation those improvements.
As I have said on previous occasions, it is as well to remember that industrial productivity in Northern Ireland is still substantially below what it was in the early 1980s. The number of people unemployed is substantially higher than it was in 1978. We should remember that the number of new jobs created last year fell far below the reduction in unemployment. Thus, the fall in unemployment was produced not by job creation but by the creation of new aid schemes, migration from the Province and the fall in the number of school leavers. As I have said, it must be borne in mind that industrial production is static and is still at or below the level it was in 1981.
Industrial production in Northern Ireland has remained static, whereas in the rest of the United Kingdom it has grown by 12 per cent. since 1981. It is as well to remember that manufacturing in Northern Ireland is dominated by two giants—Short Brothers and Harland and Wolff. Of 90,000 manufacturing jobs, 11,000 are directly associated with Short Brothers and Harland and Wolff and perhaps a third—30,000 manufacturing jobs —are directly or indirectly related to those two giants. If they were threatened with closure, that would have a dramatic effect on unemployment in the Province. If, by some disaster, they closed, 20,000 or 30,000 jobs in Northern Ireland could be lost. Furthermore, subcontracting jobs in Great Britain would be at risk.
We would all agree that Harland and Wolff has made great strides in improving efficiency and productivity over the past few years, and that it has been innovative in using the latest computer-designed techniques for designing ships. The company can now compete, expecially in the high technology sector of shipbuilding, with any other in the world. Management and workers have worked together in a way that can serve as an example to any other company in the United Kingdom. Together they have improved productivity and agreed on a common goal for the company—to ensure its survival and to make it as competitive as possible. As a consequence they have managed to reduce losses per man—unfortunately, they are not profits per man—to one third of the United Kingdom shipbuilding average, and losses per man at the 618 company are now comparable with those of any other shipbuilding yard in the world. These are great steps forward by Harland and Wolff.
A few months ago there was a great sense of anticipation that the company, having made sacrifices and lost jobs in recent years, would achieve continuity into the early 1990s with the advent of Ravi Tikkoo. It was anticipated that the yard could be kept going and that jobs in it could be held at around 3,000. We all thought that if Mr. Tikkoo's concept of the Ultimate Dream was viable and the vessel could be built at Harland and Wolff, it should be.
Some questions must be answered. First, can Harland and Wolff build the ship? The company says that it can. Secondly, can there be an agreement on its price? Again, it appears that Harland and Wolff and Mr. Tikkoo can agree on that. So those two questions have been answered by the company, but the next two must be answered by the Government—we desperately want these answers. Can Mr. Tikkoo's company be assured that normal export credit guarantees will be available in this case? We need a yes or no answer to that, not prevarication. Next, if a contract were signed, would it receive support under the sixth directive of the EEC? Again, that needs answering with a yes or no, not with prevarication.
Instead of providing direct answers, the Government have tried to concentrate on the ownership of the yard. We now face the charade of the potential customer, Ravi Tikkoo, turning into a potential buyer, purely because the Government see this as an opportunity of ridding themselves of a loss-making shipyard. The Government should stop playing this game and answer the two questions I have asked.
I have other questions for the Secretary of State about the Ultimate Dream order. Why are discussions about the Ultimate Dream order and about the sale of the yard now so inextricably linked? What is the current state of those discussions? When will the Government come clean about them, and about their results?
Short Brothers has been the main topic of this debate. As we all know, a "For Sale" notice has just been slapped on it, which is not too surprising in the light of the Government's privatisation proposals for the rest of the United Kingdom, or of the track record of the new chairman of Short Brothers, Mr. Rodney Lund. He has the unique distinction in the aerospace industry of knowing nothing about it. That seems unfair to Short Brothers, as most aerospace companies throughout the world like to have people in charge, and in charge of their negotiations, who have vision and who know something about the industry over which they exercise control.
Short Brothers, which is in the forefront of the aerospace industry, now has a chairman who knows little about it. What he does have is a track record of privatisation. We are driven inescapably to the conclusion that he has been appointed for his skills in that direction and for his familiarity with the City. Privatisation and the possible break-up of the yard seems to have been in the forefront of the minds of the people who appointed this gentleman to his present position——
§ Mr. Kevin McNamara (Kingston upon Hull, North); Yard? We are talking about Short Brothers now.
§ Mr. MarshallI apologise if I gave the impression that I was referring to Harland and Wolff. The chairman and 619 managing director of Harland and Wolff have our confidence. I wish we could say the same of the higher management of Short Brothers.
We have noted the Minister's repeated assertion that, if the company is privatised, the Government want it to remain as a whole. In our view, which is shared by the shop stewards, that position is untenable. If the company is privatised as a whole, we are convinced that the buyer will be interested in only one part of it—the missiles section. The future of the other two sections—aircraft and aero-structures—would be insecure. If the company is sold, we should like a guarantee that the buyer will keep it as a whole and that jobs will be guaranteed for perhaps five or six years.
Ministers appear to have misunderstood what Harland and Wolff and Shorts symbolise to the people of Northern Ireland. They are regarded as symbols of the Government's continued commitment to the economy of the north of Ireland. Rightly or wrongly, the recently announced decisions to privatise the companies are regarded by a substantial number of people as the Government's intention to withdraw, perhaps not fully, from the economy of Northern Ireland and as a shot across the bows to show that the level of support given in the past cannot continue indefinitely.
The debate gives the Secretary of State an opportunity to nail those allegations as lies and to say that the Government will continue to support the economy of Northern Ireland and Harland and Wolff and Shorts. The best way of showing that determination and giving those guarantees is to do away with the nonsense of privatisation, accept that Harland and Wolff and Shorts should remain in the public sector and offer continued hope of prosperity to Belfast and Northern Ireland as a whole.
§ The Secretary of State for Northem Ireland (Mr. Tom King)The subject for the debate chosen by the right hon. Member for Lagan Valley (Mr. Molyneaux) is the economy of Northern Ireland, with particular reference to the future of Short Brothers and Harland and Wolff. The House will therefore understand if I begin by discussing the economy of Northern Ireland.
I have two rather contrary messages to deliver. First, I enormously welcome the debate. Thank goodness hon. Members representing Northern Ireland have expressed interest in economic issues. I congratulate the right hon. Member for Lagan Valley—there is no point in being churlish because it would be rather like a vicar berating the congregation for being too small—on his initiative in launching the debate.
I appreciate very much the comments by the hon. Member for Leicester, South (Mr. Marshall) and others. They correctly identified my presence as being not only symbolic but a sign of the close personal interest that I have taken—as has my hon. Friend the Under-Secretary of State, the hon. Member for Gosport (Mr. Viggers)—in the economy of the Province. We were delighted to be joined by other hon. Members, who showed their interest in the subject.
Secondly, having made those tolerably friendly remarks, I have found this the most appallingly depressing debate. I do not think that I have ever listened to so many speeches with which I profoundly disagreed. In certain 620 respects I resented them, and in others they were an insult to the skills, ability and industry of the people of Northern Ireland, who have shown their abilities to triumph over all the problems of the Province. They have not come pleading with begging bowls, saying, "We have not a hope of competing in world markets unless we receive special assistance and twice as much subsidy as anyone else."
Anyone who pays a visit to Northern Ireland will see its abilities and achievements. Its people do not moan about the disadvantages they face. They are succeeding and earning a worldwide reputation because of their hard work, determination and skill. I have the deepest admiration—it is often defined as the work ethnic that exists in many parts of the Province—for the inventive-ness, scientific skills, education achievements and qualifications of many people in Northern Ireland, which is why its economy has recently moved forward in so many respects.
The economy in Northern Ireland has suffered from high unemployment. When l heard the hon. Member for Belfast, North (Mr. Walker) say that there was little sign of improvement, I thought that he was selling Northern Ireland short. I have recently received the review of the Trustee Savings bank for Northern Ireland. It is appropriate to quote from its document because it was in the public sector but is now in the private sector. I hope that its review will not immediately be regarded by hon. Members as discredited. It mentions the present position rather differently from the miserable language that we heard in the debate.
The review says that the steady growth of the United Kingdom economy—which has out-performed other European countries and, in many respects, the United States and Japan—has, although it has taken longer to arrive, had an impact on Northern Ireland. It further says:
Evidence from the most recent CBI Business Surveys, however, indicates a degree of optimism.It says that there isConsiderable business confidence … Capacity utilisation remains good and there is little evidence of capacity constraints despite growing local, national export demand … Both CBI and PA Management surveys of investment intentions indicate that strong capital investment is taking place and is likely to continue over the coming year … The CBI report positive investment plans across manufacturing and service industries and PA attribute the healthy manufacturing investment outlook to buoyant demand, increased order books and the success of past capital investment.Listening to hon. Members, I wondered whether they had recently visited the Province or whether they were aware of what is going on there.Although the figures given by the hon. Member for Leicester, South were correct, I genuinely believe that the continuing falls in unemployment are being reflected in an increase in employment. After the debate, I shall show the hon. Gentleman an interesting graph in the Trustee Savings bank review, which tends to confirm the unemployment decline. In September 1986, unemployment reached 135,000. As a previous Secretary of State for Employment in England and Wales, I came to the Province determined to do my best to help employment in Northern Ireland. As we stand here now, unemployment is down to 115,000. That is last month's figure. It is confirmation not of a continuing decline but of the improvement that every hon. Member welcomes.
I see the hon. Member for Foyle (Mr. Hume) present. I am sure that he will accept that there is a spirit of greater 621 confidence in what he would call Derry. There is greater confidence in the Province in future economic prospects and employment. In addressing the real problems, we should not sell the Province short. We should not underrate the real achievements of many people who in the past year have been recruiting, investing, scoring export successes and expanding their businesses. In that improvement lies one of the best hopes for the Province.
§ Mr. KilfedderI wish to make it clear that I resent the arrogant words of the Secretary of State, who queried whether Unionist Members—I assume he also included the hon. Member for Foyle (Mr. Hume)—ever visit the Province. We live there and are committed to it. My speech was restricted to the two giant industries—Short Brothers and Harland and Wolff. I referred to the fragile economy of Northern Ireland. Is the Secretary of State saying that the economy is not fragile? Did he meet the workers at Shorts? Did he speak to those workers, or did he speak only to the management? Apparently he thinks that he is speaking for everyone in Northern Ireland. We live there and meet the people every weekend when we go home. The Secretary of State should understand that people in Northern Ireland resent anyone who expects the Ulster people to shout "bwana" to the Secretary of State in his cantonment at Stormont castle.
§ Mr. KingThe point I was making is that my perception and that of many visitors and customers in Northern Ireland is different from the presentation that the hon. Gentleman gave. To try to describe Northern Ireland as a Province without hope, prospects, skills or abilities——
§ Mr. KilfedderOn a point of order, Madam Deputy Speaker. I did not say that the Province——
§ The Lord Commissioner to the Treasury (Mr. David Lightbown)That is not a point of order.
§ Madam Deputy Speaker (Miss Betty Boothroyd)Order. It is for the Chair to decide whether it is a point of order.
§ Mr. KilfedderOn a point of order, Madam Deputy Speaker. I seek your protection, because the Secretary of State is saying that I said that Northern Ireland was a country without hope or skills. I did not say that, and I resent——
§ Madam Deputy SpeakerOrder. This is a debating Chamber and that is not a matter for the Chair. The debate must continue.
§ Mr. KingI am grateful for your ruling, Madam Deputy Speaker.
The hon. Member for North Down (Mr. Kilfedder) may not have heard my opening remarks. He may have addressed his remarks solely to the two companies concerned, but I have made it clear—the right hon. Member for Lagan Valley knows this—that the topic for debate is the economy of Northern Ireland, with particular reference to those two companies. Therefore, I am addressing those issues.
The Northern Ireland economy faces challenges and starts from a more difficult position. However, it has achieved more and made more progress in the past year than it has in other recent years. That should be 622 recognised. I say to the hon. Member for North Down that the two companies concerned can be sustained, not by Government subvention, but by orders, which may in certain circumstances require Government assistance.
There would be no order in Harland and Wolff after the present SWOPS order were it not for the fact that a Ministry of Defence order is about to be constructed. That order makes it possible for the yard to consider taking further orders. It is no great secret in the House that I did what I could to ensure that the order went, in fair and successful competition, to Harland and Wolff. There are a number of orders in Shorts now which are there because of the skills of the company, the quality of its products, the commitment of the Government and whatever part I could play in helping to support export orders. The hon. Member for Belfast, North said that Ministers have stood aloof from the problems and have not sought to support employment. He said that Ministers are strangers to Northern Ireland and have not made a commitment to it. The hon. Gentleman will have to stand by his own conscience and judgment in those remarks.
Having dealt with the comments about the general state of the economy, I want to turn to the central issue, which is the fear that has echoed round the Chamber. Hon. Members seem to equate privatisation with liquidation. The right hon. Member for Lagan Valley inadvertently, or perhaps deliberately, pleaded for a stay of execution. That is what many people in Northern Ireland think is about to happen.
§ Mr. MolyneauxIn a legal sense.
§ Mr. KingI understand that, but people are talking about the concept of privatisation as if it is the greatest threat that the companies have ever faced. I wonder what Mr. Harland and Mr. Wolff would have said as they embarked on their career. If somebody had said, "You should be part of a Government Department. You think that you can build ships, but you would be much better off if you had civil servants advising you at every step," I think I know what Mr. Harland and Mr. Wolff, who built a company with a name that echoes famously around the world, would have said to that suggestion.
§ Mr. MolyneauxI do not resent the slap on the wrist that the Secretary of State administered earlier. However, I do not think that we were as guilty as he suggested. I agree that Mr. Harland and Mr. Wolff would have been horrified if they had been told that they could build ships and sell them only with a Government subsidy. At that time, their competitors were not benefiting from Government subsidies. That is the central problem.
With respect, I should like the Secretary of State to address his mind to the question that was put to him by myself and by my hon. Friend the Member for Antrim, East (Mr. Beggs). Can the Secretary of State point to an aircraft manufacturer anywhere in the world that is not being propped up by subsidies? The problem for the future is that if the two industries are privatised they will not be put out into a world where there will be fair competition. They will be meeting unfair competition. That is the central theme of our argument.
§ Mr. KingI took careful note of the direct question that the right hon. Gentleman asked, and I intend to answer it.
I wish to analyse the arguments that have been advanced in the debates as to why the idea of moving from 623 public to private ownership is bound to be disastrous for companies in Northern Ireland. One of the right hon. Gentleman's arguments was that the shipyard has a limited range of customers, unlike many of the industries that have been privatised in the service sector. Let us consider what happened with the Rolls-Royce aero engine company. It has a pretty limited range of customers—only people who manufacture or buy aircraft. That company was not in the service sector.
What about the Royal Ordnance factories? I had some personal experience of their privatisation, because there was one in my constituency. They had a limited range of customers, and there was a great fear whether, in private ownership, they could succeed outside the umbrella of the Ministry of Defence. There has since been a much more effective sales and marketing effort, and there is a much better prospect of long-term security of employment in that industry.
The most obvious illustration is British Shipbuilders. The right hon. Gentleman talked about the disadvantages of Harland and Wolff being geographically isolated. At that point, I said to my hon. Friend the Minister, "Can you think of any industry where it matters least if it is geographically isolated?" A shipyard would be the most obvious example. No one has ever told the Koreans that they are geographically isolated, yet they dominate the shipbuilding market and are considered fully competitive. No one seriously suggests that the future of the Govan shipyard would be secured by its continuing to be part of a loss-making nationalised industry that attracted orders at such a rate of public subsidy that, in the end, every order was a crisis and every month or year of survival was a bonus. Now owned by Kvaerner, a specialist company that has identified a market for its products, the prospect of long-term employment in the Govan yard is much better than it would have been in a general purpose nationalised industry.
The right hon. Gentleman said that we cannot keep companies in Northern Ireland unless they are publicly owned, and he cited the companies that have been there and left. I understand the problems that affected the synthetic fibre industry, such as the Courtaulds clothing plant and British Enkalon, but it is also worth remembering Du Pont. It is making its third consecutive investment in Northern Ireland in recent years. It is a successful company whose presence in Northern Ireland is based not on massive Government subsidy—certainly not on public ownership—but increasingly on the performance of the plant and the quality of the work force. It is a tribute to the skills of the engineering work force at Du Pont that when the company carries out chemical engineering work at its other plants in Europe, the engineers from Maydown are asked to do it.
In addition to public ownership, Shorts and Harland and Wolff have benefited from a substantial network of public finance of one sort or another. In shipbuilding, some finance comes through the intervention fund. The hon. Member for Leicester, South asked whether intervention fund assistance would still be available. We shall try to ensure that it is maintained, although it is discretionary. We recognise the need to make it possible for Harland and Wolff to compete against other yards within the terms of the European directive.
The right hon. Gentleman asked me to name any aircraft company that operated either without subsidy or without some involvement in defence. Shorts produces 624 Tucano aircraft, and it has won the Starstreak missile order—the largest missile order ever placed by the Ministry of Defence—for a sum in excess of £200 million. The company is a valued and respected Ministry of Defence contractor, and its products command markets and continued support.
Against that background, I can see how Shorts will play its part. Other aerospace companies that have defence contracts—they may be development contracts, such as the one for the Starstreak missile—won those orders by virtue of their capabilities and their products in competition with others. I expect that to continue.
The fear that has been expressed in the debate has been a feature of other privatisations. I understand why, when the first companies were privatised, there were serious fears about the risks to employment, but, to use the hackneyed phrase, there is no need for us to look in the crystal ball when we can read the book. Very few Jaguar employees are saying, "Please let us return to the benefits of public ownership." Not too many people are saying, "I do not care for Associated Ports. I much preferred the British Transport Docks Board." Few of the employee shareholders of the National Freight Corporation say, "Bring back the good old days of British Road Services." Privatisation may be new to Northern Ireland, but it is not an English phenomenon. Privatisation has taken place in England, Scotland and Wales and the logical economic benefits have been felt everywhere.
I believe that our proposals must be accompanied by a consideration to secure employment, and that was the only part of the remarks made by the right hon. Member for North Down with which I agreed. We are concerned about that, as our record shows. It is essential that we achieve a good understanding of the intentions of anyone who might acquire the companies. We shall look very carefully at. any proposals that come forward, not simply at the price or financial arrangements, but in the widest possible sense at the implications for the Northern Ireland economy.
I stand by the record that I spelt out at the beginning of my speech. I made my commitment on the steps of Stormont castle, when I made it clear that I would do all that I could to help the economic progress of the Province. I have explained that unemployment has fallen by 20,000 since its high point in September 1986. I intend to do all that I can to ensure that that fall continues.
I want to see maximum employment and the best possible prospects in Harland and Wolff and in Shorts. I passionately believe that through private ownership and by the private sector approach there is a better prospect. of a brighter future than will ever come through a continuing and dead dependence on public support and subsidy, which tends only to enfeeble and enervate companies. The evidence of the improvements that can come from a private sector approach is all too apparent.
Both the companies are operating in the most difficult market conditions facing any product that is manufactured in the world at the moment. That is especially true of shipbuilding. The aircraft industry is also extremely difficult. If we cannot obtain orders, that will be a very serious problem. There can be no guarantee that orders will be obtained. The Government will do all that they can to support genuine efforts to sustain employment on a viable basis for both companies. I say that against a background in which Harland and Wolff has faced major problems. It has a proud name, but its future will determine whether there are to be jobs and orders. I note 625 that the company has major assets. It has excellent facilities and very good equipment, as the hon. Member for Leicester, South said. It has had major capital investment to its advantage, and it has considerable skills.
We embark on the challenge with those assets to our advantage. I note also for those who are concerned about the recent financial progress of Shorts that it has excellent products, not least in its missiles. I believe that it holds what is known as the "Pride in Excellence" award, which was awarded yet again to the company by Boeing for the quality of its manufacturing for Boeing to the very highest standards. It has real achievements.
Both companies have assets, real achievements and potential. The challenge that we face is to see how most effectively they can make a valuable contribution to the economy of Northern Ireland. We believe that our proposals are the right way to proceed. They have brought great benefits to companies and employees in Great Britain. We want to see those benefits in the rest of the United Kingdom and applied in Northern Ireland as well.