Shipbuilding

HC Deb 19 May 1988 vol 133 cc1112-54

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

4.17 pm

Mr. Brian Gould (Dagenham)

I beg to move, That this House, deeply concerned at reports that Her Majesty's Government intends to withdraw all financial support from British Shipbuilders, and aware of the grave threat to British merchant shipbuilding posed by the contractual problems of NES'. and the uncertain future of Govan yard, calls upon Her Majesty's Government to affirm its commitment to British merchant shipbuilding and provide the support needed to sustain this essential British industry.

We have drafted, the motion because we believe that a once great and still vital British industry is in mortal danger. There have been many occasions in the past when that claim has been made in respect of British shipbuilding. There have been many debates in the House in recent years in which grave fears have been expressed about the survival of that industry, but I truly believe that on this occasion the claim is justified, that this really is crunch time for British merchant shipbuilding, and that there is an axe poised over the industry which, in a sense, only the Minister can remove.

The purpose of the debate and the motion is to invite the Minister to make it clear that he sees, as we do, an important future for this essential British industry. We intend—I am sure that the Chancellor of the Duchy of Lancaster will understand this—to use the debate to seek answers to questions, and to ask him to allay fears, Lo dispel rumours, to remove doubts and to make clear his commitment, and that of the Government, to the future of British shipbuilding.

No one disputes that British shipbuilding has gone through an extremely difficult period. Shipbuilding worldwide has had a difficult time because of the depressed state of demand for shipping, but the current problems that have arisen in respect of North East Shipbuilders—the Govan and Appledore yards—arise not just in the context of that difficult worldwide situation, but as the direct consequence of steps that the Government have failed to take. It is the Government who have raised those question marks; that is why we ask the Government to remove them.

The Government are exhibiting their now-familiar predilection for the triumph of ideology over the future of an important British industrial sector, together with their preoccupation with raising cash by disposing of those parts of the industry which can be sold off, accompanied by a willingness—at least implicit and increasingly clear—to junk those parts which cannot be sold off. That attitude threatens the taxpayers' investment, jobs, the regional economy of the north-east and the south-west, and the continued survival of an essential component in our industrial future.

The current problems are the obvious, inevitable and possibly even intentional consequence of the Government's attitude in the past, with their determination to dismember British Shipbuilders. They set sail on that course four or five years ago, when they began privatising the naval warship yards. It was always on the cards that, as the more viable parts of British Shipbuilders were disposed of, the increasingly small number remaining would face the growing threat of non-viability.

When the Chancellor of the Duchy of Lancaster made his statement in the House on 18 April, and in statements that he has made elsewhere in recent days, there were hints that the Government's argument was that it was somehow inevitable, and a logical consequence of the process of dismemberment, that those parts of British Shipbuilders which remain cannot be sustained; that buyers or recipients must be found for them and that the rest must go to the wall. The Chancellor will not be surprised if I give him notice that we reject the inevitability of such an outcome. We will use this debate and future occasions to make clear our commitment to the industry and our belief that it would be wrong, not to say active industrial sabotage, to allow what remains of British merchant shipbuilding to go to the wall in the way that the Government contemplate.

When the Minister replies, I hope that the first matter to which he will address himself is the uncertainty which exists in respect of the Govan yard in particular. On 18 April, the House was told that someone—I am tempted to say a buyer, but I am not sure that is the right term—had been found to take the Govan shipyard off the Government's hands, and that the lucky candidate was the Norwegian gas ship firm of Kvaerner Industries. The House was informed that it was to take over rather than purchase the company; as we understand it, it is more a matter of a giveaway than a sale. As my hon. Friend the Member for Great Grimsby (Mr. Mitchell) has often said, it is rather like saying, "You like the ships? Have the yard as well."

If the yard is a viable proposition for a Norwegian gas ship builder, and if that company believes it can make the yard a going concern, why cannot the Government accept that the yard can be made viable and have a future? This seems to be another example of the Government's willingness to get shot of a public asset at almost any price.

No one begrudges the Govan shipyard and all who work there the chance of a viable future. We on this side of the Chamber will take great care not to say anything that would in any way jeopardise that future. We understand the precarious nature of the situation and the importance of guaranteeing, so far as a guarantee can be given, the jobs in that part of the industry. However, we must have further information, assurances and guarantees as to exactly what is proposed.

A month has gone by since we first heard the Minister's statement, and presumably the negotiations have made some progress. We hope that the Chancellor of the Duchy will be able to tell the House more about the outcome. His answers are of crucial importance to the British shipbuilding industry and to all those who work in Govan.

We should like to know, for example, what exactly the Minister meant when he used the cryptic phrase "some restructuring" in his statement on 18 April. What does that mean in terms of existing jobs, future employment, the pensions of those who remain and of those who leave, long-term investment, and so on? What does Kvaerner have in mind for the Govan shipyard? One can understand why it is that, having closed down its own yard and made hundreds of its own workers unemployed, the company now needs, at least in the short term, some cheaper—perhaps temporarily cheaper—capacity. It may be that, in the short term, some future exists for the Govan yard.

We need to know what will be the future of the yard after Kvaerner's immediate objectives have been met. Will it be closed down, in the same way that the Norwegian yard was closed, and will Kvaerner then move on to another knockdown, giveaway yard in some other part of the world? What guarantee for the future is being offered to the Govan workers as a consequence of the deal? I hope that the Minister will provide answers to those questions.

Another cryptic remark was contained in the Chancellor of the Duchy's relatively short statement on 18 April, relating to the transfer of the Appledore yard. The right hon. and learned Gentleman made it clear that there were buyers in the offing for that yard as well. On 18 April, my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) pointed out that Appledore includes not just the north Devon yard but also the Ferguson yard in Port Glasgow. It is a substantial operation employing hundreds of people at the two sites, and it is essential that those workers be given some information at this stage, a month after the statement, about who is the prospective purchaser and what are its intentions.

Many people in north Devon who depend upon Appledore for their employment are extremely alarmed. I am sure that the same is true of the workers at Port Glasgow. They are concerned that a private purchaser may use the acquisition and the assets of the yard not for shipbuilding but for property speculation. I hope that the Chancellor of the Duchy will dispel any fears that the workers may have. Four weeks after the right hon. and learned Gentleman's statement, both the House and those whose livelihood depends on those yards are entitled to more information.

Although this subject is not strictly within the terms of the motion I have moved, I hope that the Minister will say something about Harland and Wolff, which is an important part of the British shipbuilding industry. He will know that there is in hand a project for the building of a major liner known as the Ultimate Dream, which will require substantial Government support. That support ought to be given because of the importance of Harland and Wolff to the Northern Ireland economy. I do not need to labour that point, because it is well understood.

Less well understood is the reason why a substantial proportion of the work involved in building that massive liner—perhaps as much as 70 per cent. of it—will be undertaken by mainland suppliers and contractors. My hon. Friends and I have received many representations on that point, including those from Senior Green of Wakefield, which is competing for an order for two oil-fired boilers, five exhaust boilers and ancillary equipment; and Industrial and Marine Switchgear of Hull, which is competing for the order to supply switchgear.

That makes a point to which I may return later. While the initial order for a ship is of course of great importance to the shipyard that is fortunate enough to get it, it has major implications for the back-up industry, the hinterland of industrial activity that goes to support shipbuilding. In the case of Harland and Wolff, much of that benefit will be felt in mainland industry.

The really urgent problem, however, and one which now demands a clear answer from the Chancellor of the Duchy, arises in respect of the most important remaining part of British Shipbuilders. Assuming that Govan and Appledore go, what will remain is North East Shipbuilders Ltd. The danger is that it will be left in a non-viable, certainly vulnerable and exposed, position.

The fears arise not only because of the inevitable consequences of this process of dismemberment—this death by a thousand cuts—but because the position of the yard, which is of such importance to the regional economy, has unfortunately been exacerbated by the contractual difficulties that have arisen on the one remaining major order on which the yard is working.

On 18 April, the Minister broke the news to the House that those difficulties had arisen. I hope and expect that in the ensuing four weeks he and his advisers, particularly his legal advisers, have been thoroughly involved in trying to sort out what appears to be a legal argument. I hope that he will be able to tell the House today that the difficulties have been resolved, or are well on the way to resolution.

It is time for the Government to establish the truth of the matter. We have heard and continue to hear—this was stated in a television programme on which the Minister and I appeared together this morning—that the problems arose because of unsatisfactory work being done by the yard. That is a very prejudicial statement; it is prejudicial both to the good name of the yard and those who work in it, and to the proper resolution of the contractual problems.

I hope that the Minister will take the chance to make it clear—as I believe to be the case—that the contractual problems have arisen not because of any unsatisfactory work done in Sunderland, but because the Danish customer is having difficulty either in finding the money to pay or in finding customers to whom to sell the ferries on. If either explanation is correct, I hope that the Minister will say so, but if the position is as I believe it to be, I feel that we are entitled to ask further questions.

We shall need to know what the status of the order is, how much of it is to be carried out and how much of it is covered by the Export Credits Guarantee Department guarantee—which, after all, is offered by a part of the Minister's Department, and for which he must therefore take some responsibility. When I spoke to him some time ago about the matter, he did not know exactly what the effect or scope of the ECGD guarantee would be. I hope that by now he has informed himself and can tell us what would happen if—in the worst case—the Danish customer was unwilling or unable to pay, and the guarantee had to be applied in its fullest possible form. I hope that he will he able to explain how many ferries would then be built, and what that would mean for the continuing work programme on Wearside. That is the minimal information that is decently and properly required by those who are still busily engaged in building the ferries. They need to know what their future is to be.

There is a further question. If the Danes drop out of the picture and the ECGD guarantee is not adequate to ensure the continued performance of the full contract, what are the prospects of finding other customers? The Minister will know that there is a strong belief in Sunderland, particularly on the part of the management at the yard, that there is a real prospect—I am not competent to judge, but this is their belief—that the Cubans may be interested in buying at least some of the ferries. When my hon. Friend the Member for Sunderland, North (Mr. Clay) and I, along with others, spoke to the Minister a couple of weeks ago, he professed ignorance—or at least, considerable doubts—about the possibilities. I hope that he will now be able to tell us what the chances are, and what efforts he and his Department will make to bring them to fruition.

These are real questions. We certainly do not intend to use the debate to rant and rave or score political points. We want to hear the truth—the facts—from the Minister, because that is what the work force needs to hear. We also hope for an answer to a much wider question. The question that we wish most of all to be answered, because the answer will provide the context in which all these matters are to be resolved, is this: are the Government still committed to the survival of the industry?

We know, and the Minister knows as well, that there have been repeated reports—I am tempted to say authoritative reports—that the Government have made up their mind to pull the plug on British Shipbuilders, arid that they are looking for an opportunity later this year to announce that they will no longer provide the financial support that is still required if the industry is to be maintained. I hope that the Minister will make it clear that those reports are ill founded. I hope that he will say that the short-term contractual problems of North East Shipbuilders are simply that, and not an occasion or pretext for announcing that that part of British Shipbuilders, which is an important component of British merchant shipbuilding, is to be allowed to go to the wall.

Mr. Eric S. Heffer (Liverpool, Walton)

Surely, if the Government decide to withdraw financial aid from the shipbuilding industry—which seems likely—and to turn it over entirely to private enterprise, that is a political question. The Government's entire policy on shipbuilding over the years has been political. They have deliberately allowed the industry to run down for political, sectarian reasons related to their outmoded and outdated philosophy.

Mr. Gould

My hon. Friend is right. I made the same point in my opening remarks. I believe that the Government's attitude to the industry has typically been dictated by exactly the political and ideological questions to which my hon. Friend refers. In fact, as I look for the point that I have reached in my speech, I see that my next remark was to be that unless the Government gave the commitment that we demand, we would be forced to conclude that this was yet another part of the British industrial steel base that was to be sacrificed on the altar of ideology.

Of course no one wants subsidies for their own sake. No one would be more delighted than all the thousands of people whose jobs still depend on merchant shipbuilding if it were possible to say that they had a viable future without subsidy. But if the present Government are to take the high-handed view that nothing is to survive if it requires subsidy—I suspect that there are powerful voices, if not in the Department of Trade and Industry at least on the Tory Back-Benches, who would say exactly that—we must face the fact that the worldwide problems of shipbuilding over the past decade have dictated that no shipbuilding industry in the world would have survived without subsidy.

We are not in a unique position. We are not even in a position that applies to Europe but from which the far east is exempt. The Koreans and the Japanese are also subsidising massively. They are doing so because they know that that is the only way to maintain the capacity in that important industry, which they have decided for political reasons—my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) is right; they have made a political judgment—they want to survive.

Therefore, the industries which survive this admittedly difficult period will not necessarily be the industries which pass the commercial test, because none of them would survive according to that test. The survivors will be those which are supported by Governments who make the political decision that they want to see national shipbuilding preserved because they recognise its importance to the national economy. That is what we ask and expect to hear from the Government. We want that political commitment so that we can be sure that the Government recognise the importance of the survival of the industry.

When we turn to competitive matters, we are also entitled to say that British Shipbuilders and British merchant shipbuilding generally have done amazingly well; they have taken huge strides to improve their competitiveness and efficiency. When British Shipbuilders has slimmed down at the cost of many tens of thousands of jobs, when it has improved the flexibility of its work practices, and when taxpayers have contributed hundreds of millions of pounds of investment to the point where British Shipbuilders and NESL are so advanced technologically that even the Japanese visit them to see how things are done, how remarkable it would be if at that time the Government said, "This is the point at which we pull the plug, destroy all that has been achieved, and thank and reward those who have made these substantial efforts by telling them that their industry is no longer required."

How ironic it would be if that step were taken, after such a difficult decade, just when for the first time there is a glimmer of a possibility—some would say a likelihood—of an upturn in world demand. The evidence is there in the fact that the proportion of laid-up shipping is at its lowest level for 10 years, now just 4 per cent. of the world fleet. The evidence is also there in the fact that the price of secondhand ships has doubled in the last year and that the price being fetched for new ships has also risen substantially. How ironic it would be if this were the time that the Government, for ideological reasons, were to decide to wield the axe and chop our industry down just when it is poised to take advantage of the upturn in world demand.

How ridiculous it would be if a great maritime and trading nation, which, despite the Government's worst efforts, still accounts for 8 per cent. of world trade, were unable to take advantage of improved circumstances. At one time, this nation built half the world's shipping output; 30 years ago it built more than a quarter of the output; now it builds only 1.5 per cent. of total output. How ludicrous it would be if we no longer had any merchant shipbuilding capacity. We would be dependent on foreigners who had had more faith in their shipbuilding industries and who had understood the commercial, strategic and industrial advantages of retaining that capacity.

Mr. David Porter (Waveney)

Will the hon. Gentleman confirm that in his last statement he ignored completely the private sector shipbuilding yards and concentrated totally on the nationalised industry?

Mr. Gould

As the motion makes clear, I am concentrating on merchant shipbuilding. That is the element of the industry which we believe is strategically important.

Sometimes the Chancellor of the Duchy and his ministerial colleague disagree with me on the meaning of "strategic". Sometimes they argue that "strategic" has a solely military connotation. Let us accept that its military connotation is strong. I have had calls today from naval architects and specialists who said that, unless we maintained the capacity to build merchant ships, not just in the mixed yards but in the specialist merchant shipbuilding yards which could undertake the range required, we would be incapable of mounting any sustained naval operation, particularly of the sort which we saw at the time of the Falklands war. All the experts agree that without that capacity, we would be unable to mount a Falklands operation again.

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)

If all merchant shipbuilding went, that would be right. But does the hon. Gentleman recall that he started his speech in a statesmanlike manner by claiming that he would do nothing to raise fears and spread rumours? He is now working himself up to a peroration in which he accuses the Government of being about to close down our entire merchant shipbuilding industry for ideological reasons, a statement for which he has no basis of fact. He is making that accusation against a Government who have so far put £1.8 billion into supporting the losses of British Shipbuilders. Does he not think that he is trying to raise fears in shipbuilding towns purely for political purposes?

Mr. Gould

Nothing would please me, my hon. Friends and the hundreds of shipyard workers who have come to London today to lobby for their industry today more than if the Chancellor were able in two or three minutes to give us the answers to the questions which we have posed and to give us the commitment which we seek to the future of British merchant shipbuilding. He will have every opportunity to convince us of his good intentions and good faith in these matters. I hope that he will, but on the basis of what he has told the House and what he has said outside, I am sorry to say that there is room for grave doubt and real fear about what the Government have in mind for this essential industry.

It is not just the strategic importance of the industry which matters; it is the impact on the local and regional economy if the NESL yards were to be lost. No doubt my hon. Friends from Sunderland and elsewhere will make that point. It is not just shipbuilding which would be affected. Other industries in marine engineering depend on shipbuilding for their survival. I think of enterprises such as Clark Kincaid, which is making engines for the ships being built in the Govan yard. My hon. Friend the Member for Greenock and Port Glasgow will have something to say about that.

The ramifications of the Government's decision are important; on that I think the Chancellor of the Duchy and I agree. We now provide him with an opportunity to give us the assurances on Govan, Appledore and North East Shipbuilders, and to tell us the truth and what the Government intend to do. We expect answers to those questions. We expect the right hon. and learned Gentleman to make clear his commitment to this vital industry. Nothing less will do.

4.47 pm

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Kenneth Clarke)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'recognises the support that Her Majesty's Government has given to the shipbuilding industry; and welcomes the prospect of returning British Shipbuilders' yards to the private sector.'. I came to the House on 18 April to give hon. Members the earliest possible information about two items of news that were of great importance to shipbuilding areas. The first was that British Shipbuilders had received approaches—unsolicited approaches which the Government did not know were coming—for the disposal and sale of two yards, Govan on the Clyde and Appledore in Devon. I made it clear that we would welcome further interest from people wishing to take over business in all the corporation's facilities. I also told the House of the contractual difficulties that had arisen at North East Shipbuilders Ltd. in Sunderland. Those difficulties were already known to the work force and were about to become public, and it was important that the House should be aware of them.

I made that statement to the House because I and the Government realise the importance of shipbuilding yards to the communities in which they are sited. We are all concerned about the prospects for the local economy in Clydeside, Wearside, north Devon and other parts of the country. As my hon. Friend the Member for Waveney (Mr. Porter) said, there are other yards as well. What we are talking about is how best to sustain economic activity, including shipyards if possible, and employment in all those places.

We need to take advantage of the opportunity to look to the future of the economy in all those places and to keep up to date everyone who is understandably concerned about the facts, so that everyone may know where we are. I am not sure that this early debate, or the approach of Opposition Members on the Front and Back Benches, is altogether helpful. It is all very well for the hon. Member for Dagenham (Mr. Gould) to say that he wishes to do nothing to raise doubt and rumour, but he concluded by constructing an argument that contained the proposition that some deliberate attempt is being made to close down the yard. That hardly reassures the worried people in Glasgow, Sunderland or anywhere else.

I have had similar experience elsewhere. I have had several meetings with the hon. Member for Sunderland, North (Mr. Clay). I mention him only because I see him in his place, as I would expect during such a debate. I have tried to be helpful and forthcoming when I have spoken to him, although sometimes I have had to be reserved to avoid jeopardising negotiations on the Clyde and elsewhere. His way of recounting to local newspapers what I have said seems aimed more at local politics than at helping the situation.

There is an important lobby today of people from the shipbuilding towns who are concerned about future employment levels in those towns. They have lobbied today largely because of speeches such as we have just heard, which have made people increasingly worried about where we are going. We ought to provide some answers. I shall certainly attempt to explain clearly where we are.

Mr. Bruce Millan (Glasgow, Govan)

Show us where we are.

Mr. Clarke

The Opposition's explanation of where we are is hopelessly political. The hon. Member for Dagenham was listened to with care. The Opposition are now confirming my feeling that their concern is to create a row, rather than to discuss the issue sensibly.

The hon. Member for Dagenham, in describing what had happened, said that the Government had created the situation. The two things that I have mentioned, the Kvaerner bid for Govan, and the difficulties over the contract at Sunderland, are nothing to do with the Government. We did absolutely nothing to provoke them. The hon. Gentleman did not mention the underlying difficulty that has to be understood when considering shipbuildin—where are the orders coming from, and where is the work coming from? It is astonishing that he made a speech about the history of shipbuilding over the last 10 years. He dealt with the past at great length, without mentioning the slight difficulty that at the moment there are no orders from anybody who wishes to buy ships beyond the existing work on the Clyde.

The problem is getting orders. The existing work in Govan is for China, and in Sunderland it is for the Danish ferries. We are looking beyond that. We are talking about the future. It is absurd to say that the Government have caused all the problems. We just do not know where the next orders are likely to come from or at what price. Like most shipyards around the world, we are trying to cope with that.

Mr. Gould

rose—

Mr. Clarke

I shall give way just once. I do not wish to give way to the Labour party before I have really got under way.

Mr. Gould

The Chancellor is right to say that winning orders is a problem. We accept that. Does he accept that one essential condition for winning orders is the assurance that the Government intend to maintain a viable British merchant shipping industry? Will he now take the opportunity to assure the House that that is the Government's intention and that they will provide all the support required to achieve that objective?

Mr. Clarke

The prospects of having a viable shipbuilding industry, which we all would like to see, remain extremely uncertain because of the condition of world markets. Having listened to the hon. Gentleman's speech, one would not believe that the Government have committed substantial sums to intervention fund support, and more to British Shipbuilders' yards. The bulk of the money that has gone to British Shipbuilders has been invested during the lifetime of this Government a total of £1.8 billion of taxpayers' money has gone into a business that now employs 6,500 people. It is absurd for the hon. Gentleman to try to make use of today's debate to say that somehow we have shown a lack of commitment to the industry during these difficult times.

Mr. Heffer

rose—

Mr. James Wallace (Orkney and Shetland)

rose—

Mr. Clarke

Let me take the factual basis a little further, as I have been pressed to do.

I made the announcement on 18 April, and as a result there has been a great deal of interest from people making approaches for a variety of the yards. It is quite right that I am asked to bring the House up to date. The news about Govan and Appledore has brought two main responses. There has been a wealth of inquiries from the private sector about the corporation's yards. Obviously we welcome those inquiries, as we welcome the prospect of returning the yards to the private sector if they have a future there.

I announced Kvaerner's letter of intent on 18 April. I am glad to say that talks have continued to go well. Not only is Kvaerner engaged in detailed negotiations with British Shipbuilders—which it would not be right for me to relate because difficult negotiations have to be concluded if we are to reach a successful solution—but it has had a very useful first meeting with the work force.

I listened to what the hon. Gentleman said about the possibility of a sale to Kvaerner. I think that I judged him correctly when I thought he would not oppose the sale to Kvaerner. I do not think that the local work force will drive away the approach from Kvaerner. I think that they welcome it, and I commend all those in Glasgow who are taking a responsible and realistic attitude.

More talks are planned for next week between British Shipbuilders and Kvaerner. I cannot anticipate where they will go, but I can point out to the House that not only has Kvaerner made it clear that it would contemplate placing two orders for gas-carrying ships in the yard—and there must be hopes of more orders—but that it wants to make west Scotland the centre of its gas technology business. If that were to happen, there would be prospects for many more jobs on the Clyde.

I am still being asked why we have to sell to Kvaerner and why we cannot simply take the orders. I have tried to explain this before, and I do not know whether Opposition Members have tried to raise that question with Kvaerner. Kvaerner is well established and has considerable expertise in this niche market—not all of it in shipping. Its gas technology business extends beyond shipping. It has recently been placing orders on licence around the world on a price basis. Its business intention is to acquire a yard and find a new base, and I think that we all should be hoping that negotiations will reach a successful conclusion so that that very important base is established on the Clyde.

The future for Govan and for what was Upper Clyde lies best in the conclusion of such negotiations. If it does not happen with Kvaerner, we would be interested in anyone else who offered a reasonable prospect for the area. As things stand, Govan is completing two ships for China. Nobody knows what it will do beyond that as a nationalised yard. It is all very well for the hon. Gentleman to read declarations about his ideological commitment to the future of British shipbuilding, but he did not say a word about what it will build in Govan and what will happen when the Chinese ships are completed and the work force in Govan starts being laid off if there is no movement towards the Kvaerner sale to which I have referred.

We have received several written expressions of interest in Appledore. It depends on how seriously one takes them—some are more serious than others—but there have been a number of inquiries about the purchase of the Appledore yard. Some are interested in Appledore, some are interested in Ferguson and some are interested in Appledore and Ferguson as an entity. Negotiations have yet to get very far, but the interest, especially in Appledore, is very strong. I do not want to raise excessive hopes, but I am optimistic about a successful conclusion.

British Shipbuilders has businesses beyond merchant shipbuilding. Its engine building facility at Greenock, Clark Kincaid, builds large diesel engines for use at sea and in land-based power generation. We have received four expressions of interest in the acquisition of Clark Kincaid, including one from the management team, and negotiations for the sale of that shipyard have begun.

Finally, British Shipbuilders has a design and computer service business, Marine Design Consultants, which is based in Sunderland and in Dundee. MDC has attracted a particularly high level of interest. Again, I do not take all expressions of interest as commitment, but I have received a huge list of people who have expressed some interest, and I am confident that it will successfully be returned to the private sector, where it can broaden the range of its work.

I accept that there are questions about the future of British Shipbuilders because a number of the yards are now the subject of negotiations between British Shipbuilders and companies which have a serious continuing interest in maintaining them in business and maintaining a level of employment. On balance, that is good news. In fact, the approach from the Norwegians has reminded people at home and abroad of the Government's preparedness to dispose of the yards to those interested in acquiring them as a business. That has produced good news for Clydeside, north Devon and elsewhere.

I was asked about Harland and Wolff. I cannot go into that because it is the responsibility of my right hon. Friend the Secretary of State for Northern Ireland. The hon. Member for Dagenham spoke about an order, or about the campaigning that is taking place because of the interest of Mr. Ravi Tikkoo in buying a large cruise ship. That is a matter for my right hon. Friend the Secretary of State for Northern Ireland. I do not believe that at present he has any indication of the cost or the level of support required. I am sure that everybody in Northern Ireland, including the taxpayer, would be interested in receiving those details and evaluating them as early as possible.

Mr. Elliot Morley (Glanford and Scunthorpe)

I want to draw the Minister's attention to what people are looking for in the order at Harland and Wolff. They want some enthusiasm and support from the Government. I accept the right hon. and learned Gentleman's point that the details are not known, but for many constituencies such as mine, which produces steel plate, and for firms such as CMR Electronics, which has submitted a major tender for the order, it will have great benefits.

Mr. Clarke

I am astonished if tenders are being submitted. It is not for me to answer on behalf of my right hon. Friend the Secretary of State for Northern Ireland, but my understanding is that the Government do not yet have estimates of cost, support or anything of that sort. If there is enthusiasm for the order, the sooner we move away from everybody being told through the newspapers about what an attractive proposition it is, and the sooner we get down to costs and estimates of how much the taxpayer is expected to contribute, the better it will be and the more likely we are to make progress. I can see that I am being drawn into a Northern Ireland debate. I touched on Harland and Wolff simply out of courtesy in response to the hon. Member for Dagenham.

The Government are explaining as carefully as we can where we stand with the yards in England. There is a good future in prospect for the bulk of the yards where there is interest in purchasing them, and we cannot be accused of a lack of commitment or of shirking our responsibilities. I shall repeat for the last time the figure of £1,800 million for 6,500 workers still employed. Last year, each job in British Shipbuilders cost the taxpayer nearly £20,000 to sustain through the support for the orders we had acquired and the subsidy for the losses that the yard was making over and above the intervention fund support. That is a commitment to one part of merchant shipping.

To return to the point made by my hon. Friend the Member for Waveney, we should not proceed with this debate on the basis that British Shipbuilders makes up the bulk of shipbuilding in this country. That is not readily appreciated by people away from the shipbuilding areas. British Shipbuilders, the nationalised industry, employs 6,500 people. In Britain—I shall leave Northern Ireland out of my figures for a moment—26,000 people are working in other yards. The total number of shipbuilding jobs in Britain is 32,500. Our £1,800 million has been used to sustain the jobs of 6,500 out of that total. That certainly means that we cannot be accused of a lack of commitment. There is no point in saying, as the Opposition seem to imply, that the only policy is to continue to throw money of that scale at the problem, particularly when they do not address themselves to the question of what they will do about new orders.

Intervention fund support has not been the major cost of British Shipbuilders. The amount of intervention fund support—the subsidy that Europeans give for orders—has amounted during our period of office to about £250 million. The rest, over £1.4 billion, has largely been spent in supporting the losses over and above the intervention fund support, and in supporting spare capacity costs when there were no new orders to cover those overheads. Every time we have taken an order the Government have given a 28 per cent. level of support. That has happened every time there has been an order from China, Denmark or wherever. The history of British Shipbuilders is that, on top of the intervention fund support, it has lost an average of about 20 per cent. more on the contract with cost overruns and delays before the ships are delivered.

The respective sales will result in new management and, in the case of Kvaerner, new forms of business. There will be people who believe that they can turn those chronically loss-making yards, some of which have been limping along in recent years, into businesses with a real future that can be put on to a commercial footing. That has to be better for the work force and for the communities that depend upon them.

Mr. Wallace

The right hon. and learned Gentleman has mentioned orders on several occasions. Is he aware that the Orkney Islands council wants to place six orders for new vessels in the near future? It found that when it wished to place an order with a British shipbuilding firm the intervention fund assistance would not necessarily be forthcoming, and it has been compelled to look abroad, where it has found that our foreign competitors are being subsidised, including one country where the subsidy will be increased threefold. How does the Minister think that that policy will help British shipbuilding?

Mr. Clarke

Intervention fund support has never been available for all yards in the United Kingdom, and most people have agreed with that. If one starts extending intervention fund support to yards that are not traditionally merchant shipbuilding yards, one simply increases the problems of excess capacity. The mood of Opposition Members on this occasion seems to be that the details of the Orkney contract would be better pursued on some other occasion.

Mr. Michael Grylls (Surrey, North-West)

Are not the figures that my right hon. and learned Friend has given of four times as many people working in firms that have been returned to the private sector a vindication of the Government's policy of returning the yards to the private sector step by step? Will my right hon. and learned Friend take encouragement and move further in the way in which he is describing? The record of the Northern Ireland Office in backing winners is not very high. I hope that it will pause before it puts more money into another dream project.

Mr. Clarke

On the first point, some of the privatised yards have been hugely successful and are doing better now than would have been the case had they remained nationalised. On the second point, I am sure that my right hon. Friend the Secretary of State for Northern Ireland would not dream of putting before the House any proposition for public support for a major industrial order that was not well-judged, based on costs and a serious assessment of what it would be likely to cost the taxpayer. That is a matter for my right hon. Friend, not for me.

I want to deal with the last point raised by the hon. Member for Dagenham, when he said that I must reaffirm the Government's commitment to the industry and so on. Nobody can quibble about our record of support for British Shipbuilders, and we shall continue to fund the corporation. We have laid an order before the House to raise the corporation's borrowing limit yet again. This will be debated in the near future on the Floor of the House. I made it clear that I no longer expect dividends to be proposed by or required of the corporation in respect of further payments of public dividend capital. Just to prove my point on the current stewardship of the Government, we shall be paying a further £24 million to the corporation this week.

I shall move on to talk about the problems at North East Shipbuilders Ltd., the problems of the orders that we have and the contractual difficulties. Hon. Members on both sides of the Chamber are concerned about the state of the ferry programme at North East Shipbuilders, and I am sure that that is why many people from the north-east have come here today. We all know that there has been a dispute between British Shipbuilders and its Danish customer. I cannot intervene in that. My hope is that the dispute will be resolved. British Shipbuilders strongly denies any suggestion that the ferries are inadequate, or that there are defects in them. Counter-allegations are being made by the customer. We hope that the dispute will be resolved and that the contract will continue.

That contract is heavily supported by the Government. A total of £1 million-worth of intervention fund support is going into every ferry built. The contract price to Mr. Johansen is £4 million. The intervention fund support does not include the soft loans, and so on, which have also gone in to help this order, which is potentially for 24 ferries. At the moment the customer is in default on a number of the contracts, with the result that only two ferries have been delivered, and, as anybody who goes to Wearside is, unfortunately, able to see, there is a growing row of fine ferries moored there. In the opinion of British Shipbuilders these are potentially available for other customers. I think that there are seven ferries now on the river.

We are still waiting for negotiations, and I do not believe that it would be helpful for me to go into a blow-by-blow account of where the parties think they are at the moment. I accept that there has to be some doubt about whether the programme will be completed, but for the time being it is continuing. For so long as it is continuing, for so long as the ECGD has not declared the customer to be in default under his loans, and for so long as neither party has declared any intention of shortening the contract, we proceed with laying the keels and the customer keeps being declared in default under the contract. Everybody is hoping that this matter can be sorted out satisfactorily but, with the possibility of the programme not being completed, we are looking to the possible future in Sunderland.

Everybody accepts that any termination of orders in Sunderland would be a great blow to the local economy. Only as events unfold will we know whether Sunderland's future lies in continued support for the Danish ferries or any other kind of order or in looking for other, alternatives ways of stimulating employment in the town.

There will be talk of Cuban orders. I do not believe that the Cubans have any intention of taking the ferries, which are of a particular design intended for the Scandinavian waters. The hon. Member for Sunderland, North is always talking to me about the Cuban order, and the Cubans do, indeed, appear to be contemplating the possibility of building freighters, but no proposition has yet come in. Remembering the history of orders of this kind over the years—Polish ships, Chinese ships—we must look very carefully at these orders. The purchaser is very heavily subsidised, so one has to look very carefully at the financial basis of what is proposed.

We are making it clear to all prospective purchasers of British Shipbuilders' yards that we will discuss with them support for new orders and the basis upon which we might contemplate continued support of an intervention fund kind for the future. I should be inclined to consider requests for support from British Shipbuilders with considerable care, if not scepticism, in the light of the very heavy losses over and above the intervention support that British Shipbuilders has consistently made in the past.

People from Sunderland obviously want to know what the immediate outlook is. At the moment we have this contract under negotiation. First, it is a small source of comfort, but very relevant, that no scenario—if I may use that awful word—that can be contemplated for the outcome of the Danish ferry dispute means that the yard will close tomorrow, or anything like it. There are months of work that is bound to continue, including work in hand, contractual obligations, and so on. We are not facing a disaster that will lead to an overnight shutdown. Secondly, other things are happening in Sunderland. The Government have helped Nissan cars to go into Washington new town, and there is the potential for a huge amount of extra employment there in the early 1990s.

In any event, unemployment is falling rapidly in Sunderland. This morning's news is extremely good. Unemployment in Sunderland has fallen by 4,500 over the last 11 months. Unemployment in the Sunderland travel-to-work area has fallen faster than the average for the northern region as a whole, where unemployment has fallen faster than in any other region of the country except the west midlands.

We are not talking about a no-hope town. We are talking about a town in which the economy is coming back very strongly. I fully expect that the hon. Members for Sunderland, North and for Sunderland, South (Mr. Mullin) will get up and say that everything is dreadful in Sunderland. I do not think that they do their town a service, because it is engaged in a great revival of activity and they should be lobbying me about the shortage of factory space for people who want to invest in alternative employment.

Things have moved a little since my last statement, but I believe that the Opposition have rushed too soon into this debate. Negotiations are continuing with Kvaerner. There are more potential customers who wish to acquire other yards—Appledore, Ferguson, and so on—with a continuing interest. The dispute over the Danish ferries is not resolved yet, but work is continuing and there is no imminent threat of all work coming to an end.

We are not talking about the end of British shipbuilding. We have had all this talk about a strategic industry and how a great maritime nation can go forward without a shipbuilding capacity. The great bulk of the industry is outside British Shipbuilders' merchant yards. We retain a great shipbuilding capacity for purposes of war or other purposes. British Shipbuilders' warship yards are already there and we have the private sector merchant yards that were never nationalised. Their employment may be modest in total, but it now approaches one sixth of that of British Shipbuilders.

I am pleased to say that there is a substantial amount of work in progress on warship building. Vickers and Cammell Laird have submarine programmes stretching well into the 1990s. Swan Hunter has two type 22 frigates and one type 23, and a second auxiliary oiler replenishment vessel under construction. Yarrow has one type 22 and three type 23 frigates. Vosper Thornycroft has work on smaller vessels until 1993.

There are good prospects of a substantial amount of new work in the shape of further type 23 frigate orders. Four companies have already tendered: Swan Hunter, Vickers, Vosper Thornycroft and Yarrow. We cannot say at this stage how many frigates will be ordered and when, but they are very important prospects. All these companies are thriving. They are the companies that the hon. Member for Dagenham was dismissing a few moments ago as failed companies in the private sector. As my hon. Friend the Member for Surrey, North-West (Mr. Grylls) pointed out they are all extremely successful warship builders.

Warship builders can and do build merchant ships as well, although they do not get intervention fund support to do so. Swan Hunter is building a cable ship at the moment. Hall Russell is building a replacement vessel for St. Helens. The small private yards that I mentioned are building a range of vessels, including tugs and fishing boats. Further orders have been announced for, among other things, chemical tankers, a ferry and vessels for the Ministry of Defence. All that is shipbuilding. The Government are not in any way indifferent to the fate of shipbuilding in this country. Large sections of the shipbuilding industry are doing well and quite a number of the British Shipbuilders yards that we are talking about this afternoon are likely to do well if they go into the hands of companies such as Kvaerner and get into specialist markets in the future.

I do not for a moment deny that we are at a somewhat difficult crossroads with British Shipbuilders with the news that I have had to report on different yards where events vary from case to case. There is a limit to the information that I can give until negotiations and disputes have been resolved.

Having put in all this money to sustain the industry through a difficult time, the Government are looking to the future of the yards and the economy on Wearside and Clydeside, at where the modern jobs, the next jobs, are to come from and at the continuing, and we hope rising, employment in those towns. That is what matters most of all. I hope that the future will include shipbuilding in most of, if not all, the places with which we are primarily concerned today. We cannot be faulted for the support that we have given to shipbuilding in the past, or that we are giving to it now, which is generous to excess compared to any other industry in the country.

We shall continue to handle the problems of Govan, NESL, Ferguson and Clark Kincaid on the same pragmatic basis, case by case, and try to reach a successful conclusion. We shall handle them in a sensitive fashion, but we are not helped by the Opposition seeing the prospect of fanning a few fears and winning a few quick political points, and spreading a few unjustified rumours in the hope that they will get some advantage out of the present changing situation in the British shipbuilding world.

5.19 pm

Mr. Ted Garrett (Wallsend)

It is 25 years since I made my first speech in the House on shipbuilding. Since then I have seen the nationalisation and denationalisation of the industry and served on the Committee that examined the relevant Bill in long and controversial proceedings.

I am cautious when it comes to predicting the total demise of the British shipbuilding industry. There are historical reasons for its present position and we should not spend much time in this short debate analysing them. We should look not backwards, but forwards to what is likely to happen.

I am pleased that the Minister mentioned Swan Hunter which is in my constituency. It was nationalised and then denationalised. When it was nationalised it spent some of the money given to it in the form of subsidy on modernising the yard and making it more efficient. The benefits of increasing its efficiency and of modernisation have been seen since it was denationalised, so the money was not wasted.

In the past two years the Swan Hunter group has made tremendous improvements in its efficiency and in cost reduction. Overheads have fallen by over 30 per cent. and productivity has improved by 25 per cent. Those are good, aggressive moves to keep the company in international shipbuilding. In some ways the taxpayer is now beginning to receive value for money.

The shipbuilding industry is now tightening up and making more aggressive its purchasing from local suppliers and from British industry in general. That had to come. In the past, the industry was rather slothful; it did not shop around widely enough to make its sub-contractors keen and competitive.

Recently, the result of this efficiency was shown when HMS Sheffield was handed over to the Ministry of Defence ahead of time. We should give credit for that to the shipbuilding workers and management on Tyneside. The ship was handed over with no defects or work outstanding, and the captain expressed complete satisfaction with his mastery of the ship. Such news was well received in the district, but not in the national press, in which one never hears about the good side of the business. All the national press ever does is knock the shipbuilding industry, and that has had an effect on morale.

Some companies are beginning to fight their way out of this position and adopt a more positive attitude. But I warn the Minister that this progress towards efficiency by companies such as Swan Hunter can be maintained only against a background of continuing work. Unless that is guaranteed, companies will have to make substantial cuts in their work forces. We are nearing the threshold of further cuts because of reductions in the volume of work.

The mix at Swan Hunter's yard should serve as an example to others. It consists of Ministry of Defence and merchant contracts. The company has tightened up its marketing, and its maintenance of overseas sales drives has brought an order from Ghana and a possible order from India. Above all, the company has won a substantial order, worth £40 million from Cable and Wireless, in the teeth of intense competition. Cable and Wireless did not hand over the contract—it had to be fought for.

The Government's philosophy of a hands-off approach to massive subsidy will have to change. A time is coming when we shall have to put in some money for social reasons. The company will need a social input of cash to maintain the initiative and incentive that it is now developing. It will need that to remain in the international market and as a large contractor for the Ministry of Defence.

We hope that when the contracts for the four frigates are announced, Tyneside will get a substantial share of the work. If it is successful, it will be based on a completely costed contract. The Ministry of Defence wants value for money, and it will get that from companies such as Swan Hunter.

The Conservative party's blind spot—it was evident in the Minister's speech—relates to the £20,000 per job that the British shipbuilding sector costs. How does that square with the amount it costs to keep a British farmer in a job? If we had that figure we would have a reasonable basis for comparison.

Mr. Philip Oppenheim (Amber Valley)

It costs £3,500 a year.

Mr. Garrett

I am not opposed to subsidies to the farming industry if they are kept within reason, but the Conservative party is usually silent about subsidies to British farmers—

Mr. Oppenheim

rose—

Mr. Garrett

I have nearly finished.

The Conservatives create mayhem about the costs of subsidising shipbuilding. I am not stupid enough to think that every shipbuilding yard should remain open if that is impossible for various reasons. My hon. Friend the Member for Sunderland, North (Mr. Clay) will, I am sure, have his say about this later. Sometimes, for social reasons, a shipyard should be kept open in the short term until work comes along, and it will, because of the efficiency measures that management is introducing and because the work force realises that do-or-die efforts lie ahead.

I conclude by asking the Minister—who, I know, will not budge if I mention massive subsidies—to bear in mind in future discussions in Cabinet and with senior colleagues that there is a case for a short social fund payment to tide British shipbuilding over until orders are obtained. If he will give some sign that he thinks there is merit in my point of view, I shall be satisfied.

5.28 pm

Mr. Barry Porter (Wirral, South)

I hope the hon. Member for Wallsend (Mr. Garrett) will forgive me for not following his argument about the north-east. As always, his speech was reasonable, save in one respect. From listening to him and the hon. Member for Dagenham (Mr. Gould), one would think that the Government had been wholly indifferent to the fate of British shipbuilding over the past nine years. I hate to repeat the figures—repetition is a form of flattery; but perhaps this is meant to be that—but the Government have spent £1.8 billion in that period to ensure that the industry is supported in one way or another. That is not indifference.

Mr. Gould

As the figure of £1.8 billion has been cited so frequently, it is perhaps worth making it clear that a substantial proportion of that money went to the much touted privatised yards, and another large proportion has gone on the costs of restructuring and redundancies in British Shipbuilders. The money has not gone entirely to British Shipbuilders' present operations.

Mr. Porter

A large proportion of it was used to pay for some restructuring in the industry, and it is right that that was done. Whatever way one looks at it, a substantial tranche of public money has gone to the British shipbuilding industry; that cannot be gainsaid.

I shall speak about my own area. My earliest memory of the shipbuilding industry was watching the launch of the Ark Royal in about 1950–51, when Cammell Laird employed about 20,000 people and was the hub of the town in which I was born. [Interruption.] This was a bigger and better one. It was difficult for me to watch the decline of a town that depended upon shipbuilding and had its heart in the shipyard. I still live in that town and I am pleased to see in the Chamber listening to my speech the hon. Member for Birkenhead (Mr. Field).

The hon. Member for Dagenham concentrated on the problems of merchant shipbuilding, but problems also exist in the warship market. They are not as critical as those in the merchant sector, but there is very keen competition between the yards. The hon. Member seemed to ignore the obvious reason for that, excess capacity, and to hope that it would go away. It is obvious that a yard such as Cammell Laird depends greatly on the Ministry of Defence and on the Government's warship procurement programme.

I was delighted to hear my right hon. and learned Friend the Minister say that an order for another four type 23 frigates will be placed some time this year. I trust that the orders will be placed sensibly and that their placing will be based upon the philosophy that underlay the privatisation of the warship yards.

I do not want to give the House a long and detailed history of the problems of Cammell Laird. I am sorry to see that the hon. Member for Liverpool, Walton (Mr. Heffer) is not here, because many years ago he worked, no doubt expertly, as a joiner with Cammell Laird. By 1984 Cammell Laird was nearly on its knees. Nobody cared or worked very much, and that was part of the Merseyside malaise. The yard had no future and was making a loss. There was a politically and industrially motivated sit-in, and without doubt the yard was within a week or so of being shut. With the help of some hon. Members from the area, about 1,250 shipyard workers walked past the pickets. They passed the jeering bully boys, and that was a significant turning point for the town and for Merseyside. The realism shown by the work force was an important British industrial landmark and ensured the survival of the yard.

I hope that I shall not destroy the political career of the hon. Member for Birkenhead any more than I have already done by paying tribute to him for his realistic response at that time. It was realism that obtained the order for the first frigate. The first and second frigates were delivered on time and in good order, and I have no doubt that when we get an order for a third frigate it will also be delivered on time and in good order.

The thrust of my argument is that Cammell Laird went along with the Government's policy of privatisation. It accepted that the Government had the right to do that, and it made itself efficient. It has now increased its work force from its low point of about 1,200 or 1,300 to about 2,000. That is significant. It would be wrong if that yard, having gone through that change, did not get orders. It does not expect them through saying that it is wonderful and marvellous and that it is Cammell Laird's turn. Similarly, it would be quite wrong if other yards got orders on the basis that it was Buggins's turn. The Buggins philosophy is purposeless.

Yards such as Cammell Laird, which have proved their efficiency and shown that they can build these ships, should be given orders on the basis of efficiency, cost and quality. If that does not happen, the whole privatisation programme will make no sense at all. Buggins must not have his turn. On the basis of efficiency, Cammell Laird must have the orders that it deserves. I am quite certain that hon. Members with constituencies on the Wirral peninsula as a whole, and in Birkenhead in particular, will do everything in their power to ensure that Cammell Laird gets what it deserves.

5.35 pm

Mrs. Ray Michie (Argyll and Bute)

I have some justification for being happy to take part in the debate, because I have a shipyard in my constituency. It builds excellent fishing vessels and is a very thrusting and enterprising yard. However, that is not the type of yard that we are discussing.

All previous speakers have highlighted the fact that, certainly in terms of production, British shipbuilding is a sad story of decline. The over-capacity in the world's shipping industry has led to a chronic dearth of orders for new ships. It is clear that world production capacity far exceeds future demand in the medium and long term. The fall has not been uniform. In the European Community, for example, the reduction has been about 45 per cent. In Japan, which is the world's main producer, production has fallen by about one third, whereas in eastern Europe it has remained stable. Korea, which is a relative newcomer to shipbuilding, now produces about 15 to 20 per cent. of the world's ships, but the United Kingdom's share has fallen to 2 per cent.

We know that nearly every shipbuilding nation subsidises its shipbuilders, either directly or indirectly. The Minister made much of the support given by the Government. I wonder if he will give some reply to the European Community Council's sixth directive on shipbuilding, which took effect from the beginning of 1987. As I understand it, the Council agreed that the aid ceiling should be set at 20 per cent. for smaller ships costing less than approximately £4.2 million.

The Government decided that the full value of the permitted aid ceiling should not be applied to ships costing £10 million or less to build. Instead, they applied a sliding ceiling under which the amount of assistance available is set at a maximum of 20 per cent. for a £10 million ship, reducing on a straight line basis by 0.75 per cent. for each £1 million drop in shipbuilding cost.

I hope that the Minister will tell us why the Government have cut this level of aid, thus damaging our yards in their efforts to win new orders. It is extraordinary that the Government, having concluded a Community agreement on the level of aid permitted, should then refuse to take full advantage of that agreement.

The decline goes on. It was said in the merchant shipping debate and it should be said again that in 1975 there were over 1,600 British ships. Now we have less than 650. Of course our fleet, like others, has been subject to changing world trade patterns and to innovations such as containerisation. The Government's 1984 Budget which removed incentives to capital investment in shipping was a great blow. I shall speak briefly about Govan.

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

I hope that the hon. Lady will be brief.

Mrs. Michie

I want to say something about Govan because, like the hon. Member for Greenock and Port Glasgow (Dr. Godman), I come from Scotland.

The Government intend to sell off the Govan shipyard to the Norwegian firm. Any additional work and the potential for future orders is to be welcomed, but I do not think we have been told about guarantees that the Norwegians will not just build these ships and then walk away. What hopes are there for more orders? The Minister said in his original statement that the company would be making conditions, but I do not think that he said anything about the Government asking for guarantees for workers or orders. I still do not understand—I ask the Minister again—why the Govan shipyard does not build ships for the Norwegian company. It has the expertise. Are we saying that we could not do it? Alternatively, is there not the possibility of a joint venture or the formation of a partnership?

Hon. Members have referred briefly to Harland and Wolff and the Yarrow shipyard, and to the hope that the type 24 frigates will go there. But the lack of civilian orders is crucial for our yards. We understand that British Shipbuilders—I believe this is true—would prefer to order in our yards, provided that they can compete on price and delivery, and great strides have been made in this direction. It is much more costly for a British company to spend time and money to send someone to Taiwan or Korea than to send him up to have a look at a ship in Govan. I believe that our companies want to build ships here.

The truth is that shipping companies will order ships only if the rate of return on a massive capital investment is at least as good as other investments. Any lack of Government encouragement means that this money goes elsewhere, to the detriment of shipbuilders. We all accept that shipping operates in a very competitive environment. It is not regulated like the airlines. Foreign shipowners can buy cheaper ships because of aid from their Governments, whether by subsidised building, protective trade or assistance with crew costs, and the stark reality is that British owners will not buy ships.

The Government policy means that British yards will not even be at the starting blocks to compete for work; that is bad for shipbuilding and repair, and bad for the national interest. Surely we should be supporting an industrial strategy instead of what seems to be a policy of sell, sell, sell.

I want to draw attention again to the fluctuating exchange rates, which can do more to damage ship-building than almost anything else.

We need a strong merchant fleet to carry our own trade and ensure control, as an island nation, of those vital lines. We need to send clear signals that we can reinforce and resupply our industry and population in times of tension or war. Have we reached the point where that can no longer be certain? It is increasingly clear that merchant shipping will dwindle further unless there is action now.

We have been asked, "Where are the ships and the orders?" Here are the orders. The fleet is aging. Today's ships average 12 years old, and 48 per cent. of container ships are more than 15 years old, so the crucial time for investing in British ships is immediately ahead; indeed, it is now. The Government seem content to let the ships go, and with the ships what remains of the great contribution to engineering skills from the shipbuilding industry, especially in Scotland.

We must take action now. The means are readily available. I heard the Chancellor of the Duchy of Lancaster say this morning on the radio that he wanted somebody to come forward with ideas. I have a list of ideas here, which I will send him rather than take the time of the House now.

Many solutions are on offer in relation to crew costs and investment. The Government need to seize them, and to find the political will to look at the future of our island seafaring nation, and the shipbuilding skills and expertise of our men, so that we have a merchant fleet of which we can be proud, which is British built and crewed by British merchant seamen.

5.45 pm

Mr. David Porter (Waveney)

I have been impressed since I came to the House last year by the golden opportunities missed by the Opposition in their choice of subject for Supply days and their treatment of them. I thought for a while that shipbuilding might be a different case, but I am relieved to hear that it is not.

My hon. Friend and namesake, the Member for Wirral, South (Mr. Porter) stressed realism in his speech. Realism is missing from what the Opposition say, not just about the market place but, amazingly for the Labour party, about the shop floor.

The hon. Member for Dagenham (Mr. Gould) who is no longer in his place, I am sorry to see, admitted that he was concerned only with the nationalised industries and yards. I have an independent yard in Waveney, Richards of Lowestoft, which was founded in 1876. It is a living, breathing, vibrant and private yard. I also have Brooke Yachts, which until recently was part of the internationally known Brooke Marine, the famous warship builders. I am concerned with Richards in this debate.

The men on the shop floor at Richards know the reality—that shipowners go to the cheapest source of supply. There is no customer loyalty, as shipping is an international concern. They know it every day, because if they forget it for one minute they will be out of work. They also know that British Shipbuilders makes substantial losses, something which passed virtually without comment until recently. The shop floor workers do not understand why that should be, and neither do I.

I was present when the Chancellor of the Duchy of Lancaster assured Richards last July that he would not allow British Shipbuilders' yards to carry on putting in loss-making bids, thereby damaging the private sector at the taxpayer's expense. I have had a letter from a private secretary in 10 Downing street since then to confirm that it is Government policy. The Government attach particular importance to BS only bidding for contracts in competition with United Kingdom private sector yards, provided that it does so on a realistic basis.

I must ask a variant of the question posed by the hon. Member for Dagenham: do the Government want a small-yard, independent shipbuilding sector? The work force at Richards are incredulous sometimes at the speed of response from the "enterprise" Department. I raised with our noble Friend the Secretary of State for Trade and Industry the case of an application for two tank vessels submitted by Richards in March. It will go abroad unless something moves fairly quickly.

The general point remains. When pressed, the official response from the Department is often on the lines that these applications for intervention fund support are being considered in the normal way. That is not, and should not be, good enough. Surely, of all the leviathans of the state, DTI should know that speed is of the essence.

On the operation of the intervention fund, an impression persists sometimes in dialogue with officials of a slightly negative approach to using the assistance available in the manner for which it is intended. Shipowners will not wait while shipyards and the Department, and the Commission in Europe, argue the toss about applications in a protracted way. Both sides need, not a long-awaited grace and favour decision but the offer of a firm amount, so that shipowners could decide their financial liability and shipbuilders quote a firm price. Our partners and competitors in other European countries have a certain amount of flexibility, which we once had. Let us have it back.

Three or four years ago, these decisions were speedy; let us have that back, too, with the confidence in the IF system that the industry needs. I do not think that I can vouch for it at the moment. We have heard of orders tonight, such as for Danish ferries. Another was required by the Government of Mauritius. There was also the Ministry of Defence range mooring vessel order, which Richards finally won. All show in different ways that something is wrong with the present system.

To defend my hon. Friends, I am aware that this is not entirely in their hands. We are dealing with an army of bureaucrats who have failed to solve the problem, many of them in Brussels and Strasbourg. We are dealing also with almost kamikaze survival tactics from Japan, Brazil and South Korea. It is a global problem. There is a dearth of new building orders. But, as the Opposition admit, there is a glimmer of hope and a definite increase in optimism about demand prospects.

To be equally fair, some of the problems are inter-departmental. There is one skipper who would order at least two new trawlers to be built at Richards in Lowestoft but for problems with intervention and fishing licences. Interdepartmental, international or intercontinental—the noise made by the Opposition at any suggestion of subsidies being removed from British Shipbuilders is head-in-the-sand stuff.

The hon. Member for Dagenham is quoted in Lloyd's List in April as saying that it is crazy for the United Kingdom to pull out of shipbuilding when the market is picking up and United Kingdom companies are returning to competitiveness. If he is talking about BS, that remark sticks in the throat, but he misses the point—that, with a vibrant private sector, the United Kingdom will not pull out of the world market.

Shipbuilding may no longer be fashionable, but the updated private sector can offer places to graduates, craft apprentices and youth trainees. Surely that contributes to what we are all trying to achieve in respect of traditional attitudes, good behaviour and honest endeavour. The private sector must have an eye on dividends. In Richards's case, the parent company let it retain dividends while rationalising working practices. But where there is profit, there is substantial tax. How much tax has British Shipbuilders paid?

5.51 pm

Mr. Bob Clay (Sunderland, North)

The hon. Member for Waveney (Mr. Porter) said that there is a glimmer of hope for an upturn in orders, "as the Opposition admit." We have trumpeted the fact that an upturn is coming and that there are orders to be secured. The difficulty is that the Government do not have the will to sustain the industry, to secure those orders and to continue to do so until the upturn comes. Once again, the Minister's speech was complacent, and I make no apology for saying that. As the right hon. and learned Gentleman acknowledged, the area which I represent faces—perhaps not overnight but certainly within months—closures and the loss of 3,000 jobs—with perhaps another 6,000 or 7,000 dependent on them—if the Danish ferry contract finishes and other orders are not secured.

I make no apology for being appalled by the Minister's complacency and at the incompetent muddle of his speech. His speech was permeated by the idea that there was great enthusiasm for buying British Shipbuilders' yards. I do not understand why so many people want to buy Appledore, Govan, the Clark Kincaid engine works or Ferguson-Ailsa if there are not orders in Britain or elsewhere. Perhaps people may want to buy those yards for property speculation, which would be disgraceful. The Minister has not yet answered that point, which was made by my hon. Friend the Member for Dagenham (Mr. Gould).

At stake are not just the thousands of jobs at NESL, but the pride of a community which at one time built and launched more than half the world's tonnage of ships, which has suffered tens of thousands of job losses since the Conservative party came to power and which now has its back to the wall, seeing perhaps the end of a tradition going back decades.

For all that unemployment may be falling slightly, it is still 21 per cent. in the area as a whole. Because of tradition, history and many other factors, two thirds of the work force live within a mile of the yards on the river. There are pockets and estates where unemployment is still 30 or 35 per cent. There is no need for us to face this crisis. The Opposition have argued long enough.

Korea and Japan subsidise their yards far more than the Government have been prepared to subsidise ours. Now our Government talk about "no further loss making." It is absurd. I am sure that the Minister has had placed in front of him by his civil servants—if they have any competence—figures showing the age profiles of the merchant fleets around the world. By the end of the 1990s, unless there is substantial new building, there will not be ships. They will have sunk, so old and unseaworthy is much of the merchant ship capacity. It is a question not whether there are orders and when they are coming—there will be an upturn—but whether the ships will be built in this country and whether they will be built in Sunderland—the point that concerns me. It was an insult to shipbuilding, and to Sunderland in particular, for the Minister to say, "If we cannot sustain shipbuilding, perhaps we should look at something else. As ever, Nissan was mentioned. We all know that we shall need another three Nissans just to replace the job losses if NESL closes. Shipbuilding is a high-tech industry. Does the Minister not understand that? The ships that NESL builds are among the most superb advanced ships in the world.

I have a suggestion for the Minister. Around the country there are great big billboards, paid for by the Department of Trade and Industry, which show the heavy features of Sir John Harvey-Jones, the former chairman of ICI, who advises British business men to get ready for 1992. A few weeks ago, the same Sir John Harvey-Jones was in Sunderland for the radio programme "Down Your Way." He chose to go on one of those Danish super-flex ferries with John Lister, the chairman of the corporation. They had an interesting conversation about the superb technological advance that those ferries represented, how they were doing what had not been done before and what an advance in building they were.

As Sir John Harvey-Jones seems to have great enthusiasm for those ferries and as everyone in the town, the management and the work force stand by the standards of those ferries aid refute any accusation of bad workmanship in Sunderland, instead of taking a stand-off attitude of "wait and see", why does the Minister not ask Sir John Harvey-Jones with his great commercial and industrial experience, or someone of his ilk, to step in and, on behalf of the Department of Trade and Industry and British Shipbuilders, promote those ferries on which payments have been defaulted?

The Minister should be able to say that we shall build all 24 and that, whether or not the Danes buy them, we shall find other purchasers. It is a disgrace, because the borough of Sunderland, which is hard-pressed with penalties, and threatened with rate capping, has done more to defend those ferries and to find purchasers than the Minister and the Department.

Whatever happens with the Danish ferries, we must recognise that by the end of the year, even if the contract is completed—as we pray it will be—we shall be coming to the cyclical crisis of where the next order will come from. The Minister says that there are no orders. I have a suggestion. Yesterday, for the third time, a report was issued showing that roll-on/roll-off ferries—not the Danish ferries being built in Sunderland but those crossing the Channel and other seaways—are unsafe. The Royal Institution of Naval Architects has recommended that work be done on those ferries to make them seaworthy and safe. It is a disgrace that that has not been done already. That work could be done in British ship repair yards with Government grants, if necessary. That essential work, on which the Government should insist, would provide a good breathing space before more orders are placed.

I am appalled that the Minister was so complacent about Cuba. I had never seen such a gap in beliefs. British Shipbuilders believes that it is dealing with a real prospect. If the Minister does not believe that, he should call BS in and accuse it of wasting public money. People have been going to Cuba, no longer at the initiative of British Shipbuilders but at the request of the Cubans who want to buy ships, and technical discussions have taken place. The Minister says that there has been talk of these orders for long enough. I cannot believe that he does not know that these orders are the hottest prospect of substantial orders for British Shipbuilders for a long time. The Department should he saying to British Shipbuilders, "What kind of financial arrangements shall we need to clinch the order? What kind of loans, period of grace, interest rates and package shall we need? Let's get on with that so that there is work in the yards and orders are signed."

Having denied that there are orders to be won and having dismissed the Cuban order, the Minister then says, "If there is an order, we shall have to consider it carefully. We are not sure whether we can carry on putting in money." I hope that he will at least have the decency to acknowledge that, if British Shipbuilders managed to clinch that substantial order, it would save NESL for a long time to come. We should not then have the final sabotage of the Department refusing to put together the necessary cover and financial package. That would really give the lie to everything else that he has said.

The Minister should face another fact. With all the talk about private yards, one would think that it was a great success story for the private sector and failure for the public sector. Let us consider some of the losses to which the Minister frequently refers in respect of British Shipbuilders. The assets of the privatised yards were virtually written off, and that shows up as part of the allegedly huge losses that British Shipbuilders has made.

Let me bring matters a little closer to home. The ITM Challenger, whose owner defaulted and went bankrupt, was ordered by the private sector. There are two sides to the private sector—the builders and the people who buy the ships. The £47 million for the ITM Challenger showed up as part of the loss put down to Sunderland. That was due to the failure not of public enterprise, but of the entrepreneurial system about which the Government are so enthusiastic.

The Danish ferries are not being ordered by the British Government, by British Shipbuilders or, indeed, by anyone in the public sector. Those ferries, whose owners now appear unable to pay for them and are attacking the standards of British Shipbuilders to cover up for that, were ordered by private entrepreneurs. I should have thought that when such a scheme fails, and that failure jeopardises thousands of jobs and threatens to end a community's history of shipbuilding, the Government, who are so enthusiastic about such schemes, would step in and do something to save the situation.

I conclude by quoting some of the Prime Minister's remarks when she named the Stena Seawell in my constituency on 25 April 1986. She said: This is a very proud day for Sunderland shipbuilders and for Britain and I am proud to be a part of it. You, Mr. Olsen, and your people designed the most modern ship with the latest technology that could be built anywhere in the world and you chose this shipyard and you chose this management and you chose this work force to to it and they've done it, and they've done it superbly. It has been a tremendous boost for us that we can achieve this in our country. It teaches us that we can do the latest technology and that we can do it well. We have the skills, the enterprise, the inspiration to do it. Thank you. Congratulations. I hope we'll be able to do a repeat performance by virtue of the tremendous advertisement we can blazon across the world with what we've done on this ship the Stena Seawell.

For the people of Sunderland, the next few weeks will determine whether that was flag-waving, empty rhetoric and hypocrisy or whether the Prime Minister is now prepared to put her money where her mouth is.

6.4 pm

Miss Emma Nicholson (Torridge and Devon, West)

I am immensely grateful for the chance to speak briefly in the debate, because I am concerned about the future of Appledore Ferguson which has been discussed in detail today. Like the hon. Member for Wallsend (Mr. Garrett), I made my maiden speech on shipbuilding because of my concern about the matter, although I do not have as many years' experience of such matters as the hon. Gentleman. Nevertheless, I share his concern for the individual yards.

There have been grand speeches today about the future of British shipbuilding. We are talking about individual yards and jobs. I am concerned because Appledore Ferguson is a large employer in my constituency. There are 530 jobs in that yard and my task is to protect them because the yard puts £10 million into the Torridgeside economy. That may not sound a great deal to some hon. Members, but the Torridgeside area has historically been short of work and incomes have been low in comparison with other areas. Every shipyard job creates in the area at least five other jobs, which must also be protected and expanded.

It is not a single-industry economy in my area, but a mixed economy with many other factors depending on the large employers. The many people who come to see the shipyard and do business there attract other work to the area. They may add to our burgeoning tourist industry and they also visit our farms. The hon. Member for Wallsend mentioned the problem of support for farms and price support for farmers, but I am happy to tell him that, in the recent agriculture debate, Opposition Members committed themselves to supporting farming and to price support in that respect.

We have to eat, and we must grow as much food of our own as it is economically possible to do. I would be deeply concerned if, as an island, we ever stopped making ships, but it is a question of balance, as in so many other areas of political life. Flow much money do we want to pump into shipbuilding and farming, and how much should go into other sectors, such as social benefits? It must be a right and proper principle for private funding to be attracted by the Government and to come into the shipbuilding industry in every way possible, so as to release funds for other socially important matters.

I was therefore delighted to hear the Minister say that the Government were committed to sustaining economic activity in shipyard areas. I welcome that crucial commitment, but, following his statement of a few weeks ago, the workers at Appledore Ferguson are intensely worried about their future. Theirs is a right and proper concern, because job uncertainty has implications for families and the future. Above all, I seek from the Minister an understanding about and guarantees for the future of jobs in the yard. I know that it is difficult to ask him to look into a crystal ball, but, as the future of the yard's employees was undefined when he made his last statement, perhaps he can tell us a little more today.

I am pleased that a large lobby has come from the yard to the House today. I have paid two visits to the yard since I have lived in the area and I have another visit planned at the invitation of the convener, Dick Mathews, and his colleagues. I have been a little late in accepting it, but I am looking forward to making the visit shortly.

The Minister will recall that I have raised with him my concerns about Appledore several times, both in debate and privately. My concerns today can be stated very briefly, but they are none the less strong concerns. First, and most important, we should retain Appledore Ferguson as a shipbuilding unit. If we consider the examples of other former shipyards, we see that part of Falmouth has become a marina under Vosper Shiprepairers Ltd. Lowestoft is halfway to being a marina under Brooke Marine and Robb Caledon Shipbuilders at Dundee has gone into luxury flats. Much nearer home, Richmond yard, Appledore, cannot be used any more for shipbuilding and has gone to become luxury flats, and Bideford shipyard is now overrun by houses.

I can accept that those may be right and proper uses for those unneeded yards, although I would have preferred Richmond and Bideford to go a different way but, as the Minister well knows, Appledore is needed in the shipbuilding world and must not go that way. It is crucial that I obtain the Minister's commitment that the Government will do their best in that respect.

In the event of a sale, it is important that every effort should be made to keep the men and management fully in the picture, because so much shipyard knowledge is contained within the yard. It has perhaps the best union-management relationship in the business, and it is important that the track record on involving the work force in policy formation should be retained during this exceptionally difficult period. I accept that commercial constraints make that sort of commitment nigh impossible to give, but I put it on the record so that it can be carefully considered as buyers come out of the shadows and become potential bids. Appledore shipyard has a unique track record on union-management relationships.

It would be difficult even for a yard with the pre-eminence of Appledore Ferguson to survive on the open market without any support. Hard work cannot win against unfair competition, and by that I mean some of the competition from the far east which is so heavily subsidised. Appledore excels in making small dredgers, but it could make any sort of ship up to 10,000 tonnes. Support of about 20 per cent. or 28 per cent.—the figure is perhaps higher than the one given by the hon. Member for Argyll and Bute (Mrs. Michie)—is necessary, even for making dredgers. I cannot help thinking that those interested in the yard will also be interested in a continuing commitment to some form of support by the Government or European Community.

Appledore has a bright future and I ask the Government to help, not hinder, the yard's development.

6.12 pm

Mr. Bruce Milian (Glasgow, Govan)

I agree with a good deal of what the hon. Member for Torridge and Devon, West (Miss Nicholson) said. Unfortunately, she is one of the few Conservative Members who takes a keen interest in the shipbuilding industry. It is a pity that more Conservative Members do not take that interest in this extremely important industry.

I do not know whether the Minister thought that anything he said would reassure those involved in the industry who are extremely worried about the future, but I can tell him that nothing he said will provide reassurance. He told us little that we did not already know and the one or two pieces of information were rather detrimental to the interests of the industry and will certainly cause more rather than less anxiety.

The Minister did not answer some basic questions, one of which relates to the takeover of my yard at Govan by Kvaerner Industries, and the continuation of the subsidies under the sixth directive. That is a five-year commitment, started on 1 January 1987. It has been renewed at the present level of a maximum of 28 per cent. for 1988, as it was for 1987, hut, as far as I am aware, there is no commitment for the Government that there will be that level of subsidy or any other beyond 1988. There have been all these stories in the press, some of which have undoubtedly been leaked from the Department—

Mr. Kenneth Clarke

rose—

Mr. Milian

With respect, if the Minister had wanted to give that assurance, he should have done so at the beginning of the debate. He spoke for a long time and told us very little, and a Minister will reply, so I have no intention of giving way to him now.

What will happen in the next three years? The Secretary of State for Scotland can give an assurance when he replies, if there is one to be given. The Minister said absolutely nothing about the level of subsidy beyond 1988. The hon. Lady has just made a similar plea, that we want to know what will happen about EEC subsidies over this five-year period and, indeed, over a longer period.

The idea that the Government have had a genuine commitment to shipbuilding over the past eight years does not bear serious examination. They have looked on British Shipbuilders as an embarrassment. They have already dismembered it by selling the naval yards and now they are hellbent on selling the rest. I do not accept that they have had any commitment to or faith in the future of British shipbuilding, certainly not on the merchant side.

Govan is an excellent yard and the facilities there are first class, as has been acknowledged by Ministers. The management is good and there is excellent co-operation with the work force. I acknowledge immediately that there has been a problem with orders in the past three or four years. Anyone who knows the yard and is worried about its future is anxious to see that it gets new work when the Chinese orders, which it is building now, run out in 1989.

Nevertheless, the announcement about Kvaerner, or rather the leak in The Daily Telegraph, of all papers, about the Kvaerner interest in purchasing Govan, has caused considerable upset and anxiety, particularly as shop stewards were specifically assured only two days previously that rumours about a Norwegian buyer were absolutely groundless. Therefore, there is some anxiety to overcome for that reason alone.

Today we have been told nothing about the progress of negotiations. The Minister keeps saying that the negotiations are with British Shipbuilders, but his Department is involved. I do not complain about that—it is absolutely right that it is involved—but an official from his Department is to be present at the meetings which he mentioned were to take place next week in Norway, so the Government have a direct interest and we are entitled to more information than we have had so far about exactly what is going on. In a foolish statement on television a couple of weeks ago, the Minister said that there was no question of the Government laying down conditions in these negotiations. In other words, the Norwegians or anybody else can take over the yard, regardless of circumstances. They can take it off our hands, as it were. Conditions must be laid down if the yard is to be sold or, as it seems, given away.

The Govan yard, like all other merchant shipbuilding yards, has had all its assets written down to nil, apart from land, in the 1986–87 accounts. Incidentally, that is a reason for the huge figures of subsidy which the Minister quoted. If the Government give away the yard at a bargain price, which is almost inevitable given their attitude, there should be understandings, and as far as possible legal conditions should be laid down, about its future.

Two gas-carrying ships are to come to the yard and that is extremely welcome. That work will be invaluable. But what happens after that? There is no definite commitment, although there are hopes, aspirations and vague promises. We do not know what the Norwegians intend to do about building other types of ships at the yard. We do not know whether they intend in due course—I hope that they do if the negotiations succeed—to put LNG carriers as well as LPG carriers into the yard. We learned very little by way of detail from the Minister today about the transfer of gas technology. There is also the question of more investment in the yard, widening the berths and so on. All those are crucial issues for the long-term future of the yard. Answers to those queries will be very important and will show whether the Norwegian company considers the yard to be a long-term commitment.

We know that there is another side to the picture. Apart from any investment, there is talk about a significant number of redundancies. The Minister did not even mention that this afternoon. We know that if the Norwegian company becomes the owner of the yard, it intends to operate with a core work force of about 450 men and women less than the present work force. There have been no discussions or negotiations with the trade unions. One of the directors of Kvaerner visited the yard and had informal conversations with the shop steward. However, I checked yesterday and there have been no official discussions with the trade unions on the future labour force, conditions and working practices in the yard. It is absolutely essential from the Minister's and Kvaerner's point of view that the discussions take place. Unless there is a proper understanding on those matters, the yard cannot possibly be successful.

There is a long way to go yet. The workers in the yard will be extremely disappointed by the Minister's comments this afternoon. They have made it clear that although, like me, they oppose privatisation, and would like the yard to remain with British Shipbuilders, if the Government are determined to dispose of it, they will make the best of things and co-operate with the new owners.

I met Mr. Gronner a senior director from Kvaerner at an informal meeting a few days ago. I recognise that Kvaerner is a reputable shipping company with wide interests in engineering and shipping as well as shipbuilding. If the negotiations succeed, I believe that the company intends to try to make a real go of the yard. Kvaerner has more faith in the future of shipping and shipbuilding than the Government. That is one of the problems that we must deal with. If the Government had the same faith as Kvaerner about an upturn in the shipping and shipbuilding industry, the yard could successfully remain under the present ownership.

The Government have said that we should he flattered—I believe that Ministers used the word "flattered"—that someone is willing to purchase the Govan yard. What an absolute recognition of defeat. The Government are saying that we should be pleased that someone is going to take the yard off their hands and make a go of it. Why can we not make a go of it ourselves? That question was asked when the news was leaked and we are still asking it, because it has not been answered satisfactorily.

We could have attracted the orders for the gas-carrying ships into Govan without disposing of the yard. I do not believe what the Minister said this afternoon about Kvaerner wanting to build those ships in that yard. We could have attracted the orders—or similar orders—into the Govan yard without disposing of the yard. As an alternative, we could have had a joint venture arrangement between British Shipbuilders and Kvaerner. However, the Government have dismissed those possibilities. We are left with the alternative of purchase, which may hold out some hopes for the future of Govan in the short term. However, I am concerned about the longer-term interest.

It would be absolutely tragic for Govan if a deal was struck with Kvaerner or anyone else which was good for the short term, but led in the long term to the ultimate demise of the yard. I am interested in the yard's long-term prospects; that is why I want to see the firmest commitment from the Kvaerner management in the process of negotiations. After all, we are selling to a foreign firm. We know how difficult it is to have decisions reversed if a closure happens in a factory or establishment under British ownership. The difficulties will be all the greater if we are dealing with a foreign firm.

I am not claiming that Kvaerner does not have good intentions for Govan: I believe that its intentions are good. I hope that those intentions are fulfilled. We can be more certain that they will be fulfilled if we lay down conditions now. Unfortunately, from what the Minister has said today and from his general attitude on this matter, it seems that the Government will not bother to try to lay down those conditions.

6.24 pm

Mr. Neville Trotter (Tynemouth)

The hon. Member for Wallsend (Mr. Garrett) and my hon. Friend the Member for Wirral, South (Mr. Porter) have rightly drawn attention to the successful state of affairs in our naval yards. I am sure that more export orders will arrive in the near future. The potential for the Canadian nuclear submarine order is gigantic and we must all hope that Vickers is successful in receiving that order.

My hon. Friend the Member for Wirral, South did not mention the submarine work carried out by Cammell Laird. It is fortunate to be one of the few specialist submarine builders in this country, and it has assured work through its initiative with Vickers. If we had more time tonight, I should have wanted to consider the refit work of the Royal Navy which is vital to the future of the repair yards on the Tyne. No doubt we will be able to return to that subject in future.

The main subject for debate tonight is clearly the future of merchant shipbuilding in this country. I believe that the House regards it as inconceivable that our island should not have some Merchant Navy shipbuilding capability. It is not simply a matter of our long island history; it is a question of looking to our future strategic needs. I remain convinced that we will continue to build merchant ships in future, although obviously on a far smaller scale than we would all have liked.

I remind the House that for a long time I have advised the marine equipment industry. I want to draw the attention of the House to the widespread nature of employment in the equipment industry. Many of the factories producing parts for ships are nationally and historically situated near ports and dockyards. However, many of the firms are in the midlands, miles from the sea. It is essential to remember that while the industry has done very well in exporting parts to foreign shipyards, it requires a healthy home base if it is to continue to do that in future.

The Ultimate Dream was referred to briefly. I appreciate that my right hon. and learned Friend the Chancellor of the Duchy of Lancaster was right to say that that gigantic project for a 160,000-tonne cruise liner, which will be twice the size of the QE2, is basically a subject for the Northern Ireland Office, as the discussions involve Harland and Wolff. More than half the cost of the ship would go in parts that would be constructed mostly on the mainland of Great Britain. No doubt many of those parts would he built on Tyneside and, I hope, Wearside.

I want to consider the sombre scene facing the merchant shipping yards. The present position has not come about suddenly. It is not a sudden development, apart from the crisis at Sunderland Shipbuilders. We have debated the shipbuilding scene for many years against a background of lack of orders and ridiculously low-cost competition from the far east.

My right hon. and learned Friend the Chancellor of the Duchy of Lancaster reminded us of the significant amount of aid given to the industry by the Government since 1979. I believe that talking about billions of pounds is almost meaningless to the man in the street. However, if we divide the commitment provided by the Government in terms of financial aid, it works out at £1 million for every working day since the Government came to office in 1979. I congratulate the Government on having provided that support for the industry and on having recognised its importance to the country.

I also want to draw the attention of the House to the enormous efforts made by British Shipbuilders management to modernise the yards and revolutionise working practices. In the past two years £2 million has been spent on research and development and £3 million on product development. Many new designs have been offered to the Sunderland yard and the other yards and an enormous effort has been made worldwide to find orders. That has not produced the number of orders that we would have wished, but it is not for lack of trying. It is the result of the gross over-capacity worldwide. In particular, it is the result of the development of the industry in South Korea. That country now has an order book bigger than that of Japan, and the small country of Korea now builds more ships than Europe.

At present, there are 75 tankers on Korea's order book. No tanker is building in Britain and I doubt whether one is building in Europe. We, like the other European countries, are left running around the world desperately trying to obtain orders for one or two ships at a time.

Korea decides the world prices. My inquiries there suggest that, allowing for the long hours of work, its wage rates are about one quarter of those that Britain pays. Industry leaders from Britain who were in Korea a few months ago suggest that the labour costs overall, allowing for the lack of national insurance contributions, and so on, are about 20 per cent. of European labour costs. It is not surprising that it has been difficult for European countries to compete against such figures.

A recent EEC study shows that the cost of building a tanker in Europe is $43 million. In Korea, an equivalent ship sells for $24 million. The cost of building a bulk carrier in Europe is $21 million, and such a ship in the far east would be sold for $12 million. I could go on with other examples. It is against such competition that we have a serious lack of orders.

The situation at Sunderland is not the fault of British Shipbuilders, and it is certainly not the Government's fault. However, there is a genuine and great worry in that area about the shipyard's future. It is hard to see what assurances the Government can give in present circumstances. The Government seem to be doing all that they can to sort out the sorry situation that has developed over the Danish order, but I am sure that my right hon. and learned Friend the Chancellor can understand the need for a message of hope to come out of tonight's debate.

It is extremely hard to see how the Danes can be justified. The yard is capable and experienced, with a well-respected managing director and a skilled work force. The reasons for the trouble are very much those suggested by the hon. Member for Sunderland, North (Mr. Clay) in his comments about the customer. It is interesting to reflect that the ECGD has not branded the customer as being at fault, and I find that rather surprising.

The ships for Cuba might produce salvation in the short term. We are looking at the long-term future for the industry in the rest of the country, but we must face the fact that in Sunderland we are talking about the short-term solution and salvation. We must all hope that something will come from the strenuous marketing efforts being made over those Cuban ships.

The intervention fund, which matches the aid given by our Western competitors in Europe, must continue. I believe that the Government accept that, and it should be spelt out. There will be an opportunity to do that as the discussions on the Cuban order proceed.

We are talking about an industry that has an important future for Britain, and hon. Members should do all that they can to ensure that future.

6.33 pm

Mr. Ken Maginnis (Fermanagh and South Tyrone)

There is one simple and direct question about shipbuilding that the Government must ask themselves and to which they must provide an unequivocal answer. Are we in the United Kingdom to retain a merchant shipbuilding capability, or do we intend for all time to surrender our traditional and proven skills in that area to foreign yards?

In recent times merchant shipbuilding has suffered cruelly at the hands of those who look for sensational negatives. Both inside and outside Government there are those whose purpose in life appears to be to demoralise and dismantle the industry.

I am disappointed by the apparent lack of understanding of the commercial realities—the need for intervention funding for our merchant shipbuilders. It evokes much ill-informed comment, and that must be a matter for regret. It should be fairly acknowledged that privatisation, even if one is convinced of the attractions for the management of the companies concerned, is not in itself an automatic panacea. It does not alter the international pricing level for ships which makes intervention funding a necessity—a commercial reality of life for all EC countries. The United Kingdom cannot isolate itself from that reality if it is to maintain a core of merchant shipbuilding capability in line with the majority of European nations.

Kvaerner, on entering talks on the sale of Govan, made it clear that it will go forward with a deal only on the understanding that there will be access to intervention funding. That is not surprising, because it is the agreed and accepted way in which other European shipbuilding nations operate to match far east competition.

I listened to the Minister on the radio this morning when he spoke of shipbuilding in terms of what is happening at North East Shipbuilders Ltd. I agree that it is a matter of regret that the company is in difficulty with clients over the future of a valuable ferry order. It is to be sincerely hoped that that can be completed as originally ordered.

However, in the present situation it cannot be surprising that North East Shipbuilders Ltd. does not have customers tied up and willing to place an order. Without a customer, the whole question of intervention funding becomes irrelevant. But surely, in current market conditions, the Government's policy on shipbuilding and intervention funding in the United Kingdom cannot be based on that one yard. Is it the Government's wish to allow a situation where such is the doubt created in the minds of those who would order ships that they automatically look away from British yards to those on the continent or in the far east?

That is not how it has to be. Everything points to an upturn in overall market conditions within the next two to three years. Whereas in 1983 there was a laid-up 90 million tonnes, or 15 per cent. of the world fleet, that figure has dropped dramatically to around only 3 per cent. today. That usage, combined with the comparative obsolescence of a large part of the world's fleet, shows that much new build must occur in the early 1990s.

I have seen the Harland and Wolff yard in my region come through a traumatic six-year period during which it has cut its work force by over 60 per cent. It has just completed negotiations which will produce a degree of flexibility within the remaining work force which is unparalleled in the United Kingdom and will match the best in Europe, and it has adapted itself to the market demand for high-tech ships. That, and the massive dry dock and other capital resources that Harland and Wolff possesses, puts it in a position to compete on virtually equal terms with European opposition.

Nor did the cost of that rationalisation come anywhere near the £20,000 per job that I heard the Minister quote on radio this morning and in the House this afternoon. With the exception of the last year, when there was a one-off situation, the average annual cost per job has been about one third of that figure.

I was surprised to hear the Minister refer to extra costs as loss costs. They are the costs of restructuring—restructuring to enable shipbuilding to move forward to the 1990s. We could not produce new jobs which would impact throughout the United Kingdom, as shipbuilding does, for anything like that cost.

What a pitiful surrender it would be if, with brighter prospects ahead, the Government were now to implement a stringent unilateral policy on intervention funding, completely out of line with our EEC partners. It would sound the death-knell for our merchant shipbuilding industry.

At Harland and Wolff one finds a different situation from that at North East Shipbuilders Ltd. Harland and Wolff has customers who are willing to place orders which would bring the United Kingdom back to the very forefront of the cruise liner market. Yet every sort of innuendo, damaging criticism and abuse is levelled not only at Harland an Wolff, but at their biggest potential customer.

Are we really trying to create a situation where we hand over to a foreign yard the work and prestige connected with that project, and probably further similar orders? Further, is every shipowner, particularly shipowners with proven track records, to be treated as fair game for totally unjustified criticism when expressing a desire to have a vessel built in Northern Ireland? That is hardly the way for the United Kingdom to go about winning major export contracts.

Some sections of the press appear to have got it wrong, too. It was not a proven industrialist, such as John Parker, who brought De Lorean to Ulster; it was the Government of the day. Leaders of industry and respected customers should not have to live for ever under that cloud. Must that spectre be permitted to crush all potential for initiative and creativity in the Province?

I am concerned that, just as we have lost virtually all our merchant fleet since 1982, so we may be losing our potential to rebuild it, if and when the opportunity or need arises. One must also consider the domino effect that any further contraction of the shipbuilding industry will have—not only in areas of shipbuilding but throughout the country. The vital knock-on effect of a large proportion of any shipbuilding contract being sub-contracted throughout Northern Ireland and the rest of the United Kingdom has already been described. Letters have been sent to my hon. Friends the Members for Upper Bann (Mr. McCusker) and for Antrim, East (Mr. Beggs) from Ulster Carpets and from CM R Electronics, which wish the Ultimate Dream contract to go ahead because it will create work for those companies. The Minister really should have understood that if Harland and Wolff is to arrive at a contract price, inquiries must go out to the companies that will be involved in sub-contracting.

Is there not every justification for the United Kingdom to retain a core merchant shipbuilding industry so that it may at least compete on equal terms with other European yards? Both the Minister and the House know the answer to that question. I hope that sensible decisions will be taken which will give back hope and confidence to both our merchant shipbuilding industry and its potential customers.

6.42 pm

Mr. Donald Dewar (Glasgow, Garscadden)

The Chancellor of the Duchy opened with the implicit criticism of our action in originating this debate. The suggestion was that it came too early. It was necessary to have this debate now because of the anxiety which exists over the uncertainty and problems facing the shipbuilding industry. That uncertainty will undoubtedly affect morale and confidence, and it is right that we should push the Government for an up-to-date report. If the House is not entitled to such a report, certainly those whose livelihoods depend on the industry are entitled to know what progress has been made. My one regret is that the House has learned disappointingly little as a result of this exercise. However, that does not invalidate our attempt, and certainly we shall be returning to press the Minister again and again.

Much depends on the Government's attitudes. Because it is not the main subject of the debate, I shall make only a passing reference to the major frigate shipbuilding company of Yarrow, which is located on my constituency boundary. The Chancellor of the Duchy made only a very casual reference to the type 23 orders, and could not say what they would total or when they would be forthcoming. I recognise that it may be difficult for the Minister to give that information, but it is essential that Yarrow receives an early order for four type 23s. As the right hon. and learned Gentleman knows, it has been promised only a variation of between one and four orders. All the yards are gasping for those orders. In the case of Yarrow, there have already been some redundancies, and if no orders are received there will be substantial job losses by the end of the year. Those orders are as important to Swan Hunter, Vickers and Vosper as they are to Yarrow. That is one area of the shipbuilding industry where immediate salvation lies entirely within the confines of the Government's ordering policy and is in the hands of Ministers.

It is interesting that the Minister feels that the talks concerning Govan are progressing well. He was being optimistic when he said that the work force there welcomed what was happening. That is not a very accurate description of the situation. There may be recognition that, sadly, the sale of Govan may be the only way forward. If that is so, everyone in the yard, in Glasgow, and in the shipbuilding industry generally will want to make a success of that development. However, it would be wrong if Ministers—as has occasionally been the case in similar circumstances previously—presented that situation as some kind of triumph and a major advance. It is a retreat for the British shipbuilding industry, now that a very important yard will be flying a foreign flag.

I have considerable sympathy with the point made by my right hon. Friend the Member for Glasgow, Govan (Mr. Millian), who questioned whether it was necessary for the yard to go with the orders. The Minister said that it was a fine prospect that Kvaerner was setting up its gas technology industry on the Clyde. I am not clear what that means, beyond the two orders which have been pledged to the yard. If there is a wider prospect, and if there will be a larger spread of jobs, perhaps the Secretary of State for Scotland, who must be following these matters closely, will say a word or two about them. He will appreciate that the phrase "some restructuring", which has taken on a somewhat sinister air, is one in which we are all entitled to take an interest.

I underline the point about early consultation with the work force and with the shop stewards. Whether or not rumours about 450 job losses are correct, it is important that we look for long-term guarantees and that the Government involve themselves not just in providing two orders in the short term but also in creating the kind of base which will allow the yard to continue flourishing.

The House was told that there was a wealth of inquiries for some smaller yards. I was glad at least that there was mention of Clark Kincaid and of Ferguson. My hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman), who has sat patiently throughout this debate but who has not managed to catch Mr. Speaker's eye, has pressed the Minister in the past on that subject. It seemed as though Ferguson was far from the Minister's mind on that occasion. I hope that the right solution will be found for that yard and for Appledore, whose future was eloquently defended by the hon. Member for Torridge and Devon, West (Miss Nicholson). We shall be looking for further details of the Government's plans at an early stage.

NESL faces a difficult and tragic situation. It is depressing to see the way in which Ministers approach it. I was angry at the way we were accused of scaremongering and of presenting a gloomy scenario that could not he justified. However, almost everything said by the Minister could be described in exactly those terms.

Mr. Chris Mullin (Sunderland, South)

Does my hon. Friend agree that it is extremely difficult for the management and the work force of NESL to secure orders against the background of the black propaganda emanating from the Department of Trade and Industry, seen most noticeably in The Guardian' front page leader on 4 March?

Mr. Dewar

It was certainly rich of the Government to accuse us of being defeatist about the industry's prospects when the Minister could only tell the House that he was unable to intervene in any way and could only stand by and hope that everything 'would be all right with the Danish contract. He acknowledged that it might be a great blow for the local economy, and the nearest thing to good news he could manage was that if a shutdown was necessary, it would not be made overnight—that there was no imminent threat of all work coming to an end: no imminent threat, but presumably a medium-term threat.

The Minister went on—I thought, suggestively—to speak of other prospects in the area, such as Nissan, and about the general level of unemployment. I do not know what is the Minister's idea of defeatism, but such remarks will not put a spring into the step of anyone working for NESL or living in Sunderland. I hope that he will take a more positive approach and will recognise that he has a duty to that yard, as he has to the other sectors of the British shipbuilding industry which have been in public ownership.

The Government resent the suggestion that they lack commitment, but there were real signs of that in what the Chancellor of the Duchy had to say. We distrust ministerial motives and believe that there is a real danger, as anyone who studies the Government's track record will understand, that the Government will privatise and shove the yards out of the public sector and then walk away from the problem without a backward glance. I do not believe that a responsible Government should do that, or that we should in any way encourage them or give them an easy passage if that is what is in their mind.

I believe that the shipbuilding industry has a future. There has been much talk about some recovery in the market, which can be seen in the amount of tonnage laid up, in charter rates and so on. It will be a long haul; it will be a difficult market for a very long time. But there is room for a specialist shipbuilding industry in this country, with all the skills and engineering excellence that it represents.

The Government should recognise that. They should look at the areas where public sector orders may arise and perhaps can be advanced. They should give realistic commitments about the level of support and their willingness to abide by at least the EEC level of 28 per cent. It is important that they put themselves out to help the industry through what is undoubtedly a very difficult period. It is all too convenient to say that part of it could be sold and the rest could be industrial scrap. That means putting on the scrap heap many people with real skill who have given a lifetime of service to that industry, or hoped to do so.

The Minister said, in a phrase that I thought rather quaint, that the industry was at a somewhat difficult crossroads. I thought it quaint because it so understated the evident danger that faces almost every yard and every part of the industry. We are determined that, if the industry is at a crossroads, the Government should at least make the right choices. We will do all that we can to concentrate the Minister's mind on that, because we feel that if he is left to himself there may well be an abdication of responsibility, with tragic consequences.

6.51 pm

The Secretary of State for Scotland (Mr. Malcolm Rifkind)

We have had a very serious and constructive debate. It is perhaps significant that a substantial proportion of those who have contributed have a deep and personal constituency interest in the future of shipbuilding. I pay tribute to my hon. Friends the Members for Torridge and Devon, West (Miss Nicholson) and for Waveney (Mr. Porter), to the hon. Member for Sunderland, North (Mr. Clay) and to the right hon. Member for Glasgow, Govan (Mr. Milian), whose passionate speeches clearly showed their concern for their local communities—as have those of other hon. Members who have caught your eye, Mr. Speaker.

The debate takes place at a time when there is a feeling on both sides of the House that we wish to maximise the prospects for shipbuilding in the United Kingdom, but on a basis that is healthy and viable. We are conscious that over the past few years the prospects for shipbuilding throughout western Europe have been very grim. Sweden, for example, has closed its last major merchant shipbuilding yard. The French have run down their yards from five to only one, and the Spanish have reduced their capacity by some 50 per cent. The Germans, the Danes and even the Japanese have been closing yards. This is not a problem peculiar to the United Kingdom, and it is not sufficient simply to have good will or good intent. As my right hon. and learned Friend the Chancellor of the Duchy rightly pointed out, in the absence of orders there is a grim future for any industry.

Over the past 10 years, the Government have made their commitment very clear. The £1,800 million that we have made available has not simply been support through the intervention fund; that has been a relatively small proportion of the total, becuse of the limits that are required. A substantial amount has been used to cover the trading losses of companies that obtained orders. That is one of the saddest facts about the shipbuilding industry; even when orders have been obtained, many companies have sustained massive losses.

The right hon. Member for Govan said that he was concerned that my right hon. and learned Friend had, as he claimed, given no indication of the Government's view about the future of support for the industry. I ask him to read tomorrow what my right hon. and learned Friend said. Perhaps I can remind him. He said that, with regard to support for new orders, we have made it clear to all who have inquired in connection with the present disclosures that we are prepared to discuss support for new orders with them.

Dr. Godman

The Secretary of State knows that I have been present throughout the debate. May I point out that I sincerely hope that, if the Norwegian firm is successful in its bid for Govan, the Government will impress on it the need to order the engines for the liquefied petroleum gas carriers from Clark Kincaid in my constituency? May I also plead for the Secretary of State to keep a tight weather eye out for Ferguson, also in my constituency? Both, as he well knows, are very important to the local economy.

Mr. Rifkind

I entirely agree with the hon. Gentleman. He is right to express concern for both establishments, and it is encouraging that there has been interest in both as a result of the Government's recent announcement.

It is important to remember a number of important considerations about Govan. First, as the right hon. Member for Govan well knows, the Government did not simply go out looking for a purchaser. Kvaerner made the first approach, expressing an interest in acquiring the yard. The Government then responded to that interest.

Secondly, it is not a speculative interest. We are all aware that, occasionally, companies buy yards and then hope to find orders. What is most encouraging and welcome about Kvaerner's interest is that, far from wishing to look for orders, it has orders, and has already said that, if it is successful in acquiring the yard, there are at least two liquefied petroleum gas carriers that it wishes to build in the yard, and further orders for similar vessels are likely. Of particular importance is the firm's suggestion that, apart from the shipbuilding role that it sees for Govan, it wishes the centre of its gas-handling technology to be transferred there. That is not only important from a technological point of view, but could lead to a significant number of jobs in the Glasgow area.

One of the curious things said by the right hon. Member for Govan was his repetition of what has been said in other quarters, concerning his personal belief that Kvaerner could have been persuaded, or could be required, not to acquire the yard but simply to place orders, while British Shipbuilders retained ownership of the yard. The House will have noted that the right hon. Gentleman did not produce an iota of evidence to substantiate that view. He informed the House that he had had recent discussions with senior management of Kvaerner. Presumably he raised this issue with them. If he has reason to believe that the firm is interested in doing as he suggests, it is surprising that he made no such reference in that respect to the House.

I must tell the right hon. Gentleman, and the hon. Member for Glasgow, Garscadden (Mr. Dewar). that the simple fact is that Kvaerner made it clear that its interest is in acquiring the yard, not in placing orders. If it does not acquire the yard, there is no guarantee or even likelihood that orders will necessarily come to Govan. They might go to many other shipyards around the world. The right hon. Gentleman must take that into account, for I know that he is as concerned as the rest of us for the future of employment in the yard. Kvaerner's present interest is the best prospect for the yard that has emerged for some considerable time.

As the right hon. Gentleman knows, once the Chinese ferry orders are complete, there are no other orders on the order book, and the prospects for Govan—whatever the view or policy of Government—could have been very serious. The fact that Kvaerner is not only interested in acquiring the yard but has ships to build there may explain the constructive approach of the unions at Govan.

When Mr. Sammy Gilmore, the shop steward at Govan, was asked whether the unions would be obstructive and seek to oppose Kvaerner's interest, he replied: We are shipbuilders, not anarchists … The name of the game is employment. He rightly went on to say that the trade unions would naturally wish to discuss in detail the consequences for the work force, saying with his customary humour: There will be no Vikings sailing up the Clyde until after the Glasgow Fair. That may be a prediction about timing, but it also demonstrates a desire for the negotiations to succeed, which is very welcome.

Mr. Milian

What I was trying to find out from the Ministers—I have not done so yet—was what understandings and undertakings they are attempting to obtain from Kvaerner in the negotiations.

Mr. Rifkind

These are delicate matters of negotiation. Our main interest is that Govan should have not a short-term but a long-term future. Kvaerner is not only talking about two immediate orders for liquefied petroleum gas carriers, but is also suggesting that future orders are likely for the same kind of vessel. Moreover, it would not be suggesting publicly that it wishes to transfer the whole of its gas-handling technology to Govan if its interests were only short-term. There was no need for it to say that. It does not relate directly to the shipbuilding activities at the yard itself. It is a sign of the serious intent of the firm to establish a long-term presence.

With regard to shipbuilding as it involves British Shipbuilders as a whole, there is a common interest on both sides of the House to try to ensure a long-term future for the shipbuilding industry. We believe that, with a return to the private sector and with the interest currently shown by the private sector, that is realisable. It is on that basis that I invite the House to oppose the motion and to approve the amendment.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 187, Noes 261.

Division No. 314]	[7 pm
AYES
Abbott, Ms Diane	Coleman, Donald
Adams, Allen (Paisley N)	Corbett, Robin
Alton, David	Corbyn, Jeremy
Archer, Rt Hon Peter	Cousins, Jim
Ashley, Rt Hon Jack	Crowther, Stan
Ashton, Joe	Cryer, Bob
Banks, Tony (Newham NW)	Cummings, John
Barnes, Harry (Derbyshire NE)	Cunningham, Dr John
Barron, Kevin	Dalyell, Tam
Battle, John	Davies, Rt Hon Denzil (Llanelli)
Beckett, Margaret	Dewar, Donald
Bell, Stuart	Dixon, Don
Benn, Rt Hon Tony	Dobson, Frank
Bermingham, Gerald	Doran, Frank
Blair, Tony	Douglas, Dick
Blunkett, David	Dunnachie, Jimmy
Boateng, Paul	Dunwoody, Hon Mrs Gwyneth
Boyes, Roland	Eadie, Alexander
Bradley, Keith	Ewing, Mrs Margaret (Moray)
Bray, Dr Jeremy	Fatchett, Derek
Brown, Gordon (D'mline E)	Faulds, Andrew
Brown, Nicholas (Newcastle E)	Field, Frank (Birkenhead)
Brown, Ron (Edinburgh Leith)	Fields, Terry (L'pool B G'n)
Bruce, Malcolm (Gordon)	Fisher, Mark
Buchan, Norman	Flannery, Martin
Buckley, George J.	Foot, Rt Hon Michael
Caborn, Richard	Foster, Derek
Campbell, Menzies (Fife NE)	Foulkes, George
Campbell, Ron (Blyth Valley)	Fraser, John
Campbell-Savours, D. N.	Galbraith, Sam
Canavan, Dennis	Galloway, George
Carlile, Alex (Mont'g)	Garrett, John (Norwich South)
Clark, Dr David (S Shields)	Garrett, Ted (Wallsend)
Clarke, Tom (Monklands W)	George, Bruce
Clay, Bob	Gilbert, Rt Hon Dr John
Clwyd, Mrs Ann	Godman, Dr Norman A.
Cohen, Harry	Golding, Mrs Llin

Gordon, Mildred	Morley, Elliott
Gould, Bryan	Morris, Rt Hon A. (W'shawe)
Graham, Thomas	Morris, Rt Hon J. (Aberavon)
Grant, Bernie (Tottenham)	Mowlam, Marjorie
Griffiths, Win (Bridgend)	Mullin, Chris
Grocott, Bruce	Nellist, Dave
Hardy, Peter	O'Brien, William
Healey, Rt Hon Denis	O'Neill, Martin
Heffer, Eric S.	Orme, Rt Hon Stanley
Henderson, Doug	Parry, Robert
Hogg, N. (C'nauld & Kilsyth)	Patchett, Terry
Holland, Stuart	Pendry, Tom
Home Robertson, John	Pike, Peter L.
Hood, Jimmy	Powell, Ray (Ogmore)
Howarth, George (Knowsley N)	Quin, Ms Joyce
Howells, Geraint	Radice, Giles
Hoyle, Doug	Randall, Stuart
Hughes, John (Coventry NE)	Redmond, Martin
Hughes, Robert (Aberdeen N)	Rees, Rt Hon Merlyn
Hughes, Sean (Knowsley S)	Reid, Dr John
Hughes, Simon (Southwark)	Richardson, Jo
Illsley, Eric	Roberts, Allan (Bootle)
Ingram, Adam	Robinson, Peter (Belfast E)
Janner, Greville	Rogers, Allan
John, Brynmor	Ruddock, Joan
Jones, Barry (Alyn & Deeside)	Sedgemore, Brian
Jones, Martyn (Clwyd S W)	Sheerman, Barry
Kaufman, Rt Hon Gerald	Sheldon, Rt Hon Robert
Kirkwood, Archy	Short, Clare
Lamond, James	Skinner, Dennis
Leighton, Ron	Smith, Andrew (Oxford E)
Lestor, Joan (Eccles)	Smith, C. (Isl'ton & F'bury)
Livsey, Richard	Snape, Peter
Lloyd, Tony (Stretford)	Soley, Clive
Lofthouse, Geoffrey	Spearing, Nigel
Loyden, Eddie	Steinberg, Gerry
McAllion, John	Stott, Roger
McAvoy, Thomas	Strang, Gavin
McCartney, Ian	Straw, Jack
Macdonald, Calum A.	Taylor, Mrs Ann (Dewsbury)
McFall, John	Taylor, Matthew (Truro)
McKay, Allen (Barnsley West)	Turner, Dennis
McKelvey, William	Wall, Pat
McLeish, Henry	Wallace, James
Maclennan, Robert	Walley, Joan
McNamara, Kevin	Wardell, Gareth (Gower)
McTaggart, Bob	Wareing, Robert N.
Madden, Max	Welsh, Andrew (Angus E)
Maginnis, Ken	Welsh, Michael (Doncaster N)
Marek, Dr John	Wilson, Brian
Marshall, Jim (Leicester S)	Winnick, David
Martin, Michael J. (Springburn)	Worthington, Tony
Martlew, Eric	Wray, Jimmy
Maxton, John	Young, David (Bolton SE)
Meale, Alan
Michie, Bill (Sheffield Heeley)	Tellers for the Ayes:
Millan, Rt Hon Bruce	Mr. Frank Haynes and
Moonie, Dr Lewis	Mr. Ken Eastham.
Morgan, Rhodri

NOES
Aitken, Jonathan	Brooke, Rt Hon Peter
Alexander, Richard	Burt, Alistair
Alison, Rt Hon Michael	Butler, Chris
Arbuthnot, James	Butterfill, John
Arnold, Jacques (Gravesham)	Carlisle, John, (Luton N)
Atkinson, David	Carlisle, Kenneth (Lincoln)
Baker, Rt Hon K. (Mole Valley)	Carrington, Matthew
Baker, Nicholas (Dorset N)	Cash, William
Banks, Robert (Harrogate)	Channon, Rt Hon Paul
Bennett, Nicholas (Pembroke)	Chapman, Sydney
Biffen, Rt Hon John	Chope, Christopher
Biggs-Davison, Sir John	Churchill, Mr
Body, Sir Richard	Clark, Sir W. (Croydon S)
Boscawen, Hon Robert	Clarke, Rt Hon K. (Rushcliffe)
Boswell, Tim	Conway, Derek
Bottomley, Mrs Virginia	Coombs, Anthony (Wyre F'rest)
Bowis, John	Cope, John
Braine, Rt Hon Sir Bernard	Cormack, Patrick
Bright, Graham	Cran, James

Currie, Mrs Edwina	Hicks, Robert (Cornwall SE)
Curry, David	Higgins, Rt Hon Terence L.
Davies, Q. (Stamf'd & Spald'g)	Hill, James
Davis, David (Boothferry)	Hind, Kenneth
Dickens, Geoffrey	Hogg, Hon Douglas (Gr'th'm)
Dorrell, Stephen	Holt, Richard
Douglas-Hamilton, Lord James	Howard, Michael
Dover, Den	Howarth, Alan (Strat'd-on-A)
Dunn, Bob	Howarth, G. (Cannock & B'wd)
Durant, Tony	Howell, Ralph (North Norfolk)
Dykes, Hugh	Hughes, Robert G. (Harrow W)
Eggar, Tim	Hunt, David (Wirral W)
Emery, Sir Peter	Hunt, John (Ravensbourne)
Evans, David (Welwyn Hatf'd)	Hunter, Andrew
Evennett, David	Hurd, Rt Hon Douglas
Farr, Sir John	Irvine, Michael
Favell, Tony	Irving, Charles
Fenner, Dame Peggy	Jack, Michael
Field, Barry (Isle of Wight)	Janman, Tim
Finsberg, Sir Geoffrey	Johnson Smith, Sir Geoffrey
Fookes, Miss Janet	Jones, Gwilym (Cardiff N)
Forsyth, Michael (Stirling)	Jones, Robert B (Herts W)
Forth, Eric	Jopling, Rt Hon Michael
Fowler, Rt Hon Norman	Key, Robert
Fox, Sir Marcus	Kirkhope, Timothy
Franks, Cecil	Knapman, Roger
Freeman, Roger	Knight, Greg (Derby North)
French, Douglas	Knight, Dame Jill (Edgbaston)
Gale, Roger	Knowles, Michael
Gardiner, George	Knox, David
Garel-Jones, Tristan	Lamont, Rt Hon Norman
Gilmour, Rt Hon Sir Ian	Lang, Ian
Goodhart, Sir Philip	Lawrence, Ivan
Goodlad, Alastair	Lawson, Rt Hon Nigel
Goodson-Wickes, Dr Charles	Lennox-Boyd, Hon Mark
Gorst, John	Lilley, Peter
Gow, Ian	Lloyd, Sir Ian (Havant)
Gower, Sir Raymond	Luce, Rt Hon Richard
Grant, Sir Anthony (CambsSW)	Lyell, Sir Nicholas
Greenway, Harry (Eating N)	McCrindle, Robert
Greenway, John (Ryedale)	Macfarlane, Sir Neil
Gregory, Conal	MacGregor, Rt Hon John
Griffiths, Sir Eldon (Bury St E')	MacKay, Andrew (E Berkshire)
Griffiths, Peter (Portsmouth N)	Maclean, David
Grist, Ian	McLoughlin, Patrick
Ground, Patrick	McNair-Wilson, M. (Newbury)
Grylls, Michael	McNair-Wilson, P. (New Forest)
Gummer, Rt Hon John Selwyn	Madel, David
Hamilton, Hon Archie (Epsom)	Major, Rt Hon John
Hamilton, Neil (Tatton)	Malins, Humfrey
Hampson, Dr Keith	Mans, Keith
Hanley, Jeremy	Marland, Paul
Hannam, John	Marshall, Michael (Arundel)
Hargreaves, A. (B'ham H'll Gr')	Martin, David (Portsmouth S)
Hargreaves, Ken (Hyndburn)	Mates, Michael
Harris, David	Mawhinney, Dr Brian
Haselhurst, Alan	Maxwell-Hyslop, Robin
Hawkins, Christopher	Mayhew, Rt Hon Sir Patrick
Hayes, Jerry	Meyer, Sir Anthony
Hayhoe, Rt Hon Sir Barney	Miller, Hal
Hayward, Robert	Mills, Iain
Heathcoat-Amory, David	Miscampbell, Norman
Heddle, John	Mitchell, Andrew (Gedling)
Heseltine, Rt Hon Michael	Moate, Roger

Monro, Sir Hector	Speed, Keith
Montgomery, Sir Fergus	Speller, Tony
Morris, M (N'hampton S)	Spicer, Michael (S Worcs)
Morrison, Hon Sir Charles	Squire, Robin
Morrison, Hon P (Chester)	Stanbrook, Ivor
Moss, Malcolm	Stanley, Rt Hon John
Neale, Gerrard	Steen, Anthony
Nelson, Anthony	Stern, Michael
Neubert, Michael	Stevens, Lewis
Nicholson, David (Taunton)	Stewart, Andy (Sherwood)
Nicholson, Emma (Devon West)	Stradling Thomas, Sir John
Onslow, Rt Hon Cranley	Summerson, Hugo
Oppenheim, Phillip	Taylor, John M (Solihull)
Page, Richard	Taylor, Teddy (S'end E)
Patnick, Irvine	Temple-Morris, Peter
Patten, Chris (Bath)	Thompson, D. (Calder Valley)
Pattie, Rt Hon Sir Geoffrey	Thompson, Patrick (Norwich N)
Pawsey, James	Thornton, Malcolm
Peacock, Mrs Elizabeth	Thurnham, Peter
Porter, David (Waveney)	Townend, John (Bridlington)
Portillo, Michael	Tracey, Richard
Powell, William (Corby)	Tredinnick, David
Price, Sir David	Trippier, David
Raison, Rt Hon Timothy	Twinn, Dr Ian
Rathbone, Tim	Vaughan, Sir Gerard
Redwood, John	Viggers, Peter
Renton, Tim	Waddington, Rt Hon David
Rhodes James, Robert	Waldegrave, Hon William
Ridley, Rt Hon Nicholas	Walden, George
Ridsdale, Sir Julian	Walker, Bill (T'side North)
Rifkind, Rt Hon Malcolm	Walters, Dennis
Roe, Mrs Marion	Ward, John
Rossi, Sir Hugh	Wardle, Charles (Bexhill)
Rost, Peter	Warren, Kenneth
Rowe, Andrew	Watts, John
Rumbold, Mrs Angela	Wheeler, John
Ryder, Richard	Widdecombe, Ann
Sackville, Hon Tom	Wiggin, Jerry
Sainsbury, Hon Tim	Wilkinson, John
Shaw, David (Dover)	Wilshire, David
Shaw, Sir Giles (Pudsey)	Winterton, Mrs Ann
Shaw, Sir Michael (Scarb')	Winterton, Nicholas
Shelton, William (Streatham)	Wood, Timothy
Shephard, Mrs G. (Norfolk SW)	Woodcock, Mike
Shepherd, Richard (Aldridge)	Young, Sir George (Acton)
Shersby, Michael
Sims, Roger	Tellers for the Noes:
Skeet, Sir Trevor	Mr. Peter Lloyd and
Smith, Tim (Beaconsfield)	Mr. David Lightbown.
Soames, Hon Nicholas

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House recognises the support that Her Majesty's Government has given to the shipbuilding industry; and welcomes the prospect of returning British Shipbuilders' yards to the private sector.