§ Ms. Angela Eagle (Wallasey)The future of Cammell Laird has been in the news recently because of the announcement two weeks ago by its current owners, Vickers Shipbuilders and Engineering Ltd., that it had effectively given up the ghost. It said that it would no longer seek orders once the current order book runs out in June next year.
The Cammell Laird yard, which is an important and historic yard in my part of the world, the Wirral, will finally close its doors after 160 years. That time has been marked by the yard's and its employees' record of vital service and achievement in the interests of the country.
When we consider what the future of that yard might be, we appreciate its central achievements. It has led the way in shipbuilding, and was a byword for innovation. In its time, the Cammell Laird yard has been at the forefront of shipbuilding techniques—it was on the cusp of their evolution. It was at the forefront of the switch from wooden ships to iron ones, from sails to steam, from riveting to welding. It is also noticeable that its history has been marked by a regular mix of merchant and military shipbuilding. Its exclusive concentration on military building may have led to its current difficulties, to which I shall refer later.
When it was founded in 1824, the shipyard was based in my constituency, but in 1858 it moved to its current site in the constituency of my hon. Friend the Member for Birkenhead (Mr. Field).
§ Mr. Frank Field (Birkenhead)I think that I am right in saying that my hon. Friend's constituency did not exist then.
§ Ms. EagleI always believe in progress. I am happy that that progress was made, because it is probably why I am here today.
In the second world war, the yard built 106 fighting ships—one for every 20 days of the war. Such service must not be thrown away lightly. At its peak, the work force totalled 12,000, but 1992 was the first year this century when it fell below 2,000. Indeed, the only other time when the work force dropped below 2,000 was in 1931, at the height of the great depression. The next few months will be vital to the yard.
In 1977, the shipyard was nationalised as part of British Shipbuilders and the decision was made to concentrate more on military contracts. That concentration may have caused its present difficulties. Its magnificent covered construction yard, which is still one of the finest in the world, was built the year after.
When the yard was denationalised in 1985, it was bought for only £1, and the value placed on it by VSEL still rankles in the local area. There were two problems with the settlement. The first was that, as it was designated exclusively as a warship yard, it did not have access to the intervention fund. Although some may disagree about its current predicament, no one would argue that that lack of access has been a major problem. Secondly, because of its designation as a warship yard, it has been badly affected by the unforeseen but welcome developments summed up in "Options for Change" in the post-cold-war world.
It can be argued that VSEL had a fundamental conflict of interest when it took over the yard, because, naturally, 157 it wanted to preserve its yard at Barrow, and it has always been suspected that it had a vested interest in not exerting itself too much to save shipbuilding on the Mersey. That is still a problem. I believe that the closure announcement gives the yard a window of opportunity to get away from that deadly embrace and to try to make its future elsewhere. The closure announcement was a pretty stark example of the company giving up the ghost and signalling to all that it would no longer try to get work after next June.
In a debate only last week, I spoke in detail about the economic effects of the closure on the local area. I described them as devastating, which they are. During the 1980s, the Wirral area lost 15 per cent. of its manufacturing employment. One of the greatest declines in the standard industrial classifications during that era was the 22 per cent. decline in the shipbuilding, engineering and vehicle sector, and that had a bad effect on the yard.
The closure would not only lead directly to the loss of 1,000 jobs; the local council estimates that it would lead indirectly to a further loss of up to 6,000 jobs, threatening 600 local suppliers. Lairds had always supported the local area and bought its materials locally. It is estimated that the closure could withdraw up to £30 million in spending power from the local economy, and could lead overnight to a 2 per cent. increase in the local unemployment rate.
In my constituency of Wallasey, the unemployment rates are well above the national average-18 per cent. male unemployment and 7 per cent. female unemployment, making an overall rate of about 14 per cent. We must also realise that the loss of full-time jobs for men, which are either not replaced or are replaced by low-paid part-time work which usually goes to women, has a profound effect on the social fabric of the area. We must take account of that.
It has been estimated that the closure of the yard will cost the public purse £111.1 million in the first year. Moreover, the costs would continue. To support that level of unemployment, there would be more social security payments, lost production and capacity, and lost tax revenues. I repeat that the economic effects of the closure do not bear thinking about. It would be the economics of the madhouse to proceed with it. We must look for a way round it, and do what we can to save that vital local manufacturing and employment base.
The way in which the closure was arranged is interesting, and may reveal some of the other motives for VSEL's behaviour. We must note that VSEL's most recent six-month profits have increased by more than £3.5 million this year compared with those for 1991. That makes one wonder exactly what is going on in the firm.
The company envisages the destruction of the yard and its shipbuilding facilities within two years. With the help of outside consultants St. Quintin, it has produced a plan for the future—a plan in which I am afraid I have little confidence. It not only suggests the destruction of the Lairds yard within two years, but says that, after the yard closes next June, there will be minimum security. To suggest that such a facility need not be guarded properly makes a mockery of the idea that the option for the yard to reopen within two years is being retained. In such a dockland area, lack of security would quickly lead to a flourishing black market and the illegal destruction and 158 vandalism of the remaining facilities. The idea of minimum security is an important clue to the real motives behind VSEL's plans.
VSEL plans to destroy the production shops immediately. As the St. Quintin report says, that would be done to reduce the rateable liability. That could be good for VSEL—but what is good for VSEL is not necessarily good for the local community, or for the country. I believe that the company is planning to asset-strip the yard, and at the same time to destroy a potential competitor. VSEL does not want the yard to pass out of its hands and to be able to bid against it for scarce work. We must take account of VSEL's possible vested interest in the matter and prevent it from fulfilling its plan.
The St. Quintin's report says that the future for the site is not for it to continue to build ships, which is what it is clearly good at, and which is what its facilities and its work force can do; but that there should be an effort once more to develop office blocks, light industry and retail on the site, with some housing. Yet the property market in the area is appalling. The St. Quintin's report admits:
A £100 million redevelopment of the waterfront on the Wirral including a mix of industrial, commercial and leisure facilities, has been postponed indefinitely. It is proving difficult to find tenants for new or existing developments.I do not know what St. Quintin's was paid for producing the report. I think that it is money for old rope. I could probably have done a better job on the back of an envelope. The report then goes on to suggest that the derelict site and the destroyed site of the shipbuilding yard could be used to build a new retail park and extra houses. There is lack of credibility in the plan. It is nonsense.The local community, in welcome co-operation not only with all Wirral Members of Parliament, but with local political leaders, with the shop stewards and with the Confederation of Shipbuilding and Engineering Unions, have got together since the announcement and have come up with a plan for which there is all-party support. The principle behind the plan is that shipbuilding must be preserved on Merseyside. I shall explain in a moment why I think that the plan is viable.
We want the yard to be returned to the local community for the £1 that VSEL paid for it when it took over in 1985. It has essentially given up trying to provide a secure future for the yard. There is all-party support on the Wirral and on Merseyside for the idea that the yard has a viable future. We want to be given the right to try to search out that future to safeguard our skills in our work force and to help the country to preserve valuable engineering skills which have served it so well in the past. We also want VSEL to provide an endowment fund to help us to get the development under way.
I should like the Minister's response on the next point. We want the Government to help us to get the yard back. The Government still have a golden share, with which they might be able to put some pressure on to VSEL. Even more importantly, the Government are effectively VSEL's sole customer. I should like a pledge from the Government, tonight if possible, that they will support us in our chosen route. We want to vest the ownership of the yard in a local community trust which would he accountable via the local authority, perhaps involving the Merseyside development corporation and other bodies, so that we could try to assure the yard's future.
I also want some idea from the Government of what would be the possibility of ending the yard's warship yard 159 status if, for example, it pledged not to go for defence contracts. As I shall explain, there are new market opportunities that VSEL has failed to exploit because of the warship yard status which has prevented it from having access to intervention funding and from bidding for other work.
The view in the international shipping market is that the prospects for recovery are excellent. The British Chamber of Shipping recently said that the average age of the British merchant fleet has now lengthened to 13 years. That exceeds the world average of 10 years. Clearly, there is a lot of potential refit work which will become available in the next few years. Three quarters of the world's tanker fleet is now more than 10 years old. The normal life span of those huge vessels is commonly thought to be about 20 years. Lairds missed out on building them originally when it went down the defence line and built Polaris. Perhaps the company should now have the opportunity to refit some of that work.
We have also seen a rise in the world merchant fleet capacity over the past four years of quite startling proportions. That capacity has risen by 10 million tonnes a year every year since 1988, according to Lloyd's Register of Shipping. It is thought likely that those trends will continue, and that foreign shipbuilders see a very buoyant market ahead of them for the next few years—so much so, that Japanese and South Korean yards are now building speculatively, seeing what they can sell on the market once they have built it. We believe that there are good growth possibilities.
If we consider what is happening on the Mersey, we see signs of a potentially useful and viable future for the yard. Merchant and refitting business is coming on stream in the world market to which the Cammell Laird yard could have access if its warship status was removed. In addition, a new freeport has been opened. The St. Quintin report had the gall to say:
Work has recently been completed to the new Freeport to the south of the docks which will increase the amount of shipping in Birkenhead.The report states that it will certainly increase the amount of shipping on the Mersey. However, it does not attempt to analyse the possible beneficial effects of that for a company with three dry docks and the best refitting and repair facilities in the world. Instead, the report comes up with a mad, crackpot idea for retail development.
If there are more ships on the Mersey as a result of the success of the freeport, that provides Cammell Laird with another market opportunity that it would be in a good position to exploit. Moreover, there continue to be offshore opportunities through the oil and gas developments in Liverpool and Morecambe bay, and in connection with the Hamilton oil development at Point of Ayr. If there is a beneficial result from the public inquiry due early next year on that development, it is highly likely that Cammell Laird would be in an excellent position to bid for that work, which would help to secure its future.
We have world-class facilities; some of the best shipbuilding facilities in the world; the best history of quality and activity of any shipyard; and a world-class work force. Cammell Laird deserves a proper chance with an owner committed to its survival, not one that is playing market games.
§ 1.2 am
§ Mr. Frank Field (Birkenhead)While it gives me no pleasure to participate in the debate as we are debating what VSEL intends to do—to destroy Cammell Laird, if it get its way—it nevertheless gives me pleasure to follow my hon. Friend the Member for Wallasey (Ms. Eagle). When I was elected in 1979, I became part of a team of Wirral Members who supported Cammell Laird and other local interests. We did that across parties. As a result of the election of my hon. Friend the Member for Wallasey, there are now five Members of Parliament who have a key interest in the yard, as my hon. Friend's predecessor is a Minister in another place and takes a proper interest from there.
In the first part of my speech I want to comment on the background to the lobbying that Wirral Members have carried out successfully in the past for Cammell Laird. I do that not for the sake of drawing attention to us, but because it is now noticeable that VSEL has no friends in the House who will defend its actions. It is important that VSEL should take note of what Wirral Members have done for Cammell Laird and VSEL, and of how determined we are to ensure that the company does not get away with destroying what my hon. Friend the Member for Wallasey has described as a most important asset for Merseyside and a valuable asset for the country.
The starting point is the Department of Trade and Industry. I welcome the Under-Secretary of State for Corporate Affairs as I know that his attitude is now different from that held by the DTI in the early days of the Thatcher Government. At that time hon. Members were faced with a real fear that the unspoken agenda of the Department of Trade and Industry was to close our yard and other yards on the basis that there were too many shipyards in the United Kingdom.
I pick up the story when we were attempting to secure vital frigate orders for the yard. I know that all the Wirral Members, as proper lobbyists, listened to what was said in the yard and in the House. We tried to find out how the contracts were fixed against us. It occurred to us late one night when a Labour Member came out of one of the House bars, got me against the wall, thumped me with a big, fat finger and said that our tender had won both frigates. The crucial information that that gave us was that we knew, from our trips into Cammell Laird, that we would have to submit two tenders for both boats. The Department of Trade and Industry had ensured that we would submit figures which could in no way compete with the figures from Swan Hunter.
I hope that the Secretary of State for Wales will not mind my drawing attention to his position. I gave him that piece of information, and he relayed it to the then Secretary of State for Defence, now President of the Board of Trade, the right hon. Member for Henley (Mr. Heseltine). One of the myths in our area is that the right hon. Gentleman is a friend of Merseyside and Cammell Laird because he gave us special treatment over the order for the frigates. He is indeed a friend of Merseyside, but not because he gave us special treatment that night. His friendship was in ensuring that the information that the yard supplied to him about our tender, as opposed to tenders, would be part of the discussion at the Cabinet table. As a result of that intervention, we gained a crucial order.
161 The next important part of our lobbying activities related to privatisation. If it had been left to Vickers Shipbuilding and Engineering Ltd., the yard would have been won by Trafalgar House. As Wirral Members, our job was to ask the then Minister at the Department of Trade and Industry, Sir Peter Morrison, each day whether the Department had a view about the favoured candidate for privatisation. Would it be the in-house VSEL bid or Trafalgar House? Every day, Peter Morrison was asked that question. However, one Thursday evening at the 7 o'clock vote, he was not anxious to talk to Wirral Members, and we realised that a decision had been made. He told us that the decision had been made. It was against VSEL, and favoured Trafalgar House buying the yard.
The Wirral Members then worked to ensure that the decision was overturned when the Economic Sub-Committee of the Cabinet met the next morning. The decision was overturned. I believe that Mr. Tebbit and Mrs. Thatcher, as they then were, were the only two people who supported the original proposal from the DTI.
This is a crucial juncture of our story, because Wirral Members were fearful about their long-term future with VSEL. We believed that we had a short-term future with VSEL, whereas there would be no future whatever with Trafalgar House. Therefore, it was important for the VSEL consortium to win, although that posed a danger to us in the long term.
Since that day, the Wirral Members have sought a way of obtaining a peaceful and honourable divorce from VSEL. Late in the day, as my hon. Friend the Member for Wallasey said, VSEL has offered that opportunity by announcing just before Christmas in rather grand style that 900 men and women were to be made redundant. Some will be made redundant before Christmas and some after. It is important to register that they are not just any men and women, although it would be important if they were: those men and women are the work force of Cammell Laird who at one stage had to fight their way through the rent-a-mob which was brought in to prevent them from reclaiming their yard.
We are therefore talking about people who are not only highly skilled but unbelievably brave, not merely in talking but in their actions in ensuring that the yard should survive. I hope that the Minister will therefore register that it is not in the Government's interest to stand idly by and let VSEL butcher the labour force in a way in which it was not butchered when the rent-a-mob was put outside the yard to destroy it.
When we are thinking about VSEL's role and the role that Wirral Members may have to play in the next six months if we do not get the separation that we require, it is also important to consider the record of Cammell Laird under VSEL's ownership. There are two parts to it. First, it must be registered that we were successful in bidding for an order for three conventional submarines. Secondly, it is also important to register that almost no yard other than Cammell Laird or VSEL could have undertaken the work. So we were not up against much competition. From that order, our attempts to win frigate orders have been thwarted by VSEL.
We know from the information that we have had from Cammell Laird that the bid that we have put together to win the orders from the Government would have to go up to Barrow. Barrow would put the VSEL levy on to our tender. My hon. Friend the Member for Wallasey called it the "deadly embrace". The effect of the embrace was that 162 we could not win those orders. I have been as puzzled as other Wirral Members about why VSEL adopted that approach and what its long-term strategy was for its own future.
I have made those comments because it is important to register the efforts and lengths to which Wirral Members have gone to secure the future of Cammell Laird. When VSEL comes to weigh up its future it should think carefully whether it wishes to make public enemies of the four Wirral Members and the former Minister who sits in the Lords, as well as the Members of Parliament from surrounding constituencies from the other end of the Wirral or the other side of the river.
It will not be a nice time for VSEL, particularly as it appears that it has reached the point of throwing in the towel in relation not only to Cammell Laird but possibly to its own future. It is possible that VSEL is waiting for some sugar daddy to come along in the form of a takeover bid to give it the diversification that it failed to acquire. If that is VSEL's strategy, it is important for it to have a quiet time while it conducts those negotiations. Wirral Members of Parliament, privately in our lobbying or publicly at every opportunity that we have in the House, will draw attention to the behaviour of VSEL. This is the third opportunity that we have been granted publicly to debate VSEL's conduct since the announcement 10 days ago, and it is merely a foretaste of what will occur after Christmas.
My other point is whether the decision is in the interest of VSEL. If it is in VSEL's interest, is it in the country's interest? If it is not in the country's interest, should not the Government say that that is the unacceptable face of VSEL and that they do not intend to allow it to continue with its proposed line of action? The Secretary of State for Wales will be aware that at several of our meetings with VSEL we have said that we believe that there has always been a conflict of interests between what it sees as its need for survival at Barrow and our needs for survival at Cammell Laird. Had there been a number of Barrow seats rather than one, and had we represented them, we would have taken a different position, but we do not represent Barrow or VSEL—we have another task. We do not accuse VSEL of behaving immorally: it has made a calculated decision about its best interests. Our duty is to question whether that is in the best interests of Cammell Laird and of the manufacturing base.
My hon. Friend the Member for Wallasey has already said that we want to pose some questions for the Government. I know perfectly well that they will meet our demands in so far as they can. From 14 years of lobbying, I also know that issuing checklists is not always the most successful way to get the Government to move. As Wirral Members, we all know that, shortly after Christmas, our job will be to present a future for Cammell Laird that is attractive to the Government and will make them realise that our proposals for our single yard are interesting to them, as they begin a new phase of developing policies to abate the rising tide of unemployment and to protect the manufacturing base. The more successful we can be in setting Laird's interests in the national scene, the more successful we shall be in protecting its interests and its future.
I end on the note on which I have ended every debate on the subject since the atrocious announcement by VSEL a short time ago that it intended to butcher the brave men and women who work at Cammell Laird. We shall not let its decision pass without one God-almighty fight. Indeed, 163 if need be, by the end of our campaign we shall have so moved the debate that VSEL will decide that it is in its interests to have a quiet life from the four Wirral Members of Parliament, and our additional member in the Lords, and from surrounding Members in the Wirral, Cheshire and Liverpool, who have given us active support.
§ Mr. Robert N. Wareing (Liverpool, West Derby)I congratulate my hon. Friend the Member for Wallasey (Ms. Eagle) on her choice of subject, because it is certainly vital to the people of the Wirral and to the Merseyside economy.
I am pleased to hear that my hon. Friend the Member for Birkenhead (Mr. Field) has been able to co-operate with Members across the party divide, but he has been lucky in the Wirral's choice of Tory Members of Parliament, because there is not a single out-and-out Thatcherite among them. Baroness Chalker and the Secretary of State for Wales do not come into that category, even though they were willing to be dragged along for a time. They have a chance to change people's attitude to the Tory Government, and although people on Merseyside will not necessarily vote for them, they may change the atmosphere nevertheless.
My hon. Friend the Member for Birkenhead mentioned the friendliness to Merseyside shown by the President of the Board of Trade. Suspicions against the Tory Government on Merseyside are very old, because people recall that, in 1981, after visiting Toxteth, the President, who was then Secretary of State for the Environment with responsibility for Merseyside, prepared a report called "It Took a Riot". It was prepared after someone in Toxteth told him that it had taken a riot to get him there.
In Locket's restaurant, just along the way, the noble Lord Howe, then the Chancellor of the Exchequer, worked against the right hon. Member for Henley and managed to get the Government to oppose any real efforts for Merseyside. Indeed, Lord Howe has been quoted as saying that to put money into Merseyside was to throw good money after bad. I hope that that is not the attitude of present Cabinet Members.
The closure of the Cammell Laird shipbuilding yard would amount to an economic and social catastrophe in an area—the Wirral—where one in eight people are now out of a job. The problem extends beyond the Wirral, because some of my constituents work or have worked in Cammell Laird, and all of us who were brought up on Merseyside remember from our earliest childhood looking across the River Mersey from Liverpool, and those cranes were part of the scene. I see that the Minister for Transport in London well remembers that. We do not want an end to that image, which testifies to the industrial skill and activity of the people of Merseyside.
The yard has modern facilities. I believe that it has the largest dry dock in Britain, which can contain the largest of vessels. Indeed, the largest passenger liner to be built in this country since the second world war, the Windsor Castle, was constructed at Cammell Laird.
The Government have made no real effort to ensure that there is a move towards defence diversification following the end of the cold war. I agree with my hon. Friend the Member for Wallasey that Cammell Laird's 164 present commitment as a defence contractor is preventing European Community fifth directive aid from being steered in the yard's direction. That dependence on warship development should end. My hon. Friend referred to the development of Morecambe bay and Liverpool bay for offshore gas or oil in the future. The yard has constructed offshore rigs and platforms, and those skills would be used in its future development.
The idea that this country should let shipbuilding continue to decline must be pushed aside. It is interesting to note that, at the beginning of this century, when Cammell Laird was at its height, 50 per cent. of the ships produced in the world were produced in Great Britain. By 1950, that figure had declined to 40 per cent., and by 1989, Britain was producing less than 1 per cent. of the world tonnage in shipping.
It might be argued that other countries, particularly Japan, coming on to the scene was inevitable. Despite the fact that their shipbuilding yards were totally devastated by the war, West Germany and Sweden made considerable gains as a result of Britain's continual impoverishment.
The Government have much to answer for. The British merchant fleet has declined by 75 per cent. since 1979. We had 1,614 vessels in 1975, but by 1988 that figure had dropped to 482 vessels, which resulted in the loss of many jobs. Many of my constituents have a knowledge of seafaring that goes back many decades. Between 1976 and 1990, the number of seafarers from this country declined from 58,000 to 18,000.
It was an outrage that, when the Atlantic Conveyor was lost during the Falkland war, that great patriot, the present Prime Minister's predecessor, did not turn to the shipbuilding yards of Britain such as Cammell Laird. She turned to the shipbuilding yards of South Korea, which has been able to make its way in the world because of its low wage costs. However, that is not the complete reason for Britain's decline; United Kingdom wage rates are currently 40 per cent. lower than those in Japan, but we still see a continual decline in shipbuilding.
In 1989, world shipbuilding orders increased by 26 per cent. In 1990, they increased by 12 per cent., but during that period, orders for vessels being produced in this country declined by 7.6 per cent. Britain now stands not No. 1 in the world of shipbuilding, but in 13th place—near the relegation zone.
There is a demand for vessels, and it will increase. Concern for environmental protection means that more and more countries will want ships that take into account problems such as pollution. The United States' desire to ban single-bottomed tankers, which are prone to leak, has created a demand for double-bottomed tankers. Britain should be taking its share of that market.
It is no use the Government saying, "We cannot interfere." The first time that I went to see a Minister—who happened to be the present Chancellor of the Exchequer—when Schweppes in the Walton constituency faced closure, his response was that the Government did not act against the commercial judgement of individual firms. I hope that the Government will intervene positively to assist Cammell Laird to change its status from that of a world warship yard to one that can provide for the civil market on a grand scale.
Cammell Laird is in a perfect location. It is situated on what is still one of the major rivers of the United Kingdom, and has good motorway links with the A41—a good road—the Mersey tunnel and the M53 motorway. If 165 the Government show a commitment to Cammell Laird and lift confidence on the Mersey, Merseyside could become the gateway of the European Community for Atlantic trade.
There is much work that can be done, and I hope that Government will consider the matter carefully. Merseyside survived the Luftwaffe, but it is having great difficulty surviving 14 years of Tory Governments who have no commitment to manufacturing industry.
The Government have destroyed this country's manufacturing base. Part of the export base of that manufacturing industry is shipbuilding. I hope that the Government will take this opportunity to do something to save Cammell Laird, to save jobs, to lift the confidence of Merseyside and to save themselves from the considerable social costs of the unemployment that will follow if they do nothing.
§ Mr. Andrew Miller (Ellesmere Port and Neston)The sacrifices referred to in the debate on engineering just now are only too apparent in Merseyside. During the 16 years that I have been in the area, major industries have disappeared off the face of the earth. It could be said that many of them were the old smokestack industries of days gone by, but more recently there have been redundancies in industries involving highly skilled workers serving the needs of a modern society.
Merseyside has suffered enormous losses in the service sector, too. Not so many years ago, the Bank of England had a major regional headquarters in the town, established there because of the shipping trade of days gone by. When I first went to Merseyside, it was commonplace to see the remnants of the old shipping trade—insurers, bankers and carriers meeting the manufacturers to arrange the transport of goods across the Atlantic. That is all past now, but, as my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) said, Merseyside can regain its pre-eminence in the shipping industry and become an important gateway to the Atlantic for Britain and its European partners.
In an earlier debate, I referred to the knock-on effects of redundancy. My hon. Friend the Member for Wallasey (Ms. Eagle) estimates that 5,000 or 6,000 jobs would be affected by these redundancies. I believe that to be a realistic estimate. These redundancies must be seen against the background of major redundancies throughout the Wirral already. The problems elsewhere in Merseyside notwithstanding, the Wirral has suffered extremely badly in recent years.
I do not believe that our major competitors would allow this to happen in their countries. Last year, I attended a meeting—my hon. Friend the Member for Birkenhead (Mr. Field) was on the platform—at which workers, local authority representatives, residents and local politicians came together to hear VSEL give a commitment to the yard. Many of us thought the firm's commitment somewhat shallow at the time. There was a debate about the potential exploitation of intervention funds if the yard were to give up its exclusive building of warships. VSEL made all sorts of promises to look into such possibilities, but the audience found the company's statements shallow—they were greeted with some disbelief.
166 Now more time has passed, and the time for action to safeguard the yard has arrived. Who says these skills are not needed? My hon. Friends have mentioned the offshore industrial possibilities. There is all sorts of potential in research at the bottom of the ocean. There is potential also in energy renewables. It would be possible to convert and apply the engineering skills developed over the yard's 160-year history to projects that meet modern-day needs. They may not include warship construction—let us hope, in many respects, that they never do. Such projects could, however, provide suitable employment for skills that already exist.
In an earlier debate, reference was made to the report recently published by the Parliamentary Office of Science and Technology. Its contents should be studied in the context of Cammell Laird redundancies. We need a driving force, but not of the kind represented by the nonsense produced by St. Quintin. When I first heard that name, I thought that it was a gaol. Perhaps that is where the report's authors should be put.
The report is an extraordinary document:
The location of companies such as Cammell Laird, Candy, Vauxhall and Unilever has enhanced the strength of the peninsula, with Port Sunlight providing an historic importance.One does not need too many qualifications to point that out. As my hon. Friend the Member for Wallasey pointed out, the report interestingly includes that the 160-acre site could be used for a retail park. It fails to mention that land of substantially higher acreage under the ownership of Unilever Merseyside Ltd. has been transformed into a retail park—just one and a half miles down the road.Why did the report make no reference to the major study funded by Unilever and Wirral borough council just a few years ago, following the major redundancies at Van den Berg and Jurgen? Why was such factual information not sought? It is an extremely weak document, and I hope that the Minister will give it the treatment it deserves. There is only one place to file such a report.
If we can create the driving force to which my hon. Friend the Member for Birkenhead referred, and establish a partnership between the area's existing industrial talents, the Government, and the work force, and make proper utilisation of all the higher and further education skills, a future can be found that would be much more worth while than a debate about a £1 share. VSEL have had a fine return on capital invested, if one looks at it in those terms.
VSEL at Cammell Laird is not a lame duck. It has enormous latent talent, and it is the job of the House to exploit that talent not only in the interests of the workers of Cammell Laird and of Merseyside, or even of our country—but in the interests of the revitalisation of the River Mersey and of the trading potential of the whole European continent. I hope that the Minister will tonight give the north-west some confidence that the Government will be part of the campaign to which my hon. Friend referred, and an assurance that VSEL will not get away with it, and that the interests of the north-west will be properly served.
§ Mr. Jim Cousins (Newcastle upon Tyne, Central)Those of my hon. Friends representing constituencies in the Wirral and on Merseyside spoke powerfully tonight about the predicament of the Cammell Laird shipyard. Those of us who represent shipbuilding areas, and still 167 more those of us who spent part of our working lives in or around the shipbuilding industry, will share my hon. Friend's sentiments.
The most powerful sentiment that we share is that we see the shipbuilding industry on Merseyside and everywhere else as a modern industry with a tremendous future. It has at least as good a future as the retail industry. The Opposition consider that shipbuilding has enormous potential: we are currently witnessing a revolution in shipbuilding techniques that is converting the industry into a high-technology, high-added-value concern. As my hon. Friends have pointed out, shipyards can be easily diversified into the energy industries, the creation of sub-sea structures, and oceanic development; they also provide facilities with important environmental uses.
As my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) pointed out, important changes in the regulation of ships and shipbuilding throughout the world can create new markets. The elimination of inferior tankers and the upgrading of roll-on, roll-off ferries, for example, have made shipbuilding a modern industry and have turned the facilities at Cammell Laird into an important national asset which must not be lightly set aside.
My hon. Friend the Member for Wallasey (Ms. Eagle) spoke of the "deadly embrace" of VSEL, and my hon. Friend the Member for Birkenhead (Mr. Field) described the separation of Cammell Laird from VSEL as an honourable divorce.
§ Mr. Frank FieldI said that I hoped that it would secure an honourable divorce. That is not what is currently on offer.
§ Mr. CousinsMy hon. Friend is wise enough to ensure that an equally honourable settlement is included in his project for an honourable divorce.
VSEL is not on the ropes financially; it has powerful resources. At the last count, its cash reserves were said to amount to some £160 million. It has benefited from the high interest rates of recent years; its profits are substantial and rising, and currently amount to over £50 million. Our fear—it is a fear for Cammell Laird now, but I suspect that it will also be a fear for Barrow later—is that VSEL will diversify its activities out of shipbuilding, but will not use its enormous resources to enable its work force, and the communities who depend on that work force, to share in its possibilities. That is the Government's task, as my hon. Friends have correctly pointed out.
There has already been a huge reduction in our shipbuilding capacity. We have recently seen major job losses in offshore oil, as well as in shipbuilding itself. At least four shipyards have closed in the past two years; slightly before that, capacity switched away from shipbuilding to other industries. Surely the Government can legitimately use all those facts to renegotiate the original deal with the European Community: the recent rundown in the capacity of British shipbuilding is very relevant to Europe, and to European directives. The rundown of that capacity has been far greater than that in any other European country. It also exceeds the planned rundown in capacity of the east German shipyards, even 168 though those yards are to attract intervention fund support of more than 35 per cent. while Cammell Laird has no access to such support.
It is perverse to classify warship yards as they have been classified for European purposes. They must be given a proper opportunity to diversify away from warship building in precisely the same way as the east German shipyards must be given a proper opportunity to diversify away from the markets of the former Soviet Union and the eastern bloc on which they depended and which have now collapsed. The warship yards of Britain—and the yards of east Germany, so heavily dependent on orders from the eastern bloc—should be given a level playing field on which to operate.
In the fading days of their presidency of the European Community, the Government must explain why they have not pressed this matter with the European Community. They must also account for the amazing fact that the reconstruction of the yards cannot attract regional development grant support. They must now start to revise the original deal in connection with the losses of the shipbuilding industry—now a part of ancient history—and state aids, which gave rise to the exclusion of yards such as Cammell Laird from the intervention fund support that is now so critical to securing the future of the yard.
In a debate on European aid to shipbuilding which took place as recently as 18 November, the Minister for Industry said that he recognised the
reality of the circumstances under which the warship yards were privatised and the arrangments entered into with the Commission at the time.The right hon. Gentleman went on to say:it is possible that over time or even fairly soon there may be a change in circumstances and that the situation could be reconsidered."—[Official Report, European Standing Committee B; 18 November 1992; c. 32.]The crisis that Cammell Laird now faces is just the sort of circumstances that the right hon. Gentleman must have had in mind.The Government must now reconsider their whole position on intervention funding and on access to regional development grants in the reconstruction of the yards. They should give the British warship yards a chance to diversify from their declining markets in exactly the same way as the German Government have rightly sought to give the east German shipyards a chance to diversify away from theirs.
Those are the powerful underlying issues behind the crisis at Cammell Laird. The present owner of Cammell Laird is not short of financial resources, having been given a very favourable deal by the Government of the time to start the yard off. All these are matters on which the Government ought to respond.
§ The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton)Let me participate in the proceedings for the third time this evening.
I congratulate the hon. Member for Wallasey (Ms. Eagle) on initiating this important debate. The sober way in which Opposition Members have spoken—reflecting the great sadness that we all feel at the predicament in which Cammell Laird now finds itself—has added to the power with which they have been able to advocate their case. I can assure them that I have been impressed by it.
I must apologise for the absence of my right hon. Friend the Minister for Industry, who is chairing the 169 Telecommunications Council. I hope that, as a Cheshire Member and as the Department of Trade and Industry Minister responsible for the north-west, I shall prove to be an acceptable substitute. [HON. MEMBERS: "Hear, hear."] I am pleased to have at least some support among my hon. Friends for that unarguable proposition.
Cammell Laird and its work force have made valiant attempts to cope with extremely difficult market conditions. As a Member of Parliament whose constituency is only a short distance away, I have been very struck by the calamity which the workers at Cammell Laird have suffered in recent times.
Cammell Laird merged with VSEL in June 1985, and, as a VSEL subsidiary, was subsequently privatised as a warship builder in March 1986. Of course, the political and economic world was very different six years ago, and the market for defence equipment has greatly reflected that change. It was considered then that many yards would have better prospects if privatised as warship builders. Although the circumstances which caused us to make those judgments at that time have changed, for reasons which I am sure everybody welcomes in general terms, nevertheless we do not welcome the secondary consequences which have produced the difficulty that Cammell Laird faces today.
World merchant shipbuilding capacity was also too high. That has had to be cut as well. It is instructive to look at the experience of other countries. After all, in Germany in the past 15 years, shipbuilding capacity has been cut by more than half, in Belgium by more than three quarters, in Spain by 60 per cent., in France by 79 per cent., and in many other countries in the Community by substantial amounts as well.
Britain is not alone in having experienced the traumas of change. In order to tackle the problem within Europe, the Commission, in its 1985 agreement with the United Kingdom Government, insisted that those shipyards which were privatised as warship yards could not gain access to intervention funding.
Of course, the unforeseen change to the European political scene resulted in the Ministry of Defence reviewing its requirements, and subsequently announcing "Options for Change". The defence sector then faced a situation similar to that which the merchant sector had faced previously. There was over-capacity in warship building, accompanied by a steeply declining order book. That meant that Cammell Laird's order book consisted virtually entirely of the construction of diesel submarines for the Ministry of Defence.
Cammell Laird's parent, VSEL, and defence companies, unable to diversify, could no longer maintain the levels of work force that they had previously employed. At the time of privatisation, and in a much more buoyant market, Cammell's work force was 2,100.
Therefore, VSEL, following the announcement of "Options for Change" announced, as early as October 1990, that Cammell Laird was for sale. At the same time, a necessary programme of redundancies was to be undertaken at Birkenhead and later Barrow. The United Kingdom Government, in an attempt to help VSEL in its efforts to sell Cammell, informed possible overseas buyers and United Kingdom industry of the availability of the yard through its British overseas posts, and day-to-day discussions with industry.
Part of the VSEL announcement in October 1990 stated that, if a purchaser could not be found for the Cammell 170 Laird shipyard, it would close in the summer of 1993 following delivery of the last of the diesel submarines. At that time, it was much hoped that the yard could be sold as a whole.
Due to the shipbuilding market and partly due to the recession, no party interested in the yard could be found. VSEL therefore decided that it might be a better option to sell Cammell Laird in small plots under a zonal selling strategy.
Although there were one or two approaches, still no serious bids were received for any of the plots. At the same time, the Department continued to approach the Commission in order to see whether it would change its mind on the availability of intervention fund for warship builders. My right hon. Friend the Secretary of State for Wales—he is present at this somewhat inconvenient hour of the morning, which reflects our commitment to the workers at Cammell Laird and to Merseyside in general—along with my noble Friend Lady Chalker, as the hon. Member for Birkenhead (Mr. Field), in his usual fair way, acknowledged, gave great support to hon. Members' attempts to resolve what appeared to be an intractable problem.
In 1990, my hon. and learned Friend the Member for Grantham (Mr. Hogg) sought to persuade the Commission that warship builders should have access to the intervention fund. The Commission would not agree to that, but did agree that United Kingdom merchant yards should be allowed to return to unsubsidised merchant shipbuilding. In the following year, my hon. Friend the Member for Gainsborough and Horncastle (Mr. Leigh), who is also in Brussels today and therefore cannot be with us, made a further unsuccessful attempt to persuade Sir Leon Brittan that warship builders should be allowed subsidy.
As recently as November this year, my officials sounded out Sir Leon Brittan's cabinet on the prospects of resuming subsidy. His officials were clear that there was no prospect that the Commission might agree to this. Officials remain in close touch with the Commission, so that if there is a change in attitude, we can ensure that any ministerial approach will produce the most favourable response.
I must tell the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) that, however laudable his aim of securing a change of status for the yard, that does not lie within our gift, unilaterally, to achieve. He is well aware that the regime under which shipbuilding is managed in the Community, particularly in respect of the subsidies available, is the preserve of the Commission. Although we attempt to influence its decisions and press strongly the case for our shipbuilding industry, it is not something about which we alone can take a decision.
§ Mr. CousinsDuring the British presidency the relevant Ministers have held the chair at such meetings. Did our Ministers ever raise the matter of Cammell Laird with our colleagues in the Council of Ministers?
§ Mr. HamiltonI cannot give that information off the top of my head, because I was not present at those meetings, but I shall, of course, inquire about it. The member state that holds the presidency must, however, act in the interests of the Community as a whole. That often produces some difficulties for those who have to bear that responsibility. Other Ministers or officials represent the United Kingdom, and I am sure that they put forward 171 vigorously those points that benefit our industry. I should be very surprised if we did not take full advantage of any opportunity to discuss the issue.
We are conscious that the EC decision is particularly hard to accept when, as several Opposition Members have said, the former East German yards have been given non-contract-related aid of up to 36 per cent. However, social and economic conditions there were so serious as to lead EC Ministers, in an Industry Council on 17 June 1992, as a whole to accept a special arrangement for those yards.
I emphasise that the maximum figure of 36 per cent. cannot be directly compared with the 9 per cent. at present available to shipbuilding in the rest of the Community for aid to specific contracts. Where there is no competition from outside the Community, east German prices must not fall below the level quoted by other Community shipbuilders. The original provisions of the directive already ensure that such action can be taken where there is competition from outside the Community. The Commission has also been instructed to ensure that those companies which have bought east German yards do not increase their capacity during modernisation.
Despite the unavailability of intervention fund subsidies, there was still some hope for Cammell Laird with the proposed development of an oil and gas terminal at Point of Ayr by the Hamilton brothers—no relation—who had applied for planning permission. However, Wirral borough council objected to that application, which is now awaiting a decision following a public inquiry. That was a significant factor in triggering VSEL's announcement on 2 December, reconfirming its 1990 announcement to close the yard.
The announcement was therefore not unexpected, but it still represents very sad news, and it was received with much regret both on Merseyside and elsewhere. Both management and work force have sought to secure a future for Cammell Laird, but it has not proved possible in the circumstances.
While this is a decision essentially for VSEL, the Government have repeatedly sought to help the extremely difficult market conditions. However, as a development area, Birkenhead already qualifies for the full range of DTI support measures. Cammel Laird, the local TEC and the Wirral task force have established a joint fund to assist retraining of redundant Cammell Laird employees—more than 800 have benefited so far. Some £37.5 million has been made available over five years under Wirral's city challenge programme. The newly designated freeport and associated maritime development zone form the cornerstone of the local regeneration initiative.
§ Ms EagleI asked whether the Government would be willing to support the local community's proposal to maintain Lairds as a shipbuilding area. The Minister is talking, quite properly, about what would happen if the catastrophe came about and the yard closed. I should be interested in his comments on the local community initiative that my hon. Friend the Member for Birkenhead (Mr. Field) and I mentioned, so that we can offer workers some hope that they may have a future if we can get the yard out of VSEL's grip.
§ Mr. HamiltonI well understand the hon. Lady's desire that shipbuilding should continue at a site where it has been carried on for many generations. If she and the local community can put together a viable scheme that convinces investors that shipbuilding can continue, no doubt it can be put forward. I am sure that she appreciates that, as it is not my direct responsibility, I cannot give a personal opinion, but I shall ensure that my right hon. Friend the Minister for Industry gives the closest consideration to her proposal.
It is very sad that circumstances have conspired in such a way that it is not possible to undertake profitable shipbuilding at Cammell Laird. It is particularly sad because no one has striven harder than the yard's management and work force to make the yard a long-term success. Submarines are still being built at Cammell Laird, but when the contracts are completed, the yard will, on present plans, be put on a care-and-maintenance basis in readiness for better times, which we hope will come. The over-capacity in world markets does not make it easier to put together the viable plans to which the hon. Lady has referred.
§ Mr. WareingDoes not the Minister understand that it is not a matter of waiting for somebody else to come along with a viable plan? Surely the Government should now declare their firm commitment to help by actively intervening to achieve such a plan. After all, they must bear in mind their responsibilities for the balance of payments, and the loss of the Cammell Laird yard will make us more dependent on shipbuilding in other parts of the world. There is also the dire social cost of allowing people to lose their jobs.
§ Mr. HamiltonI appreciate the hon. Gentleman's point, but he will know that we are not masters in our own house. We have to justify our decisions about subsidies and intervention to the European Commission and have to fit our schemes with those set out in Brussels. Otherwise, the level playing field for which Opposition Members have so eloquently called will be perceived differently by other member states of the Community. These matters must be discussed and agreed. It is not possible for us to take the kind of unilateral action that the hon. Member suggests.
§ Mr. Frank FieldThe Minister talks about us not being masters in our own house, and there could not be a truer statement about the plight of Laird's at the moment. Earlier, he said that Laird's had been unsuccessful in bidding for orders to keep the yard going. The crucial clause that he omitted from that sentence was "under the current ownership". One of the points that we have made this evening is that VSEL clearly does not believe that it is in its interests for Laird's to succeed. When we tried to win orders for frigates, VSEL marked up tenders in a way that made it impossible for us to win.
It is important to register that fact—but as the Minister said earlier that attempts had been made to sell some of the land, it is also important to register the fact that in the weeks leading up to the announcement that the yard was to be butchered, the Merseyside development corporation attempted to buy from the shipyard vacant land which nobody thinks will be used for shipbuilding, yet it was impossible for a sale to be agreed. Several people have reported similar reactions from VSEL, which seems to suggest that the company has a long-term strategy for the 173 yard vis-a-vis its value for VSEL's books, but not a long-term strategy for building ships and keeping the workers employed.
§ Mr. HamiltonI hear what the hon. Gentleman says, and again, I shall draw it to the attention to my right hon. Friend the Minister for Industry. It is not possible for me to comment on it now because I am not in possession of the facts.
In spite of the sad story that I have catalogued, I am especially pleased to be able to announce that the Under-Secretary of State for the Environment, my hon. Friend the Member for Hornchurch (Mr. Squire) has just approved a £2.45 million city grant towards a £7.2 million scheme of industrial development in the challenge area at Valley road in Birkenhead. The project involves the reclamation of 11 acres of derelict land and the building of 173,000 sq ft of industrial and warehouse units, which will provide space for 400 new jobs.
I know that, in the midst of recession, from which we hope we are emerging—there are now signs which give us grounds for optimism—this may all seem like rather cold comfort. I appreciate that, in the context of the difficulties that we have experienced in recent months and years, what is happening will be hard to take, but we have to look to the future.
The Government are firmly committed to the regeneration of Merseyside. It is a massive task, and it will not be achieved overnight. Industrial change is always painful, and when Labour Governments were in power they had to face similar traumatic changes. We are committed to cope with those changes and to ensure that as far as possible the pains of transition are diminished, if not eliminated.
Although I do not know what future is in store for Cammell Laird, for its employees and for the site that it occupies, I can say that the Government take seriously everything that has been said in the debate, and that we shall do our level best to ensure that the Wirral constituents of hon. Members on both sides of the House are given the best future that it is within our power to give them.