HC Deb 16 July 1992 vol 211 cc1213-22

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wood.]

9.38 am
Mr. Frank Field (Birkenhead)

I thank you for calling me, Madam Speaker, and for giving Wirral Members the opportunity to debate the issue. I see that my hon. Friend the Member for Barrow and Furness (Mr. Hutton) is here and I know that he hopes to catch your eye, Madam Speaker. As in the first debate on shipbuilding in which I participated, I see that my hon. Friend the Member for Jarrow (Mr. Dixon) is in his place. There was never a shipbuilding debate in which the two of us did not take part.

I will set the background to the debate, and I hope that others will continue it. We shall then wait with great interest for the Minister's reply. I welcome the Minister to the Dispatch Box on the first occasion on which we have met in debate in the Chamber. I welcome him to his position not only because of his ability, but because he represents a seat, not in the north but in the south, which has been hit by high unemployment. Unlike many Ministers, this Minister is well acquainted with the underlying theme of our debate.

Perhaps I might begin with a comment on the role that Cammell Laird plays in the Wirral. It is very difficult to think of Birkenhead and the Wirral without a shipyard—not that the men and women who work in the yard believe that they are owed a job or that they have the right for ever and a day to build ships. I happen to believe that there is a role for shipbuilding at Cammell Laird in the future, and not just the immediate future. The men and women working in the yard look forward to other opportunities of deploying their skills for the good of themselves, their families, their town, their area and their country.

This debate is an attempt to persuade the Government to give our town and other towns similarly placed the breathing space that they need to move from being wholly dependent on military contracts to obtaining contracts in the civilian sector. Other Wirral Members will want to catch the Chair's eye today to make this point, too.

Shortly after the 1979 election, the shop stewards wished to set up an all-party group of Members to protect and promote their interests in this place, and although the electorate have made changes in the composition of the Wirral group of Members who represent them in this House, there has been no change in the commitment on the part of those Members to honouring the pledge given back in 1979.

My predecessor, Edmund Dell, was a Cabinet Minister; he made sure that no shipping order was agreed to by the Cabinet before Laird's interests were fully debated. Equally, without the expertise of the yard it would have received no orders at all after 1979. The Wirral group of Members made sure that the yard competed on equal terms; had they not done so, no orders might have been placed after 1979.

The President of the Board of Trade told the shop stewards when he met them recently a little bit of the history of the placing of a crucial order after a sit-in in the yard. I should like to tell a little more of that story, because it is highly relevant to this debate.

I recall the horrendous experience that we went through in the yard when Lord Tebbit was Secretary of State for Trade and Industry. A small group of workers thought that, if they called everyone out on strike, Lord Tebbit would be more inclined to give them an order than if they were working. At three mass meetings of the yard, the workers had refused to follow that line, but this tiny group persisted with their strategy and in the end managed to persuade one of the smallest groups in the shipyard to declare a strike and put up barriers around the yard.

It is entirely to the credit of the men and women who walked through rent-a-mob back to work at that time that we are holding this debate today. Had they not shown that courage, the yard would certainly have closed. Many of those men and women are still working in the yard and are having to accept redundancy quietly and with dignity. They walk away down the road without causing industrial strife, knowing that if they caused it to protect their own jobs they would bring every other job down around their ears at Cammell Laird.

After the men and women of the yard broke the sit-in, the Government were about to place a number of frigate orders for which Laird competed. When he met the shop stewards recently, the President of the Board of Trade said that there has been no special treatment for Laird. The yard won the order by fair competition.

As the Minister of State for Defence Procurement knows, when the Government are about to place such orders, there is a frenzy of activity among hon. Members on both sides anxious to win the orders for their areas—knowing that if they win them they will put at risk jobs in other areas. Their first moral duty, however, is clearly to the people who sent them here.

During the negotiations for this key order, the Wirral Members were sure that the competition was being rigged against Laird, but they did not know how. Late one night, one of the Members who was sure that his yard had won the orders came out of the bar and poked me with his finger saying, "Our tender has won both orders." I prayed that my face did not betray the crucial information that he had given me. We had had to put in tenders for the two boats, so we immediately knew that the Department of Trade and Industry, as then run, was asking for our fixed costs to be spread across both orders, whereas other yards were being allowed to submit a single order for both boats.

I relayed this information to the right hon. Member for Wirral, West (Mr. Hunt), who relayed it to the man who is now President of the Board of Trade, who, in turn insisted in Cabinet that the then Prime Minister should not have her way and award the order to Swan Hunter: he insisted that it was his responsibility to place the order. There was no discussion in Cabinet; the Prime Minister decided that she, the Secretary of State for Defence and the Secretary of State for Trade and Industry would meet afterwards to agree the order, whereupon a prime ministerial minute would be noted.

That was the first time that I realised how Cabinet is run. Far from everyone joining in and debating an issue, everyone meekly accepted that there should be no debate around the Cabinet table and agreed that this crucial question should be decided separately.

The then Defence Secretary, now President of the Board of Trade, won the order for Laird not because he favoured it or felt a special attraction for Merseyside but because he had taken the trouble to phone the yard to ask what its single tender for both boats would be. On that basis, Laird won the competition fairly and squarely on price.

Even in its current desperate situation, Laird is not asking for special treatment. We are asking the House to reflect on the consequences of the Government's "Options for Change". There seems to be no dispute in the House about the correctness of the strategy. Given the massive changes in eastern Europe, it seems right to adjust our defence budget accordingly—although I would enter a note of caution. We welcome the changes in the east, but for the past nine months or more tribalism has been emerging across much of Europe—not merely the old-fashioned tribalism that we experienced before the rise of the nation state, but tribalism armed with weapons, some of them nuclear.

I therefore do not follow the conventional wisdom, often expressed in this Chamber and more often out side it, that the world is a safer place now that the Soviet empire has disintegrated. I think it is a much less safe place. The Government have begun the necessary task of debating and implementing "Options for Change" and the sort of strategy and weapons that we will need to back up the programme in a world in which tribalism reigns. This will necessitate a very different procurement programme from the one that we have followed since the war.

I end with the need for the Government to think about how badly placed some of these communities are. They have served the Government well by expertly fulfilling their procurement programme in the past. We do not hold out a begging bowl or ask for outdoor relief from the Ministry of Defence or anywhere else. Our plea is that we be given time to adjust. I hope that the Minister in replying will discuss the programme of the immediate future for placing naval orders. Perhaps more importantly than that for our shipyards, I hope that he can tell us something about the placing of refit work. If he can, I trust that he will give an undertaking that when those orders, particularly for the refit work, are placed, the Government will consider any serious bid and not confine themselves to the bodies which normally compete for refit work.

We do not simply need work; we need work behind which there is a business programme—I am happy to use that buzz phrase—which considers how yards will make the adjustment over the next few years to ensure that we can continue to build merchant and naval ships in this country. We should be able to take the massive skills in our shipyards safely into other employment which is unconnected with military trade.

That is the plea that I make this morning, and I am sure that other hon. Members will wish to reinforce it. I am grateful for this opportunity to open the debate and to set out the needs of my constituents before we rise for the summer recess.

9.50 am
Mr. Barry Porter (Wirral, South)

I am obliged for this opportunity to speak in the debate. I cannot hope to match the eloquence of the hon. Member for Birkenhead (Mr. Field), but I hope to match him in the intensity of feeling that we share on the Wirral.

The hon. Gentleman has the honour to represent Birkenhead, which is perhaps not the prettiest town in the world, but it is our town. It is my town in the sense that I was born there and I count that as great an honour as the hon. Gentleman has in representing the town. My first memory of the shipyard was the launching of the Ark Royal by the Queen Mother in 1953. The history of Birkenhead and the Wirral is of a people who, if they did not work in the yard, certainly had a relation who worked in it or was in some way connected with the yard. It has that proud history, but it has it in common with many other shipbuilding towns, some of which no longer have yards.

I agree entirely with what the hon. Member for Birkenhead said. Compassion is not a word that springs easily to the lips of hon. Members when my name is mentioned, but that cannot be said of the hon. Member for Birkenhead. We are not here today on a compassionate basis. We are not here to ask for money, because I know full well that there will not be any. In fact, we have been told that.

Over the past few years, we have, in our various guises, explored every avenue: we have scraped, scratched, seen potential purchasers and looked for orders. With the help of Ministers and others, and especially with the help of the work force in the yard, we have been able, in our own small way, to keep the yard in existence.

If the yard were to disappear, it would not simply be a disaster for the people of the Wirral; in view of what the hon. Member for Birkenhead has said, it would be a disaster for the country as well. The hon. Gentleman was correct to say that the world is not a safer place: it is an infinitely more dangerous place. While I can understand the reasons for "Options for Change", I believe that we should be moving cautiously.

To stray from the subject of the debate for a moment, I must say in respect of "Options for Change" that I have reservations about the merger of the Cheshire Regiment with the Staffordshire Regiment. Indeed, I do not simply have reservations about the merger; I oppose it root and branch and I hope that the Minister will bear that in mind.

We are not here to ask for money. We are not holding out the bowl. We are here to try to find a way forward, and the hon. Member for Birkenhead has already said what that way forward might be. He encapsulated in a phrase what we are asking for when he referred to a "breathing space".

It is possible that there will be other types of work in the vicinity around Liverpool and Morecambe bays which the yard could take up in future. We might not build ships in future, although I hope that that is not the case. There is certainly other work on the horizon and that horizon is not too far distant.

We have nearly a year before Vickers Shipbuilding and Engineering Ltd. closes down Cammell Laird unless something happens. I do not believe that it is beyond the wit and ingenuity of the Government to find something during that time to allow the yard to continue and so allow the people of the Wirral to maintain that proud heritage.

9.54 am
Ms. Angela Eagle (Wallasey)

I thank my hon. Friend the Member for Birkenhead (Mr. Field) for his ingenuity in securing the debate. I also thank other hon. Members with interests on the Wirral and elsewhere for taking the time to come to the Chamber to put their case today.

I want to supplement what has already been said and consider the effect that closure of the yard will have on the local community. The view is that closure would be catastrophic. At the moment, about 1,000 people are directly employed at Cammell Laird, but some 5,000 to 6,000 other local jobs in supply industries are thought to be dependent on the yard.

The Wirral saw a dramatic collapse in its economy during the 1980s. There was a 15 per cent. fall in the proportion of people employed in manufacturing over that period. Of the nine divisions of the standard industrial classification, there were modest rises in only two of them in the Wirral over the period—in banking, insurance and financial services and the public sector. There were serious falls in the other seven divisions. There was a 22 per cent. fall in the shipbuilding, engineering and vehicle industry division, and that was above the national average.

We are talking about a closure against the background of an already seriously depressed manufacturing sector and local economy. In 1971, 10,000 people were employed in the yard in shipbuilding. I agree with the hon. Member for Wirral, South (Mr. Porter) that most people who live in the area have worked in the yard or have relatives who have worked there. If the yard were to close, the effect on the psychology of the area for manufacturing and commercial investment and on individual confidence would be hard to grasp as being anything other than catastrophic.

Unemployment in the Wirral is currently 14 per cent., although there are patches of much higher unemployment, particularly of the long-term unemployed who often tend to be skilled people who used to work in manufacturing and who simply cannot find jobs in other areas. There is also a very large youth unemployment problem which causes social problems. There are 19,088 officially unemployed people in the Wirral—one in seven of the work force. It is estimated that closure of the yard would add 2 per cent. to that total.

We must bear in mind the fact that many of Cammell Laird's materials and services are bought locally. More than 600 local firms supply goods and services to the yard to an estimated value of £30 million. It is clear from what I have said that closure would have a serious effect. The local authority estimates that closure would cost the public exchequer about £111 million at current prices as a direct cost in lost tax revenues, increased welfare payments and retaining costs.

The solution to the problem has already been outlined to some extent in our debate. All Wirral Members want to keep the yard open. Indeed, it is crucial that it remains open. In the past decade or so, demand in the yard has been influenced by two effects. The first has emerged over the past two years in the form of "Options for Change" and the implications of a reduction in naval building as a result of welcome changes in the world's political environment and our defence needs. The second effect was the general shrinking of shipbuilding.

However, there is evidence that there will be an upturn in shipbuilding over the next decade if we can just maintain our capacity long enough to take advantage of it. It has been suggested that almost three quarters of the world's tanker fleet is more than 10 years old. The normal life span of a tanker is approximately 20 years. There will therefore be plenty of business in that area and we will be in a good position to compete for that so long as the yard exists.

Diversification made necessary by "Options for Change" involves an attempt to move to civil engineering. There is the Hamilton oil development at Point of Ayr, and, as the hon. Member for Wirral, South said, there is much potential work to be had in the Liverpool bay oilfields and in the Morecambe bay area. Cammell Laird would be in a good position to take advantage of that.

I add my voice to pleas for a breathing space, so that, after 1993, when what is left of our contracts will have run out, we can diversify and renew our ability to compete in a revived shipbuilding market and ensure that that crucial manufacturing sector for the Wirral and for the country can be maintained and protected.

10 am

Mr. John Hutton (Barrow and Furness)

I also congratulate my hon. Friend the Member for Birkenhead (Mr. Field) on his success in choosing this subject. It is an important and timely debate. My hon. Friends the Members for Birkenhead and for Wallasey (Ms. Eagle) and the hon. Member for Wirral, South (Mr. Porter) expressed the earnest hope of my constituents in Barrow that the Cammell Laird shipyard is able to remain open and enjoy a successful commercial future in the decades that lie ahead. We share a common heritage. We are shipbuilding communities and we are immensely proud of our traditions and contributions to the economy and defence of this country over many decades. It is tremendously sad to see a great shipyard such as Cammell Laird struggle and be unclear about its future. I look forward to hearing the Minister's comments offering a decent future for the shipyard at Cammell Laird.

My constituents and I look to the Government to give a sign that they are conscious of the immense upheaval and distress that "Options for Change" is causing. Hon. Members welcomed the end of the cold war and recognised the immense opportunities that that offered the peoples of the world. At the same time, many constituencies have more to lose than anyone else as a result of the changes. As hon. Members have said, we do not have a begging bowl, but we are legitimately entitled to ask the Government to recognise that reductions in shipuilding capacity are tremendously difficult to replace. The shipyards are strategically important, and not only for our defence needs. As we know, it is immensely difficult to predict 10 or 15 years ahead—perhaps even three or four years ahead—what our defence needs will be and it is virtually impossible to replace a reduction in capability and investment. I hope that the Government are taking that point fully into account.

I do not believe that, as a maritime nation, we can afford to see great shipyards such as Cammell Laird, Birkenhead and VSEL in Barrow go down the plughole. It would be criminal for the Government to sit back and allow that to happen.

I want the Government to recognise that it is incumbent upon them to encourage a policy which will reward innovation and promote investment. We have heard about the immense opportunities that are available in offshore marine engineering, oil and gas exploration, submersible vehicles and perhaps remote-operated vehicles. We have a capability in our shipyards, not only in my constituency but in others, to take advantage of what many believe will be a buoyant, worldwide market for marine engineering products. The Government have a responsibility to tell us what steps they will take to promote those developments.

Underpinning those points is a requirement that the Government recognise the immense economic potential in many shipbuilding communities. In the past, many of our constituencies have been dependent on providing ships for the Ministry of Defence. In my constituency, we have exclusively worked for the Ministry of Defence for at least the past 20 years and for a long time before that, but we have a wider capability than that. My interest in the matter leads me to conclude that the Government should introduce an expansion of the intervention fund scheme so that naval yards such as VSEL and Cammell Laird can take advantage of that source of funding.

Hon. Members who represent shipbuilding communities want clearer information from the Government about their future naval procurement policies. In 1986, when VSEL in my constituency left British Shipbuilders and became a private company, we were expecting 27 SSNs from the Government and, along with our colleagues in Cammell Laird, we expected to build 15 of the Upholder SSK class. Following "Options for Change", those projections of 27 SSNs and 15 SSKs became 19 SSNs and only four SSKs. That is a huge reduction in the work load of Cammell Laird and VSEL. We want clearer information about the Government's future procurement policies and their strategy in respect of maintaining a vibrant shipbuilding industry. I am confident that our shipyards and shipbuilding communities can make a huge contribution to revitalising British engineering. The success of British engineering lies at the root and heart of the success of British manufacturing.

10.5 am

The Minister of State for Defence Procurement (Mr. Jonathan Aitken)

I have found today's debate a rather moving experience, because what the House of Commons does best is what has been happening in this short Adjournment debate—Members of Parliament fighting articulately for the interests of their constituents, particularly at a time of considerable anxiety and worry over the future of Cammell Laird.

I am grateful to the hon. Member for Birkenhead (Mr. Field) for the realistic way in which he opened the debate. He certainly struck a chord with me when he said that it would be hard to think of Birkenhead and the Wirral without a shipyard. Almost my first job in politics was to work as private secretary for some years for the right hon. Selwyn Lloyd, who was born and bred in the Wirral. I spent many weekends working for him and sometimes answering mail from his constituents who worked at Cammell Laird. It is obviously a fine tradition of the area to have not just profound local pride but deep local roots, as exemplified by my hon. Friend the Member for Wirral, South (Mr. Porter) who, like Selwyn Lloyd, was born there. Hon. Members could hear in my hon. Friend's speech great commitment to a local area.

I was glad to hear expressions of deep pride in Cammell Laird. They were entirely justified, because the yard has an enviable record of building warships and a wide range of merchant vessels to a high standard.

Mr. Tom Clarke (Monklands, West)

The Minister will recall that, a week ago last Monday, he met a delegation from my constituency about the future of Inchterf, the proof and experimental range. Unfortunately, we have had an official decision to close the range. That has deeply saddened my community on the eve of the Glasgow fair holidays. I repeat the request from Strathclyde regional council and Strathkelvin district council that the Minister should visit the location before September when the decision is to be implemented.

Mr. Aitken

I will certainly consider that request sympathetically. I do not want to respond off the cuff when we are dealing with an entirely different subject. I took carefully into account the hon. Gentleman's representations when he saw me with his delegation only a few days ago.

I again refer to Cammell Laird and remind the House of how great its record of service has been, particularly during the second world war when it made a significant contribution to our defences, with the work force putting their efforts into completing an aircraft carrier, five destroyers, four frigates and seven submarines. Since the war, there has been a continuous record of fine service and achievement. The Ministry of Defence has been very happy with the high quality of work undertaken by Cammell Laird not just over the years but recently on the three Upholder class submarines which are being built in the yard. That order was won in open and fair competition with other yards, and the timely achievement of the build programmes for the submarines was a great credit to the work force and management of the company.

In the few remaining minutes, I shall respond to the specific questions that hon. Members asked, all of which revolved around the plea for a breathing space. I listened sympathetically to that plea. It focused on two main areas—the shipbuilding programme and the ship refitting and repair programme.

The Government currently have in hand a major programme of work in naval shipbuilding aimed at the re-equipment and modernisation of the Royal Navy. We have on order 19 ships and submarines which have not yet been accepted into service by the Royal Navy. The total value of those orders, including the weapons and equipment to be fitted into the ships, amounts to the equivalent of approximately £5 billion at today's price levels.

However, as we have previously announced, there is to be a reduction in the submarine force levels. I have discussed the matter at length with the hon. Member for Barrow and Furness (Mr. Hutton). The reduction applies to both conventional and nuclear-powered submarines as well as to frigates and destroyers. However, I am sure that the hon. Member for Barrow and Furness was heartened by our announcement last week of the firm order for the fourth Trident submarine.

All the changes on the world international scene and in our shipbuilding programme inevitably mean that a reduction is likely in the work load of the industry generated by Ministery of Defence orders. Overall, the potential capacity is in excess of the likely requirements of the United Kingdom warship building programme. That means that the shipbuilding industry will have to turn to new markets. In some yards, notable successes have been made in winning export orders, such as those for frigates for Malaysia, corvettes for Oman and fast patrol craft for Qatar.

I am afraid that I do not have any great expectation of new naval orders during the period of particular anxiety at Cammell Laird—which I take to be the next 18 months before the work on the submarine programme is completed. I say that simply because we now have in place such a large shipbuilding programme that we do not plan to go to tender for the next batch of type 23s until autumn 1993. The possible order for the helicopter carrier is not likely to go out until late 1993. I am sorry to say that we have no plans to order more patrol submarines in the Upholder class.

The hon. Member for Birkenhead referred to ship refitting opportunities, which are of particular interest to him. All shipyards with the required capability and capacity will be invited to compete for ship refitting work. In the next year or so, that is likely to be predominantly work on the ships of the Royal Fleet Auxiliary. We think that there will be approximately half a dozen refits, mainly of ships of the RFA. The contracts are always well publicised in the MOD contracts bulletin.

If hon. Members are interested in following the procedure, they should look at the recent advertising of the ship refitting requirements for the minesweeper HMS Atherstone. The adverts were published in April and the closing date for the bids is the end of July. Provided that a yard can produce the right price and meet our contractual requirements, there is no reason why it should not win some of the work. The House will appreciate that I cannot give precise details of what work will be offered for competition in the next 18 months or so, but I assure hon. Members that all the contracts will be fully advertised in the contracts bulletin as they arise.

The hon. Member for Birkenhead raised the possibility of a bid from Cammell Laird and asked how it would be treated. It is our policy to consider even unsolicited bids from all those who are qualified to undertake the work. From everything that I know about Cammell Laird, I am sure that it is likely to be fully qualified to undertake such work. All such bids must be received within the published time scale and meet our general requirements of financial guarantees and so on. That is a matter which Cammell Laird could usefully examine.

The hon. Member for Wallasey (Ms. Eagle) referred to the knock-on effects of unemployment at the shipyard. She said that 5,000 or 6,000 ancillary jobs could be lost in other areas. Of course, I understand that well. The hon. Member for Birkenhead was kind enough to refer to the high unemployment in my constituency. I understand how heartbreaking it is to have the scourge of unemployment, at the levels which exist in both Wallasey and Thanet, South, and on top of that to face the major hammer blow of the closure of a major shipyard. I am well aware of the need for a breathing space and the compassionate view for which my hon. Friend the hon. Member for Wirral, South argued.

It is difficult for the Ministry of Defence to be specific in such cases. I was glad that there was consensus that the world had changed and that "Options For Change" went in the right direction. However, we must continue to recognise that the world is a dangerous place and that we shall continue to need a Royal Navy and well-built and refitted warships.

I recognise the grave effects on local communities when circumstances such as those we are discussing arise. I wish that I had a magic wand to wave to solve the problems. I can only say that we have listened seriously and sympathetically to the good arguments made by all the hon. Members who have spoken in this short debate.