Swan Hunter

HC Deb 12 May 1993 vol 224 cc801-9 3.30 pm

Mr. Robin Cook (Livingston)

by private notice): To ask the President of the Board of Trade and Secretary of State for Trade and Industry if he will make a statement on what help he will offer Tyneside in the wake of the loss of the naval contract by Swan Hunter.

The Minister for Industry (Mr. Tim Sainsbury)

The Government deeply regret that Swan Hunter has been unable to secure orders, including that for the new helicopter carrier for the Ministry of Defence. We are well aware of the potential loss of jobs both at the yard and among suppliers. The company will need to take decisions in the light of the failure to win orders and these decisions are likely to involve early job losses.

In the event of substantial job losses, the Government are considering a number of measures to help the area. We would intend to designate a new enterprise zone in the area and will urgently examine possible sites. This would be subject to European Commission agreement. English Estates would implement an important £2.5 million industrial development at Walker Riverside in conjunction with the city council and Tyne and Wear development corporation. The Tyneside training and enterprise council and employment service locally would offer an enhanced range of labour market help to those affected by the closures.

In addition, I can confirm now, ahead of the results of the assisted area map review, that both Newcastle and south Tyneside travel-to-work areas will retain their development area status, subject to agreement with the European Commission. Availability of regional selective assistance will be important in attracting new investment and new jobs. We are putting into immediate effect the Tyneside TEC plan for dealing with the closure of Westoe colliery, which is designed to help the whole area and not just those leaving the colliery. A further £2 million will be available to Tyne and Wear development corporation from the additional £20 million recently made available for coal regeneration measures for increased provision of new industrial sites in the area.

The area already benefits from support from many regional and urban schemes. The Government will be examining urgently how priorities can be focused within these schemes to help the area. I have asked my Department's regional director in the north-east, with colleagues from the Departments of the Environment and Employment, to co-ordinate all those concerned locally with regional regeneration to advise on how they can target resources most effectively to have an early impact in attracting new employment.

We do not in any way underestimate the importance that shipbuilding and Swan Hunter in particular have had for Tyneside. I hope that all concerned will co-operate to build on the measures that I have announced today.

Mr. Cook

Will the Minister confirm that last November he was warned by the constituency Members that Swan Hunter would be at risk of closure if it lost the naval contract? Are we to understand from the measures that he has just announced that the Government have not a single proposal to try to keep open the last remaining shipbuilding yard on Tyneside? Does he appreciate that, if they intend to do anything to save the yard, the situation is now urgent, and that even as we discuss the matter the directors of the company are meeting the bankers? Surely the Government can announce something that they will do to continue shipbuilding at this yard, a yard which has already secured two export orders which could be lost if it were to close?

Does not the crisis at Swan Hunter provide a clear example of why we must plan ahead for conversion of defence industries that are losing defence orders?

Will the right hon. Gentleman confirm that Swan Hunter cannot get help from the European intervention fund to diversify because the Government agreed at the time of privatisation that British warship yards would be excluded? Will he return to Brussels and get that changed after today?

Will the right hon. Gentleman confirm that every part of the yard we are discussing is within the boundary of an urban development corporation which is appointed by the Government and accountable to the Government? What extra resources will it receive to cope with any extra need?

In the light of the right hon. Gentleman's statement about enterprise zones, will he give us an undertaking that, if Swan Hunter falls, the Government's own urban development corporation will use its planning powers to stop those high-tech facilities in the yard being demolished to make way for service industries, for warehousing or for supermarkets? Will it then try to find another operator to bring work to one of the most modern shipyards in Europe, with some of the most skilled people in Europe?

Already in the shipbuilding yards on both banks of the Tyne one in three men is out of work. If Swan Hunter closes, one in two could be on the dole. It is not just Tyneside, but the nation, that will have its eyes on the Government to see whether they can rise to the gravity of the crisis and match it now with help on the same scale as the blow they have just delivered to the local community.

Mr. Sainsbury

The hon. Member for Livingston (Mr. Cook) asked a number of questions. Underlying many of those questions appeared to be an attitude that belittled the achievements of enterprise zones and of urban development corportions. I wonder whether the hon. Gentleman is aware that the Tyne and Wear urban development corporation has already created 10,000 jobs. Is he not aware of the success of other enterprise zones in job creation? Is he suggesting that Tyneside should spurn those offers of help? That seemed to be underlying what he said.

The second thing that seemed to underlie the hon. Gentleman's questions was the suggestion that the yard should stay open regardless of the market for its products. If that is his attitude, I fear he must be the only person in the House who is not aware of the excess capacity in shipbuilding and, in particular, in warship building. I wonder why he does not recognise the advantage to that area of a transition from excessive dependence upon the old industries of coal, shipbuilding and steel to a more diversified economy, with vehicles, pharmaceuticals and electronics providing employment that will last and provide opportunities in the future.

Mr. Neville Trotter (Tynemouth)

My right hon. Friend must be well aware that the announcement that Swans has lost by a very large margin is a cruel blow for Tyneside. We welcome the steps taken today, but it is absolutely essential that the local initiative that will come from Tyneside, the local effort, be matched on a sustained basis by national Government. [Interruption.]

May we have a promise that every Government—[Interruption.]

Madam Speaker

Order. Hon. Members must desist.

Mr. Trotter

May we have a commitment that every Government Department and agency will have its resources harnessed to this task?

Will my right hon. Friend pay an early visit to Tyneside to hear of the problem for himself? Does he agree that we have on Tyneside a very valuable asset in the labour force at Swan Hunter, who are highly trained, very skilled, hard working and flexible? Is not that an attraction for new industry?

Mr. Sainsbury

I am happy to confirm what my hon. Friend said about the skill of the work force and, even more importantly, about the commitment of the people of Tyneside to build on the opportunities that they are given through the measures that I have announced and through the programmes that are already in place there. They have the opportunity to build a more diversified and prosperous industrial future for a region with a very great past in industries that, sadly, are now fading.

I am also happy to confirm to my hon. Friend that I shall make early arrangements to visit the region this month.

Mr. A. J. Beith (Berwick-upon-Tweed)

Does not the Minister realise that all the measures, many of which we have already, are not enough even to replace the mining jobs that we are losing in the north-east, let alone to replace the jobs of all the skilled shipyard workers who will be put out of work as a result of a devastating decision for Tyneside? Does not the Minister also realise that the most useful thing that he could do would be to tell the Secretary of State for Defence to bring forward orders for type 23 frigates now so that there would be some shipbuilding work for the yard?

As a Minister whose Department is responsible for monopoly policy, will the right hon. Gentleman investigate and ascertain whether the order that was placed was in any way subsidised by the profits from the Trident contract? If that were so, it would mean that a monopoly supplier was buying its way into another monopoly.

Mr. Sainsbury

I am assured that there is no question of underbidding. The price tendered by the successful bidder was broadly in line with the expectations of the Ministry of Defence. I hope that the right hon. Gentleman recognises that, if the order had gone the other way, it would have been very bad news for two other areas of the United Kingdom.

I find it rather surprising that the right hon. Gentleman, who is a member of a party that has on a number of occasions and in a number of documents called for more substantial and earlier reductions in defence expenditure, now seems to be calling on the Ministry of Defence to order ships for which it has no immediate requirement.

Mr. Peter Atkinson (Hexham)

I welcome the package of measures that my right hon. Friend has announced today, although I am bound to say that the House and my constituents who work in the Swan Hunter yard would have preferred to celebrate today the placing of the order for ships with that yard. We await fuller details of the tender so that we can be satisfied that like was compared with like in awarding the contract.

Will my right hon. Friend join me in congratulating the work force and the management of Swan Hunter on their valiant efforts in the past months? They have done their utmost to secure the order—sadly, only to fall at the last fence.

Mr. Sainsbury

I am happy to join my hon. Friend in that and to recognise the skills and commitment of the work force. We all wish to see those skills and that work force find job opportunities, if not in that yard then elsewhere, and we wish them to build on what I have announced and on the schemes already in place.

The tender, of course, is a matter primarily for my right hon. and learned Friend the Secretary of State for Defence and my hon. Friend the Minister of State for Defence Procurement. I am assured that the tender was awarded on a like-for-like basis and that it was genuinely won with a substantial price difference by Vickers Shipbuilding and Engineering Ltd. and its partner Kvaerner.

Mr. Stephen Byers (Wallsend)

Tyneside does not want ministerial day-trippers; it wants positive action from the Government. The sense of despair and disappointment felt yesterday on Tyneside as a result of the announcement will turn today to anger and a sense of betrayal as a result of the Minister's complacent statement. The Government stand condemned for doing nothing to help the thousands of workers who depend on Swan Hunter.

Is the Minister aware that there is a widely held view that the announcement to award the hull to the Clyde, which would mean thousands of Tyneside jobs being sacrificed, was rushed forward to yesterday so that the Chancellor of the Exchequer could take some good news to the Scottish Tory party conference which starts today in Edinburgh? Will the Government, even at this late stage, take positive steps to preserve and protect shipbuilding at Swan Hunter, or will they simply do nothing and stand to one side to witness the end of shipbuilding on the Tyne?

Mr. Sainsbury

I hope that, on reflection, the hon. Gentleman will realise that his suggestion is unworthy of him. The Labour Front Bench has been pressing for the decision on this order to be brought forward.

Mr. Michael Jopling (Westmorland and Lonsdale)

Does my right hon. Friend understand that all those with roots in the north of England warmly support the measures that he has announced today and those measures that the Government have already announced and implemented to help that part of the country? Does he also understand that, while there is quiet satisfaction and pleasure in and around Barrow, the order which has been placed on the basis of technical excellence and value for money will help that part of Cumbria where many of my constituents work? There are massive and continuing problems in Barrow as a result of the end of the cold war and the collapse of communism and the rundown in submarine building. My right hon. Friend will need to pay attention to the continuing problems in Barrow in the months ahead.

Mr. Sainsbury

I thank my right hon. Friend for his welcome—and, indeed, that of other hon. Members—for the measures that I have announced. They will bring further practical help and job creation opportunities to the region.

My right hon. Friend is right about what he said about Barrow. I am well aware of the difficulties there, both by reason of the peripherality of the area and the rundown of jobs in the Trident building programme. I know how welcome yesterday's announcement will be in Barrow and, indeed, on the Clyde.

Mr. Nicholas Brown (Newcastle upon Tyne, East)

The Minister has just lectured the House on the recognition of achievement. Perhaps he will tell us where, in his announcement today, there is a recognition of the achievements of the directors and work force of Swan Hunter shipyard since privatisation in 1986. He supported that privatisation. How have the people of Tyneside been rewarded for all their work?

Many of the things that my constituents would like me to say to the Minister would not be allowed in the House, so I simply ask him a question that the whole of Tyneside wants to be asked: is it the Government's intention that Swan Hunter should remain in existence as a shipyard? If so, what orders will go into that yard? Orders will need to be committed by the end of the week or the yard will go into receivership.

Mr. Sainsbury

I hope that there is no hon. Member who does not recognise the difficulties, the regrets and, indeed, the sorrow and bitterness that may be felt because of the long history of shipbuilding on the Tyne, especially by Swan Hunter. We owe it to the work force and management of Swan Hunter to be practical and realistic. There is excess capacity in warship building. We all know the reasons why there is a cut in defence orders not simply in the United Kingdom but worldwide. We would not be helping that management or work force if we were to suggest that orders could be conjured out of nowhere. The measures that I have announced today will provide practical help to an area which has suffered a severe blow.

Mr. James Hill (Southampton, Test)

I am sure that my right hon. Friend will agree that the House has heard many sad stories about yards that did not get defence orders. There was always a three or four-corner argument on who should get the latest frigate order, and so on. My firm of Vosper Thornycroft, in Southampton, which is privatised, has made great efforts. The opportunities that my right hon. Friend is showing today to this area could be something for the future because Vosper Thornycroft, after going worldwide to get orders and doing everything that it could to cut back its work force and ensure that it had a substantial order book, now valued at about £700 million, could be an example to Swan Hunter. I am sure that, with my right hon. Friend's help, this will not be a disaster story but something for the future.

Mr. Sainsbury

I certainly join my hon. Friend in congratulating Vosper's shipyard in his area on its success in building up a substantial export order book. It is another privatised yard that is expanding and taking on staff. As my hon. Friend recalled, it is inevitable that, when there are orders to be placed, the Ministry of Defence, on behalf of the taxpayer, should seek value for money. Seeking value for money inevitably means on occasion that there are losers of orders as well as winners. That is the inevitable result. It is obviously a matter of great regret for those who lose, but it is not realistic to suggest that one should simply place twice as many orders so that there are no losers.

Mr. David Clelland (Tyne Bridge)

Is the Minister aware that, far from the impression that he gave of an outdated industry, Swan Hunter is one of the most modern facilities in the world? Is he further aware that, during the term of office of the Government, companies such as Plessey and Marconi—companies at the forefront of technology—have also closed facilities at Tyneside? Having destroyed our mining industry, now destroyed our shipbuilding industry, decimated our manufacturing industry and undermined our local democracy, can he explain to the people of Tyneside, particularly in Tynemouth, why any of them should ever contemplate voting Tory again?

Mr. Sainsbury

The hon. Gentleman would do his constituents and British industry a better service if he recognised its achievements, as my hon. Friend the Member for Southampton, Test (Mr. Hill) did, in winning record export orders, record manufacturing output and unsurpassed increases in manufacturing productivity.

Mr. Christopher Gill (Ludlow)

In view of the strategic implications of losing a shipyard, will my hon. Friend discuss with the Secretary of State for Defence what scope there might be within the Royal Navy for ordering ships of a lesser specification? I am thinking particularly of those ships which are badly needed to replace our amphibious warfare ships, which are essentially ships which transport rather than fight. It would be possible to design ships which would serve their purpose with the lower specification and would serve the purpose of creating orders which are badly needed in British shipyards.

Mr. Sainsbury

I know that my right hon. and learned Friend the Secretary of State for Defence and my hon. Friend the Minister of State for Defence Procurement will both have noted what my hon. Friend said. I refer him to what my hon. Friend the Member for Thanet, South (Mr. Aitken) said last week, but I can also confirm that the order that has been placed for the helicopter carrier is by no means for a ship that is gold-plated. It will be a practical vessel which will meet the requirements of the Navy for the task that it has been given.

Mr. Doug Henderson (Newcastle upon Tyne, North)

Does the Minister understand that the great sense of anger among workers in the shipyard community and the whole of Newcastle is born out of a sense of betrayal? The Government have told workers that they believe in an industrial policy, yet it is clear that a decision has been made on defence procurement which does no more than set one industrial area against another, without regard to the regeneration of two industrial communities in the north.

Is it not time that there was much closer liaison between the Ministry of Defence and the Department of Trade and Industry? Is it not also time that a more long-term approach was taken to defence procurement? Does the Minister accept that an urban development corporation is wholly inadequate to deal with a situation in which 3,000 direct jobs and 6,000 or 7,000 indirect jobs are at risk? Does he not believe, as his boss used to believe, in the need for a strategic economic development body on Tyneside?

Mr. Sainsbury

I can assure the hon. Gentleman that there is the closest possible co-operation between my Department and the Ministry of Defence. The wider issues to which he referred were fully taken into account. But surely he can recognise that we were ordering not two helicopter carriers but one, and that one yard or the other, sadly, had to be the loser.

As I said earlier, I am sure that we can all appreciate the feelings of those on the losing side, but we must be realistic. That is why I have announced a package of measures that can be taken and are being taken by the Government which will genuinely help to attract employment and provide better training and relocation opportunities to the work force of Swan Hunter.

Mr. Roger Knapman (Stroud)

Would the order have been available to either yard if we had initiated the cuts in the defence budget advocated by either of the Opposition parties?

Mr. Sainsbury

My hon. Friend makes, clearly and simply, an effective point. If the Opposition parties' proposals on defence expenditure had been followed, there would have been no order for either yard.

Mr. John Evans (St. Helens, North)

Does the Minister accept that his announcement today, which means the virtual closure of Swan Hunter, is a sad occasion for someone like me who served his apprenticeship as a marine fitter in that shipyard? Is he aware that, when I entered the House in March 1974 after handing in my notice at the Hawthorn Leslie shipyard, there were six yards on Tyneside building ships—the Walker naval yard, the Swan Neptune yard, Hawthorn Leslie, Clelands of Wallsend and Redheads of South Shields, as well as Swans. All the yards that I have named have closed during the past few years. The Tory Government have stood back and done nothing, while thousands of skilled shipyard workers have been thrown on the dole queue.

Is it not time that the Minister accepted that it is in Britain's national interest to retain shipbuilding on Tyneside where some of the finest ships that have ever sailed the seven seas have been built? Is not it incumbent upon him and his Government to provide work and orders to maintain shipbuilding on Tyneside?

Mr. Sainsbury

We all appreciate that the failure to win the order was a bitter blow not just to persons such as the hon. Gentlemen who are involved with that shipbuilding area but to those working at the yard and those who have worked at the yard and their families. But it is surely impractical and unrealistic to suggest that we should conjure up orders for warships which the Ministry of Defence does not want in order to keep warship building going when there is excess capacity for warship building.

Is not the hon. Gentleman aware of the scale of the reductions in shipbuilding, both merchant and warship, not just in Britain but throughout Europe and the rest of the world? There is no point in trying to prop up a yard to build ships for which there are no orders. There is point in doing what the Government have announced today, which is to provide better opportunities for attracting employment and training for the work force.

Mr. Keith Mans (Wyre)

Does my right hon. Friend agree that it is sad for Tynesiders that the decision has gone against them, but the fact remains that had the decision gone the other way the job implications on Clydeside, and particularly in Barrow, were likely to be even worse because of the geographical nature of that area? Does he further agree that the way in which the tender was set out and won by VSEL clearly demonstrates the good value for money that the taxpayer is getting from this method of providing warships for the Royal Navy?

Mr. Sainsbury

My hon. Friend makes an important point about value for money for our defence expenditure. I fear that he is right to draw attention to the fact that, if my hon. Friend the Minister of State for Defence Procurement had awarded the contract to Swan Hunter, I might have been hearing much the same comments that I have heard today but from a different group of Members. That brings us back to the fact that there is not a need for two ships, but two yards were bidding and one had to be a loser.

Mr. Ronnie Campbell (Blyth Valley)

Is the Minister aware that in the past three or four months 5,000 jobs have gone in the mining industry, that after last night's decision on fishing thousands of fishing jobs will go, and that thousands upon thousands of jobs will be lost on the closure of Swan Hunter? When will the Minister realise that he is not setting up enterprises in the north-east but closing them down? Where shall we find enterprises that will put 10,000 people back to work? When will the Minister get off his backside and get something done in the north-east?

Mr. Sainsbury

I hope that the hon. Gentleman will pay tribute to the excellent work that has been done by all those—

Mr. Campbell

What about the miners, the fishermen and the shipyard workers?

Mr. Sainsbury

If the hon. Gentleman will pause for a moment, I was saying that I hope that he will recognise the excellent work that has been done by all those people on Tyneside in the local authorities, by business men in the chamber of commerce, and by the training and enterprise council. In the urban development corporation, 10,000 jobs have been created, jobs have been created in the enterprise agencies and we have achieved success in the measures that we have taken in Sunderland. Let us look forward and try to build on the industries of the future, not try to prop up the past.

Mr. Bill Olner (Nuneaton)

I have never heard a Minister so complacent in all my time in the House. I am sure that the House will regret the fact that a great shipbuilding industry is going, not temporarily but for good, and when there is a dire need for the British merchant fleet to be modernised and replaced. When we lose the capacity for building ships at Swan Hunter on Tyneside, any orders will go to foreign countries, to our competitors.

The Minister's talk about enterprise zones is slightly flawed and hollow. Swan Hunter has the ability to make good quality ships that our merchant fleet could use, and we should be using it.

Mr. Sainsbury

Again, I have to say that, if we are to provide practical help, we must recognise that there is a great excess capacity of shipbuilding in the world, not just warship building but merchant ship building. To be realistic, it was most unlikely that Swan Hunter would be able to win merchant ship orders against the competition that is around, even were there such orders waiting to be placed. I suspect that the hon. Gentleman knows that there are no such orders. That is why I emphasise again that the measures that we have announced are devoted to attracting new industries and to providing premises for those new industries, which will create employment in the vehicle, pharmaceutical and electronics industries, for which there is a promising future and where great success has already been achieved on Tyneside.