§ 3.40 p.m.
§ THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK)My Lords, perhaps this would be a convenient moment for me to answer the Private Notice Question asked by the noble Lord, Lord Hoy.
Her Majesty's Government recently received a communication in the form of a letter (it was not a directive) from the Commission, suggesting that the payment of construction grants on mobile off-shore installations under Part III of the Industry Act 1972 is a contravention of the Council Directive on Aid to Shipbuilding, No. 273 of 1972. The letter invited our observations. We do not accept the Commission's view of this matter but we are considering their letter and will be replying to it in due course.
Pending the resolution of this issue, which may take some time, we shall of course continue to meet our obligations to pay these grants. And of course the House will be aware that the Directive in question expires at the end of this year.
§ LORD HOYMy Lords, I am grateful to the noble Earl for that answer and also for the assurance that the Government will continue to give grants under their obligations because of the 1972 Industry Act. What perturbs us a little is why, when that Act was passed so recently, the Government were able to give both Houses of Parliament the assurance that these grants in no way contravened our entry into the E.E.C. If we had that assurance—and I do not think the noble Earl will deny it—why should this point arise?
What also causes us some difficulty is that the attraction of a firm like Marathon is not the only firm concerned. There are yards like Rob Callaghan who have entered into contracts of this kind and who are very important to the Scottish economy. They also would be affected, and indeed many others if in fact the practice was changed.
I should like to ask the noble Earl one question. This is the second day in succession on which we have had to meet a case of this kind, because yesterday it arose in connection with the Commonwealth Sugar Agreement, where the E.E.C. denied us the right to give grants and said that we had contravened Section 92 of the Treaty of Rome. The Government then appealed to the Commission of Foreign Ministers under Section 93. Is it the intention of the Government to adopt this tactic until such time as we can find a settlement to this particular problem?
§ LORD GLADWYNMy Lords, could not the Government agree that if the Commission should insist, over our own objections, that their interpretation of our Treaty obligations in this case is the right one—and we should all hope, of course, that during the next month or two the Government will be able to persuade the Commission not to do any such thing—then the only course open to the Commission is to take the matter to the European Court? Will they not further agree that on several occasion the French Government have been taken to the Court and have had to accept the decisions of that Court, although of course they did not want to do so? In other words, is it not a fact that if we want to insist that other members of the Community should abide by their Treaty obligations as 1380 defined by the Court, when our own interests are concerned we shall, as a last resort, have to take the rough with the smooth?
§ THE EARL or LIMERICKMy Lords, I will first briefly answer the point made by the noble Lord, Lord Gladwyn. He may well be right, but this does not yet arise because, as I would say in reply to the noble Lord, Lord Hoy, we are dealing here with a matter of interpretation. I think this should be put into perspective. It is the duty of the Commission to keep a watch on and investigate subsidies of all types, and while in this case we do not accept their view, we must recognise, as was pointed out by the noble Lord, Lord Gladwyn, that such inquiries are to be expected and indeed are necessary to ensure that competition is as fair as possible within the Common Market.
The noble Lord, Lord Hoy, asked why it had been raised now. It is raised as a matter of interpretation. We do not agree with the view which has been put upon this matter by the European Commission, and we shall be giving our reply to tell them why we do not agree. Meanwhile, as I said in my answer, we shall continue to pay the grants. The noble Lord then referred to the case of sugar. I do not think the question of the implication of this general article arises, for the reason that we are dealing with a matter of interpretation and on this I think a clear and full answer was given yesterday by my noble friend Lord Ferrers on the whole position of sugar.
§ LORD HOYMy Lords, I do not want to insist too much on this, but when the noble Earl said that we had this assurance, when the 1972 Act was going through Parliament we had an assurance that this was in no way a contravention of the Treaty of Rome because this specific assurance was asked for, and that British industry was going to do its job. What we find a little surprising is that having accepted the 1972 Industry Act with that assurance, we now find at this very late stage that Europe is saying to us, "You, the British, have contravened the Treaty of Rome".
I am not dissenting from what the noble Lord, Lord Gladwyn, has said, but as sometimes it has been said that we have not obeyed international rulings from international courts I wish that the 1381 Benches below the Gangway would also agree with us when we want to agree with the International Court so far as Iceland is concerned.
§ THE EARL OF LIMERICKMy Lords, these statements were made and it remains the view of Her Majesty's Government that there is no contravention. We adhere to the opinion that these grants may properly be paid to the Marathon Construction Company in such a way as not to be in conflict with our E.E.C. obligations.
THE EARL OF SELKIRKMy Lords, have the Government an obligation to pay the Marathon Company, and would they be in breach if they did not pay?
§ THE EARL OF LIMERICKMy Lords, it is my understanding that undertakings have been given in terms of Clause 11, Part II, of the Industry Act which were given on the basis that these would not be in conflict with obligations under the E.E.C., and this remains the view of the Government.
§ LORD SHINWELLMy Lords, may I ask the noble Earl, Lord Limerick, this question. In the possible event that may be regarded as a hypothesis at the present time, that the Commission's interpretation is considered correct, what is to happen to the shipbuilding industry on the Clyde?
§ THE EARL OF LIMERICKMy Lords, I should not like to deal with a hypothetical question. As I have said, it is a complicated question which I believe will take quite a long time to resolve, and the Directive with which we are here concerned expires at the end of this year.
§ LORD SHINWELLMy Lords, does the noble Earl appreciate that when a question takes a long time to resolve this creates uncertainty? What is to be the position of those persons who are employed by this particular shipbuilding firm on the Clyde? Is it not likely that they will consider whether it is worth while remaining in employment in that particular industry?
§ THE EARL OF LIMERICKMy Lords, I believe that what I have said, including the statement that we shall continue to pay the grants pending a determination of the case, should serve to remove the uncertainty.