SHIPBUILDING (REDUNDANCY PAYMENTS) BILL

HL Deb 21 February 1978 vol 389 cc68-108

5.31 p.m.

The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)

My Lords, I beg to move that the Bill now be read a second time. The Government announced a year ago their intention to bring forward to Parliament proposals for special redundancy payments schemes, in order to assist British Shipbuilders and Harland and Wolff to alleviate the human problems resulting from contraction of the shipbuilding industry brought about by the great slump in world demand for ships.

This Bill now before the House is the means through which my right honourable friend the Secretary of State can achieve that objective. It is an enabling measure, which empowers the Secretary of State to make schemes for providing financial assistance to employees of British Shipbuilders and Harland and Wolff, or their subsidiaries, who become unemployed, or take less well-paid work; either because a company closes or reduces its activities or reduces the numbers employed. It is my firm hope that this Bill will have as speedy a passage through this House as it had through another place. It is a humanitarian measure. It is designed to cope with the consequences of a unique, worldwide situation which is affecting shipbuilders in every part of the world in the same way. Shipyards everywhere are faced with falling production because of the huge drop in demand. This is not simply a trough in a normally cyclical demand cycle; it is a massive change, and a structural change, in the whole of world supply and demand.

I spoke just now of the speedy passage this Bill had in another place. This, I think, reflects the support this Bill has on all sides and the urgency with which it is needed. It is not a welcome Bill, but it is a necessary Bill; and I trust this House will deal with it in the same spirit and with the same despatch as in another place.

Before I go on to deal with the content of the Bill, I should like to say a little about why there is this urgency, and what has led the Government to take this step. In 1973, orders for new ships placed throughout the world amounted to over 70 million gross registered tons. World production capacity was about half that. In 1974, the net figure for orders fell to 24 million tons. When I say, "net figures", I am talking about the total tonnage ordered less cancellations in the same period. In 1975, a great flood of cancellations of tanker orders meant that instead of a net addition to the world order book, there was a net loss of nearly 19 million gross registered tons. Even ignoring cancellations, the new orders placed in 1975 and 1976 have been no more than about 13 million gross registered tons, and in 1977, they look more likely to be nearer 11 million tons. This, my Lords, to serve a world industry with a capacity of well over 35 million tons.

A direct comparison of these tonnage figures may exaggerate the extent of the employment crisis, because the lost orders are nearly all tanker orders; and tankers do not need as many men to build, for each gross ton, as other kinds of ships. But in real terms, it still represents a loss of output amounting to about 40 per cent. in employment terms; and by any standards this is a grave blow to world shipbuilding. Moreover, all those in a position to make an informed judgment are agreed that the level of demand is unlikely to begin to rise significantly until the early 1980s; and then only relatively slowly. This is not therefore a short-term crisis; it is a situation which is likely to be with us for some years.

It is a sad fact that people must sometimes pay for the foolishness of others. Employment in shipbuilding has been declining steadily in this country, for very many years. In other countries, notably Japan, it has expanded grossly over the same period—indeed, out of all proportion to the likely growth of demand. We, and our European partners, warned the world, and the Japanese in particular, that serious over-capacity would result if the rapid and unjustified expansion of world shipbuilding capacity were to continue. There was the oil crisis but, even without it, there would have been serious over-capacity today.

So it is distressing for us to have to face the consequences of a situation as serious as this when we have had no hand in its making. And it is for that reason that this Government are determined to do their utmost to keep contraction of the shipbuilding industry here to a minimum. But shipbuilding is an international market, and neither this nor any other country can isolate itself from the effects of a world slump of this magnitude. Some redundancies are inevitable. That has to be faced. People inevitably ask, "How many?" But it is not possible to make a forecast with an acceptable degree of accuracy. Many different factors will affect the numbers. Thus, while world demand will never reach the peaks of 1973, so far as can be foreseen, there could well be some modest increase by 1981. And this, I should add, is the time limit for the duration of the schemes we propose under the Bill. On the other hand, there could conceivably be no increase in demand at all. In any event, precisely how much of the reduced world market can be won by British Shipbuilders and Harland and Wolff in the future remains to be seen.

I said a moment ago that the Government intended to do their best to keep contraction to the minimum. Their actions in this regard will obviously have an effect on the costs of the proposed redundancy schemes. So it is right for me to refer to what is clearly a most material step; namely, the introduction by the Government last year of the Shipbuilding Intervention Fund.

For the fact of the matter is that there is now a wild scramble for orders throughout the world, which has led to fierce, and sometimes even unfair, price and credit competition. And without assistance of the kind provided by the Intervention Fund, orders would well be impossible to achieve. This situation was not of our making. For two years, we and our European partners have urged the Japanese Government in our discussions in the OECD to take some action to stern the disproportionate flow of orders to Japanese yards, whose capacity is still so large that it could not be satisfied even if they won every order placed throughout the world. At a time when Japanese yards were capturing, each month, up to 80 per cent. of the orders won by the OECD shipbuilding nations—as compared with half during more normal times—the Government could not stand by and see our own shipyards starved of orders. We pressed, unsuccessfully, for a Community policy which would enable this country, and our European partners, to secure at least their fair share of the world market, but there has been no agreement so far—only proposals from the Commission for massive cutbacks in employment, with which we do not agree.

We were, therefore, forced to introduce our own proposals, and this is why the Intervention Fund was introduced. It received the backing of the Commisson and our Community partners, and was agreed to conform to OECD rules. It helped to complement the modest price increase imposed by the Japanese Government on its own industry, after many months of pressure from ourselves and our partners. It is a fair scheme and it is successful.

Last year, with its help, British Shipbuilders won orders amounting to 540,000 compensated gross registered tons, worth nearly £400 million. This is a substantial achievement, especially given the higher labour content of these orders as compared with previous production, which included many tankers. The total for the country as a whole is over 730,000 compensated gross registered toils. It is a performance which, in relation to output in recent years, is better than that of our major competitors, including Japan, who appear to have secured little more than half a year's full output last year.

But even the Intervention Fund is not enough, by itself, to win orders in today's market. It is not enough simply to be able to match prices; one must be able to offer reliable, prompt delivery, a good specification and a sound ship; and the success of our shipbuilding industry this year is not merely a reflection of the value and effectiveness of the Intervention Fund. It is also a tribute to the agressive and co-ordinated marketing of British Shipbuilders, which has been made possible by nationalisation.

It is also right for me to commend the loyalty and good sense of many British shipowners, who placed a very large proportion of their orders in United Kingdom yards last year. I hope very much that they will be able to continue and perhaps improve on that record this year; I am sure that most of them accept that it is as much in their interests as anyone else's that there should continue to be a sound, viable United Kingdom shipbuilding industry.

In spite of these successes, we must not lose sight of stark realities, for our achievements last year in winning new orders for this country did not provide a full year's work for the industry. Indeed, the figures I have given—especially about the performance of Japan—serve to illustrate that it is impossible, even by quoting the lowest prices, to secure enough work to maintain full output from existing capacity. The plain fact is that shipbuilding industries all over the world are facing the inevitability of contraction; and we must do likewise.

May I now turn to the Bill itself. The first clause, after describing the circumstances under which financial assistance to employees of British Shipbuilders, Harland and Wolff and their subsidiaries, is to become payable, enables the Secretary of State to make schemes for this purpose. The reason for proceeding in this way will, I hope, be fairly clear. Schemes of this kind are inevitably lengthy and complex—as anyone who has studied the scheme for the iron and steel industry will be aware. This scheme could prove to be even more complex, because of the greater variety of individual circumstances that it may have to deal with. One is aware of the dislike of the continuing growth of subordinate legislation, but I suggest that in the circumstances that prevail here the making of schemes in this way is entirely appropriate. And your Lordships will observe that we have provided in Clause 2 for the schemes to be approved by Parliament by the Affirmative Resolution procedure, so that each House will have full opportunity to discuss and comment on the schemes.

I should also mention at this point that the schemes will simply set out the many and varied conditions attaching to eligibility for, and level of, benefit. They will not lay down any policy for British Shipbuilders or Harland and Wolff to follow in implementing the schemes. Nor will they propose any "targets" for the number of redundancies—I have already explained how inappropriate any such exercise would be. This is not a Bill for redundancy; it is a Bill for redundancy payments. Implementation is, in fact, a matter for British Shipbuilders and Harland and Wolff, in consultation with the trade unions, and we have therefore tried in this Bill to provide for the maximum flexibility in order to meet all possible circumstances.

For example, it may be that, in the light of the uncertain future of the world shipbuilding market, some workpeople—perhaps those nearing retirement age—would feel it preferable to leave at a time of their own choosing, if given a suitable cash inducement to do so, rather than risk being forced to leave if no work can be secured. There may be others who would like to take up employment in another industry, in another part of the country, but who would need the special help to move their households which a scheme might provide. If, therefore, a need arose to reduce the numbers employed in a particular company, the intention would be to effect redundancies by calling for volunteers in the first instance. For this reason, the Bill does not limit payment under a scheme to those affected by a closure—a scheme can also cover those left without work by the contraction of a particular yard; or allow payments to those who are transferred to less well-paid work as an alternative to losing their jobs altogether.

Flexibility must, however, have its limits, and one such limit, imposed by Clause 2, is that the schemes will operate only for a limited time; two years in the first instance, which may be extended to four years by means of an order by the Secretary of State, subject again to an Affirmative Resolution of both Houses. There is a very good reason for this limitation. As I said earlier, the Bill seeks to deal with a special situation, which has arisen as a result of a sudden once-for-all structural change in the world balance of supply and demand for oceangoing merchant ships. But we expect that the large disparity between supply and demand which now exists will greatly diminish within the relatively short time-scale envisaged by the Bill, simply because shipyards throughout the world which have no ships, or fewer ships, to build will be forced to cut back or close, thus bringing supply into line with demand. The purpose of the Bill is to alleviate the social effects of that part of this relatively rapid worldwide process, which this country is unable to avoid. It is not to put shipyard workers in a privileged position in the ups and downs that are part of ordinary commercial and industrial life.

Before I leave the subject of timing, I draw your Lordships' attention to the fact that under Clause2 the prescribed date in relation to a scheme may be earlier than the date of the order making the scheme, or indeed, earlier than the date on which the Bill becomes—as we hope it will—an Act. This does not, of course, mean that any payments can be made before the necessary statutory authority is given. The purpose is simply to allow payments to be made retrospectively to those who have already been affected by the slump. Retrospection is itself not unlimited. In the case of the scheme for Great Britain, the Bill provides that the date prescribed by order cannot be earlier than 1st July 1977, the shipbuilding industry vesting date for the purposes of the Aircraft and Shipbuilding Industry Act 1977. It is our intention that the same date should apply to a scheme for Northern Ireland.

Clause 3 contains the financial provisions. I can, perhaps, say just one word about that. It provides for the Secretary of State to reimburse British Shipbuilders in respect of payments and expenses—all out of money provided by Parliament. It also provides for the Department of Manpower Services to do the same for Harland and Wolff, but in this case the money would come from the Northern Ireland Consolidated Fund.

There is very little more to be said about the contents of the Bill at this stage. But your Lordships will expect me to say something about the schemes, and about their likely costs. There will be two schemes, one each for Great Britain and for Northern Ireland, but we intend that the detailed provisions of each shall be, to all intents and purposes, identical. Some of your Lordships may have seen the outline of what is proposed for the schemes, which was recently announced elsewhere—in fact, in the Hansard of another place, in the Written Answers at column 475 of 7th February 1978—but it may be convenient if I summarise the main points here very briefly.

First, it is proposed that there should be redundancy payments for workers aged between 40 and 65, with a minimum of one year's qualifying service, the payments being graduated according to age, length of service, and earnings before redundancy. The payments will comprise three parts; a flat rate lump sum determined according to age, up to a maximum of £750; a lump sum related to earnings and increasing by an even progression, according to completed years of total continuous service; and, thirdly, income support payments calculated on the same basis and payable over a maximum of two years. A ceiling is proposed for the aggregate total payment under this scheme and under the Redundancy Payments Act 1965, equivalent to two years' previous normal earnings of the individual concerned. This would have the effect of limiting the maximum payment under the scheme in lump sum and weekly payments, to £7,400. There would also be some tapering of payments to those nearing normal retirement age, to ensure that no one would receive more on redundancy than he would have earned by remaining at work.

The minimum payment will be £300 for those with at least one year's service, and this will also apply to those of 40 or under who do not qualify for the age and length of service payments. Other important proposals include provision for some income support during re-training; and for mobility payments in certain circumstances. I must emphasise that a good deal of detailed work remains to be done to produce a detailed scheme suitable for incorporating in a Statutory Instrument, and some further consultation with the industry will be necessary on a number of points. It has taken a long time to reach even this point, but the time spent has been worthwhile, since the outcome has been an outline scheme which has many advantages over existing special schemes in other industries. Moreover, the painstaking effort and goodwill which have gone into it reflect great credit on those in the Confederation of Shipbuilding and Engineering Unions, British Shipbuilders and Harland and Wolff who undertook this task.

Before I turn to the overall cost of the schemes, I want to reply to those who have suggested outside this House, both generally and with particular reference to recent events at Swan Hunter—and I put the suggestion in its simplest and most direct form—that "redundancy payments should not be made to those who lose their jobs as a result of their own industrial action." I believe that proposition in this context to be quite misconceived. To attempt to put such a principle into effect would be unjust and quite impractical.

The Swan Hunter case is a perfect illustration of why this should be so. The workers who have recently received notices of redundancy are boilermakers—that is, steelworkers engaged largely in the earlier processes of building a ship. It is true, however, that although the underlying dispute was one of very long standing the particular sequence of events which led to Swan Hunters losing a share in the Polish order began with industrial action taken by outfitting workers—that is, those engaged in later processes. In such circumstances, can it fairly be argued that these redundancies were caused by those workers on whom they have now fallen? I say this not to attempt to apportion blame in this particular case but to illustrate that it is unduly simple to suppose that some sort of justice can be done by attempting to make a crude link between redundancies and industrial action.

I hope that I may be allowed briefly to develop these points. All experience suggests that it is impossible to apportion blame beyond argument in industrial disputes. Can it ever be said of any dispute that blame lies entirely with one party? How can one justify singling out for further penalty one particular group of workers, and still more one individual worker, who happens to become redundant in circumstances which have included industrial action? The loss of the job itself is surely enough of a personal disaster. And how can justice be served in denying payment to a redundant worker when his colleagues—perhaps just as much involved as he is in industrial action—keep their jobs? How, also, could one allow for the case of a worker who was absent for some reason—sickness perhaps—while industrial action was taking place, industrial action in which he had no active part? More difficult still, how could one distinguish an individual who had dissented from a group decision to take industrial action but had felt obliged to accept a majority view?

Industrial practices and relations are far too complex a field to permit such a punitive system as has been suggested to be applied with any equity. If in a measure such as this we sought to impose on unemployed workers—and, I may add, their families—harsh financial penalties just because one of the last and immediate causes of their misfortune was a deep and intractable industrial dispute which may have had its origins before they entered the industry and in which they may have played little or no part, then I believe we should do immense damage to industrial relations, not just in the shipbuilding industry, not just in the North-East, but throughout the entire United Kingdom. In simple terms, the suggestion is, in my view, neither practical nor fair. I ask noble Lords to bear that in mind before they think of supporting the unsophisticated slogans with which some commentators have sought to attack the men made redundant.

The object of this Bill is to cope with one of the consequences of worldwide contraction of the industry. It is not an exercise in industrial relations policy. Of course, irresponsible action by any part of the workforce is to be discouraged, whatever the circumstances, let alone in the present particularly difficult situation. But that is not a job for this Bill. I acknowledge, of course, that it may well be that industrial action could precipitate part of the inevitable contraction of the industry as a whole in one yard rather than another. That in itself may, one hopes, be a sufficient deterrent to irresponsibility.

Regarding payments, some commentators have sought to link events at Swan Hunter with the levels of benefit proposed, putting the emphasis on the maximum figure of £10,400, of which £7,400 would be payable under the scheme and £3,000 under the Redundancy Payments Act 1965. With respect to all those commentators, I should like to point out that the sort of employee to whom this level of benefit will be payable will be the man of 55 who is earning over £100 a week and who has been with one company for his entire working life. That does not seem to me to be an excessive payment for such a man on being left without work in an area where unemployment is already a very difficult problem. As must be perfectly obvious and as the Explanatory and Financial Memorandum to the Bill seeks to make clear, the payment to the average worker would be far less and there would be no one under the age of 41 who would receive more than £300. There will be many who will not regard those as particularly generous payments in all the circumstances. So I hope your Lordships will agree that the Government cannot be charged with reckless extravagance in what they are proposing.

I come to the last matter, the cost of the schemes. I have already mentioned that the overriding factor will be the number of those benefiting: but since our aim is to keep contraction to the minimum, it follows that we shall keep the costs of the scheme to the minimum. It might be helpful, however, if I were to point out that, even if one assumes a fixed number of redundancies and a certain level of average pay, there are still many other variables which can affect the cost.

For example, payments increase with increasing age and length of service, so that if the take-up is weighted in favour of the higher age groups, as might happen if there were a call for volunteers in order to reduce capacity in a particular yard, then the average payment would obviously be higher. If, on the other hand, a yard were to close, the age and length of service profile of those receiving benefit might well reflect that of the industry as a whole, and the average cost would consequently be lower. We have thought it right to give, as an illustrative example, the effect of an age and length of service profile matching that of the industry as a whole. That produces an average payment of £1,500 per head at an average pay of £65 per week. The eventual average could be higher, simply because more long-serving or higher-paid employees qualify for benefit; but it is the overall cost that is important, and as I have already said, this must depend almost wholly on the number of employees who benefit from the scheme.

I hope I have given your Lordships sufficient explanation of the background to this Bill and of its purpose and intentions. The principle of the Bill is not controversial; the Bill has been welcomed, albeit with much sadness, on all sides. It is a social measure, and it is an urgent social measure. It is designed to mitigate the consequences of a unique problem faced by shipbuilding workers throughout the world, and I therefore ask your Lordships to give it a speedy passage. I commend the Bill to your Lordships. I beg to move.

Moved, That the Bill he now read 2^a.—(Lord McCluskey.)

5.58 p.m.

Lord CAMPBELL of CROY

My Lords, we thank the noble and learned Lord, Lord McCluskey, for his explanation of the Bill and also for his attempt to give an indication of the Government's thinking about the kind of schemes which are likely to arise under it. A Bill for this purpose is now necessary. It is a matter for great regret, I am sure, in all parts of the House that we in the United Kingdom must prepare for redundancies in this industry.

As the noble and learned Lord has said, this is an enabling Bill allowing for special schemes devised for redundancies to come forward in orders presented to Parliament by the Government of the day. These schemes are additional to the statutory redundancy scheme which applies to industry as a whole. Because of the world-wide crisis in shipbuilding I doubt whether there will be any serious complaints from other industries, provided that the schemes are fair and equitable. There have been precedents. I give the example of the scheme some years ago for the textile industry when it became clear that industry would have to contract and rationalise.

Nor should there be objections from other countries to sound and just schemes to ameliorate redundancies in the ship-building industry. Other countries with shipbuilding industries are also having to take action. Britain was not responsible for the oil crisis in 1973 and the subsequent collapse of the tanker market and the market for large ships; nor has Britain contributed to the over-capacity which now exists in the shipbuilding yards of the world. We have not expanded in Britain as other countries have—for example, Japan. So I would say to my noble friends that we should support the principle of providing the Government with powers to lay such schemes before Parliament.

It is the nature of the schemes themselves which is still very vague. Some of what is known is, I must say, ill-considered and objectionable. Our aim from this Bench is to help the Government to put on to the Statute Book a measure adopting the principle, to which we agree, but we will wish to examine carefully the way in which the Government are setting about this business. In the course of this speech I must be critical of some of what has so far emerged, though I start by exempting all the noble Lords now sitting on the Front Bench opposite, who are not themselves in the Department and have not been involved. I hope they will use their undoubted influence with their colleagues to secure improvements in the Bill.

Throughout the story so far the Government have been left behind events. This enabling Bill should, in my opinion, have appeared last summer. Even now, late in the day, the Government are unable to give anything but a sketchy outline of the schemes they have in mind. The noble and learned Lord referred to the first outline that was produced, and of course it came a day too late. It appeared as an Answer to a Written Question in Hansard in another place the day after the Bill had left the other place. I can inform the noble and learned Lord of this. At eleven o'clock that night, when the Third Reading was taking place, the Minister had to hand out photostat copies, some of which had pages missing to anybody who was there. That was the first chance they had of considering the outline scheme, on the day the Bill was leaving them. Of course, it appeared in Hansard on the following day, and so we in your Lordships' House have had the benefit of a few days of study of that scheme—and it is only an outline.

Then, on that last day, as a result of that outline scheme the finances were completely changed, the quantities of money were changed. Indeed, the Financial Memorandum in the Bill which we have before us now is different from the one which was in the Bill in the Commons, because as it left the Commons they had to take account of that Written Answer and write a new figure into the Financial Memorandum we have before us; that is, that the scheme is estimated as costing £1.5 million per one thousand men, whereas three months ago in another place it was down as £0.9 million. So in three months the figure has been upped by two-fifths. I give that as an illustration, because it is disquieting that the Government seemed to have so little idea of what these schemes were to cost.

One reason the Government have given for this vagueness, and then changes in the estimates, is that discussions have been going on with the unions. But they have been going on for a year. One of the Ministers, Mr. Les Huckfield, said during the debates that the discussions had started in February 1977. They have, of course, been taking place with the Confederation of Shipbuilding and Engineering Unions. I understand—this is the information from the debates in another place—that that confederation of unions will contemplate only voluntary redundancies. So the first question I put to the Government is this, and I hope there will be an answer today: has there been any progress with those talks with the confederation since 7th February? The second question is: if there has been no progress to speak of, what is the Government's attitude on this? Today I was glad to hear the noble and learned Lord indicate that voluntary schemes were only a part of what the Government had in mind. But if the confederation are still not thinking beyond voluntary schemes, after a year's discussion, there is still a lot of ground to be covered.

Of course, voluntary redundancies are satisfactory in some ways. It means there is little argument about who is to leave. But they do have disadvantages. It does lead to unpredictability concerning numbers and also the areas in which people are to become redundant and leave. That means that it is difficult, if not impossible, for British Shipbuilders to work out manpower strategy. It could also lead to losses in vital skills and in certain age groups, while leaving those in the industry who are unskilled or may be in age groups for which there is not enough work.

Hitherto, the Government have said very little about this question of where the redundancies were going to fall, or indeed about redundancies at all. During the passage of the Aircraft and Shipbuilding Industries Bill, in which I took a certain part, whenever the question of redundancy came up the Government were very silent: they said they were leaving the organisation of the nationalised part of the industry to the new nationalised corporation; namely, British Shipbuilders. That is why, accordingly, we have been waiting for the first report of British Shipbuilders. Under Section 5 of the Act that was due to reach the Secretary of State by the end of last year. It was not issued by him until last week. It was published in the latter half of last week. It has not been printed, but I have managed to obtain a copy. Of course I was looking to see whether the new nationalised corporation had in their first report said anything about redundancies; I can tell your Lordships' House that the answer is that they have said virtually nothing.

It is, of course, a very difficult problem. They speak about "manpower development"; that is the only reference to it. They say that any arrangements or proposals for this are to appear in their first corporate plan, and that they do not expect to produce that corporate plan until the end of 1978; that is almost another year. So there is no light to be shed there about where these redundancies are likely to fall or how they are to be treated. So I ask the Government: have they any idea yet how and where the enabling powers which they seek in this Bill are to be used?

The only publicised case we know of so far is Swan Hunter, where over 1,100 redundancies have been announced. If the Government are in a hurry to get this Bill through, as we understand they are, is it for that case that they need it? I heard the noble and learned Lord pointing out the difficulties concerning allocating the blame for an inter-union dispute, and I do sympathise with that. But some of us have grave doubts whether taxpayers' money should be used for special additional redundancy schemes, over and above the statutory schemes, for men who have put themselves out of work by inter-union disputes. If blame can clearly be allocated—and I realise there may well be great difficulties—I do think there are great doubts about whether these schemes should apply in those cases. Is that the only shipbuilding redundancy situation in prospect at present for treatment under this Bill?

Then we come to the whole question of eligibility and qualifying for particular sums. This needs clarification. Of course, the details will come later in the particular orders in relation to schemes put before Parliament. But those orders cannot be amended; at that stage they can only be approved or thrown out by the House. So some of the points which the Government should deal with while the Bill is still before Parliament are these, and we shall raise them at later stages. First, are there any restrictions on men returning to the industry if employment picks up, perhaps unexpectedly well as some of up hope it will, in five or 10 years' time. There is something about this in the outline scheme in the Hansard of another place of 7th February, but it is not clear. Then there is the question of casual workers. Will casual workers in the industry be eligible for payments? This is something which I know the confederation of unions has been talking about.

Will the workers in subsidiaries which are in no way connected with shipbuilding be eligible? There are subsidiaries of British Shipbuilders which, as a result of historical accidents, are trading companies or are concerned with such matters as housebuilding, motorcycles and concrete. As the Bill stands, workers made redundant in those subsidiary companies appear to be eligible. According to my count no fewer than 61 of the 140 subsidiaries are companies of that kind not connected with shipbuilding.

Next we come to the approximate cost of the scheme. The Government have so far given no indication whether they expect 200 redundancies or 20,000. There has been absolutely no indication and therefore, I believe that both Houses must recognise that, to a great extent, the Bill is a blank cheque. I think that on those points the House would be glad of more information. Indeed, it ought to have more information before the Bill leaves us.

I turn to the serious defect in the Bill, which does not need clarification as it is unfortunately, all too clear and I ask the Government to look at it again. The Bill does not apply to all shipbuilding firms: it applies only to those which are, under British Shipbuilders and Harland and Wolff. When the Government produced their nationalisation Bill three years ago, they did not aim to take over all the shipbuilding companies. Rather like nationalising the steel industry, they deliberately left a private sector. As a result, there are a number of independent shipbuilding firms which the Government never set out to nationalise and which were not covered by the Aircraft and Shipbuilding Industries Bill which is now an Act. They are as hard hit by the present recession as any of the other shipbuilding companies. Indeed, the Government have already recognised that, because the assistance under the Intervention Fund, to which the noble and learned Lord, Lord McCluskey, referred, does not exclude them. It extends to the independent shipbuilding companies—why on earth have they been omitted from the Bill?

I should point out that somewhere between 5 and 10 per cent. of employees in the British shipbuilding industry are working in these independent companies. They are smaller companies; they are not the largest companies, but they are just the kind of small businesses of whom the Government, in an excess of pre-Election zeal have declared themselves to be the special new found protectors. The Prime Minister himself has announced this and, I understand, has appointed his right honourable friend Mr. Harold Lever as their champion. If there is no reasonable response to this point, I hope this evening, I shall be in touch immediately with both of those right honourable gentlemen.

The independent shipbuilding companies' employees are members of the same unions as the employees in the nationalised sector. If the unions are still only willing to talk of voluntary redundancies, then I recognise that there is no need for them to have considered this matter yet. However, if and when it becomes necessary, and probably compulsory, to have schemes for redundancy, then the unions are most unlikely to ignore complaints from their members who are being discriminated against because they happen to be in the independent companies. It is no fault of theirs and it is no fault of the companies for whom they work. It was the Government of the day who decided not to select those companies for nationalisation and left them independent.

Therefore, I ask the noble and learned Lord whether he will tell us the latest position as regards the Confederation of Shipbuilding and Engineering Unions. Has he consulted them about this matter? Are they thinking in terms of redundancies for the whole industry or only for the nationalised part of the industry? I should be very surprised if they are not concerned with the interests of all their members, for whatever shipbuilding companies they work.

The reasons offered by the Government so far have been pathetic. Again, I exclude the noble Lords opposite who have not been involved. However, in another place the excuse has been given that these companies build only small ships. Apparently they have not noticed that other countries are now building small ships, including countries like Japan. Japan has recently concluded an order with Germany for building small ships. Shipbuilders in the present world crisis are having to build the kinds of ships which they hope they can sell, whether they be small, large or whatever, in face of the fierce competition which the noble and learned Lord mentioned. The smaller independent companies, if they have to spend their working capital on additional redundancy schemes in order to be fair, will of course suffer and be at a disadvantage compared with their rivals. Alternatively, they may simply not be able to provide the extra money for the additional redundancy scheme. That would be inequitable and inexcusable under this Bill.

Another reason that has been given is that it is difficult to draw the line and that if one goes beyond the nationalised part of the industry one would be getting down to the builders of small fishing boats, rowing boats—indeed the Skylark. A ship can be defined and it has been defined in previous legislation. Ships have to be registered and the companies that build them can be identified without too much difficulty.

I should like to illustrate the gross anomalies which can arise on this part of the Bill. If a man working in house-building or concrete production somewhere in the centre of England, who may never have seen the sea or a ship in his life and who has never been employed on any work connected with a ship, is made redundant, he appears to be eligible, if he is working for one of the subsidiary companies covered by the Bill. Another man who has worked all his life in shipbuilding will not, as it stands, be eligible, because his company was not selected three years ago by this Government for nationalisation and it is now in the independent sector. That is monstrously unjust and it is penalising the smaller businesses and their employees.

Therefore, I ask the Government to think again about this matter and I offer our help to correct it. There can be no difficulty about delay. I assure noble Lords that from this Bench we shall agree to the Committee stage which is, at present, well over two weeks ahead—indeed, the Committee stage and the Report stage can be brought forward if necessary if there is any question of an Amendment putting this matter right being thought to cause delay. It need not cause delay. As regards an Amendment going to another place, it can be taken there on the same day as it leaves us. I am sure that an Amendment of this kind would receive general agreement and would not meet with any opposition in either House. As regards the question of privilege, of course it would be amending the Bill in a financial scheme; it is not a question of this House suggesting that more money should be spent, but simply a question of how it is shared out. Of course, there is no difficulty about another place waiving its privilege in order to accept such an Amendment if it is generally agreed. Therefore, we shall help the Government as much as we can to put right what is a glaring anomaly.

To sum up: we support the principle of the Bill. Flow it is to be applied, however, is still vague and the Government have been unable to make proposals or assess the cost, and they have given no indication of the numbers involved. I conclude with one interesting observation. Although the Government have made no attempt to estimate the numbers who are likely to be redundant, they have, in the manpower memorandum, said that 30 to 40 extra staff would be required for the National Coal Board computer agency work arising from the schemes. It seems very strange that it is possible to make an estimate of as many as 30 or 40, which is a very large number considering the amount of computer work that would be involved. Is that really correct or is that a mistake? The schemes may be complicated, but they certainly should not require permanent extra staff of that order for the computer belonging to the National Coal Board.

6.20 p.m.

Viscount SIMON

My Lords, from these Benches I should like to assure the noble and learned Lord, Lord McCluskey, that he will have the support he asks for in getting this Bill through as quickly as possible. That does not mean that we also, like the noble Lord, Lord Campbell of Croy, do not see some difficulties in it. I should like to call attention to some of those difficulties and to ask some questions.

The first question that has worried me ever since I started trying to understand this proposition is: What are the considerations which persuaded the Government that very much higher sums should be paid to people who are made redundant in the shipbuilding industry compared to those who are made redundant in any other industry? Of course, I recognise—as we all do—with the greatest of regret, that the probability is that there will be a large number of people in this industry who will become redundant. But it is not obvious to me—and it does not seem to follow naturally—that because a large number of people are being made redundant, their individual needs should be very much greater than those of people being made redundant elsewhere. I, personally, have not managed to find any explanation for that.

I should like to make it clear that we do not disagree with the sort of figures suggested in the preliminary outline of the scheme. My question is simply this: If those figures are right for shipyard workers, why are they or something like them not right for workers in other industries? In the course of the debate on Second Reading in another place the Minister in charge of the Bill said: The purpose of the Bill is … not to put shipyard workers in a privileged position".—[Official Report, Commons, 16/1/78; col. 176.] But surely, rightly or wrongly, that is exactly w hat the Bill does. When the noble and learned Lord winds up this debate perhaps he could give us some more information on the Government's thinking about this matter and tell us the criteria which were applied and which persuaded the Government to single out shipbuilding as an industry which ought to have higher payments for redundancy. Perhaps he could tell us whether they agree that workers in other industries face just the same difficulties if they are made redundant and will need the same measure of support.

I know that the noble and learned Lord referred to the special situation which has arisen as a result of a sudden, once-for-all structural change in the balance of supply and demand, and this, again, was referred to in another place. But to my mind that does not meet the point why, because the number of people involved is greater, one has to consider much larger sums per individual to be disbursed. I wonder whether the noble and learned Lord is right to describe it as "sudden" when, as he himself said, we were warning the world in 1972 that this situation would arise. As regards "once-for-all", that is a very bold statement to make about any development in industry. However, that is by the way. My point still is that I do not understand why, because more people are involved, they should necessarily expect or deserve more compensation for redundancy than others.

That brings me naturally to the point which has already been touched upon by the noble Lord, Lord Campbell of Croy, about the employees of shipbuilders in the private sector. I am sure that the noble and learned Lord cannot dispute the fact that, if they are made redundant, their needs would be just the same as those of employees in the public sector. The Government's resistance in another place was, as the noble Lord, Lord Campbell of Croy, said, really very thin. There is a difficulty about definition, but with goodwill I am sure that that difficulty can be overcome.

As to causing delay, I believe that in another place the Minister suggested that he would have to go hunting all round the country for those who would be eligible to come into the scheme. Would it not be perfectly satisfactory to legislate for any private employer who satisfies the definition himself to make an agreement with his employees identical to the agreement made between British Shipbuilders and the unions? He could then say to the Government, "I have an identical agreement and this is where you ought to make the same contribution to my payments as you do to the payments of British Shipbuilders".

I was going to say a few words about what have been called self-inflicted wounds, but much has been said already and I would simply say that I agree with what the noble and learned Lord said about this. I do not believe that it is a practicable or a fair proposition that people should be penalised because of industrial trouble with which they may or may not have had anything to do.

As has already been said, the nub of this problem will be in the schemes that are produced, and those we can discuss later when they are brought before us in the form of a draft order. However, as has already been said, this is a very unsatisfactory way in which to discuss matters of this kind, and I should like to make three points about the draft schemes in the hope that they may influence the thoughts of those who are negotiating. In the first place, I suggest that it is very important that the Government should be active parties to the negotiation. Of course, I agree that the details have to be worked out between British Shipbuilders and Harland and Wolff on the one side and the unions on the other. However, I think noble Lords will agree that if two parties are negotiating in effect to agree on sums of money that will be paid by a third party, the negotiation may not be very realistic unless the third party is closely involved in it.

In this context I wonder whether—and it is probably too late—consideration could not be given to the help offered by the Government being offered in the form of a loan to British Shipbuilders and to Harland and Wolff, to be repaid over, perhaps, a long period out of the profits which we all hope they will make in due course. It may be that noble Lords will think that this is putting an impossible millstone around the neck of the nationalised shipbuilding companies. I should have thought that it was not necessary to suggest that the loan must be repaid at any given time. I should not even mind if it was a loan free of interest. What I think is important is that when British Shipbuilders and Harland and Wolff produce their accounts from time to time, the fact that they borrowed this amount of money from the Government should be shown on the face of their accounts. If it is not done in that way, I can quite understand that once these companies are—as we hope they will be—successful, they will produce results which everyone will think very good and people will forget the amount of money given to them under the bill in order to help them in their early stages.

The second point that I want to make is that in the outline scheme presented to us there is a reference—as indeed there is in the Bill—to "prescribed employees". It is said that "prescribed employees" means employees prescribed in the scheme. I hope there is no question but that the prescribed employees must be all the employees, not only the members of the unions which are members of the Confederation. I do not think that there are many non-union people in the shipyards, but there are a number of people—particularly managerial staffs and such people—who may not be members of unions within the Confederation. I hope it can be laid down in the Bill that all employees of the companies are eligible for treatment in tile same way.

I was disturbed to hear what the noble Lord, Lord Campbell, was saying about the attitude of the Confederation of Unions on the 'subject of voluntary severance. I hope it may be found that that is unduly pessimistic. It seems to me that the third important thing, is that management must have the last word on who is made redundant. They must of course have the fullest discussions with the unions, but management has the responsibility to ensure that the reduced labour force is adequately balanced both in age and in skills.

In this connection I was going to refer—but I think that perhaps the noble and learned Lord has helped me out of this—to the average of £1,500 per man, which seemed to me very low and suggested to my mind that possibly the old and well established rule of "last in, first out" was having an undue influence on the thinking of people. It seems to me a very low figure, and the result of it might well be to leave an ageing labour force. I think that the noble and learned Lord referred to this. He said that it was based on the industry profile by age, and perhaps therefore my criticism is not sound.

Finally on the scheme, it is essential to stiffen up the reference to retraining and to put more emphasis on it. That is surely absolutely necessary. If it involves, as I think it may, a substantial expansion of facilities for training this should be undertaken. Above all, let all those concerned with the working of the schemes never forget that they are dealing with people, and not numbers or statistics. I should like to think that in each shipyard a special unit could be established to advise and assist individuals in the problems which they individually will have to face. This will be a whole-time task. Perhaps I might suggest that these units could be staffed by employees who might otherwise be added to the list of redundancies. The cost need not be large. There are one or two specialist professionals who may be required in the units. If those working in these units are dedicated to helping their fellow workers—and, I repeat, helping them individually and not treating them as though all their worries and problems are the same—how much could be achieved both in alleviating the social effects of that part of the worldwide process which this country is unable to avoid (those are words from the Minister in another place) but also in cementing good industrial relations within the yard!

6.33 p.m.

Lord BOYD-CARPENTER

My Lords, the state of the British shipbuilding industry can give no joy to any noble Lord or anybody outside. It is one of the tragedies of these last 20 or 30 years that an industry which was, at one time, our pride, and which built some of the finest ships in the world from the old "Mauretania" down to the "Queen Elizabeth", should have reached the state it is now in. But I felt that the noble and learned Lord the Minister was a little ingenuous when he first of all suggested that this development was unexpected and, secondly, added, "no fault of ours". If he will allow me to say so without disrespect, the attitude that these developments were unforeseeable and "no fault of ours" is precisely the attitude which has done most damage to British industry right across the map. I was indeed sorry to hear a Minister from that Bench adopting that attitude.

With the greatest respect, he is wrong in fact. I recall in the middle 1950s, 23 years ago, when I was Minister of Transport and, as such, in close touch with the shipyards because we dealt with merchant shipping, going round the yards, and in private pointing out to management and union leaders that the delays in delivery, the hold-ups due to demarcation disputes, all the silly nonsense of who does what, was going to do long-term damage to the industry. I got absolutely no response. They all pointed to their long order books for four or five years ahead, and appeared to disregard the fact that the length of those order books could be more than matched in foreign yards, because the source of it all was the world shortage of shipping following the massive destruction of shipping during the war.

I think we can do nothing but harm to our own economic recovery if we suggest that this decline is no fault of ours—using "ours" in the broadest sense of all concerned, Governments, employers, workers, the lot. Be that as it may, we have to deal with the situation which has in fact arisen. The noble and learned Lord said that this was a humanitarian measure Maybe it is. But if it be humanitarianism it is humanitarianism with blinkers on. Rather the sort of humanitarianism of the 19th century mill owners—most of them, I am glad to recall, Liberals—who subscribed generously to charities abroad out of the proceeds of oppressing their workers at home.

What can be the justification for the discrimination which this Bill seeks to exercise between worker and worker? During the noble and learned Lord's speech I waited for him to deal with the question which the noble Viscount, Lord Simon, put directly to him as to why, while the great majority of workers in this country made redundant have to be content with payments made under the Redundancy Payments Act 1965, special and additional provision had to be made for redundant shipbuilders. There may be a good reason for this. The noble and learned Lord will recall that he did not tell us so, and, with great respect to him, it is not self-evident.

With a million and a half people unemployed in this country today—a factor which disturbs everyone in this House as much as Her Majesty's Government—an enormous number of people have been made redundant. It is the greater part of that one and a half million, apart from the unhappy school-leavers who never had a job from which to be made redundant. What is the argument for special and particular provision for redundant shipbuilders? If there is such an argument, what is the answer to the question of my noble friend Lord Campbell as to why this higher and better provision should be made only for shipbuilders made redundant from companies owned by British Shipbuilders? What is the justification for discriminating within the shipbuilding industry and, as my noble friend pointed out, giving the benefit of the scheme to people who have never seen a ship or the sea at all?—because, if one looks at the Memorandum of the Bill, one sees that all the ordinary capital of a company they are in is held by British Shipbuilders.

This humanitarian measure can depend in an individual case, for the man who has never built a ship in his life, on whether all the ordinary capital of the company in which he works, or only part of the ordinary capital, is held by British Shipbuilders. The ordinary employer in those terms is not necessarily wholly responsible for the capital structure of his employees. This is a series of proposals that calls for explanation. It cannot be presented to this House and the country as a display of the Government's warm and admirable humanitarianism. It is discriminatory and arbitrary and, so far, the arbitrariness has not been explained. This is made all the more difficult by the form of this measure. We are simply presented with an enabling Bill and are told that a scheme will come along. The noble and learned Lord told us, as Ministers for generations have told both Houses of Parliament, "It does not matter; you can pass the enabling Bill because you will have the right to deal with the Statutory Instrument to authorise the schemes when they come along". But as my noble friend pointed out, when the Statutory Instrument to authorise the schemes comes up, all that this House or another place will be able to do will be to say "Yes" or "No"; we are left in the silly position that if, for example, we think the scheme is insufficiently generous we are compelled to reject it and provide, for the time being at any rate, that nothing will be paid. Or, if we think it marginally too generous, we are quite unable to amend it.

It would have been so much better in a matter of this sort if the Government had brought forward a Bill with the schemes—and the noble and learned Lord said that only two were contemplated—scheduled to it, so that either House of Parliament could have scrutinised the details of the schemes and amended them in the ordinary Parliamentary process. Perhaps we are entitled to some explanation as to why that proper Parliamentary procedure was not followed in this case and why we are simply presented with an enabling Bill to authorise the making of schemes.

That method of proceeding makes it necessary at this stage, as both the noble Lords who preceded me have done, to ask a number of questions because otherwise we shall not know until we are plunged into the Committee stage what are the difficult matters with which we ought to deal. The first of my questions relate to discrimination. My second question is this: Will the benefits provided under the schemes be taxable in the hands of the recipients or not? We are dealing with potentially substantial sums, rising, as the noble and learned Lord told us, when payments under the Redundancy Payments Act are taken into account, to 10,500, these to be paid over a year or two.

If they are not taxable, it would be a very well-paid man indeed who would not be much better off with the benefit of that sort of pay tax free than by earning a large salary or wage subject to taxation. The House will remember that in private industry, when a comparable situation arises and compensation is paid to a departing officer or director of a company, any payment of over £5,000 is subject to tax and is treated as income of the year. Will that apply in this case? What is the taxation position in respect of payments which are, from a tax point of view, substantial, and which, from the point of view of the value in the hands of the recipients, might well produce a situation which could be extremely anomalous?

I come to what is, I know, the difficult and delicate point which was described well by the noble Viscount, Lord Simon, as that of the self-inflicted wound. I fully take the noble and learned Lord's point about the practical difficulties of discrimination in the Swan Hunter case, but I hope the noble and learned Lord will take it from me that, on the other hand, many people outside find it a little difficult to swallow the idea that they should be taxed at the present levels of taxation to provide, over and above what at any rate the people concerned would have got under the Redundancy Payments Act, additional payments to people who in a very direct sense have been the authors of their own injury.

I hope the noble and learned Lord will not let himself be so blinded by the practical and technical difficulties that he will ignore the very real feeling that an anomaly of this sort can cause. And when he says eloquently that, because someone had acted in the course of an industrial dispute, it would be wrong to impose harsh penalties—"harsh penalties" was the phrase he used—does he recall that what he described as harsh penalties are what the Government are meting out to every other person who is redundant in this country, even though they be people who in the overwhelming majority of cases have not contributed in any degree whatsoever to their own redundancy? Thus, "harsh penalties" does not seem to be a phrase that, on reflection, the noble and learned Lord will feel that he can justify.

There are many other questions that I hope will be asked in Committee. I hope that what the two noble Lords who preceded me said and what I have tried to add will indicate to the noble and learned Lord that there are many people who regard this measure, however compassionate the circumstances which have given rise to it, as a very curious series of transactions which require to be very fully explained and justified to a critical and perhaps somewhat cynical public.

6.48 p.m.

Lord LEE of NEWTON

My Lords, the main question, a fair one, that has been asked is: Why shipbuilding? I can only go from my own experience. I am not in the confidence of the Government. I live in an area where there is heavy unemployment among shipbuilders and I had the job for two years of trying to look after the problems of the Northern Region, where the Swan Hunter yards presented quite a headache.

I suggest that the combination of events in shipbuilding—that is, the need for swift modernisation as the only way we could hope to keep any orders at all from abroad, with, at the same time, the terrible decline in orders for shipping—has brought about an agonising situation for the shipbuilding industry, and one which it will probably face for a number of years ahead. The third issue to be taken into account is the fact that most of the large shipbuilding yards are in development areas.

Thus, we have a most unholy trinity. I rather agreed with what the noble Lord, Lord Boyd-Carpenter, was saying, in that we have known of this for a great many years, and certainly things should have happened systematically over that period, but they did not. We are now, therefore, in the awful position of having the need for modernisation if we are to get any orders at all and the fact that most of these great yards are in development areas, and this seems to me to justify rather exceptional treatment so far as the shipbuilding industry is concerned.

Speaking of Swan Hunter, while I was there I had the good luck to be able to keep open Furness, a yard employing 3,000 to 4,000 people, by bringing it into the Swan Hunter firm. Therefore, to people like myself it is terribly annoying—one feels a little bitter—when one looks at the dispute which resulted in the Polish ships being taken away. But of course it would be quite wrong to believe that that meant the difference between permanent employment and massive unemployment. The Swan Hunter yards themselves have for long been in grave difficulties. Sir John Hunter told me on many occasions how near they were to massive redundancies years ago. It is not the case that had they got those orders they would have been assured for years ahead. Indeed, had they got the orders it is more than probable that there would have been unemployment more immediately on the Clyde, where those ships have now gone.

I completely agreed with the noble Viscount, Lord Simon, when he talked about the need for greater emphasis on retraining. I know for a fact that, in the period I was up there, when I managed to keep that yard open, even though there was massive unemployment in the North-East there was the terrible problem of there not being sufficient skilled labour. Indeed, they were transferring skilled men almost on a shuttle system from the Tyne to the Weir, back again and so on. So in the midst of the heaviest unemployment in Britain, probably, there was a terrible famine of the very skills which, had they been available, could have employed many of the unskilled people. I have always believed that we in this country have never got right the problem of retraining. We skimp the thing. We are short-sighted. We believe we are doing a great job of work if we increase the amount of money we give to retraining. In this day and age, with the coming of the technological revolution, the position will be reached—indeed, it is coming now—in which there will be massive unemployment among unskilled people and an equally large demand for non-existent skilled people. That is the position we are now facing.

So I would suggest to the Government, although I know there is now a great deal of work being done on this, that they really must not skimp the idea of retraining, especially in industries like shipbuilding. The noble Lord, Lord Boyd-Carpenter, was telling us about his period as Minister of Transport, when demarcation disputes were the order of the day. He is quite right. They were stupid disputes. There was a change in material, perhaps, from copper to aluminium or to timber, and who drilled the holes immediately became an argument. But that problem has almost disappeared from the shipbuilding industry because of the amalgamation of two of the principal trade unions; and, although we have had disputes of other types, it is not easy—and I keep quite close to industry—for me to remember when the last demarcation dispute took place in the shipbuilding industry. That shows that, by sensible amalgamations, you can obviate the kind of problems which I remember so well by way of demarcation disputes.

Unfortunately, in this country it is not open to us to get the ideal of industrial trade unionism—that is, one union one industry—which I, for my part, would love to see. It is not possible because two great general workers' unions are spread throughout the whole of our industries. We were the first in the field—I see a member of the Transport Workers' Union looking at me down his nose at the moment—but it is not now possible for us to say that we are going to insist upon industrial trade unionism when there are 2 million (I think it is) in the T & GWU at the moment a large number in the Municipal and General Workers, and so on. So we are suffering from the fact that we were first in the field in our methods of organising workpeople. I hope that my noble friend can go a little further on the question of how wide the redundancy scheme goes. Is it the case that people making components, people who are not really employed in the shipbuilding industry itself, will be able to benefit from this scheme? I hope the Government do not take it too wide, because I can think of a dozen industries in which components are made by people who, although they are in no way connected with that industry, play a vital part. Take the car industry, for example.

On the question whether you should exclude the Swan Hunter people because of what happened, quite frankly you cannot do it. As I was trying to say a minute or two ago, no person who knows that industry can say that, had they had those Polish orders, there would have been no redundancies. In fact, we all know there would have been redundancies. Let me give your Lordships a comparable case. In the area of Merseyside where I live we have the problem of British Leyland, where 3,000 jobs will now disappear, I suppose. Was that caused by a long strike, or was it caused by inefficiencies, it may be, in the line layout? It may be there was not the same effort; I do not know. But once you begin to say of an industry which is already in decline, that you can attribute the cause either to a strike or to action of that type, you are facing issues which no legislation can possibly safeguard. I hope that noble Lords, especially those from the Party opposite, will not pursue that kind of line. Otherwise, I am afraid they will entangle themselves in issues which go far beyond that which is happening in relation to this redundancy scheme. At one time I thought the noble Lord, Lord Campbell, was complaining that the Government had not gone wide enough in their nationalisation measure. He seemed to be saying, "If only you had nationalised the lot, there would have been no problems".

Lord CAMPBELL of CROY

My Lords, would the noble Lord give way? He must have misheard me. What I said was that it was a decision by the Government to select certain companies, and now they appeared to be ignoring them.

Lord LEE of NEWTON

My Lords, I can recall the noise that was created from the other side about the repair yards. If the repair yards had not listened to the Party opposite, they would not be arguing now about redundancy payments. You cannot play this both ways.

Lord CAMPBELL of CROY

My Lords, I am sorry to interrupt the noble Lord again, but I did not mention the words "ship repair" in the whole of my speech.

Lord LEE of NEWTON

My Lords, I thought the noble Lord avoided it, just, on a number of occasions. But, again—I am jumping about a bit because of interruptions—on the issue of whether the Government are treating shipbuilders in an isolated way which has never been enjoyed by other workers, this again is not true. The coal industry—deservedly, in my opinion—had even better conditions for redundancy than the shipbuilders are now getting. In the North-East, in Wales and in areas where there were enormous pit-closure programmes, there was the opportunity for people to retire early and to get 90 or 95 per cent. of the money they had been earning in wages, which was a far better scheme than this one—far and away better. So I put it to noble Lords opposite that where you have conditions of that type—and the noble Lord, Lord Campbell, knows parts of Scotland to which this applies—the Government are faced with the issue that, if you do not do something exceptional, the whole economy of the region will collapse. Then how much is it going to cost, not only in the loss of manpower, which is vital, but also in terms of finance?

So, for the reasons I have tried to explain—and, as I say, I am not in the confidence of the Government—I can see from my own experience why they feel that, in areas where there is a great dependence on mining, shipbuilding and that kind of thing—on steel, indeed—there is the need for some kind of exceptional treatment. I put it to noble Lords opposite that we really must not now hold up the passage of a Bill which can be of enormous importance, certainly in the humanitarian sense but also in the economic sense, in regions where it is badly needed.

6.59 p.m.

Viscount ROCHDALE

My Lords, I must apologise to your Lordships for intervening in this debate when I had not put my name down to speak, but I will be very brief. There are two points I should very much like to make, having listened carefully to the whole of the debate and, in particular, to the noble and learned Lord who moved the Second Reading of the Bill. My first point deals with the time factor. I can remember very clearly that, during the Second Reading of the Aircraft and Shipbuilding Industries Bill, I asked the Government spokesmen what they were doing by way of giving thought to the question of redundancy; because even then, and long since, it had been obvious that something in the way of redundancy measures was becoming very necessary. It was also obvious that our competitors in other countries were at that time actively engaged in thinking what was the best thing to do. I got no response at all during the Second Reading of that Bill, even though it appeared to me that the longer something was left the more expensive (whatever the scheme was) it might be. However, today, at long last we have got a scheme embodied in this enabling Bill.

I agree with my noble friends Lord Campbell of Croy and Lord Boyd-Carpenter that this is something we must not interfere with, in time, too much; but I agree with them very much in the various reservations they have put down by way of question to amplify many of the points that seem peculiarly vague. I agree with my noble friend Lord Campbell very much when he said there are instances, special instances, in some industries where something very special and unusual has to be done. My noble friend quoted one case which was the textile redundancy scheme of about 1960 or 1961, in which, as it happens, I was very closely implicated. In fact, I was chairman of the committee that had to administer the scheme from the Cotton Board in Manchester and I am well aware that there are special cases at times when special considerations have to be given. But, on the other hand, the longer special consideration is deferred, the more expensive very often it becomes.

My second point is a less critical one. The noble and learned Lord during his speech was at pains to associate the company of which I was previously chairman, Harland and Wolff, with the companies in British Shipbuilders. I was particularly glad to hear that, because during the Committee stage of the Aircraft and Shipbuilding Industries Bill I put down a series of Amendments the purpose of which was to attempt to see that that company should not be left out in the cold, squeezed out, by British Shipbuilders on many important issues which would put them at a disadvantage.

I think that one or two of my Amendments were accepted but, for the most part, they were not. But I was given an assurance then by the noble Lord, Lord Melchett, that, although the Amendments were not going to be embodied in the Bill, there was every intention of co-operation between British Shipbuilders and Harland and Wolff on these great issues so that they should not be at a disadvantage. My information is that in the interim period those assurances were well justified and I am glad to be able to say that I think that this Bill is a further bit of justification for those assurances. I should not like to let the occasion pass without saying, Thank you.

7.4 p.m.

Lord McCLUSKEY

My Lords, may I begin by saying that I am happy to acknowledge the positive and constructive responses that have been made to my introduction of this Bill on Second Reading. I think I can say that everyone in the House has acknowledged the necessity and, to that extent, has welcomed it. From what noble Lords have said, I accept that the points made are serious and deserving of answers, if not today then later. I will try to answer them the best I can today, but I am sure that the noble Lord will appreciate that some of them may be better dealt with at greater length at Committee when that stage is reached—and not today. I have already made one long speech and there is an important debate to follow.

My Lords, since November, and the Explanatory Memorandum of the Bill that went to another place and the Explanatory Memorandum today before us, costs have risen. I acknowledge that and I acknowledge that the order of change is as the noble Lord, Lord Campbell, has stated it. Of course, in November when the Bill was presented to another place, no outline scheme had been agreed between the parties to the negotiations. There were certain parameters for these parties in the discussions and these were based on the Iron and Steel scheme. The scheme which eventually emerged from the discussions was of a somewhat different character, particularly in relation to those below the age of 55. For that reason, the whole financial picture has changed.

I hope that that is sufficient explanation at the moment. No doubt that can be gone into further, but that, added to what I have already said in opening the debate, will explain it fully. I cannot say anything more at this stage about progress since 7th February with the CSEU. I do not think that I should do so at the moment. There is to be a meeting to which I shall refer, later, and perhaps I can confine myself to that observation.

The noble Lord, Lord Campbell of Croy, asked for clarification in relation to a person who returns to industry. I think that he will see from paragraph 11 of the outline scheme which was printed in the Hansard of 7th February that, in fact, there is provision that if a person returns to his employment within the period of time, then there may be a deduction from the redundancy payment made to him. If he is paid on a basis of 38 weeks' wages, then if he returns within the period of 38 weeks, there will be some deduction. It is an artificial relationship between the qualifying number of weeks for payments and the number of weeks during which he may not return without making some contribution. It is explained in paragraph 11 of the draft outline scheme.

My Lords, the noble Lord, Lord Campbell of Croy, also made a point, which was repeated by my noble friend Lord Lee of Newton, about the payment of redundancy payments to those who have had no real connection with shipbuilding and allied industries but who happened to be employed by subsidiary companies of British Shipbuilders. Some of these companies have no obvious connection with the main activities of British Shipbuilders, but they are very few. Some of the companies, although they have been referred to in another place and by reference here, are dormant and have no employees. Others, although not directly linked with shipbuilding, have some connection, sometimes a very strong one. For example, a company may be a training company, and as training is an integral part of the industry, one would tend to include such a company. But there is a possibility for excluding from the schemes the employees of those few subsidiaries whose trading connection with the main activities of British Shipbuilders is, at best, tenuous.

I refer to the point made by the noble Viscount, Lord Simon, when he asked about "prescribed". Of course, one may use the term "prescribed" in the Bill to select those employees whom it would be inappropriate to include because they have no real connection with shipbuilding but who happen by an accident of history to come under those who might benefit under the Bill itself.

A considerable point was made here, as was made in another place—a serious point—about the fact that the Bill discriminates between those employed in the public sector and those who are not. I acknowledge that that is a serious point. I acknowledge that there is discrimination. There has been a considerable and elaborate defence of the Government's position in another place. I can go into that at some length today, but I should prefer not to do so for a number of reasons. First, this matter can be gone into more fully at Committee stage; and I think the noble Lord, Lord Campbell, will accept that. Secondly, the explanations have already been given; but, thirdly, those who have read the proceedings in another place will note that the Minister, Mr. Kaufman, offered to meet the representative body concerned. I think that the noble Lord, Lord Campbell of Croy, may know that there is to be a meeting very shortly. I am not suggesting that at that meeting the Government will change their mind. I do not know; but I do not want to say anything now which may seem to prejudice the holding of that meeting. I prefer that that meeting should take place without anything further being added to what the Government have said on that matter. If the House will allow me, I will leave it at that.

The noble Lord, Lord Campbell of Croy, made a point about the extra computer staff. That figure is not a hard one; it is a guess and I will say no more about it. The noble Viscount, Lord Simon, was concerned about the fact that here we are discriminating in a different sense; we are giving higher payments to those made redundant here. He asks: are their needs greater than those made redundant in other industries? There have been a number of schemes—the noble Lord, Lord Campbell of Croy, referred to one and my noble friend Lord Lee of Newton referred to others—which have been designed to allow for inevitable redundancy and inevitable shrinkage in various industries. I can mention them briefly: the iron and steel industry has already been mentioned; the docks industry has not been mentioned but is well known to your Lordships. The mining industry as well.

Viscount SIMON

My Lords, if the noble and learned Lord will permit me, the position in the docks industry, with which I was very familiar, was different. In the docks industry the registered dockers could not be made redundant, therefore it had to be a voluntary scheme. Under the dock labour scheme it was impossible to make a dock labourer redundant. When it was necessary to reduce the labour force, it was necessary to offer inducements to people to seek voluntary severance.

Lord McCLUSKEY

Yes, my Lords, I acknowledge that. That was the only case of its kind in that respect. I can still point to the docks scheme, because in the event the payments were substantially larger than those people might have received had they been receiving redundancy under the Redundancy Payments Act 1965; so to that extent one could point to that scheme as well. The mining industry is another example.

So I refer first to these precedents; I refer also to the fact that when there is a crisis of this kind, there tend to be great numbers made unemployed in one particular area at the same time. That area may well be, as has already been said, an area of considerable unemployment. Furthermore, when people leave in a situation like this because of redundancy, the prospect of their returning to work is a very remote one indeed. These matters, and those I mentioned in opening, are the proper answer to the question asked by the noble Viscount, Lord Simon.

Lord BOYD-CARPENTER

My Lords would the noble and learned Lord allow me? Will he say how many of these precedents involve payment, as in this case, direct from the taxpayer as opposed to those from the industry concerned?

Lord McCLUSKEY

My Lords, before I attempt to reply to that, I am not certain that I would acknowledge the validity of this distinction. At the end of the day someone has to pay; and the public has to pay whether it is paid through extra charges in the docks or paid directly in the form of taxation.

Lord BOYD-CARPENTER

It is a pure question of fact.

Lord McCLUSKEY

It is a twisted question of fact. It may be pure but it is slightly twisted. It carries an assumption which I am not prepared to accept.

Lord BOYD-CARPENTER

My Lords, the noble and learned Lord says it is twisted. It is a perfectly plain question of fact. What he means is he does not like having to answer it.

Lord McCLUSKEY

My Lords, I will withdraw the word "twisted" and insert the word "loaded", if I may. It is a loaded question. The noble Lord asks first about support direct from the tax-payer. First, the general notion of the redundancy payment under the 1965 Act. There is support from the taxpayer and some contribution from the employer. The iron and steel industry scheme, which was introduced on the model of a scheme which the Europe of Six had before we joined the EEC, was introduced in 1974. Financing is by Her Majesty's Government direct with part recovery of costs from the EEC. In the docks industry, as the noble Viscount, Lord Simon, can confirm, that is financed by a levy raised on the employers by the National Dock Labour Board, and payment is then made to the dockers. That, of course, is a case where the employers will have to pass the payment on to those who use the docks. Regarding the mining industry, I cannot give details at the moment of who pays in respect of the scheme; but I can inform the noble Lord by letter if he would like me to do so.

Lord BOYD-CARPENTER

My Lords, I am much obliged.

Lord McCLUSKEY

My Lords, may I turn to the next point that the noble Viscount, Lord Simon, made. It was echoing a point made by the noble Lord, Lord Campbell of Croy, that it may be possible, in relation to the private sector, for the Opposition and others to give the Government some assistance. That is a matter which we will look for if we are able to make any progress on the matter of principle here. I cannot hold out any immediate hope of that; it is not for me to do so. I have taken note of what both the noble Viscount and my noble friend Lord Lee of Newton said about retraining and the importance of that. That will be taken into account when we come to deal with the details of the scheme to go into the order.

Viscount SIMON

M y Lords, I apologise. If the noble and learned Lord will allow me, I raised the question about the prescribed employees. The noble and learned Lord answered it with a point that was quite different from the one that I had raised and said that it may be used to exclude manufacturers of cement. My point was that it should include everybody in the shipyard whether or not a member of the union.

Lord McCLUSKEY

My Lords, I should have replied to both aspects of it. As regards that aspect, the noble Viscount sought assurance that the power to prescribe would not be used to confer benefit on members of unions and exclude others. I can give him that assurance without qualification.

The noble Lord, Lord Boyd-Carpenter, raised a number of points. He suggested that I had said that the crisis was unforeseeable and was no fault of ours. I used neither form of words. What I said was that we warned the world that there would be such a crisis. That of course was in 1972. I do not think that I used the word "unforeseeable" at that point. Secondly, I did not say that it was no fault of ours, I said that we had no hand in its making. In respect of that observation, I had the support of the noble Lord, Lord Campbell of Croy. He agreed with me that over the years there was a decline in British shipbuilding employment but suddenly in the early 1970s there was a massive and excessive growth of shipbuilding capacity in Japan and other Asian countries. We did not cause that and we did not cause the oil crisis. To that extent, I can properly say that we had no hand in making this particular crisis.

I have already referred to the other schemes and need add nothing to that. The noble Lord, Lord Boyd-Carpenter, also asked me: Why not follow the ordinary Parliamentary practice and, instead of introducing an order which cannot be amended, put the schemes into the Schedule to the Bill? I know of no scheme for special redundancy payments which has gone into the Schedule to any Bill so far. If the noble Lord considers that there has been one, perhaps he could let me know.

Lord BOYD-CARPENTER

If the noble and learned Lord is relying on that, he has already indicated that he knows of no scheme where the whole cost has been imposed on the taxpayer of whom Parliament is supposed to be the guardian. Parliament should therefore see that he has a scheme in the Bill.

Lord McCLUSKEY

My Lords, I was responding to what the noble Lord suggested was the ordinary practice. I know of no such practice. He asks whether or not the benefits will be taxable. I can give the exact position in relation to that: lump sums up to £5,000 in any one year are tax free. Over that amount, they are subject to income tax. The income support payments spread over a two-year period are aggregated with any other income and liable to income tax at whatever rate may be appropriate to the individual concerned. In other words, as the noble Lord surmised, normal tax rules apply.

Reference has been made by the noble Viscount, Lord Simon, and others, to the self-inflicted wound. I sought to anticipate this criticism. I chose my words as carefully as I could. I am indebted to the noble Viscount for his support and also to my noble friend Lord Lee of Newton. I do not think that I should add anything further. I look forward to giving the House further explanations when we come to consider this matter in Committee and I therefore commend the Bill again to your Lordships.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.