HL Deb 28 November 1978 vol 396 cc1133-6

2.59 p.m.


My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what relationship the recently announced financial results of British Shipbuilders bear to the target of limiting losses, in the year ending 31st March 1979, to £45 millions set by the Secretary of State for Industry and announced by him on 4th July in accordance with Section 10 of the Aircraft and Shipbuilding Industries Act 1977, which requires the determination of financial duties.


My Lords, the financial target for this year is based on British Shipbuilders' forecast of the loss this year. The 1977–78 accounts relate to losses to March 1978. A substantial part of these losses, I should add, were on contracts taken before nationalisation.


My Lords, in thanking the noble Lord, Lord Leonard, I do also warmly congratulate him. Not only is this his first appearance at the Dispatch Box but it is also his maiden speech. It is daunting to have to do both at the same time, and upon a subject so fraught with serious problems. He has carried out his first assignment admirably and I am sure that we look forward to hearing him again frequently. As regards the substance of the reply which I have received, has there been any reason since July for a further assessment of losses and a change of target for the current year, in view of the recent announcement of the loss by British Shipbuilders of no less than £105 million in the first nine months of its existence?


My Lords, I answer the noble Lord's question by saying, as I have said before, that a tremendous amount of the previous loss was due to prevesting assumptions and computations. So far as the present situation is concerned, we have it on the advice of the Finance Director that British Shipbuilders is on target for this year. That sounds to me something that we can be happy about. On the other hand, I think that the whole House and the noble Lord. Lord Campbell of Croy, will agree that the unprecedented contraction of the shipbuilding industry worldwide is something that we must take into consideration. We must hope that we shall be able to weather the storm. As your Lordships know, the shipbuilding industry, as a whole, is going through a time when it is not beyond the bounds of possibility that we may have to reduce the tonnage in shipbuilding as a whole. I do not know whether that answers the noble Lord's question but it is the best that I can do at present.


My Lords, what is meant by the term "on target"? Does it mean that British Shipbuilders is going to accrue further losses?


My Lords, my noble friend is, believe it or not, quite right. The Minister has stated that it should seek to keep within the limit of £45 million. Your Lordships must realise that such losses occur worldwide; they do not occur for us alone, and that is the reason for the Intervention Fund. It is up to us. We have to compete with our Far Eastern friends and we have to do the best we can to ensure that the losses are at a minimum. From the point of view of the loss, the target set was £45 million and the Finance Director says that he is on target for that. However, I agree with my noble friend that it is a loss.


My Lords, will the noble Lord enlighten me? He referred to the losses incurred before vesting day. Could he tell us what has happened to the money belonging to certain shipping companies such as, for example, Brooke Marine, which was very much in credit at the time of vesting day?


My Lords, I think that I should be given notice of a Question of that sort, because I do not have the information for which the noble Baroness asks.


My Lords, will the noble Lord say whether the figure given includes the very heavy subsidy on the building of Polish ships, or is that additional to the losses now announced?


My Lords, all subsidy is reached by a proper accountancy approach to the matter. It does not take in Polish shipping or any other shipping; it is based on the broad tonnage which is to be built by British Shipbuilders over the year.


My Lords, while the shipbuilding industry throughout the world is, as the noble Lord has said, in a great recession, an up-turn is expected in the mid-1980s. Is it not disquieting that virtually all the other shipbuilding countries have made arrangements, and announced them, to adapt and adjust to this situation, but Britain is apparently still undecided?


My Lords, I do not think that I would quite agree with what the noble Lord has said, because I must say that British Shipbuilders is at present bringing about a Corporate Plan. That Corporate Plan takes into account all the points made by the noble Lord and it is hoped that capacity may be cut, and could be cut, to 430,000 tons. That in itself will involve redundancies and until the Corporate Plan is produced and put forward we cannot arrive at any figures. However, the most that I can say is that we shall keep the shipbuilding industry at the maximum possible in keeping with showing a profit in conjunction with the Intervention Fund, which, I mentioned before, is the important factor as regards keeping abreast of our competitors worldwide.


My Lords, is the noble Lord aware—


My Lords, as the whole House I am sure recognises, my noble friend Lord Leonard needs no rescue from me, but I see that we have already taken 29 minutes on Questions and there is to be a Private Notice Question and a Statement. I hope that I have the support of the House when I say that I think we should move on.