§ 5.10 p.m.
§ Viscount LONG rose to move, That the draft order laid before the House on 12th March, be approved. The noble Viscount said: My Lords, with the leave of the House, I should like to speak to both orders together, because they relate to each other. The amendment which we are considering today is minor and uncontroversial, and I trust I shall not need to take up much of your Lordships' time in introducing the orders. Nevertheless, a brief comment on the general industry situation may be useful. The worldwide problem of over-capacity and recession affecting the shipbuilding industry are well known. In the middle of last year, when the Government announced their policy for supporting the shipbuilding industry, new orders were at extremely low levels and there were few grounds for optimism. The general situation now is somewhat better. The levels of ordering have increased and orders worldwide in 1979 were double those in 1978, with EEC countries obtaining a 58 per cent. increase.
§ However, while the increase in the levels of new orders and of inquiries is very much to be welcomed, we must remember that 1978 was itself the lowest year for new orders since the slump in shipbuilding began, and that even the improved levels of orders are well below those needed to sustain available capacity worldwide. British Shipbuilders' orders in 1979 were only about the same as in 1978, but since then there has been an improvement although still with a substantial subsidy coming from the Government. The market is still uncertain and it remains to be seen whether the improvement will be sustained
§ The Government made it clear last July that they wished to see a viable and flourishing merchant shipbuilding industry. We therefore continue to attach particular importance to the prospect of British Shipbuilders achieving high levels of efficiency and productivity and of their being able to compete without subsidy when the recession is over in what is still likely to be a very tough world. One of the main elements in BS efforts in this 1308 direction is the planned reduction in the size of the industry which is taking place in agreement with the unions. BS's current strategy, reached after very full consultations with the CSEU, is to reduce the size of its merchant shipbuilding activities to a capacity of just over 400,000 cgr and an employment level of between 18,000 and 19,000. BS hope to be able to reach their manpower targets by mid-1980 by a combination of transfers, wastage and voluntary redundancies.
§ Since mid-1979 there have been 3,500 redundancies in merchant shipbuilding. In addition, as part of the recent broadly self-financing wage settlement, a further 3,000 voluntary redundancies are to be sought from BS as a whole and some will come from merchant shipbuilding. It was clear last year to all concerned in the industry that a further contraction of the industry was inevitable, given the severity of the crisis. That process is well under way, but has not yet been completed.
§ Turning now to the detail of the scheme and the present amending orders, I should perhaps remind your Lordships that the enabling legislation was drafted in such a way that two orders, establishing payment schemes for certain classes of redundancy, were required; one for Great Britain and one for Northern Ireland. That is why there are two amending orders before us today, although their substance is identical.
§ In July 1979, the present Government introduced amending orders which extended the life of the schemes by two years to the end of June 1981. They also dealt with a few anomalies which experience had shown existed in the original schemes. In addition, they dealt with one point we are considering again today; the previous earnings limit. In the two shipbuilding schemes and the general redundancy payments scheme under the Employment Protection (Consolidation) Act 1978, an upper limit is placed on the level of previous earnings which are taken into account in calculating the payments which should be made. Those who earned less than the limit have their benefits calculated on the basis of their actual earnings Those who earned more have their benefits calculated on the basis of the upper limit. When the shipbuilding schemes were first introduced the then current upper limit on previous 1309 earnings in use in the general scheme was adopted
§ Last year there was an increase in the upper limit on previous earnings in the general scheme and similar changes, operative from the same date, were made in the shipbuilding schemes. The orders before your Lordships now simply cotinue that policy. The upper limit on previous earnings in the general scheme has already been raised by statutory order from £110 to £120, with effect from 1st February 1980. The draft order will, if approved, similarly raise the upper limit on previous earnings in the shipbuilding schemes to £120, with retrospective effect from 1st February this year.
§ Experience of the shipbuilding schemes so far has shown that the upper limit on previous earnings affects only very few people. The public expenditure implications of the amendment raising the limit are, therefore, insignificant and well within the margin of estimating error on a scheme such as this. I am, therefore, confident that your Lordships will agree on the need to keep the scheme in line with related legislation, and will approve the minor amendment contained in this order. I beg to move.
§ Moved, That the draft order laid before the House on 12th March, be approved. —(Viscount Long.)
§ 5.17 p.m.
§ Lord BLEASEMy Lords, I should like to thank the noble Viscount, Lord Long, for the way in which he has given an explanation of these two orders. Of course, I readily agree that they be taken together for the convenience of the House. I very much welcome the noble Viscount's general remarks concerning the industry. The shipbuilding industry is going through a very serious situation as regards employment; indeed, no one would know more about that than the noble Lord, Lord Strathcona and Mount Royal, who is sitting beside the noble Viscount, who met a delegation from Harland and Wolff last week. It is something about which I should like to speak to him at a later stage.
However, the order allows for an increase in the limit for calculating weekly earnings for redundancy payment purposes. 1310 Briefly, I should like to express the concern which has been voiced by the British shipbuilders of Great Britain and by Harland and Wolff of Northern Ireland, at the present serious decline in employment and at the uncertainty for the future of the British shipbuilding industry. Since 1976 the workforce in British Shipbuilders has been reduced from 42,000 to 18,000 and in Harland and Wolff of Northern Ireland some 1,400 employees have been declared redundant since July last year, and the immediate prospects are very bleak. I welcome the note of optimism which the noble Viscount suggested pertains today, but I should like to see it being realised in some forms of employment in the industry.
The noble Viscount also mentioned matters concerning the size of the industry. A considerable amount of concern has been expressed that the manpower structure of the industry has reached a crisis situation. Trade unionists accept the Shipbuilding Redundancy Payments Scheme as an alternative to security of employment in the industry. I realise that this is not the occasion for a debate on the shipbuilding industry, hut I believe that an early occasion should be set aside to debate the situation pertaining to the United Kingdom shipbuilding industry, not only as regards merchant shipping but also as regards the future of Admiralty and defence shipping.
I am also bound to say that concern has been expressed by those in Harland and Wolff and in British Shipbuilders at the possible way in which the Shipbuilding Redundancy Payments Scheme may be used. Some would feel that it is being used to dismantle British Shipbuilders, and perhaps is detrimental to the employment structures within Harland and Wolff, and perhaps being used for the benefit of a policy of privatisation (a new word that has been coined) of the United Kingdom shipbuilding industry.
It appears to many in shipbuilding that there is no real or genuine attempt to stimulate interest in the future of these shipbuilding workers. It is believed that much more could be done —and especially under Clause 7 of the principal Act governing these orders; the Shipbuilding (Redundancy Payments) Act 1978 —to promote the retraining of shipbuilding workers in new and relevant skills. We 1311 are not opposed to these two orders being approved by this House.
Viscount LONGMy Lords, I am most grateful to the noble Lord, Lord Blease, for what he has said and contributed to this important order. I noticed that he was a little alarmed about the way the redundancy money was being raised only slightly. I think he really wanted a much higher figure. The new limit —if he had heard me earlier —contained in these draft orders follows the terms of the order agreed by both Houses last December amending the redundancy payments provisions of the Employment Protection (Consolidation) Act 1978. There is a well established practice of raising such limits by sums as is convenient, and I do not think that any real injustice arises over this practice in this case.
The noble Lord referred to wanting more orders for shipping. I suppose one really looks at the salesmen and says, "Off you go and find the orders." Naturally the shipbuilding industry is in urgent need of more orders, and every order we get means more employment for those in the industry. The noble Lord referred to training schemes. I think that in Harland and Wolff in Northern Ireland there is already a training scheme for those who need to be retrained, or are already needing to train for this type of industry. I hope I have answered as much as I can on this order, and I commend it to the House.
§ On Question, Motion agreed to.