HL Deb 21 April 1983 vol 441 cc648-53

3.47 p.m.

Read a third time.

Lord Bruce of Donington moved the following amendment: After Clause 1, insert the following new clause:

("General duties of Secretary of State.

. The Secretary of State shall exercise the functions assigned to him by section 2 of this Act, and shall act generally, in the manner he considers is best calculated:—

  1. (a) to enable United Kingdom shipbuilders to establish and maintain a predominant position in the field of shipbuilding and ship repair;
  2. (b) to encourage United Kingdom and foreign ship owners or customers to use the services provided by United Kingdom shipbuilders and ship repairers; and
  3. (c) to ensure that United Kingdom shipbuilders are properly protected against unreasonable competition from foreign shipbuilders and ship repairers.").

The noble Lord said: My Lords, this amendment has been put down in consequence of the failure of the Government during the earlier stages of the Bill, both in Committee and on Report, to assign to themselves anything other than powers in connection with British Shipbuilders. Your Lordships will recall that the original Act of 1977 imposed some duties on British Shipbuilders. These duties were specified. The Bill which we have been considering during the past few weeks takes away those duties and substitutes powers by British Shipbuilders, to be exercised, subject to regulation and direction, by the Secretary of State.

We on this side of the House believe that this is an unsatisfactory situation. A responsible public corporation was set up in 1977 to rescue the whole of the shipbuilding industry from the abysmal state into which it had fallen by that time, when it was getting only 4½ per cent. of the world market. That corporation was formed to take over a number of firms—most of which were ailing, apart from the warships section—and to bring succour to the entire industry. This Bill takes away any general duty, on anybody at all, to promote the interests of British Shipbuilders.

There are two principles on which this amendment is moved. The first is a general principle that one might have thought would be acceptable to the party opposite. It is the principle that those who have powers should also have responsibilities and duties. Indeed, the country at large is lectured at very great length from time to time on the necessity of, for example, the working population realising the duty it has either to its employers or to the country as a whole. It therefore comes a little odd that the Secretary of State should be relieved of any duty. This would seem contrary to the whole philosophy of the party opposite. So far as this House is concerned, I would have thought that such a situation would be unacceptable.

From time to time, doubts are expressed across the whole of the party spectrum as to the usefulness of the House of Lords. Some, I am given to understand, would like to abolish this House, while others would like to reform it. There is one point on which I believe all of your Lordships will agree—there may be a variety of views as to the whole spectrum of activity covered by your Lordships' House—and that is that this House does serve as a partial check on the Executive. This is an instance where I would appeal to all your Lordships to give the amendment before you very careful consideration.

This amendment would impose no onerous responsibility upon the Secretary of State. Indeed, one might almost have thought that the Government would accept the amendment with immediate alacrity, because its objectives are beyond any kind of party argument. The other reason for putting down this amendment is that at possibly no time since the industry was rescued by the Government setting up a public corporation in 1977 has the industry been in such a parlous state. At no time since then has there been a situation in the shipbuilding industry when the firm support of the Government—and I do not mean merely financial support—is required in order that the industry may continue.

I can put this point in no better words than those set out in last Sunday's issue of the Sunday Times, which stated: Productivity in British yards has been raised, 23,000 jobs have been shed, and tender prices screwed down so far that all merchant ships are built at a loss. Indeed, the more ships built, the more money lost. No longer can the loss of a contract, like that for the 'Cunard Countess', be dismissed by Mrs. Thatcher with 'win some, lose some' shrug of a football manager whose team has suffered a humiliating reverse. The very future of the team is now at stake. The article continued: In effect, the Government must now decide: does it or does it not want a shipbuilding and ship repairing industry? It"— that is, the Government— has, after all, a responsibility to preserve a core industry capable of safeguarding the nation's security and independence of action—factors whose importance was underlined during the Falklands War, when the merchant fleet and shipbuilding yards made such a huge contribution". In my view, those words encapsulate the current situation; a situation in which the results of the industry—according to the best information at my disposal (and I have not yet seen the latest accounts which go into early 1983), and despite the more favourable result in the year ended 31st March 1982—have not been so promising. Indeed, according to the Sunday Times on, I think it was, 13th February, losses for the current year soared to £70 million.

That is the situation in which the Government have brought forward this particular Bill, the main purpose of which seems to be the facility to enable the Government to dispose of the warship companies. I shall not refer to that aspect any more except to say—and I believe the Government will agree—that that is the Bill's main purpose. But it does provide an opportunity now to lay upon the Government, and to persuade the Government to think about, the policy that they will adopt towards the shipbuilding industry as a whole.

The industry's labour force has been severely depleted. A number of the yards are running at a loss. We are now in a position where only 44 per cent. of United Kingdom domestic orders are placed with British shipyards. This record is quite abysmal when one considers how other countries' shipowners consider their own shipyards. In Italy, for example, 95 per cent. of the Italian shipowners' orders to go Italian shipyards. In West Germany, some 82 per cent. of orders go to domestic shipyards—and in Japan, of course, 100 per cent. of the orders do.

The Government may argue that this is a very unusual clause to put into a Bill, laying as it does a duty on the Secretary of State. But if the noble Lord the Minister will refer to the Telecommunications Bill, he will find that Clause 3 lays down specific duties on the Secretary of State, so there is a good and more modern precedent for doing so. Why, therefore, should a duty not be laid on the Secretary of State in this matter?

It is all the more necessary because the present responsibilities of the Department of Industry in relation to shipbuilding are very sketchy. I have been all the way through the duties of the Department of Industry as officially published, and it seems that the matters which are put down in this amendment—to help United Kingdom shipbuilders, for this is not confined to the nationalised company British Shipbuilders but also includes private British shipyards—would enable the department to cover any of them.

If the noble Lord the Minister will carefully go through the structure of his own department and will examine its whole organisation, the functions of its regional policy and development grants division, its industrial and commercial policy section, and its industrial and commercial policy divisions (both "A" and "B"), and its industrial sponsorship—particularly in relation to the shipbuilding division—he will find that nowhere is there explicitly stated as a duty any of the items set out in this amendment.

It may be objected that these requirements of the amendment impose too great a liability. I cannot imagine the noble Lord disagreeing with the objectives of paragraphs (a) and (b) but I am putting some emphasis on (c), which would lay upon the Secretary of State a responsibility to act in the manner that he considers best, to ensure that United Kingdom shipbuilders are properly protected against unreasonable competition from foreign shipbuilders and ship repairers. Nowhere in the whole of the Department of Industry's functions as published is there such a responsibility.

It is to the Department of Trade that we now turn. It has some limited responsibility, but only in regard to Europe. If one looks at the functions of the Department of Trade, as officially set out, it says it is responsible for general policy on trade with other countries and international negotiations on general trade, and the protection of United Kingdom commercial interests within the Community. It seems to me rather an odd limitation. There does not appear to be any requirement expressed in official terms in the published documents—and I have nothing other than the official documents—that lays on the Department of Trade any responsibility for the protection of British commercial interests outside the EEC.

This amendment would enable the Department of Industry to think again and to consider whether in the circumstances it would be proper for it to take on the responsibilities that are set out in the amendment. This becomes more particularly apposite in view of the recent contract which went from the Central Electricity Generating Board by a somewhat mysterious route to a company in Korea. I am within the recollection of your Lordships as having gone in some detail into the nature and extent of this transaction, and it is also within your Lordships' recollection that never at any point was a reply received from the Government to the very detailed points that I made in the course of that debate.

It was therefore with some dismay that I read the report of the proceedings in another place and the words of the Minister, which had some bearing—in fact a very apposite bearing—on this Korean episode. The Minister said (and I quote from col. 249 of Hansard dated 19th April): Some hon. Members have this evening blamed the difficulties of our merchant shipbuilding industry on unfair competition for the Far East, and on many occasions the prime culprit has been identified as Korea. We should be wary of putting all the blame for our problems on unfair competition. The fact is that Korea, for example, has a substantial comparative advantage over the United Kingdom. It has come late to the business. Its industry is very new and has the benefit of considerable recent investment. Labour is cheaper and workers are prepared to accept working practices which would be unacceptable to their British counterparts. The Minister declined in any way to intervene further.

I ask your Lordships to appreciate the enormity that is implicit in that statement. It means that in relation to countries where the wage levels are as low as 23 to 25 per cent. of European levels (I do not refer purely to those of Britain) where they live not under ordinary democratic conditions, as we do in this country, not under conditions where there are free trade unions, which there are so far in this country, but live under a military regime with a veneer of democracy, with pliant unions—which in the case of Poland are, quite justifiably, such anathema to the party opposite—where in effect you get forced labour, there is nothing that Her Majesty's Government are prepared to do to prevent unfair competition.

Is that what the British Government really want? Is that the notice they are serving on British industry as a whole, that when they talk of the necessity for British industry to be more competitive—which I am sure we all agree within the context of the Western democratic world—it means they are prepared to stand idly by in the face of competition with newly industrialised states under conditions of virtual dictatorship, able to enforce wage levels which are a fraction of Western European levels and enforce working conditions and hours of work which were long extinguished before the end of the Victorian era? Is this the kind of competition that they are prepared to stand idly by, accept and support? We need an answer on this because if the reply is "This is the kind of competition we really mean and we are prepared to stand idly by and allow this," then the damage that will be done to British industry is going to be very much worse than the damage that has been inflicted on it in the past.

I repeat that nobody objects to competition on what we would call a fair and reasonable basis. I know "fair and reasonable" is sometimes an ambiguous phrase to put into legislation, although the lawyers tell me that the term "reasonable" is sometimes very good to have in a legal clause because it implies that it is a conclusion or an expression that all reasonable men would accept. But is that the policy that the Government are prepared to follow? If they are, then the country should be on notice that this is the case.

In the meantime the shipbuilding industry and the shipbuilding towns in this country are facing very considerable distress indeed. Already the streets of our shipbuilding towns are filled with people who have to go to the labour exchange to draw benefit. These are the realities of the situation. A great cloud hangs over the shipbuilding industry.

It is my hope that the Government will accept the amendment in its present form, but, if they do not, then the onus lies upon them quickly to produce a plan for the British shipbuilding industry which shows a Government determination to translate it into actions, rather than merely expressing words, to ensure that the shipbuilding industry in the United Kingdom does not go down the drain.

It is a matter of vital concern to the whole prosperity of the country. It is a matter of vital importance so far as the ordinary defence aspects of the situation are concerned, as we have seen from the Falklands Islands episode, in which the whole of the shipbuilding industry devoted every conceivable effort to support of the campaign that was then waged.

We should like an answer from the Government but we hope that within reasonable parameters of the clause laid down in the amendment they will not have any hesitation in accepting it. I beg to move.