HL Deb 09 February 1984 vol 447 cc1287-90

4.27 p.m.

Lord Lyell

With the leave of your Lordships, I shall now repeat a Statement which has been made by my right honourable friend the Secretary of State for Trade and Industry in another place in reply to a Private Notice Question. The Statement is as follows:

"Yesterday the Government were informed that British Shipbuilders and Trafalgar House had reached a conditional agreement on the acquisition of Scott Lithgow. Negotiations are still under way. Final agreement requires Government approval. In the meantime it is still open to other parties which have expressed interest also to pursue the matter with British Shipbuilders. The Government have, of course, been kept fully informed of the terms of the conditional arrangement between British Shipbuilders and Trafalgar House and we are currently examining these."

My Lords, that concludes the Statement.

Lord Bruce of Donington

My Lords, we on this side of the House should like to thank the noble Lord for having made that Statement. We of course have very little information about what is going on behind the scenes and have to rely very largely on reports that appear in the press—notably in the Financial Times. We are therefore relieved that the Government are keeping an open mind on the question, and that other firms are to be permitted to tender. But that deals with only one aspect of the matter.

The noble Lord will recall that on 20th December last his noble friend Lord Cockfield made a Statement about the Britoil contract with Scott Lithgow and said that there would be a six-week delay while negotiations took place between the parties to see whether some satisfactory arrangement could be made to resolve the differences that arose between Scott Lithgow and Britoil. Can the noble Lord say whether there is any connection between the negotiations that have taken place with Britoil and the apparent sudden spate of offers, to which the Government have given no discouragement, from a number of outside firms for the acquisition of a company which, according to the noble Lord's noble friend the noble Lord, Lord Cockfield, was involved in rather considerable litigation? Can the noble Lord throw some light on that aspect of the matter? Will he bear in mind that there is some anxiety lest the action by Britoil against British Shipbuilders has to some extent been overshadowed by what appears to be a connected bid from outside firms—as it were back-door privatisation of the company? Perhaps the noble Lord can make some comment on that.

Lord Taylor of Gryfe

My Lords, we, too, on these Benches should like to thank the noble Lord for repeating the brief but hopeful Statement regarding the outcome of the negotiations at Port Glasgow and Greenock. The House will be relieved by the prospect of the 4,000 redundancies announced some time ago perhaps being offset a little by the possibility of Trafalgar House taking over the yard and employing at least a large proportion of the people who a few weeks ago seemed to have no hope of further employment in the yard.

We have been told that at the moment the details of the terms of the take-over cannot be given, and I should like to ask the Minister whether, when the terms are agreed and spelled out, he will return to the House and tell us a little more about the detail of this interesting transaction. I assume, and I gather from the Statement, that the workforce is to be fully involved in the negotiations on the take-over. Without the workforce's full co-operation the whole take-over could be frustrated.

We should also welcome at the end of the day some comment on the new responsibilities of Trafalgar House in regard to the Britoil contract. It is somewhat surprising that a private company can come in and negotiate a contract to take over this particular liability when it did not seem to be within the powers of British Shipbuilders so to do, and perhaps at some stage we may be given an explanation of the new situation which has arisen which makes that possible.

However, with what might be termed as those qualifications, we very much welcome the Statement that has been made, and we sincerely hope that it will relieve the gloom just a little at the tail of the bank of the Clyde.

Lord Galpern

My Lords——

Lord Lyell

My Lords, I look forward to hearing the noble Lord, Lord Galpern, in a few moments, but first I should like to reply to the two other noble Lords. I wish to thank the noble Lords, Lord Bruce of Donington and Lord Taylor of' Gryfe, for their welcome of the Statement which I have repeated this afternoon. I should also like to thank the noble Lord, Lord Bruce, for the publicity for the Financial Times, that admirable organ that helps to inform me, too, and I think a great many other Members of your Lordships' House. The noble Lord wondered whether there was any connection with the comments made by my noble friend Lord Cockfield on 20th December last year. I would not be able to give the noble Lord very detailed information on any connection between anything that my noble friend said on that date and the news that I have been able to give your Lordships today.

I stress to the noble Lords, Lord Bruce and Lord Taylor, that the details of the agreement which we hope will be reached between Trafalgar House and British Shipbuilders have yet to be settled, and I am sure that your Lordships will agree that for commercial reasons they must remain confidential. However, I assure your Lordships that the Government will be examining the details in depth to ensure that the deal is a sound one in the best interests of the taxpayer.

The noble Lord, Lord Bruce, referred to what he called back-door privatisation. I certainly refute that suggestion. The noble Lord also asked about legal action. If any satisfactory arrangement is reached, then clearly the current legal disputes between Britoil and British Shipbuilders will be settled. I stress to the noble Lord, Lord Bruce, that we believe that a new start for the yard, under new ownership, offers a real chance—the best chance—of long-term survival for the yard and for everybody who has an interest in it.

I am particularly grateful to the noble Lord, Lord Taylor, for his kind words in describing the Statement as "hopeful". I appreciate his local connection and note the way in which he used the attractive term "the tail of the bank"—which I seem not to have heard since 20 years ago when I was working in Glasgow—which showed the noble Lord's local connection. I cannot promise to give the noble Lord, nor your Lordships, the terms of the particular deal, but I hope that subject to the confidentiality aspect in a commercial sense, we shall be able to give as much information as we possibly can on that score.

The noble Lord, Lord Taylor, asked two other questions. First, I stress to the noble Lord that full agreement on what was mentioned in the Statement will of course depend on Britoil being satisfied on both commercial and technical grounds that the new operator can successfully complete its rig as well as on the full co-operation of the workforce. I understand that discussions between British Shipbuilders, Trafalgar House, and Britoil, and in a parallel way between Trafalgar House and the representatives of the workforce, are in hand at this moment.

Lord Galpern

My Lords, only a few weeks ago the workforce in the shipyard decided to carry on despite the fact that the contract with Britoil had been lost. Today the workforce has come out on strike and left the factory as a protest against the method of handling the transfer of the effects of the shipyard to Trafalgar House. Bearing that in mind, will the noble Lord ensure that British Shipbuilders will be instructed to invite tenders for the transfer of the Scott Lithgow shipyard and that the period of time for lodging tenders will not be unreasonable? I particularly ask about that because already in Scotland in the instances of the transfer of the technical college at Hamilton and the sale of the Robroyston Hospital great bargains were offered, and in one case that was due to the fact that tenders were not even invited. Therefore will the noble Lord see to it that a reasonable opportunity will be given to anyone who is interested in submitting a tender?

Lord Polwarth

My Lords, will not the noble Lord agree that rather than carp at the details of the proposed transaction we should warmly welcome the only possible solution to keeping open this famous shipyard and maintaining some employment in shipbuilding on the Lower Clyde, as well as the hope that possibly it will restore the yard to the high state of efficiency which it enjoyed prior to nationalisation?

Lord Lyell

My Lords, first I should like to thank the noble Lord, Lord Galpern, for his interest in the Statement. Of course we would expect his interest, since he is a firm supporter of everything that goes on in and around Glasgow. I am afraid that I could not follow the noble Lord down the line regarding Hamilton and Robroyston, and while I accept the principle of what he says, I could not necessarily accept it in relation to this particular operation so far as Scott Lithgow is concerned.

I stress to the noble Lord, Lord Galpern, and to your Lordships, that a number of other companies besides Trafalgar House have expressed interest. One of the other companies is Bechtel, and only yesterday Howard Doris expressed an interest in tendering for the completion of the Britoil contract. I hope that this little snippet of information will be of some comfort and value to the noble Lord, Lord Galpern, and to your Lordships.

I am immensely grateful for the sturdy support of my noble friend Lord Polwarth and, indeed, his support for what we hope will be the ability to complete this contract. My noble friend has considerable experience, both from this position and outside, of these operations. We are all the more grateful to my noble friend for his forthright support.