HL Deb 14 May 1986 vol 474 cc1150-60

3.40 p.m.

Lord Young of Graffham

My Lords, with the leave of the House, I shall now repeat a Statement on British Shipbuilders that is being made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:

"As the House will know, British Shipbuilders won only 23,000 compensated gross tonnes of orders last year. This was little more than a tenth of the amount forecast in its corporate plan. This was not for lack of government support. The financial support for individual orders is not the problem. The problem is that orders are simply not there to be won. In Sweden, for example, which a few years ago had one of the most modern merchant shipbuilding industries in the world, the entire industry is closing down. This reflects the latest downturn in the shipbuilding market, which has resulted in capacity reductions and redundancies across the world. Despite government support of over £1,400 million since 1979 and the recent increase in the level of support for new orders, it has proved impossible for British Shipbuilders to maintain its current capacity in the absence of new orders.

"British Shipbuilders has therefore today announced measures which deal with this overcapacity. They include a decision to close by the end of the year Smiths Dock, the Troon shipyard of Ferguson-Ailsa and the Wallsend site of Clark Kincaid. In addition, British Shipbuilders has, as part of its wage negotiations, proposed a two-year deal which will seek to match manpower and capacity more closely to demand. The Government regret that these necessary measures will lead to total redundancies of some 3,500 people by March 1987. British Shipbuilders hopes that a substantial number of these will be achieved by voluntary redundancy.

"The Government propose to provide to British Shipbuilders immediate support of up to £5 million in the current financial year to enable it to set up a new subsidiary, British Shipbuilders Enterprise Ltd. This will provide expert and practical services for those facing redundancy. It will ensure that they have at their workplace counsellors with the skills and resources to guide them towards retraining and redeployment opportunities, and to provide financial support to take advantage of those opportunities. It will also offer financial help and advice to those wishing to take the initiative of setting up their own business.

"In addition, my right honourable friend the Secretary of State for Employment has asked the Manpower Services Commission to provide a further £1 million specifically for the retraining of redundant employees of British Shipbuilders in direct co-operation with the new Enterprise Corporation. He will also make available £1 million via the city action team for job creation measures and to stimulate enterprise in the North-East.

"The community programme is already being expanded in the North-East from its present level of 22,000 jobs to 29,000 jobs at an extra cost of some £30 million. My right honourable friend has asked the Manpower Services Commission to explore urgently new ways in which the resources of the community programme and the enterprise allowance scheme can be used in order to lead to permanent jobs in the North-East.

"In addition to these measures, my right honourable friend the Secretary of State for the Environment has reviewed the derelict land reclamation and urban programmes in the areas affected. At £13 million, the reclamation programme in the North-East region this year is already substantial, but this will be increased by a further £1 million. My right honourable friend also proposes to allocate an extra £2 million under the urban programme, adding to the region's £35 million programme this year.

"The British Shipbuilders Enterprise Corporation will also operate in Scotland. My right honourable and learned friend the Secretary of State for Scotland will consider urgently additional measures to help the areas affected by the redundancies announced today.

"The measures I have outlined will be in addition to the existing regional aid programmes, including assistance via English Industrial Estates for which the areas concerned are already eligible."

My Lords, that concludes the Statement.

Lord Bruce of Donington

My Lords, the House will be grateful to the noble Lord for having repeated the Statement made by his right honourable friend the Secretary of State for Trade and Industry in another place. Indeed, on first looking, I was under the impression that the Statement might be repeated in your Lordships' House by the noble Lord, Lord Lucas of Chilworth. The fact that this is not the case relieves me of the necessity to point out that this Statement bears all over it the fingermarks and footmarks of the noble Lord himself. It is nothing more than a political patter littered with the usual ambiguities for which the noble Lord is famous.

The noble Lord himself will recall his statement in this House yesterday when he claimed the remarkable success of the Government's economic policies. Today's Statement just shows how valuable that observation is. In regard to the shipbuilding industry, in 1979 the labour force stood at 33,000. It has since been reduced by two-thirds and, before this announcement was made, stood at 10,000. It will now be reduced to 6,500. So much for the success of the Government's economic policy!

The fact of the matter is that the Statement is not concerned with the British shipbuilding industry at all. By the whole tone, tenor and content of the Statement the Government have given the country notice that they have completely abandoned the British shipbuilding industry. It is all very well to say, as indeed the noble Lord has said, that the Government have provided £1,400 million of taxpayers' money in support of the shipbuilding industry. That should be compared again, oddly enough, with the noble Lord's statement yesterday in reply to another question, in which he revealed that out of the taxpayers' pocket nearly £7,000 million had been paid in support of the common agricultural policy. He ought to be reminded of that.

The Government are always prepared to give way at the drop of a hat to the demands of the City. We have the Bank of England formally reproving the Chancellor of the Exchequer for introducing a tax on American depositary receipts. Now the Government are going to climb down on that. They are entirely in the hands of their City masters, and the Statement only underlines that.

The Government could and should have come to the aid of this industry a long time ago on matters that they cannot even apprehend. The Government know perfectly well that in France, Japan and Germany package deals for shipping are offered that are much more favourable than those that British Shipbuilders is able to offer. The Government also know perfectly well that they could have maintained the capacity of British shipbuilding by causing forward orders to be placed, by our requirements for fishery protection ships and other ancillary vessels for the Royal Navy, and so on. They could have exerted themselves to preserve and enlarge the British shipbuilding industry, but they do not care to do it. They have written off the shipbuilding industry.

Moreover, the rump that remains can hardly be encouraged by the fact that the world knows that the British shipbuilding industry has been abandoned. It is likely therefore that even the rump that remains will receive many orders from the outside world in the full knowledge that the Government themselves have no confidence in the industry? The noble Lord knows quite well that the Government could have offered special concessions to shipowners to build their ships in the United Kingdom, as happens in other countries where in some cases there is 100 per cent. take-up by foreign shipowners from their own shipyards. The Government choose to do none of these things.

The Government complain from time to time—or the Government's supporters complain—that there is nothing wrong with the policies; it is only their presentation that is at fault. The noble Lord is a past master at the art of presentation. But no presentation on his part can mask the fact that in this one most vital industry in the country of enduring value the Government have backed down. They prefer to follow the policy that has been announced, often in raucous and strident terms, by the Prime Minister of free competition all over the place, even though other countries do not do so.

Lord Kennet

My Lords, we on these Benches share many of the preoccupations of the Labour Opposition. Perhaps I may start by saying that we are glad to see that an enterprise company has been set up immediately and without struggle or difficulty. We remember the long period of struggle and difficulty that we, on these Benches, and in another place, experienced in trying to get the same done for the coal mining industry. I am glad that this time the successful precedent of British Steel has been followed up without further ado. We welcome also what are, I take it, no less than five tranches of new money that will help this enterprise company and other government programmes up there. It is good that this has been done promptly. We can understand why it has been done promptly. We are happy that the results of our labours, as shown up in recent by-elections, should have led the Government, in this, their seventh year, to do the right thing so promptly this time.

I have three questions, two relating to the short term and one long term. My first short-term question is to ask whether the noble Lord can remind the House of the last recipient of a government shipbuilding order. Was it private or public sector? The second short-term question is to ask whether the Government will join us on these Benches in wishing Mr. Graham Day better luck with British Leyland than he has had with shipbuilding. The long-term question is to ask whether the Government agree that, in the long term, the solution to the problem is an equitable sharing of the burdens of shipbuilding, as well as the burdens of shipping, world-wide, in some kind of internatioanl system agreed by all the countries concerned. Will he agree that what is needed in this country to back that up and to provide the data and initiative for it is that the Government should at long last get a firm grip of the totality of national maritime policy, which includes shipbuilding as much as shipping and all other forms of seafaring activity?

Lord Young of Graffham

My Lords, I am grateful to the noble Lord, Lord Bruce of Donington, for recognising that the success of the Government's economic policy can be seen today in facing up to reality and not in looking at problems and wishing that the world were different. I know that noble Lords opposite often resent my talking about other countries and imagine that we are not only an island but also a universe to ourselves. I am forced, however, to remind your Lordships' House that Sweden, which once had the most modern facilities in Europe, has effectively abandoned merchant shipbuilding; that in Holland the Dutch Government refused support to their industry to build a sister ship to the large North Sea ferry won by Govan, and that even the Japanese are having to adjust to the shortage of orders. The Japanese have been cutting capacity since 1979. Today they are considering a reduction of one-third in larger yards and contemplating 20,000 job losses.

The Germans have cut their shipbuilding capacity by half since 1976 despite the widespread use of soft credit to finance sales to developing countries. France is also cutting capacity. I can tell your Lordships that we are bound by the fifth directive on shipbuilding aids to the credit terms in an OECD understanding. It is true that some Community countries are allowed more generous terms, but their direct production subsidies are lower.

We must face reality. The simple reality is that this year British Shipbuilders, the corporate plan of which calls for 200,000 tonnes of orders, has so far received orders for 23,000 tonnes. Above all, we must look forward and not back. In the plans outlined today we are looking for ways in which we can utilise the skills, the expertise and the energy of those employed in British shipbuilding in other occupations in the future. This has nothing to do with depositary receipts or many other things in the City. I would remind your Lordships of Glengarnock, a steel mill closed six or seven years ago. At that time it employed 700 people. Today, as a result of British Steel (Industry) and the Scottish Development Agency in setting up a Glengarnock Valley task force, over 1,100 people are employed. We have to look forward. The package outlined today is a way of dealing with a world-wide problem, a way of looking towards the future.

I know that in 1977 there were 38,000 people employed in British Shipbuilders. But there is an enormous world surplus of capacity in shipbuilding. Third world countries are becoming shipbuilders, and we have not seen the end of it yet. We are not giving up shipbuilding. We hope very much that, in its new form, we shall see British Shipbuilders as a viable and active company.

I thank the noble Lord, Lord Kennet, for his comments. I shall have to write to him and place in the Library the answer to his short-term question relating to the last order received from the Government. I can, however, say this. At present it would be wrong to go down the route of Polish ship orders, of providing a considerable subsidy and incurring further losses on ships that are simply not required. If we want to help British shipowners, what we must not do is help further to increase the surplus capacity of ships on the world market. What we must do is find ways of looking ahead, realising that the world goes forward and not back, and so find a way to utilise the skills of our work force.

Lord Glenamara

My Lords, I wonder whether the noble Lord or anyone in the Government, with the possible exception of the noble and learned Lord the Lord Chancellor, realises the effect that this further body blow will have on the North-East of England. As I have pointed out to your Lordships' House so often, the North-East has by far the highest unemployment in Britain. Middlesbrough has 28 per cent. unemployment. The county of Cleveland in which it is situated has 22 per cent. unemployment. And now this!

My noble friend has pointed out the contrast in regard to the Government's treatment of the agricultural industry. How many economic farms are there in Britain? Not one. Farms throughout the country are growing grain that no one wants. The Government are quite happy about that. Why the different treatment of these marvellous men? Let me tell the noble Lord that once the labour force of a shipyard is dispersed, it can never be re-assembled. This is dispersing one of the most valuable national assets of a maritime country. The Government committed the lunacy, the sheer idiocy, of privatising the paying parts of the industry engaged in naval work. Now, in spite of what he says, the noble Lord knows that they are abandoning the shipbuilding industry.

This Government are finished. They are bereft of ideas, bereft of policy, and discredited. They are clapped out. Why do they not go, before they ruin the rest of the economy?

Lord Young of Graffham

My Lords, I am grateful for the noble Lord's observations which I shall take as they were offered to me—surely in jest. The noble Lord does not seriously believe that government policy can create ship orders from nowhere. The noble Lord does not seriously believe that cross-subsidies will actually save industries. The noble Lord will surely accept that the world changes and that we have to look ahead. Of course, there is a surplus at the present time in the production of grain in Europe, and that will have to be dealt with through the Community. But it is an entirely different matter. If we see that there is to be—I hope that there will be—a return to building ships, we shall have in British Shipbuilders a facility to do so. But we cannot sit by and build castles in the air. There must be orders before ships can be built.

4 p.m.

Lord Boyd-Carpenter

My Lords, can my noble friend say whether British Shipbuilders has given to the Government and himself any explanation of its apparent inability to match the delivery dates of its foreign competitors which resulted inter alia in the loss of the contracts for the refitting of the "QE2" and for the building of the new P and O cruise liner? Has that inability to match foreign delivery dates and to be sure of keeping to them anything to do with the demarcation disputes between the unions concerned which certainly in the years in which I was involved in this matter did immense and apparently permanent damage to the shipbuilding industry?

Is my noble friend also aware that some of us very much resent the personal observations about himself which the noble Lord, Lord Bruce of Donington, saw fit to make?

Lord Young of Graffham

My Lords, I am grateful to my noble friend. I often feel that our generation has inherited the world's oldest industrial buildings. We have also inherited the world's oldest industrial relationships; and a relationship based on conflict was, I suspect, the legacy of the Trade Disputes Act 1906 which led to demarcation disputes. It led to our losing orders across a whole field of industrial activity in which shipbuilding has proved to be the one that has paid the greatest penalty.

I very much hope that in the future—and I prefer to look forward—we shall leave the age of demarcation disputes behind us. I hope very much that in the future we shall build quality products to time.

Lord Underhill

My Lords, has the noble Lord forgotten that on 2nd May your Lordships had a debate on the EC Committee's report on maritime policy? Has he forgotten that it was made quite clear that we cannot deal with maritime policy without dealing with shipping, shipbuilding and ports? Yet the whole of his Statement today has dealt solely with shipbuilding.

Does the noble Lord accept the arguments advanced by the British Council of Shipping, which are in line with those of the trade unions; and that nothing he has said in his Statement has anything to do with the policies advanced by your Lordships' EC Committee dealing with maritime policy in the UK and in Europe?

Lord Young of Graffham

My Lords, my Statement today is dealing with a more limited matter; that is, providing a future for those who unfortunately will face redundancy in the years to come as a result of the lack of orders in the shipbuilding industry not only in this country but also I am afraid world-wide. That is the immediate problem. My concern is that those who are to become redundant are given, at the earliest possible opportunity, a chance to do something different, to use their redundancy to look towards the future. That is where I think your Lordships' House should be looking this afternoon.

Lord Greenhill of Harrow

My Lords, is the Minister aware that departments in Whitehall have been arguing for years—and I say literally for years—about the building of a new ship for the supply of St. Helena? This ship will eventually be required. Why can the order not be placed now?

Lord Young of Graffham

My Lords, the noble Lord has a far greater memory of Whitehall than I do; but I shall certainly look into the matter. However, I assure the noble Lord that orders that could be placed now have been placed. It is only with the greatest reluctance that we face the situation that we have today.

Lord Orr-Ewing

My Lords, will my noble friend bear in mind that sometimes the French build small ships which they hope to sell to third world countries for coastal defence purposes and if they do not sell them, they absorb them into the French Navy? If they sell them, it helps to retain an element of shipbuilding in France in this very difficult market.

Will the noble Lord press his noble friend the Minister of Defence to reconsider whether we could not start building some small ships on the same pattern? I do not know whether he saw in this morning's paper a report that following the position where Japan had half the world shipbuilding market and has now had to cut right back South Korea, this very morning, had an order for a third Norwegian car ferry. So Norway, which was also a first-rate shipbuilding country, in now losing its market to an up-and-coming South Korea.

In the face of this competition we recognise broadly that the noble Lord has to make temporary provision. We only hope that he is keeping the organisation going so that it can expand to meet the needs when world demand for ships expands.

Lord Young of Graffham

My Lords, I am grateful to my noble friend. There are one or two orders in prospect. There is one for a fisheries' protection vessel, and a new ferry for services to the Scottish west coast islands. Both British Shipbuilders and United Kingdom private sector yards have been invited to bid. I have no doubt that a decision will be made before very much longer.

We must be very careful that we do not perpetuate the existence of a yard by building products which are no longer required for any purpose. It is more in the interests of the workmen themselves, and everybody in the yard, that we begin to look forward to finding them a productive future. I am told that even Korea has now ceased to make further investment in shipbuilding and is looking very hard and very competitively for new orders. I have no doubt that one of these days Korea will be in the same position as ourselves. There will then be other nations coming forward. The simple truth is that the effects of the Industrial Revolution, which started in this country 250 years ago, have so far gone only halfway round the world; the other half still lies ahead.

Lord Hatch of Lusby

My Lords, the noble Lord is very fond of preaching to the House about facing reality. Does he not accept some responsibility by the Government for creating the reality that he talks about? I have asked the Government many times over the past 12 months about their policies towards the collapse of the British Merchant Navy. As the noble Lord, Lord Kennet, has said, this is a part of the whole of maritime policy historically in this country. The Government have always fobbed me off by saying that while there may be a temporary lull everything is all right. About an hour ago the noble Lord was telling me that the Government cannot create jobs. Apparently the Government can destroy jobs, take jobs away from men.

Can the noble Lord answer this question? He is constantly telling us about the success of the Government's economic policies. Can he tell us why the most profitable parts of the British maritime organisation have been sold off from national control and put in private control? Can he tell us how government support for the shipbuilding industry in this country compares with that in other countries? It is nonsense to suggest that there is no longer any need for shipbuilding in the world. There is a great need for shipbuilding. It will go on. It may fluctuate, but it will continue. Why are we not retaining our share of it?

The noble Lord gave a figure of £ 1,400 million since 1979. That averages out at £200 million a year. Can he tell us how that compares with what the Germans, French, Japanese and Koreans are paying to subsidise their shipbuilding industry? The noble Lord gave the game away when he said that the Germans were making 20,000 shipbuilders unemployed. That figure of 20,000 is double the total number of those who were in work today before the cuts. How can the Germans afford a shipbuilding industry which employs that kind of number whereas this country, with a much longer tradition of shipbuilding and maritime expertise, is apparently going to be destroyed by the clear action and policies of this Government?

Lord Young of Graffham

My Lords, I am grateful to the noble Lord, Lord Hatch of Lusby. First, I must tell him that I do not claim that I have ever preached to the House. However, I have asked your Lordships, and the noble Lord in particular, to face reality on occasion and I would ask him to face reality today. We must look at a world in which the Government have invested £1,400 million to little avail—since the outside world has not changed. We must look at British Shipbuilders, which has succeeded in winning only 23,000 tonnes out of 200,000 tonnes, which in the reduced circumstances is the requirement in order to break even. We must look at a world in which not the Germans but the Japanese are contemplating a reduction which would involve 20,000 job losses; they have already taken 10,000, and a further 20,000 are a possibility. We must look at a world in which ship orders are simply not available—and all the wishing in the world will not bring them back. We must face reality. We must look forward. We must look for other occupations for many people who were previously engaged in shipbuilding.

Lord Hatch of Lusby

My Lords, will the noble Lord answer my question about privatisation?

Lord Young of Graffham

Gladly, my Lords. Surely, the one thing that makes no difference in the real world is whether you have a profitable warship-building company put together with other shipbuilding companies that cannot get orders, or whether you keep them separately and allow a privatised and revitalised company to go ahead from strength to strength. If we really want to see shipbuilding continue, then we should allow the warship-builders or the others to have full access to the private sector and to the market; but that does not deal with the real problem and it is only trying to avoid reality to say so.

Lord Bruce of Donington

My Lords, I intervene again mainly as a result of the remarks of the noble Lord, Lord Boyd-Carpenter, in which he accused me of making a personal attack upon the noble Lord, Lord Young of Graffham. I make a point of never attacking individuals, although I may attack what they say with some vehemence. However, I think that the noble Lord, Lord Young of Graffham, knows that what I say is conviction and not malice.

The noble Lord has not addressed himself to the question. Indeed, the noble Lord, Lord Orr-Ewing, gave him some hint of it when he asked what steps the Government were taking as regards advanced orders. That lies within the sphere of government. If the Government are interested in the British shipbuilding industry, they know quite well that, in the same way as they pour thousands of millions of pounds into piling up grain which nobody wants, they can make useful expenditure in producing shipping that is required now; namely, fishery protection vessels, ferries, and ancillary ships. The noble Lord knows that that can be done.

It is not we on this side of the House who are not facing up to reality. We face up to the reality of this miserable Government which is very real indeed. Why does not the noble Lord address himself to the problem of the shipbuilding industry in a country that has been renowned for centuries for its shipbuilding skills? Are we to understand that the Government are prepared to abandon it completely? That is the impression which they give. In view of what has happened this afternoon, will the noble Lord convey to his noble friend the Leader of the House the fact that it is quite indispensable, in view of the nature of the Statement this afternoon, that the House has an opportunity to debate the whole of the shipbuilding question in the United Kingdom?

Lord Young of Graffham

My Lords, if one matter has become absolutely apparent it is the Government's attitude and the Government's determination and desire to see that shipbuilding continues in this country. However, we have to face reality. We have to ensure that the volume and capacity of shipbuilding accords with the likely body of demand. In taking the steps that we are taking today, we are facing reality, we are defending the shipbuilding that we have, and we are not giving up as has Sweden (which was a great shipbuilding nation) and as have many others in Europe. We are looking at what we have in a different and changing world. It may well be that those opposite would very much have wished a few years ago to have kept blacksmiths' forges in operation. The world changes. They had to be turned into garages. Today we must look at shipbuilding and see whether many of the skills of our people can be turned to something useful.

Lord Annan

My Lords, as raucous and strident questions seem to be in order this afternoon, I wonder whether the noble Lord would permit me to put one to him following what the noble Lord, Lord Hatch of Lusby, said. The noble Lord said that it was the Government's fault and that theirs was the responsibility for destroying the shipbuilding industry. Is it not a fact, as the noble Lord, Lord Boyd-Carpenter, said, that this industry was sold down the river, destroyed and demolished during the 1950s and 1960s by constant strikes, constant demarcation disputes and constant pilfering in the yards; and that the unions bear a very heavy responsibility for this—the unions, not the Labour Governments of the past, nor the Conservative Governments of the past? Was it not an example of trade unionism having run riot?

I wish to put another question to the noble Lord. People are disturbed about unfair competition. It occurs in many fields. Only the other day British Leyland were complaining of it in regard to restrictions put on their imports into Japan. Are the Government contemplating making a study of which countries discriminate against our exports? The noble Lord may reassure opinion to some extent if an inquiry of that kind were launched.

Lord Young of Graffham

My Lords, I am grateful to the noble Lord. Although I suspect that the unions must bear some part of the blame for the conduct in the 1950s and 1960s, there is no question that even if we had a very efficient shipbuilding industry, such was the competition from the third world, such were the prevailing wage rates and other matters, I suspect that we would have found the industry in decline in any event. Nevertheless, we are very much aware of the problem of unfair competition; and my right honourable friend the Secretary of State for Trade and Industry only a few days ago set up an internal unit which is closely monitoring this matter and will ensure that steps are taken where they are deemed necessary.

Lord Hatch of Lusby

My Lords, as I have been referred to personally, I should like to ask the noble Lord whether it is not a fact that for several years all the unions concerned with shipbuilding and with the maritime industry as a whole have been making representations to the Government about their fears of the collapse of the whole industry?

Lord Young of Graffham

My Lords, I hear what the noble Lord says. The time to regret a hangover is not when you experience it; you should slow down the night before. I wish that perhaps we had moderated our behaviour in the 1950s, because we may have suffered less in the 1980s.