Harland and Wolff: Super-liner Project (Hansard, 4 May 1988)

§ The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell)
My Lords, the Government have received no formal approach for subsidy for this project. European Commission rules do not require evidence of competition before subsidy can be granted. However they limit subsidy to 28 per cent. of contract costs.

§ Lord Bruce-Gardyne
My Lords, I am grateful to my noble friend for that information. Has he noted that Mr. Ravi Tikkoo appears to have been touting the project around the globe, just as a previous distinguished entrepreneur, into whose clutches the Northern Ireland Office once fell, did in similar circumstances? Can my noble friend assure the House that before a 28 per cent. subsidy or any other subsidy is given to that project he will take particular care to make sure that it does not have gull wings?

§ Lord Lyell
My Lords, the device to which my noble friend refers was the subject of a debate during which he made sundry comments about Ministers putting their own portfolios at risk in such ventures. In this venture there is no risk of that. It is far too early to make any commitment to Government support for the project since we have not received any proposals. However, I assure my noble friend that when proposals are received they will be fully assessed.

§ Lord Blease
My Lords, does the Minister agree that the tenor of his reasoned reply will be more readily accepted by United Kingdom taxpayers in Northern Ireland than the plaintive tone of the Question? If the order for the liner is placed in accordance with EC intervention rules and other cost factors, will the Minister agree that it could give a much-needed boost to the overall competence of the United Kingdom shipbuilding industry as well as to Harland and Wolff?

§ Lord Lyell
My Lords, those questions will be more easily answered when we receive formal proposals from Mr. Tikkoo, together with the figures which the Government and the company will require.

§ Lord Prys-Davies
My Lords, perhaps I may ask the Minister two short questions. First, can he confirm that both his department and Harland and Wolff have the organisation and the accounting systems which will be necessary to properly monitor and handle the contractual relationships which Harland and Wolff may enter into in respect of the venture, given its magnitude and complexity? 565 Secondly, if the venture is to attract public money, will the subsidy be at the expense of other Northern Ireland heads of expenditure?

§ Lord Lyell
My Lords, so far as payments are concerned, in previous cases the payment and monitoring systems were divided into three parts. First, Harland and Wolff would provide weekly cash forecasts to the Department of Economic Development. Secondly, consultants for the department would check the work in progress and provide monthly reports. Thirdly, the company's auditors would provide reports and certificates on a quarterly basis.
In response to the second question asked by the noble Lord, perhaps I may say that any funding for the project, once concrete and firm proposals are received, will have to come from within the Northern Ireland block.

§ Lord Graham of Edmonton
My Lords, can the Minister tell the House in general terms how the Government view the interests of individuals like Mr. Tikkoo with reference to the affairs of Northern Ireland? Is the idea of relief for the taxpayer tempered in the minds of the Government with a proper sense of the national interest and concern for the protection of jobs in Northern Ireland?

§ Lord Lyell
My Lords, the interests of Mr. Tikkoo and the taxpayer, as well as the protection of jobs in Northern Ireland, will become clearer when Mr. Tikkoo or anyone else brings firm proposals and figures to my right honourable friend.

Viscount St. Davids
My Lords, does my noble friend know whether there are any dry docks in this country which are able to take a vessel of that size? Is he aware that if there are no such dry docks, any repairs done to this vessel would have to be done abroad?

§ Lord Lyell
My Lords, I understand that the Harland and Wolff shipyard is capable of building the vessel. I am not aware whether or not the same facilities would be available to provide for repairs or whether existing facilities would need to be enlarged. If I am able to adduce any further information concerning suitable dry docks for a vessel of that size elsewhere, I shall write to the noble Lord.

§ Lord Harmar-Nicholls
My Lords, is my noble friend aware, as my noble friend who tabled the question made clear, that the taxpayer has been bitten in the past and as a consequence there is a need for the utmost vigilance to ensure that things that are offered in the future are the right ones? Ought we not to be careful not to sour the atmosphere so completely that we frighten off people who may have genuine products which could bring good to this country in terms of employment and general profitability?

§ Lord Lyell
My Lords, I hope that nothing that I have said today could sour any atmosphere. My right honourable friend's door is open to Mr. Tikkoo and to all entrepreneurs who might wish to come to 566 Northern Ireland with projects. They are all most welcome.

Lord Bruce of Donington
My Lords, on the assumption that the noble Lord's department comes to the conclusion that the proposal is a perfectly sound one and one that should quite properly go ahead, in the event of the European Commission seeking to invoke Directive No. 6 will he make quite sure that researches are made into the previous application of that particular directive to other European countries before agreeing to the intervention of the European Commission in this matter?

§ Lord Lyell
My Lords, certainly we should need to be in touch with the Commission. In a recent case to which the noble Lord is no doubt referring, the sixth directive was invoked when Govan shipyards alleged that a French yard had exceeded the sixth directive in a bid to build a ferry for Brittany Ferries. As the noble Lord and your Lordships will be aware, the sixth directive provides that where there is competition for a contract the Commission can at the request of any member state examine the bid. In that particular case the United Kingdom lodged a formal complaint, and after examining the bid the Commission ordered the French yard to pay back to the French Government that amount of support which had breached the sixth directive.

§ Lord Moran
My Lords, is it not the case that the subsidy that is being talked about for this project is simply that which is available to any shipyard in the United Kingdom? Is it not also the case that it has been made available in many cases in the past and is not in any respect a special subsidy for this project? That said, does the Minister not agree that if this turns out to be a viable project it will be very valuable for employment in Belfast and for the economy of Northern Ireland?

§ Lord Lyell
My Lords, the noble Lord is quite correct. Subsidies of this type are available for shipbuilding. Contract support is the correct label for any government expenditure on a project of this type. I would not commit the Government to subsidies for any other project in any other yard although we would look at what subsidy might be available were Mr. Tikkoo to produce realistic figures for my right honourable friend's consideration in respect of this particular project. The noble Lord is quite correct in saying that if the project were found to be realistic and were to come to Belfast, we should all be very pleased.

§ Lord Crickhowell
My Lords, as an old friend of Mr. Tikkoo—and incidentally can we spell his name correctly?—I should like to ask my noble friend whether he agrees that there can be no criticism of Mr. Tikkoo in asking Harland and Wolff to build this ship, although possibly he may be brave. Does he also agree that the Government will have to look at the ability of Harland and Wolff to carry out the task and at the readiness of French and other European shipyards to undertake the task, with or without subsidies?

§ Lord Lyell
My Lords, I am not too sure whose name is being spelt incorrectly. Mine is frequently spelt wrongly but I do not think that it is pronounced as my noble friend pronounced the name of the entrepreneur—at least, not so far as I know. I do not think that we could be responsible for checking on subsidies from any other nation. That would be for Mr. Tikkoo and for Harland and Wolff. However, as I stressed to the noble Lord, Lord Bruce, the sixth directive would bite.

§ Lord Underhill
My Lords, will the Minister encourage the Government to reconsider his reply to my noble friend, that any grant or subsidy made would come out of the Northern Ireland budget? Will he do so, first, because of its effect on the general position in Northern Ireland and, secondly, because one would hope that subcontracting would benefit the whole of the United Kingdom?

§ Lord Lyell
My Lords, I am afraid that the position will remain as I stated it. If the project is found to be realistic and the contract is eventually signed, that will be the time to look at any spin-off or alternative contracts elsewhere in the United Kingdom. The first step must be for Mr. Tikkoo to produce realistic figures to my right honourable friend.

§ Lord Underhill
My Lords, perhaps I may again intervene. The Minister definitely replied to my noble friend to the effect that any subsidy or grant would come out of the Northern Ireland budget. Is he now saying that that may be reconsidered?

§ Lord Lyell
My Lords, I reiterate for the second time, no. Any subsidy would come from the Northern Ireland block.

§ Lord Bruce-Gardyne
My Lords, in view of our past experiences in these matters, could my noble friend assure us that this House, and indeed another place, would have an opportunity to look at any specific proposition for taxpayer subvention which might arise in these circumstances? Could he also at the same time confirm that over a great many years this shipyard has been invited by Ministers to observe the obligation to become commercial and has so far shown a total inability to do so?

§ Lord Lyell
My Lords, concerning my noble friend's second question, he will know the figures. What we have done for Harland and Wolff and government support for sundry contracts in that yard are a matter of public record. So far as concerns my noble friend's first question—and he is expert at asking questions—we would give no guarantee that your Lordships would be able to have such a debate. That is entirely a matter for the usual channels and, I have no doubt, for my noble friend.

§ Lord Harmar-Nicholls
My Lords—

Noble Lords
Next question! Order!

§ Lord Harmar-Nicholls
My Lords, whilst I apologise for asking a second question, may I ask my noble friend whether he is aware that if every time a business prospect is brought to this country it has to 568 be debated by the politicians in both Houses, not many prospects will be brought to this country?

§ Lord Lyell
My Lords, I think that the answer I can give to my noble friend is the same that I gave to Lord Bruce-Gardyne, that if either of my noble friends wishes to ask the Government any particular question there are many channels available for them so to do—now, later at night, or indeed early in the morning.