HL Deb 29 November 1990 vol 523 cc1061-4

3.15 p.m.

The Lord Bishop of Chester asked Her Majesty's Government:

Whether they will support an application on behalf of Cammell Laird Shipbuilders to change its status to a merchant shipbuilder and to allow it to receive intervention funding.

The Minister of State, Department of Trade and Industry (Lord Hesketh)

My Lords, the 1985 agreement between Her Majesty's Government and the European Commission on the restructuring of British Shipbuilders and the proposed privatisation of the warship yards such as Cammell Laird does not preclude those yards from engaging in merchant shipbuilding on an unsubsidised basis.

The Lord Bishop of Chester

My Lords, I thank the Minister for that Answer. Is he aware of the enormous expectancy among the workforce at Cammell Laird and that Cammell Laird is very much the lifeblood of Birkenhead? Is he also aware of the back-to-work campaign in 1984, which at the time the Prime Minister called courageous, and the democratic co-operation of the workforce in Cammell Laird, the remarkable unanimity among the unions and the very high quality of work? The workforce expects some government intervention at this point to rescue the yard. Is it possible that the Government, having given the Answer about the EC ruling, are prepared themselves to intervene in this situation? I understand that the French company CMN of Cherbourg has received help from the French Government. Is the Minister aware that Cammell Laird seeks to build high speed catamarans for the cross-Channel service in direct competition with CMN of Cherbourg and that without government help the yard will not win the contract?

Lord Hesketh

My Lords, the agreement that the British Government reached in 1985 with regard to British Shipbuilders fell under the terms of the fifth directive on shipbuilding. On 1st January 1991 the seventh directive on shipbuilding comes into effect. The purpose of the directives is to reduce excessive merchant shipbuilding capacity in Europe. If the Government were to intervene that would be in direct contravention of the agreement that we reached with Commissioner Sutherland regarding the fifth directive.

I should remind your Lordships' House that the reduction in employment in the merchant sector of the shipbuilding industry in Europe has not been confined to this country. In France it has fallen by 79 per cent., in the Netherlands by 83 per cent. and in the United Kingdom by 86 per cent. In Sweden employment has fallen by 98 per cent.

Lord Williams of Elvel

My Lords, do the Government recognise the gravity of the problem? Two thousand jobs will be lost directly if Cammell Laird closes down and a further 2,000 jobs will be lost among contractors. That spells economic disaster for Birkenhead and the Wirral. Can the Government think of a way to go back to the Community and renegotiate the deal they made over privatisation? After all, we put enough money into the Community. Could we not get some of our money back?

Lord Hesketh

My Lords, on a day when I read in the Financial Times of the Labour Party's uncontrolled endorsement of economic monetary union I find it surprising that the noble Lord, Lord Williams, asks us to fly in the face of the fifth shipbuilding directive, which was in force at the time the agreement was reached, and the seventh directive which will come into effect on 1st January.

Lord Dean of Beswick

My Lords, is the Minister not aware that the shipyard is in an area which has one of the highest unemployment rates in the United Kingdom and where there is very little prospect of anything to take its place? Will he give serious consideration to taking the matter to the new Prime Minister with the request that was put so well by the right reverend Prelate in his Question?

Lord Hesketh

My Lords, the right reverend Prelate specifically referred to an application to the Commission. I must point out to the noble Lord that there are many other examples throughout Europe. That is why I quoted the percentages involved in the reduction in numbers employed in merchant shipbuilding and why we cannot go for a reapplication.

Lord Orr-Ewing

My Lords, can my noble friend explain why the French have found a way to subsidise a rival firm but we in this country do not seem to be able to find a way round the regulations? Perhaps a copy of their regulations as they apply can be put in the Library. For the convenience of some noble Lords they may be translated into English. Does he believe that we can contrive to do exactly the same as the French have done in so many other ways to preserve what they believe to be in the best interests of their country?

Lord Hesketh

My Lords, the fact of the matter is that under the 1985 agreement with the Commission Cammell Laird was a warship yard. The CMN yard referred to is a commercial and warship yard.

Lord Bruce of Donington

My Lords, will the noble Lord confirm or deny the allegation that the French are subsidising that company and that it is in competition with our yard? If he becomes aware that the French are effecting that kind of subsidy, will he completely reopen the whole question? Does he agree that it is very well known that in many cases the French obey only those Community regulations with which it suits them to comply?

Lord Hesketh

My Lords, I can assure the noble Lord that we keep a close watching brief on our position and responsibilities in Europe in regard to both our own activities and those of others. It is important to understand that conditions of parallel existence do not pertain in these two cases. Cammell Laird came out as a warship yard under our arrangements with the Commission, and arrangements differ from country to country on the basis of what they consider to be their priorities. The CMN yard is a warship and commercial yard; at that time Cammell Laird was not a commercial yard.

Viscount Mersey

My Lords, does the Minister agree that Cammell Laird's problems arise simply because we are now building extremely few warships? Is he aware, for instance, that in a few years' time we shall have only four diesel-electric submarines? Can he tell the House of any period in British history since the reign of Henry VIII when the Royal Navy has been smaller?

Lord Hesketh

My Lords, I do not have numbers for the Royal Navy fleet in my hand or at my disposal. It may be worth pointing out to your Lordships' House that under the Commission's directive intervention is allowed in order to preserve warship capacity if it is seen to be necessary for the defence of the realm.

Lord Geddes

My Lords, with regard to the question put by my noble friend Lord Orr-Ewing, can my noble friend the Minister tell us whether we are playing by the same set of rules as the French?

Lord Hesketh

My Lords, I believe that we are. I produced the figure for the reduction of employment in merchant shipbuilding of some 79 per cent. in France to show that other countries also have had to take their share of the strain.

Baroness Phillips

My Lords, is the Minister aware that this is one of the many reasons why the British people are disenchanted with going into Europe?

Lord Hesketh

My Lords, in the light of my earlier remarks with regard to the Labour Party's commitment to EMU today, I am slightly surprised by the noble Baroness's question.

Lord Swinfen

My Lords, if we are playing by the same set of rules, can my noble friend tell me whether we are both obeying them?

Lord Hesketh

My Lords, I feel that I can go no further than I have already gone this afternoon when I said that I believe that we are.

Lord Mackie of Benshie

My Lords, can the Minister say—

Earl Ferrers

My Lords, I do not like to interrupt the noble Lord but we have been eight minutes on the first Question. After he has put his question, perhaps we might move on.

Lord Mackie of Benshie

My Lords, can the Minister say whether he is simply going to accept the massive rise in unemployment in Birkenhead or whether the Government have any plans to alleviate it?

Lord Hesketh

My Lords, the Government have many plans which revolve around all kinds of schemes such as for inner cities, deprivation and so on. However, the Question on the Order Paper refers specifically to an application to the Commission which would drive a coach and horses through a great European principle.