North East Shipbuilders: Closure Terms (Hansard, 13 June 1991)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay)
My Lords, the exchanges between Her Majesty's Government and the European Commission with a bearing on North East Shipbuilders contain much commercially confidential information which it is not appropriate—nor would it be the practice—to publish. The essence of these exchanges relating to the closure of North East Shipbuilders and associated matters have however been made publicly available in the minutes of evidence taken before the Trade and Industry Select Committee in October 1989.

§ Lord Jay
My Lords, as this yard was one of the most modern in Europe and employed a large labour force in an area of heavy unemployment and as a private firm was ready to operate it without any kind of subsidy, does the Minister agree that it is a mockery of accountability when neither Parliament nor the public can be told the terms of the agreement or who made it on behalf of the DTI?

§ Lord Reay
My Lords, a note submitted by the then Chancellor of the Duchy of Lancaster to the chairman of the Trade and Industry Committee on 24th July 1989 sets out the background and the details of Her Majesty's Government's notification of 12th December 1988 to the European Commission of proposals for the disposal of British Shipbuilders' remaining operational subsidiaries and for closure aid to North East. Shipbuilders. In addition, the note summarises developments and discussions with the Commission relating to North East Shipbuilders between the date of notification in December and the Government's decision in July 1989 that the future interests of Sunderland would not best be served by continuing to pursue shipbuilding bids at the expense of the enterprise zone and other measures to promote new jobs in the town. I have nothing usefully to add to the information contained in that submission.

§ Lord Dormand of Easington
My Lords, do the Government and the Minister know that in fact two offers to purchase the yard were made clearly without any subsidy of any kind from the Government? I should have thought that that would appeal to this Government perhaps more than to any other. For the 1198 Minister to say that the commercial information is confidential is a scandal. Is that the way to proceed in a situation of this kind where literally thousands of skilled and dedicated workmen are thrown on the scrapheap, as has happened? I must say to the House that it is a most unsatisfactory reply from the Minister.

§ Lord Reay
My Lords, by December 1988 unsuccessful attempts to find a satisfactory buyer for the Sunderland yard had dragged on for many months. Work in the yard was running out and a decision had to be taken so that the workforce could be given redundancy pay and the opportunity to find new jobs. That was the principal reason why the yard was closed.

§ Lord Clinton-Davis
My Lords, why is the Minister so shy about declaring the reason for Mr. Newton, the responsible Minister at the material time after the date to which the Minister has just referred, having gone to Brussels if it was not to seek to ensure that the Sunderland yard could be reopened? Why does the Minister not inform the House or at least the people of Sunderland, who surely are entitled to know why their jobs have disappeared, of what went on and what was the essence of the deal, without giving away any so-called confidential information?

§ Lord Reay
My Lords, in discussions with the European Commission in June 1989 on specific proposals from a new interest for continued shipbuilding in the yard, it became clear that the Commission would open a procedure under Article 93.2 of the Treaty of Rome. That would have resulted in reopening the package notified in December 1988, jeopardising both earlier disposals and the Sunderland remedial measures. Therefore the Government concluded that the best interests of Sunderland and other areas which would have been affected would not be served by submitting a renotification to the Commission.

§ Lord Jay
My Lords, will the Minister say why Mr. Newton, the Minister later responsible, apparently was not told of the agreement for a period of many months? Who was the Minister responsible for making the agreement?

§ Lord Reay
My Lords, Ministers knew perfectly well about the negotiations in Brussels. It is nonsense to suggest that the notification to Brussels and the response from Brussels were withheld from Ministers. However, it is a sad fact that in the three years prior to the closure announcement, NESL alone incurred losses of £100 million. Perhaps I may remind the House that the cost of British Shipbuilders to the taxpayer in the 10 years of its existence was around £2 billion.

Lord Bruce of Donington
My Lords, will the Minister tell the House who within the Government were responsible for pre-judging the result of any case brought by the Commission under Article 93? Surely somebody must have advised the Government. I do not know which European lawyers advised them or whether they advised themselves. Why should they 1199 automatically have assumed that any proceedings brought under Article 93 which are challengeable in the European Court would have had the results that the Government say that they might have had? Or is there some reason other than the possibility of Article 93 being brought into operation?

§ Lord Reay
No, my Lords. As I explained, when it became clear that the Commission would open a procedure under the article to which the noble Lord refers and that that would result in reopening the package that had been notified, which would have jeopardised the earlier disposals and the remedial measures, the Government concluded that the interests of Sunderland and other areas would not be served by submitting a renotification.

§ Lord Dormand of Easington
My Lords, I hope that the House will forgive me for speaking a second time. I should like to ask the Minister a specific question. He said that Mr. Tony Newton, the Minister, knew that negotiations were taking place. Will he say specifically what were the contents of the negotiations? That is the crucial point.

§ Lord Reay
My Lords, I have explained the situation. When the specific proposals from a new interest came up in conversations with the European Commission, it became clear that the Commission would open a procedure under Article 93.2 of the treaty. For that reason the Government concluded that it would not be in the best interests of Sunderland or other areas to submit a renotification to the Commission.