HL Deb 17 December 1992 vol 541 cc676-80

1.11 p.m.

The Parliamentary Under-Secretary of State, Northern Ireland Office (The Earl of Arran)

rose to move, That the draft order laid before the House on 19th October be approved.

The noble Earl said: My Lords, this order repeals the Aircraft and Shipbuilding Industries (Northern Ireland) Order 1979 in so far as, first, it provides for financial assistance to Short Brothers; and, secondly, it repeals certain duties of the Department of Economic Development in relation to Harland and Wolff.

Following the privatisation of Short's and Harland and Wolff in 1989, the Government consider that there is no need to continue to make specific legislation for them. On their privatisation, the Government made it clear that both companies would be treated similarly to other private sector industrial companies in Northern Ireland. Therefore, the legislative basis for any future financial support to either business will be the Industrial Development (Northern Ireland) Order 1982.

The privatisation of Harland and Wolff was achieved by a sale of the business to a new company, Harland and Wolff Holdings PLC. The Department of Economic Development retained ownership of the old company, Harland and Wolff PLC, and is responsible for its remaining liabilities. In addition, the department retained responsibility for those subsidiaries of Shorts which had financial obligations relating to aircraft sales financing. For technical legislative reasons, the relevant companies were made subsidiaries of Harland and Wolff. In view, therefore, of these continuing obligations of Harland and Wolff PLC, there may be a need for the department to provide assistance to this company and only those articles of the 1979 order which are no longer relevant are being repealed at this stage.

A complete repeal of the 1979 order will be effected when the remaining obligations of Harland and Wolff PLC have expired. I beg to move.

Moved, That the draft order laid before the House on 19th October be approved.—(The Earl of Arran.)

Lord Prys-Davies

My Lords, I thank the Minister for explaining so clearly the meaning of the four articles in this order. However, he might also have mentioned that this is a hybrid order. When he replies, I am sure that he can confirm that there were no petitions against the hybridity of the order, or otherwise that they have been resolved.

I should like to ask a question about Article (3), which refers to Short Brothers PLC. It is this: is the department prudent to abandon its power to give financial assistance to Short Brothers in the future? I appreciate that, as is pointed out in the explanatory note, Short Brothers will still be eligible to receive financial assistance under the Industrial Development (Northern Ireland) Order. As far as it goes that is fine, but we know from experience that circumstances may yet show that the assistance which may be required by the company may be outside the range of assistance which is at the disposal of the Industrial Development Board—or that the IDB budget might be inadequate to meet that burden without distorting the remainder of its programme. Therefore, I ask again: should not the department have retained the power to give assistance if circumstances dictate that such assistance is necessary and appropriate?

I ask this question because Short Brothers, which is now a wholly-owned subsidiary of Bombadier, a Canadian company, is still of vital strategic importance to the whole economy of Northern Ireland. It represents about 10 per cent. of Northern Ireland's manufacturing capacity. It employs about 8,000 people in and around Belfast. In addition, it provides employment directly or indirectly for at least another 8,000 people throughout Northern Ireland. Again, we return to my question: is it prudent for the department to preclude itself from giving assistance to the company if changing circumstances dictate that such assistance is necessary and desirable? I wonder whether I would be far off the mark if I were to suggest that the true author of Article (3) is not the department but Her Majesty's Treasury.

I have one or two questions about Article (4), which relates to Harland and Wolff. The Minister explained very clearly the distinction between Harland and Wolff PLC and the trading company, Harland and Wolff Holdings PLC, and I am extremely grateful to him for the clarity of that explanation. The trading company, Harland and Wolff Holdings PLC, was created as a result of the privatisation, which offered so many juicy fruits to the people of Northern Ireland.

The effect of this order is that the department is abandoning the five powers specified in Article (4) in relation to what I might call the "shell" company, Harland and Wolff PLC. What powers will the department retain in relation to that company, for how long, and why will they be retained?

The order does not deal at all with the present trading company, Harland and Wolff Holdings PLC. May I ask the Minister, as we approach Christmas, what message of comfort the department brings to the trading company and to the men and women who are employed by it at the end of what has been a very bleak year for that company? The Minister knows very well that there are deepening anxieties in the air of Belfast about the financial and employment situation in this very famous dockyard. During the first six months of this year Harland and Wolff Holdings PLC made a loss of £6 million. I understand that five out of six shipbuilding options, which were much talked about at the time of the privatisation, have now been cancelled by China Navigation Limited, of, I hasten to add, Hong Kong. I believe that only one ship is currently under construction in the yard, but my information on that point might not be correct. Not so very long ago Harland and Wolff employed 10,000 people. The number is now down to 2,000, and, sadly, within a week another 400 people will have been made redundant.

What is particularly significant about this latest round of redundancies is that it includes a substantial number of staff who undertake the skilled work; the scheduling of the work programme and the highly skilled design work which lies at the core of ship construction. To many people the loss of these core workers suggests that before long Harland and Wolff Holdings will be just another UK assembly point for a thrusting Far Eastern company trading with Continental Europe. Of more immediate concern are the employment prospects of the core workers who are being made redundant before Christmas, bearing in mind that Northern Ireland has no other shipbuilding capacity which can offer employment to the core workers. Where will the core workers find alternative employment—in the United Kingdom or further afield in Japan or Korea? So approaching Christmas and a new year, I ask the Minister what comfort, if any, the Government can bring to the privatised shipbuilders of Northern Ireland and, in particular, to the men and women who are employed by the company.

I have underlined as best I can the significance of the order for Northern Ireland and for two of its major companies, one of which is of strategic importance to Northern Ireland. I shall listen with great interest and some concern to the Minister's response.

The Earl of Arran

My Lords, I thank the noble Lord for his reaction to the order. I shall do my best in the brief time available to me to answer the questions that he has asked. I can tell the noble Lord that no petitions were received. The point of the order is that it repeals the Aircraft and Shipbuilding Industries (Northern Ireland) Order 1979 in so far as it provides for financial assistance to the new privatised Short Brothers PLC and in respect of certain duties of the Department of Economic Development in relation to Harland and Wolff PLC, the company which the department has retained within its ownership following the sale of the shipbuilding business to a new company, Harland and Wolff Holdings PLC.

The noble Lord went on to speak of the future of Short's. We are satisfied that adequate resources will be available if they are necessary under the industry's development provisions in order to assist where necessary the future development of Short Brothers PLC. Under the business plan prepared by Bombadier for the development of Short's the Government are satisfied that Short's will continue to operate as a separate entity and that its headquarters manufacturing capability and research and development activities will remain in Northern Ireland, the point made by the noble Lord concerning the core activities of that company.

The noble Lord also asked about the powers being retained. They include, for instance, the power to fund Harland and Wolff PLC, to provide guarantees and to fund the cost of taking professional advice. Furthermore, so far as concerns Harland and Wolff Holdings PLC, I can confirm that the company had already indicated its intention to make some 94 redundancies before the end of 1992. This will bring the total number of redundancies announced since the end of 1991 to some 400. That will not be of comfort, as the noble Lord has said, but the company has at the same time indicated that it very much regrets having to take this action but concluded that it was necessary in order to improve its overall competitiveness.

Finally, I can say to the noble Lord that Harland and Wolff Holdings PLC is the newly privatised company set up to acquire the shipbuilding business. Harland and Wolff PLC is the company which has been retained in government ownership in view of the continuing financial obligations not acquired by the two privatised companies, Short's and Harland and Wolff Holdings. I hope that I have been able to answer the questions put to me. In those circumstances, I commend the order to the House.

On Question, Motion agreed to.