Shipbuilding Industry: Future (Hansard, 28 November 1994)

The Minister of State, Department of Trade and Industry (Earl Ferrers)
My Lords, all sectors of the economy are equally important in maintaining and increasing our national prosperity. The Government make no judgments about the relative prospects of individual sectors.

§ Lord Peyton of Yeovil
My Lords, does that, or does it not, mean that the Government agree that, as we are an island living by our trade, the existence of an adequate shipbuilding industry is desirable? Secondly, can my noble friend the Minister say whether the Government have considered the impact upon the north-east economy, already not that strong, of the demise of Swan Hunter?

Earl Ferrers
My Lords, my noble friend should not read into my Answer whether or not the Government agree that, as we are an island economy, a shipbuilding industry is desirable. Of course it is desirable. However, we live in an increasingly circumscribed world and there are others who are producing such ships at a time when they are required less than they used to be. In the 1930s, we had 30 per cent. of the world market for merchant 477 ships. However, we now have only 1 per cent. It is our desire that our shipbuilding industry should be competitive. To that end, we have complied with the OECD's agreement which requires the elimination of subsidies, establishes an anti-dumping code and controls credit terms. Altogether, that is a good deal for the United Kingdom. We hope that our shipbuilding industry will be able to benefit from it.

§ Lord Dean of Beswick
My Lords, is the Minister aware that the shipbuilding industry is rather a special case, bearing in mind that our history as a seafaring nation shows that we have only survived on the basis of being able to build ships and have men to sail in them when there has been a necessity to defend the realm? In today's very uncertain world, are we not in a most dangerous situation where we are almost down to nil capacity? What will happen if—God forbid!—war breaks out again? Who will we turn to on such an occasion to build ships for us?

Earl Ferrers
My Lords, I understand the concern of the noble Lord, Lord Dean of Beswick. However, we are living in a competitive world. There is no way in which a government can subsidise an industry fairly when such action would put at risk other organisations which might also be competing. In fact, we do participate in some form of subsidy which was given by the Seventh European Community Directive. That enables our shipbuilding industry to be subsidised where it is subject to unfair competition from non-European Union countries. On the whole, we must recognise the fact that all our industries have to compete in the world market. We hope that they will do so.

§ Baroness Oppenheim-Barnes
My Lords, will my noble friend the Minister confirm that, far from fading away, carriage by sea is still our third largest invisible export?

Earl Ferrers
My Lords, I am sure that my noble friend is entirely right in her observation, but I would need to do a little checking before I could say that with great certainty. However, I have no doubt that my noble friend must be correct.

§ Lord Peston
My Lords, does the Minister recall that his right honourable friend the President of the Board of Trade referred not long ago to intervening before breakfast, luncheon and dinner to save British industry? In the light of what has happened to the British shipbuilding industry and, more generally, what has been said about British industry, can the noble Earl interpret what his right honourable friend said?

Earl Ferrers
My Lords, if I may say so, I think that it is perfectly simple. My right honourable friend will intervene on behalf of British industry and he has done so in agreeing with the OECD agreement that there should not be anti-dumping—at the moment it can be construed that there is; that there should be credit terms which are controlled; and that there should be the elimination of subsidies. But the fact is that there are some parts of the world, particularly in the Far East, where there have been considerable increases in 478 capacity. Korea has said that it will double its capacity. That is fine provided that it does not dump its ships on the world market.

§ The Lord Bishop of Newcastle
My Lords, may I ask the noble Earl a related question touched on by the noble Lord, Lord Peyton? Does the Minister see any prospect of employment for thousands of shipyard workers on Tyneside who are eager to use their skills?

Earl Ferrers
My Lords, I understand the concern of the right reverend Prelate the Bishop of Newcastle, but there is no advantage in keeping alive an industry which is unable to compete—if there is such an industry—simply by virtue of trying to create jobs. We have to create jobs in that area, if that is necessary, which will enable people to provide goods and services which are required, and without subsidy. That is something which the Government have been keen on doing and we have been successful in obtaining considerable investment in the north east from other countries.

§ Lord Peyton of Yeovil
My Lords—

§ Lord Sefton of Garston
My Lords, may I ask the Minister—

Noble Lords
Order!

The Lord Privy Seal (Viscount Cranborne)
My Lords, I am very much in the hands of the House. I am aware that we have one more Question and six more minutes or under in which to ask it. I wonder whether your Lordships would be prepared for the noble Lord, Lord Peyton, to wrap this up and for us to move on to the next Question.

§ Lord Peyton of Yeovil
My Lords, will my noble friend ask his right honourable friend the President of the Board of Trade to take another careful look at this, particularly as there is a danger of making these judgments on a very short-term basis? The shipbuilding industry raises very long-term problems and I hope that my noble friend will look at it in that light.

Earl Ferrers
My Lords, I understand my noble friend's concern that shipbuilding is a long-term business. He is perfectly right; it is. However, I suggest to him that it is impossible to keep going by artificial subsidy a number of businesses which one may feel are in the long-term interest, even if in the short term they are unable to be viable. Our concern is that they should be viable. There is a great deal of evidence to show that those shipbuilding industries which are now involved with shipbuilding have done a great deal to make themselves viable.