HC Deb 04 August 1976 vol 916 cc795-6W
Mr. Gwilym Roberts

asked the Secretary of State for Industry whether he will make a statement about Cammell Laird Shipbuilders Limited.

Mr. Kaufman

In 1972 the Government decided to make available up to £20 million in direct assistance under Section 7 of the Industry Act 1972 to enable Cammell Laird Shipbuilders Ltd. to strengthen its position and to carry out a modernisation programme then estimated to cost £14 million, of which £5 million would have come from statutory grants. The company has traded profitably for the four years since then and there have been no bank borrowings to date. The company's order book extends to the end of 1978 with capacity substantially utilised through 1977.

Difficulties with the modernisation programme led to the appointment of a new contractor. As a result of this and of inflation, the estimated cost of the programme has risen to £32.5 million of which statutory grants should provide £6.5 million. Contract claims against the original contractor are being pursued. It will be understood that I cannot comment on them. Depending on their outcome the company, in order to complete the programme, may need up to a maximum of £6 million beyond the £20 million already committed, all of which will now be applied to the programme.

My Department has conducted a thorough review of the modernisation pro- gramme and of the company's prospects and has consulted the Organising Committee for British Shipbuilders. The Organising Committee has formally decided that it would wish to complete the programme, and has accepted responsibility for meeting expenditure on it incurred after the vesting day for British Shipbuilders.

To cover the contingency that before the company vests in British Shipbuilders expenditure on the programme may exceed the £20 million already committed, I have decided to provide the company with further direct assistance under Section 7 of the Industry Act 1872 up to a maximum of £6 million if this should be needed to defray the costs of the programme up to vesting day.

In addition, to enable the company to meet short-term fluctuations in its cash requirements, I have agreed to guarantee under Section 7 of the Industry Act 1972 a bank overdraft facility for the company of £3 million.