§ Mr. Tom King
The Government required that Harland and Wolff's tender should be unsubsidised and comprehensively costed. Harland and Wolff's tender met that requirement. This has been confirmed by an independent and internationally respected management consultancy which reviewed Harland and Wolff's bid.
While the Government are satisfied that Harland and Wolff's bid is free of subsidy and comprehensively costed we intend in addition to put the company on a similar footing to a private sector company. In placing the AOR order with Harland and Wolff Ministers have specified that Harland and Wolff's performance and costs in building the AOR will be subject to a stringent system of actual financial and performance controls monitored by independent assessors. Under this:
- (1) If Harland and Wolff incurs higher costs than expected in building the vessel, the extent of the overrun will be netted directly and automatically off subsidy available for merchant shipbuilding with a direct effect on the company's ability to secure further work in the yard;
- (2) If in addition those higher costs exceed 5 per cent., then Harland and Wolff will not be permitted to bid for Ministry of Defence contracts until it brings its costs again below that margin.
- (3) Should extra costs exceed 10 per cent. there will be an immediate review, by Ministers, of both alternative arrangements for completing the AOR contract and of the future of Harland and Wolff itself.