HC Deb 27 June 1988 vol 136 cc22-3W
Mr. Cran

To ask the Chancellor of the Duchy of Lancaster if he will make a further statement on arrangements for the sale of the Govan shipyard by British Shipbuilders.

Mr. Kenneth Clarke

I have today approved, on behalf of the Government, the terms of the sale of the Govan shipyard by British Shipbuilders to a subsidiary of the Norwegian Group Kvaerner Industrier. Kvaerner has secured an order for two gas ships with the option for its clients to confirm orders for two further ships later this year. I have agreed to offer intervention fund support within the limits permitted by the European Community sixth directive for all these orders. Once secured these orders would provide work for Govan well into 1992.

Agreement with Kvaerner brings the promise of a secure future for the yard for which BS has not been able to win further orders beyond the two ships for China announced early last year. Kvaerner has confirmed its intention to transfer its ship technology to this country and to develop Govan as its centre for gas ship technology in support of activities worldwide. There is the possibility of further investment in future by this major engineering group.

Subject to the approval of the Euopean Commission and agreement on certain outstanding matters of detail, my right hon. and noble Friend therefore intends to give his consent for the disposal of British Shipbuilders Govan yard to Moss Rosenberg Verft, the shipbuilding subsidiary of the Norwegian group Kvaerner Industrier. I have received formal application for consent from the chairman of British Shipbuilders. The board of Kvaerner Industrier approved the broad terms earlier today.

Completion is planned for the beginning of August to allow Govan to start under new ownership after the annual summer holiday. Kvaerner will then pay £6 million for the yard, while BS will meet certain agreed costs. These include costs arising from the completion of the present work load, which BS will subcontract to Kvaerner, costs of redundancies, and a contribution to a programme of capital investment Kvaerner plans to undertake to restructure the yard. Certain payments will be made on completion, others over time as expenditure is incurred, giving a net cost of disposal to British Shipbuilders of up to £25 million valued at completion.

The liabilities of Govan Shipbuilders Ltd. will remain with the company and therefore with BS. Nothing is being written off. The assets and work force will shortly be transferred into a new subsidiary of British Shipbuilders, which will become Govan Kvaerner Ltd. on completion.

The trades unions representing the work force have already agreed to proposals from Kvaerner for a reduction of up to 500 in the number of employees and to certain changes in the yard.

I welcome the achievement of this agreement, as I am sure will the people of Scotland in particular. I look forward to welcoming Kvaerner to these shores once the final hurdles have been cleared.