§ Mr. Selbyasked the Secretary of State for Industry whether he intends to make any alteration in the financial structure of Govan Shipbuilders Limited before the company vests in British Shipbuilders; and if he will make a statement.
§ Mr. KaufmanThe then Secretary of State for Trade and Industry told the House on 30th June 1972 that the Government would provide adequate financial support for Govan Shipbuilders Ltd. for a period of five years or until it attained commercial viability if that was earlier. In August 1975 I announced an extension of this period of support to the end of 1979 subject to certain conditions. The House was informed that the Government's financing of the company would take the form recommended by Hill Samuel; viz., equity for fixed capital, loan for working capital, and grants for losses. As a matter of convenience the greater part of the Government's investment has initially taken the form of loans with the intention that these should in due course be converted into the form recommended.
To meet the intention previously announced to the House I propose before the company passes to British Shipbuilders to 218W convert £14 million of the outstanding loan to shares, so that the Government equity investment will equal the direct assistance given to the company for acquision of fixed assets; to convert the remainder of the loan at present outstanding of £9.25 million to grant to meet past losses. I shall also pay to Govan Shipbuilders as grant the remainder of its unpaid losses as at 30th June 1977, some £6.6 million.
The sum to be paid to Govan will exceed the sum currently provided in Estimates and approval for a Supplementary Estimate will be sought in due course. The conversion of loan to equity and to grant, although involving no new public expenditure, will also necessitate Supplementary Estimates.