§ Dr. Godmanasked the Secretary of State for Trade and Industry whether, before giving his consent to the sale of Scott Lithgow Ltd, he sought any assurances from Trafalgar House about future levels of apprenticeships and youth training at Scott Lithgow.
§ Mr. Norman LamontThe agreement between British Shipbuilders and Trafalgar House provides that Scott Lithgow will continue to employ all apprentices undergoing their apprenticeships at the time of the transfer, and to make available the relevant facilities to enable them to complete their apprenticeships.
§ Dr. Godmanasked the Secretary of State for Trade and Industry if he will give a detailed breakdown of the sum of £71 million stated by the Minister of State Department of Trade and Industry, 28 March, Official Report, column 289, to be the net cost to British Shipbuilders of the sale of Scott Lithgow to Trafalgar House.
§ Mr. Norman LamontThe net cost of £71 million for the disposal of Scott Lithgow has the following main components.
457W
£ million Costs to British Shipbuilders Reconstruction of company as a continuing operation, including provisions for retraining and meeting net current liabilities, after writing off past losses (78.0) Loan from British Shipbuilders to Scott Lithgow to cover outstanding claims (1) (6.1) Other items (6.4) Gross Cash cost (90.5) Additional Item Non-cash item: write down of some of Scott Lithgow's debtors (7.0) Gross cost (97.5) Income to British Shipbuilders Purchase price to be paid over 3 years 12 Repayment of loan re outstanding claims (see (1) above) 6.1 Repayment of outstanding loan (in 3 years time) 8 26.1 Net cost (71.4) Note Costs in 1983–84 Gross cash cost (90.5) less lst instalment of purchase price 3 Net cost in 1983–84 (87.5)
§ Dr. Godmanasked the Secretary of State for Trade and Industry whether, before giving his consent to the sale of Scott Lithgow, he sought any assurances from Trafalgar House about the disposal of those parts of the site not required for the company's future operations.
§ Mr. Norman LamontThe Government have been assured by Trafalgar House that if it establishes, after investigation, that there is land surplus to the requirements of the Scott Lithgow business, then Trafalgar House will co-operate with the Scottish Development Agency and the Scottish Office to pursue other economic uses of this land to the benefit of Inverclyde.
§ Dr. Godmanasked the Secretary of State for Trade and Industry whether the sum of £12 million to be paid by Trafalgar House for the acquisition of Scott Lithgow includes the value of the fabrication already completed by Scott Lithgow and its subcontractors in connection with the BP contract 2001.
§ Mr. Norman LamontThe sum of £12 million is the consideration paid by Trafalgar House in respect of Scott Lithgow after the reconstruction of the latter's balance sheet. That reconstruction takes account of the fabrication already completed in respect of hull 2001.
§ Dr. Godmanasked the Secretary of State for Trade and Industry whether the sum of £12 million to be paid by Trafalgar House for the acquisition of Scott Lithgow includes the value of the fabrication already completed by Scott Lithgow and its subcontractors in connection with the Britoil contract 2002.
§ Mr. Norman LamontThe sum of £12 million is the consideration paid by Trafalgar House in respect of Scott Lithgow after the reconstruction of the latter's balance sheet. That reconstruction takes account of fabrication458W already completed in respect of hull 2002, and of the extensive remedial work required on some of that fabrication.
§ Mr. Millanasked the Secretary of State for Trade and Industry what arrangement has been made for the completion of the BP contract at Scott Lithgow; what the penalties are for the delay in completion; and how much of the cost is being met directly on indirectly by his Department.
§ Mr. Norman LamontBritish Shipbuilders and BP are discussing the problems which led to the issue of a notice of cancellation on the BP rig being built at Scott Lithgow. Until these discussions are complete, it is not possible to give an estimate of the full extent of any penalty payments, or to say where responsibility for meeting them will lie. In the meantime work towards the completion of the rig is continuing.
§ Mr. Millanasked the Secretary of State for Trade and Industry if he will give a breakdown of the figure of £71 million stated by the Minister of State, Department of Trade and Industry, 28 March, Official Report, column 289, as being the cost to the Government if Scott Lithgow had been closed.
§ Mr. Norman LamontI told the House on 28 March at column 289 that the net costs to British Shipbuilders of the Trafalgar House deal were broadly equal to the cost of closing the yard. That statement was based on the following estimate of the cost of closure.
£ million Estimated Costs to British Shipbuilders Cost of meeting net liabilities of company in the case of closure, including cancellation costs of Britoil rig (73) Redundancy costs to British Shipbuilders (6) Other costs, including estimated extra costs on existing contracts as yard is run down (7) (86) Estimated Income to British Shipbuilders Forced sale of fixed assets 4 Sale of equipment on Britoil rig 15 19 Net cost (67) In addition, however, closure would have led to substantial wider costs to the taxpayer in the form of redundancy costs falling on Government, unemployment benefit costs, and lost tax revenue.
§ Mr. Millanasked the Secretary of State for Trade and Industry how much of the figure of £125 million in the spring Supplementary Estimates Class V Vote I in respect of British Shipbuilders related to Scott Lithgow; and whether any modification in that figure is now necessary to take account of the figures stated by the Minister of State, Department of Trade and Industry on 28 March, Official Report, columns 289–90.
§ Mr. Norman LamontAll of it. In addition to the £88 million cash cost of the deal in 1983–84, BS also forewent stage payments from Britoil issuing a cancellation notice in December 1983. This shortfall in cash flow would of course have arisen this year whether the yard had been sold or closed, or the contract renegotiated.