§ Order for Second Reading read.
§ 4.13 p.m.
§ The Minister of Technology (Mr. Anthony Wedgwood Benn)
I beg to move, That the Bill be now read a Second time.
This is a short Bill and, in other circumstances, the House might not want to devote a great deal of time to it, but, in view of the public interest in the shipbuilding industry at present, I hope that you will allow me, Mr. Speaker, to present it by making a report to hon Members about the progress of the industry, which has real problems but is making real progress, and, therefore, to set the Bill in that wider framework.
First, I should deal with the Bill itself. which, like its immediate predecessor, the Shipbuilding Industry Act, 1969, is of great importance to the industry and to a lesser extent important to its ancilliary supplier industries. Section 7 of the Shipbuilding Industry Act, 1967, gave the Minister power to give guarantees to facilitate the financing of orders for ships placed by British owners with British shipbuilders. The Bill would simply and solely raise from £400 million to £600 million the statutory ceiling on the guarantees which the Minister can give. This is part of a rotating fund.
As I explained when I moved it, the main aim of the original Bill in 1967 was to prevent British shipowners being forced to place their orders abroad solely to obtain better credit terms. British owners can take advantage of other countries' export credit, but are not eligible, of course, for British export credit arrangements. As our shipbuilding industry enjoys no natural protection, and, in the absence of a home credit scheme offering broadly similar terms to those available abroad, British shipowners would be fighting a losing battle for the custom of the British owner.
Shipbuilding does have a number of difficulties. First, there is no tariff protection for it. It is genuinely a wholly international market, although not by any means a perfect market, and this 1471 makes the shipbuilding industry's need for a home credit scheme quite unique. Practically all the other shipbuilding countries have such schemes and I will be referring to other forms of aid abroad. Without such schemes, there would be a ridiculous situation in that the industry would be competitive only in the export market, although our home market is one of the largest in the world.
When I introduced the previous amending Bill, I hoped that the £400 million would last the life of the Shipbuilding Industry Board. I was too pessimistic, in the sense that the orders since then have taken us above that top. This therefore provides a natural moment to pass this Bill, against the background of a very big world shipbuilding boom.
The House may know the figures, but if not, perhaps I might give them. Net new world orders rose from 18.3 million gross tons in 1965 to 25.4 million in 1968 and 29.5 million last year. Orders for United Kingdom registration have risen even more spectacularly. The total order book for United Kingdom registration at the end of 1968 was 6.8 million gross tons, worth £618 million. The present order book is 9 million gross tons, worth £900 million. The net new orders secured by the industry are 2.5 million gross tons in 1968 and 2.1 million last year.
These figures over the last year can be compared to average net new orders over the period 1960–64 of 1 million gross tons per year. This is a substantial increase in new orders.
§ Mr. John Rankin (Glasgow, Govan)
I was interested in my right hon. Friend's reference to a world boom. I wonder whether he read the reference in The Times yesterday to the serious state of inflation? Can he relate the two? Is the boom part of the inflation or is the inflation part of the boom?
§ Mr. Benn
I aim to deal with some of my hon. Friend's points during my speech. In so far as I fail to do so, he can intervene to ask me to do so, and in so far as I fail again, he can raise the matter with my right hon. Friend the Paymaster-General, who will be winding up. I am just trying to set the Bill against the background of a very 1472 big boom in world shipbuilding and an increase in new orders for the industry.
These new orders have covered the whole spectrum of shipping—the giant tankers, container ships oil-drilling exploratory ships, as well as ships of traditional shape and size. The price of ships has also risen considerably, which, in part, answers the question of my hon. Friend the Member for Glasgow, Govan, (Mr. Rankin).
It is clear—clearer, curiously, than when we first debated this matter some years ago—that the ship market expansion is real and likely to continue. This further £200 million which I am bringing before the House is expected to last during the life time of the board. My office has kindly put on my brief that it is expected " with confidence " to last through the lifetime of the board. I struck out " with confidence " because this is the third time that I have come forward with a Bill of this kind.
The Bill does not change the requirements of the Shipbuilding Industry Act, in that, before I give guarantees, the S.I.B. must recommend them to me and must take into account what the shipbuilder is doing about the reorganisation of resources. This is not new, but I would remind the House of it. Before the board can consider recommendations, the shipbuilder has to tell the board about his investment plans, changes in organisation, expected profitability, industrial relations and so on. This is part of the general procedure which has been adopted to see that the shipbuilding industry policy has been directed, as far as possible, to strengthening the industry in the long term.
This check list on progress made is one of the means by which the board maintains contact with the industry on these points. The power not to recommend by the board is a sanction of last resort and may have played some part in encouraging the reorganisation which everyone recognised was necessary.
Some questions have been put about the Shipbuilding Industry Board and whether its life should be extended. When I introduced the Bill I made it clear that a decision on extension was one that we would have to consider nearer the time. I tell the House frankly that one of the 1473 reasons why I was extremely anxious about the future of the board was that the whole object of this exercise was to get a short, sharp reorganisation within the industry, not for the industry to feel that this was something in the nature of a permanent support programme.
Therefore, the sense of impending dissolution of the beard which was built into the Act was very much part of the policy. However, having now got near to the expiry of the life of the board and considering the problems of the industry and the progress made, we have decided, after consulting the interested parties, that it would be right to extend the life of the board to the end of 1971. I hope that I will carry the House with me in this. I will be making the necessary Order under Section 9 of the Shipbuilding Industry Act, 1967, for an extension of the board's life.
Other questions have been asked during the last few months about the credit aspect. My right hon. Friend the Paymaster-General, speaking in the House on 25th January, and explaining the Government's intention to introduce the present Bill, undertook to review the continuing need for a home credit scheme. This review is not yet completed, and whereas this £200 million will go some way to meet the immediate position it must not be confused by the House with any decision about a permanent scheme which will have to be reached later.
Section 7 provides for the limit to bite on the liability outstanding at any one time and this envisages a revolving principle because I am allowed under the Act to undertake further guarantees as repayments are made to the banks under the existing guarantees. The repayments, which only began to trickle in some time after the scheme came into operation, are expected to reach £13 million this year and will tend to rise, although I am not suggesting that this is a totally self-financing scheme. We are getting some benefit. We want to have a little more experience about the reorganisation and consider the proper procedure under the scheme when the S.I.B. has been dissolved in due course, before we come to a final view on the permanent scheme.
It would be wrong to present the Bill to the House without making a special 1474 reference to the London and Scottish clearing banks who have agreed to help the shipbuilding industry by making credit available under the scheme at the fixed export credit rate while the long-term review is carried forward. The banks have recognised the valuable balance of payments contribution made by the industry in building British ships which would otherwise have been built abroad. I would also like to express my thanks to the Ship Mortgage Finance Company, whose advisory committee has agreed from the outset to advise me on the determination of the security requirements and to act as my agent in the negotiations on the security and legal documentation with the shipowner.
I should also tell the House, although those who follow these matters will know it, that no cost will fall on the Exchequer unless there is a default by the shipowner and the security proves insufficient to cover the loan. Moreover, the shipowner in these cases pays the fees to cover the legal and administrative costs and there has been no case of default so far. If we are as fortunate in future as we have been hitherto with our scheme, reaching £400 million, this will be a very satisfactory operation.
That, broadly, is all I need to say in introducing the Bill. I will now turn to the state of the shipbuilding industry. I recognise that there will be many hon. Members on both sides who may want to refer to particular points about the firms in their own areas and my right hon. Friend the Paymaster-General will do his best to deal with them.
§ Mr. Stanley R. McMaster (Belfast, East)
On a point of order. I apologise for interrupting the right hon. Gentleman, but it would be for the convenience of the House if you would rule, Mr. Speaker, whether it will be in order for us to follow the right hon. Gentleman and to speak a little wider than the actual Clauses of the Bill during the debate.
§ Mr. Speaker
My first impression is that it would be in order. The Bill increases the amount of money from £400 million to £600 million, which is a 50 per cent. increase; and £200 million is a lot of money. I think that the debate is fairly wide.
I have never listened to a Ruling with greater interest, Mr. Speaker, because I was just in the process of packing up my speech. I have never known an hon. Member take such a risk in asking for a Ruling from Mr. Speaker at a time when everything looked as though it was going all right. Still, he has taken the risk and with those memorable words of yours, that £200 million is a lot of money, we can proceed.
What I really wanted to say about the industry generally is that it is against this background, of a world market continuing at a high level, which has really in a sense doubled as compared in the 1960s, that the industry has had to face this challenge, while reorganising. I do not want to go over old history. Without quoting Geddes, or stirring any old memories—and everyone here has memories of the industry—the fact is that the industry has been reorganising and is different from what it was in 1966. Therefore, this period of boom and many of the problems which are not wholly resolved stem from the fact that these two processes had to go on together. In the post-Geddes years the industry missed out on the flow of orders that was beginning to pour out from customers from all over the world.
For example, in tonnage terms British industry took only 2.2 per cent. of new world orders in 1966 and only 5 per cent. in 1967. This reflected the extent to which the industry, before reorganisation, had not been able to take advantage of this growth in world demand. But in 1968 and 1969 there was a revival and British yards won 9.8 per cent. and 7 per cent. in those two years. The British order book at the end of 1969 amounted to £600 million in merchant ships. In my experience of the House, and I dare say that others will feel the same, the exchange of statistics across the Floor in a political spirit does not often illuminate the problem. But I am only trying here, without drawing particularly controversial conclusions, to indicate that the problem of the industry was that world demand was rising very rapidly.
The industry was in a difficult position which is why Geddes was set up and reported. Part of the difficulties stemmed from the fact that the reorganisation began rather late in the context of the increase in the world order position. Out- 1476 put in 1968 and 1969 as a result of these two factors inevitably fell behind, because of the low level of orders placed in 1966 and 1967. We often hear of very fast construction times measured in weeks and months, but these figures relate only to the construction or assembly of very simple ships and even these sometimes refer to hull structures. The period from order to delivery is much longer, particularly if the order books are full.
The recent level of output, which has been low, reflects this low level of ordering in 1966–67 and it is also, looking forward more optimistically, an explanation of the higher figure of completion, something like 1½ million gross tons or more, expected for the next two years, which is a substantial rate of completion.
Having said that, there is obviously disappointment—and this has been mirrored in Press comment—that the output has been rather slow to respond. I say candidly that the effects of reorganisation and of the productivity agreements have been slower than many really may have expected or hoped. There are favourable factors, for example, the new steel-working facilities at Harland and Wolff, which, when fully operating, in association with the new dock, should have a marked impact on the tonnage figures because this somewhat unsatisfactory form of measurement is so susceptible to changes in the number of giant tankers or bulk carriers produced. There have been other less spectacular production improvements which will also come on stream, for example, Appledore and Robb Caledon.
Possibly as important in considering the state of the industry today is the fact that the reorganisation, coupled with the high level of orders, has brought about an increase in the number of yards that have taken multiple ship orders, or orders for similar ships from different owners. This is not limited to the case, although it is the most outstanding case, of the SD 14 programme at two Wear yards. If there is a single fact which is important to shipbuilding productivity and makes better management easier to achieve it is the run of similar or identical ships produced by yards specialising in that type of ship.
Although it may have been attractive in the old days for yards to be able to say, 1477 " We can provide you with anything you want " it is absolutely fatal today for, at any rate, a single yard to boast that it can produce a wide range of ships. If one tried to maintain this position one would be striking at the security of employment of the men employed in that yard.
The challenge of this reorganisation, which is not merely a matter of company structure—although that can be important—but which very much concerns market and production policy and the mix of skills required in a yard, has not been without its problems.
Here one must distinguish between what one could call the special and different problems obviously affecting such undertakings as Upper Clyde Shipbuilders, of which the House has heard a great deal and upon which further reference may be made in today's debate, and which is now faced with the necessity of its 3,500 redundancies of which the House knows, or Harland and Wolff, where the basic problem is to achieve a profitable use of the new facilities as soon as possible. Anyone who has followed the Harland and Wolff problem will recognise that to get a good throughput of steel at the same time as one is building a big dock on the premises presents great difficulties.
Then there is the Cammell Laird problem of the transition to a specialised type of merchant shipbuilding, which has created problems inevitably for management.
Wherever one looks at the British shipping industry, in which every yard one visits, one can see how the reorganisation, just by merging and the redeployment of resources and the re-equipment where it has occurred, has imposed great strain on management and the people in the yard. It is easy for us, holding debates in the very airy atmosphere of the House of Commons, with a bright sun shining and controlled temperature, to forget that the people grappling with this problem of reorganisation have a difficult job on their hands. The occasions where people have " blown their top " in shipbuilding about each other, or about shipbuilding if they have not been in the industry, have always been occasions when unfair and foolish things have been said. I know that the House, and par 1478 ticularly hon. Members with shipping constituencies, want the debate to be conducted against a background of their real experience of what is involved in making this big change in an old and distinguished industry.
There have been other cases where shipbuilders are facing, or have faced, difficulties. The special case of Austin & Pickersgill, which I have mentioned, is one which is on the good side. Others, having obtained a good order book, are having difficulty in increasing productivity, more or less for the reasons I mentioned, and are finding that the fixed price they had to quote in negotiation, often as long ago as 1967, made insufficient allowance for the increases in shipbuilding costs which, as the steep rise in world ship prices shows, are not peculiar to this country.
This is another aspect of the problem of the increase in price: the combination of fixed prices, without escalation clauses, with a long period from order to delivery, and also the accountancy convention of making provision for losses as soon as they are identified, which may mean that company results can look particularly bad in a single year. So, while not wishing to under-estimate the problems which the industry still faces, it would be no service to the industry or those employed in it either to conclude—not that any hon. Members in the debate would do so—that the industry should be written off or, on the other hand, to go to the other extreme and demand massive further assistance for it.
I know that there is a special case for ship-repair, which really lies so far outside the terms of reference of the Bill that I do not think that any hon. Member would want Mr. Speaker or Mr. Deputy Speaker to broaden the range of the debate to cover the whole problem of ship-repairing.
At the same time, the relationship between shipbuilding and ship-repairing is so close that it would be wrong not to say something about the problems, particularly in respect of a special case which has come to public notice, the Palmer-Hebburn case. Although Geddes did not cover ship-repairing and it lies outside the ambit of the board, let alone the Bill, discussions are in progress, contact has been established at a number 1479 of levels, and the Department is as interested in trying to make a contribution as far as it can—and these things are never easy—to a solution of this problem as it has done with cases like Furness, where we have been able to help.
Our reason is that underlying our whole approach to this industry lies our concern for the people who work in it.
§ Dame Irene Ward (Tynemouth)
My point arises out of what the Minister was just saying. I was wondering whether ship-repairing was not included, because, for example, on the Tyne Smiths Docks are in a ship-repair yard and are in the consortium of the Swan Hunter group. It must, I think, although I may be wrong, come into the question of the money which we are arguing on the Bill.
§ Mr. Benn
I think that what the hon. Lady says, in common sense suggests a concern with both. Shipbuilding and ship-repairing are so close, and the possible use of facilities under certain circumstances across that frontier makes it relevant. But one does not want to base it simply on the fact that there is a ship-repairing capability within a shipbuilding firm, because that would make it too narrow. Although this was not specifically referred to in Geddes, we know that the association has looked at it. The council will be making a comment on it and I want the House to know that the matter is not out of our minds.
Finally, there is no reason why this industry, operating in a world market which has been rising with surprising steadiness despite the earlier prediction of decline—and I was cautious some years ago—should not be successful provided that premature judgments are not taken before recent changes have had time to be fully implemented. If ever an industry needed time to reshape itself, it is the shipbuilding industry.
This is the background against which the Bill will be debated. It is not a Bill to provide further grants or loans for the industry, to give it an easier ride. On the other hand, it provides what experience abroad, as well as in the United Kingdom, shows to be necessary if ship orders are not to go abroad simply to obtain cheap credit. There may be many who would prefer to see a situation in 1480 which there was no such competition for other countries' orders by way of favourable credit.
A lot of countries with shipbuilding industries recognise that the present pattern has unattractive and undesirable features and does not benefit anyone very much. We have played as positive a part as we can to bring about the international understanding reached through the O.E.C.D. last year with the maximum credit terms for ships' exports. When I see what sort of support is made available abroad in one form or another, it is quite remarkable. The Japanese have a home shipbuilding programme of construction on the basis of credit on terms more favourable than the international understanding agreed minimum export credit rate for ships and the E.E.C. has a 10 per cent. subsidy. Italy pays more and France rather less, although France has a cost escalation provision and Sweden has some other arrangement.
I can understand the situation because we are all under the same sort of pressures and concerns. There is a great deal to be said, if we could only do it, for moving forward towards a better international understanding in this direction. The people who have done best out of all this are those in the shipping industry, because over the years they have been able to get ships at a price well below their cost of production from many countries. This, of itself, does not make sense.
So this is the long-term objective which we have. Unfortunately, it really is not practicable to reach international agreements covering the whole range quickly, but we are playing an active part and, meanwhile, it is necessary that credits for home ship orders should continue to be made available in the interests of the industry and of the national balance of payments.
Having, in this brief tour d'horizon of the shipbuilding industry, identified some of the real problems, I make it clear that we ourselves think it right to review and examine the trends and tendencies and policies and prospects in the industry in the 1970s. My right hon. Friend the Paymaster-General is responsible within the Department for looking after shipbuilding, and I have agreed with him that we should look ahead and consider the state 1481 of the industry and the possible international developments.
This is the proper time for that, four years after Geddes and after we have had experience of the Shipbuilding Industry Board and in anticipation of its demise after its prolonged life. I believe that we have achieved something, with the good will of both sides of the House over the years, in contributing towards the recovery of this important industry.
I know that there is much that can be said in sharp debate on this subject today if hon. Members choose to do so, but I hope that the Opposition, in their comments. will not forget that next Wednesday they have chosen a debate on unemployment, and I hope that, in the speeches they make today on the shipbuilding industry, they will say nothing that would be incompatible with what they will be saying next week when we discuss the level of unemployment.
§ 4.24 p.m.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
I must first declare, as is usual, a remote interest in that I am a director of business which is owned by a ship builder, although it does not build ships. I will take up the broader review which the Minister of Technology went into first and then come to the more detailed questions of credit.
I agree with the right hon. Gentleman that there are grounds for optimism about the shipbuilding industry. I thought that his general review of the position was sound in many aspects, although perhaps he did underplay some of the real and serious difficulties which are facing shipbuilding at present. It could be said, judging from the newspaper reports and the financial results of the shipbuilders, that the industry is going through a very sticky patch. His approach today was much wiser that the approach of starry-eyed optimism which existed in the industry in Geddes days, when we thought that we had the answer to everything. He had reckoned without the physical and human difficulties which lay ahead. The success of the industry is still far from what we would like it to be and indeed what we hope it will become in future.
There is the serious worry of the balance of payments aspect. I have never understood how the right hon. Gentleman managed to claim, in his speech on 1482 the Address in reply to the Queen's Speech last November, that " great balance of payments benefit " was being conferred by the great success of the shipbuilding industry. We had figures only this week showing that its deficit on the balance of payments was £19 million in 1967, then £78 million in 1968 and £150 million in 1969. These are large deficits for a manufacturing industry in which one would hope that this country could at least break even if not make a surplus.
There are also these worrying figures about the declining share of world orders we have been taking. I know that world orders have increased so sharply that we have been able to increase our orders, and the House is glad that that is so. Nevertheless, the percentage we are taking has been dropping steadily, apart from year to year fluctuations, and it would have been a happier situation if we could have maintained our percentage. It has dropped from about 10.4 per cent. in the first half of the 1960s to about 7.2 per cent. in the second. If that had not taken place, the situation would have been very much better.
Despite the world boom, the profits of the industry give great cause for alarm because, without profits, investment in the future, and the money saved up to get through sticky patches are inadequate, and I think that the right hon. Gentleman's analysis of some of the factors which went wrong was perfectly reasonable. But there are other factors, too, I regret to say. Leaving aside the three big groups which have made big losses —U.C.S. Ltd., Harland and Wolff and Cammell Laird—there are some very low profit figures in many other firms in the industry. The firms which are making satisfactory profits are very few. Lower Clyde Ship Builders, Austin and Pickersgill, Vosper-Thorneycroft and Appledore are the only ones to make a healthy profit. These are all yards which resisted mergers, it is worth pointing out —although it is a party point—which were pushed by the Government through the Shipbuilding Industry Board. They resisted what they might otherwise have done.
§ Mr. Albert Booth (Barrow-in-Furness)
In fairness, would not the hon. Gentleman agree that Camell Laird, Harland and Wolff and Vickers also resisted 1483 mergers and have no startling profits to show?
§ Mr. Ridley
If Harland and Wolff and Cammell Laird had merged we would have had an almighty loss on our hands which would have been more difficult to deal with than the present situation.
Although some reorganisation has taken place in the industry, it has been far from the lines which Geddes laid down and to that extent the point made by the hon. Member for Barrow-in-Furness (Mr. Booth) bears me out. It is probably unwise to force shotgun marriages on these various yards, which know where their interests lie, and perhaps the most successful groups in the country are the two which resisted forced mergers. They knew best.
§ Mr. William Small (Glasgow, Scotstoun)
The hon. Gentleman claims that there was coercion for mergers to take place, but I know of no such case. Surely they were all on a willing seller/willing buyer basis.
§ Mr. Ridley
There was coercion in the sense of threatening to refuse permission to borrow money under the provisions of the Shipbuilding Industry Acts through the Shipbuilding Industry Board unless certain mergers took place. Admittedly, the coercion was not carried to extreme but pressure was put on many yards. We should cease doing this and credit should be made available as of right rather than as a result of following some action which might well do more harm than good as the case may be.
§ Mr. Benn
But surely this is exactly contrary to the advice of Geddes. Before we had the Geddes Report, credit schemes were available to the industry whether it was reorganised or not. It was the failure to reorganise that led to the drop in percentage of world orders from 50 per cent. in 1946 to 2 per cent. in 1966. There had been some form of subsidy with no reorganisation made part of the scheme.
§ Mr. Ridley
Let us be fair about this. These credits are, first of all, a subsidy to the shipowner, not the shipbuilder. They are secure forms of cheap finance so that the shipowner does not automatically go abroad for equivalent matching terms. To use the granting of subsidies 1484 or assistance to shipowners to chastise shipbuilders is a bad procedure. I am not saying that there should not be ultimate sanctions, but, following the mergers which the Government and the Shipbuilding Industry Board attempted to force, the evidence is that, while some were successful, quite a lot of firms which did not merge have had better results than they would have had had they merged.
§ Mr. Edward M. Taylor (Glasgow, Cathcart)
Before leaving the question of sanctions, would not my hon. Friend think it a valid point to observe that Lower Clyde Shipbuilders has not been terribly successful in obtaining naval orders from the Government since it declined to join U.C.S.?
§ Mr. Ridley
That is a case that I would not like to confirm or deny, not having information about where the Navy has or has not placed its orders. But that sort of pressure, if it has taken place, would be quite wrong. The ships should be ordered in the yard able to give the best service.
I do not propose to say much about the three big groups in difficulty. The right time to talk about them will be if the Government make specific proposals to help them. Incidentally, I wish that the money which has been given to Upper Clyde Shipbuilders could be legalised by means of the Bill which the House has been promised. It is wrong to make advances without giving the House the chance to debate the issue and to have a full report on the affairs of Upper Clyde Shipbuilders in a debate.
I find this particularly surprising since the Minister of Technology said in the shipbuilding debate on 23rd January, 1969The plain truth was that as the guarantees were being exhausted and there was urgent need to seek Parliamentary authority, and in view of my own reluctance, which I must confess, to proceed in anticipation of statutory authority, a practice which I very much deplore, I thought it proper to bring the Bill forward…"—[OFFICIAL REPORT, 23rd January, 1969; Vol. 776, c. 683.]So the right hon. Gentleman has gone on record as saying that he very much deplores the practice of spending money or taking action for which there is not true statutory authority. I therefore hope that we shall have the Upper Clyde Shipbuilders Bill soon so that we can discuss the matter then.
1485 The same applies to the other two yards in trouble—Harland and Wolff and Cammell Laird. There are many factors. The House is not in possession of the full facts and figures. We do not know what case has been put to the Government. We do not know how serious their plight is. We do not know how best they could be helped. Therefore, it would not be right for me to say what should or should not be done in either case unless the Government make full information available and put forward their proposals for us to comment upon.
From all this, it is clear that the industry should be examined again. It will not be the Prime Minister who will instigate a re-examination of the shipbuilding industry, because he will not have enough time to do it. But we on this side of the House feel that an examination to see what will be of the most help for the future would not be a bad thing.
Contributing to the poor results has been the big factor which the Minister mentioned, namely, that orders for ships now coming into the profit and loss accounts of shipbuilders were taken two or three years ago at very low prices. But ships for which orders were taken later than that, after the world market perked up, are also showing losses because the contracts on which they were taken were often on fixed price terms and there has been an escalation of costs far beyond what the shipbuilders foresaw or indeed what was likely on past practice, or what they could have obtained from the shipowners in view of the competition for the orders.
Since 1964, according to the official figures, the cost of materials has gone up by about 21 per cent. and the cost of labour has increased by 60 per cent. That is a very high rate of striking—60 per cent. in six years. But in the last few months there has been a further escalation of costs. There is some anxiety that even recently booked orders which appeared to be taken at profitable prices may well turn out to be not as good as had been hoped.
The same factors have hit ship-repairing, too. I agree with the Minister that we cannot have a debate about ship-repairing, now. But it is the Cinderella of the industry because it has had no help in the way of grants and loans and 1486 it has to meet the same rising costs and difficulties as the rest of the industry.
I am not against high and rising wages, but to be absorbed into a profitable business they must have two elements. First, there must be an element of predictability about them. It must be possible to make a fixed priced tender for two or three years ahead and to have a reasonable idea of what wage costs will be during that period. Secondly, no shipyard in world competitive conditions can pay higher wages than the productivity which it achieves allows.
There are several factors about this aspect of the scene which should cause the House concern. The escalation of shipyard wages has continued whether the industry was profitable or not, through boom and slump, and it was to some extent aided by the developments on the Clyde whereby people began to think that even if shipyards went bust there would be somebody to help and to save the business from ruin. There are stories on the Clyde that pressure has been put on shipyards to go bust because the Government would rescue them. I hope that that sort of attitude will not be encouraged by anything which happens in future because in the end all concerned must earn their own living.
§ Mr. Rankin
The hon. Gentleman, a responsible Opposition spokesman, says that shipyards on the Clyde have been encouraged to go bust. Could he give an example? Is he referring to Lower Clydeside or Upper Clydeside? Could he say specifically which shipyard ever received such encouragement, and when?
§ Mr. Ridley
The hon. Gentleman knows full well that the effect of the belief that there is a safety net under the shipbuilding industry and that no great yard can be allowed to go out of existence has encouraged people to try to get as much out of it as they can. I do not blame them. I am not making any allegations. But if the hon. Gentleman talks to any shipbuilder in the country he will know that the pressure for higher wages has been unabated by consideration of the profitability of the business, and that people believe that the Government will save the industry whatever happens. This is very unhealthy.
The retiring Chairman of Harland and Wolff made the same point. He said that 1487 as from 1st August labour relations in the shipbuilding industry suddenly became very much worse after a long and smooth passage. Yet what happened just before August?
§ Mr. W. E. Garrett (Wallsend) rose —
§ Mr. Ridley
May I answer my own question before I answer the hon. Gentleman's?
The Prime Minister ran away from his industrial relations legislation and it became clear that nothing at all would be done to intervene in a situation which, including the highest possible labour costs in estimates, still caused losses to be made on ships on which honest shipbuilders were trying to make a profit through the sweat, skill and brains of everybody in the yard.
There are still serious difficulties on the labour front. There are still restrictions on the entry both of apprentices and of retrained men. This is a nonsense in the development areas. There are probably vacancies for several thousand skilled men in shipbuilding on the North-East Coast, as the hon. Member for Wallsend (Mr. Garrett) knows. Yet there are 58,000 unemployed men in that region. The situation is the same on the Clyde and probably on the Mersey. How can there be so many vacancies for skilled men and at the same time such a large number of unemployed men? We have training centres and retraining schemes, and yet supply and demand simply do not match up.
Productivity is still not growing fast enough. Over-manning and inflexibility still exist in the industry. If the industry is to have the bright future for which we all hope then both sides of it—and I do not say that management is not guilty of imperfect performance in many areas —must try to clean up these blemishes and go ahead as hard as possible.
I am sure that the proposals which my right hon. Friend the Leader of the Opposition has put forward for reforming industrial bargaining and for trying to obtain fixed price contracts between management and men and making them enforceable have a real and dramatic importance in relation to the difficulties in the industry which I have been describing. The Prime Minister described the pro- 1488 posals as an attempt to drive down wages. If the Prime Minister knows how we are to drive down wages I should be grateful if he will tell us. It is not easy to drive down wages in the present climate. I do not think that my right hon. Friends know how to do it, nor have they the slightest intention of doing it. Institutionalising the bargaining system and getting wages on contracts in shipbuilding will help those who have to build ships on contract to deliver the goods and, I hope, also make a profit.
Turning to credit, I make no complaint that the Government have under-estimated twice how much this would be, because it gives us the opportunity again to debate this industry. It is surprising how much the Government have under-estimated the cost. No doubt, in a year or two, there will have to be another Bill, because I do not believe that this limit of £600 million will last for very long either. We are not quite clear how much is outstanding; how much has been lent, less how much has come back. We have always warned that the original £200 million would be too small and that the second £200 million would be too small. My hon. Friend the Member for Eastleigh (Mr. David Price) spotted this at the very beginning, and on each occasion he urged that a bigger sum should be allocated because the limit was obviously too small, and I am sure that he will feel the same about this Bill.
So long as both sides of the House welcome Bills of this sort, I suppose that there is no harm in debating the matter. On the other hand, if one tries to imagine what the total might reach, one gets to very big figures. Only now has the first repayment started—
§ Mr. Ridley
The repayment is one-eighth of the sum outstanding on each ship every year, so it will be eight years before the first loans are totally repaid. If there were a stable level of ordering and the cost of ships remained the same —both very unlikely postulations—it would he eight years before the peak was reached. At the present rate, well over £1,000 million would be oustanding at that time. But we have to add to that the world boom in shipping and the increase in the cost of ships. I do not know when the Minister thinks the peak 1489 will be reached, nor what he thinks it will be, but it will clearly become a major item of credit which we shall have to watch carefully.
The effect of this on the banks must also be watched carefully. They are also asked to subsidise export credit at 5½ per cent., and it will become a very big item. I know that the first 5 per cent. of the value of their deposits is all that they are called upon to finance directly. That amounts to £500 million worth of credit at present. But the value of bank deposits is increasing, and will continue to increase, and that £500 million in seven or eight years' time may be a very much bigger sum. After the 5 per cent. of their deposits the burden is taken by the authorities, which is only right and proper; but I do not quite see why the first 5 per cent. should be taken by the banks. This is the banks' money and they have been very public-spirited and helpful in advancing it, but their shareholders, who have not been consulted in the matter, might not feel quite so generous if they were asked what they thought about it.
The Paymaster-General was a little ingenious about this in his statement of 21st January. He seemed to suggest that this was a gesture from the banks and their shareholders which no one had any qualms about, but the position is not very regular, and I hope that the Minister in winding up will tell us how he sees the development of bank lending for this purpose. because it is truly a Government responsibility and not one which the banks should meet.
I am very pleased that the Government concluded the agreement in O.E.C.D. last July which limited the credit to eight years, 20 per cent. down payments and 6 per cent. rate of interest. That 6 per cent., I understand, corresponds with our 5½ per cent. which is net, as opposed to gross of servicing charges and commissions, so we are within the terms of that international agreement.
A working party which was set up at O.E.C.D. to examine further impediments to true competition in shipbuilding listed five main headings: direct building subsidies; customs tariffs or any other import barrier; discriminatory tax policies; discriminatory official regulations or internal 1490 practices; specific aid for investment in and restructuring of the domestic shipbuilding industry. We are probabbly guilty of two or three of those practices, but I have no doubt that others are guilty of more of them. I heartily agree with the Minister when he said that the best way forward is to try to level up these different types of subsidy and to get an international understanding of what one can and cannot do; otherwise, subsidies will escalate.
It would be of great help if the Minister were to publish a White Paper, or place in the Library information of subsidies and aids which foreign countries give their shipbuilders or shipping. This would enable us to know the extent of the problem, and help the general cause by giving publicity to something which we would all admit to be a nonsense if we could only agree to get rid of it. If we have responsibility for the industry, we shall certainly take the initiative in getting that working party to hasten forward with its studies and recommendations and, if we can get the others to agree, to bring subsidy and aid to equal levels in every country.
In the meantime, I do not see that any country has an alternative to ensuring the suport of this industry. Otherwise, there would be completely unfair competition and the whole industry might be wiped out. This does not excuse the industry from trying its best, as it has done in the past, nor the work people from treating the serious challenge to the industry with the greatest responsibility. We hope that the shipbuilding industry will succeed and we feel that it must be supported until such time as international agreement can be reached. In this Measure we see something which is useful and is not a subsidy within the terms of the international agreement, and we intend to support the Bill.
§ 5.8 p.m.
§ Mr. Edwin Brooks (Bebington)
As my right hon. Friend said in opening the debate, the House is bound to be tempted to stray widely, because we are holding the debate under the shadow of anxiety and grave concern in a number of major and ancient shipyards in this country. Perhaps the House will therefore excuse me if I refer to some of the problems which beset my constituents on the Merseyside.
1491 As my right hon. Friend implied, we are in the second stage of a crisis, the first stage of which seems to have occurred in the mid-1960s with a sharp fall in the proportion of world orders which British shipyards were achieving. He has given figures indicating that in 1966 about 2 per cent. of the orders then placed were gained by our own yards. In the second stage we have seen a remarkable recovery in order books, not only in this country but throughout the world, which has led to an almost unprecedented boom in shipbuilding which seems certain to persist throughout the early 1970s. The problem now is not one of lack of orders but of lack of profitability in the orders acquired. This problem straddles a whole number of shipyards.
We on Merseyside have realised in recent months that although no doubt some of the difficulties experienced by the Cammell Laird yard have been precipitated by the removal of the contract for the Fleet submarines which had previously been shared with the Vickers yard in Barrow-in-Furness, nevertheless it is clear that the range of problems being experienced by Cammell Laird is paralleled by the experience in other yards notably Upper Clyde Shipbuilders, and Harland and Wolff, to some extent Vickers and even Swan Hunter. This is a national problem and in some respects a national crisis.
The paradox is that, despite substantial injections of public money, despite considerable Government assistance which has been given to the shipbuilding industry in recent years, despite the fact that the orders have been sought and acquired and that there has been an unprecedented boom in world shipbuilding, we have nevertheless a situation that was emphasised only yesterday in regard to my Birkenhead yard of almost certain major losses on shipbuilding contracts from now until the end of 1972. An industry which is incapable of making a profit in the foreseeable future is on the path to disaster.
We must ask ourselves some serious questions about the place of shipbuilding in our economy during the 1970s. There are a whole number of problems which I am not competent to discuss 1492 with any expertise. But one problem which has rarely been looked at in general terms, though we have been aware of it on Merseyside, is that with the decline in the naval shipbuilding programme to which this country has become committed in recent years, and indeed in the whole post-war period, there is inevitably a loss to traditional naval shipbuilding yards of what were once secure contracts from the State. There is in the process of the withdrawal of naval contracts an inevitable problem involving the right mix of trades in the various yards.
The problem of redundancy is not simple. As we have seen on the Mersey, clearly the problem is moving from a sophisticated nuclear submarine programme, whether it be Polaris or the Fleet submarine, to what in most respects are relatively unsophisticated types of vessel.
All vessels present their own peculiarities, but the ratio of the outfitting trades to the other trades which applies to a sophisticated vessel is not applicable right across the board. The problem of the mix of labour is of critical significance and is particularly complicated by the traditional lines of trade union organisation in the yards. We appreciate that there are major and urgent problems facing the unions of reorganisation and rationalisation of their own structures to accommodate themselves to the pressing priorities of the next 10 years.
I agree to some extent with the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). As I understand him, though I do not accept all his strictures on the Government, and once or twice he was guilty of political hyperbole, there is a problem of commercial discipline in the industry. About two years ago the Public Accounts Committee scrutinised the work of the Shipbuilding Industry Board. We ascertained without any equivocation that the work of the board was based on commercial criteria. The Government confirmed this and said in evidence that if there are to be social considerations they should be defined and made explicit. But until they are defined, justified and quantified, then so far as possible commercial disciplines have to be maintained.
1493 It is self-evident that since we are in a highly commercial, competitive, cutthroat world our yards must be able to balance on their own feet and should not indefinitely look to a safety net from this Government or any other. There may be dangers involved if the impression is given that the Government exist as a Lady Bountiful prepared to fill every begging bowl from now into the indefinite future. I share the view that if this is the attitude in the shipbuilding industry, as well as in any other industry, it should quickly be removed.
I do not believe that it is the Government's function to prop up industry when it has outlived its usefulness. Moreover, it is self-defeating to give the impression that, no matter what the inefficiency of management or anyone else, the Government will always come along and bail an industry out of its misfortune. There must, if necessary, be a far more ruthless approach to the shipbuilding industry, because it is intolerable that after years of massive injection of public money we are now debating today a critical situation across the whole of our shipbuilding yards.
§ Mr. Rankin
I am interested in what my hon. Friend is saying. I hope that he has taken into consideration that our shipbuilding industry is unprotected and that, if it has to live in the world in that state, then individuals within the wider community will not entertain that industry so long as there is plenty of protection elsewhere in the community.
§ Mr. Brooks
I accept that the British shipbuilding industry is face to face with competition from yards overseas which are buttressed by hidden subsidies and very often cocooned by their Governments in ingenious ways. But one of the objects of the Bill is to put the British shipbuilding industry on a relationship of equality with those other yards.
What worries me about my hon. Friend's intervention, although I understand his object, is that if all the time we have to say, " There is an open-ended commitment to protection because all over the world the other yards are being protected ", we will never be in a position to impose commercial disciplines. It is an ever-receding mirage, like the pot of gold at the end of the rainbow. While there may be interfer- 1494 ence with the free market economy across the world, let us have this defined. Even if we are in an inferior position in relation to other overseas competitors —and this needs to be spelt out in far more detail—it seems to me that we should not be prepared to subsidise the British shipbuilding industry on an even more favourable basis than other yards.
This is a problem of the use of national resources. We have in this industry a vast amount of labour and capital locked up and we have in the year ahead a substantial commitment to the industry. We have to ask ourselves whether this is the best possible use of these vast resources over the next 10, 15 or 20 years. In the critical months ahead, we require to have a longer perspective forecast than we have tended to have recently.
Inevitably, one asks why profitability is absent from so many of the contracts which have been placed, and we need more information from my right hon. Friend. All shipbuilding yards throughout the world have been faced with escalations in costs. The rising cost of steel is not peculiar to Britain. It is rising internationally. Certainly the cost of labour is rising internationally. From some reports that we have from Germany and the Netherlands, the price of labour has been rising there no less than it has here.
For an industry which is of necessity having to place long-term contracts and where the end product does not materialise for years to come not to insist upon realistic escalation clauses in its pricing policy is almost beyond belief. An industry falling into this predicament is guilty of some inefficiency, to put it mildly.
It may be said that the cost inflation has been greater than could have been realistically anticipated. However, it is the function of management to anticipate these problems and, while one must have sympathy with industries which are facing these considerable increases in costs, it has to be borne in mind that other industries also face increases of this magnitude, and it is not the case that all of them are seeking Government assistance on the scale now considered appropriate for this particular industry.
I want to refer briefly to the position on Merseyside. I do it with diffidence, 1495 because, at a time when we all know that critical negotiations are taking place which are of enormous significance for the future of tens of thousands of people, we should not say anything to complicate the negotiations. I propose to say relatively little. But we have also to bear in mind that the workers in the industry are becoming a little impatient about the silence which has descended upon the negotiations that so vitally affect their livelihoods. It is one thing to maintain silence during a period of intense negotiation, but I hope that my hon. Friends recognise that the time is coming when many of us who are deeply concerned about the position on the Merseyside and elsewhere will feel disposed to speak out more forcefully and explicitly than we have been persuaded to do hitherto.
I must make one reference to what has appeared in the Press on the Merseyside this morning, because apparently it reflects the attitude of hon. Gentlemen opposite, some of whom I know to be normally well informed and moderate men. But I see that they are now quoted as saying that the whole cause of the distress and difficulty now being experienced by Cammell Laird is due to the Government. If that sort of accusation is to be made, for what I can only call mischievous and irresponsible political purposes, the rest of us will have a good deal to say about the other causes of the problems which Cammell Laird is experiencing.
Even with this provocation, however, it would be unwise tonight to dwell too explicitly on the complex causes underlying the present crisis at Cammell Laird. One of the spokesmen for the party opposite on the Merseyside is quoted as saying that the firm had no option but to place fixed-price contracts. I do not know who insisted that they had no alternative option—
§ Mr. Ridley
Until recently, no shipbuilder has been able to obtain escalation clauses because his competitors were offering fixed prices all over the world to shipowners. I agree that the situation is changing now, but, hitherto, it has been almost impossible.
§ Mr. Brooks
I am glad to hear the hon. Gentleman elaborate a little on the point. 1496 What he has said makes it clear that the Government have no responsibility for this predicament, assuming that it was inevitable.
We are told that the Japanese yards are incapable of accepting orders way into 1973. In the sort of seller's market that we have seen in the last two years, surely it would have been possible for the firms to have insisted upon more realistic escalation in their pricing policy. If the hon. Gentleman implies it is never possible, no matter what the boom, to put an escalation clause into a contract, the problems of the shipbuilding industry will be even more serious in the next five, six or seven years. I hope that he now feels that the firms should insist upon it. It is long overdue.
I felt compelled to speak briefly about Cammell Laird, to rebut those who do not know the details and who can easily make all sorts of accusations from an armchair. It is easy to criticise and, in the process, perhaps damage the achievement of the solution that we all want. I have responded in this way, and more could have been said, because in the last 12 months on Merseyside we have had a repeated barrage of accusations against the Government. They were held to be solely responsible for the afflictions that beset the yard. We all know that that is not so and never was so.
We have had forecast figures of redundancies, for example, of up to 3,000. We all knew at the time that they were wholly unrealistic and exaggerated. But many of us have been reluctant to say very much until now because we felt that there would be intricate negotiations which would have to be pursued without irresponsible accusations being made. But if such are to be made by hon. Gentlemen opposite in this run-up to a General Election, they cannot grumble if we begin to disclose some of the facts which we know and which do not lend themselves to the grossly over-simplified claims of hon. Gentleman opposite.
§ 5.28 p.m.
§ Mr. J. Grimond (Orkney and Shetland)
The House is grateful to the hon. Member for Bebington (Mr. Brooks) for what he has said about the need for the industry to be commercially viable. It was a courageous line for him to take, 1497 representing, as he does, a yard which is in some difficulty.
I agree with him about escalation, though it is fair to say that it presents very great difficulties. It is not easy to estimate how far costs will escalate, especially in the case of what is essentially an assembly industry. Some of the troubles which the yards have met have not been due to them as much as to their suppliers. Many of the people who supply our shipbuilding industry have themselves a large export trade and have done well in export markets. So that argument cuts both ways.
The hon. Gentleman pointed out that wage rates and steel prices have risen all over the world. I do not know the latest position, and I hope that we shall hear more of the comparative figures, but some years ago when our industry was short of orders, wage rates were high in other industries, especially in Sweden, but the rate of productivity was also high. Many of our yards operate on old sites in constricted conditions in which it is not easy to make the fullest use of modern machinery.
The industry also suffers from the treatment that it gets in the news. It is always assumed that it is good to take orders. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) and the hon. Member for Bebington pointed out that it is not much good taking orders which will run a company into heavy losses and prevent it making adequate investment. Anything which goes wrong in the industry is always news. One would think that there never was a ship delivered late until the "Jervis Bay ". But I believe that four other ships of that order, which were built abroad, had to be modified during the building process. We are not by any means the only shipbuilding country which suffers from late deliveries and occasional strikes and industrial troubles.
I welcome the Bill. I do not blame all the industry's troubles on the Government, but I think that the Government have placed too much emphasis on amalgamations and size. In some cases this may be good, but in others it is not. The Lower Clyde Shipbuilders seem to have been a success, but the Upper Clyde less of a success. There is no particular advantage in amalgamating shipyards 1498 unless economies can be effected. Either the berths must be used better or the labour force must be deployed to better advantage.
Some small yards inevitably depend on expertise and on having made a corner for themselves in the industry or upon doing a particular job rather well. I could not understand the advantage of taking Connell's yard into the Upper Clyde Shipbuilders. It is a specialised corner of the industry. It added little to the consortium and gained little from it.
I am not clear what the Government's attitude is on the Lower and Upper Clyde. It would seem to be a blessing that the Lower Clyde resisted any blandishments to amalgamate with the Upper Clyde.
On Government subsidies, the hon. Member for Bebington is right that it is not a satisfactory position where all shipbuilding countries subsidise their yards and enter into a kind of competitive spiral. I was glad to hear what was said both by the Minister and by the hon. Member for Cirencester and Tewkesbury about the latest agreements on limiting credit. Have any steps been taken to control or have some agreement about other forms of assistance by Governments to the industry?
I understand that the Swedish Government give a subsidy not only to the shipbuilding industry, but all Swedish industry through the taxation system. I suspect that the new Swedish yard at Gothenburg was built through being able to accumulate profits in a way which would be impossible in this country.
I now turn to other questions that 1 want to put to the Government. First, is it right that if we go into the Common Market it will no longer be possible to deliver steel to the industry at a uniform price all over the country? For example, Harland and Wolff obtains steel at the same price as the North-East Coast or the Clyde. Would it not be a serious matter if this became illegal under the Common Market regulations?
Secondly, concerning the Upper Clyde, I am always suspicious about unemployment statistics and figures for redundancy. I think that we have to look at the river as a whole. I sympathise with those who are now working on the Upper Clyde who are worried in case they lose their jobs. But it would assist us if we could 1499 be told what the overall situation on the Clyde really is.
Is it right that there is a shortage of labour on the Lower Clyde'? It may be said that it is not easy for labour to move from the Upper to the Lower Clyde. However, the fact is that some of Denny's workmen from Dunbarton are working at Yarrows and other places. It is not impossible to move considerable distances up and down the river. I do not suggest that it is convenient for those who live high up on the north bank to come to the south bank, as from Dunbarton to Govan and so on, but it can be, and is, done. It would be interesting to hear what the overall situation may be.
It is essential that we should not damage Yarrow. It is one of the most important and profitable enterprising units on the Clyde. Yarrow's Admiralty Division is of great importance in Scotland as a high-level experimental and research place.
Is there any news about the site at Burntisland? There have been rumours in the Press, but I have not see what the end is to be. I understand that it is out of shipbuilding. Is it out of the industry altogether? Is it being used on prefabrication or for any other purpose?
Lastly, the general development of the industry. I take it that now it is settled policy that the major groups, and indeed some of the smaller yards which are being assisted, should form the fixed equipment of the industry. It seemed at one time that there was a case for building a new yard on a new site. As I said earlier, many of these yards from Greenock to the Upper Clyde—no doubt also Cammell Laird, to which I have not been for many years, but certainly Swan Hunter on the Tyne—are jammed in on narrow rivers and launch ships with difficulty. John Brown's has to launch big ships up the Cart. I know that Sir John Hunter thinks that this has a certain advantage in that it concentrates the mind and makes for economy. I am not being dogmatic, but to the layman there is something in going to a green field site in Sweden and seeing a yard laid out where the steel goes in at one end and goes straight out into the dock at the other as a ship. I do not know the economics of it. It may be that these 1500 great experiments on the Continent have proved less successful than was thought. After all, some of the big Dutch yards are in difficulty.
I should like to know whether attention is being given to the possibility of developing new sites or whether it is considered that, with the lack of capital and the other problems of the industry, it is out of the question.
§ 5.37 p.m.
§ Mr. William Small (Glasgow, Scotstoun)
The right hon. Member for Orkney and Shetland (Mr. Grimond) referred to what is happening on the Upper Clyde. I do not wish to say too much about what is happening there at this stage, but I am concerned.
The workers and their representatives are the longest continuing unit on the Clyde. Fairfield's has had changes of management, so it has had difficulties. I think that to fix a figure like 3,500 starkly in the face of trade union negotiations is hardly a correct assessment. These matters should have been negotiable rather than be stated as facts. I hope that the outcome on the Upper Clyde will be satisfactory.
Both my right hon. Friend and the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) paid unswerving adherence to the restoration of the health of the shipbuilding industry in Britain. I do not know whether the Tories—if they ever get into power—mean to retain the Ministry of Technology and whether the hon. Member for Cirencester and Tewkesbury is to be the health technician for the industry. If so, it causes me to despair. The shipbuilding areas in Britain have been areas of constant struggle under the regional employment zone; that is, they carry R.E.P., which has helped with wage contracts and making them competitive. To that degree, it would not appear to be the best solution to have a change of Government.
The Minister dismisses history, but I do not think that we can dismiss the history of this industry. The D.S.I.R. reported in 1960 and mentioned criticism by the Institution of Professional Civil Servants on the troubles of the industry. That criticism was not welcomed by the industry. In 1966 we had Geddes. Everybody was relieved, and the illusion was created that this was the real answer, 1501 but in fact it is only part of the answer. Geddes dealt with reorganisation, and the interesting thing is that the people who welcomed Geddes most were the trade unions. Within three months they issued a declaration of intent to support Geddes right to the end.
I shall short-circuit my argument by considering the scene in 1950. In those days we had Clore and Hugh Fraser. In 1950–51 Clore acquired shipyard sites, and other forms of investments were taking place. Barclays Bank Review for 1967 shows that investment in this industry was only 1.1 per cent. of the total. In terms of investment, the only people who are likely to give guarantees are the Government who have done everything that it is reasonable to do to help.
When the Shipbuilding Industry Board was set up it was given a life of five years. The assumption was that within that time, which would bring us to 1970, it would be possible for the board to do the job envisaged by Geddes. The setting up of the board was accepted by the trade unions and by the employers. To use football parlance, we are now playing in injury time. It is proposed to add one year to the board's life, but this is not enough. We cannot expect the board to do in one year what has not been done in five, and to this extent the Bill falls short in what it should do.
I have here a copy of The Times for today. The leading article is headed:Shipbuilding: using public money to best advantage.The writer saysThe Minister of Technology has little option but to extend the life of the Shipbuilding Industry Board (though directing it to be far tougher in securing trade union cooperation when handing out new grants).That is a reasonable statement, and one with which I agree.
I come now to the question of grants. When an employer applies to the board for a grant, the unions know nothing about the reason for the application. I think that this matter should be on the agenda for a meeting between employers and unions so that the latter know what the money is for. If they know the state of play, they have a far better understanding of the issues at stake and respond much better.
Most of the employers have " bought out " the trade union rule book, and 1502 there is now a new working set-up between employer and worker. To that extent progress has been made. I support the extension of the credit being afforded to the industry, and I hope that it will soon be restored to health.
§ 5.45 p.m.
§ Mr. Edward M. Taylor (Glasgow. Cathcart)
It is always a pleasure to follow the hon. Member for Glasgow, Scotstoun (Mr. Small). He speaks with great authority, and he has fought hard for Yarrow, in his constituency.
I agree that there is real concern in the industry about the board's life being extended for just one year. We cannot criticise the Government for this, because this is what the Act provides for, but one thing which is clear from the results published by Cammell Laird and Harland and Wolff, as well as from the troubles at Upper Clyde Shipbuilders, is that if there was a case for the board, there is now a case for considering its extension for a period during which one might reasonably hope the industry will sort out its problems.
Both sides of the House have accepted that this is a special Bill, making special provision for the shipbuilding industry. It can be justified, first, because, as the hon. Member for Glasgow, Govan (Mr. Rankin) said, the industry has traditionally been unique in that whereas other industries have been able to shelter behind tariff walls, this industry, until we had the Marples credits, and then the Shipbuilding Industry Board, was virtually unprotected against foreign competition. If this industry had the same kind of protection as others have, and if it could rely on the home market for British shipping orders, it would be in a profitable and prosperous situation.
The second reason why the industry is rather special is that it not merely provides jobs, but that these jobs are concentrated in areas where there are chronic unemployment problems, such as the Clyde, the Tyne, and elsewhere. For this reason, the industry deserves special consideration.
There is a feeling in the industry—which may or may not be justified—that the board has concentrated its attention on those who have the biggest problems, or have failed most to cope with some of the problems confronting them, 1503 and that those yards and groups which have been successful have failed to get a great deal of support. There is a feeling on Clydeside that Scot Lithgow has had little assistance from the board, yet this group has made remarkable progress. It has coped with cash and inflation problems very successfully, and has launched into a great deal of new shipbuilding activity. Labour relations are also very good.
This might be justified if there were no plans for expansion by the Lower Clyde, but the Minister knows that there is an ambitious plan under which the James Watt dock might be used as a covered building berth. The plan is attracting a great deal of attention, and I hope that the Minister can give us an assurance that this group is not regarded as the " step-bairn " of the board and that their problems will not be neglected. Surely success is worth backing more than failure.
The Government should make it crystal clear that they have abandoned any intention which they might have had at any time of forcing a shot-gun marriage between Upper and Lower Clyde. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) talked about sanctions and disciplines which had been used. We all know that, probably for well-intentioned reasons, pressure was brought to bear on Lower Clyde to join Upper Clyde. It firmly refused to do so, and it is disturbing that thereafter there seemed to be remarkable absence of British naval orders awarded to Scot Lithgow. I hope that the Minister can make it clear that no pressure of this sort will be brought to bear in future.
The Geddes Report said that the future of the Upper Clyde lay in building specialist ships. We have all seen that the recent policy of Upper Clyde Shipbuilders has been to move away from specialist shipbuilding and towards the building of a standard cargo vessel. This may be more profitable than a wide range of ships and the possibility of passenger liners, but this is not the path which Geddes saw for Upper Clyde. Is it entirely wise for Upper Clyde to put virtually all its eggs in one basket in this way? 1504 The other thing which the Geddes Committee recommended was special provision for a lower negotiated price for steel for the shipbuilding industry. That was one of its firm recommendations. Has any progress been made here? I was very interested to hear the Minister emphasise, rightly, the problem of labour relations. Good labour relations are vital if we are to have a good shipbuilding industry. Bad labour relationships mean that strikes are held, and penalty payments add up. On Upper Clyde, we have suffered a great deal from losses of this sort.
But I hope that neither the Government nor anyone else will think that the solution to this problem lies in legislation. The Government had a well-intentioned plan called " In Place of Strife ", which they abandoned for the wrong reasons, apparently because of pressure. We should make it clear that the way to avoid strikes, in shipbuilding in particular, is not by legislation or interference or committees. It is by having employers who, in their ordering, purchasing, building and industrial relations, are prepared to accept responsibility for the job.
§ Mr. Eric S. Heffer (Liverpool, Walton)
I hope that the hon. Gentleman will inform his hon. Friends and his Leader of his view that legislation is not the answer.
§ Mr. Taylor
No one on this side or elsewhere has said that legislation is the answer in industrial relations. I am just putting my own view that perhaps too much emphasis is placed on the possibility of legislation.
I spent a lot of my working life in labour relations in this industry before I came to the House. The reason that we have strikes, I believe, is that they pay. Far too often, particularly in the shipbuilding industry a trade union official puts forward a claim, which is turned down automatically, whereupon he tells a mass meeting of the men that there is " nothing doing ". Then, just before a launch to which have been invited half the nobility of England, Wales and Scotland there might be an unofficial strike, and the claim is conceded.
In shipbuilding and elsewhere, if we could have employers—I am aware of all the difficulties—who can say " Yes ", when they mean yes and " No " when 1505 they mean no, this would be a far more effective deterrent of strikes and industrial problems.
§ Mr. Arthur Lewis (West Ham, North)
But is it not a fact that there need never be another strike from now to Domesday if the workers were treated as quickly and as generously as this and the other Governments have dealt with people like the judges and those on the boards of nationalised industries? If they were, I can assure the hon. Gentleman that there would be no strikes.
§ Mr. Taylor
I do not want to widen the debate, but I do not entirely agree with that.
Major concessions are not always the way to avoid strikes. They can often buy trouble for the future. But what would help in shipbuilding is to make it clear as soon as possible to those who run our shipyards that it is their job to sort things out: they have the responsibility and the power. I know that all hon. Members would accept that there was a real case for Government aid to enable the industry to sort out the short-term problem, but no one would support continuing subsidies for all time in all circumstances.
The Ministry of Technology has played a noble and helpful rôle in the development of Upper Clyde Shipbuilders by his repeated visits to the area. We are also grateful for the recent visit of the Paymaster-General. The management there has had to face more crises in a short time than any other industrial organisation. It is understandable that the Government have been reluctant to give the House too much information in case it affected confidence. But I have three brief questions.
First, what progress is being made with orders which have been accepted? Secondly, can the Government make it clear that the Shipbuilding Industry Board will continue to back the obtaining of further orders by Upper Clyde Shipbuilders? Thirdly, when will the legislation be forthcoming which was promised to safeguard the offer made to Upper Clyde Shipbuilders last year?
It is difficult to make the right decision, but the Government's decision today is the right one, and the general policy of a temporary injection to enable the 1506 industry to sort out its own problems is the right assessment. For that reason, I support the Bill.
§ 5.58 p.m.
§ Mr. Arthur Blenkinsop (South Shields)
I join other hon. Members in their wholehearted welcome of the Bill. The query which some of us have is whether the rôle and responsibility of the S.I.B. is wide enough for the kind of problems which arise today. One cannot completely separate, when considering the whole industry, the position of the ship-repair industry. That is, of course, excluded from the consideration of the board as at present constituted. I should be very glad to know whether any thought is being given to the possibility of establishing or reconstructing the board, so as to widen its responsibilities.
This is in the minds of some of us on the Tyne. We equally recognise the considerable contribution of the earlier Act and of the board itself to the regeneration of shipbuilding on the Tyne. There can be no doubt that, had matters gone on as they were going before the Act was passed and the board constituted, we should have been in an even worse position than we are. The flood of orders and the much more healthy general attitude towards building on the Tyne would not have been possible without the positive contribution of the board and the Government.
In my constituency, in South Shields, the prospects and future of the yard have been very much strengthened. When there is so much publicity for the things that go wrong, it is only right to give much more emphasis to the number of cases in which earlier delivery has been given, as with the yard in South Shields and up the river. This is something for which the industry has every right to take credit.
This also applies to ship-repair, which is in such great difficulty. There have been some notable examples of major ship-repair work on the river being done well ahead of time. One example is of a Russian transport vessel which came in for the insertion of stabilisers. The job was completed well ahead of schedule. The docks in North Shields, in the constituency of the hon. Lady the Member 1507 for Tynemouth (Dame Irene Ward), have a good record in this respect.
In spite of these favourable developments, we are only halfway through the reconstruction problems of the industry. There are many complexities and even on a river like the Tyne there are many different rates of pay and differences in working conditions. In other words, the number of complexities on a river as short as the Tyne is fantastic. They must all be reconciled with the development of the new consortium.
The fact that there are now better industrial relations on the Tyne is due to the hard work that has been done by all concerned on both sides of industry. I was interested in an article in The Guardian today by the President of the Amalgamated Society of Boilermakers, Mr. Dan McGarvey, who is well known to hon. Members. He wrote:The trade unions are to blame for some of the present trouble in the shipbuilding industry, but the major part of the responsibility must be put elsewhereThat indicates that the leadership of the unions recognises the joint responsibility. I have no doubt that the unions have taken major steps to move away from traditional practices in an effort to put the industry on a modern basis.
It is right that we should call attention to the situation which we on the Tyne face and this applies particularly to the mouth of the Tyne, where large numbers of shipbuilding, ship-repairing and marine contracting men are out of work. About 850 men in my constituency are out of work all from these trades. Everything possible must be done to ensure that the repair yard up the river at Hebburn is saved, that the current rundown in the repair industry is checked, and that an effective examination is made of both the ship-repairing and shipbuilding industries to discover what are the most constructive lines which future development should lb/> Emergency action is needed to save the yard about which many hon. Members are concerned particularly when one recalls the background to Hebburn. We must also tackle the problems of other repair yards which are facing great difficulty. In addition to this emergency action, we need a thorough investigation 1508 to decide the longer-term structure of the industry.
I welcomed the announcement of a review of the industry. I assume that the Minister was referring to a review of the whole industry and not only the shipbuilding section. I hope that he will give more information about this review.
The Shipbuilding Council, which represents both building and repairing, is at present conducting some inquiries on behalf of the Government. It is to be hoped that it will make some constructive recommendations quickly, because we cannot wait long before at least some emergency action is taken. I hope, therefore, that my right hon. Friend will comment on this situation and will announce what emergency and longer-term action may be practicable. We at least hope that he will consider the possibility of the board having greater responsibility.
All of us on Tyneside are deeply concerned about the level of unemployment and the threat of the closure of the famous repair yard at Hebburn. After all, it is only recently that it was in large part reconstructed. People have some very bad memories indeed of what occurred at this place some years ago. In those bad days, when there was great anxiety about the terrible level of unemployment, the Government of the day gave little encouragement and response to the efforts that were made to bring the situation to the attention of the Administration.
Fortunately, today, the situation is different. The Government have shown their concern with this and other matters and we anxiously await knowledge of the practical steps which can be taken to overcome a situation which no hon. Member is willing to accept.
§ 6.7 p.m.
§ Dame Irene Ward (Tynemouth)
It seems clear from the debate so far on this very acceptable Measure that whatever happens to the Bill, the shipbuilding and ship-repairing industries will continue to face a large number of problems.
This occasion gives us an opportunity, to which we are entitled, to debate, river by river, the problems of these industries and to state our views. I support everything that the hon. Member for South Shields (Mr. Blenkinsop) said. We are all most anxious about the future of the River Tyne.
1509 As hon. Members on both sides of the House who have spoken are extremely knowledgeable on these issues, I have been considering what sort of contribution I can best make. Although a number of important points have been raised, it might be a good idea if I were to inject into the debate a few different aspects of the general problem.
I have concluded that part of the problem of the shipbuilding and ship-repairing industries lies in the fact that they are, in a way, schizophrenic. I say this because their technical performance, in terms of the production and repair of ships—this can be said of the whole future of both industries—depends to a great deal on the actions of certain Government Departments.
The actions to which I refer affect not only ship-repairing, but the economy of the country. For example, Britain recently contributed to the opening of ship-repairing yards—these yards are no doubt necessary in other parts of the world—in Hong Kong and on the Island of Malta. Those new ship-repairing yards bring about an improvement in the overall economy of the country.
It is much more economical when large new tankers are developed to have necessary repairs done where that is most convenient. There are two angles from which we should consider this problem. We have suffered in this country and there is little reassurance for the ship-repairing part of the industry on the Tyne.
When we were debating the Ports Bill, the hon. Member for South Shields and I argued forcefully about it. I pay tribute to the hon. Members for Wallsend (Mr. Garrett), Newcastle-upon-Tyne, North (Mr. R. W. Elliott) and Jarrow (Mr. Fernyhough) for not voting for the Port of Tyne Bill. I feel strongly that the port authority wishes to upset traditional backgrounds with reference to travel arrangements in work on shipbuilding and shiprepairing. This is regrettable. The authority has to produce a profit, but if, in producing a profit for the port, it makes it more difficult for those working there to work efficiently, again we have a schizophrenic outlook.
I wonder whether the Ministry of Technology would agree with the arguments pat forward by the hon. Member for South Shields and by me. It is traditional 1510 for men who live on the north bank of the Tyne to be employed on the south and those who live on the south to be employed on the north. This travelling to and fro has been a great feature of work on the river. It is regrettable if the authority is not to work in the interests of the port and in favour of the maintenance of the shipbuilding and ship-repairing industry. Here again, there is a schizophrenic approach.
If we are to produce additional credit for the Shipbuilding Board it is important that it should have the full support of the Government and the Opposition and that the interests of shipbuilding and ship-repairing should not be interfered with by other interests. The Government of the day have to come down in favour either of supporting shipbuilding and ship-repairing, or of taking an attitude sometimes on one side and sometimes on the other. When we were debating this question, all hon. Members who know about the Tyne and about shipbuilding and ship-repairing regretted the decision taken on the Port of Tyne Bill.
The hon. Member for Gateshead, West (Mr. Randall) supported the Second Reading of the Bill, but I am not sure whether he knows much about shipbuilding and ship-repairing. Again, there was a schizophrenic approach, making it more difficult for those engaged in the industry. The workers were on the side of the hon. Member for South Shields and myself, but the Port of Tyne authority paid no attention to our views and went ahead with its proposals, which was very regrettable.
Reference has been made to naval orders. They are tremendously important. When they come to a river such as the Tyne a satisfactory home base is provided by which tenders can be obtained for work elsewhere. In 1931–32, we had disastrous unemployment in the industry on the Tyne and almost immediately naval orders ceased. Firms working on the river could not make a profit and they could not employ workers only on fulfilling merchant shipping orders.
When we have discussed defence policy, especially in relation to east of Suez and aircraft carriers, I have thought how very important this is to shipbuilding, and, of course, to ship-repairing. When arguments pass to and fro in defence debates 1511 between those who want to reduce our defences to an almost negligible quantity and those who want to maintain them, there is never any reference to the lack of employment which can follow if we do not get naval orders. If we could have two new aircraft carriers that would be of great benefit to the shipbuilding industry. Here, there is a shizophrenic attitude between the two sides of the House.
More schizophrenia is to be found over steel policy. Yesterday, when we were debating the Ports Bill, many hon. Members opposite commended nationalisation of steel, but the escalation of prices in relation to the shipbuilding and ship-repairing has stemmed from nationalisation of steel. The British Steel Corporation has decided to transfer iron-ore shipments from the Tyne to the Tees. That is a devastating blow to our prosperity. It could affect the capacity of the Tyne to compete in the markets of the world.
My hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) said that the shipbuilding industry never had a protective power. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) said that there might be a reduction in the price of steel going to shipbuilding and ship-repairing.
My schizophrenia comes to the fore again and I look back to 1931, when a protection Bill, promoted by all parties, was introduced in an endeavour to meet the economic collapse of the early part of the 1930s. I decided to make my maiden speech on the question of giving protection to all the various parts of the shipbuilding industry which we had to import. Daringly, I decided to move a new Clause designed to protect shipbuilding against increases in prices accruing from the protection Bill aimed at protecting the general economy.
In fact, I subsequently made by maiden speech on the mining industry. The then Government introduced a Clause, which lasted in legislation for a long time, to relieve shipbuilders from having to pay increased charges for imported goods. This was a helpful step in the long haul back until we were at full speed ahead at the outbreak of the Second World War.
If, in 1932, the Government could do that for the protection of shipbuilding 1512 and ship-repairing, which we have always regarded as part of our national heritage, there is no reason why it cannot be done now even with steel nationalisation. The materials used in the production of steel must be imported. Shipbuilders and ship-repairers should be exempted from having to pay escalating prices to the British Steel Corporation.
I should like a specific answer tonight. If the matter is under consideration, it is important that deep thought should be given to the action taken in 1932 to protect the industry. There are some very full order books now. My suggestion, if implemented, would be a good protection for the future.
I was interested in the Prime Minister's announcement of a new inquiry into the problems arising from shipbuilding and ship-repairing. Whatever hon. Members opposite may think about profits, there cannot be better conditions for workers, nor can taxes be levied so that social welfare can be improved, unless profits are made. Through no fault of its own, shipbuilding and ship-repairing is not making a realistic profit on the capital being injected into the industry.
As the Government and the Opposition are joining in trying to find solutions to our problems, it would be advantageous to examine some of these suggestions and not always have schizophrenic problems arising, with those of us who are interested in shipbuilding and ship-repairing not knowing the final outcome.
We on the Tyne have just had the devastating news about the closure of Palmer's Yard, which will cause increased unemployment, which is already above the national average, and have a serious effect on morale.
I hope that the other parts not essential to the national economy, which takes first place in the thoughts of all of us, will allow the Paymaster-General to be on our side. It is not often that the Government and the Opposition have the wholehearted support of both sides of the House.
§ 6.27 p.m.
§ Mr. John Rankin (Glasgow, Govan)
References have been flying around to the possibility of " a shot-gun marriage " between Upper and Lower Clydeside. I have heard such references, but they have 1513 been accompanied by a suggestion that naval orders have not come the way of Lower Clydeside as frequently as they did in past years, as a form of Government pressure on Lower Clydeside to look with approval on this possible consortium.
I hope that my right hon. Friend will deal with this problem in winding up the debate and let us know that there is no truth in it. After all the turmoil there has been in Upper Clydeside, I do not think that we should start to create even greater turmoil, possibly, by a tie-up between the upper and lower reaches. I do not deny that in the evolution which will take place in the industry in the west of Scotland there may be such a happening in due course, but at present it would be quite out of keeping with the situation on Clydeside, and it would make matters worse.
I went again to make my position clear over the decision to build standard cargo vessels at Upper Clydeside. I realise that there are arguments for it, but I think that it will reduce the total engineering and scientific skill in this part of Glasgow. Before I became a Member, I was a headmaster in the part of Glasgow which I now represent. I had technical classes in my school and when students were qualified they went to Glasgow's technical college. For those technical classes I required seven separate schools in the Govan area. With the introduction of the standard cargo vessel, I think that we shall reduce the rôle of those schools. There will not be the same demand for so many of the highly-qualified people to run the yards as are required in the type of economy when the specialised ship prevails.
I intervened in the speech of my hon. Friend the Member for Bebington (Mr. Brooks), who suggested that the wages of those in the shipbuilding industry, which was a nationally-based industry, were affected by world conditions. This meant that they were operating in a market where they had to be subsidised by the income made at home, and this, he felt was unfair. I believe that that is not an unfair account of what he said.
I differ from my hon. Friend—with respect, because his speech was of a very high quality and covered a wide area. I feel that to treat the wages of the shipyard workers in this way would be to create a physically unworkable different- 1514 tiation. The draughtsman in the shipbuilding office, if this idea were applied, could almost earn a lower wage than the draughtsman working in a sheltered industry. That would create a differentiation that is impossible to defend. The draughtsman in an engineering industry in the city would probably be more highly paid than the draughtsman working in the shipyard.
Until today I believed that all the problems of shipping and shipbuilding resided on Clydeside. I have been living with them for so many years that I thought that there were no problems in shipbuilding anywhere but on Clydeside. It seemed to me that whenever I said anything about it in the House everyone sighed and thought, " Here's Clydeside again ". I am sorry to hear that the problems are not located only in Clydeside, and I sympathise with my hon. Friends who perhaps have been in the same situation for longer than I suspected. I am sorry that shipbuilding is causing them worries.
Yesterday's edition of The Times made it clear to me that the problems which I thought belonged to Clydeside were British problems. The losses incurred by Harland and Wolff of about £3.7 million were one example, and what has happened at Cammell Laird's is another. But despite those losses the demand for new ships is not expected to lessen, and that is a good thing. The Times, reporting the views of the Shipbuilders and Repairers National Association, warned us yesterday:It must be emphasised that the industry is faced with the paradox of full order books and mounting losses. The future employment of all concerned can be secure only if everyone cooperates to produce ships as quickly and as economically as possible.Co-operation is a method of controlling inflation, and it must be world cooperation. Japan and Sweden are no more immune than we are to the forces affecting shipbuilding production. If we are to face up to our task in Britain the necessary co-operation must start within the shipbuilding industry. There should be a continuous contact between the workshop floor and the management desk.
That is one of the things I have found absent on Clydeside. I have in former years gone round the entire Govan yard with the chief executive, and when I 1515 stopped to talk to men working in the yard he kept aloof 15 and 20 yards away and never joined in what were important little conversations. Contact between men and management is absolutely essential to the success of any shipbuilding undertaking, particularly as the men are so spread over a very wide area compared with those in more orthodox industries. The mass meeting of men and management must not be disregarded as a method of keeping confidence alive between both factors in production. It can be the quickest way of allaying fears and suspicions, which do arise and spread all too easily.
For example, in an inflationary period such as now affects us labour costs always come to the fore. There are many other factors, the price of ships, for example and getting the ship out in time, which, in turn, depends often on labour relations. These are weakened by the fact that men and management have not kept a sufficiently close relationship. Failure to observe this condition with the QE2 cost U.C.S. nearly £30 million and, in turn, upset the flow of work on other ships, causing them to be late in delivery and resulting in further financial penalties. The importance of delivery on time cannot be overstated, but it implies confidence between men and management which means continuing consultation.
If this spirit is to live and thrive then wages should be maintained during redundancy when men are training for a new job. It is wrong that because a man is made redundant and starts training, his wages go down. No one can say how long any trade will last. Therefore, those on the shop floor, to safeguard their future, should be trained when entering the industry for at least two jobs.
British shipbuilding has been in trouble for over 20 years. It is not something that has happened during the last five or six years. Between 1957 and 1966 profits earned and capital employed fell steadily from 10 per cent. to 2.6 per cent. During that process of continual rundown very little was said. To take Clydeside as an example, John Brown's yard was making heavy losses year after year without anyone saying much about it because the losses were always met by the engineering group which sustained them. Linthouse yard, also in my constituency, 1516 along with Govan, was not having a happy time, either, and when its yard closed not so long ago the labour force was absorbed at Govan. What was the result? It was that 1,600 men came to work with the 2,800 already at Govan to do the same amount of work.
And so, in June of last year, I stood here and told of what was happening in Govan, when two and sometimes three men were having to use the same tool, two standing by and saying to the other, " Give us a shot of your tool." I was told that that was not a very cautious thing to say; but it was true. This was one of the reasons why costs rose pellmell on Clydeside. Now we are told that Yarrow wants to join up with the yards on Lower Clydeside. Yarrow wants to get out. Linthouse shipbuilding has ceased, Clydebank has not, but that day is not perhaps far off. Whether it will make much difference I am not sure.
Now that Yarrow wants to get out, Govan is to be deserted by the other members of the consortium created by my Government. Govan and Scotstoun will be the only two yards left in. Will my right hon. Friend carry on the system created some time ago? I would like him to make the position of the Yarrow yard clear. This may result in the break-up of U.C.S. and that might or might not be a good thing. It might have serious results.
Yet I pay my tribute to the present organisation because, since 1968, it has launched eight ships and delivered five. It has built nine ships in 1969 and delivered 10. So far this year it has launched three and delivered one. This does not take into acount the output from Yarrow which is purely naval. I have a good idea of what the figures are there but I had better not give them in public. I do not know whether they are suposed to be secret. That represents altogether £100 million worth of merchant shipping, which is an encouraging result and the reason why, in the long run, it might be better if the consortium is kept together. We must also add the output of naval vessels from Yarrow.
With the co-operation of men and management U.C.S. could, given the chance and the time, be brought to a triumphant success. The challenge is there, to men and management and to 1517 this House. I hope that we will all respond to it.
§ 6.49 p.m.
§ Mr. Stanley R. McMaster (Belfast East)
I am particularly pleased to follow the hon. Member for Glasgow, Govan (Mr. Rankin), as I have done in many debates on this subject. I can support most of his arguments.
I believe that both Front Benches were perhaps a little too complacent today. They placed the problems of the industry before the House in rather a minor key. I am somewhat alarmed by this attitude and particularly the attitude of the Minister of Technology. Any hon. Member— or, indeed, anyone else— who has followed the articles in the Press, particularly in the weekend Press, would be concerned. I have here copies of two articles in the Sunday Times, one in the Sunday Observer, the article in The times yesterday, which the hon. Member for Govan referred to, and the leading article in today's issue.
Anyone who has read those would be concerned as would anyone who had read the report of Harland Wolff, in my constituency, which has announced a loss of about £3.7 million in the last year and Camell Laird, which has announced the loss of more than £2 million. Indeed, that loss may not represent the full loss if one takes into account contracts on its books on which it will make a further loss and on which it has announced that it is to delay its final estimation of losses for some weeks.
We have heard a great deal about the difficulties in the Upper Clyde—during the debate—three hon. Members from Glasgow have already taken part, as well as hon. Members representing constituencies on the Tyne and Wear, and in my case on the Lagan. The main shipbuilding areas of this country have expressed great concern about the position of our shipbuilding industry.
It cannot be claimed that the Government have been taken by surprise by this turn of events. When they came into office they set up the committee under the chairmanship of Lord Geddes which sat between 1965 and 1966 and reported in great detail on the state of the industry. I refer briefly to the final part of that report, part 7, chapter 27, which set out the committee's conclusions and recom- 1518 mendations. At paragraph 568, on page 152, the report says that there are three possible courses for the industry—either it will decline or it will hold on, or it will enter a period of growth. I shall refer in some detail to the first of those three alternatives because if one studies that alternative carefully one becomes alarmed. Under the heading " Decline ". the report said:Gradual evolution on recent trend, with no real gain in competitiveness, a decline to seven and a half per cent. of the world market or less and an output of little more than one million gross tons per annum on average. The mix containing more big ships at a lower average price per ton, turnover showing no improvement, profitability falling and cash resources inadequate. Foreign industries growing and renewing themselves: the British industry failing to attract its share of good, young managers and men. Sporadic appeals for Government aid to ease the decline. Employment on new building falling to some 30,000 as productivity rises gradually.That was a forecast for 1972–75. What has happened in the short period since Geddes reported in 1966? We now have a position—at the beginning of 1970 and not in 1972—of a decline to 7 per cent. Geddes said 7½ per cent. in 1972: our output is less than 1 million gross tons and here we are appealing to the Government for further help, just as Geddes forecast in the least favourable of his three prognostications for the industry.
Geddes went on to suggest certain remedies as he saw them. He mentioned first management, under the main heading of " Rationalisation ". There has been a substantial rationalisation under the Shipbuilding Industry Board. Reference has been made to the facilities provided in the Harland and Wolff yard, in my constituency. They are most impressive. There is a new, magnificent building dock which has been erected there, with a fine, German-built crane over it, with new fabrication sheds in the process of completion and modernisation which should place our shipyards in Britain in the forefront of world production.
The Geddes Report's first recommendation under the heading, " Employers and trade unions jointly ", contained the following passage, paragraph 573(e).Agreements. To observe bargains in the spirit and the letter." I was pleased to hear the hon. Member for Glasgow, Scotstoun (Mr. Small) referring to the way in which the trade 1519 unions had welcomed the publication of the Geddes Report. How different, I regret to say, in practice their performance has been. Anybody who read the article which appeared in the Sunday Times of 26th April entitled, "Will unions put skids on Upper Clyde's slipways?" knows that it set out in great detail—and it was a carefully drafted article—the traditional dispute between the boilermakers and the finishing trades and showed how this merry-go-round had led to ever-increasing costs, which can cause nothing but alarm.The Geddes Report went on to recommend action for the trade unionsTo review union structure and procedures, having regard to the special situation of the industry, and bearing in mind the possibility of covering all shipyard operatives in five unions.There has been an amalgamation of the unions, but, unfortunately, as hon. Gentlemen opposite know, the old demarcation problems still exist in our yards. The articles which I have mentioned referred to the problems in one yard when time and motion study men came on to the scene. Because one of those men did not belong to the Boilermakers' Union—and these were time and motion study experts appointed to help the yard improve its efficiency—the men came out on strike.
Would the hon. Gentleman agree that there has been a diminishing of the number of demarcation disputes as such in the yards, and further agree that there have been amalgamations of unions in the yards—such as the shipwrights and the boilermakers—and that there are moves towards amalgamation in other directions? Would he agree that this is not a matter which can be overcome in one or two years? It will take a long time. The unions are moving as fast as possible in this direction to overcome these problems, but a speech of the kind which the hon. Gentleman is making does not help those trade union officials who are doing their utmost to overcome these difficulties.
§ Mr. McMaster
I certainly willingly agree. As I said before, there has been some progress. But hon. Gentlemen opposite gloss over the problem that it will take time. But 1520 we have not got time. One cannot lose £3 million, £4 million,£6 million, or £8 million in a single yard and remain in the business.
§ Mr. McMaster
Time is against us, but if the hon. Gentleman will listen to the rest of my speech I intend to go into the point in more detail.
I admit that I castigated the trade unions firmly for not going fast enough with their amalgamations and for not adopting a sensible enough attitude. There has been an improvement, but we must look at the go-slows during the last six months and the work-to-rules in furtherance of wage claims against a background of substantial losses in the shipyards. These are causing alarm.
Management is equally to blame. But first I should like to turn to the next section in the Geddes Report, because I feel that this is of great importance to the country. Geddes' main recommendation, so far as the Government were concerned, was at paragraph 575(a). It said:Policy. To adopt a positive policy towards ship building as a potential contributor to economic growth and the balance of payments.The report went on to deal with implementation. It recommended the Government:To initiate the proposed process of consultation about our proposals within the shipbuilding industry and to ensure that proper consideration is given by those concerned to the price of shipbuilding steel; and, if the necessary response is forthcoming, to establish the Shipbuilding Industry Board…and…to consult with other governments about the early establishment of a study group…The last passage from the report to which I want to refer is from page 159, which contains a summary of conclusions and recommendations. Under the heading "Steel", the report says:Steel accounts for about twenty per cent. of merchant ship costs and the key factor is the basic price of heavy plate.Shipbuilders and steelmakers have a joint interest in maintaining and increasing the British share of the growing world market for ships.The eventual objective should be a ten per cent. reduction (at constant prices) in the steel costs of British-built ships and as a start the arrangements for a differential price for such plate supplied to shipbuilders should be reinstated.1521 That was one of the principal recommendations of the committee. Yet, during the last 10 months of this critical year, the price of steel has risen three time. The first increase became operative in June last year, when, after reference to the Prices and Incomes Board, the Government conceded only part of the full increase sought. It was, nevertheless, the major part. The British Steel Corporation was allowed to add the balance in November, and a further increase of 10 per cent.—Geddes recommended a reduction of 10 per cent.—came into force in January this year. Here is yet another cause of the current troubles facing shipbuilding.
§ Mr. Gordon A. T. Bagier (Sunderland, South)
In his study of the steel industry, has the hon. Gentleman examined the competitive prices of shipbuilding industries overseas? Does he not also agree that the British Steel Corporation has made provision for any shipbuilder who has committed prices ahead to make application for them to be considered in the committed contract price?
§ Mr. McMaster
Those are excellent points and I accept the force of the hon. Gentleman's remarks. I am glad to expound this subject a little more.
First, I deal with our competitors overseas. Six months ago it was hard to find figures of what they were offering, because obviously they will not provide them to competitors. But more favourable steel purchasing terms were available in Germany and Sweden and perhaps also Japan. Since then, there has been a sharp increase in the price of steel on the Continent and their prices are now comparable with those in Britain. But that is not the full picture. In Japan, the industry is vertically integrated and it is well-nigh impossible to discover what the comparable price of steel is there. Japan is our main competitor.
I accept the hon. Gentleman's second point that the steel producers here, where contracts have been taken for the delivery of a ship at a fixed price, have allowed that the price of steel should not escalate during the ship's production, and I welcome that concession. However, I go further. Geddes recommended that the Government should go further.
The shipbuilding industry is a main purchaser of British steel. It takes it in 1522 very large quantities. The Government should look again at that Geddes recommendation in the critical situation facing the industry today and consider whether a concession price by quantity of order of heavy plate could not be granted, as Geddes recommended, to the shipbuilding industry. This is essential for the viability of the industry.
Steel comprises about 20 per cent. of the price of a ship, but labour costs are perhaps the most critical factor. I have already referred to the way in which labour costs have risen at U.C.S. It is a matter of some regret that the trade unions have not adopted a more sensible attitude. I see the objections of hon. Members opposite on this, and I hope to deal with them. I draw their attention to what has happened over the last 12 months. The situation has been stated by leading members of the industry, including Mr. Len Redshaw, Chairman of Vickers, and also in an article in the Sunday Times about shipyard costs. They estimate that labour costs have risen by between 10 and 15 per cent. in the last 12 months—a frightening increase.
The article says that without doubt the main problem is wages and elaborates that theme fully. It says:Exactly how much they have risen is hard to estimate. Redshaw claims 12 to 15 per cent. more is being paid for 10 to 12 per cent. less output;
§ Mr. McMaster
I take the point and I agree. The article goes on:but the unions naturally find this a wild exaggeration. But it is no secret that in many yards the management has given way to pay claims that did not have the equivalent increased productivity so as to avoid a strike.The author of that article, Mr. John Fryer, put his finger on the basic problem. This is just one of the many articles which have appeared in the national and technical Press on the subject.
§ Mr. McMaster
No, unfortunately not, but I believe that they are relevant to the whole of Vickers. The article goes on to deal with the position of Palmer's yard in a subsequent passage about why 1523 it has had to close down. The remarks are not confined to Palmer's. The recent rapid rise in wages has also taken place at U.C.S., Harland and Wolff and other yards.
I want now to meet the point put by the hon. Member for Liverpool, Walton (Mr. Heifer). I believe, as does my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), that wages should be fair and reasonable and that reasonable increases should be granted by the shipbuilders, but I must add—and the Government have made the point many times—that this must be matched by increased productivity. This is an international industry. We are competing with world shipbuilding and if we raise wages by 10 or 15 per cent. to keep them level with other industries and to keep workers in the shipbuilding industry, that is fair enough—as long as productivity goes up by the same amount at the same time.
§ Mr. Heffer
Does not the hon. Gentleman agree that the important question of profit is basically a management question? If one operated a shipyard on the basis of the critical path system, there might be better results than if one operates it in the way that so many yards have been operating in the past—a way of totally incompetent management with hundreds of workers sometimes not being able to work because the materials are not there for them at the right time.
For example. there have been cases where joiners, arriving to put a deckhead up, have found that the plumbing work has not been done. I could give example after example from my own experience of total incompetence on the part of management. The workers cannot be blamed for that sort of thing when hundreds of man hours have been wasted through lack of initiative on the part of incompetent managements.
§ Mr. McMaster
As I said to the hon. Gentleman, I accept that much of the blame rests on management—there has not been proper planning and a proper work-flow—but I think that he is oversimplifying. I would be in error if I sought to blame it entirely on labour, but I do not—I seek to spread the responsibility. Surely both labour and management are equally responsible and must 1524 work together to ensure higher productivity.
This does not turn simply on the flow of materials to the work, but on demarcation agreements and overmanning. The hon. Gentleman knows these problems well. This is where more co-operation is needed. I agree with the point about spending. It leaves a great deal to be desired in most of our yards. I have been around most of them and seen some of these faults for myself.
Therefore, management has failed in its duty. After all, productivity is principally their responsibility, as is the estimation of prices, in which they have been wildly out. We have spent a good deal of time considering the fact that we have taken too many fixed-price contracts. But they were taken two or three years ago. Since then one of the reasons why the estimates were at fault was devaluation in 1968, which would make a fixed price contract which did not take that possibility into account substantially out.
Contracts in the shipbuilding industry are signed one year, work does not begin for two or three years and is not completed for two, three or more years after that—at least five years from the date of the original contract. On top of the effects of devaluation was the escalation in wages which I have mentioned. Here I would lay the blame squarely on the Government, who, up to last year, insisted that wage increases should be matched by productivity. Then, suddenly, their policy collapsed six months or a year ago. They have just introduced the Industrial Relations Bill, which completely abandons all concept of controlling—
§ Mr. Speaker
Order. This is a broad debate, but not quite so broad as that. We will debate that subject on Second Reading of the Bill.
§ Mr. McMaster
I will return to my main point.
Some of the contracts taken after 1968 had escalation clauses built in. The order books were becoming fuller and they could bargain a little more keenly, but these clauses also grossly underestimated the rise in prices. They allowed for about 3 or 4 per cent. and, as I said, there has been a rise of at least 10 per cent., perhaps 12 and in some cases 15 per cent. 1525 in wage rates alone, which are a substantial part of costs, in the last 12 months.
There is one slightly silver lining, in that demarcation—hon. Gentlemen opposite, many of whom have worked in the industry, know this—is playing a lesser part, because we are moving away from the complex passenger ships towards the large bulk carriers and tankers. Therefore, where there is not so much work for the finishing trades, demarcation is a lesser obstacle. But progress here has been lamentably slow since the Geddes Committee reported. The facts are clear Lo the nation and to everyone who works in the industry.
My suggestion to the Government and to my own Front Bench, who may be in charge of these affairs within the next few months, is that there should be an immediate plan for the industry. After all, we are a maritime nation. I admired the courage of the hon. Member for Bebington (Mr. Brooks), who suggested that the resources employed in shipbuilding would be better employed in other industries. I am sorry that he is not still here, because I do not believe that it is quite so easy to redeploy these resources.
There could be grave disadvantages in allowing our shipbuilding industry to die—and that is what we are facing. As a great maritime nation, we could be held to ransom by any foreign country which drove us out of the business. It is ironic that a Government who began their period in office with a National Plan should have failed so lamentably to plan clearly for our shipbuilding industry. They have allowed too many British orders to go abroad.
§ Mr. Heffer
I accept that there is a serious problem for the future of the shipbuilding industry, but has not private enterprise utterly failed here? It has to have money pumped into it by the Government. Therefore, is not the logical conclusion that we shall have to take over the industry? I hope that this would be at very reasonable share prices, but not inflated prices. They could almost give it to us at the moment, to put it back on a proper and viable basis.
§ Mr. McMaster
This shows the unwisdom of giving way. I know the hon. Member's fondness for nationalisation, but I was about to deal with those points.
1526 At present, the shipbuilding industry is facing a very serious crisis. I believe that the Government have failed, first, through the failure of their incomes policy, which has led to this rapid escalation in costs, direct and indirect. There are 70,000 men employed directly in the shipbuilding industry and 200,000 or more indirectly. Orders have gone abroad which should have been placed in this country. We debated just before Christmas a British Railways order which went to Italy. Where is the logic in that? Italy pays a subsidy of 15 to 20 per cent. to its shipyards. We allowed British Railways, a nationalised industry, to order its boat in Italy when we are putting millions of pounds into our industry to try to save it. It is nonsense.
When it comes to private or seminationalised industry, British Petroleum orders its ships in Japan because, it says, it wants to sell it petrol there. Have Her Majesty's Government attempted to say to American oil companies, "We will buy your oil if you build your boats in Britain"?
§ The Paymaster-General (Mr. Harold Lever)
Is the hon. Gentleman suggesting that British Petroleum is a nationalised company; or that, though not nationalised, the Government should interfere in its commercial decisions by reason of its powerful shareholding? Is that what the hon. Gentleman is inviting the Government to do?
§ Mr. McMaster
I shall deal with that point later. But the Government should certainly have interfered in the British Railways case and should not have allowed the order to go to Italy.
Foreign countries give assistance to their shipyards. It has been suggested by hon. Members opposite, particularly by the hon. Member for Bebington, that we should not give a lead in assisting our shipyards, but should attempt to negotiate with foreign countries to persuade them to abandon their unfair practices.
That is all very well, but it is extremely airy-fairy. We have been bargaining with foreign countries for many years and we have not made much progress. France subsidises its shipyards by 10 per cent. In development areas it gives them an even larger subsidy. Italy pays a subsidy of 15 to 17 per cent., depending on the location of the shipyard.
1527 Japan assists her yards by granting special credit terms. An interest rate of 4 per cent. over eight years is available for Japanese owners who place orders in Japanese yards. Until very recently, Japan imposed a 15 per cent. duty on Japanese owners who ordered boats abroad. Last year, in Japan, which has the biggest and most productive shipyards in the world, shipowners ordered 1,566,000 gross tons of shipping, all of which was placed in Japanese yards. Even though the duty has been dropped, Japanese owners are still ordering their boats in Japanese yards.
I suggest that we impose a similar duty while our shipbuilding industry is facing competition from Japan, France, Italy and other countries. Unless we build up our own industry with British orders, it cannot hope to compete in world markets.
The troubles of the industry are not unique to this country. We have spent a lot of time in this debate considering the difficulties of Upper Clyde, Cammell Laird, Harland and Wolff and other yards, but leading Swedish and German yards are also showing losses.
Against this background, I advocate that the Government publish a cohesive plan for the industry, and announce clearly their intentions and the way in which they plan to put the industry in a position to compete not only with German and Swedish yards, but with the massive Japanese yards. Otherwise, our industry will go out of business altogether.
I know the Government's difficulty. They are afraid that if they announce their intention to support the industry the trade unions will take it as a cue for slapping in more wage demands. The management may rest on its laurels and say, "The Government will support us, whether we put our house in order or not. They will bail us out, whether or not we are efficient". We must face this difficulty. The trouble about the Government's not publishing a plan and announcing their intentions is that uncertainly continues in the industry. It does not attract men to it. People do not see a future in it.
As the hon. Member for Walton said, the fault is that of management. Perhaps 1528 the weakest part is middle management which needs to be supported. More life must be coaxed into the industry. Men of ability must go into the shipyards instead of into other engineering enterprises. Before they can be persuaded to do so they must be sure about the industry's future. Who, reading the articles in the Sunday newspapers, would be sure about the future of our yards?
We need a master plan for shipbuilding. A Minister for Shipping and Shipbuilding, responsible to the House, who gives his time exclusively to the industry, should be appointed. We have had Ministers of Civil Aviation. The aviation industry, important as it is, is less essential for the country than the shipping and shipbuilding industry.
I welcome the provisions in the Bill. I was glad to hear the Minister say that so far they have not cost the Government a penny. The banks have been paying the money. We could pass a Bill increasing the limits from £600 million to £800 million, but who would pay for it? It would be the bankers and the shareholders in the banks, who receive a slightly lower dividend because the money could be lent elsewhere at a higher rate of interest. I congratulate the joint stock banks and other banks which have contributed money at a special guaranteed rate to home and overseas owners. I am glad to learn of this protection.
I should like the Government to reconsider the pros and cons of protecting the industry for a limited time to enable it to put its house in order and to make it clear to the industry that it is for a limited time. There have been too many extensions in the past. We must give the industry the protection it needs so that it can face the competition to which I have referred. It is no use Britain saying to other countries, "We shall not protect our industry. You can protect your industry until you drive us out of business. We are going to lead the way".
I am glad that management is getting away from the idea of fixed price contracts and that it is in a better negotiating position and can write in escalation clauses, which I hope will be reasonable. However, I hope that the Government will ensure that wages do not increase to such an extent that, whatever the escalation clause, the position is nonsensical in four or five years.
1529 I have every confidence in the ability of our industry, with assistance, to match the competition of any other shipbuilding industry in the world, whether it be the recently modernised Japanese industry, or the older, well-established Swedish and German industries. I am convinced that the steel makers and the shipbuilders, with their years of experience and traditional skills, can turn out boats as good as, and indeed better, cheaper and quicker—and the question of delivery is important—than any other shipbuilders in the world. But the Government should let the industry know what they intend.
§ 7.30 p.m.
§ Mr. Gordon A. T. Bagier (Sunderland, South)
The hon. Member for Belfast, East (Mr. McMaster) in his closing remarks appeared to be asking for massive Government interference into the private enterprise industry. He wanted a national plan for the industry, which I welcome. Probably the best plan a Labour Member of Parliament could advocate is the one which was discussed briefly by my hon. Friend the Member for Liverpool, Walton (Mr. Heller), which is to take all the firms into public ownership. What worries me is that we would also have to take into public ownership a large section of the present management. There is no doubt that part of the deep-rooted malaise affecting the industry at the moment has been caused by bad management.
The hon. Gentleman then seemed to imply that increases in wages and salaries in the industry would have a disastrous effect. He is saying that although workers in the industry see increases in wages going to workers in the car industry and other industries, they themselves should say, "We do not want any increases". The situation will never arise in which, because their industry does not happen to be viable, workers will accept the situation that their salaries are at such a level that they will underpin that sort of arrangement.
§ Mr. McMaster
If I may make the point clear, I do not expect the trade unions to accept the situation. I was saying that along with rises in salaries they should make sure they play their part in keeping of productivity.
§ Mr. Bagier
That is quite fair and I follow what the hon. Gentleman is saying. There have been great strides in 1530 productivity by the trade unions in the shipbuilding and ship-repairing industry. Perhaps it has not gone as far as it ought to go, and there are many ancient reasons for this. It is an old industry containing a large number of trades and there are difficulties in arranging agreements and in deciding what new skills will be done by what old trades.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) referred to the demarcation problems which exist in the industry. I believe that these disputes are often misunderstood by the general public and by hon. Members opposite. They are not disputes about who drills what hole, or draws what line, as would appear from the newspaper headlines. They involve all the new technologies which exist in a cold, hard, competitive world. This affects the angle iron smith, the driller, the corker and the rivetter, most of whose industries have disappeared. Arguments as to who should do what job are felt very deeply because a man may lose his livelihood and skills and have to start afresh. These are the main reasons for the deep-rooted arguments and negotiations which take place in many demarcation disputes, matters which seem to the outsider who is not personally affected to be so trivial. However, they are most important to the individual who will be knocked out if he is the loser of the argument.
The shipbuilding industry employs many thousands of men. Had it been a corner shop which was not paying its way, it would probably be allowed to close. But it is not. It is a huge industry which, with its good workmanship and skills, has built up a world wide reputation. But it is an internationally competitive industry and many of its problems should have been foreseen 20 years ago on the lines that the industry would eventually have to face up to the hard competitiveness of shipbuilding industries in Japan, Sweden, Western Germany, Lisbon and elsewhere. But it was not foreseen.
The hon. Member for Cirencester and Tewkesbury chided the Government for giving too much scope in one direction and saying that in other matters we should have done a little more. In reply I would say that we compare favourably with the £70 million offered by the right hon. Member for Wallasey (Mr. Marples) 1531 who was responsible for the industry under the Conservative Government. He gave no indication to the industry about how it should put its house in order to meet the hard, competitive problems of the outside world. This process should have taken place some time ago. The structure of an industry and the jobs in it cannot be changed overnight. The social consequences must be carefully taken into consideration.
I am pleased that the industry has begun to write escalation clauses written into its contracts. The fixed-price contract has been a problem, which is nothing to do with this Government. It is a question of negotiation probably on an international level. Like my hon. Friend the Member for Bebington (Mr. Brooks), I fail to see why, if we were in a position of having short order books when our Japanese competitors had long order books, some escalation clauses could not have been written into our contracts. There may be a good reply to this argument and I hope that I will hear it tonight. Escalation clauses of this kind will provide some cushion if there are to be improved standards for those who work in the industry and a possibility of profits.
I welcome the Bill for its two main provisions. The first is that it will provide an extra £200 million credit, but secondly it will also expand the life of the Shipbuilding Industry Board which has been doing a useful job. In its membership of the Shipbuilding Repair Council it plays its part, along with the trade unions, in discussing the problems of the industry. I also welcome my right hon. Friend the Minister's reference to the SD14 success. If I may be forgiven for making a constituency point, I wish to extend congratulations to Austin and Pickersgills on receiving the Queen's Award, which was mainly because of the huge success of the SD14. It is a pity that there is still a bitter dispute in the other consortia at Doxford, which has lasted six weeks. I am sure that deep-rooted problems are involved, but I hope both sides will get together and find a solution. This dispute has kept this shipyard idle, with disastrous effects on future orders and delivery dates.
§ Mr. Ridley
The hon. Gentleman has mentioned the cold competition which the 1532 industry faces. This sort of strike will do inestimable damage to the reputation, as well as to the health and strength, of the shipyard. Does he not agree that something more has to be done if this problem is to be solved for the future?
§ Mr. Bagier
I could not agree more, but I cannot take upon my shoulders apportionment of blame. There are great faults on both sides. This particular dispute is doing tremendous damage to future delivery dates in the yard, and I very much hope that the two sides will soon reach a solution.
I wish that we could get a little more clarity of thinking on the part of the managements in their dealings with the men. Part of the difficulties in the yards lies in the tremendous gulf which still exists between management and staff. Some yards have made progress on this matter timidly and slowly, but there is still an attitude in the industry of "them" and "us". It is based on a history of antagonism against managements who, in the old days, were rather tough towards the trade unions whose main job was to get what they could from them. Big changes are taking place, but managements have to do still better.
Serious social problems arise when men are made redundant. They are entitled to be consulted and told about their future at the earliest possible moment. Only recently, we have heard the tragic news that Palmer's yard at Hebburn is to close in June. The first indication that the shop stewards and members of the local council who represent 1,100 men in that town had was when they read about it in the Press. There was no consultation about the problems which the yard faced. There was no consultation about possible new working methods and potential savings which could be seen.
The most important factor, of course, is that it is disastrous for the 1,100 men involved. When they are added to an already inflated unemployment figure in the area, it is not surprising that it causes great concern to those who represent the area. My hon. Friends the Members for Jarrow (Mr. Fernyhough) and South Shields (Mr. Blenkinsop) and I have been given great assistance by the Ministry of Technology. Since last Thursday, we have had interviews with my right hon. Friend the Paymaster-General and 1533 my hon. Friend the Minister of State. My hon. Friend was courteous enough last night to meet the shop stewards and councillors who represent the area and to discuss the problems with them. That is the kind of human approach which ought to be copied by the managements.
Earlier today, we heard a slightly schizophrenic interjection by the hon. Member for Tynemouth (Dame Irene Ward) about the problems of the area, and both the hon. Lady and the hon. Member for Belfast, East referred to rising steel prices. Of course steel prices have escalated. In these days, it is difficult to keep costs level, and when they go up in ancillary industries, they go up in steel. However, steel prices remain competitive with, if not less than, those of most other countries with whom we are in competition. They are not really an Important factor.
Although I can understand it, it always strikes me as a little strange when hon. Gentlemen opposite undertake to provide cheap steel at the expense of the commercial expertise of a nationalised industry in order to help a privately-owned sector of industry like shipbuilding. I do not regard their remarks as very helpful. The hon. Lady, for instance, provided us with what appeared to be a number of 1930 or 1932 solutions, most of which are hardly applicable to 1970.
The Bill is one which should be welcomed by both sides of the House. With it, the Government have shown that they are concerned about the future of the shipbuilding industry. I hope that we shall hear from the Front Bench opposite a little about the possible implications of the Selsdon Park proposals. I have in mind, for example, the effect of withdrawing the regional employment premium which goes to our ship builders. Last year, it accounted for £1.5 million of the £F1.6 million profit made by Swan Hunter. The industry is entitled to know the Opposition's thinking. I hope at some stage that it will be made clear how it affects an industry like shipbuilding. We are entitled to know.
We are extending a hefty credit ceiling to the shipbuilding industry, and I welcome it. It compares very favourably with the meagre assistance which was offered when the right hon. Member for Wallasey was the Minister responsible. 1534 We hope to see a healthy future for the industry, and it will be seen provided that it is given the confidence which I am certain that the Government are prepared to give it.
I qualify those remarks with a note of warning. Although there is a boom in ship demand in the world today, I should prefer to see the state of the industry between periods of demand, when the demand tapers off gradually and finds a plateau where, in a real competitive world, this country is able to remain competitive hold up its head, get the orders and produce the goods. Only then can we say that we remain what we have always been—a great shipbuilding country.
§ 7.45 p.m.
§ Mr. Albert Booth (Barrow-in-Furness)
Mr. Speaker, I seek to endear myself to you in two ways, first, by referring to the Bill, and, secondly, by speaking briefly.
The Bill increases the limit on the guaranteed payment for ships built in British yards from £400 million to £600 million. To see this in perspective, it is necessary to recall that it is only three years ago that we legislated for this scheme with a limit of only £200 million. The necessity to increase the limit in this dramatic fashion is a measure of the success of the scheme and of the huge increase in the orders obtained by shipyards.
However, the amount of guarantee is only one part of the bargain laid down in the original Act. The other part was an improvement in the efficiency of yards. That was to come about as a condition of receiving these guarantees. I hope that my right hon. Friend will comment on the improved efficiency that has been brought about in our shipyards. Obviously, the reorganisation which has taken place in terms of yard amalgamations is much more readily apparent to the outsider than the improvements in efficiency which have come about inside the yards. Nevertheless, the latter point is even more important to the health of the industry than the former.
The improvement in our order books is best demonstrated by comparing the new orders obtained during the 12 months ended 31st March, 1968, with those obtained during the 12 months ended 31st 1535 March of this year. Over that period, the order books of United Kingdom yards rose from 2,094,000 tons to 4,605,000 tons. That is a remarkable increase, and one of the reasons for it is the high degree of subsidy being paid by the taxpayers of shipbuilding countries to ship owners.
The main beneficiaries of the policy being pursued by the Governments of ship building nations are the countries which own ships but do not build them. At present, 2½ million tons of shipping is under construction in the world's yards for Liberian registration. I suggest that Liberian taxpayers put precious little into the pockets of the owners who purchase those ships. The money is found by the taxpayers of the countries which build them. In view of that, I agree with those who say that an international agreement between the shipbuilding nations is urgently needed to redress the position.
I do not derive any satisfaction from the suggestion that this can be done only in the long term and by very small stages. On the contrary, it has to be done quickly and with a sense of urgency. We are in a good position to promote such an international agreement, because we do not suffer as much as many other countries as our merchant fleet is being rapidly expanded. Although our rate of shipbuilding is lower than that of Japan, the rate of expansion of our merchant fleet compares favourably with Japan's.
Inevitably, in shipbuilding debates, we tend to turn our eyes to the comparison of shipbuilding rates between ourselves and Japan and see Britain as a rather poor second. If we focused our eyes for once on the position of merchant fleet expansion we would see that 2,594,000 tons is being constructed in the world for the Japanese fleet compared with 2,531,000 tons for United Kingdom registration. We are almost on a par with Japan. It is amazing that on a par with ourselves and Japan is Liberia, with 2,464,000 tons now under construction.
§ Mr. McMaster
For completeness, will the hon. Gentleman tell us what proportion of those Japanese orders are being built outside Japan and what proportion of the British orders are being placed outside Britain?
§ Mr. Booth
I am grateful to the hon. Gentleman for intervening on that point, because I want to challenge him on the point that he made relating to Japanese shipbuilding figures.
The hon. Gentleman pointed out, for example, that 1½ million tons were ordered last year to be built in Japanese yards for Japanese owners. To give a complete picture I would point out that about 2½ million tons are being built in Japan for Japanese owners. I believe that we could usefully combine with Japan and other shipbuilding countries to solve the problem of the percentage of our shipbuilding tonnage compared with the expansion of our shipping fleet.
At present, 1,130,000 tons are being constructed abroad for British owners compared with a total tonnage being constructed in the United Kingdom of 1,741,000. In other words, if all those orders had been placed in British yards and were being constructed now we would have a building rate of about 3 million tons, which would be a wonderful position to achieve.
I believe that this would justify an inquiry by the Ministry of Technology into the reasons why these orders have been placed abroad. I envisage that the inquiry would have to discover how far orders have been placed abroad because of the success in specialisation which has taken place in certain foreign yards, how far it is due to unfair subsidies, and how far it is due to other factors. I am sure that the result of such an inquiry would show that the explanation for the difficulties which face some of our yards is not that which has been offered by many hon. Gentlemen opposite.
I do not believe that it is due largely to wage claims in our yards. It is necessary to know the reasons why these orders have gone abroad. If it is due to specialisation, that points to what our policy should be on specialisation in our yards. If it is due to other factors, no doubt they would also show the way that we should go. I believe that we should have this information to determine what future Mintech policy should be for future British shipbuilding.
§ 7.55 p.m.1537
Mr. E. Fernyhoough (Jarrow)
I thought that my hon. Friend the Member for Wallsend (Mr. Garrett), who has sat here longer than I, was about to rise, Mr. Speaker. Therefore, out of courtesy, I wanted to give him this opportunity to speak.
I am sorry that I was not present when the Minister moved the Second Reading of the Bill. I was taking a deputation to another Ministry, so I was debarred from hearing what he had to say about the shipbuilding industry in general. I was particularly disappointed not to hear my right hon. Friend's reference to the pending closure of the Palmer's Yard. I wonder whether it will be possible, when the Bill goes to Committee, for Amendments to be moved so that the ship-repairing industry might be able to get some of the financial benefits which the Act does, and the Bill proposes to, give to the shipbuilding industry.
The yard in my constituency which is due to close in a few weeks' time is the most modern, best-equipped repair yard probably in the country—certainly on the North-East Coast. As some of my hon. Friends have said, the announcement came like a bolt out of the blue. It shocked not only the men, but also the whole community, because it meant that twice within most men's memory this community had suffered the same tragic consequences.
It is unbelievable that a company like Vickers should have neglected to consult the men with a view to seeing whether a way could be found to overcome the difficulties and keep the yard viable.
I met some of the men last night. They told me that they had not been asked to discuss the difficulties facing the yard. They said, "Had we been approached, had it been put to us that we were in any way responsible for endangering the life of the yard, we would gladly have cooperated." They made it clear that they would gladly co-operate, even at this late hour, if there was any chance, as it were, of giving the yard a blood transfusion to keep it open.
I hope that my right hon. Friend will be able to give me some assurance on this matter. Is there no possibility of the life of this yard being extended for a few months until such time as a microscopic 1538 inquiry can be made into the reasons why the most modern, up-to-date, best equipped dry dock facilities in the North-East should have become unviable? Neither the men nor I can understand why a great industrial complex like Vickers has not taken the men into its confidence to see whether, with both sides sitting at the table, some way could be found to avoid this catastrophe.
The hon. Member for Belfast, East (Mr. McMaster) said that Britain was a great maritime nation. I hope that we will not make the same mistake that we made in the coal mining industry. We have let that industry run down too rapidly and we could face great difficulties next winter, or the succeeding winter.
It would be a sorry state of affairs if we, as one of the principal maritime nations of the world, allowed our ship-repairing facilities to run down to such an extent that we became almost entirely dependent on repair yards overseas. I do not think that it is necessary to allow that to happen. We have been winning orders in competition with foreign yards, and the yard in my constituency has recently broken into the Russian market. The Russians have sent two ships to the Tyne to have stabilisers fitted and other improvements made. I cannot believe that this yard is to close because the firm has lost money on individual contracts. It may be that the flow of work has not been sufficient to meet all the amortisation charges, but this is something which should have been looked into.
There has not been one industrial dispute in this yard during the last six or seven years. Many questions have been asked today about the number of days lost through strikes and the number of disputes which have occurred during the Government's tenure of office. I repeat that there has not been one dispute at this yard. It has perhaps the best record for industrial relations in the country. How comes it, when there is a real base for what I call being competitive, that is, good labour relations, and after£4½ million being spent on it only five or six years ago, this yard is to close?
Is it not possible, for a few months while an investigation is made into the position, for some Admiralty and other repair work to be brought forward? Is it not possible to persuade B.P. to be 1539 ultra-patriotic and see to it that every repair job that it has goes to this yard? Unless we get a blood transfusion, unless we get some immediate help, 1,100 men will find themselves signing on at the employment exchange in a matter of weeks.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said that there were plenty of vacancies for skilled men. The hon. Gentleman does not know what he is talking about. There will be a job for every boilermaker made redundant, but there will not be any jobs for fitters, plumbers, electricians, and scores of other men whose skill we as a nation can ill-afford to lose. The dismissal of these 1,100 men will make the male unemployment rate in the Tyneside conurbation almost 10 per cent., and I say that this is indefensible. We cannot call ourselves a civilised nation if, faced with the prospect of unemployment of that magnitude in any area, we are not prepared to do something about it.
We told the people at the last election that if private enterprise fell down on the job we would not hesitate to step in. I should like to think that we would be prepared to see whether in this industry the State can efficiently, effectively, and profitably run a ship-repairing yard which the great Vickers empire, with all its managerial skills and experience, finds it cannot do.
I hope that the skills of these men will not be lost. We have proved, and are proving, that the shipbuilding industry is competitive. Orders would not be forthcoming if people could get a comparable ship at a cheaper price at any other yard. If we have more or less won the battle there, the time has come for us to have a real, deep-searching inquiry into the repair side of the shipbuilding industry with a view to ascertaining, first, the size at which it can be maintained and, secondly, making certain that the men whose skills and ability are world renowned, and who have received messages of congratulation from all quarters of the globe for the work they have done, are given the opportunity of continuing to use those skills not only to the benefit of themselves and the community in which they live, but the nation.
§ 8.6 p.m.
§ Mr. W. E. Garrett (Wallsend)
I think that the House must have been impressed by the speech of my hon. Friend the Member for Jarrow (Mr. Fernyhough) whose constituency is on the other side of the Tyne from mine. I think that he fairly set out the terrible industrial relations which must have existed at Vickers. As a former employee of Vickers, I am not surprised to hear of a complete breakdown of industrial relations in the company.
I have never before heard my right hon. Friend being so modest as he was this afternoon. Here we have a success story. We have rescued an industry which, in shipping parlance, was virtually on its beam ends. My right hon. Friend spoke for half an hour, during which he completely under-estimated the part which the Government have played in rescuing the shipbuilding industry and making it as efficient as it is now.
I have the good fortune to represent the Wallsend constituency, and I dare say that the House is unimpressed by the monotonous regularity with which these huge ships are launched, and the monotonous regularity with which members of the Royal Family come to Tyneside to launch them. Every ship is a success story of craftsmanship, design, and delivery on the dot to the satisfaction of the customers, so much so that they keep coming back, and the Swan Hunter group at Wallsend has the largest order book in its history.
Unfortunately I did not hear the speech of the hon. Member for Belfast, East (Mr. McMaster), but I wish that labour relations were as good in his yard as they are in mine.
§ Mr. McMaster
We have a full order book but the point is what profit, if any, will be made on the orders either in the hon. Gentleman's constituency or in mine? That is the sore point.
§ Mr. Garrett
We could get involved in a doctrinaire argument about whether profit, in the sense which the hon. Gentleman means it, or in the sense which I mean it, is essential to the industry.
Since 1944 we have seen the inherent conflict between private capitalism and State capitalism. Had it not been for 1541 State capitalism rescuing the industry, the situation would be extremely grave.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) made some play 'with the question of wages and, although he never said it outright, he implied that wage rates were one of the factors in reducing the competitiveness and profitability of some companies. I should hate the House to get the impression that those employed in shipbuilding are earning enormous wages. Some in the industry earn adequate wages, which are negotiated through very hard, cruel and harsh collective bargaining. But there are also people in the industry who come out every Thursday night with about £10. That is not uncommon. The House should not think that everybody in the industry is earning £40 a week. Those who are are working damned hard and those rates are the result of very close negotiations.
On Tyneside, labour relations, except for this terrible breakdown at Palmer's yard are very good and I should like to see them continue. I believe that they will, because there seems to have been struck up a personal bond between the leaders of the unions and the senior men who manage the industry. This can do only good. The Swan Hunter group is reorganising its Wallsend yard. No reference has been made to this, but a £2½ million reorganisation—albeit a comparatively modest sum—is taking place without any interruption of the flow of productivity. At the end, it is expected that through-put of steel will be increased by another 300 tons per week. This is what we want, and I hope that it will continue.
I have always wondered why, since the war, no real thought has been given to an adequate dry dock on the North-East Coast. The much-vaunted Palmer's yard, which is capable of taking a ship of 103,000 tons and which cost £4½ million to extend, is a case in point. Even at that period, it must have been realised that it was inadequate. I have never heard a statement from any Minister or any of the senior people in the industry about why we in Britain, particularly on the North-East Coast, cannot build a dry dock capable of taking these huge vessels of up to 300,000 tons. The Portuguese Government saw the advantages here and, with the aid of other foreign capital, they now have a dock which is 1542 taking virtually all these huge tankers for the necessary repairs.
It is ludicrous to think that we launch a huge ship into the river and give it sea trials in the North Sea, and that it never returns to the river because there is no dry dock facility for it. If my imagination ran riot, I would think of extending Palmer's dock, which is the subject of controversy at the moment, so that it could take 300,000-ton ships. We could then launch a ship on the north side, and after it had done its trials, we could take it into a dry dock on the south side before it went into commercial use. That may not be feasible, but has any feasibility study been done? This point has always given me some concern.
The people on Tyneside welcome this extension of credit. We are sure that it will be used wisely if the opportunity is given. We hope that the prosperity of this industry will continue for many years to come.
§ 8.15 p.m.
§ Mr. Simon Wingfield Digby (Dorset, West)
This is, of course, a limited Bill, dealing with Government guarantees for bank loans, but it raises very much wider issues than why home owners should go on ordering at home. It is not surprising that we have ranged over a wide field. The scope of the Bill is small indeed in the perspective of the industry's problems. We have had a valuable and interesting debate and many of the speeches I have heard—I apologise to those hon. Members whose speeches I did not hear—have interested me very much. The right hon. Member for Orkney and Shetland (Mr. Grimond) made a number of points with which I greatly sympathise. I used to have a personal sympathy for his idea of a new building site on green fields.
The announcement by the Minister about the continuation for an extra year of the Shipbuilding Industry Board was certainly overdue. I could never understand the hesitation here, because I gather that a number of approved plans are in the pipeline on which only the S.I.B. itself can finally pay the money. When the idea of the S.I.B. was first mooted, the Opposition doubted whether it could really end at the end of 1970, and those doubts have certainly proved true.
Those of us who know something of the industry—many hon. Members who 1543 have spoken do know it—know that it is an industry of cycles. There have been ups and downs, but usually, on the ups, the industry has been prosperous. What is a little alarming now is that there is an "up" in the industry throughout the world, yet we are getting disappointing results from many of our firms. There is a world boom, yet British shipyards are sustaining losses. I need only remind the House that Lloyd's recorded for last year three records. One was that the tonnage of ships for which plans were approved went up to 7¾ million and another was that the number of ships went up considerably to 156.
We are living with a certain amount of foreign subsidies. It is very satisfactory that the Government have succeeded in concluding an agreement in O.E.C.D. on credit terms, and it is equally nice to know that this is being honoured, so far as we know completely, by foreign Governments. At the same time, we must record that certain foreign Governments are going on with subsidies in other ways. In France and Italy in particular, subsidies have been estimated at between 10 and 17 per cent. In Japan, too, there are subsidies and all of the Japanese merchant fleet is built at home. Also, a study is being undertaken by O.E.C.D. of all subsidies. When the report is published, I hope that the Government will be able to get a little further in some international understanding on this matter.
The hon. Member for Bebington (Mr. Brooks) faced up to the question of the viability of this whole industry. There has been a lot of Press publicity in recent weeks and there have been some pessimistic arguments based partly on profits. In the past, there have been arguments against shipbuilding on the low conversion factor and other things. But there is a very strong case, in a maritime nation like our own, with still a large merchant fleet, for our having this industry and ensuring that it is viable.
We have a large national investment in shipbuilding; in the skill of the labour force, in management and in capital equipment, which must amount to a very large figure indeed. In addition, this industry is concentrated in certain areas, so that it has a big effect on employment. A factor which appeals to 1544 my hon. Friends is that it is a traditional British industry.
The Bill is designed to extend the guarantees. Guarantees were first mooted seven years ago, under the "Marples plan" of May, 1963, and the present scheme came into operation almost exactly three years ago. We discussed it in Standing Committee D on 20th April, 1967, when my hon. Friend the Member for Eastleigh (Mr. David Price) said that we would be forced to run some kind of credit scheme until such time as our competitor shipbuilding nations abandoned their credit schemes. That is the position we are in today, and the Government have been slow to recognise it.
The then Parliamentary Secretary, who I am glad to see in his place, though in another capacity, showed a shining faith in Labour policies at that time and suggested that borrowing rates were likely to go down under Labour. I regret that he has been disappointed.
Two years later, on 4th February, 1969, we again discussed the subject, when the original £200 million guarantee had run out and when no less than £287 million had already been committed. At that time, in Standing Committee E, I asked the Government for the secret of their calculations because it seemed to me, on their figures, that the additional£200 million, making£400 million in all, would be insufficient. Today, we are having the third bite of the cherry. I wonder whether we shall be coming back for a fourth bite before long, for I gather that already£400 million has been committed. The way things are going it seems unlikely that£600 million will be enough.
As has been mentioned, we are going into a revolving scheme and the repayments have only just started. It may be a long time before we reach the peak of loans. Further orders and demands on the fund will depend on a number of factors, such as on the world boom in shipbuilding continuing, which I think is likely, and on delivery dates abroad remaining long, which is also likely. There is every reason to suppose that we will be able to persuade home owners to go on ordering at home.
It therefore seems likely that by 1972 or thereabouts the then Government will 1545 be returning to the House for another£200 million, because£800 million will probably be the sum required to keep the revolving scheme fully operating.
The Government may believe that before that time there will have been a review of the Shipbuilding Industry Board to see whether it should continue in any particular form, and it might be thought now that that will be the moment to deal with the future of the scheme. However, in the meantime it strikes me as somewhat untidy not to have sufficient money in the scheme to make it revolve completely.
The effect of this extension of the scheme is merely that home owners will still be able to borrow at 6¼ per cent. if they are prepared to order in home yards. We have been told that the cost to the Government is likely to be nil, and I am glad to hear that. We do not know what the cost will be to the joint stock banks, though it cannot be a very profitable transaction for them. I suppose that it will cost the Bank of England something, because I understand that after a certain limit, some of the borrowing must be transferred to the Bank of England, and perhaps the Paymaster-General will comment on this.
It will be seen, therefore, that British owners ordering abroad will gain little advantage—probably a ¼per cent. advantage. I imagine that if they order abroad they will be able to get finance at about 6 per cent. compared with 6¼ per cent. here. Will there, in fact, be a disadvantage of¼ per cent. for home owners ordering at home?
I return to the question of the general state of the industry, about which there has been much Press comment in recent weeks. In the business section of The Times a leader stated:Clearly, something is wrong in British shipbuilding, particularly when order books are bursting at the seams, yet no one seems able to earn healthy profits.That must be the cause of anxiety to hon. Members who have the interests of the industry at heart.
We need not go far to see the reason for this. As has been pointed out by many hon. Members, this is essentially an assembling industry, and the cost of materials has gone up considerably. My figures show that between 1964 and 1969 the price of materials increased by 20 1546 per cent. I wonder how much more they are likely to increase in the next year or so? Hourly wage rates have gone up, according to my calculations, during this time by 58 per cent. Although one likes to see high wages being paid, one must consider the wages paid by one's competitors.
No doubt they have risen as well, and this brings me to the important question of productivity and competitiveness. The trouble has been the fixed price contract. Several hon. Gentlemen opposite have queried whether firms were wise to accept fixed price contracts when they did. The answer is that they could not have got the orders otherwise. Happily, things have changed and it is now possible to negotiate contracts on a cost price basis. Although some contracts may have had escalation clauses, the escalation allowed for was not sufficient to meet the inflation which occurred.
It is in considering this aspect that we come to a responsibility which the Government cannot shuffle off. I refer to inflation. It has gone on, and is going on, and hon. Members who are interested in this and other industries are extremely anxious about the speed with which it is likely to proceed in the near future.
§ Mr. Bagier
The hon. Member went very quickly over the question of fixed-price contracts. He passed it off by saying that orders could not have been obtained except under those circumstances. Is he saying that if there could not be fixed-price contracts, they could not get a ship built? It seems obvious that they were not getting a ship built because most of our competitors were on long order books.
§ Mr. Wingfield Digby
This is a matter of commercial judgment. I am sure that they were anxious to keep the yards going and that they saw better times ahead. It may be that they quoted too low prices in some cases, but that enabled the yards to survive. Now, with order books in foreign yards very long, it is easier to encourage orders to come here. That is a happier aspect of the situation.
In the meantime, there are a certain number of fixed-price contracts negotiated on what has turned out to be too low a price and they have to be worked through the books. That is an explanation of some of the bad results. We hope 1547 that if there is not undue inflation this situation will be remedied in future. This is the reason for the very bad news we have had in recent weeks.
The case of Harland and Wolff has been referred to. I am glad that one hon. Member referred to the fact that it has adopted the modern answer with its new shallow building docks and new shops. They should be the answer to many problems which may arise in future, but, meanwhile, there has been a substantial loss. I understand that the Shipbuilding Industry Board is looking at the present aspect and we may be told about that in the reply by the Government.
I sympathise with hon. Members opposite about the closing of Palmer's yard because I always regarded the North-East Coast as second to none in its reputation for ship-repairing. It is a sad fact that it is no longer in the right place. This is one of the difficulties and one of the facts of life. Nevertheless, I am very sorry to know that a yard of that kind, on which a great deal of money has been spent, should have to close. If I were to discuss ship-repairing at greater length that would widen the debate considerably. I hope, however, that the Minister will look carefully at this question, because problems of ship-repairing are at present more serious than those of shipbuilding. The remedy is less obvious because of the new geographical factor which did not exist to the same extent before.
We have heard that the Yarrow yard, which was always regarded as a yard of efficient warship builders, has left Upper Clyde Shipbuilders. Perhaps when we debate Clyde shipbuilding we shall be told more about this. We have read in the papers about the Cammell Laird loss and further losses to be announced later. This is disquieting to all of us. I do not think that the Government can escape all blame, for it was they who cancelled the contracts for nuclear submarines which were placed at that yard and which I believe most of us understood would continue there.
This brings me to the whole question of nuclear propulsion. I do not want anyone to think that I have a "bee in my bonnet" about this and, speaking from 1548 the Opposition Dispatch Box, I have to be careful what I say. I beg the Minister to remember that other people have had the idea of a fleet of container ships, nuclear propelled and built at a reduced price. It would be sad for a maritime nation such as ours if we allowed the Japanese to get ahead of us in this sphere. From what I hear there seems ground for believing that they are looking at this matter. If we are to get into this field of activity with a new type of propulsion we shall have to look to our laurels fairly quickly.
I come back to the Shipbuilding Industry Board and the decision on a year's prolongation. I do not see what else the Minister could have done. Sir William Swallow is himself on record in the last few weeks as saying that we have never before experienced inflation like this. It is posing day-to-day problems for the industry. We have read with great interest The Times report on 24th April of the statement by the Prime Minister that there is to be a new inquiry into the industry. We rather wonder what the Government's intentions are about this. I hope that we can be told.
One may inquire too much into an industry. Many problems are fairly evident. One of the remedies is co-operation, which, I think it is recognised on both sides of the House, is so necessary between management and unions in this industry. However successful co-operation has been in the past, it is vital that it should be successful in the future. I, too, read the article by Mr. McGarvey in The Guardian today; and I was glad to see the importance which he attached to it.
Several hon. Members have expressed the view that the outcome of Geddes has been a little disappointing. The hon. Member for Glasgow, Scotstoun (Mr. Small), who speaks with great authority, because he has spent many years in the industry, applied the telling description of "injury time" to the present period. As to the implementation of Geddes, which is largely a question of amalgamations, the results have been disappointing so far. Perhaps they will not be in the longer run.
Geddes made a very definite recommendation about steel prices. My hon. Friend the Member for Belfast, East 1549 said that it was necessary to have special price for steel for shipbuilding. This is the one recommendation of Geddes which has been ignored by the Government, although they have set so much store on the Committee's other recommendations.
The only report of the board available to us is that for 1968ߝ69. I hope that these reports can be published a little more quickly. I trust that we shall get the next one soon, because the figures I have been able to get from this report are a little out of date. According to this report, the board made grants to a total of£5.773 million and loans to a total of£9.435 million. That is probably old history, and it would be nice to know the up-to-date figures.
It is even harder to determine exactly what expenditure and loans have gone from the Government to Upper Clyde Shipbuilders. I have read in the newspapers that it is about£20 million, plus£3 million, or£4 million. The Opposition will look forward to debating this question on the forthcoming Bill on Upper Clyde Shipbuilders. Perhaps the Paymaster-General will tell us when we can expect that Bill.
Has all this money been spent wisely? I realise the difficulties. There have been special considerations in special areas like the Upper Clyde. But rescue operations are usually bad business. I was struck by the heading of the leading article in The Times Business News today:Using public money to best advantage".Are we using public money to the best advantage? The amalgamations on the whole have been disappointing. In this as in any other industry we want to encourage success.
If we concentrate too much on rescue operations, the danger is that there will be too little money left for the new and exciting developments in the industry which have been the foundation of the success of our Japanese and Swedish competitors. We should not be propping up the uneconomic, except for the very best of social reasons. We should be giving every encouragment to the success stories. Let us not forget that there are success stories in the industry; and, when we have worked through the difficult phase of fixed price contracts, this will become even more evident.
1550 Although, tonight, we must be somewhat depressed by the industry's problems, we should not be unduly pessimistic. We should remember that we are an island which has practically the largest merchant fleet in the world and that we need so to organise ourselves that we have a profitable shipbuilding industry. But today the money, whether private or public, needs to be well spent.
In June, we shall have a little evidence of the past success of British shipbuilding when a ship which is 137 years old is coming back to the constituency of the Minister. It has lasted all this time. British shipbuilding has had a great name throughout the world, and it has done a great deal for the prestige of our country. We must show in the future, as in the past, a certain amount of wisdom in the organisation of our shipbuilding yards. There is something to learn from the wisdom of our forefathers, who set up our successful yards on the Clyde, the Tyne, the Wear and other rivers. We must look forward, and not backwards.
§ 8.40 p.m.
§ The Paymaster-General (Mr. Harold Lever)
This is one of those days on which we can say with certainty that the House has had a very good, constructive debate, in which both sides have shown great sympathy for the very real problems of the shipbuilding industry. That is not to say, however, that the Opposition could resist those lurchings into demagoguery which they consider to be effective opposition. This is a sort of occupational reflex of the Opposition, which I regret because I have a high regard for them as an opposition. I am sure that they are the best opposition we have, and I am anxious that they should improve as an opposition. They are lacking in experience. I have no doubt that they will get more, but as they are bound to occupy this rôle for a considerable time I want to make modest contributions, not out of ill will but out of a constructive spirit, to improve their style of opposition.
For example, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who opened the debate for the Opposition, was at his best when being constructive and not attempting to make party points out of an issue on the fundamentals of which we are all agreed. He could not resist stepping aside and making one 1551 or two snide comments. For example, he talked about the groups that had failed and those that had resisted groupings and were successes.
§ Mr. Lever
The hon. Gentleman named as the groups that had failed Cammell Laird, U.C.S. and Harland and Wolff. Only U.C.S. of those three is a group formed in the relevant period, so only one out of the three failures, as the hon. Gentleman calls them, was a group. Of the successes, Austin and Pickersgill is a group. I cannot remember the names of the other two firms the hon. Gentleman gave as successes, but they were both groups, so all three successes were groupings. Vosper-Thorneycroft was one. So far from the groupings having failed, the three outstanding successes the hon. Gentleman mentioned were groups of recent formation.
§ Mr. Ridley
The right hon. Gentleman should get his facts right. I did not say that Harland and Wolff and Cammell Laird were groups. I never said anything of the sort. The right hon. Gentleman tried to make Austin and Pickersgill merge with Doxford and Laing, and he tried to make Lower Clyde merge with Upper Clyde. It was those projected mergers that were resisted, and it was obviously for the benefit of the industry to resist.
§ Mr. Lever
When I quoted the hon. Gentleman has having said—and he will see it in HANSARD—that those which grouped failed and those which went their own way and did not group succeeded, he gave that statement an assenting nod, until he got the sting in the tail. The fact is that, apart from the phantasmagoria haunting hon. Gentlemen opposite about what I am supposed to have done, or my colleagues or predecessors are supposed to have done in the way of trying to make Austin and Pickersgill merge with somebody else and Lower Clyde join Upper Clyde, there is not the smallest evidence for any of this.
The fact remains that the three successes were groups and the notable failure, Cammell Laird, insisted on going its own way, and is having certain difficulties. I make no complaint. Harland and Wolff was not a group formed in the post- 1552 Geddes period. As for U.C.S. I will deal with that in due course.
§ Mr. Ridley
The Paymaster-General cannot get away with this. He has made a slightly offensive attack upon me and now he is proving himself to be totally ignorant of what his Department has been trying to do. If he is not aware that the Shipbuilding Industry Board tried to force those two mergers, would he ring up Sir William Swallow, and then apologise to me for having maligned me?
§ Mr. Lever
The hon. Gentleman has got it quite wrong. Characteristically, he mistakes me for the Shipbuilding Industry Board. He must realise that this is an independent body set up by an Act of Parliament. It can give what advice it likes. He must not say that I or my Department tried to merge people, we have not done anything of the kind. Scott Lithgow's, a post-Geddes grouping on the lower Clyde, was the third successful firm—[Interruption.] If the hon. Gentleman says otherwise he must look at HANSARD tomorrow and see what he did say. These three successful firms were all groups formed after the Geddes Report and they have done very well.
It shows what lengths my party will go to to help the industry when I say that we went to the trouble of removing Charles Longbottom from membership of this House to equip Austin and Pickersgill with a first-class managing director. It just shows that there are no limits to the efforts of my colleagues in the interests of the important industries of the country.
The right hon. Member for Orkney and Shetland (Mr. Grimond) was troubled about Burntisland. It is now satisfactorily in the East Scotland Group and quite active.
§ Mr. Lever
I think it is building now. It is functioning well in another reasonably successful group.
The second demagogic point made by the hon. Member was that the labour legislation, not very specifically defined, intended for the distant date when his hon. and right hon. Friends will be governing, would solve many of the problems of the shipbuilding industry. It will solve all of the problems because it will bring the shipbuilding industry 1553 to a rapid end! It would attempt to impose on that industry's labour relationships the kind of vague, dogmatic claptrap which parades as labour legislation intended to govern our great industries.
I can think of no industry on which it would have a more fatal and speedy effect than the shipbuilding industry and on the sturdy men employed in it. The tasks of the industry, taken seriously, are tasks for management and men. Both have had their failings but the management failings are the more serious because the higher people go the more leadership they aspire to, the more responsibility they must take for shortcomings. The men are to be led by their management and expect to be led. The first responsibility will always be upon the management. The men must play their part, must seek to co-operate and improve their practices and their productivity, but the first responsibility will always rest upon the management.
§ Mr. McMaster
Has the right hon. Gentleman read carefully through the proposals in Geddes dealing with this point and checked to see how the Government have come up to scratch on its requirements relating to labour relations?
§ Mr. Lever
The hon. Gentleman must not take this immature attitude of assuming that everything is done by the Govment. To say, "If labour relations have not progressed that is the Government's fault; the Government clearly dictate to everybody in the country what they should and should not do", is a stupid way of approaching the problem. Labour relations depend upon the amount of cooperation that can be got from the unions and the rank and file in improving conditions. The first responsibility for getting that is upon management and if they are not able to do it they ought not to undertake the task.
It is rather like the kind of wails we get about inflation, saying that it was not management's fault it was inflation. Anyone who wants to trade successfully without inflation should not have chosen this century in which to trade. Anyone who wants to treat with docile and easily bullied workers will get the same advice from me. They are not qualified for the leadership involved in modern management. As far as the men are concerned, 1554 I am by no means encouraging resistance to change or improvement in productivity and practices. On the contrary, the Government have always clearly and firmly expressed their position on this and they will continue to do so. We do not pretend that we have bayonets or legislative possibilities for coercing men to go where management has failed to lead them.
The third point which the hon. Gentleman could not resist as a point against the Government, was that in spite of our efforts we have a deficit on shipbuilding account. That means that we buy more ships abroad than we sell ships abroad. He really must think again if he is to fulfil his function as Opposition spokesman effectively—as I want him to do—and as he does when he is talking in a constructive fashion and not seeking to make these somewhat unsupportable points. He must do better than he did on that point. Is he really saying that it is a deficit because we buy more ships abroad than we sell abroad? The question all depends on the size of one's shipowning industry. If we had no ship-owning industry whatever we would be in surplus because we would not have bought any ships abroad but would only have sold ships abroad. That would be a strange way of reaching a surplus.
What the hon. Gentleman calls a deficit is the fact that shipowners here have invested in ships abroad over and beyond, as it happens in recent times, the capacity of the British industry to supply. It would be impossible for the British industry to have supplied the whole range of ships that have been ordered abroad by British shipowners. What the Opposition regard as a deficit is a very valuable revenue-earning asset.
The hon. Gentleman may think that I am being malicious this evening, but to show how kind my real intentions are to him I shall mitigate his offence by saying that he is in good or bad company because his habits of presentation are followed on current account by the Board of Trade. I hope that I shall not get into trouble for saying that. Ships bought abroad which are a revenue earning asset and vital to our exports are treated as deficits on the current account by the Board of Trade, although the Board of Trade is not putting that in the context of a shipping debate or criticising the 1555 Government for it. But the hon. Gentleman has that in mitigation in attempting to make this false point.
The hon. Gentleman has asked for the White Paper on Government Aid. The O.E.C.D. will produce a revised version which will cover the whole of the world and it would he better if we awaited that—
§ Mr. Lever
In the near future it is expected.
There has been some mention of the fact that the banks are paying the cost of this finance because they are providing cheap finance. This point has been raised before and I do not understand whether those who raised it, raise it to regret the concession is being made to shipowners who buy in Britain at the low interest rates, or regret that the Government do not lend the money instead of the banks. They are always agreeably inexplicit about their complaint. They feel that there is a point to be scored but they are not sure what it is so they content themselves by saying that it is generosity at the expense of the banks' shareholders. Would they rather that the Government made good the difference in interest rates to the banks, although the banks are content to accept this rate and they do it reasonably as part of their overall banking business in contribution to the economy of the country today? This seems to me a very sensible position. What point is it that the hon. Member for Belfast, East (Mr. McMaster) and other hon. Gentlemen would like to make upon this? I should be keen to hear it.
§ Mr. Lever
What the hon. Gentleman is complaining about is that the banks are willing to provide this money at cheaper rates. My right hon. Friend has stressed the gratitude of the Government for the far-sighted and wise view they have taken of the over all advantages to their shareholders in the contribution they are making to the general economy. Now the hon. Gentleman wants the Government to pay, quite unnecessarily in view of this cheap money that is available. I hope 1556 that his constituents note that their prospects of getting finance would be worsened by the hon. Gentleman by his suggestion that the money should be obtained the harder way by throwing it into the general burden of public obligations when here are the banks wise and far-sighted enough and helpful enough to provide the money. The point has at last been made explicitly and I am grateful to the hon. Gentleman for doing so.
Although the subject of ship-repairing is not strictly covered in the debate I want to say something about it in reply to the anxieties which have been expressed. The general trend of ship-repairing has tended to be adverse to our yards. We must look at this in the light of what are to be the future developments affecting the ship-repairing trade. We shall shortly be getting a report from the group which has been studying this matter on behalf of the Shipbuilding and Ship-Repairing Council. I promise the House that the report will be immediately studied with a view to seeing what my Department can do to help the ship-repairing trade to meet changing conditions.
§ Mr. Lever
It will be a public report. I see no reasons why it should not be published, since it will not have any obvious fingerprints on it indicating secrecy.
I want to deal particularly with the question of Palmer's yard. I understand he anxieties felt about this by my hon. Friends, particularly my hon. Friend the Member for Jarrow I Mr. Fernyhough). I assure him that we are looking earnestly at all the possibilities—and I know that he will not expect me to say more at this moment—of providing job opportunities in that area, where male unemployment is high.
I turn now to the general position of the industry. In 1965, the shipbuilding industry was in a state of despair. As my hon. Friend the Member for Wall-send (Mr. Garrett) pointed out, my right hon. Friend was singularly modest. I think that he has been modest, but then cautious understatement carries a great deal of weight and my right hon. Friend did not wish to blow his own trumpet. It would therefore be improper of me. 1557 after the modest way in which he presented the Government's achievement, to attempt to magnify it. But however modestly he spoke, he made it clear that in 1965 little hope was left in the industry. It looked as if it would fall apart. The nation had a choice to make as to whether it would do something to assist the industry or allow it to fall to pieces and leave great and perhaps permanent pools of unemployed lying around in areas already subject to high unemployment, such as Scotland, the Tyne, Sunderland and elsewhere.
The Government took action. This is not the right time to summarise all we have done. The record is known to the House. In fairness, I think that the Opposition supported the view that the Government had to take action. On the whole, we have great successes to record.
The only problem which arises now is the question of profitability of yards in some cases with orders on a fairly wide scale based on fixed price contracts and the like. This is a hump over which the industry will have to climb. It took the orders at world prices. It is wrong to assume that the managements are to be criticised as wholly incompetent and in a state of moronic depravity in signing contracts at fixed prices.
This is a great industry which, apart from wartime and post-war booms, had had the greatest difficulty in getting orders. It was anxious to get them and here were orders available, but they had to be taken at fixed prices. Although certain things might have been more skilfully done, in fairness to them one should add that it was understandable that the managements had to take these orders at world market prices, and if the thing is now having to be fought out it is partly because they have been unable to take into account sufficiently the escalation of costs and partly because the time scale has meant that they have not been able to organise the productivity increases which would have existed if the industry had not been recovering from a state of deep depression. People should get their time scales right.
My hon. Friend the Member for Glasgow, Scotstoun (Mr. Small) said that Lord Geddes said that all would be well by 1970. He said nothing of the kind. Lord 1558 Geddes said that action should be completed as far as possible by 1970 but that the harvest should be reaped in 1972–75. In saying 1972–75, he was, if anything, putting too short a time scale on the completion of a vast operation. It is a tremendous job to take a battered and beaten industry without orders and organise its recovery and put it on a viable basis in a very short time. A satisfactory time scale is needed to make the necessary adjustments on all fronts—ordering policy, labour policy, yard reorganisation, and so on. It takes years to make all this effective.
I say to some of the critics of our shipbuilding industry that they can criticise the comparative efficiency of the British shipbuilding industry vis-à-vis other shipbuilding industries only after a careful appraisal of the subsidies given by other Governments and the tariffs applied. It is taken for granted by some of what I call the seminar tough guys that if an industry is losing money common sense indicates, however hard one's heart may beat for the people in it, that it must be abandoned and we must assume that it is totally inefficient. There is no difficulty in pinpointing possible inefficiencies in every industry, but before pronouncing on an industry we must consider what is going on in other parts of the world concerning subsidies and compare it with what is being offered to the British shipbuilding industry. Other industries enjoying substantial tariff protection, unlike the shipbuilding industry, and making relatively modest profits are not regarded as wholly incompetent because they do not make vast fortunes protected by tariff barriers which the shipbuilding industry does not have.
I come to the last part of the story of Government help, namely, what we should do about some of the weaker brethren. I have been asked to say what is to happen about Cammell Laird, Harland and Wolff and others, but at this point in time I cannot usefully go into detail on them. It is, however, clear that, with orders being no problem—the order situation is excellent and strong the problem is to make the industry reasonably viable. At the fringe there are the weaker brethren who need a little more patience and help. This is always said to be subsidising inefficiency.
1559 The hon. Member for Dorset, West (Mr. Wingfield Digby) said that rescue operations rarely paid. Is that so? It is hard for a Government always to judge the situation correctly, but I remind the hon. Gentleman of the rescue operation which we mounted for the Cunard Company. Seventeen million pounds worth of British effort had gone into a hulk which would not be launched. It was regarded as no longer feasible by the Cunard Company to launch it. If anything looked like a failure, it was that vast ship which everyone pronounced could not make a profit and would not succeed. The seminar tough guys were well to the fore urging the Government to stay away from it and to let it be scrapped. But the Government stepped in and provided the money and the ship was launched. It has been a great success and the Cunard Company has gone from strength to strength in its general shipbuilding business and is playing a very big rôle in our invisible exports, much to the advantage of the country, and is placing orders in syndicate with others in the shipbuilding industry of this country.
We put up£20 million towards that venture. There was a great deal of criticism of our action at the time. But the Government will get every penny of it back if they have not already done so. The Cunard Company has achieved immense success. The ship was completed and is an ornament in support of our invisible earnings.
§ Mr. McMaster
The Minister skipped quickly over what he must have realised from the debate is the main problem mentioned in the Sunday newspapers—the present spiral of inflation through wages rising too quickly. What do the Government intend to do to stop this inflationary spiral which threatens to make all our contracts unprofitable?
§ Mr. Lever
I thought I had dealt with that point briefly. This is not a debate on inflation. I know that the hon. Gentleman travels from country to country, but he does not seem to broaden his horizons in so doing. There is inflation as a worldwide phenomenon. It is not only in Northern Ireland and Great Britain. Those who journey abroad in wider directions, not just this interesting little trip which the hon. Gentleman 1560 makes, find that this inflationary problem exists in every country and, indeed, has been going on for a considerable time.
The hon. Gentleman wants to know what the Government intend to do to stop it. He might also legitimately ask what action the American Government intend to take, what action the French Government intends to take, what action the German Government intend to take. what action the Dutch Government intend to take, and what action a number of other Governments intend to take. I think that the matter would have to be taken to the Security Council if it were regarded as a matter for Government intervention. [An HON. MEMBER: "Tell the electorate."] The Opposition are in their irresistible pusillanimous condition when they can think of any grievance which the electorate might conceivably be expected to have, whether or not it can be substantially supported in intellectual argument.
It is not good enough to say, "Tell the electorate". Inflation is worldwide. It is raging in America. It is going on in all European countries. We are all doing our best to reduce it and pursue policies, with international co-operation, to cool it off as much as we can. At some level it has been going on since the Battle of Waterloo. I must resist all invitations to pose in the supposed role of King Canute and order back the tides. I have listened to many speeches in my 25 years in the House in which Ministers thumped the Dispatch Box in their determination to control inflation, but I regret to say that the Dispatch Box has been the only visible recipient of the impact of their policies.
To return to the question of rescue operations, I believe that we should not subsidise inefficiency. Subsidising inefficiency, however, must not be confused with patience in difficult situations in helping people who are in difficulties to move from the situation of difficulty to the situation of strength, as in the case of Cunard and as in many cases where we have intervened.
We will not always be perfect, and there will not always be perfect timing in so dealing. My right hon. Friend has been frequently criticised because he did not throw 14,000 men summarily on the unemployment scrap heap on the Upper 1561 Clyde based on some supposedly justifiable doctrine of gainful operation. It is said that the efforts made to keep alive shipbuilding on the Upper Clyde are to be condemned, and are without justification.
I do not accept this. I believe that it is time that people understood that the workpeople in these situations are not mere factors of production. They are human beings. There are much wider considerations than are known of by those who sit, however earnestly and sincerely, in seminar conclave about the consequences of their gainful calculation.
As to the Upper Clyde, we tried with a complement of 14,000 men to keep it viable on its original business, making a mixed bag of ships. One Glasgow Member complained that we are abandoning that policy for simpler ships. We tried the other, to keep employment at its maximum. There is nothing at all for my right hon. Friend to apologise for in trying. He is entitled to every credit for having tried to keep the maximum employment in an area of high unemployment. If he failed to keep the whole 14,000, it was right to try to turn it to greater viability by making smaller and simpler ships.
I agree with the right hon. Member for Orkney and Shetland that there is a lot to be earned in the making of smaller ships and that we need not be constrained solely by impressive-looking schemes involving 500,000-ton tankers. Upper Clyde has rightly made decisions to move to small, repetitive cargo ships where, given the co-operation of the work people, they will have a real chance of viability.
I sympathise with the hon. Member for Glasgow, Govan (Mr. Rankin) who wanted to keep 14,000 employed on the traditional skills in that area. I sympathise with the men who are affected. These are not easy decisions for men to make, or indeed for Ministers to ask men to make, in accepting a redundancy of 3,500 out of a working force of 14,000. I have every sympathy with the men in having taken time to ponder this matter and in having found it difficult to swallow. I admire immensely the discipline and understanding shown by the men and their trade union leaders in seeking to make possible plans for a permanently viable Upper Clyde shipbuilding industry on a somewhat reduced scale.
1562 This Bill will provide another piece of support for the British shipbuilding industry. We do not know—and very few of us will know even when the published figures are available—the full extent of subsidy and help given to shipbuilding. But it must be right for the British Government to seek by every reasonable means to give help to the shipbuilding industry to make it more efficient through the S.I.B. and generally to further its prospects in the future. I have every confidence that the prosperity of the shipbuilding industry will not be cyclical as has been suggested has always been the case in the industry. That might have been so before the war, but we are now living in a different world. It is a world in which continual burgeoning international trade increases year by year to an extent that has never been seen in the world's history. So long as that continues there will be a great rôle for British shipbuilding. I want to see our great traditional shipbuilding industry encouraged to become more efficient and to play a successful part in meeting that demand.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).