§ Order for Second Reading read.
§ 10.0 p.m.
§ The Minister of State, Department of Industry (Mr. Gerald Kaufman)
I beg to move, That the Bill be now read a Second time.
The House will remember that when announcing the introduction of the Shipbuilding Intervention Fund on 24th February last year, I said that my right hon. Friend would be bringing forward proposals to Parliament for redundancy schemes to assist British Shipbuilders and Harland and Wolff to alleviate the human problems caused by any contraction of the industry.
The Bill now before the House provides the means through which my right hon. Friend proposes to accomplish that objective. The House will have noticed that the Bill is a simple enabling measure. Fundamentally, it does nothing more than empower my right hon. Friend to make schemes to provide financial assistance to employees of British Shipbuilders or Harland and Wolff, or their subsidiaries, who lose their jobs, or who are transferred to less well-paid employment, either because a yard is closed, or because its activities, or the numbers employed there, are reduced.
Everyone knows the extent of the collapse of the world shipbuilding market, which has resulted almost entirely from the massive world tanker surplus, but also from unjustifiable expansion of shipbuilding capacity—again almost wholly for tankers—in Japan and other countries. The effect of the oil crisis has been to reduce worldwide demand for new merchant ships to about 13 million gross registered tons annually, and virtually to eliminate demand for new tankers altogether. World output in the past, by contrast, has averaged about 34 million gross registered tons and theoretical capacity is even greater. Although a straight comparison of these two figures exaggerates the extent of the crisis—because of the relatively low Labour content in tankers—it still reflects an excess world capacity in employment terms of about 40 per cent. Everyone is agreed 174 that the level of demand is unlikely to begin to increase significantly until the early 1980s, and then only relatively slowly.
It has been said before, and I take this opportunity of saying it again, that the United Kingdom has made no contribution to this tragic situation. Employment in shipbuilding in this country has been declining steadily for very many years. In 1972, we and our European partners warned the world, and the Japanese in particular, that serious overcapacity was being threatened because of the rapid and unjustified expansion of shipbuilding facilities in Japan and elsewhere. So, even without the oil crisis, there would have been over-capacity today, although perhaps not as serious as it now is.
Having made no contribution to excess capacity and having tried to persuade others to act sensibly, we do not see why the very small percentage share of the world market that we have had in recent years should be further reduced. That is what threatened us in 1975 and 1976. That is why, as the House knows. we introduced the Intervention Fund last year and why similar assistance is available to Harland and Wolff, to help it meet the fierce and often unfair price competition which arises out of the desperate struggle to capture as many as possible of the few orders available.
The fund has been used very successfully by British shipbuilders. Last year, with its help, they won orders amounting to over 540,000 gross registered tons, worth nearly £400 million. Given the higher labour content of these orders as compared with previous production, which included many tankers, this is a substantial achievement, although still falling short of a full year's work. If we take into account the total orders won by Harland and Wolff and the private sector—again with Government assistance in most cases—the total for the country as a whole is over 730,000 compensated gross registered tons. It is a performance which, in relative terms, is not likely to be bettered by any of our major competitors, including Japan, which managed to secure only about 45 per cent. of a year's full output last year.
This performance is not merely a tribute to the Intervention Fund. It is also 175 a tribute to aggressive and centralised marketing b British Shipbuilders and by the board of Harland and Wolff, which has been made possible by nationalisation. I am also happy to pay tribute to the patriotism of many British ship owners, who had placed a very large proportion of their orders in United Kingdom yards up to the end of last September. I do not yet have the figures for the whole of 1977, but I am less happy to note that an excellent nine months' record is likely to have been blemished when the figures for the final quarter are published. I hope very much that British ship owners will De able to restore that record this year. It is as much in their interests as in anyone else's that there should be a sound and viable United Kingdom shipbuilding industry, as I know most of them recognise.
But, despite the relative success in winning new orders last year, the figures I have given—especially about the performance of Japan—illustrate just how impossible it is, even given the lowest prices, to secure enough orders to continue full output. As I said when introducing the Intervention Fund, shipbuilding industries all over the world are facing the inevitability of contraction, and this country cannot isolate itself from that trend. In 1978, competition is likely to be even more fierce than it was in 1977. Many countries now have subsidy schemes, and it is not impossible that there could be even fewer orders to share out this year. It is also likely that many yards in many countries will run out of work and that countries everwhere will be feeling the same social pressures which threaten this country and which it is the purpose of this Bill to alleviate.
I want to make plain that neither the Bill nor the schemes that we shall put forward will propose any "target" reduction in capacity for British Shipbuilders, on Harland and Wolff. It is for British Shipbuilders, in consultation with the trade unions, to decide the shipbuilding industry's operational and corporate strategy, and it will be some time before British Shipbuilders can complete a corporate plan. We have, therefore, tried to provide for the maximum flexibility for 176 any special redundancy scheme in order to meet every kind of option.
We envisage, for example, that, given the uncertain future for shipbuilding in the light of world market conditions, there may be some workers—perhaps those nearing retirement—who would prefer to leave now, at a time of their own choosing, if given a suitable cash inducement to do so. There may be others who would like to take up employment in another industry in another part of the country and who need the help to move their households which a special redundancy payment would provide. If a need arises to reduce the numbers employed in a particular company, the intention is to call for volunteers in the first instance. The scheme will not, therefore, be limited simply to payment in the event of closure.
The next important point I wish to make is that the Bill envisages that the schemes will operate only for a limited time—two years in the first instance, which may start from 1st July last year, that is, vesting day for British Shipbuilders, and which may be extended to four years by an order by my right hon. Friend, subject to affirmative resolution of both Houses. There is a very good reason for this limitation. We are seeking to deal with a special situation which has arisen as a result of a sudden, once-for-all structural change in the balance of supply and demand for ocean-going merchant ships, with a world industry—not just a United Kingdom industry—which has gone from wild boom to unprecedented slump. That slump has been slow to be felt because of the huge order books built up during the boom, but its effects are now beginning to be acutely felt in every merchant shipyard here and elsewhere, and they will press down harder as 1978 goes by.
Against this background it is our expectation that the large disparity between supply and demand which now exists could disappear within the time scale envisaged. Shipyards throughout the world which have no ships, or fewer ships, to build will cut back. The purpose of the Bill is to alleviate the social effects of that part of this worldwide process which this country is unable to avoid. It is not to put shipyard workers in a privileged position in the ups and downs that are part of ordinary industrial life.
177 The scheme will be implemented by means of orders laid before Parliament and subject to affirmative resolutions of both houses. Parliament will accordingly have adequate control over the terms of the scheme. The other reason for proceeding in this way is that the schemes will inevitably be very detailed indeed, especially if we are to ensure that they operate fairly between different individuals.
In the first instance, payments will be made by British Shipbuilders and Harland and Wolff directly to the workers who benefit, and the Government will reimburse the two undertakings both their expenses in operating the schemes and the payments made under them. At my request, a basic scheme has been worked out in consultation between British Shipbuilders, Harland and Wolff and the Confederation of Shipbuilding and Engineering Unions. It is now being studied by the Government. Only the broad structure has so far been proposed and a great deal of work still needs to be done on the detailed provisions. When consideration within the Government has been completed, I shall need to have further consultations with British Shipbuilders and the CSEU to arrive at a scheme that I can recommend to the House.
Until these consultations have been completed, I obviously cannot say very much about the proposals. What I can say, however, is that they envisage a combination of a lump sum payment based on age and length of service plus an income support payment based on length of service only and payable during the subsequent period of unemployment for up to two years. However, as I have indicated, the full details of the schemes will be laid before the House as soon as agreement is complete and draft orders can be prepared.
As to the cost of the schemes, everything will obviously depend on how many men qualify for benefit during their currency and, as I have already said, we do not intend to fix any target for across-the-board contraction. For any arbitrary figure for the number of beneficiaries there are still many variables which can affect the total cost. In general, for example, payments will tend to increase with age and length of service. If the take-up is predominantly among the higher age groups, as might happen in a general 178 slimming-down process, the average payment and the total cost will be higher than would be the case if take-up were to be spread across the full age range, as in the event of a closure.
Once the full details of the schemes are prepared, it will be possible to offer some illustrative examples based on age and length of service data, as has been done for past schemes in the Explanatory and Financial Memorandum to the bill. In another debate in the House last month the hon. Member for St. Ives (Mr. Nott) suggested on behalf of the Opposition that higher levels of payment than those mentioned in the memorandum would be justified. I share that view. Indeed, I would expect the cost of the scheme which I bring forward to the House to be higher than the illustrative example for previous schemes given in the Explanatory and Financial Memorandum.
This is a measure which everyone can agree is needed to meet the consequences of a unique world problem faced by the shipbuilding industry and to mitigate its effects on workers in this country. I therefore hope that it will be accorded a speedy passage, both in this House and in another place.
I commend the Bill to the House.
§ 10.12 p.m.
§ Mr. Norman Lamont (Kingston upon Thames)
On behalf of the Opposition I give the Bill a welcome, albeit a cautious one. It must be a cautious welcome for the reason that the Minister gave—that this is really enabling legislation and what is important is the details of the schemes, which we do not have.
It must also be a cautious welcome because some people are becoming a little worried about the effect of redundancy payments schemes. We on the Opposition Benches accept the general principle that the victims of industrial change should be compensated. The only way to be able to move to competitive manning, the only way to be able to get people to move from our old industries into new opportunities, is for the process to be made less painful, for it not to be accompanied by all the misery of having to throw workers, particularly older workers, out of work with no hope of a job.
For those on the Conservative Benches who believe in a market economy it is important that change should be humanely 179 handled. Only in that way will a free economy be able to work to the advantage of all.
But, while we accept the general principles of buying out jobs, there are dangers of which we should be aware. The late Richard Crossman rather late in life discovered a fundamental principle of conservatism derived from David Hume—that Acts of Parliament often have the opposite effect to that which is intended. Some people would consider that the redundancy payments legislation of recent years has had unexpected effects. I can think of few pieces of legislation more in need of re-examination and of a comparison of their intended effects and their results than the original Redundancy Payments Act. I refer to that because it was the original Act upon which many layers have been built since, in both the public and private sectors.
The thinking about that Act and the thinking which has accompanied many others since was that buying out jobs with large, tax-free sums of money was a way of easing the rigidities of the labour market, a way of reducing resistance to change. But it has met increasingly in recent years with complaints from employers that it is extremely difficult for them to make redundancies. Employers find themselves having to make substantial payments above the minimum, and they cannot afford to do so without coming near to bankruptcy. Companies are in danger of becoming bankrupt with all the workers losing their jobs rather than the company being able to save some.
When we are talking about this sort of legislation we must remember that once a scheme is established in one industry, it has repercussions in others. Therefore, the effects of these measures, one on top of the other, may not be as we originally intended, which was to encourage labour mobility, it may not be encouraging people to take the risk of looking for new jobs. It may be having the effect of making people less mobile and spreading arthritis throughout the whole economic system.
The other point that I would make, particularly following what the Minister said when he talked about a once-and-for-all situation, is that achieving competitive levels of manning is something 180 that we have to go on doing all the time. We tend to look at Japanese steelworks or German shipbuilding firms and think about making an adjustment to get down to their level of manning, but this is a process that ought to go on all the time.
It is not just a question of making an adjustment once. It is not just a matter of making an adjustment where there happens to be a lot of cash floating around, particularly from the Government. It is a development that management ought and must be able to negotiate freely with the unions all the time if we are to have any hope of being competitive.
It is important, if we are not just to increase the rigidities in our economic system, for these benefits to be pitched at exactly the right level. They must be high enough to encourage some people to leave voluntarily and not too high to discourage natural wastage or the departure of those whom firms or industries cannot afford to lose.
The results of some redundancy schemes have been unexpected, even perverse. In the Chrysler scheme at Linwood we saw how the seduction of tax-free money has taken the sting out of the cold, even in a black area for unemployment, for many more than anticipated. At the docks we saw how a system introduced to correct wage imbalance in the age profile of the labour force ended up creating another imbalance in the age composition of the labour force.
BOAC is reputed to have spent £2 million on buying out over-manning. Such was the success of the scheme that, immediately after it had been implemented. BOAC had to go back and recruit people again. This shows the element of the unpredictable in voluntary schemes. The Minister emphasised that this was a voluntary scheme. That brings me to a question which I would be grateful if the Under-Secretary would answer when replying. Will there be any restriction on people who have taken these large sums going back into the industry? That has been a feature of some schemes in the private and public sectors.
There are ways in which the effects of voluntary redundancy schemes can be very quixotic. One can see the attractions of a voluntary scheme. The Minister has referred to many of them. There are no recriminations. There is no need to 181 choose between employees. There can be no complaint that one person has been treated less fairly than another.
What can happen with these voluntary schemes is that it may be the younger, more able, staff who will leave. They will take the risk and the opportunity to get new jobs with their cash bonus. There is a strong chance that organisations will be left with a large proportion of labour less able and less adventurous. In addition, the skill mix could be all wrong. We may find that the skilled men will have a better chance of getting employment and opt for the scheme in disproportionate numbers; or it may be the unskilled men who have a wider range of opportunities available to them.
The result of many redundancy schemes has been that some firms have been left with a labour force which is unbalanced because it comprises predominantly the semi-skilled and those aged around 40. It is extremely important to get the precise terms of the scheme right. That will affect the take-up by different skills and age groups.
Referring to these details concerning the profile of the labour force leads naturally to the cost of the scheme. The Explanatory Memorandum gives various figures for the cost based on the assumption that the profile of those taking up the scheme will be the same as the profile for the industry as a whole. The figure quoted is £900,000 for each 1,000 workers. It would be an extraordinary coincidence if the take-up of the scheme, the possible profile of the age and skills of those taking up the benefits, turned out to be exactly the same as the profile of skills and age for the industry as a whole.
The only guide that I have as to the mix of skills and age in British Shipbuilders is what I saw Mr. Chalmers quoted as saying—namely, that 39 per cent. of craft workers are over 45 years of age and 56 per cent. of non-craft workers are over the age of 45. It would be entirely a matter of coincidence if the take-up were a mirror image of the distribution of age and skill in British Shipbuilders.
I should be extremely surprised if the costs quoted in the Explanatory Memorandum were not handsomely exceeded. Perhaps tonight we saw the Minister of State moving a little in that direction 182 when he prayed in aid the remarks of my hon. Friend the Member for St. Ives (Mr. Nott). The Minister did not quote those remarks strictly accurately. I took the precaution of looking up what my hon. Friend said. He did not say that we should definitely give better benefits than these. He said that it might be that the benefits ought to be higher. In praying in aid the remarks of my hon. Friend the Minister of State was possibly coming to the conclusion that the sums of money mentioned in the Explanatory Memorandum were likely to be exceeded.
One reason for this, and this brings me back to an earlier point about what happens in one industry affecting what happens in another, is that the workers in British Shipbuilders and the unions there must have read the newspaper stories about the sorts of sums being paid to buy out redundant jobs in the British Steel Corporation. I do not accept that those stories are accurate. They may or may not be. The sort of figures quoted—£8,000, £9,000,£10,000—must make people compare those figures with the sums quoted in the Bill.
The Bill speaks of a maximum of £3,650 and an average figure of £900. Bearing in mind all the publicity and the terms in which people are alleged to have been bought out by the BSC, I should have thought it would be surprising if the unions in British Shipbuilders settled on the sort of terms described in the Explanatory Memorandum. That seems to be a game that was finished long ago. The cost will very much depend on the total number who become redundant.
I intended to ask the Minister what he envisaged would be the eventual number of redundancies in British Shipbuilders. Predictably, he said that the Government had no views on that at the moment. I can only assume that that will cause considerable worry in the shipyards. People there must have read the sort of figures that have been quoted. Newspapers have talked about 10 per cent. of a labour force of 80,000 being expected to take up this scheme. They must have read of other opinions voiced in newspapers to the effect that it might be necessary eventually to get rid of 20 per cent. or more of the labour force if we in this country are to become competitive.
183 I do not know the answers to these questions, but I know that I do not think that it is a very persuasive argument to say "We shall have a labour force of a particular size now because we have borne a fair amount of adjustment and contraction in the past. Alas, the world is not like that. What has happened is not very relevant. It is not the size of labour force that one would like to have that matters. One cannot complain that other people have suddenly appeared in the shipbuilding industry. All that will determine the size of the labour force is whether our industry can be competitive.
All that has happened in the past is history. Alas, we cannot maintain a labour force of a given size simply because we have had a contraction in the past. We can maintain a labour force of a given size only if we are competitive.
I should like to ask the Under-Secretary about a number of detailed points. I shall go over them quickly. I am slightly surprised by the reference in the Explanatory and Financial Memorandum to the computer staff being increased by 40 in order to cope with this scheme. That struck me as a surprisingly large number. I do not know the total size of the Computer Agency. I shall be interested in the Under-Secretary's comment.
I was also interested in what the Minister of State said about the length of time for this scheme. It is envisaged that it will last two years, but there are powers to make it last for four years. It seems curious to write into a Bill that a scheme will last for two years but to include also power to double the time for which it will exist. It is very important that a scheme of this kind should be brought to an end at some time and that it does not just drag on year after year. It would have been better if the Government had settled for the shorter period.
There is reference in the Bill to earnings being made up. How is it intended that this should work? To whom will it apply? Does it apply merely to the movement of people within British Shipbuilders and making up earnings there, or does it equally apply to people who leave British Shipbuilders and take up jobs outside the industry? Will there be an option there of making up earnings? If it applies outside the industry, presum 184 ably people will have the choice of either a lump sum or the make-up of earnings. I should be grateful for some indication of the Government's thinking on that matter.
Will the lump sum benefits be related to earnings? I have heard that there is some concern among both skilled workers and middle managers in British Shipbuilders that it is not intended that the lump sum benefits shall be related to earnings. If it is not so, that could be quite hard on some of the managers and some skilled workers.
Those are the detailed points. I return now to the general points in the Bill. There is one unusual feature of the Bill. It is a point that one cannot refrain from making. I am slightly surprised that the Bill itself was not included in the original nationalisation proposals. After all, there was a bit in the legislation on the nationalisation of the steel industry providing for redundancy payments. Why was this scheme not included originally in the nationalisation Bill?
Perhaps it would not have encouraged some Labour Members—not all—who claimed that greater job security would come from nationalisation. Their rhapsodies would have had to be a little modified if there had been a schedule tacked on dealing with redundancy payments.
In another sense, it is curious that we have to have a separate Bill providing Government money to deal with the buying out of jobs in what, after all, is meant to be a commercial undertaking, albeit State owned, operating at arm's length and not interfered with for political reasons, we are told. Why does British Shipbuilders not negotiate its own redundancy scheme, as the British Steel Corporation does today, without any payment direct from the Exchequer? The corporation does its own negotiations and pays out of its own capital. Although, of course, the cost is indirectly paid these days by the Exchequer, it is not a direct subsidy.
I make this point because there is some concern in the small private sector—the small number of private ship repairers left—that the terms of the Bill will have an adverse effect on them because they, too, need to slim their work forces and might need to negotiate with the unions and buy out their members. Such firms 185 will be faced with a situation in which the unions in the public sector will have got a particular level of benefit, and the small ship repairers, and even the few privately owned shipbuilders, might find those terms very onerous.
I quote one example. If a man aged 41 has worked for 20 years in the shipbuilding industry, under the statutory scheme he would have to get, if made redundant, £1,700 from his employer and, under the arithmetic of the Bill, £3,000 on top of that, making a total of £4,700. If a firm had 100 men for redundancy, the amount would be nearly £500,000, which would be very large for some of the small private firms left.
I hope that mentioning this aspect will not leave me open to one of the Minister of State's farragos about how we fought to have private ship repairers excluded from nationalisation. Of course we did, but we were assured constantly that they would be faced only with fair competition, that British Shipbuilders would not be subsidised except to the extent that the private sector would be subsidised. Indeed, the Intervention Fund has been made available to both the public and the private sectors.
If that is the case, is it not worth considering whether the scheme proposed in the Bill should not have been an industry-wide scheme rather than confined to British Shipbuilders? There is a precedent in the way in which the redundancy scheme for steel workers in the EEC is available for both the public and the private sectors. I do not want to make that a definite proposal, but the Government should consider it.
We welcome the Bill. I have expressed some caution because lump-sum payments are rather a crude method of dealing with redundancy. It has been remarked on many occasions how crude it is that a man who is redundant on Friday and gets another job on Monday should be treated in the same way as another who will have the ill luck to be on the dole queue for a year.
There are many other matters which need to be discussed in considering the problems of demanning and making people redundant. Many other things have to be done for these problems to be handled humanely—for example, through job counselling and training. 186 Many redundancy schemes insist that people should undertake training and will not simply go out into a sort of casino or lottery for getting another job, but will thereby have some assurance for the future. If we are ever to have a labour-market policy anything like those in West Germany and Scandinavia, we have to do all these additional things and not just use the crude weapon of the lump sum, tax-free benefit.
These are matters for British Shipbuilders. I am sure that its practice is the best and that it knows better than I how the problem should be handled. I only comment because there is something curious about this scheme being the subject of separate legislation. But, thereby, Parliament is involved and one comes to express an opinion.
We support the Bill, with those qualifications. We intend to address ourselves to these points in Committee, but otherwise I have great pleasure in commending the measure to my right hon. and hon. Friends.
§ 10.35 p.m.
§ Mr. E. Fernyhough (Jarrow)
There were many points raised by the hon. Member for Kingston upon Thames (Mr. Lamont) to which I should like to reply, but it is getting rather late and I know that other hon. Members wish to get into the debate. I hope to meet the hon. Gentleman in another place when we are dealing with the Bill, and we could then perhaps debate the issue effectively.
I have mixed feelings about the Bill. There is some gladness in the sense that we are to give to men, many of whom have given their lifetime to the industry, a joyful farewell. There is sadness in that it means that men who have acquired great skills, and who have given devoted service in their various yards will no longer be able to use those skills. It is, therefore, with both gladness and sadness that I welcome the Bill.
Sitting here, I wondered, Mr. Deputy Speaker, whether the story of Jarrow would not have been different if we could have had something such as this in the 1930s. I thought of the bitterness that is still felt in Jarrow about how Palmers was closed down and about the activities of Shipbuilding Securities, which was able to close down yard after yard throughout the country. Men were 187 thrown on the scrapheap and driven into a life of poverty and almost degradation. If we had then had a Bill of this kind, with the compassion and understanding that it shows, I wonder whether we would not have had as a consequence a more united nation than we have today.
I want all hon. Members to remember one thing that I say now if they remember nothing else. Let those who are critical of the Welfare State remember that this is part of the Welfare State. Let them remember that the Welfare State has bought off revolution. If anyone believes that in the post-war years we could have gone through the same experiences that tens of thousands of decent people went through in the 1930s and kept this nation in the state that it is today, that person is living in fairyland.
I believe that it is because we have tried to understand what happens to a man when he is thrown on the scrapheap and when this is accompanied by poverty, that we are able to give every support to a Bill of this kind. It removes much of the bitterness and much of the hatred which would have accompanied these dismissals if they were brought about in the manner of the 1930s.
The shipbuilding industry has always known its lean years and its fat years. It has always been a feast or a famine. The men in the shipyards and in the ship repairing industry have been very used to being given the sack and not knowing whether it would be a month or a year before they got another job.
I am glad that the Minister has made one thing perfectly clear—that because we did not build up our shipbuilding industry as rapidly as did most of our competitors, we are not going to reduce it as much as some of them would like.
It would be a disaster if a maritime nation such as ours, with the experience of two world wars behind it, were ever to say that it did not intend any longer to have a viable shipbuilding industry. No nation can less afford to disregard its shipbuilding and ship repairing industries than can this country. Therefore, we must always think in terms of making them viable, because no other nation so depends upon its maritime workers.
As a result of improved yard conditions and better investment in the yards, 188 I hope that we may be able to get bigger order books and so reduce the number of redundancies that are necessary. I know that we shall have to fight for that bigger share. But the men whom I know are determined that, as far as it lies within their power, they will have that share. But they understand the changing world in which we live. I wonder how many ships 35 million tons of oil from the North Sea has displaced this year. I wonder to what extent the bringing of our food from the Continent of Europe, as distinct from bringing a lot of it from New Zealand, has altered the pattern of shipbuilding and reduced the number of ships required. Each of us has to think these facts through and spell them out to those who will be affected by them.
I am certain that the men in the yards will not only be very grateful for this measure but will also accept it as being due to them. Private industry has done much the same, despite what the hon. Member for Kingston upon Thames said. On another occasion I shall give him the names of the firms concerned. But in a constituency such as mine, where large private employers have considerably enlarged the redundancy payments scheme, it would be wrong that private employers should have done it and that British Shipbuilders should not have done it.
I think that the men are due it. I believe that they will respond to it, and I hope that we shall have a viable industry and be able to take an ever bigger share of a diminishing market.
§ 10.43 p.m.
§ Mr. Neville Trotter (Tynemouth)
At last the Government appear to be acting realistically, bearing in mind the very serious future facing this industry. My hon. Friend the Member for Kingston upon Thames (Mr. Lamont) said that we had heard precious little about redundancy from the Minister of State and his colleagues during the long sessions that we had on the shipbuilding nationalisation Bill, for obvious reasons. But at last we have some recognition of the real facts of life.
Thank heavens this industry did not expand in the way that many were seeking some years ago. If we had followed the example of the Japanese, as many people urged, where should we have been today? We should have needed not 189 10,000 or 20,000 redundancies but 100,000 or 200,000. The position is serious enough, but it could have been a great deal worse.
It is extraordinary that, after four years in office, the party that believes in planing still has no plan for the shipbuilding industry. The Government realise at last that there are serious problems, but still we cannot be told what the plans are. We are told that they are being considered, and still being considered day after day, unlike other countries where our competitors are facing hard facts of over-capacity which are known to all hon. Members.
The Minister of State visited Japan shortly after I was there some 18 months ago. He heard, as I did, that one-third of the jobs in Japanese yards were to be lost, and similar figures apply among our main competitors in Western Europe. These are terrible figures in all those countries, and we face perhaps as great a threat here. But there are no plans. The Government's attitude is "Let us wait and see what happens."
The Minister of State referred to centralised marketing, and he mentioned Harland and Wolff in this connection. Is Harland and Wolff now engaged in a centralised marketing exercise with British Shipbuilders? If so, it is the first I have heard of it and the first the House has heard of it. Otherwise, how is it engaged in centralised marketing? Is it centralised with itself? That does not make sense.
Which yards will get the orders and which will get the redundancies? Will the orders go to the efficient yards or those with the most political clout? Will they go to the yards that have had the most capital spent on them, or those with the best labour force? Will the redundancies be on the Tyne, Wear or the Clyde? Will these decisions be decided by British Shipbuilders alone, or will the Government bring influence to bear? Wherever it is to be, I am quite sure that it is the aim of the Government that the redundancies should not fall before the next election.
On the question of cost, I agree with my hon. Friend the Member for Kingston upon Thames. I cannot for one moment see people in Tyneside accepting £900 to join the dole queues in an area where one 190 person out of 10 is already unemployed. I cannot believe that for such a sum people will voluntarily leave work to join the dole queues. The figure will have to be much greater than that. The figures mentioned in the Bill are patently nonsense.
I agree with what my hon. Friend said about unfair treatment of private yards. Most of these yards were not even suggested for nationalisation. There are 70 to 80 private yards left, and the vast majority of these were never even considered for nationalisation. Some 50 per cent. of ship repairing is carried out in these yards. Most of them are quite small and all are facing serious problems. Although we heard nothing about redundancies during the Committee stage of the Aircraft and Shipbuilding Bill, we heard a great deal about fair competition between the private and public sectors. I ask the Government to think again about this moral point. As has been said, the Intervention Fund applies industry wide.
The Bill will apply to shipbuilding subsidiaries of British Shipbuilders and other companies. If we look at the list of subsidiaries of British Shipbuilders, we see that there are some 140 companies. Some interesting ones included are R. Harris and Son (Builders) Ltd., R. Harris and Son (Concrete) Ltd; and R. Harris and Son (Plant Hire) Ltd. I remember from discussions in Committee that these firms are building in the Devon area and came into the public net through Appledore and Court Line.
Other companies include William Squires Merchants Ltd.—what do they sell, I wonder, what do they merchant? Then there are, for example, Warethorn Properties Ltd., Bluescroll Ltd., Mast-lake Ltd., Moonchase Ltd., Oakspine Ltd., and Basingstoke Buildings Ltd. What do they do?
Another is the Mid-Tyne Ferries Ltd. This operates the ferry boats across the Tyne in the middle of the yard area. Suppose that another Tyne tunnel were built and the ferries were not needed any more. Will the ferrymen benefit from the redundancy scheme even though it does not apply to the other ferrymen on the river who are not within British Shipbuilders?
Then there is the Sunderland Forge and Engineering Co. Ltd., and the Wolsingham Steel Co. Ltd. They do not build 191 or repair ships, but they spend part of their time making equipment for ships. Here we are moving into a different industry—marine equipment. That carries the scope of the Bill very far indeed.
I point out to the Under-Secretary that we are discussing a scheme for wholly-owned subsidiaries of British Shipbuilders. But a number of the dry-dock companies are not wholly-owned, including nearly all the repair yards on the Tyne. These companies include Brigham and Cowan Ltd., Brigham and Cowan (Hull) Ltd., the Middle Docks and Engineering Co. Ltd. and North-East Coast Contractors Ltd.
These are major repair yards on the Tyne, employing thousands, which are not wholly owned by British Shipbuilders, because their preference shares are owned by outsiders. I have checked this matter with a lawyer who confirms my opinion as an accountant that these companies are not wholly owned by British Shipbuilders. Is the Minister saying that there will be no redundancy scheme for those men who are employed in the ship-repairing yards? If that is the case, will he say why? Could it be that the Government, in changing their draftsmen on shipbuilding matters have had no more success than in the past?
I believe that the future of this industry depends on its efficiency, productivity and competitiveness. It is an industry that is more competitive in the international sphere than any other—and, I would add, an industry that is less suitable for nationalisation than any other. This scheme must be seen as part of an overall plan to achieve efficiency and competitiveness in the industry. The scheme is essential and must be accepted by all hon. Members if we are to improve the prospects for the industry. A great deal more needs to be done, however, than simply providing for redundancy. I wait with interest to hear the Government's detailed plans for the successful future of this industry rather than just their ideas for laying off those who cannot be employed in the industry.
§ 10.52 p.m.
§ Mr. W. E. Garrett (Wallsend)
I am surprised that after four recent attempts to catch the eye of the Chair, I have succeeded in doing so on this occasion.
192 I thought that the hon. Member for Kingston upon Thames (Mr. Lamont), from the Opposition Front Bench, spoke very well, considering that he has never worked in a shipyard. He made a first-class job of it.
I think I am coming to understand the workings of the Chair on these occasions. It believes that it is necessary to call a Member of the Privy Council to speak first on shipbuilding matters when it knows full well that fellows such as me have expertise on the subject. Indeed, there are certain Members of the SNP who can speak with equal eloquence on the topic. I know that on this occasion I have been called to speak for one reason only, namely, that the Bill has merit.
The Ministers who prepared the Bill have courage. They have worked hard to create a situation which will provide money—and that is what it as about, money—to those who will get their cards, leave the shipyard gate, and receive a guaranteed payment. That never happened when I was a young man. I never dreamt that it would happen in my lifetime, but it has. Whether it had been done by a Tory Government or the present Government, I would still have regarded it as an indication of how far we have moved in our understanding of the situation that faces anybody who, as a result of economic forces, finds himself with his cards—sacked.
There are not many Members in the House who, in common with me, have been given the sack—not because of my inability, I presume, but because the company could not carry on paying my wages in the then situation. This Bill is on similar lines to the miners' Bill. It is a landmark, and yet few of us recognise it as such. We have to convince those who will benefit from the Bill, which I think will be passed by Parliament, that it is a tremendous achievement. There will be a lot of mutterings about it, but it is a good Bill and I hope that we give it 100 per cent. support as it progresses through the House.
§ 10.55 p.m.
§ Mr. James Molyneaux (Antrim, South)
As Northern Ireland and Harland and Wolff appear throughout the Bill as a sort of balancing factor in every other line, I thought it right that, on behalf of 193 the Ulster Unionist Parliamentary Party, I should give the Bill a general welcome.
I trust that Ministers will not be reluctant to repeat assurances that Harland and Wolff will not suffer by reason of its exclusion from British Shipbuilders. I am glad to see the Minister of State responsible for commerce in Northen Ireland is on the Government Front Bench. I do not wish to embarrass him by asking questions on sensitive matters, but I trust that the Minister who is to reply will be able to assure us that Harland and Wolff, which has not been involved in, for example, the Polish ships order, will not be neglected and will be to the fore when contracts for which the yard is well fitted are being considered.
My impression is that the Minister of State acts as an effective salesman for Harland and Wolff, and I hope that he will have the support and co-operation of his colleagues in the Government.
§ Mr. Kaufman
I should like to give the hon. Gentleman the assurance that he seeks. My right hon. Friend and I work closely together in seeking orders for Harland and Wolff and recently we have had considerable success as a result of our joint efforts.
§ Mr. Molyneaux
I am happy to accept that assurance and to pay tribute to both Ministers for the efforts they have made to assist Harland and Wolff in its special difficulties. One does not like to plead special difficulties in Northern Ireland, but it is accepted by the House that Harland and Wolff has been through a particularly difficult time. The Minister's assurance will be warmly welcomed not only by my party but by the work force in the yard and all right-thinking people in Northern Ireland.
§ 10.58 p.m.
§ Mr. Frederick Willey (Sunderland, North)
Like everyone in the shipbuilding industry, I welcome the Bill. On balance, it is better to make provision by legislation than otherwise, though this is an enabling Bill, which means that we shall have to look to the orders for implementation of the legislation. They will be affirmative orders, but the House is still at a great disadvantage.
There are major issues to be settled, including the question of comparability with other industries. In Sunderland we 194 shall be particularly concerned about the relationship to earnings. Unfortunately, we shall not be able to move amendments to the orders, and obviously the House will not want to reject such measures.
§ Mr. W. E. Garrett
On a point of order, Mr. Deputy Speaker. My right hon. Friend has said that this is an enabling Bill, but what is to be decided tonight is the main issue. The other matters can be dealt with in Committee. I understood that this was a Second Reading. Is that not so?
§ Mr. Willey
I am obliged to my hon. Friend the Member for Wallsend (Mr. Garrett). We shall discuss the clauses in Committee, but we shall still be confronted with the difficulty that the provisions with which we are concerned will be contained in the orders, which are not subject to amendment.
§ Mr. Garrett
This is not a Bill giving us orders; this is a measure that will, I hope, go to Committee. It will then be decided whether it is in order.
§ Mr. Willey
I shall not take the matter further, save to say that there is a real difficulty. I do not dispute that there will be full discussions with both sides of industry. However because the Bill is recognised to be a matter concerning Parliament we shall be put in a difficulty. We should consider whether the powers to make the order should be circumscribed by writing in provisions that should be made obligatory in any such orders. It is difficult to proceed without having consultations with both sides of industry, and there is a difficulty that I hope my hon. Friend the Minister of State will consider.
I share some of the mixed feelings about the Bill. Obviously it depends upon two assumptions. One assumption is that whatever steps are taken and whatever success we have, there will be a serious contraction of the shipbuilding industry. The second assumption is that that contraction will take place in areas of serious unemployment. Both assumptions are disturbing.
I accept what the hon. Member for Kingston upon Thames (Mr. Lamont) says 195 about the need for a general re-examination of redundancy. I should like to see a greater emphasis on the provision of alternative employment in the areas where the unemployment is caused. On the Wear we are concerned about providing alternative employment. I shall not pursue again the argument about Greenwells and South Docks, but we are now concerned about getting repair work for offshore vessels and coastal vessels, where we think there is a market. I should like to see a greater obligation on the employers, who, perhaps inevitably, are causing redundancy, to feel a direct responsibility to their employees in the sense that they have art obligation to do what they can to provide work.
Redundancy in shipbuilding is not new. There has been a serious run-down year after year. On the Wear there are always hundreds fewer employed in the industry as each year passes. I impress upon my hon. Friend that while we fully accept the provisions contained in the Bill we hope that those who have to take advantage of them will be kept to the minimum.
As for orders, I agree that the intervention fund has been a tremendous asset. Nationalisation has also been a tremendous asset. It has fortuitously provided a formula whereby we can get orders more easily than competing countries. Incidentally, I remind my hon. Friend that we are looking forward to the Indian orders. Again, they will reduce the number of men who are made redundant.
I repeat the illustration that I gave the other night, of Doxfords. If only a greater initiative can be allowed to Doxfords and its investment programme, that again will reduce the number who are made redundant.
§ Mr. W. E. Garrett
On a point of order, Mr Deputy Speaker. It is now five minutes past eleven. My right hon. Friend represents, as I do, a constituency in the Northern Region. If he wants to use his position to explain the problems in the North-East, especially in his constituency is it not possible that Opposition Members will take advantage of that, which could mean that we go on all night? I know that my hon. Friend the Member for Easington (Mr Dormand) 196 has a definite point to put, as have others of my hon. Friends. I think that with the consent of the Minister and Opposition Members we should try to confine ourselves to the Bill. Unless we do, we shall be here all night.
§ Mr. Deputy Speaker
I hope that the hon. Gentleman will pardon me if I say that, because of the lateness of the hour, it would be helpful if we could get on with the speeches of hon. Members. I assure the hon. Gentleman that nothing will be allowed that is out of order.
§ Mr. Willey
I do not expect my hon. Friends the Members for Easington (Mr. Dor[...]nd), and Coventry, South-East (Mr. Wilson) to intervene. After allowing for injury time, I hope to speak for a shorter time than did my hon. Friend.
§ Mr. W. E. Garrett
I spoke for only five minutes, because I watched the clock. I wish that my right hon. Friend would do the same.
§ Mr. Willey
I have no wish to detain the House. I am content to emphasise that if one is dealing with redundancy, one has to exert all one's efforts to reduce the extent of it. I hope that that observation will commend itself to my hon. Friend.
§ 11.6 p.m.
§ Mrs. Margaret Bain (Dunbartonshire, East)
As the right hon. Member for Sunderland, North (Mr. Willey) said, this legislation has great implications for those areas now suffering from high levels of unemployment, and nowhere is that more true than in West Central Scotland. Only today I received an invitation from the district council of Clydebank to attend a meeting which is to look at industrial development on Clydeside, obviously bearing in mind what is happening to the shipbuilding industry in West Scotland.
It is distressing that the House appears to be discussing, with apparent equanimity and, to judge from the empty Benches, apparent disinterest, the whole problem of redundancy within the shipbuilding industry. I share the slight cynicism of the hon. Member for Kingston upon Thames (Mr. Lamont), inasmuch as I believe that the establishment of British Shipbuilders was very much a preparation for the mental process of 197 accepting redundancy within the shipbuilding industry.
One of the sad features that we as Members have to encounter as we visit our constituencies and face redundancies in all industries is that for many people the concept of a large lump sum is in many ways so enticing that they are prepared to give up their jobs, not recognising that the lump sum, which often reaches four figures, and which for many people is the largest sum that they have seen in their lives, is not a guarantee of security; nor, indeed, that there is any opportunity of alternative employment.
Within the shipbuilding industry at Barclay Curle, on the Clyde, we have a situation in which 94 redundancies were declared out of a work force of 400, but the men told the shop stewards that they would settle for good severance pay rather than fight the implications of unemployment.
In Clyde Action, in November and December 1977, an argument was put forward that far too many people were accepting without question the concept of redundancy. The convener of the Scotstoun yard said that it was not accepted that rundown in the shipbuilding industry was inevitable, and a four-point plan was put forward. It was that there should be investment for modernisation of the industry; that British ships should be built in British yards; that there should be import licensing and flag discrimination; and that there should be integration of the shipbuilding and ship-owning industries. One of the main leaders of the shop stewards in that area, Jimmy Airlie, said at a meeting of Labour Members of Parliament—I hope that the House will excuse the language—If this Government intends to pursue such a policy, then they're in for a helluva fight.The shipbuilding industry in West Central Scotland has suggested that there should be an international trade union conference on the problems of the shipbuilding industry. This was suggested by John Chalmers, of the Boilermakers Society. I wonder whether the Minister is prepared to say that the Government would be prepared to back such a move by the trade unions.
I turn now to the matters raised by the Minister in his opening remarks. He said that one of the great problems that we 198 are facing is over-capacity in the shipbuilding industry, and that this was a direct result of expansion in the Far East shipbuilding industry. I contend that it was not so much the expansion of the Far East industry as the policies operated by the Governments of countries such as Korea and Japan that have an unequal footing to those shipbuilding industries in terms of competitiveness compared with the British industry. Had the British Government seen fit to implement policies sooner or later which would have helped our shipbuilding industry we would not be in the present situation.
When the Intervention Fund was introduced I said, as I am sure the Minister of State will recall, that it was too little and too late. He accused me of the usual Scottish nationalist cynicism. How much of the Intervention Fund is left? I am sure that the figures have changed since the exchanges that we had in the debate on the Polish contract as it affected British shipbuilding. Will the Under-Secretary indicate whether he envisages any extension of the fund during the two-to-four years in which it is envisaged that the redundancy payment scheme will run?
The Minister of State also said that any reduction in the labour force would be a direct result of consultation between British Shipbuilders and the trade unions involved. In this context, what will the role of SAIMA be? SAIMA has still not been recognised as a negotiating union, yet it represents 70 per cent. of middle management within the British shipbuilding industry. Are we to assume that the redundancies envisaged by the Government will not affect middle management and, therefore, that there is not a case for saying that SAIMA must be represented? Or are we to assume that the organisation is just to be totally ignored? Last year it was the unanimous recommendation of British Shipbuilders and ACAS that full recognition be given to SAIMA along the lines accorded to the confederation. I should appreciate clarification on this point.
§ Mr. W. E. Garrett
On a point of order, Mr. Deputy Speaker. It would help the whole House if hon. Members were told what SAIMA meant. The Minister might know, but Back Benchers such as myself do not know what it 199 means. I ask the hon. Lady to give the full name.
§ Mrs. Bain
The Minister of State also said that this was a sudden, once-and-for-all situation which British shipbuilding was confronting. During the inter-war period similar problems were faced by the British shipbuilding industry. As one who studied that period—not with first hand experience, but in depth—I know that the policies enacted later helped the industry.
The Minister of State said also that only the broad structure of this plan had been drawn up. There is a drastic need for details of the plan to be given. There are implications for all sections of the shipbuilding industry. Do we have to accept that £3,650 will be the maximum redundancy payment level, or are we to accept confederation claims that a much higher level will eventually be recognised by the Government? In the Shipbuilding News for November 1977 the CSEU indicated that it was seeking a far better scheme than that indicated by the Minister when he first referred to this scheme in February of last year. May we have more details of the level of payment which will be given to men made redundant? Will the Minister also indicate what funds, if any, will be made available for extra retraining which will be necessary for the men who will lose their employment? Can we have further information as to the extent of the closures and redundancies the Government envisage?
The Government are prepared to accept a great deal of the blackmailing attitude being adopted by the Common Market. I refer to an article which appeared in 200 The Scotsman in December 1977 in which reference is made to a warning given to EEC members thatunless they agreed to reduce their shipbuilding production capacity to 45 per cent. by the early 1980s, to take account of declining world demand, the European Commission would under the Rome Treaty use the powers they have to curb national subsidisation.What are the implications of that threat for the intervention scheme as envisaged by the Government, and what are the Government doing to withstand the pressures of the EEC and the OECD in these matters?
Finally, I ask whether British Shipbuilders and the Government have consulted many of the smaller yards involved in these schemes such as Ailsa Shipbuilding in Troon, which has already had to make 200 people redundant in 1977. It had hoped to receive the temporary employment subsidy and to gain from the Polish contract, but this did not happen. What are the implications for small yards such as Ailsa Shipbuilding?
In terms of ship repairing, will the Government look closely at the areas of Scotland and round the coasts of England and Wales, where our fishing fleets are serviced and repaired? Will any help he given to these areas, and will there be scope for that aspect of the Bill to be examined further in Committee?
In company with most hon. Members, we are forced to give the Bill a muted welcome, since we must accept the reality of the situation, but I believe that there is still a challenge open to British shipbuilding. I know from personal experience in the Clyde yards area that we have the skills, the expertise and the engineers, and we have the ability to go out, given proper assistance, to compete with anyone in the world. We should be restoring our pride, and I find such a situation as that which confronts us here very distressful, because it seems that we are accepting that we do not have the skills and expertise, which I, for one, will fight to preserve.
§ 11.16 p.m.
§ Mr. David Hunt (Wirral)
This is a sad night for British shipbuilding, but I believe that, provided that we take the right decisions now, it will be possible to preserve our reputation for building the best ships in the world in British shipyards.
201 In welcoming this important Bill, I wish to raise one crucial question. Where does the Bill fit into a long-term policy for British shipbuilding? We have not yet had an answer in this debate, and it seems that no long-term or even medium-term policy exists. We were told by the Minister of State that it will be some time before one is devised, before the corporate plan is finalised.
The Minister described the most depressing situation in which we find our shipbuilding industry, at a time when unemployment is at an unacceptable level. The world over-capacity which he sought to describe will probably become even more serious in the immediate future. World shipbuilding capacity is double that which is required to meet the expected demand for new ships over the next few years. Yet new shipbuilding nations outside the OECD, such as South Korea, Taiwan, Brazil and Yugoslavia, are all competing aggressively for new orders, and the rest of the world is being forced into a desperate rethinking of its future capacity. Only a few countries are yet seeking to rationalise and streamline their shipbuilding industries. The vast majority still seem to be attempting to sail away from reality on a sea of subsidies.
The Minister mentioned with pride the Intervention Fund. We have already had a lengthy debate about the Polish shipbuilding order, and, no doubt, we shall soon have an announcement about an order to build ships for India. It is becoming clear that all these orders are being bought at great cost to the British taxpayer, and our country, instead of leading the European Community—
§ Mr. W. E. Garrett
Is it in order to challenge on fact when an hon. Member makes a statement? If it is not in order to challenge the facts that he states, I am wrong, but if I am right, I challenge a certain point which the hon. Gentle-man has made.
§ Mr. W. E. Garrett
No, Mr. Deputy Speaker. If you were listening to the hon. Gentleman, it is relevant to his knowledge of—
§ Mr. Hunt
I was saying that if our country, instead of simply rushing towards support schemes, were to lead the European Community towards a viable long-term policy, we should see some progress towards an EEC-wide scheme. But what is the result of this Bill? Without a corporate plan, the introduction of a wide-ranging redundancy payments scheme may well attract out of the industry some of its most valuable labour. What we surely need at the same time as the introduction of the Bill is clear rationalisation, so that we can preserve and improve our expertise in readiness for the even more bitter competition in the 1980s.
In summary, I should like to hear from the Under-Secretary how he believes a long-term strategy will be evolved over the coming months. We need urgently to work out a plan for a slimmed-down industry with a capacity much more in line with our share of a greatly reduced world market. In that way we can ensure that our best yards are kept competitive and our skills preserved as we move into an even more difficult era for our industry.
§ 11.20 p.m.
§ Mr. Michael Marshall (Arundel)
I shall be brief, because many of us are anxious to hear the Minister's winding-up speech and his answers to a number of important questions, and also because I join in the welcome given to the Bill, in the terms used by my hon. Friend the Member for Kingston upon Thames (Mr. Lamont). I agree with much that my hon. Friend the Member for Wirral (Mr. Hunt) said.
203 The right hon. Member for Sunderland, North (Mr. Willey) put his finger on one aspect about which we have not heard enough from the Government Front Bench—the question whether the Bill will be needed. We are all united in hoping that it will not be needed, if the order book should improve, and we should like the Under-Secretary to address his mind to the state of orders. If he cannot give us the detailed picture tonight perhaps he will answer in writing those of us who raised this matter.
The measure is related to a fluid marketing situation. We know all about the Polish order and we hear much discussion about orders from India. The Minister of State made a cryptic reference to the fact, which we welcome, that in the first nine months of last year British shipowners had been patriotic in placing orders extensively in this country. But I think that he then said that in the last three months the position might become blemished. I wonder what that means. In the time scale of shipbuilding contracts three months seems a short period. It is hard to see how the figures could be altered for the whole year. A long lead time must be involved. More information on that matter would be helpful.
The Minister of State referred to European attempts to get together and cited the 1972 discussions on over-capacity. In doing so he reinforced the feeling of many of us that the crucial issue here, as on many other industrial matters, is how to realise the value of Community membership in trying to achieve a common stance. We should like up-to-date information on the matter. I trust that British Shipbuilders, along with other European shipbuilders, is trying to see a way ahead in these matters. The attempts to move towards the specialisation of shipbuilding within Europe, tied in with the funding within Europe, are in direct parallel with the steel situation, which many of us are anxious to explore.
The answer to the question how redundancies will operate must presumably depend on where the orders are being placed. They are being placed in various yards up and down the country dependent not only on their expertise but on their industrial relations. I noted with care some of the Minister of State's comments in the Adjournment debate initiated 204 last Friday by his right hon. Friend the Member for Sunderland, North.
Steel has recently been much in the news. In a sense tonight we are seeing a direct parallel. This great industry must face many big challenges, including not only the question of redundancies but the very shape and nature of British Shipbuilders. I am worried because once more we have seen lumped together a rather disparate group. My hon. Friend the Member for Tynemouth (Mr. Trotter) spoke of some yards which may feel it difficult to fit within the framework of the Bill.
This is a Bill of great importance. It does not just relate to British Shipbuilders, because it establishes certain norms. We are all worried about the decline of certain traditional manufacturing industries. We are all anxious to avoid redundancies. It would be marvellous if we could see these industries sustained at their present level but, being realists. We have to recognise that that is unlikely. We have to see what pattern we can work for the future.
The Minister may also appreciate that those of us on the Select Committee on Nationalised Industries who have been looking at the steel industry are now looking at British Shipbuilders. We shall look forward to an increasing dialogue on these matters. This measure may present a useful opportunity for many of us who want to hear more about the industry. Having given the measure a cautious welcome I look forward to the Minister's comments.
§ 11.26 p.m.
§ The Under-Secretary of State for Industry (Mr. Les Huckfield)
I welcome the constructive spirit in which the debate has taken place and I shall endeavour to answer most of the points that have been raised in the same spirit. I hope that right hon. and hon. Members will forgive me if I have to gloss over some points since I wish to cover as much ground as possible.
The hon. Member for Kingston upon Thames (Mr. Lamont) made a point about delay in introducing the Bill. It was my hon. Friend the Minister of State who anounced the Government's intentions to propose such a Bill when he announced the introduction of the Intervention Fund on 24th February last year. Since then 205 the Confederation of Shipbuilding and Engineering Unions and, first, the Organising Committee and then British Shipbuilders, have been in pretty well continuous consultation. The hon. Member will realise that a detailed scheme such as this takes time to work out. With that in mind I say that we have introduced the Bill at the earliest opportunity and have made provision to ensure that no one shall suffer hardship as a result of any delay by making it possible to apply the scheme retrospectively.
I hope that the hon. Member will realise that there has not been any undue delay on the part of those involved in the negotiations or on the part of the Government. My hon. Friend has been into a great deal of detail about the worldwide crisis facing the shipbuilding industry. Orders placed in the United Kingdom fell from a peak of 4.4 million gross registered tons in 1973 to only 75,000 gross registered tons in 1975. I am pleased to report some success in that in 1977, between them, British Shipbuilders and Harland and Wolff won orders amounting to 710,000 gross registered tons—55 per cent. of that representing foreign orders won in the face of severe competition.
In 1975 only 10 per cent. of the orders for United Kingdom registration were placed in British yards but the figures for last year will probably show that more than three-quarters of the orders for United Kingdom registration were placed in the United Kingdom. I am sure that all hon. Members recognise that the Intervention Fund has played a considerable part in this success.
The hon. Member for Dunbartonshire, East (Mrs. Bain) referred to the Intervention Fund. It was to deal with the competition from the Far East, particularly Japan and Korea, that the scheme was introduced. The hon. Lady asked for details of how much remained unallocated in the fund. I can only refer her to the statement made by my right hon. Friend when we debated the Polish order on 12th December, in which he said that £15 million of the fund remained uncommitted.
Despite the success of the Intervention Fund—and I include in that the great success of the Polish order—we still won only sufficient orders to provide the 206 equivalent of nine months' work in our yards. I take fully into account the points made by my right hon. Friend the Member for Sunderland, North (Mr. Willey), who described the difficulties he has experienced in his constituency. I have been in the North-East several times recently and I know of the severe unemployment problems that my right hon. Friend has in Sunderland. I am sure that we all admire the way in which he has been persistent in pressing in this House the claims of his constituents.
§ Mr. W. E. Garrett
Will my hon. Friend also recognise that there are other Members of Parliament in the Northern Region who have emphasised consistently to the trade unions concerned the situation that faces British Shipbuilders? Will he take this opportunity to emphasise to them once again the competitive situation in a world market that British Shipbuilders must face? They, too, must recognise their responsibilities.
§ Mr. Huckfield
I shall take on board what my hon. Friend has said. If he had waited for one further minute, he would have heard me paying him an equally glowing tribute.
Despite the success that we have had with the Intervention Fund in getting orders for British yards, it is a fact that shipbuilding all over the world still faces excess capacity. Concerning the more detailed numbers of the possible redundancies, both the hon. Member for Arundel (Mr. Marshall) and the hon. Member for Dunbartonshire, East referred to a forecast from the European Commission that total Community output would fall by 45 per cent. in real terms over the next five years. The Commission does not say what it expects the contribution of individual member States to be.
I doubt whether this is necessarily the best way to approach the Community's shipbuilding problems and our own problems. While we recognise that world demand has fallen to 40 per cent. of output in real terms, and could well rise at least a little in the next five years and, perhaps. more rapidly after that, the fact is that no one really knows what the situation will be in five years' time. I believe that it would be foolish and shortsighted to embark upon a massive programme of contraction which would 207 simply make the Commission's prophecy self-fulfilling.
We do not accept that we should have to bear a capacity reduction in excess of the likely world average, in view of the fact that the United Kingdom can hardly be held to account for contributing to that excess capacity.
§ Mrs. Bain
With reference to the European context, will the hon. Gentleman explain the implications that lie behind the threat of movements towards national subsidisation schemes, to which I also referred? In order to protect the British shipbuilding industry as a whole will the Intervention Fund be extended over the five-year period to which he refers?
§ Mr. Huckfield
That matter will have to be considered. However, I take on board the concern that the hon. Lady has quite properly shown.
The main policy of the Government and of British Shipbuilders is to keep the maximum number of yards going, to provide the maximum number of jobs and to provide the maximum number of ships. The hon. Member for Wirral (Mr. Hunt) asks where and when this is to happen. I hope that he will appreciate that as vesting date was only on 1st July last year it will take some time for British Shipbuilders to draw up its corporate plan, and it is for that plan that we shall have to wait to gain more precise details of how British Shipbuilders sees its strategy going forward.
§ Mr. Huckfield
The simple answer to this will be considered when it is received from British Shipbuilders. I cannot give the hon. Member any more details than that, except to say that the plan will be prepared from each profit centre's outline and will be worked out in consultation with the relevant trade unions at local levels. The corporation's overall 208 corporate plan will be framed so as to reflect the agreed priorities for the allocation of available resources throughout British Shipbuilders, and the House will be kept informed.
The hon. Member for Kingston upon Thames asked for more details of the outline of the scheme. I have to say to him again that negotiations are still taking place, but I can tell him that the payments proposed consist of a lump sum to be determined in accordance with age and length of service, and income support payments based solely on length of service which would be payable for a period of unemployment of up to two years.
Within this broad framework there are obviously still a large number of matters to be considered. The House will have an opportunity of considering those matters when the appropriate draft orders are laid for affirmative resolution.
I assure the hon. Gentleman that there will be the fullest consultation with the trade unions involved, based on the principle of the maximum decentralisation possible, which was enshrined into the original nationalisation Act and which British Shipbuilders has been pursuing as its philosophy hitherto. But the hon. Gentleman seemed slightly to misunderstand the way in which some redundancy schemes in some industrial installations work.
As far as both British Shipbuilders and I are concerned, the hallmark of this scheme will be flexibility as applied to individual yards. Based upon the experience which is applied in most industrial situations, most arrangements of this type are usually negotiated between the unions and management to suit the purpose envisaged. It is not a scheme whereby the money is held up and anybody who wants it can take it. The agreed numbers of redundancies, the age structure and where the redundancies will be taking place are usually agreed on the appropriate basis between the unions and management.
The question of workers wanting to come back into the industry can be examined later. I cannot agree that this scheme will produce arthritis in the industry. The hon. Member for Kingston upon Thames wants the shorter period for which he was asking, but that could provide too much of a straitjacket. I 209 believe that the proposed scheme can be administered on a decentralised and flexible basis. Although it will be administered in consultation with the trade unions on a flexible and decentralised basis, it will take into account all the human problems to which my right hon. Friend the Member for Jarrow (Mr. Fernyhough) and my hon. Friend the Member for Wallsend (Mr. Garrett) so ably referred.
The final cost of the scheme cannot be forecast at this stage with any useful accuracy, because it is not possible to anticipate how many people will qualify for payments or what their personal circumstances will be. It might be possible to give some kind of range of payments per thousand workers, but even that will necessarily be a bit vague, because we do not know the age structure of the yards involved. For example, if a yard were to close, the age and length-of-service structure would presumably reflect the average for the industry as a whole. If the yard were able to avoid closure, and it was necessarily a slimming operation, the average age of those taking the benefit would be relatively high, thus resulting in higher than average payments.
Having said that, the hon. Gentleman will realise that the factors that will influence the overall cost of the scheme will be, first, that benefits are almost certain to be linked in some way to earnings—that will obviously be an influencing factor, especially as earnings rise over time—and, secondly, that, if he makes a comparison with the iron and steel scheme, which some of his hon. Friends have done, he must bear in mind that that scheme provides for a cut-off below age 55 which may not necessarily apply to this scheme. I repeat, it is difficult to go beyond that in giving more details of the overall cost of the scheme.
I think that a true comparison is difficult, because of the age structure and length-of-service comparisons, and so on. It has to be remembered that this scheme is not open-ended. It is limited in its duration, and this will obviously serve to place an ultimate limit on the cost. As my hon. Friend has already assured the House, once the full details of the schemes are prepared, it will be possible to offer some illustrative examples based on age and length of service data.
210 The hon. Member for Tynemouth (Mr. Trotter) and the hon. Member for Kingston upon Thames made some comparisons with shipbuilding in the private sector. They asked why the scheme could not have been applied to the private sector. I shall not dodge that question. I shall meet it head on. I am sure that the House will appreciate that this scheme is primarily designed and primarily aimed to meet a special situation—that of the gross world over-capacity which has arisen as a result of the collapse of the world tanker market, and from the building of large facilities for the construction of such vessels and similar large vessels, such as bulk carriers, cargo liners and container ships. The crisis yards in these circumstances are, in the main, publicly owned. That is why the scheme has been introduced with these demarcation lines.
§ Mr. Trotter
But is it not true that our foreign competitors in shipbuilding are moving their labour forces ever more over to repairing and that repair yards abroad are competing with the privately owned repair yards in this country? This may be three or four stages removed from the collapse of the tanker market, but it is having an effect on our privately owned ship repairing yards.
§ Mr. Huckfield
I appreciate what the hon. Gentleman said. I know he is concerned that there is some kind of shifting of resources in some of these yards. But I hope that he will bear in mind that what I have stated is the main aim of the scheme as envisaged.
§ Mr. W. E. Garrett
The hon. Member for Tynemouth (Mr. Trotter) has missed the point of the argument. The bigger the ship, the less the amount of repairs. The greatest amount of repairs required is on naval construction. A tanker has only one engine, and there is less repair on a bigger ship than on many of the smaller ships which have more than one engine. Will my hon. Friend explain this fact to the hon. Member?
§ Mr. Huckfield
I thank my hon. Friend for his intervention. He has explained the point adequately to the hon. Member for Tyne. I do not think there is any need for me to add to what he said.
I was simply trying to explain the main aim of the scheme as envisaged, and why 211 the boundary lines have been construed as they have been.
I recognise the constructive spirit in which the Bill has been debated. We have had some very sincere contributions from all parts of the House, including from the hon. Member for Antrim, South (Mr. Molyneaux), who expressed his concern on behalf of the employees of Harland and Wolff.
This Bill will enable us to bring before the House a redundancy scheme which will be the result of the closest consultation between British Shipbuilders, Harland and Wolff and the Confederation of Shipbuilding and Engineering Unions, and which will allow us to alleviate some of the social and human effects, to which may hon. Friend the Minister of State referred, of the worldwide shortage of orders. We are going to do our best to get the orders. I am sure that, in that spirit, the House will do no other than welcome such a measure and give it a Second Reading.
§ 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).