asked the Secretary of State for Trade and Industry if he will make a further statement on the position of the shipyards in Upper Clyde-side.
The House will have learned with regret of the sudden death of Mr. Hugh Stenhouse, the Chairman of Govan Shipbuilders Ltd. Mr. Stenhouse has made an outstanding contribution to the task of setting up the new company in difficult circumstances and his death will be a sad loss to all concerned. For its part, the Government will continue to work towards the establishment through Govan Shipbuilders Ltd., of a viable merchant shipbuilding industry on the Upper Clyde.Negotiations on the guarantees concerning an order for four ships for Irish Shipping Ltd. have been completed and the Liquidator is starting work on these ships at Govan forthwith. I am publishing details of financial commitments entered into in the OFFICIAL REPORT. Discussions have started between the unions and Govan Shipbuilders Ltd.
Following is the information:
DETAILS OF FINANCIAL COMMITMENTS AND LIABILITIES UNDERTAKEN IN RESPECT OF FOUR SHIPS FOR IRISH SHIPPING LTD AND IN THE PROVISION OF WORKING CAPITAL TO THE LIQUIDATOR:
1. In his statement of 20th October the Secretary of State referred to the provision of guarantees to shipowners and the Liquidator and to the provision of working capital to the Liquidator.
2. Negotiations with Irish Shipping Ltd. and with the Liquidator of Upper Clyde Shipbuilders Ltd. on the guarantees needed to enable work to begin at Govan on four ships ordered by Irish Shipping Ltd. from U.C.S. have been concluded.
3. The ships are expected to cost some £3 million more to build than the Liquidator or any successor company could expect to receive from the shipowners under the contracts. The Liquidator was prepared to start work on these ships only if he were assured that the extra cost would not fall upon the U.C.S. assets. The Government have agreed therefore to meet these extra costs. It is estimated that about £2 million will be required for this purpose by the Liquidator.
4. The Government have also undertaken, in the event that the ships are not delivered by certain dates, to refund all payments under the contracts made directly by Irish Shipping Ltd. after 15th June, 1971, and those made by Banks on their behalf. The maximum potential liability under this guarantee is estimated at £11 million.
5. Up to £1½ million will be made available to the Liquidator for working capital purposes in the form of a loan with priority for repayment after the secured creditors who are certain Banks and the Shipbuilding Industry Board.
6. No estimate can be made of the total amount likely to be recovered by the Liquidator from the assets of U.C.S. including working capital. If it is insufficient to meet the secured creditors in full, there would be no direct recovery of this loan by the Department but a substantial part may be recovered indirectly in the return which the S.I.B. receive on their secured loan.
7. The Supplementary Estimates now before the House include provision for these commitments.