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Orders Of The Day

Volume 901: debated on Sunday 2 March 1975

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Aircraft And Shipbuilding Industries Bill

Order for Second Reading read.

Before I call the Secretary of State for Industry to move the Second Reading, I should inform the House that already over 40 right hon. and hon. Members wish to speak in the debate.

3.32 p.m.

I beg to move, That the Bill be now read a Second time.

This Bill fulfils a pledge contained in both of Labour's 1974 General Election manifestos. It deals with two industries which are in need of structural change and reorientation to achieve greater efficiency, secure economies, avoid duplication and facilitate rational planning and decision-taking. It deals with two industries, because we believe that a similar prescription is right for each of them. But our reason for nationalising them lies in the particular—and different—circumstances of each industry.

The Bill deals with the real world of the shop floor, the research laboratory and the sales contract, not with arid political generalities or statistical abstractions. It takes into public ownership the main companies making complete aircraft and guided weapons—the British Aircraft Corporation Ltd., Hawker Siddeley Aviation Ltd., Hawker Siddeley Dynamics Ltd. and Scottish Aviation Ltd.

This is a successful industry. It is the largest and most comprehensive aerospace industry in Europe, and second only to the United States industry in the Western world in terms of size and in terms of technical pre-eminence. The companies are profitable.

For all that, however, it is an industry that could achieve more and an industry facing big and immediate problems. The civil side particularly is faced with bleak and uncertain prospects. We need to find better ways to link our undoubted technical excellence to the needs of the market. The case for a merger between the main airframe companies—a comparable argument applies on guided weapons —is very strong and has widely-based support.

The aerospace industry has a string of technological achievements that are second to none—of recent years, for example, the Harrier vertical take-off and landing military aircraft, and Concorde. Its efficiency has been enhanced by progressive concentration into fewer units. Export orders stand high, though much of the recent increase in the figures is attributable to inflation.

As a country, we can no longer afford the luxury of two groups sometimes competing wastefully against each other in world markets, and anyway failing to realise the economies that a merged and rational structure would permit. The companies operate at arm's length and in an unco-ordinated way. Their aircraft and guided weapons overlap. Often they directly compete. Both have design teams engaged in speculative design studies across the whole range of aircraft and guided weapons. Their international collaborations and discussions have until very recently been uncoordinated if not actively competitive.

If the right hon. Gentleman believes that the merger is part of what is required, when, in order not to indulge in political dogma, did he last discuss with the companies concerned, and how often has he had discussions with them on, the the possibility of a merger, even accepting, in the hindsight of the British Leyland affair, that that is the right course?

I intend to develop the argument. I have made only a brief reference to it so far. I have had informal discussions with the industry about this matter.

I am coming to the point. The matter has been under discussion on many occasions, including under the Conservative Government.

There is a need for rationalisation and it is vital that all of us, including workers in the industry, face up to what it means. "Rationalisation" is a word which has acquired overtones of ruthless dismissals, cutting capacity and so on. I do not believe that drastic and sudden action of that kind is sensible industrially and commercially, let alone socially.

But we cannot escape the need to increase efficiency and increase manpower productivity. It is no good believing that we can go on producing what we cannot sell—and sell to the nation at a profit which can be distributed to the workers in higher wages and higher living standards and ploughed back into new capacity.

The size of the industry, like the size of any industry and the future of any individual works, depends ultimately on the ability of the industry to sell its products in world markets. To do that, improved efficiency and productivity are needed.

There are two ways of increasing productivity. One is to sell the same amount as before but with fewer people. The other is to sell more than before, with the same number of people. I hope we can achieve the second of these courses, but a sensibly planned reduction of manpower in full co-operation with the unions, over a period, mainly by controlled recruiting, will almost certainly be necessary. Given that, reorganisation of our resources under unified control, choice of the right projects and the right collaborations, I believe that the aircraft industry in this country can realise its full potential.

Manpower reductions on their own will solve no problems. A merger of the main groups will improve the quality of project choice decisions.

How much lower than its present potential will its full potential be under nationalisation?

I cannot answer that, and the hon. Gentleman knows that it is impossible, given the present state of the market and the world conditions in civil aviation—and in military aviation for that matter—to predict with any accuracy. But it is clear from my discussions with those in the industry that there will have to be some rationalisation, and the hon. Gentleman knows this.

It is absolutely essential to have common criteria and common objectives so that we shall be able to fight for our place in world markets. There is quite sufficient competitive stimulus there without our having to compete with ourselves as well. Added to that, there is the need for rationalisation of production. We shall be able to spread work loads, and it should be possible progressively to ensure that work is organised in the most efficient pattern, utilising skills and specialisms at particular plants.

The hon. Gentleman asks whether they are used to the best advantage. Has he talked to anyone lately in the industry? The people to whom I have talked over the last few weeks are convinced that they are not used to the best advantage.

The record of the aviation industry in world markets is second to none. When the right hon. Gentleman makes such a statement, he really ought to produce evidence to support it.

I am absolutely convinced that there is scope for geographical rationalisation, rationalisation between civil aircraft plants and between military aircraft plants. Some reorganisation will also be possible on the design and development side.

It is arguable how far competition between design teams ought to be stopped, and that is a matter that the new Corporation and the organising committee will have to consider in the first instance. On any basis, however, it ought to be possible for unified control to eliminate wasteful duplication in this area and deploy the resources more efficiently. Again, there will be administrative savings from elimination of duplicated services. [Interruption.]

Sales operations will be able to cover a wider range of consumer needs—[Interruption]—and to do so without having to sell against other—

Order. The right hon. Gentleman has given way three times in 10 minutes, and 40 right hon. and hon. Members wish to speak. I appeal to hon. Members to bear in mind that the fewer the interruptions and the less giving way there is, the more speeches we shall be able to have.

We are absolutely convinced, in spite of the interventions of hon. Members, that a merger between the two big groups offers great opportunities for doing the same things more efficiently and more cheaply, and for selling more British goods by deploying our resources better.

Structural reorganisation has long been talked about. The Plowden Committee of Inquiry in December 1965 discussed what it called "the main question" of
"whether the two existing airframe groups…should be merged".
It dismissed the idea that competition between them was sufficiently strong or useful to have a significant bearing on future organisation. The report stated flatly that
"the Government should not seek artificially to maintain the present two group structure of the industry".
Those words are not from the Government but from the independent Plowden Committeee of Inquiry in 1965, and I do not think anyone could claim that the case for maintaining two groups has strengthened since the mid-1960s.

Most people, I believe, would agree that amalgamation of the resources of the two main groups is urgent and long overdue. I understand that the hon. Member for Henley (Mr. Heseltine) told workers in the industry, when he was Minister for Aerospace, that he had made strenuous efforts lo bring about a merger of the companies.

Put plainly, everyone knows that these firms have to be merged. Everyone knows that under private enterprise it has not happened, nearly a decade after it became clear that it should happen. The private sector in this respect has failed to deliver the goods. That, in a nutshell, is one—and only one—unanswerable argument for nationalisation.

There are other arguments which are equally strong. It has become increasingly clear in the aerospace sector, as in some other sectors, that private sector firms are not able to finance the huge scale of current projects from their own resources. Firms have had to come to the Government for help. That help has been provided through launching aid and special arrangements as in the case of Concorde. We have also financed basic research to the benefit of the industry.

An industry which depends for its existence and progress on public money on this huge scale cannot be called a genuine example of private enterprise. It is much better that this massive public stake should be based on public ownership. Moreover, the provision of money on that scale to private firms means detailed monitoring—it has to be so—to achieve the degree of accountability that we all expect in this House.

If, instead, the public money is channelled into a publicly-owned undertaking, the accountability can be at the strategic, corporate level, and the substance of accountability can be maintained and improved, but the detailed intervention and monitoring by the Government under public ownership can be dispensed with.

It is not the Government's intention that new civil projects by British Aero-space will normally be monitored by the Government in detail at factory level, as has been the case of necessity in the past.

There may be some Opposition Members who are trying to stem off full public ownership. They may ask why we cannot have a kind of Government minority shareholding in the aerospace industry. They may even contend that the Plowden Committee in 1965 suggested that. The hon. Member for Henley shakes his head, but I have heard it expressed in the House on previous occasions by supporters of his party that we could perhaps deal with these problems by taking a minority stake. But it was never suggested by any Minister in the Conservative Government when they were in power. When the Conservatives were in power they could have taken many more active steps to bring about a merger of the two main companies.

We rejected a solution along those lines because there was no indication that it would bring about a merger, because it would not resolve the issue of accountability, because it would continue the confusion of roles—which has bedevilled the industry, for example, in project choice—and because it would not be satisfactory and would not relieve the Government of the need to carry out the detailed monitoring of the projects they support.

I can see right hon. Members opposite who know this to be the case, because they held varying ministerial positions in connection with aviation. The monitoring required has been of terrifying proportions, and we believe that public ownership will at least overcome that difficulty.

But the major factor in our decision is that the workers, expressing their wishes and aspirations through their unions, have made it abundantly clear that they want the industry in which they work to be taken into public ownership.

That goes also for the workers of Scottish Aviation, whom hon. Members from the Scottish National Party claim on occasion to represent. I address these remarks to the Scottish National Party Members because they have an amendment on the Order Paper. The workers have asked to be included within British Aerospace not as a separate corporation but within the general framework, and I am utterly surprised that the Scottish National Party, if it believes that it represents the interest of Scottish workers, can put down an amendment of this kind and propose to vote with the Conservatives tonight.

Would not the right hon. Gentleman consider that the reason for worry among the work force of Scottish Aviation is that the present Government have done nothing to remove many of the problems facing that company? When we consider the vast sums of money, something like £800 million, poured into the English aerospace industry, is it not time that more money was put into the Scottish industry?

First, it is much more money than the hon. Gentleman suggests. If, however, he and his hon. Friends purport to represent Scottish interests, he should know what Scottish workers in Scottish Aviation are saying about this.

We want public ownership, as do the workers in the industry, not because we want to subsidise it. There is no intention to subsidise the building of aircraft which no one wants. We want public ownership because the changes that it will make possible will increase the structural efficiency of the industry, release the energies and loyalties of the workers in it and give them their opportunity to compete in world markets.

The purposes that I have outlined dictate the scope of the companies to be nationalised. The formula set out in the Bill—companies in Great Britain making complete aircraft or guided weapons with a turnover exceeding £7·5 million in the relevant year—excludes helicopters. These are a substantially separate business. We do not judge that there would be significant advantages in terms of economies or increased flexibility from including helicopters. For similar reasons we have excluded firms such as Britten-Norman making light aircraft and Short Brothers and Harland, which in the Government's view is best handled within the context of the Northern Ireland economy. As regards equipment and avionics manufacturers, we do not feel that there is a strong case at this stage for amalgamating any of them with the airframe manufacturers.

As I have explained, the main objective of nationalisation is to achieve a structural reorganisation of the airframe industry. On the other hand I emphatically do not believe that it is sensible to put statutory barriers in the way of future acquisitions if at some future stage, in the view not only of both parties but of the Government, it seems sensible in the conditions then prevailing for some specific activity to be brought within the Corporation.

That is the case for nationalising aircraft manufacture. The case for doing it is clear and convincing.

No, I cannot give way. I had given way on three occasions when you, Mr. Speaker, reminded the House that more than 40 right hon. and hon. Members wanted to speak, and I have given way again since then.

The case for nationalising the shipbuilding industry is equally compelling. The intention of this Bill is to take over all the main companies in Great Britain engaged in shipbuilding, ship repairing and slow-speed diesel marine engine building. These three sectors have a long tradition.

The shipbuilding industry provides a balance of payments benefit of around £200 million each year. Although it is not, in national terms, a major employer, in the main shipbuilding areas—which are all in assisted regions—whole communities depend on the industry for their livelihoods. Often it has a high technology content—for example, in naval ships or in the offshore drill ships now being built on Clydeside.

The history of British shipbuilding over the last 20 years has been, I am sorry to say, one of decline compared with the substantial expansion and progress of yards abroad. Launchings of merchant ships have fallen from 26 per cent. of the world tonnage output in 1955—20 years ago—to less than 4 per cent last year. Over the same years world output has grown at an annual rate of just over 10 per cent. each year while British output has actually declined, from 1·41 million gross registered tons to 1·12 million tons. Our output is one-sixteenth that of Japan. It is half that of Sweden and Germany. Britain is the only major shipbuilding nation not to have achieved any growth in output in the last 20 years.

But it is not only total output which has remained static. Since 1968 output per employee in British yards, despite some significant investment projects in the same period, has also remained virtually static while in all our major competitors it has increased between 20 and 90 per cent. That disparity is largely the result of poor investment.

Since 1966 a total of £299 million has been given or committed by the taxpayer to United Kingdom shipbuilding to promote reorganisation and new investment in the industry. That figure excludes investment grants, regional development grants and other assistance given to industry generally on a non-selective basis. Only the aircraft industry, in the private sector, has received more taxpayers' money.

Moreover, the claims on the public purse from the shipbuilding industry are likely to continue and to grow further.—

No. I have given way on too many occasions already.

What I have just said was acknowledged in an article in the Economist on 6th June last year, which said:
"it is almost impossible for shipyards to raise capital, and the main reason for this is the poor reputation of the industry….Government finance is therefore essential if the industry is to survive the decade."
Certainly a large proportion of the money which has been given has gone to three companies already under Government control—that is, Govan Shipbuilders, which, we fondly recall, was nationalised by the previous administration, Harland and Wolff, and Cammell Laird. The support provided by successive Governments to keep these companies going on social grounds, to achieve viability in the long term, was necessary because of the weaknesses identified generally in the Geddes and Booz-Allen Reports into the industry.

Although there are, of course, exceptions, in general the shipbuilding industry is still suffering from outdated facilities, bad labour relations, weak financial control, low productivity and late deliveries.

New investment per employee is higher in every one of our competitor countries. For example, it is twice as high in Germany, five times as high in Japan, and seven times as high in Sweden. Output per employee also is lower than in any other country.

The underlying causes of the industry's problems can be traced to its fragmented structure and the failure of the individual shipbuilders to act together in a co-ordinated manner to match the power of their main customers and of their competitors. In general, shipbuilders have found it more difficult to take intiatives in marketing and design.

Another factor has been the excessive concentration by managers on production, at the expense of marketing, financial control and industrial relations. We build ships of as high quality as any country in the world, but we are unable to make sufficient profits partly because of our shortcomings in the commercial side of the business.

The Geddes Report in 1966 clearly highlighted the shipbuilding industry's problems. As recommended in that report, the Shipbuilding Industry Board was set up to encourage the necessary rationalisation and new investment in the industry. In its existence, which came to an end in December 1971 when the previous administration decided that they could not continue that assistance, the SIB gave some £19 million in grants and £18 million in loans to the industry, and several major mergers took place. Yet when Booz-Allen and Hamilton investigated the industry again in 1972–73 they found almost exactly the same shortcomings and failures as those identified by Geddes. The necessary changes simply cannot be achieved within the existing fragmented structure.

We believe that the shipbuilding industry should make its full contribution to the economy, justifying the use of the resources provided for it. Some of the companies to be acquired do this already. It is my hope that they will act as catalysts to change in the other companies which will be vested in the Corporation. Nationalisation offers an opportunity to make a fresh start in the industry.

I shall give way to the hon. Gentleman because he wants to make a shipbuilding point and I have not given way on that subject.

If the only criterion on which the right hon. Gentleman plans to nationalise the shipbuilding industry is its relative weakness, will that not apply to ship repairing where economies of scale do not come into the matter and the companies concerned might be profitable?

The weaknesses of ship repairing are similar to those of shipbuilding. I intend to make that point clear later. We are trying to save the shipbuilding industry and, for that matter, the ship repairing industry. The figures of investment by our major competitors are devastating and, I am sure, will convince the hon. Gentleman that it is necessary to call a halt now so that we can save something of the industry. Nationalisation will give us that opportunity.

It is agreed by all concerned, including the Shipbuilders and Repairers National Association on behalf of the existing management, that what is needed is a strategy for a co-ordinated national shipbuilding policy. That will enable the shortcomings and difficulties to be dealt with on an industry-wide basis. They are not at the moment dealt with on an industry-wide basis. Benefits could be derived from a combined approach to export markets, collective forecastings of demand trends, co-ordinated research and development and the co-ordination of operating plans between the different yards.

Nationalisation will also ensure that the public money which will no doubt be needed by the industry over the next few years will be forthcoming to make sure that we have an industry with proper public accountability so that the rationalisation of the structure can go ahead in a proper manner. I must stress that, as hon. Members who come from shipbuilding areas will certainly appreciate, we do not accept that nationalisation is necessary as a soft option. If it were, we would have proceeded in this way much earlier. I am absolutely and utterly convinced that if we are to save shipbuilding it will be on the basis only of public ownership. Without nationalisation we shall miss the last available chance to put the industry on a better course for the future. That better course must include everything, including management and labour relations.

The Corporation will be required by Clause 2 of the Bill to have full regard to the need to promote industrial democracy so that the workers will be entitled by law to be involved in the decisions which affect their livelihoods. The present relationship between workers and management is one of conflict, and it must now be placed on a more constructive basis. The unions themselves will have to contribute to this process.

It is no use the hon. Gentleman just blurting out "British Leyland". He had responsibility in the previous Government for the shipbuilding industry and contributed very little to try to smooth out some of these difficulties.

We must find ways for the unions represented in each yard to work more closely together and ensure that close links are maintained between the workers in the yards and the national bodies involved in the future planning of the industry.

What applies to shipbuilding equally goes for ship repairing. PA Consultants, reporting on the ship repairing industry, highlighted problems remarkably similar to those of the shipbuilding industry and found that there was insufficient investment, outmoded facilities, poor labour relations and late deliveries, all of which combined to make some shipowners prefer to repair and refit their vessels abroad. PA pointed to the need for rationalisation, recommending that there should be one major repairer to each main estuary.

I know that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) has raised this matter time and again. I hope he will forgive me if I do not give way. I have already given way a great deal.

I do not want to be discourteous to hon. Members on either side of the House. I have given way a great deal and I do not think that I ought to give way further.

To ensure that the necessary changes occur, we propose taking into public ownership the larger ship repairers situated on the main estuaries.

Moreover, in many instances shipbuilding cannot realistically be separated from ship repairing.

No, I will not give way. I understand that 40 hon. Members wish to speak in the debate. I have already given way many times. I think it would be best if I were to get on.

Several shipbuilding companies carry out ship repairing activities. Most of the ship repairers listed for acquisition are in the same group as shipbuilding com-panies—all but six of the 12 listed—and are closely integrated with them, exchanging labour, and with the repairers doing the outfitting on new ships.

The Bill also provides for the acquisition in Great Britain of the builders of slow-speed diesel marine engines whose fortunes are completely bound up with those of the shipbuilders.

I cannot give way further. I am sorry. I usually give way freely, and I have already done so this afternoon. However, I must get on.

No. The Bill also provides, as I said, for the acquisition in Great Britain of the builders of slow-speed diesel marine engines. The performance of marine engine builders has not been outstanding. Apart from Doxford, all the engines built are foreign-designed and made under licence.

On a point of order, Mr. Speaker. I am sorry to do this, but I understand that 40 hon. Members wish to take part in the debate. Many hon. Members who have no intention of trying to speak in the debate may wish to raise important questions on the points made by my right hon. Friend. For example, my right hon. Friend has raised a point of information. I, too, would like to raise a point of information but am unable to do so because my right hon. Friend refuses to give way. Surely we are entitled to put points of information, not Committee points. For example, why have some firms been included and others not, despite arguments about one major firm in an estuary?

I must be permitted to deal with what has been said. The House is in a difficulty. There are constant complaints about the length of Front Bench speeches. I constantly hear hon. Members complain that they cannot get in because the Front Bench speakers have taken an hour or so. The Secretary of State has already given way six times. If he goes on giving way, his speech will last for an hour. It is for him to decide, but he has my support if he does not give way.

On a point of order, Mr. Speaker. Are we not in order to ask why firms which were included in the first Bill—

Order. If the hon. Gentleman were to catch my eye during the debate, he would be in order in putting that question.

I have already been speaking for about 35 minutes and I still have some way to go. I am not normally discourteous to my hon. Friends, or to hon. Gentlemen opposite for that matter. I usually give way freely.

I was referring to the builders of slow-speed diesel marine engines. The inability of individual companies to act together—for example, to develop facilities for making their own equipment or to support research—has been a weakness contributing to poor performance, and it is one which ought to be overcome under public ownership.

In addition, the closer integration with the shipbuilders which nationalisation will facilitate will enable the engine builders to schedule their production more efficiently and to become involved in the total engineering of the ship to the mutual benefit of themselves and the builders.

There will be many matters of importance and complexity to be discussed when the Bill goes into Committee, as I trust it will, if the House gives it a Second Reading this evening. I have no doubt that the Opposition will wish to deal with such matters as the compensation terms, public accountability and the important provisions for industrial democracy in great detail.

We are taking these industries into public ownership at a time when both of them face grave difficulties. The world civil aircraft market is depressed and has been for some time, and no early relief can be expected. However, the civil market will improve. There will again be more promising opportunities. The new Corporation will be ready to make the most of these.

The aircraft industry has unique resources, but it has great problems and some structural weaknesses. Public ownership is the way to resolve these weaknesses and give the aircraft industry a new opportunity to find and fulfil its proper role in the country's economy.

The prospects for shipyards throughout the world are bleaker than perhaps at any time in the past 20 years. The demand for new merchant ships, especially oil tankers, has slumped to almost nothing. Existing orders are currently being cancelled. Many ships are being laid up. New orders for all types of vessel will be very hard to come by. Shortage of orders will, if present conditions persist, start to become critical and many British companies will find themselves in difficulties when they seek to obtain orders by the middle of next year. The prospects for new merchant ship orders remain poor.

During the first six months of 1975 the tonnage of total orders world-wide was less than the tonnage of tanker orders cancelled. Japanese yards are now quoting prices of new orders that are below the price a United Kingdom shipyard would need to break even, and Japan is obtaining the great majority of the available orders. It will be more important than ever for the British shipbuilding industry to become fully efficient and competitive in the present situation.

Many new major yards are still coming into operation in developing countries such as South Korea, Brazil and India.

It will be of paramount importance for the new Corporation to overcome the weaknesses that it will inherit as a task of great urgency. It is vitally important to thousands of workers especially in assisted areas—the weaker economic regions of Britain—that we succeed.

The shipbuilding industry, together with the closely related ship repairing and marine engine building industries, is faced with deep-seated and longstanding difficulties which have combined to put the industry in the state in which we find it today. We have seen that private enterprise has proved incapable of eradicating these difficulties and failings. In an article published in the Economist recently it was said that public ownership was now the last hope of the industry if it was to survive. It must be made to work, and I hope that all concerned with the industry will do all they can to ensure that it does

No. Our proposals for the shipbuilding and aircraft industries are part of the Government's programme to instigate and encourage new investment, to restore British industry to a competitive position in world and home markets. They, too, are part of our objective of changing the structure of British industry and of ensuring that it is more responsive to the needs of our economy.

Above all, the Bill helps to fulfil our aim of bringing about a fundamental and irreversible shift in the balance of wealth and power in favour of working people and their families. It is in that spirit that I commend the Bill to the House.

4.15 p.m.

Last week the House debated the generalisations of the Government's latest strategy for industry. Today is a day of reality, because the Labour Government, faced with the problems of two totally different industries, have one, and only one, response—nationalisation. They have failed to appreciate what is now apparent to the entire nation; namely, that, far from solving the intransigent problems of industry, the process of transferring ownership to the State actually worsens the situation. It brings change more slowly and not more quickly but just as inevitably at a cost which is totally disproportionate to the illusory benefits which are claimed on its behalf.

Every speech over three decades that we have heard from the Government Dispatch Box could broadly have been couched in the same language as the Secretary of State has used today. There has always been the promise, but when it is matched against the reward and the performance of the nationalised industries, the Government, far from being more responsive to the nation's needs, are less responsive.

The current losses of the nationalised industries are £1,000 million a year. I shall put it more graphically. Half of the tax paid on the profits of every company in this country now go to subsidise the nationalised industries. To put it another way, approximately half the wage of every employee in the British Steel Corporation is paid by the taxes levied on fellow workers in other industries. A total of £3,750 million worth of capital has been written off in the nationalised industries since the war. Put more realistically, it means that of our National Debt 7½ per cent. consists of capital transferred from the nationalised industries which they are unable to service and which the general taxpayer now has to service at an annual cost in the region of £270 million.

Every time we have listened to these proposals we have been promised reform and success. It was the Prime Minister who told us of the proposals to nationalise iron and steel. He said:
"In the view of the Government the economic problems of the country cannot be solved, nor the industry enabled to make its full contribution, except on the basis of full public ownership."
Every time the consequences have belied the promise. This year the British Steel Corporation is expected to lose £300 million. So it will always be, because the assumptions upon which the claims are made are wholly fallacious. It is the tragedy of this nation that what is self-evident to other advanced industrial competitors is beyond the comprehension of half the Labour Party to understand, and beyond the will of the other half to resist.

I turn to the specific Bill which we are asked to read a Second time today. The Bill breaks new ground in a number of ways. First, it is without precedent for two wholly dissimilar industries to be nationalised in one Bill. Secondly, it is without precedent for two industries to be nationalised in a one-day debate. Thirdly, it is without precedent for 43 companies to be nationalised by one Minister. Fourthly, it is without precedent for 140,000 people to be transferred from the private to the public sector without any but the most slender of reasons.

The process is clear. The more indefensible the legislation becomes, the shorter is the parliamentary process, and the further into the economy the State progresses, the more extensive are the powers it takes at every step it advances. It creates the platform from which to spring the subsequent leap. If anyone was deluded for one instance about the outcome of the Chequers exercise, let him or she look no further than the deliberations this afternoon. When the phrases of the so-called new industrial strategy have long grown cold, the reality of this legislation will remain.

I want to deal with the Bill as it applies to the manufacture of aircraft and aero-space equipment. There are five reasons that could be put forward to support such a concept: that the industry has failed the nation; that, because the industry sells a substantial part of its output to Government or nationalised bodies and receives development support, it should be publicly owned; that there is a long-term strategy that can be pursued only in public ownership; that it is the intention of the Government to run it down; or that it should become possible to abandon the monitoring which the Civil Service has hitherto had to maintain on the private sector.

Let me deal with the last two of those reasons, because they are the two that I did not anticipate when I was thinking of the Minister's possible advocacy this afternoon. One of them is that it is the intention of the Government to run down the industry. What an extraordinary posture for a Secretary of State for Industry to bring to this House; to tell the industry, its employees and its new management, that the strategy of a Labour Government is to help in dismantling the industry as effectively as possible! What an advertisement for the salesmen of British industry travelling across the world to be told that the activities of the Minister behind them are actually to produce a lower level of industrial support for their activities! What a concept that now that the public is going to take on the industry it will be possible to abandon the monitoring process whereby the Treasury and the Department of Industry probe into every last detail of the activities of the private sector in this industry!

Does the Secretary of State honestly believe that? Does he for one moment understand what civil servants are doing to the steel industry or to the energy industries? They are crawling over them day by day. No worthwhile decision is made in those industries unless it is approved by the Treasury or the civil servants at the Department of Industry. Indeed, the whole essence of the Prime Minister's argument in favour of the controls of the National Enterprise Board is that the Treasury would be there to keep a watching eye on what it was doing. The argument that suits the Secretary of State is to come here today and say "Do not worry. Monitoring is no longer in fashion; it is out of date. We shall pass control back to the management that we shall appoint in place of the free enterprise management".

The pious thought will last as long as the first crisis. The first crisis will bring a demand from the Secretary of State for Industry for cash, and the Treasury will respond with the ruthlessness with which it controls all the rest of the public sector. Anybody who has ever been in government will know that.

However, there are the first three reasons. By no argument that I have ever heard can it be supposed that the aerospace industry has failed this nation. In the last 10 years the industry has contributed £3,300 million to exports. In 1974 it achieved a record export total of £600 million. In the first 10 months of this year it has reached the even higher figure of £653 million, and I understand that an additional order worth £180 million was placed today.

In the last 10 years the British Aircraft Corporation and Hawker Siddeley have contributed more by way of tax on profits than was contributed by the whole of the nationalised industries put together. Throughout the period from 1955 to 1973 the net return on assets in the nationalised industries was in the range of 2 per cent. to 6 per cent. per annum. In the private sector as a whole it was 19 per cent. In the British Aircraft Corporation in 1973 it was 26 per cent. In the aerospace division of Hawker Siddeley it was 30·8 per cent.

So let us not hear any more about "failing the nation".

The second argument depends on the assumption that where the State is a major customer or a significant contributor—

Order. If the hon. Gentleman is not giving way, the hon. Member must resume his seat.

The second argument depends on the assumption that where the State is a major customer or a significant contributor of development finance, it has some moral or political right to ownership. It is an argument, I understand, of particular charm to the Left but of sinister foreboding for the rest of us—for it is relentless. The more that the State buys, the more it owns, but the greater the claims that it can then make.

What began for this industry as a partnership between private sector companies working for the Ministry of Defence or as the joint development of projects with the Department of Industry has now, without notice or agreement, become an arbitrary claim to convert that partnership into take-over. Once the aircraft industry joins the airlines and the aero-engine companies, it will be claimed that it is logical that the avionics industry should head the next shopping list. Once shipbuilding and ports are in public ownership, for how long does the shipping industry believe it will remain free? It is a remorseless process. To accept it in any context is utterly impossible on the Opposition side of the House.

The interest of observers and employees in the industry will centre on the future of this industry. The argument that one might have expected to hear from the Secretary of State today is that there is some positive, outward-going purpose in it all, a strategy, a plan or a vision for the future. However, when on 20th October the Secretary of State for Industry was asked specifically what changes would take place under nationalisation which would affect the shipbuilding industry, his answer was not to produce a strategy but to rest on the mere act of nationalisation itself leading to solutions. No answer so reveals the bankruptcy of the legislation.

The reality is that the Government place faith in the change of ownership out of all account with the record of that particular process in the past. They have no idea of how to set about creating a new framework of confidence and opportunity for either of these industries.

Perhaps I may ask, by way of illustration of this point, who will be heading the two new Corporations which have been announced today. Why is it that after two years of preparation the Government are not able to give a single indication as to the men who will take over from the existing management in these companies? May I ask, for example, where the Secretary of State will find men such as Lord Robens, Sir Arnold Hall or Sir Arnold Weinstock, and the guiding influences that they have contributed, or the industrial skills of Sir John Lidbury or Sir George Edwards?

Does the hon. Gentleman deny that most of the shipbuilding companies in this country—not all of them, but most—are sustained only through Government assistance and that without the public money that has been pushed into those companies we would not now have a shipbuilding industry, and certainly not a ship repairing industry? Therefore, is it not logical that if public money is being pushed in to the extent that it is, the public have a right to have control over these industries and to use them in the best interests of the nation?

The hon. Gentleman will be as aware as I am that of the £156 million that has gone into the industry, well over £100 million has gone into three companies which the Government already own, and that the losses rise proportionately to the degree of public support. I doubt very much whether the hon. Gentleman has an argument there.

I believe that Mr. Deputy Speaker will want to reinforce the problems indicated by Mr. Speaker a few minutes ago. We are desperately short of time. This is one of the hardest speeches that anyone has had to prepare, because of its complexity and length. I have no wish to detain the House for longer than is absolutely necessary.

The situation, however, is more serious than that which arises simply because there is now no strategy, or, indeed, no apparent leadership for the future of the aerospace industry. The Secretary of State talks today of the need for an integrated industry. But I had already agreed in 1973 with Hawkers, GEC and Vickers that this should happen. Detailed talks were already being conducted with Sir Henry Benson acting as mediator to speed the process. There was no question of shareholdings or Government finance. There was to be no cost to the taxpayer. It was a great process of voluntary rationalisation. Behind that process two years ago the strategy for the future was clear. Just as we forged a European partnership in space, just as we saw major advances in the creation of an integrated European structure for helicopters, so we had already started discussions in Europe to lay the foundations of the one strategy for our industry that offers a prospect of long-term strength.

The ad hoc, bilateral and multilateral inter-company and inter-Government arrangements that have become accepted in the development of major aerospace projects must now be extended into a more comprehensive agreement that recognises the need for common European civil and military procurement policies.

If Europe worked together for a common strategy, not only could we create a manufacturing base much nearer to the American scale than is now possible, but the strength of that base, backed by concerted procurement, would enable Europe to insist on partnerships with America, or possibly other world manufacturers, that would guarantee a technological presence and a design leadership in Europe which I do not believe to be maintainable in any other way except at prodigious and totally unacceptable cost. As the largest industry in Europe, this must be in our interest. The alternative is to watch other European Governments build up their industries in competition with ours, when in fact we should unite with them in competition with the rest of the world.

In terms of work for our factories—this is where the right hon. Gentleman has totally failed to understand the positive opportunities which lie ahead of our aerospace industry—the gap between what Europe will manufacture and what it will purchase in the next 20 years is measured in thousands of millions of pounds. Our priority should be to close that gap with possibilities of enhanced employment and technological prospects, and that can be done only by pressing on with European integration, which is so obviously in the long-term interest of this industry.

All this was known to the present Ministers when they came to power. They could easily have continued the talks which we had initiated with the companies. They could have pressed ahead with discussions with our European partners. But it conflicted with their nationalisation obsessions. It did not suit their anti-European prejudices. For two years we had a cynical dereliction of duty, when there were no policy, no direction and no initiatives. As they pursued then-narrow dogmatic aims they left a policy vacuum which will have its consequences immediately in additional unemployment, and in the long term it may have prejudiced the viability of the British civil industry.

I should like to turn now to shipbuilding, ship repair and marine engine companies listed in Schedule 2 of the Bill. The fact which the House should be debating is that world over-capacity in this industry is reckoned to be of the order of 40 per cent. to 50 per cent. Certain low-cost countries—the Secretary of State knows them; he listed them; Korea, India and Brazil—are expanding that capacity. The question, therefore, is: what is the likely future role of our shipyards? Immediate answers present themselves, but none of them will be advanced by nationalisation and many of them will be positively impeded. Particularly is this so because the answers differ from shipyard to shipyard, company to company and from the major industry to its subsidiary ones. But the present Government for two years have produced no answers of any sort. They have persistently turned down every offer from the industry to start on the difficult reappraisals that are needed. Consequently, the Government have put off solutions and thus have made them more painful when inevitably they come.

The framework of nationalisation will, by its essential political and compromising nature, at first delay and then blur the dawning of reality. Not only will the least efficient parts of our industry not be saved but the strong parts will be seriously weakened.

Take the ship repair industry first. This industry is essentially very competitive. It is dependent on a high degree of salesmanship and entrepreneurial skill, and is one where the reputation for quality of service and turnround to the shipowner is of critical importance. Despite the cyclical depression at this time, the companies in this field, relatively small and highly flexible are better left to flourish and face the problems on redeploying their activities under their own devices.

In the shipbuilding industry there can be no generalisations. The warship builders—Vospers, Yarrows and Vickers—are highly specialised, have good work loads and have every prospect of maintaining their positions. They are amongst the most successful of our yards. Nationalisation to them poses special threats. Overseas Governments will undoubtedly fear the closer relationship which comes from buying their equipment from nationalised yards in a country whose Government are increasingly prone to interfere for political reasons in the list of customers which our industry may supply.

Secondly, the warship builders since 1973 have worked under the discipline of the Carrington policy of specialisation, exactly the sort of rationalisation which one would have thought the Secretary of State was advocating. Will he or his Minister of State, whoever is to reply to the debate, state that the Carrington policy of specialisation still stands, or are we to see an increasingly harassed and politically controlled shipbuilding corporation diverting naval orders to the less specialist yards? That is the way in which nationalised industries have always been pressed to behave in the past, with the consequence that what might in the short term appear to be short-term help for ailing yards will in practice weaken our warship builders' competitive position.

That was the message yesterday in the answer of the Secretary of State when he told us that the specialist policies of the Carrington directive would be up for consideration by the new British Shipbuilders Corporation. Undoubtedly the most emotive argument centred around the capacity which will be available in the construction of the large merchant ships, tankers and bulk carriers. It dates from 1973 when the world boom conditions filled every berth in every nation. It is to understand our problems to remember that much of our capacity was the last to be filled and, therefore, will be the last to become empty. We delude ourselves if we are lulled by any complacency at the present work flow. The real questions must be directed to the reasons why our yards were the last to be filled.

In searching for answers about the future a totally varied pattern emerges. Some of our yards, such as Austin and Pickersgill, have been modernised, have specialised and can look forward to independent trading conditions. Other of the smaller yards have their own specialisations and operate at the smaller end of the market where the number of contracts on offer at any one time is bound to be incomparably larger. Their problems are peculiarly unsuited for centralised nationalisation conducted inevitably in conditions of heavy pressure from politicians and unions. Where this legislation is at its most defective is where it comes to the intractable problems of a world scale for the giant modern vessel. For two priceless years when the order books were full, when something could have been done, the Government have held no dialogue about the future. Now, when the crisis is nearly on us, their only response is to set up a nationalised body. Not one single idea have we heard today of the plans which are to flow from that body, not one idea as to how the industry's performance will be improved. We are not told how capacity is to be reduced, what parts should be maintained, how large an industry this nation can sustain, what cost is involved in doing that, what alternative work could be done.

It is curious that the Secretary of State's one apparent contradiction is that he is in favour now of running down the aircraft industry but is actually trying to build up the shipbuilding industry. I should have thought that the question he should be asking himself is whether there really is a future for this country in trying to compete with virtually all the underdeveloped world in trying to take on the most important work of this sort, and whether the nation would not be better off in assessing where we have skills and where there are particular techniques on which we should concentrate. I strongly doubt whether that will lead us into the construction of heavy shipping in the shipyards which we shall need to modernise at prodigious cost.

Order. I believe the hon. Member was here when Mr. Speaker made his appeal. There is no sign that the hon. Member for Henley (Mr. Heseltine) is giving way.

The shipbuilding industry has been urging the Government to discuss the issues for nearly two years. But once again dogma has been accorded a higher priority than industrial rationalisation. The urgent problems which have been evident throughout the period have not only not been solved; they have not even been discussed. The threat of nationalisation destroyed the industry's ability to pursue its own solution. The delays have exacerbated the problems, and when it comes to the machinery itself it is the least suited and most expensive for the job. As I pointed out to the hon. Member for Liverpool, Walton (Mr. Heffer), let us never forget that of the £156 million worth of Government money which has gone to shipbuilding since 1965, £115 million went to the shipyards with a high degree of Government ownership and involvement.

These were the private companies that had failed. The hon. Gentleman knows that very well.

The question which we should ask is whether it would not have been better to redeploy our assets rather than pour our money in where we have already lost it. It is incredible that every time we have a debate on industrial policy, hon. Members regard it as axiomatic that because a party in Government did one thing, that is a justification to believe that it will always do that again in the future. We should learn from our mistakes. If hon. Members opposite were a little more flexible in their approach to the mistakes they have made, we might be able to find a basis of a dialogue about industrial policy which would give industry the consistency of approach it requires in order to flourish.

I always give way whenever we have debates, but I am very concerned at the length of this Bill and its complexity and the fact that a number of hon. Members wish to speak.

I am concerned about two aspects of compensation—the effect of the terms on individual companies and their effect on our general economic situation. The terms proposed to companies are more like confiscation than compensation. During the six-month valuation period to the end of February 1974, share prices were artificially depressed because of the Yom Kippur War, the state of emergency, the three-day working week, price control, dividend restraint and, most of all, because of the commitment in the Labour Party's February 1974 General Election manifesto that the industry would be nationalised. When steel was nationalised, there were alternative bases of valuation which provided a reference to periods outside the immediate threat of nationalisation. The compensation terms now bear no relation to the asset value of the companies concerned. The value of Hawker Siddeley for compensation purposes is just over half its asset value of 1st January 1973. Does the Minister really believe this is fair to the 60,000 direct shareholders and hundreds of thousands more whose savings are invested through pension funds, insurance companies and investment clubs? When the current Secretary of State for Energy announced that Court Line had collapsed and that he was going to nationalise it, he referred to the valuation being based on the special circumstances of the case and, in particular, the past trading record of the company, the future prospects and the net assets. What an incredible position—a bankrupt company can sell assets to the Government at one price while a whole industry can be purchased on terms incomparably less fair and honest under legislation passed by this House.

I am also concerned about the effect on public expenditure. The Secretary of State claimed yesterday that there was no direct effect on demand. That was a wholly misleading view. Compensation will be paid in Government stock, and that will affect the gilt market, tending to increase interest rates generally. The interest payable on Government stock is higher than the return the Government will get from the equity holdings, and the difference means increased public expenditure. Government stock will be given to industrial companies which will have no use for it. They will, therefore, sell it and, in the main, spend the proceeds. Is the Secretary of State seriously suggesting that this is not a pull on resources? At the end of 1967 the sale of steel stock was so great that the then Labour Government had to introduce special provisions to cope with the demand for cash, as opposed to the Government stock they had issued under their legislation. There is no extra pull on resources only when expenditure is matched by restraint elsewhere. To the extent that the money supply is not increased to match the compensation in the Bill, cash absorbed by this stock will not be available elsewhere. So at the very least it is a switch in the demand on resources. All over Whitehall, the knives are out and public expenditure programmes everywhere are under scruitny. The Government's policies in this Bill will affect overall demand in the economy so that expenditure on schools, hospitals and pensions will be the low or inflation will be the higher.

The priorities of this Government are clear. The majority of its members know, the House knows and the nation knows that these two giant bureaucracies will end up just like all the others, but there is no will in the Government to resist the appetite of its extremist Left. It has been said recently:
"People should take seriously fears about the growth of State power especially given the penchant of some socialists for the continual spawning of giant new institutions under centralised control. We should not be in the business of creating endless giant leviathans manned by armies of bureaucrats."
Those are not my words. They were spoken by the Secretary of State for the Environment, though he had to go to Costa Rica to say them.

The contemptible truth remains. After two years of the most cynically opportunist mismanagement of our industrial affairs, the only positive proposals from the Government are yet more nationalisation. I am sick and tired of listening to the Left indulging in its ever more exaggerated misrepresentations about the strike of capital. Its policies deprive industry of funds, its speeches destroy industry's confidence, and its legislation removes industry's freedom. I am appalled at the complacency with which these bleeding hearts and vacuous minds contemplate rising unemployment, the investment collapse and the emigration of our talent, of which this Bill is an encouragement.

This Bill will be fought at all stages by the Conservative Party, and I urge the House to refuse to give it a Second Reading.

4.47 p.m.

This is a measure of industrial archaeology, and the Minister at the Dispatch Box should have been the Minister in charge of museums, galleries and folkcraft.

I support the view already expressed that, apart from the insult to democracy and to this House caused by combining about five major industries in one Bill, it is a monstrous injustice that only one day is being allowed for the debate. This reflects the total failure of the Leader of the House to protect Back Benchers, and the result is that we shall have a shapeless muddle of a debate. Constituents with a vital interest will feel very frustrated at the outcome. There is worse muddle and confusion because these proposals include firms which, even under the last Conservative Government, have not had to put out the begging bowl. They have been successful, yet they will now be confused with a number of concerns which have not been viable and whose future is extremely dubious.

The one modest piece of congratulation I can offer to the Government is on their recognition that the Drypool Group should be split into small groups and that they should seek their future under private enterprise. That is the only feature of this measure which gives us even a minor degree of comfort.

The House is being asked to consider all the wrong questions. The question which the nation has to face, and which will have to be faced eventually by some Government or other, is how far we should continue to commit a skilled work force to the various industries in the Bill, to what extent those industries have a future in these islands, and what their future size and shape should be. The answers to those questions are currently so uncomfortable, owing to decades of delay and cowardice, and particularly in view of the poor state of world demand, that the Government have funked facing them and have simply introduced a Bill aimed at trying to preserve the industries in their existing shape and, as far as possible, with their existing manpower levels.

We on the Liberal Bench reject that strategy entirely. We believe that some very unpleasant but nevertheless necessary questions should have been asked and some very painful decisions taken. It is clear that the industry concerned with building conventional shipping faces probably a generation of gross overcapacity. It has been estimated that if by some appalling stroke all the shipping in the world were to be sunk tonight, world capacity could replace it all within 14 years. In various parts of the world there will have to be sharp reductions in capacity.

We should be asking ourselves whether that is the case for this country too, and whether a skilled and experienced labour force should be allowed to get cracking on much more rewarding industries. Much of the blame for avoiding these painful decisions during the last few crucial years must rest on the last Conservative administration, which, as in the case of Upper Clyde and particularly the airframe industry, dodged the questions by handing out enormous and demoralising sums of taxpayers' money.

Whatever has happened in the past, the time has now come to face up to these problems. We believe that the strategy should be to leave alone those companies within these various industries which have shown themselves to be viable on an independent basis, and that the rest should be enabled by a modest expenditure of public money gradually to adjust. That means running down their activities to a scale which accords with the poor state of world demand.

It is no service to skilled people to tempt them to go on in a particular industry until they reach an age at which it is unreasonable to expect them to retrain. It is very much more the job of the Government to give leadership to such people and to lead them out of industries which have an extremely dubious future, giving them the opportunity, while they are still young enough, to get into activities with much more rewarding prospects.

I take it that it was because of this situation that the National Enterprise Board would not take on either of these industries at any price. Lord Ryder knew that if he were once to touch the shipbuilding, ship repairing or marine engine industries, or the greater part of the airframe industry, his reputation for avoiding lame ducks or for taking on profitable concerns with a viable future would be destroyed. Instead, in a Bill which is extraordinarily bare of any details and which has as few new concepts as the Secretary of State's speech had enthusiasm—in other words, nothing at all—we are asked to give a blank cheque for that old, utterly played-out recipe of nationalisation.

Because the Bill is dodging the real issues and because the solutions put before us have already proved bankrupt, I and my right hon. and hon. Friends will vote against it tonight.

4.56 p.m.

I wish to confine myself to shipbuilding, which probably epitomises more than any other industry the faults with post-war British industry. After the war we had far and away the best shipbuilders in the world. For several years we accounted for about half the total world output. Shipbuilding became one of the greatest boom industries in the world.

What advantage did we take of that? By the time of the Geddes Report in 1965 our share of world output had fallen to 8 per cent. What we forget about Geddes is that its recommendations were based on the objective of restoring that figure to 12½ per cent. with the expansion of British capacity to 2¼ million gross tons. In fact there was no expansion and the recommendations were not fully implemented because the Tory Government of the time, against the wishes of the industry, wound up the Shipbuilding Industry Board.

The position today is that we account for less than 4 per cent. of world output. The Booz-Allen Report came out in 1972. It made several predictions and I shall deal with two of them. It predicted a surplus of world capacity lasting at least until 1980, and it said, which is important in the context of this debate, that this would lead to intense competition not between shipbuilding industries but between Governments. That is the situation we must face in world shipbuilding. It also said that, even if we assumed continuing substantial State support for British shipbuilding, there would be a decline of employment of between 27,000 and 35,000 in 1977. It predicted that there would be one major closure. It is in that position that we have to consider what should be done for shipbuilding.

Twenty years ago in writing about shipbuilding I argued that it should be a national responsibility, but I did not then argue that it should be nationalised. I anticipated the Geddes Report by 10 years. We have to face the fact that Geddes was 10 years too late and that it was sabotaged. I acknowledge that the Industry Act came along with a special provision for shipbuilding, but by then the damage had been done. In this situation it is difficult to see any alternative to nationalisation. Moreover, haphazardly and fortuitously, Government investment in the industry has often taken the course of putting Government money into the least efficient and the least viable yards. That is not always the case, because we have Sunderland Shipbuilders of course.

In this situation, I can see no other course but nationalisation to help the industry. But the troubles of shipbuilding will not be solved by legislation. It provides only an opportunity to give rational aid, a chance for the industry to deal with its problems rationally. I emphasise this because since the nationalisation of Sunderland Shipbuilders the management has expressly declared that things are exactly the same as they were under private enterprise. The shop stewards have expressly declared that they cannot find out what is going on and what will happen. Both management and shop stewards complain of the dead hand of the Department of Industry.

If we give the industry this opportunity, we must do it with more imagination and vigour and recognise the needs of the industry. We must also do it with some flexibility. Last year Austin and Pickersgill offered the Government 25 per cent. of its equity. I discussed the matter and reinforced the firm's case. But the Government would not accept the offer. That shows a rigidity that we cannot afford.

We must recognise that different conditions obtain in different yards. My hon. Friend the Member for Sunderland South (Mr. Bagier) and I have an interest because Austin and Pickersgill pays the highest wages in the country and Sunderland Shipbuilders pays the second highest. We have the most efficient, well-managed yards in the country. The sooner we can get the organising committee set up, with the industry feeling that it is dealing with its own problems, and the sooner the yards' autonomy is acknowledged, the better it will be for everyone.

There is still a good deal to be done if we are not to set out to help the industry too late. With inflation, the cost of a ship now doubles in four years. That is relevant to Sunderland, because we have orders lasting until the end of 1978. The cost-inflation insurance scheme was introduced too late. Prompted by the industry and the precedent of France, I raised the matter several years ago. We have it, but we have it late and we do not have it right. So far, not one policy under the scheme has been signed. We must improve the scheme and extend it. I support the view of the General Council for Shipping that the scheme should be extended to British owners. That would give us a peg to persuade British owners to put more orders into our own yards.

The problem is immediate. We must deal with the threat of the import of shipping. Let us be realistic. The Japanese dropped their prices by 30 per cent. to 40 per cent overnight. We must face up to that. I know that discussions are going on in the EEC and the Association of West European Shipbuilders, and there have been discussions in Tokyo, but something must be done immediately and, if necessary, unilaterally. We cannot afford to allow an unfair challenge to prejudice a basic, essential industry.

I promised to be brief, so I conclude by saying that the Government's steps are inevitable. The sooner the organising committee is set up, the better for everyone in the industry. We have the headquarters ready in Sunderland, and the committee will receive a warm welcome. I look forward to the opportunity in Committee to press upon my right hon. Friend the need for action now to protect British shipbuilding.

Would not this be an opportune time to put everyone's mind at rest with an announcement of where the head-quarters will be?

5.5 p.m.

The right hon. Member for Sunderland, North (Mr. Willey) confined his remarks to the shipbuilding industry. I propose to confine mine to the aircraft industry.

I hope that the Secretary of State will forgive me if I start on a slightly personal note. In recent months he has built up a position of considerable respect on both sides of the House, but the only thing I could respect in his speech this afternoon was his evident embarrassment at having to introduce a double-barrelled Bill concerning two major industries, and the way in which, far from trying to argue or justify the points he was making, he fell back on statements such as "I am convinced", "I believe" and "I am sure", without producing the kind of evidence that we are used to having in the House.

Perhaps half the trouble about our debate stems from the fact that we are talking about ownership. It is a great mistake to think that the owner is the employer. In all businesses the employer is basically the customer. There are two major customers for the aircraft industry—the Government, operating through the Defence Department or the airline corporation, and the foreigner. To a small extent there is also the private airline sector. In judging whether the industry has done well up to date, we must look at the record to see whether it has satisfied the two employers that count, the customer in the shape of the Government and the customer in the shape of the foreigner.

I do not want to revive old controversies about particular aircraft projects, closely associated as I was with some of them. But I do not think anyone would deny that the TSR2 fully lived up to the specifications laid down by the Air Ministry laid down the operational talked about nationalisation easing the choice of projects. That is not so. The Air Ministry laid down the operational requirement that produced the TSR2. Whatever may be said about the TSR2's cost and delay in the programme, it undoubtedly would have been a very successful project compared with the abortive F111. It could have been earning a good deal of foreign exchange today.

The same is true of the P1154, and it is already proving to be true of the Harrier. It was true of the Trident and the VC10, ordered to the specification of the British airline corporations, and aircraft such as the BAC111 and the Skyvan, ordered privately. It is true of multinational aircraft such as the Concorde. Of course, there is room for debate about whether Concorde should have been ordered, but it has met the specifications laid down for it. I am a fervent supporter. The Jaguar has also met its specifications, and it looks as though the MRCA will do the same.

Where the Government are the customer, we have had full satisfaction on both the defence side and the civil side. Where the foreign customer is concerned, the facts speak for themselves. The sum of £700 million is the minimum expected to be earned by the aircraft industry this year. Even allowing for inflation, that is a formidable contribution to our balance of payments.

Until I was about 40 I believed only in intelligence. Since passing that age, some months ago, I have come increasingly to believe in experience. I want to say a word from my experience of this industry which I have seen as a customer at the Air Ministry, and as the intermediary in transactions at the Ministry of Aviation.

What is the object of this Bill? It is—the Secretary of State tells us—to achieve greater control and greater accountability. Let me tell what I experienced in the two offices I held which were directly concerned with the aircraft industry, particularly at the Ministry of Aviation. There I was, on one side, the sponsor of the private industry which the Government now propose to nationalise. I was also the Minister responsible for the two nationalised Corporations, BOAC and BEA as they then were.

I can tell the Secretary of State that I had no less control over the private enterprise sector than I had over the publicly-owned sector. No changes were made in the boards of the private companies without the chairman consulting me or my Permanent Secretary. When it came to any major project, any important change in the project management team was discussed with me, the experts from the Ministry or with the experts from the RAE at Farnborough who helped to monitor the project. The Contracts Branch kept a close eye on all that was going on. We had complete control.

The Secretary of State was pleading the case for a merger of the remaining groups. We do not need nationalisation to bring about a merger. Lord Duncan-Sandys brought about a merger of far more disparate organisations without any nationalisation. He did it purely by personality, influence and argument. I do not believe that the right hon. Gentleman would be unable to do this if he put his mind to it. He may not be as formidable a figure as Lord Duncan-Sandys, but he has quite enough ability and intelligence to bring it about. I have no doubt that the Civil Service would back him.

The liaison between the Minister, the Ministry's top echelons and the company boards over all senior appointments was extremely close, as it was over policy. The liaison on technical management was intimate between the Ministry, the RAE, the firm concerned and the contract branch. I had less control in that respect over BOAC and BEA because I did not have any team monitoring what they were doing. I do not believe that the Secretary of State, as the Minister responsible for other nationalised industries like steel, has any more control over that industry than I had over the privately-owned aircraft industry at the time I speak of.

The privately-owned aircraft industry had certain advantages which will be denied to a nationalised industry. It had greater flexibility in dealing with foreigners. In the credit terms which it advanced and the prices it charged, it was much less subject to political pressure. If the industry is taken over tomorrow the right hon. Gentleman will find that foreign Governments will say that for political reasons he must reduce the price, improve credit terms or extend the length of time over which repayment is made. The private companies also had a stronger bargaining power, not only with the trade unions, which is important—as a partially reconstructed Labour psychology will now admit—but also over sub-contractors. The aircraft industry is dependent on its subcontractors to an extent which has not yet emerged in this debate. There are dozens of little firms throughout the country that make nuts and bolts and spare parts for any big aircraft project. The big groups can negotiate with them on a purely commercial basis. Once they begin negotiating with a nationalised industry the bill is bound to rise. It may be argued that Ferranti made a £5 million excess profit. At least we got it back. There will not be a £5 million excess profit if the industry is nationalised—there will be a £5 million excess loss.

Beyond this, the private firms have a certain amount of money with which they carry out private research. That is how they started the Concorde project, by arranging with the French for the wing of the VC10 to be built in France. That is how they designed a special experimental aircraft to test whether the Concorde shape could be used for slow landing. This was done out of their own money. They have the discipline and the incentives of private enterprise which, leaving aside social and political considerations, are, I think, accepted in all parts of the House as being the best disciplines and incentives yet devised.

Why are the Government doing this? I think it must be accepted that the private enterprise approach is the most efficient economically, leaving aside the other considerations. We do not want to see Marks and Spencer changed into GUM. We have had a look at both and we know how they work. We know that even in France Aerospatiale has not done very well in comparison with Marcel Dassault, although the French Government as the owner of Aerospatiale have every incentive to push things to it. The answer is that the Government are doing this purely for ideological reasons because of Clause 4. Well, we can say of Clause 4 what the American novelist said many years ago; "It all happened long ago in a far-away country, and, besides, the wench is dead."

In the old days, when Clause 4 was first debated by the Labour Party, the owners were largely the managers of a business. That is not the situation today. In today's aircraft industry the owners are the shareholders. They are widely scattered, with the shareholdings being largely in the hands of institutions. Management is independent of ownership and in so far as it is disciplined or responsible to anyone it is to the customer and, therefore, in this case, largely to the Government. The issue is not one of ownership but one of control.

The Government are in the wonderfully lucky position of having it both ways. They have control of the industry as customers and they have the advantages of the private enterprise system in that they are not responsible for its management and direction. The Government have as much control as any Socialist could wish and yet there is enough freedom to satisfy most Conservatives.

I wish that I could let the matter rest there, but I fear that there is another motive in the minds of those in the Labour Party—perhaps not the Secretary of State—who have insisted in manifesto after manifesto on nationalising the aircraft industry. They have insisted upon this despite the employment that it brings.

I found over the years when I was responsible for the industry that there was a deep aversion towards the aircraft industry on the part of many Labour Members. I say that with regret. In many minds the industry is connected with the armaments business. It is also connected with luxury transport, with Concorde, and with money spent on speed and comfort when it might be spent on other things. This is what frightens me. The British aircraft industry is today the leader among the European aircraft industries and in certain respects—such as the murdered TSR2 and, I am glad to say, the living Concorde—it is ahead of anything the Americans or Russians have done.

I have a terrible fear that the aircraft industry may well be sacrificed when it is nationalised by the Government and will become the Cinderella of our industrial complex. For this reason, I hope and pray that all hon. Members on this side of the House, not only in my party but in other parties, and members of the Labour Party will resist, and will take every possible step to defer, the passage of the Bill.

5.20 p.m.

Like the right hon. Member for Brighton, Pavilion (Mr. Amery), I propose to talk about the aviation side of the Bill, but I am sure that he will not expect me to agree with some of the points which he made. The proposal to take the aircraft industry into public ownership will be widely welcomed by the employees in the industry. I say that as a Bristol Member of Parliament who has been concerned with the aviation industry for many years and many of whose constituents are employed on aviation projects at Filton and Patchway.

I congratulate the Secretary of State for Industry on introducing the Bill so early in the Session in order to ensure its passage. Governments have always had a hand in the aviation industry, and they have been key investors by financing successive projects. Many of us want the industry to be taken into public control so that we can decide the way in which the money shall be spent, because we have serious reservations about the way in which the managements of the companies have handled matters.

What the right hon. Member for Henley (Mr. Heseltine) and the advertisements in today's newspapers by the Society of British Aerospace Companies Limited have not said is that the research and development on defence and civil projects has been financed by the Government. None of those projects would have succeeded or been pursued without Government finance. We believe that there must be a measure of public accountability for the way in which the money is spent.

I must, however, express my concern and alarm about the proposed cut-backs in the BAC Concorde work force. I regard Concorde as being the jewel in the crown of the British Aerospace Corporation. Like the right hon. Member for Pavilion, I fully support Concorde, and have done so all the time that I have been a Member.

For far too long we have witnessed cutbacks in industries prior to their being taken into public ownership. I ask my right hon. Friend the Secretary of State not to let that happen with the aviation industry. It tends to put jobs in jeopardy before the Government have had time to set up the new corporation. We are awaiting the certificate of airworthiness for Concorde; the French have already had theirs. It is madness to contemplate the break-up of the Concorde team just before the aircraft goes into passenger service.

I believe that the world airlines will have to operate Concorde once it has gone into service. In spite of the despicable way in which the Americans have treated us by trying to prevent the aircraft from landing at New York, I believe that once it is in service the world airlines will want to use it. If the Government are stupid enough to contemplate the possibility of cut-back or cancellation, our technology will simply be exported to America. That is the only way in which the Americans will catch up in the supersonic race. It would not be the first time that that had been done. There is a distinct resemblance between the MRCA and the TSR2.

Is the hon. Gentleman aware that the British Aircraft Corporation is contemplating making 2,400 workers redundant in the commercial aircraft division as a whole, about half of whom are in my constituency, where some of the hon. Gentleman's constituents work, but the Government have expressed the view to BAC that the number of jobs lost should be 4,000?

I expect that the figure of 4,000 has been mentioned to the hon. Gentleman through the same source as it came to me. I have had no confirmation of it. Perhaps the Under-Secretary of State will have something to say about that.

The Concorde team must be kept intact. We must not lose our nerve. It is no use the Department of Industry or anyone else getting cold feet at this stage after millions of pounds have been spent. All that would be lost if there was a cutback. I appreciate that Concorde has powerful enemies, but I hope that premature cut-backs will be resisted.

Bristol has been the main home of British aviation since the 1920s, and the workers have suffered because they are reliant on Government projects. Their jobs have often been put in jeopardy because of decisions made by successive Governments. I shall not bother the House with giving all the cancelled projects which have affected the work force. The proposal to take the aircraft industry into public ownership must put an end to all that. Men must not fear losing their jobs, and they must not be reliant on the whims of Government and Government money. For far too long we have footed the bill and the money has been frittered away.

I agree entirely with what my hon. Friend has said about Concorde. Does he accept that private companies such as the British Aircraft Corporation tend to blame Governments for all their mistakes but credit private enterprise with all their achievements? Also, does he agree that the workers in the aircraft firms in Bristol whom he and I represent are anxious to see the promotion of industrial democracy as set out in the Bill?

My hon. Friend knows about these problems, as I do. I hope that the question of shop floor involvement in the new Corporation will be discussed fully in Committee. The Bill will go a long way towards banishing the fear of unemployment.

I wish to put two main points to my hon. Friend the Under-Secretary of State. First, does the Department of Industry agree with the proposed cut-back just when we are about to take over the industry and set up the new Corporation? This is a key point, and we should like an answer to it today. Secondly, we should like an assurance that, in the management of the new Corporation, power will not be allowed to fall into the hands of those who have failed so abysmally in the past. I hope that new people will come into the industry. A fresh approach is needed; that is what the employees in it deserve. I hope that in setting up the new Corporation a start will be made on making the industry viable.

5.30 p.m.

It is incredible that when two such important industries are to be taken over by the Government the House should be allowed only one day's debate. There are 42 constituencies affected by the shipbuilding side alone, and their 42 hon. Members will no doubt wish to take part in the debate, and that is apart from the aircraft side. I note the contrast with the Government's procedure on the Hare Coursing Bill, when they found unlimited time to put forward arguments on the chasing of hares.

I shall concentrate on shipbuilding, which is vital for the future prosperity of Tyneside, where nearly half the industrial capacity for shipbuilding is concentrated. Throughout the world the industry faces a crisis greater than any it has faced in modern times. On the one hand, there has been a doubling of capacity to construct vessels and, on the other hand, a halving of demand. That extra capacity has come largely from countries in the Far East which have received considerable Government aid. Japan alone can now build more than all the ships which are likely to be needed in the world for the next few years.

Another formidable challenge comes from the new industry in Korea, where four or five new giant yards are being constructed. The first was built in only 15 months and was designed and supervised by a British company. That is a tribute to the management skill of the British shipbuilding industry, which is often falsely maligned. It is ironic that the first major order obtained by the new Korean yard was for vessels to Govan design for Kuwait. This is an order which would have gone to the nationalised Govan yard if it had been in any state to take on the work. Korea is a hard-working nation, labour is abundant, there are no strikes and the quality of the ships is apparently satisfactory. The pay is £9 for a 44-hour week. The Government make available 80 per cent loans over 15 years at 7 per cent. That is the measure of the competition which faces the British and Western European shipbuilding industries.

When we look at the present state of the British industry we find that the private yards on the whole are in good heart and the naval yards are doing extremely well with up to 80 per cent. of their orders coming from abroad. They are world leaders, but we are already receiving reports that foreign Governments are worried at the prospect of nationalisation and the dead hand of Government applied to naval exports.

The private yards have two problems. One is raging inflation. They cannot be blamed for that. That is the fault of right hon. and hon. Gentlemen on the Government Front Bench. Their second problem is the difficulty they are experiencing in competing in present world conditions, especially when they do not receive Government aid comparable with that received by their competitors. I might add that none of the Western European Governments have suggested that their shipbuilding industries should be nationalised because it is necessary to provide them with aid.

What a contrast when we look at the other side of the British industry! The State-controlled yards tell a horrifying story. Harland and Wolff lost £60 million in a year. Contrast that with Swan Hunter, which made £14 million in a year. The aid committed to Harland and Wolff is now no less than £140 million. The total committed aid for Govan is betwen £50 million and £60 million, which represents £10,000 for every person working in that yard. Tens of millions of pounds of public money are being poured into Cammell Laird. The Public Accounts Committee recently deplored the lack of effective control over public funds put into this yard. That is what is known by the Government as "public accountability". What examples for public ownership; what examples for State control! Yet this example of public ownership is to be applied to the flourishing or reasonably successful private yards.

Let us look at the reasons put forward for the nationalisation of the yards.

The first is that they have failed the nation and taken public money. The total State aid made available to shipyards over the past 10 years and commited for the future is £300 million. Of that, 90 per cent. has gone to yards controlled by the Government. The private companies have had £18 million in loans, which they are required to re-pay in the normal way with interest, and £8 million in grants. A further £4 million in grants in now available to them. So 90 per cent. of that public money has gone to the State-controlled yards.

The second argument is that the private yards have failed to modernise. In fact, the private yards have spent tens of millions of pounds of their own money on modernisation. The picture now is very different from what it was a few years ago. One of the main problems with Harland and Wolff is that money has been poured from a bottomless public purse into an enormous new outfit which is capable of building 1 million-ton ships at a time when no one wants large ships. How wise the managements in the private yards were not to follow down the false path of building huge ships. Had they done so, it would have led to disaster all over the country and enormous redundancy now.

Is the hon. Gentleman advancing the argument that the Government or the Northern Ireland Office should cease to support Harland and Wolff by subsidy?

In a Written Question which should have been answered yesterday I asked the Secretary of State for Northern Ireland whether the Government's policies required redundancy in Harland and Wolff. The Secretary of State has not yet been able to answer that Question.

I am expecting the answer from the Minister. The hon. Gentleman's Government will answer in the near future.

Will the hon. Gentleman answer my question? Should the Government cease to support Harland and Wolff?

I will turn round the question. How much more public money is the hon. Gentleman prepared to put into Harland and Wolff? Is £140 million not enough?

I realise that the hon. Gentleman has been trying repeatedly to get into the debate. I have given way to him twice, and I shall not do so a third time. My view is that £140 million is enough public money for any one shipyard.

During the past year I have been able to visit many of the leading yards in Europe and North America. Without exception, all the yards that have been constructed anew for the building of large vessels have no new orders. In the other yards I found a similar state of affairs to that which exists in our own industry. The yard by which I was most impressed was that of Blom and Voss in Hamburg, whose attitude, efficiency and order book were similar to those of Swan Hunter on Tyneside.

The third argument put forward for nationalisation is that the industry has not maintained its share of the market. That is true, but there are understandable reasons for it. There has been a complete change in world trade and, especially, a change in Britain's world position. Our merchant fleet at one time was two-thirds of the world fleet. With the emergence of developing countries which have their own flag fleets, ours is now only 10 per cent. of the world. That is the fault neither of our shipbuilders nor of our shipowners. One-third of the free world's demand for shipping is not open to competition by our builders because of restrictions imposed by Governments. Our output has remained the same, but the export figures which are so often quoted ignore two important factors: first, the high value of our naval exports in which we are a world leader; and, secondly, the great sophistication of many vessels built in our yards.

The fourth argument is poor labour relations. The House is well aware that labour relations have been a weakness throughout the whole of British industry. They are especially bad in nationalised industries. Those who work for the State after nationalisation do not seem to have found that the change of employer has brought happiness to their lives. If the shipbuilding industry is to be nationalised, one can expect in future that labour troubles will be on a national scale instead of only on a local level, as they have been in the past.

Perhaps the most noticeable feature of a visit to a foreign yard in almost any other country is that management has to deal with only one union and not with the multiplicity of unions which has bedevilled relationships in this country. I shall be interested to know what proposals the Government have for the reform of that side of the shipbuilding industry, about which we have heard not a word. I suggest that no single factor could do more to improve relationships in the shipbuilding industry than a reform of the union structure.

The fifth argument put forward is that there will be greater job security under nationalisation. I ask those who think that: How many jobs have been lost in the other nationalised industries—coal, railways and steel? Anyone who thinks that the industry will be run in future for the benefit of the workers is mistaken. Apart from the naval orders, our industry is entirely subject to fierce foreign competition, and the shipbuilding industry will remain subject to hard economic forces. The effect of these forces may be delayed if the taxpayer is required to pay up. Subsidies from the taxpayer for the running of the industry can, however, only delay the economic forces and not prevent them.

The final argument is one of poor management, but in general I believe that the management is not poor. On my visits abroad I found that the calibre of management is very much the same as one finds in leading yards in this country. One might ask what is the standard of management in existing nationalised industries of all descriptions. If there is to be a change after nationalisation where are these wonderful new managers to be found? The last Secretary of State for Industry has said that if there is one thing clear about British shipbuilding it is that it must be run by people who believe not only in it but in its being in the public sector. The present Secretary of State will find it extremely hard indeed to find enough people to run the industry in future who believe in such a foolish idea.

The ship repairing industry is completely different from the shipbuilding industry. It is a service, not a productive, industry. To nationalise it because the Government are nationalising shipbuilding is as logical as to nationalise all the garages because the car manufacturers are to be nationalised. What will nationalisation do to help this highly competitive industry?

The reasons put forward by the Minister for nationalising both the shipbuilding and the aircraft industries—he has given no real reason for nationalising ship repairing—are really excuses. This debate is a sham. The real reason is purely political. It is based on emotion and not on economics. The present Secretary of State for Energy was the evil genius who designed this scheme and he has left the present Secretary of State for Industry to implement it. I imagine it is perhaps now being implemented, therefore, not with the zeal of a fanatic but more with a view to appeasing the Left Wing.

I cannot understand, on this manifesto argument, why the Government do not include pills and lorries as well in their nationalisation plans. If they are all to be taken over, why are they not put in the same Bill and have done with it?

Order. The hon. Member for Tynemouth (Mr. Trotter) is learning what happens if he gives in to temptation.

We may live to see the day when all this is done in one Bill. The Secretary of State left until his last sentence the real reason for the Bill—some nonsense about power to the people. I got the impression that he did not have much confidence in that personally, because he rushed it out right at the end of his speech. Nothing could be colder, harder, more bureaucratic or more inefficient than the State as employer or owner. Nationalisation will help neither the people who work in these industries nor the country in general.

The Government are borrowing £20 a week for every family in the country. At a time when the need is for increasing productivity and cutting down Government spending, the Bill will have exactly the opposite effect.

The Minister said not a word about compensation, presumably because this is the shabbiest part of the whole shabby Bill. Shipyards are to be taken over at a price which is less than one year's profit or only a fraction of their assets. If taxpayers think that they are getting bargains by this Bill, I warn them that they will be paying out money many years ahead for the losses which will occur as a result of the take-over.

These industries are different from any industry previously nationalised. It is not just that the Government have now started their attack on manufacturing industries. The special feature of the shipbuilding industry is its international nature. It does not have captive customers but is wide open to international competition. If a shipowner wants a ship built he can go anywhere in the world for it, and if he wants a ship repaired he also has a wide choice of country. In meeting this sort of competition this industry cannot get away with the standard of service which has become synonymous with nationalised industries.

The sane alternative would have been to set up a shipbuilding industry council. It was, in my opinion, perhaps a mistake to abolish the Shipbuilding Industry Board. In such a council, Government, management and unions could work together on planning for the industry. At the same time, a holding company could be set up for the existing State yards. Let the State-owned part of the industry then try to put its own house in order, and let the Government try to prove their case for State ownership in this industry by example.

Vital points have been left undecided by the Government. For example, how in co-operation with the rest of Europe is the industry to deal with the challenge of the new yards in Japan, Korea and the rest of the world which have State aid available to them? How is the archaic trade union structure in the yards to be reformed.

How is inflation to be overcome? The industry is being priced out of the market in a situation where, with 26 per cent. inflation, prices are doubling in not four years but three years. If ever there was a need for some form of insurance against inflation for home orders it is at this time.

It is clear that the Government have no policy and no strategy for the industry. Two years have gone by without their having any policy, and a further year will pass whilst this giant bureaucratic structure is set up. For three years, at one of the worst times in the history of the industry, there is no policy and no guidance from the Government. The Minister yesterday dodged this issue, and he ignored it again today, as I expected.

This is the act of a bankrupt Government. They are bankrupt of ideas, they will bankrupt the shipbuilding industry and they seem determined to bankrupt the country.

5.47 p.m.

Like other hon. Members, I will be brief. I shall confine myself to the aircraft industry, so the hon. Member for Tynemouth (Mr. Trotter) will understand if I do not follow him in everything he said. But I must disabuse him and the hon. Member for Henley (Mr. Heseltine) of their belief that the Bill is supported only by the wild men of the Left. That is a description which, for several reasons, I cannot identify with. Yet I wish to support this Bill sincerely because my constituency is totally dependent for its life on the aerospace industry. We have both guided weapons and airframe companies based in Hatfield, together with sub-contractors dependent on the aviation industry.

Hatfield is not a place where one has to argue the merits of nationalisation. Workers at Hawker Siddeley Aviation do not need to be persuaded that the time has long passed when the British Aircraft Corporation and Hawker Siddeley Aviation ought to have become one company.

The hon. Gentleman can go and ask them, as I did several times in the last General Election campaign.

Nor do workers at Hawker Siddeley Dynamics needed to be persuaded. They see themselves losing jobs in Stevenage which they gained when they lost jobs at BAC's guided weapons division. They see themselves losing those jobs in Hawker Siddeley Dynamics at a time when BAC is recruiting, and they know that in about two years' time the process will be reversed. Thus, there is not only constant change in job and career structures with two such companies operating, but the industry as a whole is losing people who do not like constant uncertainty and change every two years or so, or being unsure of their long-term prospects. They are walking out of the gate, and so we lose the industry's most vital resource—skilled manpower, although that manpower wants to make the industry a success.

The concern in Hatfield has not been about whether we should nationalise. It has been about when we intend to nationalise. Understandably, Hatfield workers have been concerned to see over the past two years that their industry has been in a state of uncertainty and flux.

When I last visited Hat-field, I found that the employees of Hawker Siddeley were more concerned about the £600 million of aerospace projects which had been cancelled in the Defence Review than they were about changing the name over the factory gate. The hon. Lady had better wait until the next General Election, when her constituents are unemployed, before talking too big.

I do not need the hon. Member for Chingford (Mr. Tebbit) to tell me what my constituents and what workers in HSA, Hatfield, think. Nor do I need the hon. Gentleman to anticipate the remainder of my speech. If he had not interrupted me, he would have discovered by now that I, too, wanted to discuss the job prospects of people working in the aerospace industry.

We must not be hypocritical about it. That engaged in the industry have experienced uncertainty and troubles in the past from Governments of both parties. They have suffered from the results of that inherent uncertainty when cancellations have occurred. However, the industry is tremendously valuable to the country. It has earned us vast revenues. Without it we would have incurred balance of payments problems far greater than we have today.

But we all know that the results of investment in the industry are long term. We do not see jobs tomorrow for money which is invested today. It is an industry which needs future planning, and it is dependent on having confidence shown in it at a time when funds are tight if it is to be successful and prosperous in the future.

I am especially concerned about the civil side of the airframe industry, as the hon. Member for Chingford will learn if he listens to what I say. I also fought the last General Election not only on nationalisation but on defence cuts. But I find it easier to go back to my constituency to justify defence cuts which inevitably have their results on jobs in Hatfield if I can also assure my constituents of the Government's determination to support the civil side of the airframe industry. That has not been very easy to do in the past 12 months.

My hon. Friend the Member for Kingswood (Mr. Walker) expressed the concern of BAC. The worry there is that there should be further investment in the civil side of the industry and a further reliance on that side. We were all over-gloomy 12 or 18 months ago about the prospects for civil aviation world-wide. Here, of course, I am referring to the decision which many of us linked in our minds with the concern of management for nationalisation—the decision to cancel the HS146. That decision was one which the Government said at the time they would put on ice—[Interruption.] The Opposition are always insisting that civil servants in Whitehall should not be the ones to say what the management of an Aerospace Corporation should do. But when the Government say that the decision on such a project must be left to the new Corporation, the Opposition say that it is a decision for the Government. They cannot have it both ways.

At a time when work on this project has declined, other aircraft, especially Dutch aircraft, have been selling very well. When many of us were trying to make out a case for the HS146, throughout Europe it was becoming more and more accepted that there was a need for a feeder liner which an aircraft of that kind would have met.

Does my hon. Friend accept also that in this case there was a failure of private capital to put in money because it was expected that the Government would do so?

I agree entirely with my hon. Friend.

There is also the issue of European co-operation and how much any European nation on its own in future can fund a new aircraft. It is an enormous investment, whether it comes from private or public sources, and it is not necessarily the case that the only way to do it is through one country. In the Airbus, we have seen an immensely successful project come into being by means of European co-operation on the civil side. With the MRCA, we see the same occurring on the military side. But I am anxious that when we take our proper place in the aviation industry in Europe we do so from a position of strength. Unfortunately, the past 12 months has not seen any strengthening of the British aerospace industry, to which Government supporters are just as committed as the right hon. Member for Brighton, Pavilion (Mr. Amery).

I was disturbed to hear in a number of speeches the apparent concern that there was no talent for managing the new Aerospace Corporation other than that which had managed the two major companies in the past. I can assure my right hon. and hon. Friends that there is plenty of talent for management and for designing and making aircraft in the British aircraft industry. It is one of the tragedies of the history of the industry that we have not utilised that talent in the past. Throughout the decision making and planning for the new Corporation, I hope that when the organising committee is appointed those resources will not be wasted. I hope that the committee will take into its confidence those people who have invested their lives, though not their capital, in the British aircraft industry, and use their experience and knowledge. If that talent is involved in the planning and management of a new Aerospace Corporation, it will be a successful and thriving one in the future.

5.58 p.m.

I hope that the hon. Member for Welwyn and Hatfield (Mrs. Hayman) will forgive me if I turn immediately to shipbuilding, which is of the gravest concern to my part of the world. I speak in the debate on this unwelcome Bill at a time when all Clydeside shudders with apprehension about what is to happen to the 6,000 workers in the Chrysler factory who in a very short time may find that there is no work.

In spite of that situation, we are talking today of nationalising at vast expense industries which have profitable areas, and apparently we have given no thought to the retention of that profitability. To my amazement, Government spokesmen have even talked today about manpower reduction, as though it was a feature of the success of nationalisation when it is the least attractive possibility for any worker on any shop floor.

But this Bill proposes to take over not just the unsuccessful. It seeks to help not just the struggling. The aim is to take over those who are outstandingly succesful. In that context, as others of my hon. Friends have done, I must ask why. Of course, there is a simple answer. This Bill is before us primarily because it supports a Government who are hell bent on the pursuit of an expensive political dogma at a time when the nation is already overtaxed and short of money.

I wonder whether the hon. Gentleman will do better in due course. We are so short of money that even emergency cases are being refused at the doors of our hospitals.

If anyone looked at television—I am sure that you, Mr. Deputy Speaker, would not have time—he would have seen that it has nothing to do with public or private medicine. The cold fact is that this Government have run out of money. That is what I am complaining about.

The Government intend to spend money in the way proposed in the Bill, but it is far too little judging, from the compensation clauses. I think that many Government supporters have at last begun to have doubts whether this nation wants any further extension of nationalisation, whatever may be said in election manifestos.

I am particularly concerned about the shipbuilding industry because the two things most wanted today are viability and profitability. Here we may agree, but we certainly differ about the ways to achieve those ends.

Let us look at what has happened on Clydeside. Upper Clydeside does not have a particularly happy history. Upper Clyde Shipbuilders started with considerable promise. Some of us warned that profitable firms would be drawn into the consortium to join unprofitable firms. The effect has shown itself dramatically, as I shall show later.

On the break-up of UCS we have, on the one hand, Govan Shipbuilders and, on the other, Yarrows. I was amazed to hear someone shout that the Conservative Government had nationalised Govan Shipbuilders. I was one of those who urged that Government to support the Clyde at that time. I am not in the least ashamed of having taken that line, and I would sustain it on similar occasions of need in future. I am referring to the disaster of the Upper Clyde Shipbuilders concept and the effect that it had on the profitable part of the industry. On the one hand, we have Govan Shipbuilders losing many millions of pounds of public money and, on the other hand, a firm which stands out—Yarrows.

I listened with interest when the Secretary of State explained what he hoped to see from a successful shipbuilding firm. It seemed that what he hoped for was precisely what Yarrows has to offer. The tragedy of today is that firm will be drawn away—not for the first time, but for the second time—from its own individual success. It was successful before it was drawn into Upper Clyde Shipbuilders, and it has been very successful since it resumed independence.

Let us look now at the catalogue to which the right hon. Gentleman referred in his opening speech. Yarrows now employs over 5,000 people—an increase of well over 250 per cent. since 1967. It may be that the firm relies to some extent on naval orders from the Ministry of Defence, but many hon. Members on this side of the House, including myself, recognise that these orders have hardly been generous under the present Government. Yet Yarrows has achieved success. The company has twice won the Queen's Award for exports, it has invested over £10 million in capital expansion, and it is highly profitable today. Its wide connections overseas, to which my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) referred, built up on mutual trust over many years, are of the greatest value to our order books. I believe that Yarrows has as many as four teams out now seeking world orders, despite the fact that the Government have restricted the countries from which orders may be obtained. Last, but by no means least, Yarrows has an excellent record of good industrial relations which has been achieved despite the considerable difficulties of an industry in which eight major unions are concerned.

All this reflects great credit on the management, the unions and the work force. There is no conflict in this company. All it wants is to be left alone to get on with a successful job and to continue to provide the national asset that it is. Yet it is to lose its independence because it is on the schedule now before us.

I should like to return to the proposed compensation about which my hon. Friend the Member for Henley (Mr. Heseltine) spoke in the course of an excellent speech. There must be many cases, as in Yarrows, where the compensation looks far from fair. Does no Minister recognise that compensation affects many pension funds and their investments? And today there are, happily, countless employees who have shares in the firms for which they work. All these people stand to lose from the meagre compensation proposed in the Bill.

All in all, this is a disastrous measure for profitable companies. Yet we are considering it at a time when this country needs profits from companies to a greater extent than ever before, and we certainly need their contribution to our national resources.

I have many times, in connection with the shipbuilding industry, said that we cannot strengthen the weak by weakening the strong. Yet again, the Government are trying to do just that. Will they never learn?

6.8 p.m.

My hon. Friends and I put down an amendment which sought to point out some of the dangers which might be inherent in the Bill relating to centralisation and the effect that it could have on the ability to take industrial decisions in Scotland. Regrettably, that amendment has not been called. However, I hope in the course of my remarks to refer to the policy being followed by the Government, particularly their proposals for devolution and the lack of industrial policy related to it.

First, I should like to refer to the Bill. Apart from its merits and demerits, the Bill has caused harm by being a year late. I do not necessarily mean that its effects would be good, but that uncertainty has been caused in the shipbuilding industry in particular. For instance, in my constituency a large prefabrication shed in the local shipyard has not been commenced partly because of the com-the nationalisation issue underlying it. pensation problem and partly because of Therefore, there has been a withdrawal of investment finance at a time when many yards and workers in those yards would have been pleased to see it. This view has been expressed by hon. Members on both sides of the House.

However, the shipbuilding industry has to operate in a world-wide climate which is not an easy one. When we examine the scale of assistance and aid which is given to this industry in many other countries, we become aware of the com-petition—I might use the term "unfair competition"—which the shipbuilding industry in the United Kingdom and Scotland, for which I speak specifically, has to suffer.

For instance, the Japanese shipbuilding industry and merchant fleet have been built up since the war by means of generous credit provided by the Development Bank of Japan. Nearly 100 per cent. of the shipping that has been required by Japanese companies has come from Japanese yards. In many instances, until 1971, credit was not given unless the Japanese companies ordered from Japanese shipbuilders. Therefore, that did not give much opportunity, even assuming that our shipbuilders were competitive, for us to compete in that market.

In markets elsewhere in the world, special credits are given for large proportions of the price, preferential rates of interest are charged, and cargo preference is given in certain countries to those who buy ships built in those countries' yards. I need not go as far as Korea or Brazil, which were mentioned earlier, to give an example. In France, where there is high cost-inflation insurance, it is intended to double the size of the mercantile marine by 1980 with the help of equipment grants and interest subsidies. Already 50 per cent. of the ships have been bought through French shipbuilding companies, although there is no formal restriction in market. In Germany the situation is that 96 per cent. of German shipping has been purchased from German yards. That may be a mark of the effectiveness of the industry there, but funding is given by the German Government to make it possible and attractive for German shipowners to buy from yards in Germany.

I turn to the list of aid which is marked out for the United Kingdom. There is a rebate of indirect taxes calculated at 2 per cent. of a ship's price, but there has been no direct support of any other kind—apart from the credit arrangements under the terms agreed by the OECD—since termination of construction grants. A cost escalation insurance scheme, which has been introduced, has not yet been used. That scheme has been criticised today as being inadequate.

Therefore, when we criticise the shipbuilding industry it is worthy of note that much of the competition that the industry faces is of a severe nature and that the industry has not been given the aids which other Governments abroad supply. Even if the industry has to be nationalised, a policy still has to be drawn up for shipbuilding which will allow the nationalised industry certain tools with which to compete against foreign suppliers. If that does not happen, the industry will be in exactly the same trading position as it is at present irrespective of whether it is partially or wholly publicly controlled.

At present most of the yards in Scotland are well endowed with orders for the next year and possibly two years. However, the worry of Scottish shipbuilders is that the present order crisis could have an effect in the period from 1976 to 1978. Reference has already been made to the world shipping position. The serious situation is due partly to the oil crisis and partly to the recession which is taking place world-wide.

I shall mention four basic statistics which will affect the market and which put the problems of the industry into perspective. First, after a rise of between 7 per cent. and 8 per cent. over several years, the volume of world trade has fallen by about 10 per cent. this year and is not expected to rise more than marginally in the coming 12 months. Secondly, according to an estimate by British Petroleum, oil traffic is unlikely to grow by more than 2 per cent. a year between now and 1980. Thirdly, world trade generally is not expected to expand at a much faster rate—it will probably expand at about 5 per cent. a year at the most, from 1976—77. Lastly, the volume of traffic will not reach the 1974 level again until 1977, and by that time the carrying capacity of the world's merchant fleet will have increased by over one-third—from 450 million tons in 1974 to 600 million tons.

Whatever method we use to improve the shipbuilding industry, the ordering situation world-wide is not encouraging. Most of the yards in Scotland are in a reasonable position at present, but they are worried about the future. I understand that Scott-Lithgow Limited has about £100 million worth of orders for shipbuilding and another £90 million worth of orders for oil-related products. Approximately the same figures apply to Yarrow Shipbuilders Limited.

Govan Shipbuilders Limited is also worried about the situation. And here it should be stated that although Govan Shipbuilders is losing money, its performance record is better than the experts gave it credit for right at the start, but it was interesting to read a comment by the managing director, Mr. Archie Gilchrist, who focused attention on some of the problems that his company is suffering. He also said that two crucial factors affected it. One was internal and related to productivity, and the other related to orders. Both are equally important.

The chairman of the company, Professor Kenneth Alexander, said early in November that the Government must take action within two months to avert the orders crisis affecting Britain's shipbuilders. He said that two options were open to the Government in this connection. The first option was to subsidise British shipowners to buy British and the second was to finance the construction of ships "on spec" so that they would be available to meet demand when the next upturn in world trade occurred.

Regardless of the machinery by which the whole of the shipbuilding industry comes under public ownership, many of the problems relating to orders will still be present. It is in this respect that the Government have not advanced a policy, and delay in tackling the issue over the past 18 months has caused trouble.

Hall Russell and Company Limited has a reasonably good order book, and the Dundee yard, Robb Caledon Shipbuilders Limited, is presently in a reasonably happy position. However, a shortfall in orders could soon develop in the Leith yard.

One of the first questions we have to ask is whether nationalisation in itself will be an adequate way of maintaining jobs which are already in danger and provide for the expansion of the industry. It is clear that nationalisation by itself does not necessarily guarantee full employment. Anyone who knows anything about the redundancy situation in the British Steel Corporation over the last 18 months or who is in receipt of letters from the railway unions will be aware of the cuts that are being made on the railways, which will lead to redundancies, and will be aware that nationalisation does not guarantee employment.

Secondly, good managers do not grow on trees. Probably one of the best assurances for the shipbuilding industry is the obtaining or continuation of good management. Again, nationalisation by itself will not necessarily supply good management. It is more likely to produce greater administration. This was the experience which hit the Scottish area of British Steel.

It is interesting to note that the yards which exist in Scotland have a very wide range of product. The largest employer, Scott-Lithgow, apart from its capability for super-tankers, has orders for bulk carriers, dredgers, oil supply vessels, tugs and trawlers. That is the range. Other yards also specialise. Govan Shipbuilders produces a range of general product carriers. However, one of the best hopes for the Scottish shipbuilding industry may be specialised and high technology ships. If that is so, one wonders whether any centralised buying agency which we may find under a nationalised structure would necessarily help the provision of those specialised ships.

I have great reservations about whether the Robb Caledon Yard—which, I admit, is not perfect—could or would survive in a nationalised structure. I am sure that one of the first projects of a nationalised body looking at the industry would be to rationalise. Here is a yard which produces small and specialised ships. It may be that it would not fit into a pattern or concentration on the larger producers rather than on the smaller specialist yards far from the centre of the industry. This is one of the points I tend to make to workers who tackle me on this score.

What we have to do first is to produce a policy which will provide reasonable inducements and financial incentives not only to our own shipbuilders but also to the home shipping industries, on the lines of those deployed by other countries. The second point could be consideration of a scrap-and-build provision, and the third—which I am putting forward only tentatively—might be that given by Mr. Gilchrist when he indicated the prospect of "spec" building to tide over the hump of two or three years.

"Spec" building is very controversial. There would probably have to be the assurance of some form of market for that to go ahead. Nevertheless, in the next two, three or four years there will be a gap in orders. It is this gap that the Government may have to consider filling if they want shipbuilding to survive as a major industry.

The Minister has raised the subject of Scottish Aviation. I have been to the Scottish Aviation factory and spoken with the management and the action committee. I know the efforts which other hon. Members, including the hon. Member for Central Ayrshire (Mr. Lambie), have put into trying to keep jobs going in this factory. However, it remains the fact that at present, regardless of nationalisation, there is a risk of many hundreds of jobs being lost. Even if the Bill becomes law, the prospect is that there could be a reduction in employment within that factory unless work is obtained for it.

Scottish Aviation produces small aircraft. It is different in many ways from the larger aircraft groups which are being nationalised. It was a very chilling experience for me today to hear the Secretary of State mention that the aviation industry would be sustaining a reduction in the work force. Again the word "rationalisation", of which we have heard so much in Scotland and which has generally meant a loss of employment, could be implemented in this instance to cut out a factory on the northern periphery because it did not fit into the major pattern of the aerospace industry.

Lastly, I suggest that there are other alternative ways for the Government to intervene in financing and in planning, the shipbuilding and aerospace industries. The Government now have the Scottish Development Agency. The National Enterprise Board in England will allow for participation in equity stock and will allow planning agreements. The Government have all the tools to hand, and yet they have chosen this blunt instrument of nationalisation, which is so bound up with State monopoly, and huge bureaucracies.

It is on this matter that my hon. Friends and I feel great misgivings in regard to the Government's plans. This sort of organisation will lump the Scottish element, which is composed of different factors and types, into one unit. It will take away a certain proportion of decision-making power from Scotland, and it will not necessarily be replaced by anything else. It will take away the right of the smaller companies to find their own markets and operate within them.

Is the hon. Gentleman aware that Scottish Aviation is controlled wholly by a firm whose headquarters is in London? Is he further aware that there is a better possibility of getting a fairer deal for Scottish Aviation if it is under Government and political control rather than under private financial control?

With the experience that the hon. Gentleman has of politics over a number of years, he must be aware that he ought not to rely upon naive assumptions that political control will of necessity assist the situation. Those who have had experience of the steel industry will know full well that that sort of external control has led to loss of initiative and loss of employment opportunities. I fully realise that Scottish Aviation is under the control of the Laird Group and as such is not under Scottish control.

I believe that it would be better for Scottish Aviation to have a large shareholding by the Scottish Development Agency to ensure that there is some Scottish control injected into it. That is a better alternative than nationalisation, under which Scottish Aviation would be lost in the British aerospace industry which is several hundred miles to the south.

The Scottish Aviation factory is in my constituency. Will the hon. Gentleman bear in mind that although Scottish Aviation faces difficulties now, it has been immensely sucessful over the past 10 years and has done extremely well? It is employing more people today than it has employed at any time in its history. Secondly, the group which controls Scottish Aviation at present has at least a sole interest in making the firm successful, whereas the nationalised concern will have many other interests in other parts of the country.

One can, of course, pay tribute to the performance of Scottish Aviation in the past. It has had many tribulations. It has had to change its form and production lines over the years, but it has hung on. Nationalisation may well kill it. However, it is a company which requires help in the form of provision of work. I hope that all hon. Members will agree with that.

I do not want to detain the House too long as many hon. Members wish to speak. In conclusion, I should like to quote from the recent report of the Scottish Council (Development and Industry). In relation to industrial centralisation and loss of industrial control in Scotland, it says:
"We have also registered firmly with the Prime Minister, with the Secretary of State for Scotland and some of his Ministers and Cabinet colleagues, our very real concern about the divisiveness created within industry in the United Kingdom as a whole and Scotland in particular by the overcentralisation of industrial authority in London. We have been assured, following direct representation to the Prime Minister and Lord Ryder, that Scottish interests will be taken fully into account."
On devolution, the same report says:
"In the ongoing debate on devolution our contribution must be to ensure that there is a firm industrial reality contained within the combination of political and administrative measures currently under consideration by government."
Lastly, in discussing meetings with Ministers, the report states:
"At a working dinner with the Prime Minister, some of his Cabinet and Scottish Office colleagues and advisers in February in addition to expressing the view that, industrially, radical decentralisation was the only effective counter to remoteness of Scotland from central decision taking in London."
It goes on to analyse that topic at length, but I shall not repeat it.

However, the argument is that these huge organisations which are being created will affect Scotland and the right to take decisions in Scotland—only marginally in the case of Scottish Aviation because it is already controlled from outside Scotland and marginally, too, because it is a company of 2,200 workers. But the British Shipbuilders organisation will take a considerable amount of decision-making power out of Scotland.

That is one of the things on which the Bill is deficient. It does not have built into its terms adequate proposals for industrial decentralisation. Indeed, it deals with the question of industrial democracy, which is welcome, but it does not deal with decentralisation, which is equally important. On these grounds my hon. Friends and I have no alternative but to oppose the Bill.

6.30 p.m.

You are probably thinking, Mr. Deputy Speaker, that this is the most schizophrenic debate that has ever taken place on the Floor of the House. I think that the business manager on our side of the House should take a hard look at the situation and ascertain how much damage has been done to two important industries by the arrangements which have been made for debating these issues.

I confess straight away that I know nothing about the aerospace industry. It is very difficult for ordinary Members to have to listen intently to a close debate on shipbuilding, learning something even from hon. Members opposite, and then to switch to learning something about the aerospace industry, even though I acknowledge that we heard an interesting speech on the subject from the right hon. Lady the Member for Renfrewshire, East (Miss Harvie Anderson). She made a first-class speech. Nevertheless someone along the line should be taking a very hard look at himself tonight.

We are now about halfway through the debate. What has emerged so far is what I expected—a lot of ideology but very little conception of where we are going in these industries, particularly in the present exceedingly difficult economic climate. The hon. Member for Henley (Mr. Heseltine), whom I am pleased to see present, made a speech with lots of gusto. Indeed, I thought he put his ideas across with rather more vigour than he has done on other occasions recently. On that I congratulate him. Nevertheless I disagree with him.

In some respects the hon. Gentleman was arguing about the past. It is no use saying what has happened in the British shipbuilding industry in the last 20 years. The skids were under that industry in the late 1920s and 1930s. That industry has served the nation well, in peace time and in war. The industry was built originally on family traditions. Some of the family traditions still exist in one large company in my constituency. The work force did not have any great love for the original employers, and they certainly have less love for the present employers.

But the love-hate relationship which has existed during this century and during part of the last century created a situation in which some good ships were built, ships which were sold all over the world and were considered by the buyers to be a very good proposition. Some of those ships were at sea for years and became famous not only for their length of service but for their durability. The British shipbuilding industry was the first to apply the principle of the turbine in ships. That, incidentally, was designed in the North-East.

As for the labour force, we can adduce any argument we like but the fact is that, unless we adopt a new concept and create a different kind of thinking among the unions, among the men on the shop floor and certainly the higher echelons of management, whoever they may be, we shall carry on as we are with a low rate of productivity which will not make us economically competitive. I am referring to the prospects in shipbuilding. I cannot discuss the productivity rate in the aerospace industry.

When British Shipbuilders is established—and I can foresee some long, weary battles in Committee—at the end of the day what will emerge will be the realisation that one of the key positions will be held by the person entrusted with the task of creating a new industrial atmosphere. He will have a mammoth job. I speak from personal experience. I did not serve my apprenticeship in the shipbuilding industry, but throughout my young life in the trade union movement I attended union committees, listening for hour after hour, week after week and year after year to the problems of labour and industrial relations in that large industry. One thing I observed was a complete lack of confidence. I spent much of my life in the chemical industry—in ICI, as a matter of fact. The confidence which was built up in that industry between men and management has resulted in a long period of continuity of production, a high output record and a low rate of industrial stoppage. We have got to achieve that situation in shipbuilding. As I have said, it is important to make sure that thought and care are devoted not only to the position of the whole shipbuilding Corporation but to the principal position of the personnel director.

As regards the location and structure of the Corporation, the hon. Member for Dundee, East (Mr. Wilson) argued the case for Scotland. I hope he will not be too offended when I say that I think it would be a good idea to locate the headquarters of the Corporation in Newcastle. It is not far from the border. One could not say that it would be too centralised there, because Newcastle is about 380 miles from London and not too far from Edinburgh or the Clyde. Therefore, the case for establishing the headquarters in the North-East is fairly sound. We have the headquarters of the Shipbuilding Research Association at Wallsend-on-Tyne. At South Shields there is the largest marine technical college in the country, and there is a school of naval architecture at Newcastle University. It would seem to be an admirable follow-through to put the head-quarters in Newcastle-upon-Tyne or, as my right hon. Friend the Member for Sunderland, North (Mr. Willey) said, somewhere on Wearside. I am a fairly tolerant man, and I would not mind if Newcastle were not chosen.

I wish to make a plea for the aerospace industry. When the Bill goes into Committee I should like the Minister to think again about taking the Rolls-Royce company out of the Aerospace Corporation. I speak for quite a number of my colleagues in the engineering industry and they feel that Rolls-Royce would be better inside the Corporation. If the Minister is embarrassed by that suggestion, perhaps he will agree that we call it the Rolls-Royce engine division of the British Aerospace Corporation. That surely would not be too painful. Of course, he may be able to think of a better suggestion, but let us at least have Rolls-Royce in the Corporation.

I have made a few points, and I hope that the Minister will take note of them and reply to them at the end of the debate.

6. 39 p.m.

I note the plea of the hon. Member for Wallsend (Mr. Garrett) for the establishment of the headquarters of British Shipbuilders in Newcastle. It is understandable that he should make such a plea, but if and when the Corporation is established the plea made by the President of the Shipbuilding Federation, Mr. Ross Belch, for the maximum possible decentralisation in any nationalised industry should be borne in mind.

I am not arguing for centralisation. If the headquarters is to be decentralised as much as possible, even if it is a small headquarters, it might as well be at Newcastle as anywhere else.

I can only hope that the headquarters will be so small that the hon. Member will not be able to claim much credit for his constituency.

The hon. Member for Wallsend also said the skids had been put under this industry in the 1930s, but historically one could make a different case. There was a substantial and profitable expansion of private enterprise shipbuilding after the war and it was not until the 1950s and 1960s that one could argue that the skids were put under the industry.

The hon. Member for Colne Valley (Mr. Wainwright) described the Bill as a piece of industrial archaeology. I think it is a piece of industrial geology. When historians sink bore-holes into our industrial history, they will find a stratum of ineptitude and failure which will surely be known as the Varley-Benn discontinuity and will be found to be completely lacking in any interesting material or valuable resources, intellectual or administrative. [HON. MEMBERS: "Keep it simple."] I shall keep it simple because that is the only hope for Labour Members to understand it.

The right hon. Member for Sunderland, North (Mr. Willey) said the industry had lost a significant share of the market. No one would dispute this. The figures are clear, but there has been an enormous increase in the capacity of the world shipbuilding industry and the percentage figures of the British industry and practically every other industry in the world have declined compared with 1945 or 1950. The only exceptions are the growth areas like Japan, Spain and maybe Sweden. The right hon. Member for Sunderland, North also mentioned the prediction in the Booz-Allen Report that there would be competition between Governments. The OECD shipbuilding committee has tried with all its might and main in recent years to ensure that competition between Governments in shipbuilding was as limited as possible in the general interest of all OECD member countries. Everyone would support the aims and objectives of that committee. The danger is that if there is competition between Governments this becomes an infinite justification for infinite nationalisation and each national Government thinks that, because other nations are doing it, they must do the same in order to survive. So we will get a general industrial ossification throughout the Western world.

The right hon. Member for Sunder-land, North asked why the industry had failed. The Booz-Allen Report covered one aspect which he did not mention. The British industry is plagued, as its competitors have not been, by the existence of 22 trade unions, including 12 staff unions. I shall not detain the House with the long and sad history, but if the management in British shipbuilding can be said to have been less successful than many of us had hoped this is one of the reasons. It is one of the severe and hostile aspects of their environment which we must take into account. The right hon. Member argued that nationalisation should be extended to British shipowners. I declare an interest because I advise a major British liner company. The British shipowning industry has supported British shipping through a large percentage of its order book since 1959. In that year, British shipowners' orders were 87·6 per cent of the total and last year they totalled 79·7 per cent. I have not worked out the average per year, but it is a very high percentage.

The European Parliament's Committee on European Transport Policy has made an important statement about what it thinks should be European policy in this field. It says:
"Your committee feels the problems of the European shipyards cannot be solved by, for example, compelling European shipowners to order European."
For "European", read "British".
"This would only shift the problem of lack of competitveness on the world market from one sector to another."
I endorse that statement.

The Secretary of State claimed, in phrases which rang through the Chamber, that he was relying on full public ownership. The word "full" was given the sort of joyous prefix to public ownership which suggested it conferred on employees a sort of legislative absolution from all industrial folly and misjudgment. I do not believe that to be so. Whatever the Pavlovian response to the word "nationalisation" on the Government Benches, I do not think it will help. It will lead only to controlled subsidies, controlled losses and controlled deterioration. We have a new word in this House which we freely throw around. It is the word "strategy". Some hon. Members seem to think that if only we have a strategy, all our problems will be solved. But the word has never been clearly defined. It is a misleading word and it could be a damaging word. As one can say that war is diplomacy by other means, strategy can mean the pursuit of catastrophe in industry by other means.

The structural reorganisation of industry is a profound and complex subject. It would take hours and would extend the patience of all hon. Members to explain what it means. There is a case for structural reorganisation in shipbuilding, but there is no evidence that it would necessarily take place or be more effective, efficient or rapid under nationalisation than under private ownership.

Our industry has suffered severe competition from other nations, so let us look at the organisation in those countries. There may be a national shipbuilding policy in Japan, but I have visited many of the Japanese yards and I know that there are no nationalised firms in the country. Their success came from many factors, but not from nationalisation. Sweden, with firms like Kockums and Gotaverkien, is the home of the most advanced technology in shipbuilding. Despite that, the Swedish industry has suffered severe difficulties, although there have been some extremely successful Swedish yards. Part of the industry has been nationalised or has received considerable public investment, but it was not a nationalised industry when it was leading the world. Its capacity to lead the world did not depend on nationalisation, and I question its capacity to continue its technical predominance now that it has been nationalised.

France is now taking many container ship orders and has one of the largest container ship fleets in the world. The French Government have a strong policy on shipbuilding but the industry, with firms like La Ciotat and Chantier Atlantique, is not nationalised. The same can be said of Germany.

My hon. Friend the Member for Henley (Mr. Heseltine) emphasised the need for a European industrial philosophy for aerospace. We need a similar philosophy for shipbuilding and a European policy that is not a justification for nationalisation in the United Kingdom or in Europe.

There is over-capacity, and if the world's shipbuilders have responded by a misjudgment of the market this misjudgment has been made by nationalised industries as well as by private sectors.

Perhaps I may refer to an advertisement which appeared in a magazine last week in which one of the major American banks claimed that it was financing a resurgence of shipbuilding in Argentina to the tune of $182 million. Argentina is running what could probably be described as a nationalised shipbuilding industry, but it is interesting that it is borrowing from the First National City Bank. Nevertheless the misjudgment of the world market is not one from which a nationalised industry, simply because it is nationalised and it has a centralised organisation in Newcastle, will be automatically immune.

The Bill refers to industrial democracy, but what does that mean? Does it mean democracy, or does it simply mean industrial populism, which is a very different thing? Is it the theory that managerial policy can no longer be applied in one of our major industrial organisations unless there has been a referendum on such a policy? Is that what the Bill will produce in the shipbuilding industry? If it is, it will be almost a guarantee that all the measures which the Booz-Allen, Geddes, DSIR and Patton Reports have rightly said the industry requires will not be facilitated but will be made substantially more difficult to achieve.

The Secretary of State's overt objective is better commercial control and management. The recent conference held by the Royal Institute of Naval Architects and the Institute of Welding pointed out that the vast investment made by the Swedes and the Japanese in
"elaborate conveyor transport and sub-assembly systems to achieve a high throughput of steel per man "
was one of the basic factors which had to be considered. It said:
"The greatest handicap to be overcome is the inability of yards to keep abreast of escalating costs. Nationalisation does not solve this problem, it merely increases operational problems by destroying faith in normal commercial operations ".
The conference concluded that what was needed was greater tax relief for investment in new equipment, suitable steel at guaranteed prices and encouragement to owners to build when capacity was available in United Kingdom yards.

The conference endorsed a conclusion reached by Mr. Ross Belch in a recent paper when he said:
"it is essential, if nationalisation is to have a reasonable chance of success, that our industry should continue to be run on a fully decentralised basis with short lines of communication between management and men, shipbuilder and shipowner; and with things
so arranged that the initiatives and quick decision-taking, so essential in an industry operating in such a fiercely competitive international market, will not be frustrated by some monolithic policy-making body."
Thus, many of our industrial problems are being brought to this House in the form of a package Bill which suggests that precisely that monolithic policy-making body should be set up. That is at the heart of nationalisation policy. Ownership is important, but it is irrelevant in this context. The question is who makes the decisions and what quality those decisions will be. I do not believe that nationalised industries in this country have ever given us an example of superior use of resources and superior decision-making. If such had been the case, both sides of the House would agree that this technique should be given the support of the nation. There is no such evidence, however. There is no superior deployment of resources and no superior decision-making. Therefore, whatever the common problems of the nationalised and private sectors of the industry, there may also be common solutions. Those solutions, however, are separate from and not determined by the particular strongbox in which the shares are lodged.

6.56 p.m.

The hon. Member for Havant and Waterloo (Mr. Lloyd) delivered a most energetic and thoughtful speech, and I am only sorry that the hon. Member for Henley (Mr. Heseltine) did not pursue the matter in the same spirit. We expect a constructive policy from the Opposition. I heard nothing from the hon. Gentleman but the most alarming comments—and the same can be said of the hon. Member for Colne Valley (Mr. Wainwright)—about what should happen to shipbuilding.

Perhaps I may urge hon. Members to read the closing sentences of the speech of the hon. Member for Henley in Hansard tomorrow. I do not have his precise words, but he seemed to be criticising what my right hon. Friend the Secretary of State is doing in reducing the aircraft industry and building up shipbuilding. By implication, he seemed to say that this was precisely the opposite to what should be done. He then devoted a short passage to what is happening in developing countries—I presume in relation to shipbuilding. I can only deduce that he believes that the sooner the various shipbuilding firms are left on their own to make a success of it and, therefore, to survive, or to make a mess of it, the better.

If the hon. Member intends to paraphrase my speech he might at least do it accurately. I have never suggested leaving the industry alone. My criticism is that for two years all the overtures of the industry to the Labour Government were rebuffed.

The hon. Member for Henley has never told us what he believes should be done—

Not only will I have the misery of reading the speech; I actually heard it, and that was even worse. The hon. Gentleman failed to come up with a constructive policy. He proceeded to apologise for the U-turn which his Government took in 1972. I do not think that what they did in 1972 was wrong. They were quite right to nationalise UCS. If they were to avoid massive unemployment in the area they had no alternative, and, to their credit, the Conservative Government were not prepared to put up with that. In other words, when they are in office they have to accept the social responsibility for unemployment, whatever the industry and wherever it is located.

One year before that, however, the doctrinaire Tories were riding high. It was they who wound up the Shipbuilding Industry Board, cutting off from the industry the board's loans and grants. The reports of the shipbuilders make clear that the industry wanted the Board to continue. Those who criticise the industry should bear in mind that many shipbuilding companies borrowed money, which they are now paying back, to modernise their yards and bring them up to date in line with foreign yards.

I am sorry that the hon. Member for Colne Valley is not here. If the hon. Member for Henley was imprecise, the hon. Member for Colne Valley certainly was not. He said that difficult questions had not been answered, and that harsh and painful decisions had not been taken. He suggested that the skilled labour should go elsewhere. I can only conclude from that that the Liberal Party believes that we should leave the viable companies alone and let the rest gradually fade away. Presumably that means that it wants to see the shipbuilding industry gurgle down the drain. I should like to know what the policy of the Conservatives and the Liberals—and, for that matter, the SNP, but there are no nationalist Members here—would be, given that they do not want nationalisation. What do they want if they do not want nationalisation?

Do we want a shipbuilding industry in this country at all? The West European countries generate about one-third of the world's sea-borne trade, and about 1½ million people in Europe are involved in shipbuilding. Will this prosperous section of the European Continent gradually opt out of building its own ships? What an extraordinary thing that would be for a trading continent to do! It would be extraordinary for it to leave it to others to build its ships. The Germans and French have consciously decided on a policy of maintaining a shipbuilding industry in the face of the most unfair foreign competition. Japan is dumping on the world's markets ships whose price covers only some of the basic costs. Even wages and profits have not been taken into account. For a long time competition has been extremely unfair in world markets. Even if Britain had the most efficient and productive shipbuilding industry, it would still have a tough job selling ships.

By the Bill, my party has decided that we shall have a shipbuilding industry that we shall sustain.

Absolutely, because there is no point in nationalising industries simply to let them fade away. We now have a streamlined railway system. Albeit with some disappointments, and with labour losses, it is a good system. We have a streamlined coal-mining industry, and we have very good electricity and gas industries. We have an atomic energy industry superior to any other in the world. All those industries were created by public enterprise.

We must decide whether we want a shipbuilding industry. I believe that some Conservatives are willing to allow shipbuilding to go under, for purely ideological reasons, and no Conservative Member has so far convinced me otherwise. I am no expert on the aircraft industry. I admit that that is perhaps not their attitude towards that industry. When I hear the almost universal Tory dirge about shipbuilding, in which even some of my right hon. Friends occasionally indulge, I feel that many people would prefer to write the shipbuilding industry off as a national loss. But it is very important for our country to remain in shipbuilding whether the industry is nationalised or not, and we should be willing to adopt policies to sustain it.

I agree that many criticisms could be made of the industry as it used to be, and I have made them. Reference has been made to bad industrial relations in the industry. It is no longer true that industrial relations are bad. I am sorry that people keep bringing up this hoary old chestnut. Anyone who ask trade unionists about the matter will be told that industrial relations have improved enormously. I have spoken to all my Friends who represent Scottish constituencies containing yards, and they all say that there has been a very welcome change in the past 10 years.

Mr. A. Ross Belch has been quoted on a number of matters. Nobody can say that he is not a man with great knowledge of the industry. He said in his Andrew Laing Lecture this year:
"I realise that it is pointless to judge the lightness or wrongness of one period by the standards of another"—
he was talking about bad industrial relations, and they were bad in the old days—
"and on this basis I am satisfied that the general body of management in the British shipbuilding industry today is as efficient and as humanitarian in its attitudes as its counterparts in any other part of the world. The trades union attitudes, too, has developed to a point where a sense of responsibility has generally supplanted one of resentment and, speaking from experience in my own Group,"—
"I am convinced that we have now between us cultivated a new quality of relationship which is a positive force in the day-to-day running of the Company."
I know that to be true of many other companies in shipbuilding. Therefore, we should end the class-war idea that there is fighting in this industry between management and labour.

Every speaker has said that we want to see as much decentralisation of decision-making as possible in the shipbuilding industry, nationalised or otherwise, and that we want as much industrial co-operation and democracy as we can get. We want decentralisation not simply in the managerial sense but also with regard to the individual shipbuilding groups.

There is a kind of British shipbuilders' headquarters already. It is called the Department of Industry. The shipbuilders are never out of the building in Victoria Street, where they are asking for this and that—quite rightly. The trouble is that the Government do not do enough for them, not that they do too much. For example, it is claimed that about 75 per cent. of the yards' capacity is used to build ships for British shipowners, but that is only 30 per cent. of what is built for British shipowners. In other words, if British shipowners raised the amount they ordered by 10 per cent. or 15 per cent. they would fill our yards. The percentages for German, French and Japanese shipowners in their countries are very high.

The hon. Gentleman will agree that for that to happen there should be a precise match between the remaining capacity of British shipyards and the remaining requirements of British owners. I do not think that it exists.

I fully agree with the point about trying to help shipowners positively in a number of ways in which their competitors are given an advantage.

In eight days' time I shall have been a Member for 20 years. In that time I have seen an enormous change in the shipbuilding industry. Of course, it still produces the same amount—about 1 million tons a year. It has overcome its labour relations problems very well, and it has rationalised, as a result of the Geddes Report, in a sensible, realistic way. It has had its set-backs, but it has also had its successes. Unfortunately, very few hon. Members speak about the successes. It is always the bad news, and never the good, that people give.

The House must be more and more concerned about shipbuilding, but not just for the sake of hon. Members like myself for whom the closing of our yards would be a social catastrophe. About 50 per cent. of my constituents derive their income in one way or another from employment in the yards. They build excellent ships, and build them very well. Those ships are still admired throughout the world. We have not had to run cap in hand every day for big subsidies. The men and women concerned are proud of their shipbuilding industry.

The House should not be concerned simply about the 10, 12 or 20 places like mine that would suffer a catastrophe if shipbuilding went under. The reason for concern is the proposition that Great Britain should remain a shipbuilding and shipping nation, as a part of Western Europe. Either with this Bill or with another Bill, the importance of Government intervention in the industry has to be recognised to fight those who are fighting us and to keep Britain's place in the world.

I hope that hon. Members who catch my eye from now on will try to confine their speeches to 10 minutes or less. If they succeed, I shall be able to call many hon. Members who have been waiting for a long time to speak.

7.8 p.m.

I shall do my best to comply with your request, Mr. Speaker. My hon. Friend the Member for Henley (Mr. Heseltine) has made it easier for me to do so, because in one of the most powerful speeches I have heard in the House he put the general case against the Bill excellently.

First, as an accountant, I should like to say something about the compensation provisions. The proposed basis of compensation is in principle too vague and unfair, and it is wrong. I suppose that the reason why it is in the Bill is that someone faced with the task of valuing the assets of the companies to be taken over thought that it would save trouble to have a rule of thumb and that an equity share price might be the best method. But I believe that for both shipbuilding and the aircraft industry it will prove to be a very uncertain, complicated and crude basis on which to value the assets.

Even now the Government either cannot or will not tell us what the cost will be. Yesterday the Secretary of State told me in answer to a Question that he could not say now but that it would have to be determined by negotiation and, if necessary, by arbitration and so on. These negotiations will be just as long as or longer than if it were done on the plain basis of a price for the assets being taken over. That was the formula adopted for the coal industry where the assets, not whole companies, were nationalised. There is no saving in time or effort with this formula of the notional quoted share price. Worse than that, it is unfair.

Quoted company share prices depend on many factors. They have nothing to do with the operation we are considering today. Stock Exchange prices are always affected by short-term considerations and they are also prices for small blocks of shares, whereas in this case control of the companies concerned is involved. Whenever control is due to be passed over on the Stock Exchange or in a commercial transaction, as the Minister of State knows perfectly well, the price is always higher than it would be for small blocks of shares.

As an example of that, only a few days ago the British Transport Docks Board made a bid for Felixstowe Docks. Its bid was 150p in cash per share. That was for shares which stood at 90p each immediately before the bid. That is an exact parallel to the situation here. The Secretary of State is bidding with unspecified paper on the basis of a valuation nearly two years old for settlement some time in the future with nothing allowed for control. This method will produce some fantastic distortions. The case of Hawker Siddeley has already been mentioned. Here the compensation will be about half the net assets. That is the technique of the asset stripper if ever I saw it. One difference between the Government's actions in the Bill and those of the conventional asset stripper is that the Government do not have to persuade anyone to sell their shares—it is compulsory. Another difference is that the Government will not say what they will do when they have acquired these assets. All that we have had have been worrying generalisations.

I believe it to be the case that if the Government were a quoted public company they would not be allowed by Stock Exchange regulations and the Take-over Code to bid for companies in this way. This is partly because they have said nothing about the stock which they propose to issue in exchange for the shares and partly because they have not complied with the Stock Exchange regulation that a bidder must state his intentions for the company and for the employment of the employees at the time of the take-over.

The rule of thumb method of the quoted share price valuation is difficult and unfair. The nonsense of the method can be encapsulated in a question which I asked the Minister to answer in the reply, if he can. We do not yet know the formula which will be used to calculate from the value of the subsidiary the quoted share price of the parent company. The vast majority of companies concerned will be subsidiaries. What formula based on the quoted share prices of GEC and Vickers could possibly give the same valuation for each half of BAC? I defy the Minister to find a formula that will produce the same valuation for each half of BAC on the basis of the two quoted share prices. Yet that is what has to be done somehow for the purposes of this compensation.

I turn now to something which severely affects my constituents, namely the question of accountability and in particular accountability to the employees of a concern. The hon. Member for Kingswood (Mr. Walker), who is my neighbour from a constituency point of view, made the point earlier that the Commercial Aircraft Division of BAC intends, according to a recent announcement, to reduce its staff by 2,400. I interrupted the hon. Member to point out, and I hope that the Minister of State can deal with this, that my information from shop stewards and management is that the Government have said that they want to see a job loss by next May of 4,000, not 2,400 as suggested by BAC.

I wrote to the Secretary of State last week asking him urgently either to confirm or refute those figures. He has not replied so far. I do not know whether the Minister is able to do so now or whether he can do so in replying to the debate. This has an important bearing on the attitude to the Bill of the BAC employees in my constituency. There are many people who are for the Bill. I believe, however, that there is a majority in my constituency that is against nationalisation. I say that after a lot of consultation and discussion during the time I have been in Parliament and before.

Apart from that, there is the middle ground made up of people who would be for the Bill if they thought that it would improve job security. I do not believe that it improves it. The figure of 4,000 jobs to be lost is one piece of evidence in that regard. Another much larger piece of evidence was the Secretary of State's speech in which he said that one of the principal purposes of this legislation was reorganisation and rationalisation. We all know what rationalisation means. It means jobs lost. The right hon. Gentleman also spoke about geographical rationalisation. What does that mean for Filton, in my constituency? What is the Government's view on the future of Concorde?

The future of Filton is tied up with the future of Concorde. I urge the Secretary of State to consider this. I take it that he has no proposals for diversification at Filton. I hope he will start seriously to sell Concorde, by flying in it, for ex-example, or visiting Filton, instead of spending time on useless Bills like this.

7.16 p.m.

I welcome the Bill, first because I regard it as the fulfilment of a manifesto commitment. That is a rather more important matter than is perhaps allowed for on the Conservative Benches. It is important if we wish to maintain faith in democratic government. After all, the Government are asking to carry out the programme on which they were elected. I also welcome the Bill because it represents an extension of public ownership into manufacturing industry, this time in a planned way and not by accident, as has often been the case.

Further, I welcome the Bill because it offers the prospect of increased industrial democracy. Finally, I welcome the Bill because it involves an industry in which the taxpayer is already heavily concerned both as an investor and as a customer. My particular interest is in one profitable part of the shipbuilding industry, namely, Vosper Thorneycroft, which employs large numbers of my constituents.

Vosper Thorneycroft is an important builder of naval vessels in particular, often for foreign buyers. It also runs an important ship repair undertaking. The case for the public ownership of shipbuilding has been made out many times over. I have never understood the doctrine which said that the taxpayer must be expected to pick up the tab for the part of an industry which makes a loss but that in no circumstances must the taxpayer have anything to do with those parts of industry which make a profit. Since one of the major objectives of our public ownership proposals is the rationalisation of this industry, it makes no sense at all to leave bits of it out of those proposals.

There may be a less obvious case for the public ownership of the ship repair division of Vosper Thorneycroft. Again, it would make little sense—since the two undertakings are closely related—to leave one out. In any case it is worth emphasising that there is a general welcome among my constituents who are employed by Vosper Thorneycroft for the public ownership proposals put forward by the Government. The unions welcome the general principle of public ownership and the prospect of industrial democracy, but they are concerned with the practical matter of job security, and, although it can be argued that Vosper Thorneycroft that, because of the has done extremely well in maintaining job opportunities, that will not necessarily be so in future, even the immediate future.

One of the major problems facing Vosper Thorneycroft is the enormously rapid increase in dry dock charges and port charges in general made by the British Transport Docks Board in Southampton. There is concern among management and unions in Vosper Thornycroft that, because of the Southampton port's obligation to make the best possible return on assets, those charges may go up so fast and to such a degree that by vesting day there may be very little of the ship repair division left to take into public ownership. I hope that my hon. Friend the Minister of State will pay attention to that point.

The unions are not the only people who give a cautious welcome, but nevertheless a welcome, to the Government's proposals. Even the management in Vosper Thorneycroft has expressed itself in the local Press recently as being content with them, believing that a nationalised shipbuilding and ship repair industry is a viable concept because it recognises—perhaps none better—that its real competition does not come from within this country. It is competing with the French, Dutch and German yards. Management sees yards in countries across the Channel obtaining quite unfair Government support and advantages which it does not receive. It therefore recognises the need for rationalisation and the proper use of resources and the pooling of effort which nationalisation will bring.

Having said that, I should not conceal the fact that unions and management have some concern about the Government's proposals. They fear that if there is some form of monolithic, centralised structure their operations on the South Coast—perhaps a relatively small factor in the national scheme but important to the South Coast—may be prejudiced. That prejudice may arise in three ways.

First, they think that the temptation to use the shipbuilding and ship repair industry as an instrument of regional policy may prove to be irresistible. It would be a tragedy if the welcome given to the Government's proposals proved to be misplaced, because the South Coast industry might be sacrificed on the altar of regional policy. I hope that my hon. Friend the Minister of State will be able to give an assurance in this respect. We feel that we have already received an assurance in conversations which we have had with his colleagues in the Department, but it would be welcome to hear it again.

Secondly, the unions and management fear that any bureaucratic structure, any centralised management, might be inconsistent, particularly on the ship repair side, with the day-to-day decision-making, which is absolutely essential. Contracts are obtained by quick responses in terms of price and time by people who know their customers and the job and do not have to refer to a centralised authority. I hope that the maximum decision-making power will be left with the component parts of the nationalised industry.

Thirdly—and this is true of shipbuilding and ship repair—much of the work is built up by means of personal contacts and relationships developed over the years. That is true of the naval vessels built by Vosper Thornycroft and of the repair work which it is able to attract to the Southampton port.

I hope that my hon. Friend the Minister of State will be able to give assurances on those points. Such assurances will be extremely important to my constituents. I am sure that the genuine welcome which my constituents have given to the Government's proposals will be strengthened and made more whole-hearted if they feel that those points are in the Government's mind and have been taken into account. I repeat that my constituents see the proposals as a means of promoting a new concept of public ownership in an industry where it is sorely needed

7.25 p.m.

In what might have struck many hon. Members as being a fair speech, the hon. Member for Southampton, Test (Mr. Gould) used four telling and significant words at the beginning of his speech. He said "I welcome the Bill". Those words are significant because, despite the verbal array from the Government Benches since the Secretary of State finished his speech three hours ago, we have yet to hear any hon. Member on the Government side come clean about welcoming the proposals in the Bill. It seems that Labour Members have certain reservations which for one reason or another they have kept to themselves.

By the time the hon. Member for Test spoke, I had jotted down four weaknesses which I thought were apparent: first, that we were talking too much about firms and too little about people; secondly, that we were talking too much about airy-fairy principles and too little about down-to-earth details; thirdly, that we were talking far too much about shipbuilding and aviation and far too little about the ship repair industry; and fourthly, that there was too much predictability on both sides of the House about the typical adherence to the philosophy of respective parties.

We have heard from hon. Members on this side of the House implied support for and defence of employers, despite the fact that many employers in the ship-building and ship repair industry are secretly and, to a certain extent, openly looking forward to losing the responsibilities of the industry to State control. We have heard right hon. and hon. Members on the Government Benches championing a cause which the Treasury either cannot cost or cannot afford. Right hon. and hon. Members opposite have turned their backs on the fact that a not insubstantial number of men and women in these industries who are trade unionists and supporters of the Labour Party are fearful that not only will nationalisation provide no security of employment but that it will not even provide continuity of employment.

Reverting to the predictable attitude which has been adopted on the Opposition Benches, there has been the championing of the cause of obtaining good compensation rights for shareholders. I should have been much happier if I had heard from hon. Members on the Government Benches concern for trade union members who find that their trade union benevolent funds are invested in companies which are en the verge of coming under State control.

I do not deny any Government the right to seek to implement their election manifesto, but there have been no arguments in support of the submission that Falmouth Docks should be included in the Government's proposals. Falmouth Docks is not unprofitable or inefficient. It has never received a penny in Government grants over and above the grants and allowances normally accorded to any manufacturing industry in a development area.

Falmouth Docks has a record of good industrial relations. Ten years ago it proposed a scheme which has formed the foundation of a new attitude in industrial relations throughout the ship repair industry. Falmouth ship repair yards are not connected with any shipbuilding operation. I noted with interest that the hon. Member for Test said that it was difficult to separate the ship repair activities of Vosper Thorneycroft because they were linked with shipbuilding. In Falmouth there is no such link with the shipbuilding industry.

Unlike the nationalised industries, Falmouth Docks has constantly fought to maintain full employment for its work force, even to the extent of offering "social work" on pointless tasks to keep the work force intact as far as possible.

It is argued time and again that there is abundant evidence that the workers in the ship repair industry want nothing more than nationalisation. Let me disabuse the minds of people who hold that view. During the General Election of October 1974, Conservative Central Office, as is its customary and courteous habit, said "Mudd, you are in a marginal seat. Whom would you like to come down to speak for you?" I said "There is nobody on our side, but if you could lay on the Secretary of State for Industry he would be most helpful". Believe it or not, the right hon. Gentleman came and spoke in my constituency in favour of nationalising Falmouth Docks. In October 1974 my majority was one-third more than it was in June 1974 and three-and-a-half times more than it was in the General Election of June 1970. Let no one tell me that the workers in the ship repairing industry in Falmouth are clamouring for nationalisation. The Falmouth Docks are a classic case of docks that can be sustained by private enterprise, but equally they must inevitably fall behind target levels imposed by any State operations.

Steel and heavy components for Falmouth have to travel far greater distances than they do to any other dockyard in the United Kingdom, at much greater cost. Will that be taken into consideration by the Corporation's accountants? We suffer remoteness, even from London-based control. Now we hear suggestions that control should be on the Tyne, the Tees, the Wear or in the North of Scotland. We cannot face that remoteness. How will Falmouth fare if it is to be controlled from North-East England? I leave it to hon. Members to sort out where the base will be. The administrative charges at Falmouth at present are totally realistic to the cost incurred, but if it is to be a State offshoot what guarantee can there be to Falmouth that it will not have to carry a totally disproportionate burden of the national administrative charges?

What of investments for Falmouth? Will Falmouth get a deep-draught wet berth? Will the dry dock facilities be increased? I cannot at this stage ask the Government to comment on this because they will properly reply that it is for the Corporation to decide. But why are we setting up a Corporation if the Government cannot define the duties and decisions of that Corporation? Are we not creating a monster without at least attempting to establish the area in which that monster will work?

I accept, therefore, that I cannot challenge the Government on these specific details of the future of Falmouth, but I ask one positive question to which I hope the Minister will reply before the debate ends. Are the Government prepared to undertake that there shall be no redundancies, either directly or through the backdoor method of non-replacement through retirement, at Falmouth Docks until the end of 1978? Secondly, will the Government undertake that there shall be no question of the closure of Falmouth Docks being considered before 1980 at the earliest? If the Government cannot give these assurances, the 1,500 men now working at Falmouth Docks will realise that the closure of the power station at Hayle, the withdrawal of railway services, the cut-back in postal services and all the other phenomena of nationalisation are no longer a nightmare to them but a reality, and that they have more to fear from nationalisation than ever they had to fear from private enterprise.

7.33 p.m.

I am speaking on this occasion on behalf of my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) and also my hon. Friend the Member for Kingston upon Hull, West (Mr. Johnson), who, unfortunately, is elsewhere on parliamentary business. I speak also on behalf of a great many workers employed in the shipbuilding and ship repairing industry on Humberside and many firms which supply that industry.

On 30th April my right hon. Friend the then Secretary of State for Energy published his Bill on nationalisation. It contained a list of firms on Humberside which included the Drypool Shipbuilding and Engineering Company, the Goole Shipbuilding and Repairing Company Ltd., the Humber Graving Dock and Engineering Co. Ltd. and Brigham and Cowan Ltd. That Bill was received with acclamation on Humberside. It contained the nucleus of a sensible shipbuilding policy for maintaining a small shipbuilding industry within the national shipbuilding corporation. These firms are not engaged in the speculative building of huge tankers or in huge prestige projects. The firms produce workaday boats for trawling, fishing, the Navy and the offshore oil industry. We thought that those firms would create on Humberside a strong nucleus for a small shipbuilding division within the national corporation, thus giving proper recognition to the skill of our work force and the part it had played in the industry.

On 20th November my right hon. Friend the Secretary of State for Industry published his Bill in which were included the Goole Shipbuilding and Repairing Company, the Humber Graving and Engineering Co. Ltd., and Brigham and Cowan Ltd.—already nationalised because of the collapse of Court Line—but not the Drypool Shipbuilding and Engineering Company. We are entitled to ask why that company is not included in the list. No doubt the reply will be that in early September the company had gone into receivership. Throughout the summer it was troubled by financial difficulties, and the company was instructed not to tell its parliamentary representatives about those troubles. That instruction came from the Department, and that is what my hon. Friend the Member for Kingston upon Hull, East was told when he asked about it.

To be correct, I was informed that the advice given by the Civil Service to the Government was that the firm should not tell its Member of Parliament, which is equally bad. I should make clear that I have been addressing the workers today, and they demand nationalisation, particularly as the receiver pointed out that one reason for the company's failure was bad management.

I am grateful to my hon. Friend. We tossed up as to who should address the mass meeting and who should sit in the Chamber from 3.30 p.m. onwards in the hope of catching Mr. Speaker's eye. My hon. Friend addressed the mass meeting and I sat in the Chamber. It is for the House to judge who won the toss.

The company was formed in 1973 with over-eagerness by the capitalist gobbling-up of rivals. The company suffered from a glut of orders and was, therefore, unable to meet the expectation which it had expressed to its prospective buyer.

Instead of rationalising the company and honouring their commitment of 30th April, on the advice of the receiver and the Industrial Advisory Committee the Government have washed their hands of the situation and said "Oh, dear; we must sell off all these little companies to private enterprise." Three of the shipbuilding firms are to be nationalised, yet my right hon. Friend says that the fourth would be better off in private hands. Why would it be better off in private hands? The reasons for nationalisation which my right hon. Friend gave in his speech apply equally to Drypool. It suffers from bad management and bad organisation. That is not the fault of the workers.

We have not been allowed to see the receiver's report, nor have the workers and the unions. We have not been allowed to see the information given by the Industrial Advisory Committee, nor have the workers and the unions. What came out of the report was that it was the fault not of the workers but of management, and that came out strongly, clearly and directly. Because of management ambition, what we had looked for, hoped for and anticipated has been thrown to the winds of private capital on the basis that it could provide better security and jobs for the workers involved. Yet the Minister when he answered Questions yesterday on the Beverley shipyard—and it is significant that the hon. Member for Haltemprice (Mr. Wall) is not in his seat although Beverley and the Brough aircraft factory are in his area—said there was an engineering company interested in the yard. Which engineering company is it? Is it the one that was interested two or three years ago, which looked to it for expansion, but which has since shed one-third of its labour force either through voluntary redundancies or wastage? That company is not going to go to Beverley any more. How are we to have people looking at the Beverley shipyard when Beverley Council shoving up the rent to £14,000 a year just before its death? This is a fine move for a Tory council. There is to be emphasis only on new industry in the area. Is that going to help in this situation?

I am told that the receiver is happy about the situation. Who is going to take over the Beverley yard at a rent of £14,000 a year? What has happened speaks volumes for what we must expect from private companies. What is to happen at Selby? There have been a few nibbles at Selby and at the fitting-out yards at Alexandra dock, but nothing concrete has yet emerged. That has been happening in the constituency of my hon. Friend the Member for Kingston upon Hull, East, but in my constituency there is not even a nibble at the facilities.

We welcome the Bill because it is what I and my hon. Friends have always wanted, but the Government have sold the pass on Humberside. They have left out the firm with which we are concerned, the firm we had most hope for and which was to be for us the nucleus of our small shipbuilding and boatbuilding area on Humberside, the firm which could give strength and direction to what we need and want.

What is the Labour Party and union reaction locally to the situation? My hon. Friend the Member for Kingston upon Hull, East addressed a mass meeting today on Humberside. Four hundred workers attended, but I am surprised, considering the weather, that there were even four there. Firms in the area closed to show their solidarity with the workers. The Humberside County Council, unlike the Beverley Council, has gone to the full extent of saying that it will supply money, and whatever else is needed, to keep the firm going until it is nationalised. But this has received scant support from the Department. Hull City Labour Party put forward a scheme, which even the Tory Government accepted, for the formation of a holding company to buy viable assets from the Drypool Engineering Company. That, too, has received little support or recognition from the Department. I say to the Minister that, while I will go gleefully into the Lobby tonight to support the nationalisation of the aerospace industry, I will go with a heavy heart over what is being done in shipbuilding. In Committee and on Report I and my hon. Friends will do all in our power to make sure that the omission from the Bill of the Drypool Shipbuilding and Engineering Company is reversed.

7.45 p.m.

The Ulster Unionists do not accept that nationalisation of the aero-space industry will improve its performance, viability or exporting ability. Whilst it is clear that the shipbuilding industry requires extensive Government assistance, we are not convinced that nationalisation will provide a panacea for its ills, but rather that nationalisation will create new and fundamental problems.

It is difficult to argue that nationalisation of the aerospace industry will improve the rate and value of exports, which in 1974 were about 50 per cent. of its production and were worth £600 million. This is an industry which is profitable, whereas nationalised industries are not. It is a technological industry which requires freedom from the inexperienced persons who seek to impose their will for purely political reasons.

In the case of the shipbuilding industry, however, there is merit in the comment by the hon. Member for Henley (Mr. Heseltine) that the nature of British yards varies so much that a stereotyped approach cannot meet the particular needs of different yards. But when he went on to discuss the need for modernisation and the expenditure involved, without which we cannot hope to compete in the world market, I recalled my most recent visit to Harland and Wolff, which is perhaps the best equipped yard in the United Kingdom and needs little more immediate investment to meet competition. It also has a work force ready to meet the challenge of any competitor.

There is a serious omission from the Bill in the exclusion of the aerospace and shipbuilding industries in Northern Ireland. Lest hon. Members feel that that is an obvious contradiction of what I have said, I hasten to add that we shall table an amendment to include Harland and Wolff and Short Brothers and Harland in the nationalisation proposals. We believe that the industry in Northern Ireland is an integral part of the United Kingdom industry. As my right hon. Friend the Member for Down, South (Mr. Powell) said in the House recently:
"We are wholly determined—whatever may be the general policy of the Government, and whether we agree with it or not—that the policy governing the industry of Northern Ireland shall be an integral part of the policy governing the industry of the United Kingdom."—[Official Report, 28th November 1975; Vol. 901, c. 1218.]
This is the only course which admits to logic as well as political integrity. There are those in Northern Ireland who have listened to the Government deny that economic withdrawal is imminent, and I pay tribute to the Minister of State, Northern Ireland Office for his sterling work in the context of Northern Ireland industry. The one single fact of including Harland and Wolff in the nationalisation would be worth far more than a whole book of assurances. To isolate Harland and Wolff from the future shipbuilding corporation would be neither logical nor fair.

Since the Minister of State's plea to improve production at Harland and Wolff, there has been a dramatic reduction from 70 man-hours per ton to 50. One could well envisage the new vibration of confidence which would flow through that yard if it was told that it would share fully in the future planning of the shipbuilding corporation and that it was not to be isolated from it.

This is not wishful thinking. Harland and Wolff is admirably suited to diversification in view of the fact that super-tankers are no longer needed. The best kind of diversification is ship repair work. With the facilities of flow-line construction and the ability to lift 1,800 tons of assembled shipping, Harland and Wolff could make a major contribution to the revival of the shipbuilding industry in the United Kingdom—but only if it was included in the proposals for nationalisation.

I put it to the House that if Harland and Wolff was excluded from the proposals for nationalisation, the Corporation would not channel contracts its way when yards which were included in the nationalisation scheme were gasping for work. It is too silly to entertain even for a moment that Harland and Wolff would receive contracts which the shipbuilding Corporation channelled in its direction when the work was much sought after by yards here on the mainland. There has been little evidence in the past of benevolence in pushing contracts towards Harland and Wolff. Indeed, it is alleged that no Government repair work has been placed with the company for about six years. It is also alleged that tenders for new Government work are not encouraged. By including Harland and Wolff in the Bill for nationalisation, this Government could herald a new era of greater prosperity in Northern Ireland.

I turn now to the case of Short Brothers and Harland. Some time ago, the former Secretary of State for Industry said that there were three main reasons for keeping Shorts separate from a nationalised aircraft industry. They were: first, that Shorts was already effectively publicly owned; secondly, that it was of the greatest importance that the firm be considered in the context of the economy of Northern Ireland; and, thirdly, that Shorts' work as a self-contractor of large United States aircraft companies depended in part on its independence of the major United Kingdom companies.

The work force at Shorts accepts that the Government's retention of the share capital at Westminster is advantageous and that direct access to Ministers here is also very advantageous. But if Shorts is to be placed under the control of the Northern Ireland Finance Corporation, the view widely held in the firm is that nationalisation would be preferable.

Although in principle we United Ulster Unionists do not favour nationalisation, we demand parity between Northern Ireland industry and United Kingdom industry as a whole.

7.53 p.m.

First, I must declare an interest as an aeronautical engineer, although I am not involved in any way with the companies whose nationalisation is proposed.

We have before us a Bill which is a stark portrait of modern British Socialism. It has no dimensions. It is without feeling. But it has a very sinister meaning. It is not about jobs. It is not about skills. It is all about politics. It will do immeasurable harm to British aerospace, and that is the topic to which I shall address my remarks.

The Bill is yet another attempt by the Socialists to "con" us into believing that nationalisation will make life better for everyone. The Prime Minister has gone on record saying that it will cost us nothing because he will print Government stock. Like my hon. Friend the Member for Henley (Mr. Heseltine), I am inclined to wonder whether the stock is to be worth anything if anyone tries to sell it.

The people might well laugh at the farce launched by the Secretary of State if it were not for the fact that the warning which he sounded was one of a declining industry in aerospace. People must now begin to wonder about their jobs who did not expect to have to worry about job security before the right hon. Gentleman addressed the House today.

Last Thursday the Leader of the House said that he could not provide any time in the near future for a debate on unemployment. However, the workers in British aerospace would have expected us to be talking about their unemployment having listened to the Secretary of State today. It may be that we have got that debate after all.

The Bill is not about the creation of more jobs. It has nothing to do with jobs. But it is job security that the people in British aerospace are worried about today. My hon. Friend the Member for Gloucestershire, South (Mr. Cope) spoke of the extraordinary situation which developed at Filton last week when the British Aircraft Corporation had to declare redundant some 2,300 workers, whereas I understand that the officials of the Department had asked for many more to be declared redundant. They were people working on a British Government contract. Before this debate ends, I hope that we shall hear more about what went on between the Department and the workers at Filton last week.

The Prime Minister is reported to have said that he did not like what was goining on in the Labour Party. I think that that is the feeling of most people in the country. What is more, the shop stewards and workers in the aircraft industry do not like it either. Hundreds of them have poured into this House to lobby members of the Conservative Parliamentary Aviation Committee about their worries. We, and not Members of the Labour Party, have met Hawker Siddeley shop stewards from Hatfield, who are fed up with being dangled on a string because of what the Government have failed to do about the HS146.

On 5th November I asked the Minister for his forecast of job opportunities in the British aerospace industry over the next five years. All that he could say was that reliable forecasts were not available. Is this what workers have to look forward to under nationalisation?

I could not agree more with my hon. Friend, though I should have been more happy to hear a Government supporter say so as well.

Workers who are not worried had better start worrying. Workers not in trade unions had better start worrying even more. The former Secretary of State said on 1st May that workers not in trade unions should marshall themselves with management. They had better do something because under the Bill there is no way in which they can be consulted about their future job prospects.

This House has trod the weary path of nationalisation too often to believe the old stories any more. If there is taxpayers' money to spend, why do not the Government do what they tell everyone else to do and invest in success? We have a very successful industry. Why do not the Government back the aerospace workers instead of just spending their money?

In the British aerospace industry there are proven design teams full of good and new ideas who can compete with all comers. What do the Government do? They tell them "You do not know how to run your business. We do, and the chaps in Whitehall do. We shall reorganise you." I fear that, rather like Khrushchev, they may also say "And if it so be, we shall bury you." The workers must be warned that a Labour Government usually do them in: when it comes to the crunch in aerospace, a Labour Government buy American. The 50 F-111Ks stand as a memorial to the aircraft which did not arrive, but cost us £46 million. The 163 McDonald Douglas Phantoms and the 60 Lockheed Hercules which did arrive are monuments to the folly of Labour's aerospace policy.

It is not only at the past that we have to look. Let us look at the future and what is happening. I warned the Hawker Siddeley workers at Woodford that while they are waiting for the Government to decided what to do about the Nimrods on their line, the Government are spending the money that they have paid in taxes to work out how to adapt—

Yes, there is the Secretary of State for Defence, who is funding a study of how American aircraft can be adapted to the British defence system.

The situation at Warton is likewise equally worrying. Those workers had better be warned that the Americans are trying to sell into this country. Their representatives have been to the Ministry of Defence to tell the staff there to tell the Royal Air Force that they can do the job for half the price that it will cost if the MRCA goes on. In American terms, it is called "off the shelf". When it comes to it, it will be our workers who go back on the shelf.

The tale of Labour's aviation policy has always been one of redundancies and decline in the British aircraft industry. One wonders who has advised the Government. One has only to look back to a quotation a few years ago by the Chief Scientific Adviser to the Government to realise the advice that these chaps in Government are getting. He said:
"There is more technology in the little finger of one professor from the Massachusetts Institute of Technology than in the whole of British industry."
One wonders whose side these advisers are on.

The critical issue in the Bill, which has not been answered by anybody on the Government Front Bench today, is: how will the Bill help to sell a single extra aeroplane? Every time we are asked that question by those outside this House and every time we try to ask it in this House we are told by the Government "Wait and see." We are particularly waiting to see the names of the wonder boys who will be brought out into the bright glare of publicity as the Minister's hatchetmen on the organising committee of the British Aerospace Corporation.

There may well be some Tories. The Minister might need their help. Surely he will not ask people in the industry to share in the belief that he expressed today that they failed the nation.

Secondly, has the Secretary of State got secret reserves of retired air marshals being quickly genned up on economics?

On a point of order, Mr. Deputy Speaker. Will you ask Ministers on the Government Front Bench to pay some attention to the words of wisdom being uttered by my hon. Friend?

I value that intervention by my hon. Friend, because I was embarrassed that the Ministers may not want to hear what I have to say. The truth sometimes hurts. I want to know whether they have some secret reserves of air marshals and whether these gentlemen are now being given a crash course in economics. By the same token, should redundant production managers from industry be put in charge of RAF Strike Command?

I think that I can solve the mystery. I have been watching the Minister's lips closely. I think that the Secretary of State for Defence is telling the Secretary of State for Industry how much more than the £600 million the cuts in aerospace will be.

Order. This is a purely hypothetical idea that the hon. Gentleman is putting forward. He really is using up his hon. Friend's time.

I value my hon. Friend's intervention. I am sure that he is absolutely right.

The last point that I would make regarding the organising committee is that perhaps the Cabinet wishes to shunt some tired politician into the chairmanship of the committee to make way for somebody further to the Left.

Parliament and the public will look very carefully at the qualifications of these people to understand why these wonder men have been kept unavailable to industry for so long.

The British aerospace industry is second only in size to that of the United States in the free world. It is the linchpin of Western defence. The four companies proposed for nationalisation are the major outlets for the work of all 300 companies in this country engaged in aviation. Therefore, control of the four equals control of the 300.

Who wants nationalisation? The Government certainly do, but the voters certainly do not. Umpteen polls have been published to prove that. Indeed, one poll as long as a year ago showed that two-thirds of Labour voters did not want anything other than the status quo and the other third did not want any more nationalisation. With the drop in the standard of living, planned by the Government, and the increase in unemployment, unplanned by the Government, I am amazed that the Secretary of State should claim that nationalisation will help to save the nation.

One commentator recently wrote,
"The British aerospace industry is second to none in inventive genius and technical brilliance."
Therefore, one wonders why Boeing, Marcel Dassault, Messerschmidt and McDonell Douglas want nationalisation to proceed in this country. I will tell the House why. It is because they are confident that they will be able to hack to pieces the British Aerospace Corporation in the market places of the world. Certainly these foreign companies have every right to believe that the British aerospace industry cannot survive without the help of a Labour Government, because not a single speech is made nowadays by a Minister in the Department of Industry without his coming to the point where he says that this industry survives only on Government aid.

On 24th November the hon. Member for South Ayrshire (Mr. Sillars) asked what had been the level of assistance to space research in each of the last five years. The Under-Secretary of State replied giving figures of between £20 million and £30 million a year without once saying that the expenditure was on projects ordered by Her Majesty's Government and was not assistance at all.

But that is only the tip of the iceberg. Earlier this year the Under-Secretary of State gave the impression that £2,600 million in aid had been given to the industry over the past 10 years. Not once did he mention that these sums were primarily orders fulfilled for the British Government for the Royal Navy and the Royal Air Force in order to defend this country. It is exactly the kind of claim that a housewife who went into Tescos could make. She could say that she was aiding Jack Cohen.

Time and again the Secretary of State has completely failed to explain—not deliberately, I am sure, but because he probably does not understand—that the vast bulk of expenditure by the Government is not aid. It is for projects which the Government want carried out.

Why do the Government denigrate British aerospace workers? Why do they not challenge the false figures put out by the European Commission and the French trying to prove that the productivity of British workers is only half that of French, German and United States workers? Do they not realise that these people are including British engines and equipment in the aircraft that they are churning out as their own production? Why do they not stand up for the workers of this country?

British aerospace workers are second to none in their diligence and skills. They deserve better than the dalliance which the Government have given them over projects like the Hawker Siddeley 146 and the way in which they have failed to fund a single project in this country since they came to power in 1974.

All the time we have had double talk about the benefits of public ownership. The Government have demonstrated today that they do not know what is going on in the industry. It is well recognised in industry that no Government Department is capable of acting with the speed, the agility and the energy required to give British industry the chance to outsell its competitors. We cannot be surprised that companies are not interested or prepared to take part in the costly political pantomime of organising themselves out of business.

Lastly, I would sound a note of caution to the Government. Aerospace is very big business. In the world it involves sales of some £12,000 billion a year, of which £2,000 billion represents sales in Europe, half of which are generated in this country. This is the big league of world industrial affairs and is way above the capabilities of a third division Government.

For over 20 years I earned my living in the aircraft industry. The good companionship of the shop floor, the vitality and imagination of the designers and the sheer personal courage of those in flight test are the envy of aerospace companies across the world. These people do not want interference by the Government. They want a chance to get on with their jobs. They have done well by this country, and they should be left in peace to do the work they know best. The great designers of the British aerospace industry—Sidney Camm, Sir Geoffrey De Havilland, Mitchell, A. V. Roe and aircrews like John Derry and Tony Richards, with whom I was proud to work—must be looking down aghast at what is proposed by the Government of their country for the industry that they built for us all.

I must remind the House, at Mr. Speaker's request, that speeches should be confined to 10 minutes.

8.11 p.m.

Unlike the hon. Member for Hastings (Mr. Warren), I welcome the Bill. My only criticism is that it was not introduced a year ago, in which event the aircraft industry would by now be nationalised.

The first statement of the Government's intention for the aircraft industry on 15th January 1975 did not include Scottish Aviation Limited, which was the only part of the aircraft manufacturing industry in Scotland. Unlike my hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara), I am not complaining about this. I congratulate my right hon. Friend the Secretary of State for Energy on listening to the representations made by the shop stewards at Scottish Aviation Limited and on including SAL within the Bill. With the announcement that the financial condition for inclusion within the scope of the Bill had been reduced to an annual turnover of £7½ million, SAL was included.

Scottish Aviation Limited employs just over 2,000 workers and depends on Government-directed orders for over half of that work force. It would have withered away if it had been left outside the British Aerospace Corporation. The Corporation will have a work force of about 70,000, and there are fears that in any future rationalisation scheme the smaller units such as SAL would disappear. That is why it is necessary to get written into the Bill certain safeguards and thus ensure that the aircraft industry in Scotland not only maintains its present position but develops.

In its 40 years' history SAL has worked on aerospace activities and has employed a maximum of about 2, 600 employees. However, there is a total, much broader picture of the company as a purely Scottish company, and all sections of those employed at Prestwick are anxious that this should be appreciated at a time when relationships between the industry and the Government are changing, and specifically when the Bill to nationalise the aircraft industry is being discussed.

We at Prestwick hope that the Government have learned from the mistakes of the giant nationalised corporations—the British Steel Corporation and the National Coal Board—in which centralisation has gone mad and created problems for both Government and workers. I ask for guarantees from the Minister that British Aerospace will be a small, central Corporation dealing only with the overall policy and investment, that day-to-day management will be controlled from within the individual groups or factories and that the management, design and technical departments will be given full powers to take decision within the framework of broad Government policy. I ask for some element of Scottish control over the future activities of SAL as a member of the British Aerospace Corporation.

When we were negotiating with my right hon. Friend the previous Secretary of State for Industry, we got the impression that it was his idea to break away from the large centralised corporation and give more local control within the scope of the Bill to the various industries. I hope that my right hon. Friend the Secretary of State today has the same intention.

The hon. Gentleman is making a powerful case, by mistake, against nationalisation. He is asking for nationalisation in name without any of the effects that we know all too well happen when an industry is nationalised.

It is not a matter of asking for nationalisation in name only. We can learn from the mistakes we made in the past. We can take a broader and clearer look at those industries that are nationalised and ensure that in any future programme of nationalisation we do not make the same mistakes. The vesting date cannot come quickly enough for the workers at Prestwick.

Clause 27 of the Bill gives the Secretary of State power to exclude from public ownership a company which has disposed of certain assets or which has gone into liquidation or receivership. We want SAL when it is taken into public ownership to be a viable concern, as it always has been, and not a lame duck. There are two problems which face Scottish Aviation. I quote from a memorandum prepared by the Secretary of the Scottish Aviation Union Joint Action Committee at Prestwick. He said:
"We have two problems now, the immediate, and the long-term. The immediate problem can only be resolved by the injection of work now, and the long-term by the remounting of the Jetstream production line. It must, however, be pointed out that for departments such as Design, Stress etc., the Technical Staff, Jetstream forms part of the immediate problem, and to that end, an early decision, and a positive one is the only answer."
Like all other sections of the aircraft industry we at Prestwick are faced with redundancies. During the summer the hon. Member for Ayr (Mr. Younger), my hon. Friend the Member for South Ayrshire (Mr. Sillars) and I met Lord Beswick and put a scheme to him to remount the production line for a civil version of the military Jetstream, using 10 of the 26 planes then ordered by the Royal Air Force as a method of retaining the present work force up to the time of nationalisation. This project was turned down by the Government on the ground that it was not a viable proposition.

I want to quote from a letter written by Jimmy Milne, the General Secretary-designate of the Scottish Trades Union Congress, to Lord Beswick on this point. He said:
"The issues which seemed to arise were: (1) the date of the market survey which SAL were using; (2) the price at which the Jetstream could be sold on the American market;
(3) the number of orders required to make the proposition a viable one; and (4) the number of workers who would likely be involved in the Jetstream programme if, in fact, it got off the ground.
The Management have told the work force that they were not informed of the detailed reasons why the Government found it necessary to turn down the application for financial assistance. As a result, the work force have now some doubt as to whether or not the Jetstream project was fully evaluated before the Government took its decision."
I ask the Minister tonight to give us some assurance that if that statement is correct we shall have a revaluation of the Government's opinion on the project.

Does not the hon. Gentleman agree that SAL and the Jetstream project would have a better chance of surviving if they were free from the dead hand of nationalisation that the Bill will impose on the entire aircraft industry?

If the hon. Gentleman had been present earlier, or at any time in this debate, he would have heard that SAL is not a Scottish company.

It is a company under the control of the Laird Group, which is a financial holding company. Therefore, we are not dealing with the benefits to be derived from nationalisation as against the benefits to be derived from a purely Scottish company producing aircraft. We are talking about whether Scottish Aviation should be controlled as part of a nationalised concern, with independent control in Scotland, as against control by a financial holding company in London which has no interest in building aircraft.

No, I shall not give way again.

A favourable decision on Jetstream is not enough. There is the immediate problem of the redundancies that the workers will face at the end of January and in subsequent months.

The hon. Member for Ayr will have noted that I have been putting forward his name quite a lot tonight. In Ayrshire, although we have political differences, we always have great friendship as regards fighting for the future of SAL. With the build-up that I am giving the hon. Member, I am hoping that he will enter the Government Lobby and not vote against nationalisation in order to try to continue Tory policies. Along with my hon. Friend the Member for South Ayrshire, the hon. Gentleman and I met the Minister of State, Scottish Office. We had a full and frank discussion with him on this immediate problem of the redundancies facing these workers at the end of January. The Minister of State suggested that apart from Jetstream there might be other work for which SAL could tender—for example, Ministry of Defence contracts—and that applications for financial help under Sections 7 and 8 of the Industry Act should be made. I ask my right hon. Friend the Secretary of State to see that those applications receive quick consideration by the Government, because if we do not do something to put more work into SAL it will not be included in the nationalisation proposal because it will not be there on vesting day.

In conclusion, the future of Scottish Aviation within British Aerospace is as a producer of light aircraft for the United Kingdom and European market and with an export trade to North America and the Middle East. Its position can be maintained as a viable Scottish part of the British aerospace industry. If the Government will help to find a quick solution to the immediate problems about which I have spoken, I see a bright future for Prestwick and Scotland. That is why, along with my hon. Friend the Member for South Ayrshire, I shall be supporting the Bill tonight.

8.24 p.m.

My hon. Friend the Member for Hastings (Mr. Warren) declared an interest in this debate. I also have to declare an interest in it. It is one of the strongest interests that any Member of this House can have. It is the interest of my constituents, thousands of whom are employed by the British Aircraft Corporation, which has two parts of its military aircraft division, at Warton and at Samlesbury, in my constituency.

Listening with the greatest care and, indeed, anxiety to the Secretary of State when he opened the debate, I began to wonder—as I am sure many other hon. Members on both sides of the House began to wonder—whether the Secretary of State really knew—or knows, indeed-what has been going on in places such as Warton and Samlesbury. Does he realise that in these two parts of my constituency, produced by the military aircraft division of BAC there are coming off the production line the finest military aircraft and the most wanted military aircraft in the world? They include products such as the Jaguar, the Anglo-French aircraft, which is probably the best small long-range aircraft available today. Does he realise that already the export orders for this aircraft are worth £300 million? Does he understand that the future of this aircraft in the export market is likely to bring in between £500 million and £1,000 million? How can he say—if this is what he is saying—that in some way the British Aircraft Corporation or the aircraft industry has let the country down?

The Strikemaster, another product, now has orders of between £50 million and £60 million, with tens of millions of pounds' worth of future orders in the pipeline. The MRCA, which is coming up to production next year, will bring in an export order that must be calculated in thousands of millions rather than hundreds of millions of pounds.

As my hon. Friend the Member for Hastings has pointed out—and I only hope that the Secretary of State for Defence, who was in the Chamber at the time when my hon. Friend was speaking, listened with the greatest care—the Americans are out to replace the MRCA with an aircraft of their own, and there will not be one American tear shed down one American cheek if this happens, but thousands upon thousands of my constituents will be put out of work if that is allowed to happen. Let the Government beware and take note, because neither we on this side of the House, nor, I suspect, those on the other side of the House, would tolerate such a humiliation for our aircraft industry.

Let the Secretary of State remember also that the maintenance of the old Canberra bombers, now used by some 20 air forces in the world, is bringing in tens of thousands of pounds as a result of keeping those bombers in the air. Not only that, but there is the major support contract with the Royal Saudi Arabian Air Force which will be worth hundreds of millions of pounds in the next few years. Because of this, I do not think that I exaggerate or persuade the House with any kind of hyperbole when I boast, as I do with great pride, that the military aircraft division of the British Aircraft Corporation is the biggest, the most successful and the most profitable of all enterprises of its kind, certainly in Europe, if not in the world.

This Bill, as I see it, and as I believe many of my constituents who will be affected by it see it, puts in peril the future employment in which they now have a pride and which they feel they are in danger of losing. This industry is becoming a victim of the obstinacy of the Government, who are determined to impose on this prosperous and sensationally successful industry a policy which the majority of people want to reject. Industry is being systematically discouraged and exhausted by policies of this kind, when the cri de coeur of the people of this country is to be left alone by the Government so that they can get on with the job of restoring our fading fortunes.

I saw last week, as many others will have seen, in the Lobby a number of trade unionists from my constituency, some of whom are employed at the British Aircraft Corporation. Their fear was the fear of unemployment. I believe that this Bill will give substance to that fear and may well bring to those people the thing that they fear most of all, the loss of their present jobs.

I am delighted to be able to support and warmly approve the words spoken by the Secretary of State for the Environment in Costa Rica recently. He said that a mixed economy was essential to social democracy, and went on:
"Complete State collectivism is, without question, incompatible with liberty and democracy."
This Bill is another step towards complete State collectivism. It is incompatible with the health and future strength of the British aircraft industry, and it promises us the bleakest of winters and a barren spring.

8.31 p.m.

I welcome the opportunity of taking part in this debate. I shall confine my remarks to shipbuilding and ship repairing. It is significant that the speeches I have heard from the Opposition have confined themselves to the aerospace industry. Stripped of all the embroidery, we are discussing a very important political question which must be examined on the basis of contributions by Members of the Opposition tonight. They said that the question of people did not enter into this debate.

I represent an area with a history of shipbuilding and ship repairing equal to that of any part of the United Kingdom. In the pre-war period, more than 20,000 workers were employed in the industries on Merseyside. Today, fewer than 2,000 people work in ship repairing. The Opposition must be reminded that, through the system of private enterprise and those who own and control shipbuilding and ship repairing, we have seen a massive diminution in the number of jobs available. The irresponsibility of those who own and control the industry—

I shall not give way. I shall follow Mr. Speaker's advice and limit my speech to 10 minutes. The reason why this industry has gone into obsolescence like many other industries is the irresponsiblity of those who own and control it. They mulcted the industries dry for profits and then abandoned them. There has been no level of investment maintained in shipbuilding or repairing to sustain the industries. In terms of competitiveness, other countries have constantly shown their superiority. For this reason, in many cases they have newly-developed industries and the level of capital investment per worker is far greater than that in British yards.

Members of the Opposition who argue that nationalisation has failed in this country should remember that, but for the public sector, British capitalism would be on its knees. It has been maintained and sustained by the public sector over the years.

The results of this debate and the general political question are of tremendous importance. Unemployment is rising almost daily on Merseyside. Its ship repairing industry once commanded the respect of the world, but now it is reduced to the lower regions of the league table in terms of tonnage built and repaired. Equipment is in use which was in existence at the turn of the century. Graving docks have fallen into disuse because of decades of neglect.

The continental ports enjoy a system which is designed to meet all the requirements of their users in terms of providing complete quayside facilities for carrying out running and voyage repairs. This system does not exist on Merseyside, and this cannot be blamed on the men who work in the industry. They do not control the destiny of the industry to the extent that the Conservatives claim. British capitalism has abandoned ship repairing and shipbuilding in Britain, and this has reduced them to their current chronic state.

Our discussion tonight centres on the question of whether or not we should have a shipbuilding and ship repairing industry. That is what the Bill is about. If we do not nationalise them, what is left of those industries—and it will soon be very little—will quickly go down the drain. There is a world market for British ship repairing and British ships. But only by nationalisation will our industries be properly prepared, and properly rationalised, to face competition in the world market.

On Merseyside thousands of men are being laid off and hundreds are on standby pay. They do not want to be paid merely for standing by for work, but lack of planning and a lack of centralised control have imposed it upon them. This jungle of administration has rendered ports like Liverpool unable to obtain work for their yards.

We have been constantly approached by both sides in the industry about the state of the industry. We have been clearly told that, if things continue as they are, one of the firms will go under before next spring and possibly the second will follow it. We are therefore contemplating the possible further loss of job opportunities in an area which is already badly hit by unemployment.

I therefore welcome the Bill. Without it there will be no British shipbuilding and ship repairing industry. From what I know of the workers in the industry, they are not so much welcoming the Bill as demanding to know when it will become law so that they may enjoy greater security and begin to plan their industry in the way in which it should be planned, under State control and with a greater degree of worker control.

8.39 p.m.

Having spent my working life in the shipbuilding industry, and still having an interest in it, I was astonished to hear the assessment by the hon. Member for Liverpool, Garston (Mr. Loyden) of the effect of nationalisation on shipbuilding. If he thinks that by nationalising shipbuilding we shall make jobs more secure, he has a big shock coming to him. Would he like to join me next week when hundreds of railway workers are to come here from Scotland to protest about job losses there? Last week the steel-workers came. Is he aware how many jobs have been lost in the State-owned industries of rail, steel and coal alone since 1959? The figure is a staggering 763,000.

Does the hon. Gentleman accept that on Merseyside we had 20,000 workers in the ship repairing industry just after the war and that we now have fewer than 2,000? That is not a publicly-owned industry but a private industry.

I accept that ship repairing has declined on Merseyside. There are many reasons, as the hon. Gentleman knows from his experience in the industry. History shows that nationalisation is not a panacea to preserve jobs. The workers in the Clyde shipyard and, even more, the workers in Scottish Aviation have far more reasons to fear for their jobs because of the Bill than they would if we did not have nationalisation. The hon. Member for Central Ayrshire (Mr. Lambie) said that the problems of Scottish Aviation were twofold. After the firm's years of success, in which it has expanded and provided good wages and employment, its real problems today are the Labour Government and defence cuts. There is no security.

As time is short I shall make only a few points, with which I hope the Minister will deal in his reply. First, it is unfortunate that throughout the debate it has been suggested that shipbuilding is a dead or dying and inefficient industry. Even if that is true in some cases, it is certainly not universally true. In my part of the country we have firms such as Scott-Lithgow and Yarrow which are successful, profitable and modern. They have reorganised, and are a credit to British shipbuilding.

We must remember that the problems of shipbuilding are international. Many countries' shipbuilding industries are in a more serious state than ours. I hope that my hon. Friend the Member for Henley (Mr. Heseltine) will bear this in mind when considering the relative efficiency of industries. I constantly hear tributes in the House to the efficiency of our agriculture. No one dares to suggest that agriculture is in any way inefficient, but we constantly hear how inefficient shipbuilding is. What is not said is that it is one of the few industries in Britain which has had to face international competition with no tariff or quota protection—in many cases with negative protection because of unfair foreign subsidisation. But agriculture is the most highly protected industry in the country. On that basis it is impossible to say that shipbuilding is inefficient.

My second point concerns the so called investment strike. How many hon. Members realise that the private sector of shipbuilding alone has invested £77 million over the past 10 years, with little Government assistance? [Interruption.] Let be tell the hon. Member for Liverpool, Walton (Mr. Heffer) the precise aid figures—not my figures, but the Government's—including assistance under the Industry Act and other forms of aid. Of the total of about £200 million provided in loans and grants since 1965, including the money that went to Harland and Wolff, only £26 million went to the privately-owned companies, which account for more than half the employment in the industry. Most of the total sum is made up of loans, which are being paid back or have been paid back. Grants totalled £8 million, of which £5,800,000 was given to enable British industry to secure particular orders for new types of ship during the Geddes reorganisation period, at the Government's request. I hope that the hon. Gentleman will bear in mind that the amount of free cash given comes to less than £3 million, out of £200 million.

I cannot give way, because time is short.

When we consider the cost to the taxpayer and the costs that will result from the Bill, I hope that the hon. Gentleman will bear in mind that the three firms which are already State-controlled have not only eaten up a massive sum of public money but are running at massive losses.

It is interesting that hardly any Labour Members have given any indication how nationalisation would help, unless it was when the hon. Member for Central Ayrshire said that he hoped that it would be the normal kind of nationalisation. He hoped that everything would carry on as normal, except with a different merchant bank.

I hope that hon. Members, particularly the hon. Member for Greenock and Port Glasgow (Dr. Mabon), who has the successful Scott-Lithgow firm in his constituency, will appreciate that the Government—as with grant-aided schools and many other things—are going ahead with this scheme for ideological reasons at a time when they have hardly any cash available. If the cash is available, why are we cutting down on the building of schools, hospitals and roads? It would be a tragedy for shipbuilding if it was to be starved of the cash. The only possible advantage which might accrue from nationalisation would be the availability of investment finance at a difficult time. However, I fear that such cash will not be available and that there will be a further rundown and more jobs loss.

I ask the Minister of State to say that if nationalisation goes ahead—and we will try to stop it—he will obtain an assurance from the Treasury that investment capital will be available over the next two or three years for the shipbuilding industry. We must always bear in mind the substantial investment made by the private sector from its own resources. The industry has found it almost impossible to raise money over the past two years as a result of the uncertainty that has been brought about by the threat of nationalisation.

Is the hon. Gentleman implying that with the mines and the railways, for instance, it was the impending threat of nationalisation which caused those undertakings to be run down to such a dreadful degree before nationalisation?

What I am saying is that we have lost many hundreds of thousands of jobs since nationalisation and I do not want to see the same tragedy occurring in shipbuilding.

Can the Minister justify the absurd basis for compensation which has been adopted? This is based on market prices over a particular period. What the Secretary of State did not say is that only one of the 40 firms—Robb Caledon—is a publicly-quoted company in its own right. All the others are private companies or parts of groups. How will the Government create a proper system of compensation based on the market quotation of one firm in Dundee which happens to be a publicly-quoted company embracing all of the activities to be nationalised, bearing in mind that this quotation covers a period when there were dividend limitation and other difficulties?

The Minister must know that this procedure is monstrously unfair. Profitable firms such as Austin and Pickersgill, Yarrows and others are being bought at ludicrously low prices. Surely there is a case for reviewing the whole of the compensation principle. I hope that the Minister can tell us that he will be flexible about this in Committee.

Shipbuilding is facing enormous international problems, such as unfair competition and over-capacity. We have had two years of total inaction during which it has been impossible for the industry and the unions to get down to the problem of finding a solution. This has been because of the uncertainty created by the prospect of nationalisation. My fear is that when we reach "Day One" of nationalisation there will not be any fundamental action, any change or sense of urgency. I fear that there will be more committees appointed and American consultants employed to do work that has already been done. I appeal to the House to reject the Bill and allow trade unions and management to get together—as has been promised—to work with the Government and to reach sensible solutions instead of imposing upon us idealogical solutions which have solved nothing for other industries and will create serious problems for the shipbuilding and aircraft industries.

8.50 p.m.

Like so many hon. Members on the Conservative Benches, the hon. Member for Glasgow, Cathcart (Mr. Taylor) seems to have political schizophrenia whenever he discusses the nationalised industries.

The Opposition continually say that the nationalised industries are run by strong and militant trade unions which prevent change taking place or productivity arrangements being made, but when it suits them they say that 763,000 workers in the nationalised industries have lost their jobs since nationalisation. We do not dispute that figure, but we point out that up to now the Government have taken into public ownership simply the basic and often bankrupt industries necessary to keep private industry going and so that it can continue to exploit the situation. We are fed up with simply taking into public ownership basic and unprofitable industries. The Opposition's main argument is that the aerospace industry is not a lame duck. Our purpose is not simply to take lame ducks into public ownership.

I wish to say on behalf of my constituents, a large number of whom are aircraft workers, and myself that we welcome the proposed public ownership of the aircraft industry. There is no question but that over decades hundreds of millions of pounds in public money has been injected into the industry in launching aid, research and development and the procurement of civil and military aircraft. Last year about £174 million of public money was spent on research and development. Apart from being the industry's largest customer because they take two-thirds of all its output, the Government's assistance is such that without this public money there would not be an aircraft industry. The industry's future depends on the constant injection of public funds.

As my hon. Friend the Member for Kingswood (Mr. Walker) said, what is lacking is public accountability and control. There have been plenty of examples of wasteful duplication of research and development and production in the aircraft industry, pushing up unit costs. The industry's technological skills, expertise and creativity have been thwarted by inept decision-making by management which has failed time and again to translate technical achievement into sales. Results of research and development based on public financial support have often been handed on a plate to competitors overseas, for their exploitation and profit creation.

Management has failed, in my judgment and in the judgment of my constituents who work in the industry, to create the kind of environment which challenges the potential and skills of those who work in it. Numerous projects have been partially developed and then cancelled. In the last couple of decades there have been periodic waves of pessimism and optimism in the industry, matched by redundancies of aircraft workers, who have been used by the employers more or less as an economic regulator—making them redundant, taking them on again and so on.

My hon. Friend the Member for Kingswood said that as Members of Parliament for the Bristol constituency we are very concerned about threatened redundancies in BAC, but we do not need to be lectured by hon. Gentlemen on the Opposition Benches about protecting our constituents' jobs. It is the policies they advocate—cuts in public expenditure—which have caused unemployment to rise to 1½ million. If they had their way, it would go up to 2 million. We are concerned about the threatened redundancies at BAC. We hope that the Minister will come to Bristol, meet management and workers and explain the position, because we are not satisfied.

I am not convinced, as the Opposition seem to be, that this situation has not been created by management. It is strange that management should wait until nationalisation proposals are on the table before announcing redundancies. My constituents in the aircraft industry have lived through one redundancy after another, irrespective of the Government in power.

I shall not give way. With all due respect, the hon. Gentleman refused to give way to me earlier.

The workers in the industry are also concerned about the possibility of the industry coming under foreign control. The Opposition have shed many crocodile tears during the debate, but if they had the opportunity they would pass the British aircraft industry over to a European private consortium without blinking an eyelid. The aircraft workers fear that the industry will come under American or foreign control, and that is another good reason for public ownership.

The workers in the industry believe that public ownership can bring about a concerted national approach, which is long overdue, co-ordinate and plan demand forecasting and marketing, develop a planned purchasing power and improve relationships between makers and users of aircraft. It can also ensure that the technical achievements of the workers in the industry are translated into sales.

Those who work in the industry are proud of its record, especially of its export record. On the other hand, no Opposition Member went even half-way towards suggesting that 50 per cent. of the exports come from Rolls-Royce, which is a publicly-owned firm. Half the exports are engines and reconditioned engines, but no mention was made of that. The industry continues to push forward the frontier of technological advance. Only under public ownership can we continue to have an aircraft industry.

Clause 2 of the Bill relates to industrial democracy. The workers I represent in the aircraft industry have made clear that they want public ownership, but a different kind of public ownership from that which we have had in the past. Nationalisation and Lord Robens do not make Socialism. The workers would like a committee to be set up almost immediately to begin to develop ideas on the organic growth of industrial democracy, which, we believe, can come only from the shop floor.

I have in front of me a cutting from the Daily Telegraph, which states:
"Lord Nelson, Chairman of General Electric, defended the group's decision to give £25,000 each to the Conservative and Liberal Parties".
He gave that money because he believed that the Conservative and Liberal Parties would fight the nationalisation proposal. Having sat through practically all the debate, I have to say "I am afraid. Lord Nelson, you have been robbed".

9.0 p.m.

I must correct the hon. Member for Bristol, North-West (Mr. Thomas) on one point. He may kid himself that BAC management has created unemployment on the Concorde line, but he should know that the decision was made by the Government he supports.

Having sat through most of this debate, I can fairly say that the case for nationalisation of the aerospace industry has not been made out. The Secretary of State spoke with the enthusiasm of someone who disliked what he had to say and had not much stomach for the arguments he put forward.

We were given three reasons for this unnecessary Bill. The Secretary of State spoke of the need to restructure the aerospace industry and for proper accountability to the Government, and he said that under the Bill the industry would be made more efficient. Yet nowhere in his speech did he answer the challenge made to him by the Society of British Aerospace Companies
"to state by what means the industry's performance would be improved as regards exports, profitability and employment security."
Those are three measures that I suspect all of us would wish the Bill to achieve. Could it be that the Secretary of State did not answer that challenge because he could not do so? The export record of the industry is second to none. Every working day in 1974 it was earning £2 million for our country, and this year it will sell overseas products to the value of £631 million.

Only today BAC has announced a huge order for guided missiles from Iran worth £186 million. In terms of profitability it has made a success of all its civil aircraft projects, including the Trident, the BAC111 and the HS748. In terms of employment security it has collaborated with France and Germany on the Concorde and the MRCA. It has looked into the future and seen where the future of the aerospace industry belongs. Therefore, it has lived up to the three requests that any of us would make of the industry. For some reason, however, that is not good enough.

BAC now has the chance to enter into partnership with the Japanese on a new version of the BAC111, which if it goes ahead must mean many more jobs at Filton. But on Saturday we were told that the Japanese were looking askance at a partnership with BAC because they did not care for the thought of nationalisation and what it would do for the industry. Can we blame them? Nationalisation in virtually every industry has failed to prove itself in terms of industrial efficiency, successful organisation, cheapness or the best use of resources.

That was borne out in a Written Answer by the Secretary of State in August which, apart from pointing out the large sums of money which had been poured into the nationalised industries, made clear that their return on assets was less than 50 per cent. of those in the private sector. This must mean that the resources of the industries were not being wisely used.

In view of that record, anyone might have expected the Secretary of State in terms of these nationalisation proposals to have looked for something fresh and something which would have demanded accountability from the aerospace and shipbuilding industries, in a different way to what has gone before. But there is nothing new in the Bill. It is as though the Government could find no fault in those industries which have been nationalised and, worse, still, they had no ideas about how to improve the performances of those industries or of any further industries that they might have in mind to take into public ownership. Yet the Secretary of State had the nerve to tell us that by this measure he would improve the efficiency of the airframe industry.

I ask the right hon. Gentleman what are his yardsticks. How will he determine whether he has improved the efficiency of the industry when, apparently, the yardsticks he will use have proved so valueless in those other publicly owned industries?

The right hon. Gentleman also stressed the importance of restructuring the organisation of the industry, as though the aerospace industry was a loss-maker instead of one which turns in huge profits and thus vast sums of taxation which help to prop up the ailing nationalised industries.

The truth is that the Secretary of State has no new yardstick. He cannot answer the Society of British Aerospace Companies' challenge because he has no answers to give it. He is nationalising, as a Socialist always nationalises, because it is written on the Socialist tablets of stone, and our nation must suffer the consequences.

Let me tell the Secretary of State something that he may have forgotten. It may be unreasonable to expect a Socialist not to want to nationalise, but I remind him that, when he takes over these industries, the money that he will be using to prop up their inefficiency will be money provided by private enterprise and the taxpayer. Whereas he may have the right to nationalise, he has also a duty to answer to this House and to the nation for the way in which he spends the money that he has taken so freely and squandered so wilfully.

The moment has come when the Government must realise that it is not enough to pursue Socialist dogma without regard to national efficiency or the return on national resources. At a moment when, as the right hon. Gentleman himself admits, the civil side of our aerospace industry is moving into a very difficult time, it seems hardly credible that we should stand the industry on its head, restructure it, force mergers upon it, set up management teams and introduce all sorts of levels of control into it, including the endless interference of the Secretary of State. If we had half a wit about us, we would realise that at this time our industry should be seeking collaboration with Europe to build those aeroplanes that the Americans seem to build so successfully and to capture that European market which the Americans consider their own.

This measure is an unnecessary and wanton piece of Socialism. I shall vote against it with more than usual enthusiasm.

9.4 p.m.

With the exception of three speeches I have heard the whole debate, and I should like to pay tribute to the brevity, pungency and cogency of a very large number of speeches, including some from Government supporters.

The Under-Secretary of State has a formidable task ahead of him in replying to the debate. The Secretary of State did a dutiful job on his Second Reading speech without much enthusiasm and without any justification for what the Government are doing, and he left unanswered a very large number of questions which hon. Members then proceeded to raise.

The Government have made the job of the Under-Secretary very much harder by what our predecessors of the seventeenth century would have called a "tacking" Bill. The Bill tacks a large number of subjects into one piece of legislation, and it has made the task of hon. Members in putting the case for their constituents and for the public very much harder.

I do not propose to repeat the powerful arguments advanced so effectively by my hon. Friend the Member for Henley (Mr. Heseltine). It is commonly agreed—I should have thought by large numbers of Labour Members—that the Bill is purely a political Bill. It is not even ideological. It is a cynical concession by the Government to the Left Wing. It has nothing to do with the public interest and very little to do with ideology but a great deal to do with the Government's survival. I cannot believe that most members of the Cabinet think that the measures in the Bill will be of any benefit to the country or the industries concerned. The Bill is a pure sop to the Left.

The country does not want more nationalisation. Some workers in the industries concerned may want it for the reason, as I shall try to explain, that will increasingly embarrass the Government—a belief that nationalisation will reinforce job security. The Government will have a bitter responsibility if by any double talk and evasions they encourage any unjustified confidence. Some middle managers may even want nationalisation, for the same understandable but unsoundly-based reason that nationalisation defends jobs.

The fact is that nationalisation as we have seen it all too often over the past 30 years tends to transform whole industries from being servants of the public to being agencies for job protection. The customers are thought not to matter so much once the bottomless purse of the taxpayer is presumed to be available to fill any gaps that lack of public custom leaves. An industry that is producer-minded instead of customer-minded is already on the way to being crippled.

The private enterprise constraints—the discipline, such as it is, that individuals know that if they do not co-operate with management and the survival of their firm and their jobs may be at risk—are though not to apply. It is thought that nationalised industries are somehow immune from the bankruptcy laws and that the Government always have taxpayers' money with which to subsidise the industries. This is the way to cripple competitiveness and demoralise quality, yet it is the mechanism which the Government propose in the Bill to shackle on to five different, but in two classes partly related, industries.

It is true that some nationalised industries have been streamlined. The hon. Member for Greenock and Port Glasgow (Dr. Mabon) made a powerful speech about streamlining. He quite rightly said that successive Governments had managed to streamline the nationalised industries at some period. But with what difficulty? We can remember the streamlining of the coal industry. By the act of nationalisation the Government make streamlining that much harder because the Government of the day have the treble task of being Government, owner and manager.

The Government will land themselves more and more with the desperate task of having to reduce the overmanning that is now present in so many nationalised industries. Overmanning does not cure unemployment. It increases unemployment because it weakens our competitive ability and thus reduces our capacity to generate secure jobs. The Government are raising expectations. It is far better to abandon double talk, otherwise their task of handling the nationalised industries will be made much more difficult.

The Bill has been introduced not at a normal time but at a time when the Government are introducing defence cuts, when there is a world recession and when, as part of the results of the world recession, there is world over-capacity on a dramatic scale in shipbuilding. It seems to us that the Government are landing themselves with lay-offs or subsidies on a massive scale if they go ahead and nationalise these industries.

Where will the subsidies come from? Rescues, jobs to make work and overmanning cost money. They have to be paid for either by increasing the taxation on healthy industry, which itself will cost other jobs, or by printing fairy gold and increasing inflation. If these industries are nationalised we shall face a succession of—

Before the right hon. Gentleman leaves the double talk to which he has been referring, may I ask whether he is aware that the taking into public ownership of the shipbuilding and aircraft industries was placed in Labour's manifestos in the last two General Elections and that, as a result, the nation elected a Labour Government to go ahead and do just that? Whilst he is on about double talk, if it is double talk to carry out a nationalisation programme, why did the Tory Government take Rolls-Royce into public ownership?

It is true that the Government, who were elected by only 28 per cent. of the people of this country, by performing their wrong-headed and perverse pledges, will make this country poorer than it need be. They are harking back to a manifesto which was itself a monument to the excessive influence of the Left Wing.

I turn now to the aerospace implications of the Bill. I cannot compete for knowledge of the industry with a number of hon. Members who have taken part in the debate. In particular, I pay tribute to the penetrating speeches by my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) and my hon. Friend the Member for Hastings (Mr. Warren).

I ask the House to accept that, in proposing to nationalise the aerospace industry, the Government are taking an unprecedented step, even for a Labour administration. This is the first time that a manufacturing industry serving world markets has been put into a nationalisation Bill. This industry has a splendid record for design innovation and for serving the British and world markets—a service which could have been even better if successive Governments had not made what have proved to be unfortunate decisions in cancelling some defence contracts.

My right hon. Friend the Member for Pavilion emphasised that in this industry the customer is the king. The customer is far more important, as he so rightly said, than the owner. Yet the Government, by clamping nationalisation on to an industry which must be sensitive to needs from all over the world, risk wrecking it.

There is a long lead time in this industry. There will be a certain momentum even if the industry is nationalised. But the fruits of 10 years hence are being prepared today, and they are being prepared only by the skill and talents of the leaders of the industry and the teams who work within it. We in this country with our aircraft industry and all its successes face immensely powerful competition. It cannot be sensible, even at the behest of the Left Wing—let alone at the behest of the Left Wing—to cripple the industry with the cumbersome control mechanism proposed by nationalisation.

Many workers in the industry are said to welcome the proposed nationalisation. I read a pamphlet produced by workers at the Bristol aircraft factory. I pay tribute to the no doubt good intentions of those concerned, but I was alarmed to find that throughout that long pamphlet there was no reference whatsoever to the obtaining of work or the function of management in taking the right decisions to secure jobs. There was a great deal of reference to the function of management in negotiating wage claims, but there was no recognition by any word whatsoever of the desperately difficult task, in world competition against powerful competitors, of identifying the market for all kinds of aerospace requirements all over the world for many years hence.

I remind the House that the firms with which we are dealing have been successful because they have had the benefit of very successful leadership. A good commercial leader will galvanise, inspire and correct. He will take risks. He will make decisions. He will have a passionate involvement in the survival of the business and of jobs, and a passionate concern to make profit, because that is the only way that jobs can be secure. Above all else, he will have a skilled judgment.

The job security of the men concerned and the people who wrote that pamphlet depends on market perceptions, design skills, engineering quality, cost discipline and management control capacity, all led by the outstanding leaders and all embodied for those leaders in the profit and loss account, which alone spells survival or extinction in a market economy. Untune that string, relax that discipline by requiring the leadership to seek authority from some nationalised board and Whitehall in addition, and the dedication to customers will dwindle, the job security will diminish and the dynamics of decision-taking, on which wealth creation and job creation depend, will tend to evaporate.

Long lines of communication are bad enough. Politicisation—a hideous word for a hideous fact—is already bad enough in this industry, with customers from abroad of whom we approve one year and disapprove the next. Yet all this would be much worse if the industry were to be nationalised. At the same time, accountability will dwindle. We all know that the industries with their profit and loss accounts are far more open to inspection than the nationalised industries, on which no one can ask any questions and no one can discover any facts.

However, we are told by hon. Members, and I am sure they are genuine—the hon. Member for Welwyn and Hat-field (Mrs. Hayman) told us so, and I entirely believe her—that some of the workers want nationalisation. Other hon. Members say that other workers do not want it. I believe that to the extent that some workers want nationalisation, and even some middle managers want nationalisation—[HON. MEMBERS: "Millions of them."]—in the industry we are already seeing the beginning of that producer syndrome, that reliance upon the unbankruptability of a nationalised industry which has led this country so far into decline already.

It is no comfort that some of the workers, for the wrong reasons—which the Government will find infinitely embarrassing—want nationalisation. Look at the benefits that we get already from the industries to be threatened by nationalisation. Did the House take in a remarkable fact mentioned by my hon. Friend the Member for Henley when he said—it is a remarkable contrast—that Hawker Siddeley and the British Aircraft Corporation alone have together in the last 10 years provided more tax on their profits than the whole of nationalised industry?

Does not that, in one nutshell, give the contrast between what is and what may be? The House should recollect that these two companies on their own, with the co-operation of Vickers, of course, and those who work with them, have produced in those 10 years no less than £3 billion of exports over a period during which all the nationalised industries have had £4½ billion written off their capital. What a contrast it is!

Therefore, we on the Opposition side of the House say—and I hope that a number of hon. Members who are not Conservatives will say this—leave well alone. Save all concerned from a bitter disappointment. Save this high-quality industry for Britain and let it develop European links so that it can continue to flourish.

The hon. Member for Welwyn and Hatfield made a valid speech. I agreed with much of it, though not all of it. She said that the finance involved in developing new aircraft today is hideously large. She spoke of the importance of a link with Government for many projects. I am talking now not of defence projects but of civil projects. But Hawker Siddeley, with its HS146—I am not a great expert on this subject but I know this—developed what might have been a very valuable idea. Hawker Siddeley ventured its own shareholders' money on condition that the Government subscribed a minimum sum, with Hawker Siddeley taking all the risk of an overrun of costs. It is a shame that the Government of the day did not see fit to try out that experiment.

I turn to the subject of shipbuilding. My hon. Friends the Members for Tyne-mouth (Mr. Trotter), Renfrewshire, East (Miss Harvie Anderson) and Havant and Waterloo (Mr. Lloyd) made extremely effective speeches, as did the right hon. Member for Sunderland, North (Mr. Willey). Here is an industry which has already been restructured under the Geddes proposals. Much investment has taken place. There are patchy results, some excellent, some firms not giving excellent results with, as the hon. Member for Wallsend (Mr. Garrett) said, low profit, low investment and low productivity chasing each other in interacting cause and effect.

But why should the Government pretend that they have any justification for taking over this industry because of the public money which has gone into it? They must appreciate that 90 per cent. of that money has gone into three firms, Cammell Laird, Harland and Wolff and Govan Shipbuilders.

Let us remember that the Government are proposing to nationalise the warship builders who have satisfied customers all over the world, with great success stories of industrial relations, profits and sales. This is an industry which faces heavy world over-capacity, and we must recognise that other countries protect their shipbuilding industries or subsidise them. There is no doubt about that. But with such a mixed industry as ours is, despite the lack of protection, with a whole range of quality, we can encourage them to improve. Surely we have to encourage managers and workers to believe that they can improve their own performance, as some firms have already done. Some firms have made themselves profitable. Yet it is proposed to nationalise them. If some have shown the way, others can follow.

Nationalisation is not the answer. Will it improve working attitudes? Will it improve performance? Look at Harland and Wolff with, in the classic words of the right hon. Member for Ebbw Vale (Mr. Foot), investment coming out of their ears, and productivity static and the loss soaring every year. It is not just a question of investment. Is there any reason to think that nationalisation will transform attitudes? I only wish it were as simple as that. Would it not be wonderful if nationalisation were a magic wand. But there is no magic wand. Nationalisation does not change attitudes.

We on this side of the House would welcome any nationalisation success. In other countries where nationalisation has been introduced, it seems to have been managed better. But I think nationalisation is a disaster. If the Government can extract some success from it we shall cheer. [Laughter.] Yes, we shall. But, wherever one looks, the evidence is that nationalisation does not transform attitudes, and we see no reason to expect that it will transform attitudes in shipbuilding.

I fear that the workers in shipbuilding who welcome the idea of nationalisation do so for the wrong reason. They expect that the fairy godmother of the Government, with the fairy gold that fairy godmothers have, with the printing press money, with higher taxation or with borrowed money, will be able to rescue jobs. That is the last lesson, surely, that the Government ought to teach. They ought to teach that rescue can come only from the industry's own efforts. I do not apply these remarks only to the workers. Both managers and workers have a responsibility for the improvements of some shipyards. The contrast is between those yards which have improved themselves and those which have not.

We do not know yet whether the shipbuilding nationalisation mechanism will be centralised or decentralised. Whichever it is, it will still break the delicate and important links with customers which successful shipbuilders have forged.

I am lost for words to describe the absurdity of putting ship repairing into this nationalisation measure. From the evidence that I have, the remarks of the Secretary of State were inaccurate. Not all ship repairers are linked with ship builders. [Hon. Members: "He did not say that."] Then I misunderstood the right hon. Gentleman and I withdraw what I said. If the Government go ahead with this monstrous plan, they should at least have the grace to think again about ship repairing.

I wish there were time to concentrate on the subject of compensation. My hon. Friend the Member for Henley made a very effective reference to the scandal of the compensation proposals, and my hon. Friend the Member for Gloucestershire, South (Mr. Cope), with his professional knowledge, made a contribution which I hope Ministers will take very seriously.

I hope Ministers will also recognise that by nationalising they will make a further call on public credit. Room must be made in their public expenditure plans if the result of that credit creation is not to expand the money supply still further and risk the danger of an acceleration in inflation.

There is much for the Minister to answer, and I hope he will not evade the many questions put to him. Are there to be massive lay-offs in some sections if the industries are to be profitable or will there be subsidies if the lay-offs are shirked and industries are not profitable? We want the workers in these industries to know that there is no magic wand which can preserve their jobs at the public cost. As the Government have found with Chrysler, these things are no longer as easy as they once thought. The Government are now dealing with the International Monetary Fund and are not as free as they used to be. I reckon the Government have learned some lessons over the past 18 months.

Many of us have not done so marvellously well in government that we can accept no part in the decline of British competitiveness. But a large share of the responsibility for the deterioration of British economic performance rests on the Left, not just those on the left of the Labour Party, but also those who distort their judgments to gratify the Left.

I thought the hon. Member for Colne Valley (Mr. Wainwright) and the hon. Member for Dundee, East (Mr. Wilson) made very powerful speeches. Nationalisation has proved a disaster. I am not blaming the managers or workers in the industries. The system relaxes constraints and diminishes attention to the customer and the market. It has led to these industries absorbing a disproportionate amount of capital at a low return and, in many cases, to bad service for the public. The burden of these nationalised industries has helped to make this country poorer than it need be and has robbed the social services of the resources which our neighbours enjoy and take for granted.

I am not relying on my own judgment alone, but also on that of the Secretary of State for the Environment in that famous lecture in Costa Rica. He went laboriously through the Social Democratic parties in Europe and explained in vivid and limpid words that none of them any longer has any belief in nationalisation. It is only the Labour Government in this country which still maintain their atavistic and destructive belief. Yet the Left pin this costly proposal on the Government. The aircraft industry and all the firms dependent upon it will be put at risk. I know of only two countries in Europe with nationalised shipbuilding industries. I hope the Left will relish the thought that one of them is Spain and that their great panacea of nationalising shipbuilding is a straight imitation of General Franco's policy.

This Bill will threaten decline to the industries concerned. It is not only from this side that misgivings have been expressed. Hon. Members opposite have spoke of voting with a heavy heart. I ask all hon. Members to examine their consciences before voting. These two industries and all those dependent upon them will be made worse if this Bill goes through. I ask all my hon. Friends to vote against it.

9.35 p.m.

The right hon. Lady the Leader of the Opposition, during business questions last week, made much of the importance of this Bill. She even demanded two days for this Second Reading debate—to avoid confusion, as she put it. We would have been rather more impressed with her vehemence if she had been present for any part of the debate today.

Will the Undersecretary explain why no senior Minister has been present on the Front Bench throughout this debate? Those absent include the Prime Minister, the Chancellor of the Exchequer, the Foreign Secretary and any of the other so-called moderates in the Cabinet.

My right hon. Friend the Foreign Secretary is at the European summit meeting with my right hon. Friend the Prime Minister. All my other right hon. Friends have total confidence in my right hon. Friend the Secretary of State for Industry and me to carry the Bill through.

Had the right hon. Lady been here, she would have seen how hard put the Tory Benches have been to drum up attendance for one day's debate, let alone two days. At one point there were only three Tory Back Benchers present in the Chamber to oppose the passage of this revolutionary measure.

But the right hon. Lady was certainly right about one thing—the danger of confusion. This has been rampantly manifest in the speeches we have heard from Tory Members. Never was confusion greater than in the speech by the hon. Member for Belfast, South (Mr. Bradford), who opposed nationalisation in general but wanted it for Northern Ireland in particular. As for the rest of the Opposition Benches, the problem was not so much confusion as schizophrenia.

On the one hand the Conservative Party, always led by the philosopher king we have just heard, goes around complaining about Governments who fail to carry out their promises. It undermines the credibility of politicians, they say. On the other hand, on this occasion the Conservatives complain because we are carrying out a pledge contained in our two manifestos last year, the pledge to take these two industries into public ownership.

The trouble with the Opposition is that they want to choose the promises that we carry out, and all in the interests of national unity. To them—and to frenetic journals like The Times—the test of a Labour Government is whether they are ready to abandon pledges endorsed by the electorate and carry out Tory policies instead. That is what Conservatives mean by consensus.

All these measures on public ownership fulfil pledges enthusiastically supported by workers in the industry, as my hon. Friends the Members for Kingswood (Mr. Walker), Bristol, North-West (Mr. Thomas) and Welwyn and Hatfield (Mrs. Hayman), all of whom represent such workers, have pointed out.

My hon. Friend the Member for Kingston upon Hull, Central (Mr. McNamara) referred to the disappointment of the workers in his constituency at the exclusion of the Drypool Group from the nationalisation proposals and to the fact that there had been a mass meeting in his constituency urging that the group should be included.

The amission of Drypool was a decision we took reluctantly after our effort to participate in a rescue attempt fell through. We provided £325,000 to enable the received to make a complete assessment of the situation, and, but for this work would probably have ceased shortly after his appointment. My right hon. Friend came to the conclusion that the best employment prospects would result from allowing the receive to negotiate with prospective purchasers of the component parts because, most unfortunately, the group has no new orders.

If that is so, why would it be better to sell to private industry rather than nationalise it?

These are matters which my hon. Friend will raise in Committee, when he moves his amendment. We shall be glad to discuss them in the detail which his constituents demand on an issue which they regard as very important.

Our determination to bring these two industries into public ownership is based upon an inextricable combination of Socialist principle and practical necessity. The fact is that without Government money neither the British aerospace industry nor the British shipbuilding industry could last for five minutes. As my hon. Friends the Members for Kingswood and Bristol, North-West pointed out, it is Government grants, Government loans and Government orders which keep these industries going. In the past 10 years the four aircraft companies that we are nationalising have received nearly £1,700 million of public money—