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Commons Chamber

Volume 32: debated on Wednesday 17 November 1982

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House Of Commons

Wednesday 17 November 1982

The House met at half-past Two o'clock


[MR. SPEAKER in the Chair]

Message From The Queen

Queen's Speech (Answer To Address)

The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address as follows:

I have received with great satisfaction the loyal and dutiful expression of your thanks for the Speech with which I opened the present Session of Parliament.

Private Business

Writers To The Signet Dependants' Annuity Fund Order Confirmation Bill

Read the Third time and passed.

Bill Presented

Highland Region (Banavie Level Crossing) Order Confirmation

Mr. Secretary Younger presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation (Scotland) Act 1936, relating to Highland Region (Banavie Level Crossing); and the same was read the First time; and ordered to be considered upon Tuesday 23 November and to be printed [Bill 14.]

Oral Answers To Questions

Oral Answers To Questions

Before we begin questions, I remind the House that if hon. Members ask more than one supplementary question when they are called they will take up someone else's time.


Voluntary And Community Organisations


asked the Secretary of State for Scotland if he is satisfied that voluntary and community organisations in Scotland receive sufficient funding from the Government's urban programme.

This year voluntary sector projects will account for a substantial proportion of the urban programme. Substantial sums are involved—£2 million capital and £3 million current—but I should be happy to see the voluntary sector benefit still further from the programme.

As the voluntary programme in England receives three times as much in percentage terms of the funds as Scotland, what action does the Minister propose to take to persuade recalcitrant local authorities in Scotland, such as Tayside regional council, to take up the 75 per cent. grants that are available for such purposes?

I do not accept what the hon. Gentleman says about Tayside. I hope he will accept that voluntary sector projects have been taking an increasing proportion of the total. The figures that I have given compare with the provision of £1 million in 1980–81. I recognise the need for greater publicity, and officials of the urban renewal unit are working with the Scottish Community Education Council to produce an explanatory pack for voluntary and community groups. I am sure that that will be helpful.

Is my hon. Friend aware that Levenmouth council of social services has greatly benefited from the substantial contribution under the voluntary initiative scheme? The money has been used in the current year and has made a substantial improvement to the voluntary initiative.

I am grateful to my hon. Friend for identifying that project. I stress that man



asked the Secretary of State for Scotland what steps he proposes to take to reduce the levels of unemployment in Scotland.

Our economic strategy, which is having considerable success in reducing inflation and interest rates, offers the best hope for creating viable new jobs in productive enterprises, and we have recently announced further measures to assist industry. For those unable to get jobs, we are expanding substantially the programme of special employment and training measures.

Is it the intention of the Secretary of State, in dealing with employment at Ravenscraig, to follow the line that he has taken on Linwood, Fort William and Invergordon and agonise on the sidelines until there is a closure or a massive loss of employment in a strategic Scottish industry and then simply discount it and say that it is due to market forces, over which he has no control?

The hon. Gentleman's account of my activities bears no relation to the facts. He will know that I made it clear in my evidence to the Select Committee last week that a proposal to close Ravenscraig would be a serious matter.

We recognise that the right hon. Gentleman and his party are reputed to be fighting to save Ravenscraig, but does he realise that there has been a decimation of the steel industry in Lanarkshire? Does he also recognise that one part of the steel industry in my constituency is working two on and one off, that a caterpillar tractor factory is laying off 1,200 workers and that a Honeywell factory is on short-time working? What does the right hon. Gentleman propose to do about that?

I appreciate the hon. Gentleman's anxiety over all those matters, but he must realise that in every one of those cases the trouble is that the customers wanting the products made by those factories have gone elsewhere for them. The Government are trying to make Scottish industry competitive once more in order to win back those markets and get back the jobs.

Does my right hon. Friend agree that jobs will be created only if industry works from a stable economic base, and that the lowering of interest rates and the inflation rate are far more likely to achieve that than any of the "live now, pay later" policies of the Opposition?

I agree with my hon. Friend. Everyone in industry has said for a long time that the reduction in interest rates and inflation are by far the most important factors for industry. The CBI made it clear at its conference recently that the last thing that industry wants is yet further borrowing that will take many years to repay and create inflation for industry.

Is the Secretary of State aware that, crucial to reducing unemployment in Scotland, is the preservation of every job in the Scottish steel industry, at Ravenscraig and elsewhere? Is he further aware that my right hon. Friends and myself in the Labour Party in Scotland will fight to preserve every job in the steel industry and will not accept from him any shoddy compromise that brings about further job loss in any part of that industry?

There is no industry in any country that can expect to save every job on every occassion in every plant. The hon. Gentleman makes himself sound incredible when he makes such silly statements.

Manufacturing Output


asked the Secretary of State for Scotland if he will make a statement on the level of output of manufacturing industry in Scotland.

The latest available index of industrial production for Scotland relates to the first quarter of 1982. In that period manufacturing output in Scotland was 0·6 per cent. higher than in the preceding quarter and was at its highest level since the third quarter of 1980.

Will the Secretary of State try to help Scotland during discussions in the Cabinet? Is it true that he is peculiar in taking some responsibility for the levels of unemployment and employment in manufacturing industry in Scotland, whereas the Government take credit for controlling the rate of inflation, but take a "hands off' attitude towards the levels of employment and unemployment?

I am not sure what the hon. Gentleman means. I have always made it clear that I regard myself as having an overriding responsibility for the Scottish economy. Perhaps hon. Members on both sides of the House will accept that I have done my best to fulfil that responsibility.

The reduction in inflation and in interest rates is critical to the survival of every business in Scotland. I fight in the Cabinet to encourage my colleagues to continue on their present course.

Does my right hon. Friend agree that output can continue only if factories are actually working? Are not unnecessary strikes, coupled with irresponsible wage demands, accounting for more lack of production and of competitive performance by Scottish manufacturing industry than any other factor since the war?

My hon. Friend is right. It is sad that it has taken so long for some employees in factories in Scotland to appreciate that if they strike today they may lose their jobs tomorrow.

Has the Secretary of State seen the recent announcement from Babcock Power Ltd. of 480 redundancies? Is that not a terrible omen for the future level of manufacturing industry, as that company is one of the main energy providers in Britain? Will the right hon. Gentleman bring forward the orders for new power stations and the refurbishing of existing power stations? Otherwise, that industry will not exist when a Labour Government return and have to pick up the remains of manufacturing industry.

I share the hon. Gentleman's worry about the situation at Babcock's. As he knows, I have had discussions with representatives from that company. I respectfully disagree with his remedy. The salvation for Babcock's depends upon obtaining orders from overseas. We are doing everything possible to help the company to win such orders. However, Britain has a surplus of capacity at power stations, so it is hardly likely that the company will gain much business there.

Unemployment Statistics


asked the Secretary of State for Scotland how many people are registered as unemployed in Scotland at the latest convenient date whose last recorded job was in the construction industry.

On 13 May 1982, the last date on which an industrial analysis of the unemployment register was undertaken, 46,521 people who had last worked in the construction industry were registered as unemployed in Scotland.

Does the Minister accept that it is crazy to have a policy that combines unacceptably high unemployment in the construction industry with a miserably inadequate building programme? Does he further accept that it is not good enough for him to suggest in a rather frantic and cosmetic manner that there should be an increase in expenditure, at the fag end of the year, under the house improvement programme? That is no substitute unless he is prepared to do something about the revenue implications of an increased capital spending programme.

Did the Minister hear the Tory leader of the Lothian regional council make that point forcefully on Scottish television and say that he had two brand new old people's homes in Lothian into which he could not put a single person because he could not make the necessary provision from his revenue budget? Will the Minister do something about that?

The construction industry will benefit substantially from the recent success of the Government's counter-inflation policy in reducing interest rates and the national insurance surcharge. We are defending the capital programme. If the hon. Member for Glasgow, Garscadden (Mr. Dewar) is worried, he should take up with his friends in local Labour authorities the fact that the Scottish construction industry has been deprived of more than £50 million of capital spending because of their rate fund contribution policy.

Would it be a sensible, if modest, contribution to the problems of the construction industry, as well as making good conservation sense, for the Government to increase the grant for house insulation for old-age pensioners from 90 to 100 per cent.?

There are arguments against 100 per cent. grants, as I am sure the hon. Gentleman will appreciate. I emphasise what the Government have done about improvement grants. We have lifted the spending limits on improvement grants for the remainder of the financial year. The hon. Member for Garscadden described that as cosmetic, but those who benefit will not see it in the same light.

Will my hon. Friend have a word with our right hon. and learned Friend the Chancellor of the Exchequer and urge him to make all employment tax deductible, so that workers who were formerly employed in the construction industry might obtain a job in personal employment?

I am sure that my hon. Friend is more than capable of making his own representations to the Chancellor.

Is it not outrageous that the Prime Minister should have given the impression last week that local authorities in Scotland have not chosen to use all of their capital allowance, and that the Minister should seek to add to that confusion today? Will the Minister use his influence to obtain a reasonable capital allowance for local authorities, coupled with the necessary revenue approval, so that jobs can be made available?

The hon. Member has not followed the Scottish announcements. We have made it clear that the serious underspending problem in England is not paralleled north of the border. We have also brought forward a series of measures on general capital allocation and on non-housing revenue account to assist local authorities to meet the resources made available to them.

Does my hon. Friend agree that the construction industry is always the first to feel the recession and the first to get out of it? Does he accept that the recent announcement by the oil companies at Sullom Voe and St. Fergus, headed by Total Oil, will involve the engagement of 3,000 construction workers during the next year, which will be an added advantage for the construction industry in Scotland?

My hon. Friend is right to point to the importance of oil industry developments for the construction industry in Scotland. I am sure that the Scottish construction industry is well able to meet these challenges.

Factory Closures And Company Liquidations


asked the Secretary of State for Scotland how many factory closures and company liquidations there have been in Scotland in each of the past three years.

Comprehensive statistics of factory closures are not available.

Instances of redundancy notified to the MSC involving 10 or more workers and arising in the context of closures for 1979, 1980 and 1981 are 86, 258 and 283 firms respectively. The number of instances up to the end of July 1982 is 207.

The total number of compulsory and creditors' voluntary liquidations—the two types which involve insolvency—recorded in Scotland in 1979, 1980 and 1981 were 238, 379 and 438 respectively. The figure for 1982 up to the end of September is 373.

Do not the figures, especially for the current year, give the lie to Ministers' repeated proclamations about the end of the recession? Will the right hon. Gentleman take note of the fact that in my constituency alone in the past fortnight there have been three substantial lay-offs and one complete factory closure? Is he aware that what really irritates my constituents, as I suspect it does others, is the gap between Ministers' speeches and the actual wreckage of the economy?

That occurs only if those listening to the speeches do not examine the facts for themselves. The right hon. Gentleman may know that 7,000 firms in Scotland went out of business last year. As 8.000 new businesses were created, that does not seem to be a bad balance.

I should like a clear statement from the Secretary of State. Is he still contending, against the background of the past 10 or 15 minutes, that his economic policies are working in Scotland? Does he believe that they are working? My hon. Friend the Member for Renfrewshire, West (Mr. Buchan) instanced the loss of 450 jobs in Renfrew last week. We lost 50 jobs in Paisley yesterday. Will the Secretary of State comment on the fact that this morning Chivas Brothers in Paisley announced the loss of another 400 jobs, which means that the Renfrewshire area has lost 1,000 jobs in a week—

I shall not attempt to answer all those questions, but I agree with the hon. Gentleman that there are many distressing instances of firms laying people off and having difficulties. The hon. Gentleman will be aware that that is common throughout the Western world. The reason for almost every closure and difficulty is that potential customers have decided to buy their goods elsewhere. The hon. Gentleman and his hon. Friends should give some thought to that.

Is my right hon. Friend able to calculate which of these closures and liquidations were due to strikes which stopped production? Does he agree that the Government's economic policies will not bring recovery unless the manufacturers are allowed to get on with the job of producing goods?

I agree with my hon. Friend that in many instances a long strike record has led to loss of jobs and the ultimate closure of a factory. I am glad to say, however, that in recent years there has been a great improvement and that the vast majority of workers in Scotland now appreciate that their first priority is to ensure that their company satisfies its customers and that if it does their jobs will be much more secure.

Why does the Secretary of State continue to mislead the House? Will he admit that among the 7,000 closures since he became Secretary of State there are the Linwood car plant, with the loss of 3,500 jobs, the Invergordon plant, with the loss of 1,000 jobs, and the Fort William paper mill, with the loss of 1,500 jobs? We are still battling to save Ravenscraig. Will the right hon. Gentleman admit that the 8,000 new companies to which he referred, taken together, do not make up for even the smallest job loss in the factories that I have mentioned?

The hon. Gentleman has inadvertently made my point for me. The best example of all is the Linwood car plant. People all over Scotland have been buying cars regularly over the past few years, but the fact that they chose not to buy cars made at Linwood meant that the factory closed. The hon. Gentleman has to face the fact that throughout Western Europe there are difficulties for industrial enterprises. None of the cases that he quoted resulted from the lack of Government help. The Government did everything that they could to help in every one of those cases.

From where does Babcock and Wilcox buy its steel—from Ravenscraig, or from somewhere else?

I asked that question when I met representatives of that company. They told me that they buy steel from Scottish steelworks and would regard it as serious if they could no longer do so. That is worth noting.

Council For Tertiary Education


asked the Secretary of State for Scotland if he has any plans to meet the Council for Tertiary Education in Scotland to discuss his response to its report on the structure of tertiary education.

My right hon. Friend has no plans at present to meet the council. The views received from the large number of bodies which have been consulted on the report are at present being considered.

Will the Minister concede that any further delay in meeting the council will prevent it convening at all, because it is the expressed opinion of its chairman that nothing further should be done by the council until a response is made? Given the problems that face tertiary education in Scotland, is it not a disgrace that this issue has been allowed to linger on in the way that it has over the past few months?

Many of the questions involving tertiary education are being dealt with by the Scottish Office and by the local authorities in Scotland. Many steps have been taken during the past three and a half years on the specific points of the report to which the hon. Gentleman refers. More than 80 organisations have been consulted and their replies are now being considered. My right hon. Friend hopes to make a statement early next year.

As the present structure is a dog's breakfast which is causing much confusion among prospective applicants, when exactly does the Secretary of State propose to make the statement, because there is a degree of urgency about the matter?

We have recently received the final documents giving the views of the various organisations concerned. My right hon. Friend hopes to make a statement early next year.

With regard to tertiary education, does my hon. Friend agree that we have to acknowledge that we are living in a rapidly changing world, which includes the introduction of the new vocational training scheme? Does he agree that all these matters must be integrated to meet the requirements of the youngsters? That is our main interest.

My hon. Friend is correct. A great deal of thought has gone into these matters. Considerable improvements have been made in adapting our education system in Scotland to meet the demands of our young people and the market generally. That is what we are doing.

Does the Minister remember that the Council for Tertiary Education was established to advise a Scottish Assembly? Would it not be better if it were fulfilling the role for which it was established?

Indigenous Industries (Recovery)


asked the Secretary of State for Scotland what plans he has to assist the indigenous industries in Scotland affected by the present recession.

In addition to our major contribution towards the marked reduction in the level of inflation, which helps all sectors, there is an extensive range of incentives available for industrial development covering investment, innovation and export. We have mounted an industrial development drive to make these incentives known throughout Scotland. The Scottish Development Agency also provides support to small firms with a range of financial, technical and marketing services.

I accept what my hon. Friend has stated in his reply, but is this not unsatisfactory for those areas that have lost their development area status, particularly the Grampian region and my constituency of Aberdeenshire, East, where there is intolerably high unemployment? Will my hon. Friend undertake extensive research into the situation at Fraserburgh and Peterhead with a view to reducing the unemployment that has been created in that area?

I fully appreciate my hon. Friend's feelings in these matters. The Scottish Development Agency is examining the particular problems of Fraserburgh. A wide range of grants and assistance are available to parts of Scotland that are not assisted areas. These include tax incentives, schemes to back innovation and export, and all the programmes that are available for small businesses and small business start-ups. Despite my hon. Friend's disappointment that his area has lost assisted area status, I am sure that he will help us to ensure that every company in his part of the world is fully aware of the assistance that is available.

In view of the difficulties experienced by indigenous industries, the Government's claim that one of their priorities is to deal with unemployment—which is belied by legislation on privatisation and union-bashing—and the reduction in the Treasury contribution to the Scottish Office, what is the Secretary of State doing to educate the Prime Minister about what is happening in Scotland?

I do not know what the right hon. Gentleman means, because there has been no reduction in the Treasury's contribution to the Scottish Office. A great deal is being done by the Government and the European Community to assist the area which the right hon. Gentleman represents.

Will the Minister concede that the closure of the Falmers factory and the redundancies at the Bata factory are due to imports of cheap footwear and clothes from Taiwan, Korea and Hong Kong? Will the Scottish Office support the initiative by the Department of Trade to set up a body to try to limit such imports? Does the Minister agree that that is the best way to help Scotland's industry?

I am delighted that the hon. Gentleman supports the Secretary of State for Trade's initiatives.

Is my hon. Friend aware that I prefer the word "encouragement" to "assistance", and that I have a fellow feeling with my hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie)? When will my hon. Friend the Minister encourage indigenous industries, especially small companies in the non-assisted and Tory-supporting areas in Scotland?

The support available to the small business sector in Scotland is at its highest level ever. Great efforts are being made to ensure that all business men, particularly those involved in small businesses, are aware of the fiscal support and advice available from Government Departments and the Scottish Development Agency.

What is the Scottish Office response to the Arthur D. Little and Scottish Office review of forest products?

The report is encouraging. We are involved in discussions with interested parties who may wish to take advantage of the report's recommendations and invest further in Scotland.

New Town Development Corporation


asked the Secretary of State for Scotland what progress has been made in improving communications between new town development corporations in Scotland and local residents.

As a result of the measures taken at my request to improve the presentation of their activities to the public, better communications have been established between the development corporations and local residents.

I recognise that some progress has been made towards making the new town development corporations more accountable, but does the Minister agree that it is appropriate for the Secretary of State now to advise the corporations to open their doors to the press and the public, as proposed by the Convention of Scottish Local Authorities?

The development corporations are, largely, commercial organisations. It has been proved beyond doubt by both Labour and Conservative Governments that their development work is of great benefit. I hope that the hon. Gentleman will agree that no Government should take any steps to diminish industrial development, which is successfully carried out by the corporations.

If the Minister is not prepared to take the advice of my hon. Friend the Member for Dunbartonshire, East (Mr. Hogg) and the Convention of Scottish Local Authorities to instruct the new town development corporations to open their meetings to the public, will he, in the interim, instruct them to make the minutes of board meetings available to the press and the public so that the people in the new towns know why decisions are taken?

Matters which are not commercially confidential are revealed to the press by the chairmen of the corporations at the specific request of my right hon. Friend the Secretary of State.

Does the hon. Gentleman agree that the best news that he could give the House would be that the new town development corporations are to be wound up and their activities handed over to the people who represent the residents?

No, Sir. There is a programme for the eventual winding up of the new town development corporations. The hon. Gentlemen's remarks surprise me, because he represents a new town which has been tremendously successful in attracting industry and jobs to Scotland.

Her Majesty's Stationery Office (Edinburgh Press)


asked the Secretary of State for Scotland what proportion of the total printwork of his Department is placed with the Edinburgh press of Her Majesty's Stationery Office.

In 1981–82 the Scottish Office ordered about £900,000 of work, including binding and systems stationery, from HMSO print procurement division. I understand that the division placed about £85.000 of this—about 9½ percent.—with its own press in Edinburgh.

Does the Secretary of State agree that in this instance there is no strike record, that wages have fallen compared with other parts of the printing industry and that the work force has co-operated in productivity agreements? Is he aware that, in spite of that, the workers have been rewarded with less than 10 per cent. of Scottish Office print work? Is it not a clear case of an industrial closure which the Secretary of State and HMSO could avert by ensuring that a reasonable proportion of work from the Scottish Office goes to the Government's one printing press in Scotland?

Printing for the Scottish Office is divided between that which is done within the Scottish Office—an activity which was transferred from HMSO to the Scottish Office recently—and that which is done by HMSO. It up to HMSO, for which my hon. Friend the Minister of State, Treasury is responsible, to allocate work between its factory and elsewhere.

In 1981–82 about £1½ million was spent on Scottish Office printing. About 40 per cent. of that was reprographic work divided between departmental resources in the Scottish Office and HMSO's reprographic unit in Edinburgh. It is up to HMSO whether it puts the work out to private contractors or does the work itself.

Will my right hon. Friend do his best to influence HMSO to ensure that a generous proportion of the 40 per cent. of Scottish Office reprographic printing goes to HMSO printing works in Edinburgh?

All that can be done by our own printing resources is done. Almost all Scottish Office printing not done by our own resources is carried out at printing works in Scotland.

The DHSS has said that it is likely to print a series of leaflets for ethnic minority groups. Therefore, will the Secretary of State ensure that the work is done by Edinburgh printers?

I thank the hon. Gentleman for his suggestion. I shall draw it to the attention of my hon. Friend the Minister of State, Treasury, who is responsible for that aspect.

Is it true that the printing of Scottish Office statistics, done in the past by HMSO, now has to be done within the Scottish Office? lf so, is that not disgraceful?

I should have thought that it was rather good. Some HMSO work was transferred to the Scottish Office in Edinburgh, and I think that the Scottish Office welcomed that transfer.

Hamilton College Of Education


asked the Secretary of State for Scotland if he will make a statement about the disposal of the former Hamilton college of education buildings.

As announced on 10 November, agreement has been reached on the sale of the halls of residence complex for £410,000 to Millers Homes (Northern) Ltd., and on the sale of the teaching block and playing fields for £270,000 to Christian Schools (North West) Ltd. Two other offers for the premises were received. These were considered to be unacceptable because of the conditions attached to the offers.

What conceivable justification can there be for the Government's almost gifting to the private education sector and a property developer 52 acres of land and buildings, constructed 16 years ago for £2 million and now worth over £12 million, for a trivial £680,000, especially since it is clear that the Minister accepted the lowest, not the best, offer? Is that not political incompetence compounded by malice?

We accepted the best offer—the one with no strings attached. The strings attached to the other offers were unacceptable. The hon. Gentleman should try to prove that the halls are worth £12 million. I offer him a bargain. I shall sell him the halls for a quarter of that price if he cares to make an offer.

Does my hon. Friend agree that property is worth only as much as someone will pay for it? A large building in Scotland, whether it is an educational establishment or a commercial building, will attract only the market value, which is what people are prepared to pay.

My hon. Friend is correct. The market value was well tested by the amount of advertising of the property.

Bearing in mind the Prime Minister's strictures at the Guildhall recently about the desirability of following the policies of sound domestic financial management, does the Minister agree that if he were to sell his own house on that basis, his wife would be upset to see the property sold at a knock-down price in a depressed market?

We accepted the best unconditional offer that was made to us. In answer to what the hon. Gentleman said about financial prudence, now that the property has been sold, the saving in the current year will be more than £500,000, and in future years more than £1 million will be saved as a result.

On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply and of the grotesque offer that the Minister has made to me, I give notice that I shall seek leave to raise the matter on the Adjournment.

Housing Waiting Lists


asked the Secretary of State for Scotland what are the present total figures for those on housing waiting lists in the district and island authorities of Scotland.


asked the Secretary of State for Scotland how many people are on housing waiting lists.

The information available to me about numbers on local authority waiting lists is neither complete nor prepared on a uniform basis. I must therefore refer the hon. Gentleman directly to the local authorities in which they are interested. They will no doubt bear in mind that applicants, including existing tenants, can put their names down with more than one authority.

Is the Minister aware that thousands of young, old and handicapped people who are seeking local authority houses in Scotland will find that answer complacent in the extreme? Is he further aware that local authorities need money from the Government to start building houses again?

There are now about 29,000 vacant houses in the public sector in Scotland. Glasgow forfeited £17 million of its capital allocation this year because of its rate fund contribution decision. That money could have been spent on improving houses in Glasgow.

It will not have gone unnoticed that the Minister refused even to attempt to answer the question: how many homeless people are awaiting council houses in Scotland? Is he aware that there are a number in his constituency? Is he further aware that there are at least 50,000 jobless construction workers in Scotland? As he will not tell us about his failure to have a proper housing policy, will he at least say how he explains to his constituents his abject failure to provide for the housing and job needs of Scottish construction workers?

As far as I know, my constituents are reasonably satisfied with their Member of Parliament. The hon. Gentleman is confused. He equates need with waiting lists. Assessing need is a professional calculation, on which detailed guidance was given by the Labour Government. That was recently emphasised by SDD memorandum 27/1982. I shall be happy to send the hon. Gentleman a copy for his perusal and edification.

My hon. Friend mentioned the number of empty houses in Scotland. Does he agree that the quickest, simplest and most effective way to reduce waiting lists is to encourage the rehabilitation and reuse of those houses?

My hon. Friend is right. Many local authorities are using receipts from the sale of council houses, which have been higher than forecast because of the success of the Government's policy, to improve their housing stock.

Is the hon. Gentleman aware that many of the 25,000 houses that are available for letting are inadequate and inferior and need to be considerably renovated? Is not the absence of national statistics about housing shortages and needs a crying scandal and something that the Government should improve?

The assessment of housing needs is conducted on a professional basis. If the right hon. Gentleman wants any information about his own local authority, I shall be happy to provide it. Local housing authorities in Scotland can use their receipts from sales and their net allocations to improve their housing stocks, and they are doing so. If they are more successful in selling council houses, they will have more money available to improve the existing housing stock.

Does the Minister recall that in answering my earlier question today he urged Labour local authorities not to underspend, saying that that would help the Scottish construction industry? Within minutes, when replying to my hon. Friend the Member for Coatbridge and Airdrie (Mr. Clarke), he said that his Department had never suggested that there was a serious underspend in Scotland. What is the true position? How does he explain that remarkable agility?

I can explain it easily. In answer to the hon. Member for Coatbridge and Airdrie (Mr. Clarke), I was referring to the general capital allocation and the non-HRA allocation, under which repair and improvement grants come. The RFC contribution relates to the general housing account.

Confederation Of British Industry


asked the Secretary of State for Scotland when he intends next to meet the chairman of the Confederation of British Industry in Scotland to discuss industrial regeneration.

I frequently meet the chairman of the Confederation of British Industry in Scotland both formally and informally to discuss industrial issues.

When my right hon. Friend next meets the chairman, will he discuss with him the operation of Locate in Scotland, particularly its recent success in bringing Wang to Stirling, and inward investment that it could achieve in future? Will he also discuss with the chairman the need to instil into Scottish industry the confidence that is reflected in the forward surge of support for the Conservative Party in Scotland recorded in the opinion poll in the Glasgow Herald this morning?

I noted that with interest in today's paper. I agree with my hon. Friend about the attitude of the CBI to Locate in Scotland. The CBI made it clear at its recent conference that it broadly supports the Government's strategy and considers that the proposed strategy of the official Opposition would be disastrous for industry and jobs.

In an earlier answer to me this afternoon, the Secretary of State referred to 7,000 businesses in Scotland that had closed and to 8,000 new businesses that had started up. Will he give us the comparative figures for employment in the 8,000 businesses that have opened as against the 7,000 that have closed?

That is an interesting idea, although I think that it would be difficult to find the precise figures. Nevertheless, the position is clear. There is a net balance in favour of more businesses opening than closing, which surely must be welcomed even by the right hon. Gentleman.

Is the Secretary of State aware that it is not surprising that the chairman of the CBI in Scotland supports the Government? After all, he is the treasurer of the Tory Party in Scotland. He is also the chairman of the constituency party of the hon. Member for Renfrewshire, East (Mr. Stewart), and he is reasonably satisfied with his Member of Parliament.

Does the right hon. Gentleman still stand by the statement that he made in the United States on 25 September, that the conditions that he had created in Scotland for inward investment would make profits quickly, keep those profits out of the hands of the tax man, and enable them to be exported at will? Is that the attraction for inward investment?

The hon. Gentleman has written that himself. That was not what I said. I said—it was true, and it is still true—that we are able to tell companies overseas which are thinking of setting up in Scotland that if they come to Scotland they will be able to make good profits and keep those profits. That, in my opinion, is a good thing for them to want to do, and I hope that I can encourage as many of them as possible to do so.

May I have an assurance from the Secretary of State that if I send him his own press release he will publicly apologise for denying what he said in the United States?

If I can get a copy of my own press release, I shall read it again with great interest. The fact remains that Scotland is a good place to which overseas industries should come, and, if they come, they will make good profits, which they can keep. That is good news.

Cottage Hospitals


asked the Secretary of State for Scotland if he has any plans to change the role of cottage hospitals; and if he will make a statement.

I have no plans to change the role of cottage hospitals. It is for health boards, taking account of the needs of the service, to consider the functions of all their hospitals, including cottage hospitals.

I thank my hon. Friend for that reply. Does he agree that cottage hospitals have an important role in local communities, especially in the Highlands, in providing employment as well as medical care? Does he accept that that should be considered in any changes that are contemplated? Cottage hospitals are like the churches and schools; without them the Highlands would become depopulated.

I appreciate the strong feelings of the local communities that are threatened with the loss of a facility such as a cottage hospital. These strong feelings have been made clear to me by my hon. Friend and by others of my right hon. and hon. Friends who represent constituencies in the Tayside area. However, health boards have a duty to manage the resources available to them and to provide the best levels of treatment and care for the population within their areas.

Solicitor-General For Scotland

Departmental Staffing Levels


asked the Solicitor-General for Scotland if he has made any estimate of the impact on staffing levels in his Department if the procurator fiscal service becomes responsible for a public defender system in Scotland.

If the hon. and learned Gentleman is thinking of introducing such a far-reaching change in legal representation in the courts, will he consider issuing a draft document for consideration by the professions before embarking on any experimental scheme?

Any proposal to introduce a public defender system in Scotland will be the responsibility of my right hon. Friend the Secretary of State for Scotland. The Royal Commission on legal services in Scotland recommended that there should be an experimental approach. I understand that that is being considered in negotiations with the Law Society.

I want adequate consultation not only with the Law Society but with the House, including hon. Members representing Scottish constituencies. Does the hon. and learned Gentleman accept that important issues, such as confidentiality and duty to a client, will arise if fiscals take over the representation of defence interests in criminal courts? Therefore, is it not essential that a consultative document should be issued and full consultation should take place before any such experiment is introduced?

I must emphasise that there is no proposal that fiscals should be involved in a public defender system in Scotland. No decision in principle has been taken. Discussions are taking place with the Law Society. Any further decision will be a matter for my right hon. Friend the Secretary of State, doubtless in consultation with hon. Members.

Who is to do the precognition on behalf of the clients whom the public defender defends? Will the police have to precognosce witnesses to defeat the purpose of their colleagues in prosecuting?

I repeat, my right hon. Friend's officials are entering into discussions with the Law Society of Scotland. All that is taking place at present is an examination of the proposal of the Royal Commission that there should be an experimental public defender system in Scotland.

Salmon Poaching


asked the Solicitor-General for Scotland whether his office has issued any instructions to procurators fiscal regarding prosecution for salmon poaching.

My noble sand learned Friend the Lord Advocate and his predecessors in office have had instructions issued to procurators fiscal from time to time regarding salmon fisheries legislation. In addition, procurators fiscal have been notified of opinions of the High Court of Justiciary issued in cases involving salmon poaching.

Does my hon. and learned Friend agree that one of the disturbing aspects of poaching in recent times has been not the local poachers but the villains—the hardened criminals? That, coupled with the netting of salmon on the coast and in river mouths, is causing great problems in Scottish rivers. Does he accept that something must be done?

Yes. I think that the somewhat old-fashioned and romantic idea that a little poaching does no one any harm must now be ignored. Poaching has become a commercial business. We know from the number of recent convictions that many of those who are involved in poaching are also involved in serious crime. The sentences recently imposed by the Scottish courts shows that they, too, take the matter seriously.

Will the hon. and learned Gentleman repudiate the attempt by Scottish landlords to make salmon poaching one of the most serious crimes in the calendar? Will he ensure that fishery protection vessels, which should be watching the fleets of foreign vessels cleaning up our fisheries, are not used, as they appear to be at times, for picking up an odd salmon net here and there?

I am surprised that the right hon. Gentleman, who has a constituency interest in tourism apart from anything else, seems to think that we should not regard seriously the damage that is done to existing salmon stocks when an extensive amount of poison is placed in our rivers. Such damage means that the tourist potential of his constituency and other parts of Scotland will suffer seriously.

Does the hon. and learned Gentleman recognise that although prosecutions for fish poaching are important, it is more important that prosecutions should be instituted for river pollution? In my constituency the rivers Girvan, Doon and Lugar are being seriously polluted. Will he consult the purification board and the regional council about the need to take action on this serious menace?

I shall be glad at any time to take up with the hon. Gentleman the matter of prosecutions for river pollution.

Prosecutions On Indictment


asked the Solicitor-General for Scotland whether, in view of the final disposal of the Glasgow rape case, he will now make a statement about the organisation of the Crown Office and the procedures in his Department for dealing with prosecutions on indictment.

There have been two recent changes to existing procedures. First, in all cases where murder or rape was the original charge on petition and where it is later thought that a lesser charge or no charge might be appropriate, there must be a reference to my noble and learned Friend, who takes the final decision, as the House has already been advised. Secondly, procurators fiscal have been instructed that they should, in general, inform persons who have alleged that they have been the victims of crimes and who have been precognosced if it is eventually decided not to proceed with the charge.

Is the hon. and learned Gentleman aware that there is widespread concern about the way in which his Department has been operating? This is based not only on the failure to prosecute in the Glasgow rape case but on many recent instances when multiple prosecutions for murder have been mounted when there has not appeared to be any reasonable prospect of even going to the jury with a murder charge? This is bad for the administration of justice and grossly unfair to the accused. Will he institute a detailed and careful consideration of the procedures within his Department and thereafter make a statement to the House?

The case to which the hon. Gentleman has carefully referred is still under appeal. Therefore, I shall make no specific reference to it. I understand that the criticism of the Crown Office in recent months has been that the discretion not to prosecute has been used too widely. The hon. Gentleman now seems to be suggesting that we are not exercising that discretion sufficiently. Clearly a balance must be established. If he wishes to talk to me about a particular case at an appropriate stage, I shall be happy to make myself available.

Will the hon. and learned Gentleman now tell us whether the resignation forced upon his predecessor over the Glasgow rape case was a recognition of his failure to handle the matter properly, or was he made the scapegoat for the mistakes of others?

I think that I am the least appropriate person to answer that question.

My hon. and learned Friend has reaffirmed that the right to prosecute or not to prosecute will be ensured by exercising the safeguard of referring such matters to his noble and learned Friend the Lord Advocate. Does he agree that if someone is charged with murder or rape and the advocate depute who is prosecuting is unable to take a decision whether to accept a plea there is a vast injustice to those involved in the case and an enormous waste of public funds as a result?

As my hon. and learned Friend has said, there is a discretion to be exercised. The advocate depute who is conducting the trial often has to take difficult decisions during the course of the trial. My noble and learned Friend the Lord Advocate has already advised the House that in serious cases involving murder or rape, decisions to drop or reduce the charges must be referred to him.

Life Imprisonment (Release On Licence)


asked the Solicitor-General for Scotland how many prosecutions have been commenced by the Crown Office in each of the past 10 years against persons who had previously been sentenced to life imprisonment and who were released on licence.

No figures are available for the number of prosecutions of persons released on licence having been sentenced to life imprisonment. All convictions of such persons are, however, automatically reported to the parole board to consider whether such persons should be recalled to prison. In the past 10 years, 20 licensees who have been convicted for offences committed while on licence have been recalled to prison.

I am grateful to my hon. and learned Friend for that reply. Does he accept that many of those who are released on licence, after having been sentenced to life imprisonment for murder, commit a second such crime and are further sentenced to life imprisonment? As the House, in its wisdom or otherwise, has decided against capital punishment for murder, will my hon. and learned Friend bring in legislation which imposes life imprisonment for life when a murder is committed?

I appreciate that the extent of a life sentence is a matter that causes a great deal of feeling. However, I remind my hon. Friend that during the passage of the Criminal Justice (Scotland) Act that matter—and the Emslie report—was considered. During the past 12 years in Scotland only one person, having been convicted of murder and released on licence, has committed murder again.

Britoil (Share Offer)

3.30 pm

I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"the refusal of the Prime Minister to direct that the families and family trusts of Ministers of the Crown should not tender for shares in Britoil when the offer opens on Friday 19 November."
The principle at stake will apply also in other cases where national assets owned by the taxpayer are sold off in circumstances where a profit could be made from their initial purchase and subsequent resale. The recent example of Amersham International shows that easy profits can be made by those with information not available to the general public.

The matter is important for three reasons. First, the House of Commons in this century has concerned itself with the standards of Ministers' conduct in public life. When the matter was first debated in the House in 1913 during the Marconi scandal the Prime Minister, Mr. Asquith, said:
"no Minister is justified under any circumstances in using official information, information that has come to him as a Minister, for his own private profit or for that of his friends."
I emphasise these latter words
"or for that of his friends",
who must be taken to include the families of Ministers.

There is now a new consideration to be taken into account which was not available in 1913. We are now embarked on a new process of selling off national assets owned by the British people whose interests Parliament exists to safeguard. The existing rules do not cover the new position. I submit that the standards of conduct as applied to Ministers should, in the special circumstances of such sales, be applied to the families and family trusts of Ministers.

Secondly, the matter is important because Ministers may possess, or be thought to possess, information not in the prospectus which could influence a decision whether to tender for shares. That matter was also alluded to by Mr. Asquith in 1913 when he said:
"Ministers should scrupulously avoid speculative investments in securities as to which, from their position and their special means of early or confidential information, they have or may have an advantage over other people in anticipating market changes."—[Official Report, 19 June 1913; Vol. LIV, c.557.]
In 1913 Mr. Asquith recognised the possibility that Ministers, their family and friends might benefit from such information. Our Prime Minister does not. In a letter that I have received from her today she states that
"it is a legal requirement that the prospectus for a sale should give all information material to a decision whether or not to apply for shares. Ministers and their families will therefore be in no more advantageous a position than members of the public who read the prospectus."
I do not accept that statement as correct in the circumstances of this sale, for two reasons. First, we know that Ministers have confidential information. The Secretary of State for Energy refused to reveal some of that to my right hon. Friend the Member for Leeds, South (Mr. Rees) during questions on his statement on 27 October. It was clear that such information was not to be revealed to the House. Therefore, a fortiori, it is not to be revealed in the prospectus.

Secondly, Ministers' families could be in a more advantageous position than the ordinary public. The principle is well understood by ordinary people who are used to competitions organised by newspapers and manufacturers of breakfast cereals, where the families of those setting the competition are excluded from taking part. The organisers are well aware that to allow them to take part would be seen to be grossly unfair and improper. Surely that principle is understood wherever breakfast cereals are sold, even in grocers' shops.

Order. The hon. Gentleman must not make the speech that he would make if I were to grant his application. I have been tolerant and I have allowed him to go a great deal of the way.

My third point relates to why the matter is important. I must prove that to you, Mr. Speaker, as you have to make a decision. May I refer to the age-old saying of Julius Caesar, attributed to him by Plutarch, that Caesar's wife must be above suspicion? Surely the families and spouses of the little Caesars on the Government Front Bench should also be above suspicion. This is not a case where, in the words of the Good Book,

"The race is not to the swift."
However, in the case of Britoil it certainly is to those who have inside information.

I submit that the matter is urgent because shares in Britoil will be open for application on Friday. I raised the matter at the first possible opportunity when the Secretary of State for Energy made his statement on 27 October. I wrote to the Prime Minister on 28 October and it has taken over two and a half weeks to get a reply. That reply, from which I have quoted, is wholly unsatisfactory. It is essential that the House should have a chance to express its views on the matter before Friday. It will be too late thereafter. The Ministers' families and family trusts will, by then, have been able to tender for the shares and, if appropriate, dispose of them at a profit. If we fail to discuss the matter now and there is any subsequent impropriety, we shall all bear a heavy responsibility.

The hon. Member for Waltham Forest (Mr. Deakins) gave me notice before 12 o'clock midday that he might seek to make an application under Standing Order No. 9 this afternoon.

The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the refusal of the Prime Minister to direct that the families and family trusts of Ministers of the Crown should not tender for shares in Britoil when the offer opens on Friday 19 November."
As the House knows, under Standing Order No. 9 I am directed to take account of the several factors set out in the order but to give no reason for my decision.

I have given careful consideration to the representations that have been made, but I have to rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

Cruise Missiles

I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,

"the rights of protest against the installation of cruise missiles".
The matter is specific. Sixteen women from Greenham Common peace camp have been imprisoned for 14 days after occupying a sentry box at Greenham Common base. They have not been accused of any crime and no violence was involved, yet because they refused to be bound over they have been imprisoned in a harsh and vindictive way by magistrates acting as willing lackeys imposing repressive Government policies.

There is also the serious specific issue of turning the non-criminal act of trespass into a criminal charge by that method. Men and women have a right to protest against the installation of those missiles and the use of a power dating back to 1361 to curb that right is a matter of great concern.

The matter is important. It is ironic that magistrates are seeking to bind the women over to keep the peace when that is just what the women are dedicated to do. they rightly fear that the installation of nuclear cruise missiles under American control, without any right of veto as to their use by the Government, will take Britain a step further towards nuclear war and the massive destruction of life that this and future generations will face if such a war is invoked. There can be no more important issue before humanity today.

Urgent consideration should be given to this issue, because of the outrageous way in which these peaceful protesters have been treated and because the majority of our people deeply oppose the idea of their country being turned into a base for nuclear weapons, either British or, as in this case, American owned. No Government have the right to threaten mass extermination as a means of conducting—

Order. The hon. Gentleman must stick to the question why I should grant an emergency debate tonight or tomorrow.

I am dealing with why this matter should be given urgent consideration. One of those considerations, which I hope will weigh heavily with you, Mr. Speaker, is that the original decision to install cruise missiles was not debated by Parliament. That should be urgently remedied so that the case so heroically supported for more than 15 months by the women of Greenham Common peace camp may be debated in this House.

The hon. Gentleman gave me notice before 12 o'clock midday that he would seek leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,

"the rights of protest against the installation of cruise missiles."
As the House knows, I decide not whether this matter should be discussed but merely whether it should be discussed tonight or tomorrow night as a matter of urgency. The House knows that under Standing Order No. 9 I am instructed to take into account the several factors set out in the order but to give no reasons for my decision.

I have given careful consideration to the hon. Gentleman's representations, but I have to rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

Ballot For Notices Of Motions For Friday 3 December

Members successful in the ballot were:

  • Mr. Norman Buchan
  • Mr. Kenneth Carlisle
  • Mr. Dennis Walters

Bills Presented

Police And Criminal Evidence

Mr. Secretary Whitelaw, supported by Mr. Secretary Nott, Mr. Secretary Younger, Mr. Secretary Edwards, Mr. Leon Brittan, Mr. Attorney-General and Mr. Patrick Mayhew, presented a Bill to make further provision in relation to the powers and duties of the police, criminal evidence and complaints against the police; to provide for arrangements for obtaining the views of the community on policing and for a rank of deputy chief constable; to amend the law relating to the Police Federations and Police Forces and Police Cadets in Scotland; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Thursday 18 November and to be printed. [Bill 16.]

Commonwealth Development Corporation

Mr. Neil Marten, supported by Mr. Barney Hayhoe, Mr. Cranley Onslow, Mr. Kenneth Baker, Mr. Peter Rees and Mr. Malcolm Rifkind, presented (under Standing Order No. 91 (Procedure upon Bills whose main object is to create a charge upon the public revenue)) a Bill to authorise the making of loans to the Commonwealth Development Corporation by the Secretary of State out of the National Loans Fund and to impose new limits on sums borrowed by, or guaranteed by, the Corporation or any of its subsidiaries: And the same was read the First time; and ordered to be read a Second time upon Thursday 18 November and to be printed. [Bill 13.]


Mr. Secretary Jenkin, supported by the Prime Minister, Mr. Secretary Whitelaw, Mr. Chancellor of the Exchequer, Secretary Sir Keith Joseph, Mr. Secretary Heseltine, Mr. Kenneth Baker and Dr. Gerard Vaughan, presented a Bill to provide for the appointment of a Director General of Telecommunications and to confer functions on the Director General so appointed; to abolish the exclusive privilege with respect to telecommunications conferred on British Telecommunications by section 12 of the British Telecommunications Act 1981 and to make new provision with respect to the provision of telecommunication services; to make provision, in substitution for the Telegraph Acts 1863 to 1916, for the matters there dealt with and related matters; to provide for the vesting of all property, rights and liabilities of British Telecommunications in a company nominated by the Secretary of State and the subsequent dissolution of British Telecommunications; to make provision with respect to the finances of that company; to amend the Wireless Telegraphy Acts 1949 to 1967 and to make further provision for facilitating enforcement of those Acts; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Thursday 18 November and to be printed. [Bill 15.]

Orders Of The Day

British Shipbuilders Bill

Order for Second Reading read.

3.42 pm

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

The purpose of the Bill is to make it possible to introduce private investment into subsidiaries of British Shipbuilders. It is also intended to make it easier for the board of British Shipbuilders to take decisions that are in the best commercial interests of the corporation.

The House well knows the Government's policy towards the public sector and their desire, wherever possible, to encourage privatisation. British Shipbuilders should be no exception, but existing legislation prevents even a modest element of privatisation. The Bill, by removing the impediments, is the first step in that direction.

Hon. Members will be aware that under the Aircraft and Shipbuilding Industries Act 1977 British Shipbuilders was given a statutory duty to build and repair ships and slow-speed diesel engines. The 1977 Act imposed a series of conditions under which the corporation had to carry out that duty. The Act is a straitjacket for the corporation. It prevents it from entering into joint ventures with the private sector, and it makes it difficult for the corporation to get out of particular activities. In the Government's view, this is far too restrictive for a corporation whose five main divisions—merchant shipbuilding, warship building, engineering, offshore work and ship repair—are so different and diverse. Indeed, the statutory duties that are imposed by the legislation do not even apply to all its activities. Therefore, there is a case for rationalising on these grounds alone. We want to give commercial freedom to the corporation, in line with our conviction that private enterprise has a major role to play.

I shall give way later.

The powers proposed in the Bill will be familiar to the House, because they are closely modelled on the Iron and Steel Act 1981, which clarified the British Steel Corporation's power to enter into joint ventures. As a result of the 1981 Act, a number of joint ventures between the BSC and the private sector have come into existence. However, although they are closely modelled on that Bill, it may help if I briefly describe the Bill's main provisions.

Clause 1 repeals section 2 of the 1977 Act, which imposes statutory duties on British Shipbuilders to promote the production and repair of ships and certain marine engines. It replaces those statutory duties with powers. Therefore, British Shipbuilders will be free to choose whether to engage in activities that it is at present obliged, by statute, to undertake.

Section 2 of the 1977 Act imposes several subsidiary duties on the corporation. The requirement to carry out those subsidiary duties is also repealed by clause 1.

We are taking this opportunity to clarify British Shipbuilders' position on national defence requirements. The Ministry of Defence is British Shipbuilders most important single customer and British Shipbuilders will, of course, continue to pay full regard to its requirements. Under the Bill, the defence implications of British Shipbuilders' activities and other matters relating to the national interest will be the Secretary of State's responsibility. That seems to be a logical approach. National defence is first and foremost the responsibility of Government.

The statutory duty for British Shipbuilders to promote industrial democracy is also repealed. The form that employee involvement takes will, of course, remain the responsibility of the BS board. Following the amendment to the Companies Act 1967 introduced last month into the Employment Act, the corporation's subsidiaries will report each year on the progress made.

Clause 1(3) gives BS permissive powers to undertake the activities previously covered by duties. It also makes it clear that BS may promote the carrying out of these activities by others, whether or not those others are wholly owned subsidiaries. That provision will allow British Shipbuilders to undertake joint ventures with the private sector.

The Minister said that one reason for the Bill was to remove inflexible controls over the management of BS, including such things as the duty to have regard to national defence and industrial democracy. How many requests has he received from the corporation to make those changes? What changes has BS asked him to make?

I shall come shortly to the corporation's attitude. The Government believe that the corporation should determine its areas of business solely on commercial grounds and that defence requirements should be judged by the Government.

Clause 2 introduces important new powers for the Secretary of State. He will be able to direct BS to dispose of assets and parts of its undertaking and to limit or cease activities. These powers will be subject to a negative resolution in either House.

The power to direct BS to limit or cease any activity will, among other things, help to prevent unfair competition. As hon. Members on both sides of the House know, there has been deep concern among the private sector ship repairers about unfair competition from BS almost since the corporation's inception. Private sector engine builders have for a long time complained about unfair competition from British Shipbuilders.

It seems to us that in dealing with any future problems of unfair competition the Government's position will be stronger with these powers of direction. We shall, of course, consult the board and the trade unions and we hope that we shall be able to act in agreement with BS, both on unfair competition and disposals. However, reluctance by nationalised industries' boards to surrender part of their empires is not unknown.

How will the Bill deal with the unfair competition that British Shipbuilders faces from overseas companies building subsidised ships?

We constantly address ourselves to that question, and I am sure that my hon. Friend knows that the intervention fund gives direct assistance with almost every order that BS gains. That instrument of subsidy has been designed specifically to help our industry compete with firms in the Far East and elsewhere. I shall say more about that aspect later.

Will the Minister confirm that he is under great pressure from private ship repair yards which want no further competition? What would be the Government's attitude to a workers' co-operative that wanted to buy a defunct BS yard? Would the Government allow a workers' co-op to negotiate with BS to take over a yard and to compete against the private interests that are putting so much pressure on the Minister?

Of course we would take a favourable view of that. We would have no objection to people employed in a BS repair yard negotiating with British Shipbuilders to buy the yard and to establish it as an independent unit in fair competition with the private sector and BS. That is a good idea and a favourable development. I assure the hon. Gentleman that if he puts such a proposition to me I will ensure that it is favourably considered by BS.

Clause 2 of the Bill contains important safeguards to prevent British shipbuilders from making changes in its organisation that would be incompatible with the introduction of private capital. They will also prevent activities that are important for our defence interests from coming under foreign control. In addition, by providing powers to direct the setting up of employees' share schemes, the Bill will allow us to honour our commitment to give employees the opportunity to buy shares.

Following the precedent of the Iron and Steel Act 1981, clause 2 imposes a duty on British Shipbuilders to organise itself so that its activities are carried out in the most efficient manner.

Will the Minister of State confirm that the Bill empowers the Government and the Secretary of State to direct that part or all of a subsidiary formed under the new arrangements could be sold to the private sector? Would not those in the private sector be unlikely to buy such a subsidiary or take a stake in it unless the guaranteed profits of warship building were available?

The hon. Gentleman's comments about the powers in the Bill are broadly right. I shall deal specifically with warship builders.

We believe that the changes are desirable, because at present BS can be prevented by existing legislation from acting in its own best interests. It is plainly absurd that it could be prevented from forming joint companies with the private sector even if it wished to do so. I particularly address that point to the representatives of the SDP who have said that they support partnership between the public and the private sectors and new ways of financing the public sector. Existing legislation is an obstacle to that. The Bill removes those obstacles, and if the SDP were consistent it would support the change.

Surely the idea of joint companies between the public and private sectors is sensible. If the SDP votes against such a modest proposal, it will show that its reactions are as Pavlovian and as knee jerk as those that it attributes to other parties. It will show that the SDP's view is neither pragmatic nor principled but simply calculated to be different from the views of others. Views about ownership may differ, but that does not mean that the boundary between the public and private sectors should be fixed by legislation for all time. That is the way to the museum economy.

I can understand Labour or SDP Members opposing steps that might be taken under the powers of direction in the Bill, but that would mean opposing those steps when they are taken. To vote against enabling legislation is to be dogmatic, which seems an immoderate stance for those who call themselves the moderates of the centre.

It must be in the interests of an industry if it can get away from the clutches of the Treasury, from having its investment decisions reviewed by Ministers and questioned in the House and from its hard-pressed management having to put in time before Select Committees. All those requirements are the inevitable and proper obligations placed on State industry. They are proper when the Government are the bankers and the owners, but that is no way to run a business and I am sure that all the managers of nationalised industries agree with that.

Separate businesses within BS will do better if they are freed from the legal straitjacket. Joint ventures will allow them to draw on the managerial and financial resources of the private sector. White Papers on nationalised industries, cash limits, financial targets and efficiency audits are no substitute for commercial freedom. British Shipbuilders' most powerful competitors all have commercial freedom, and only commercial success will halt the loss of employment in BS.

It is absurd to pin hopes of preserving employment on an ever-growing combination of public ownership and subsidies. The taxpayer has financed over £540 million of losses in BS, but that has not solved the problems. Some hon. Members, including my hon. Friend the Member for Rutland and Stamford (Mr. Lewis), draw attention to unfair competition and subsidies elsewhere, but the one thing that cannot be subsidised is delivery dates, and that is where our competitors have sometimes had the edge recently.

Those are the reasons why we want to see an injection of private resources into British Shipbuilders' activities. However, I stress that the Bill does no more than enable that to happen. Some of the corporation's most important activities will remain in public ownership for the foreseeable future. Merchant shipbuilding is unprofitable and in present conditions would obviously not be attractive to a private investor. The Government will have to continue to support merchant shipbuilding for the foreseeable future.

How can the Minister talk about commercial freedom while the EEC is putting pressure on all its members to phase out State aid at a time when the Japanese have developed a powerful cartel? Is not that the commercial freedom of the madhouse? We are the only people in favour of commercial freedom and we are in the most vulnerable position of any shipbuilding nation. Others are garnering their strength. How is that commercial freedom?

I disagree with the hon. Member. The European Community regulates State aid within Europe and there is no reason to believe that Britain's support to its industry is less than that of other European countries. As to the Japanese, the hon. Gentleman used the phrase "forming a cartel", but all the evidence shows that the Japanese Government's support for its industry is less than ours. We should be deceiving ourselves if we believed that the secret of Japanese competitiveness was simply Government support. Japanese shipbuilders have many advantages and they are much more competitive than many European organisations.

The hon. Member for Newcastle and Tyne, East (Mr. Thomas) mentioned warship building. Warship building is profitable and is one area of the corporation's activities that could attract private sector investment. However, I should emphasise one point. The Bill will prevent defence interests, such as warship yards, from falling into unfriendly hands. Nevertheless, the view of Opposition Members and of the right hon. Member for Stockton (Mr. Rodgers) is that, because the Ministry of Defence has been British Shipbuilders' main customer, it should remain in public ownership. That misses the point. We must return to a position where the Ministry of Defence is not its main customer. Before nationalisation, exports accounted for 50 per cent. of its business.

As the chairman of British Shipbuilders said, many jobs depend on regaining lost markets overseas. I was extremely surprised when the right hon. Member for Stockton supported the public ownership argument the other day. I know what Labour Members believe, but it is surprising that the SDP should believe that, for example, if the National Health Service is the major customer of the pharmaceutical industry, that industry should be nationalised. There is no reason why a company that is a main supplier to the Government should not be in private hands. What is important in this case is the ability of the warship builders to compete as successfully in world markets as they used to do.

The argument is simple. The shipbuilding industry is nationalised and the Ministry of Defence is the largest customer of its shipbuilding section. The shipbuilding section is often successful in obtaining foreign orders. If that is so, how will a privately owned warship building sector be more able to attract the orders that it does not attract at present?

The right hon. Gentleman's facts are not up to date. The industry has not attracted export orders and has achieved nothing like the success that it had before nationalisation.

Whether one talks about shipbuilding, aircraft or any industry that supplies the Government, there is no reason why it should be publicly owned.

A second reason for the Bill is that it is anomalous that, even if British Shipbuilders decided that it wished to get out of one activity, it could not do so. If, for example, the corporation decided that it did not wish to remain in ship repair—and I think that there are strong reasons why it should not—its statutory duties could prevent it from following its commercial instincts.

The board of British Shipbuilders has, of course, been consulted on our intention to change the framework within which it operates. The board is in favour of privatisation and the injection of private capital into the industry, but it is opposed to fragmentation of the corporation. It believes that the piecemeal disposal of mainstream activities could damage future viability. I should emphasise to the House that the Government would exercise the powers in the Bill only after taking into account the views of the board and the effects on the rest of the industry. We intend to build on the industry's strengths. Warship building is the only part of British Shipbuilders to make substantial profits since nationalisation. It would be wrong if those companies were starved of investment because of losses in the rest of the corporation. In the past, capital expenditure has suffered because of the demands for extra cash to meet unexpected trading deficits. Privatisation could open new sources of finance and help with investment.

Warship building guarantees profits because it is underwritten and the contract price is fixed at the beginning of the job. Does the Minister believe seriously that if British warship building is privatised we can sustain a merchant shipbuilding industry in Britain?

We should not maintain warship building in public ownership in order to maintain our merchant shipbuilding capacity. The two should stand separately. The hon. Member for Newcastle upon Tyne, West (Mr. Brown) said why he believes that warship yards make profits, but we must deal with more than domestic sales. We wish to see the same export sales that existed before nationalisation.

A shipbuilding industry need not be totally publicly owned to survive. Among British Shipbuilders' competitors, the French industry is a mix of public and private ownership and the German industry is mostly private. I need hardly remind the House that the most successful shipbuilders, in the Far East, are privately owned.

However, Sweden began to move shipbuilding into public ownership in 1975, since when more than one out of every two jobs in its merchant shipbuilding industry has disappeared. In British Shipbuilders, more than one quarter of jobs have disappeared since nationalisation. Time and again experience has shown, in this and in other industries, that nationalisation cannot protect jobs.

The Bill is another example of the Government's determination to strengthen the industry. Since we came to office, we have provided the crorporation with more than £600 million. Cash requirements have been halved, and capital expenditure, which when we came to office was running below the needs of the corporation, has been increased. We approved the substantial project for the modernisation of Vickers. Throughout a long and difficult period, the Government have supported the industry and they will continue to support the merchant shipbuilders.

Labour Members talk about investment, but they should know that investment by itself is not enough. What matters is not the quantity of investment but its quality and the use to which it is put. A problem of the industry is that the massive investment in the 1970s did not produce a significant increase in productivity, which has not yet passed the level reached before nationalisation. There have been achievements, especially under the present chairman, Mr. Atkinson. In previous debates I paid tribute to him, to his management teams and to his work force for their effort, but we still have a long way to go to catch our competitors. The Bill will be an additional spur to even greater efforts.

The House should know that we are examining British Shipbuilders' new corporate plan. I told the House in April that it would be wrong to place great reliance on the forecast in the previous corporate plan of a continuing improvement in real prices. Unfortunately, our doubts on that have been more than justified and British Shipbuilders and the shipping industry once again face a severe recession.

We cannot isolate British Shipbuilders from those severe conditions. They will mean that the corporation will not be able to achieve its loss target for this year, which is £10 million after intervention fund assistance. We shall have to consider British Shipbuilders' new corporate plan and financial support for British Shipbuilders in the context of the massive overcapacity that exists world-wide. We must recognise—this relates to the intervention by my hon. Friend the Member for Rutland and Stamford—the dangers of being drawn into a subsidy race. It would be against the interests of British shipbuilding to add to existing overcapacity. The Government do not intend to go down the road taken by the previous Labour Government who authorised the disastrous Polish shipbuilding deal. When we have completed consideration of the corporate plan, I shall report to the House.

The industry faces difficult market conditions. I know from my visits to the yards the great efforts being made to win orders. Those difficult conditions are no reason for failing to give the industry the chance to attract private capital and entrepreneurial and managerial skills. That should be a challenge and an opportunity, and not something to be feared, as apparently the Opposition do.

We are taking powers in the Bill to enable the Secretary of State to direct the board on disposals and to limit or cease activities where that is in the industry's best interests. The other day a right hon. Gentleman referred to the matter as being only a question of theology. I dispute the word "only". But it is not a matter of theology. There is nothing theological about helping the shipbuilding industry to improve its ability to compete and survive. It is only by harnessing public and private resources that the battle for orders and jobs will be won.

I commend the Bill to the House.

4.11 pm

The Bill is not relevant to the problems facing the shipbuilding industry. If the Minister is to divide warship building from the building of the merchant fleet, that will mean the end of merchant shipbuilding in the United Kingdom. We shall be giving up, after all the sacrifices made by both the people in the industry and British taxpayers, if we take the soft option of giving warship building to the private sector. It will make a profit and that profit will be at the expense of British taxpayers.

In effect, the Bill contains only two clauses. It does nothing to further the industry. Many of my right hon and hon. Friends have great experience of the industry in the areas they represent and will be able to speak with real authority. There is no evidence that the board of British Shipbuilders wants privatisation. Of course it says "Yes" when the Government hold a pistol to its head. If one looks at the submissions made to the Select Committee on Industry and Trade, British Shipbuilders does not advocate privatisation. It advocated the improvement of the shipbuilding industry by different forms of investment. It did not say that the answer to the problem was privatisation. The industry was taken into public ownership and saved in 1977 because of the failure of the private sector. We would have had no shipbuilding industry if we had not taken it into public ownership and supported it with Government finance and reorganisation. A substantial price has been paid by those who work in the industry, quite apart from the investment made by the British taxpayer.

The point about the separation of merchant shipbuilding from warship building is that at the moment merchant shipbuilding is unfortunately in trouble. We hope that it will improve. The warship building yards are still doing well. If they are left together there is a danger that the warship building yards will be in trouble because they will be starved of investment. There will be then two industries in trouble and not one.

Those are not the facts that have been put to me by the people in the industry. Since public ownership about 20,700 jobs have been lost from the shipbuilding industry, leaving about 65,000 people directly involved. With the transfer of a number of yards from merchant to offshore and naval building, merchant shipbuilding and engineering are now carried out in 15 yards compared with 27 in 1977, in 28 berths compared with 66 in 1977, in two marine engine building companies compared with five in 1977. Those reductions were carried out without any major industrial relations confrontation. The recent dispute at the Robb Caledon yard has been the only serious industrial dispute within British Shipbuilders. I know that my hon. Friend the Member for Dundee, West (Mr. Ross) will confirm that.

There has been a considerable improvement in performance. A loss of £110 million in 1979–80 was reduced to £20 million in 1981–82 in a severely depressed market. That is the background against which British Shipbuilders is having to work.

The Bill relates to the powers and duties of British Shipbuilders. It is not, as the Minister said, a strictly privatisation measure similar to the British Aerospace Act 1980. It allows the Secretary of State to direct the corporation to transfer assets into a specially formed subsidiary company or companies and to sell those companies if the Secretary of State so directs. It is an enabling Act that gives wide powers to the Secretary of State. Some of my hon. Friends are well aware of the arguments about enabling Acts. For instance, within the Labour movement we have the Militant Tendency. My word, the Government can show it a thing or two. The Government are taking powers without further parliamentary control. In my opinion, that is against the principle of parliamentary democracy. The Government are playing fast and loose with the House of Commons.

If we are not careful, the shipbuilding industry will become like the steel industry, which was brought into public ownership for good reasons at the outset and then turned into a political football and kicked backwards and forwards by the Labour and Conservative Governments until it was almost destroyed.

We do not want to kick it about. We want it to remain within the public sector because we believe that that is the correct place for it. The hon. Gentleman voted for the measure at the time and I am encouraged to know that he will vote against the Government this evening. He is consistent on this issue.

Can the board refuse to comply with the directions of the Secretary of State if in its opinion such directions are against the interests of British Shipbuilders? Could there be confrontation? The question arises from the Bill. The division between the board's powers and the Government's wishes has not been clearly defined. The Minister mentioned in detail the changes, which will give the Secretary of State wide powers.

I understand tht some claims for compensation from the 1977 nationalisation that went before the European Commission of Human Rights are still outstanding. Can the Minister tell us the up-to-date position and say how that situation relates to the changes? The Government cry crocodile tears, but we should have an answer.

What is the purpose of the right hon. Gentleman's question about compensation before the European Court? Does he believe that the nationalisation terms were unfair?

We just want to know the Government's attitude. They have been in office three years and have done nothing about it.

When British Shipbuilders was nationalised in 1977 the three warship yards received about £25 million compensation based on 1974 figures. They claimed £75 million. The Tories said that they would rectify the position when they came to power.

My hon. Friend has great experience in the matter and I thank him for what he says.

The hon. Member for Surrey, North-West (Mr. Grylls) mentioned the breaking up of the yards and the division between merchant shipbuilding and warship building. That would be the death knell of British shipbuilding as we know it. If the yards are split, will the Government give preference to private yards? Will they favour those in which private money has been invested? The buyers will tell the Government that they have bought the yards and want the invesment, whether in warships or whatever.

What is the Government's policy on warship orders? The Minister talked about the lack of overseas orders. Prior to nationalisation, for virtually a decade, there were no overseas sales. In the 1950s we built about 40 per cent. of the world market.

Now it is down to 4 per cent. During the decline, when Japan, Korea and other European countries went into merchant and warship building, our industry was in private hands and no investment was made. Our share of the market virtually disappeared.

The Minister might at least have paid tribute to the work of British Shipbuilders during the Falklands dispute—to the turnround of ships and the skill called upon in the interests of the nation. We would have been in a sorry state had we had no basic shipbuilding capacity and had had to rely on foreign imports.

How will defence orders be decided on? They come 100 per cent. from the public sector.

At present the orders come from the public sector and go to the public sector. If part of British Shipbuilders goes to the private sector, it will be the public sector versus the private sector.

I made the same point to the Minister. The only guaranteed profitable part of British Shipbuilders is naval shipbuilding. The Minister and the hon. Member for Surrey, North-West (Mr. Grylls), who is secretary of the Tory industry group and who has an interest in pharmaceuticals, both mentioned the pharmaceutical industry. They said that, to follow our argument, because the NHS is the biggest customer of the industry the industry should be nationalised. If NHS custom was withdrawn, what chance would the industry have of surviving? That is the exact analogy with naval shipbuilding being hived off from British Shipbuilders.

That underlines my point. The Ministry of Defence is a publicly owned body. Its orders should go to the public sector.

Warship building is profitable and has helped to reduce British Shipbuilders' deficit. The Minister dismissed the argument that one sector should help another. All shipbuilding countries are having difficulties. It is outrageous that the warship building sector should be sold off so that the private sector can make profits out of the public sector.

What is the difference between warship builders and any other defence contractors? The right hon. Gentleman seems to believe that defence contractors have guaranteed profits. Does he believe that Racal, Marconi, GEC, Plessey and all the other defence contractors should be publicly owned?

We are talking about 100 per cent. direct involvement. One argument for nationalising the airframe and aircraft industry was that it involved 90 per cent. public money. My hon. Friends may later wish to take up the Minister's argument.

The difficulties facing the shipbuilding industry include the severe workload gap for 1983–84, the poor market and the fact that the future of warship ordering is unclear. We do not know what proposals there will be in the Defence Review. The outlook for merchant shipping is even more serious. Because of the oil glut, demand for offshore development has declined considerably.

British Shipbuilders told the Select Committee that
"the UK needs a proper maritime policy for both merchant and naval fleets—and fishing too for that matter. Once the capability in shipbuilding and ship repair has been disposed of, it will not be recoverable. BS want the ships lost in the Falklands dispute to be replaced in addition to normal fleet replacement. Shipbuilding, like shipping, is a national strategic asset—and should be treated as such by government. It is perfectly reasonable to be able to ask that there should be government support. 'If you want to have a navy you have to have one every day, not just sometimes.'"
That is what the chairman of British Shipbuilders said in evidence to the Select Committee. There is no reference there to privatisation or denationalisation. He was asking for an overall plan. It was an all-party Select Committee. It recommended that
"iii. the Government should set up a high-level interdepartmental working group to consider the full implications of a maritime policy for the UK embracing both shipbuilding and shipping;
iv. the Government should press the European Community to co-ordinate its policies for shipbuilding and shipping both internally within the Community and in its relations with countries outside the Community;
v. the Government should remind all public authorities of the desirability of buying British materials and components and also ships built in British yards;"
The Minister referred to the Polish order. Without it, merchant shipping development would have been in great jeopardy. If, in the face of great Government opposition, we had not reordered the "Atlantic Conveyor", many shipyards in the Northern region would have been in jeopardy. The P & 0 liner order going to Finland was a national disgrace. Those are some of the facts. Against that background, we must consider what British Shipbuilders has pressed the Government to do. I shall again quote from the evidence that the deputy chairman of British Shipbuilders gave to the Select Committee:
"BS's Deputy Chairman stressed that the last few years had been traumatic for the industry and for the workforce, largely located in areas of already high unemployment. It seems clear that for the most part there had been an extraordinary level of realism and degree of co-operation between management and workforce. While there have been difficulties recently we found the approach of witnesses from the Confederation of Shipbuilding and Engineering Unions and from the Shipbuilding and Allied Industries Management Association most constructive."
In other words, people involved in the industry want it to survive and have been co-ordinating and co-operating to that end.

There is great skill in the industry. There are great spin-offs into other industries such as steel, components, engine building and fitting out. That is why the Opposition maintain that we should buy British. That is why the Bill is irrelevant to the problems that face the nation.

Britain faces the threat of Korea. That country keeps its tenders 5 per cent. below the lowest tender in the United Kingdom because the industry there receives massive Government support. That makes nonsense of any claim that British Shipbuilders should compete in the free market. The Government should recognise that point.

I do not know whether my right hon. Friend has read this months edition of Shipbuilding News but in it the chairman of British Shipbuilders, when referring to international competition, said that

"there is no future in boxing by Queensberry rules if your opponents are engaged in all in wrestling."
That is what we are talking about with regard to international competition.

Once again my hon. Friend has underlined the Bill's uselessness and the damage that it will do. We have no hesitation in opposing it. The Minister has not made out a case for it. It is a short Bill. It chiefly consists of two clauses. They will cause havoc in the industry and will not help in any way. Not only will the Opposition vote against it, but if the Government are foolish enough to enact it before the next general election we shall reverse the proposals when we return to office. Repealing the Bill will be part of our campaign to create and recreate an industrial base—of which shipbuilding is a vital part—that we can build upon to produce full employment and get the manufacturing sector moving again. The Bill aims directly at the manufacturing sector. It will make us dependent on foreign imports rather than on British-built ships. It is irrelevant and I ask the House to oppose it.

4.35 pm

There have been many debates on the shipbuilding industry since I was elected in 1974, and all of them have taken place against a background of depression and uncertainty about its future. I am afraid that will continue to be so for many years for reasons beyond our shores. We are talking about an industry that, perhaps more than any other, faces international competition. Nothing is more international than the shipping industry and the shipyards that supply it.

Before discussing the future I shoud like to pay tribute to the past and especially the immediate past. It is right that we should pay tribute to the work force for the way in which it responded to the sudden calls as a result of the Falklands campaign. I shall confine my examples to Tyneside. HMS "Illustrious", a complicated carrier and one of the finest ships in the Navy, was made ready for service three months early. That required 19 weeks' work to be completed in eight weeks. That remarkable achievement deserves to be praised and recorded.

I do not wish in any way to detract from the splendid work that was performed by shipyards during the Falklands campaign, but perhaps the hon. Gentleman will also pay tribute to the work forces in other shipyards who have done so much to keep the industry going during these difficult years.

I should like to pay tribute to many who work in the shipyards, but one cannot give blanket coverage as there have been some unfortunate occurrences where the same dedication has not been apparent. Those who have been unwise enough to follow that path are those who are most likely to suffer in future.

One cannot divorce the discussion of shipbuilding in Britain or elsewhere from the shipowning scene, the circumstances of which are grim. The world recession led to a fall in the volume of world trade at the same time as the very large scale development of shipbuilding in Japan and the developing countries of the Far East led to a flood of ships pouring on to the seas of the world.

The Japanese went in for shipbuilding in a very big way 10 years ago—and these new yards started producing a great volume of ships just at the time that the world recession began because of the increase in oil prices.

The first ships to be affected were tankers. The Japanese thought that they would collar the world tanker market. They constructed tanker building yards all over the island. Practically every coastal town of any size had such a yard with the latest equipment and a hard working oriental work force. They produced so many tankers that now about half of the world tanker fleet is surplus. Many are tied up in Norwegian fjords or the bays of Brunei. Moreover, many are steaming at half speed not only to save fuel but so as not to arrive too soon with oil supplies to the market. It is incredible that half the world's tanker tonnage is now surplus and ships that are only a few years old are being scrapped.

When the market for tankers collapsed, the oriental yards turned to bulk carrier construction and diligently produced a large number of such vessels to carry grain and minerals. Now the same thing is happening again. Work cannot be found for this flood of ships, and the number of vessels laid up is frighteningly high. About 1,000 ships throughout the world are laid up. In 1980, 10 million tonnes of shipping were laid up. Last year, the figure was 27 million tonnes. It is now 76 million tonnes.

Changes have occurred in world trade. Oil now comes from the North Sea. In rough terms, according to what I am told by friends in the shipping industry, for every million tonnes of oil produced in the North Sea, one fewer large crude carrier is needed. At the moment, oil production amounts to about 90 million tonnes a year, and the need for perhaps 90 large tankers has thus been removed from the world merchant fleet.

I have referred to over-capacity in the bulk trade. Some figures I was given recently showed that the income obtained from the charter of a standard-sized bulk carrier able to go through the Panama canal was $2,850 a day. The cost of paying the crew amounted to over $3,000 a day. The income was therefore insufficient to meet the crew costs, let alone other running costs which amounted to over $2,000. This allowed nothing for depreciation of the cost of the ship or interest on the loan taken out to buy the ship and nothing towards investment in a new ship. With such losses from operating there is now hardly any demand for merchant ships of most types. Many types can hardly be given away. With owners selling to reduce their losses, an almost new second-hand ship can be bought for a fraction of the price of a new one. Against that background, who will order a new ship?

I pay tribute to the management of British Shipbuilders, which has done well in the past year in gloomy and difficult marketing conditions. The chairman has already been mentioned. There are many who could be praised. I single out Mr. John Parker, the deputy chief executive. I know of no one in the shipbuilding industry who has worked harder in recent years. He has slaved away, travelling from one end of the world to the other to obtain orders. We have done relatively well in a very bad situation.

No hon. Member can fail to agree that there is a defence implication for our Merchant Navy and our merchant ship building capacity. The size of the Merchant Navy has fallen from 1,600 ships of 50 million tonnes in 1975 to fewer than 1,000 ships and about half that tonnage. There must be some level below which it will not be possible to react to a crisis such as the Falklands campaign. There is a national need to maintain both the Merchant Navy and a shipbuilding capacity to enable us to continue to operate ships in future.

I was pleased to hear the Minister make the important statement—probably the most important in the debate—that the merchant ship building yards would not only remain in public ownership but would continue to receive public support. No one can say that the Government have not helped the industry. This aid amounts to about £600 million since 1979, expressed in pounds of historical value. If translated into pounds of current value, the figure is £700 million. A vast sum has gone into the industry.

I cannot understand the argument that the introduction of private capital is harmful to the warship building industry. Last year's accounts show that the warship building division made a profit of£32 million and the merchant ship building division a loss of £l36 million. What happened was that the profits made by the warship builders were siphoned off to keep the merchant ship builders going. That cannot lead to the capital investment and improved productivity that is needed in the warship building yards. The managements of the warship building yards say that they have not been receiving adequate investment for that reason. I see such investment coming from outside the industry. I see nothing wrong in it.

The future size of the warship building industry must depend mainly upon the ordering rate for the Royal Navy. I make no secret of the fact that I should like to see more warships built. A larger warship building industry is possible only if we obtain our share of foreign export orders. All over Western Europe complex naval ships are being built and sold.

In considering the future of the industry I say now as I have said before that two factors that must be borne in mind are the fierce competition from merchant builders in Korea and other Eastern countries and the need for deeper inquiry into the reasons why we are no longer obtaining orders from foreign countries for major warships. It is 10 or 12 years since this country obtained a major warship export order.

The hon. Gentleman and I share a common interest in Swan Hunter. I accept his general argument about the warship yards and warship building. Does he accept that if all the pressure were to give warship orders to yards that had been privatised in order to maintain their profitability and private investment, the naval orders that have enabled Swan Hunter to remain viable for the past five years would no longer be available?

The hon. Gentleman refers to Swan Hunter. It is a matter dear to both our hearts. I thought that at one stage the Ministry of Defence had stated that each of the mixed builders—Swan Hunter is the main such builder, part warship and part merchant—would in future issue figures separately for their two divisions. I understood that undertaking to have been given in reply to the Select Committee, but I note that there is no division in the current set of accounts so we do not know how the results are split between naval and merchant work.

I do not see the threat envisaged by the hon. Gentleman. I do not believe that Swan Hunter will be an export yard except for large ships, such as carriers. If the Australians decided to order a carrier in this country, I would expect the order to go to Swan Hunter. For a long time export orders for frigates and destroyers have been handled at Vosper Thornycroft and Yarrow.

The type 24 frigate can be built in a number of places. If the pressure were to put orders for those frigates into yards that had been privatised in order to maintain agreements about the profitability of those yards, would not jobs in Swan Hunter in my constituency and at Wallsend be placed under severe threat? My firm judgment is that this threat would arise. The hon. Gentleman does not seem to have answered the point.

If there were a political decision to send the orders to one town and not the other, it would, of course, mean jobs going to one place and not to the other. I do not believe that what the hon. Gentleman suggests will happen. I think he meant to refer to the type 23 frigate. The type 24 was designed but got no further than the drawing board, so the point about details does not matter. The issue is whether British warship orders will in future be given to Swan Hunter. I am convinced that they will be from all my knowledge of the Navy and its plans for the future, and I have no doubt at all that there will be substantial naval work for the Tyne.

The hon. Gentleman, the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) and myself have a deep interest in Swan Hunter. However, the hon. Member for Tynemouth (Mr. Trotter) is not following the point. If the naval shipbuilding capacity of this country is privatised, there is no way that privatised naval shipbuilding yards will give their guaranteed profits to Swan Hunter. Therefore, the future of Swan Hunter must be in grave jeopardy if naval shipbuilding is privatised.

The hon. Gentlemen are going rather far in supposition. Is the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) suggesting that warship yards are to be sold? If that is what he is suggesting—

My understanding is that private capital will be invested in the warship yards.

I have no doubt that the point will be cleared up in the wind-up speech, as it always is.

The main class of ship to be built for the Royal Navy at Swan Hunter in the years ahead is being designed at Swan Hunter now. It is being designed not at Yarrow or Vosper Thornycroft, but on the Tyne. This is a phoney and spurious argument. There is a class of large ships of the Royal Navy, as Opposition Members should know, upon which design work is being carried out at Swan Hunter now. The question of design is being rethought in the light of the Falklands experience.

I am concerned with Vosper Thornycroft. Will my hon. Friend forgive me for pointing out that most of the design teams for the type 42, the type 22 and, we hope, the type 23, which will come eventually, are either at Yarrow or Vosper Thorny croft. They carry the overheads of maintaining the design teams, irrespective of the order book. The real argument is not one of public or private ownership, but where the teams are being maintained, and that is in those two yards. My hon. Friend is right in saying that if we go back to very large vessels Swan Hunter would play a part. However, as I understand it, Swan Hunter is not in the design at the moment. The main design for frigate replacement is done at Vosper Thornycroft and Yarrow.

On a point of order, Mr. Deputy Speaker. As the hon. Member for Tynemouth (Mr. Trotter) clearly, and perhaps genuinely, misunderstands the import of a particular part of the Bill. should not the Minister enlighten his hon. Friend?

I am sorry. but I cannot help the right hon. Gentleman. It is a matter for the Minister whether he intervenes.

My mind goes back to the largest class of frigate built since the war—the successful Leander class. Such frigates were built in yards all over the country. It is 20 years since the design came out. I do not remember which yard was the lead yard in designing them, but I do know that the 10 or 12 yards that built them were privately owned, yet the design was used by all. The argument is a spurious one.

No, I shall not give way. We have discussed the matter sufficiently.

The third repeated question in any discussion on the industry is that of the financing of orders in the merchant shipbuilding yards. The problem of obtaining orders is not just one of the cost or the delivery time, but very much the length of time over which one can pay for the ship. International agreements among the shipbuilding countries are definite and open as to the interest rate and the period of payment. However, one constantly hears of clandestine methods of evading those agreements being used in the shipbuilding countries. Shipowners tell me that the period of repayment and the interest rate are in many cases as important to them as the price. It can be the main factor in deciding the country where the order is placed. We need to look very closely at how we can help the shipbuilding industry in this respect.

Mr. Derek Kimber is a leading figure in the industry who has worked extremely hard on the export side with great success. With his knowledge gained from talking to shipbuilders all over the world, he believes there is a need for flexible repayment terms so that the shipowner can have the balance of his loan carried forward and the main part of the repayment effected when trade turns up, as it must do. The equilibrium will be between critical supply and demand and the upturn in orders should come again in the next four or five years. Freight rates can vary enormously by a factor of three within a period of 18 months. When they have gone up again, owners will be better able to meet the cost of servicing and repaying a loan. This is something that the Minister might take on board as a means of financing ships.

Whoever owns the industry and however we discuss its organisation, it will have a difficult future. The degree of success, the size of the industry and the prospects for future employment will depend, first, on continued Government support for the merchant ship building side, which I was delighted to hear the Minister pledge tonight, and, secondly, on the skills and the productivity of those who work in the industry. We cannot get away from the fact that, as in every other industry, the future is in the hands of those people rather than in the hands of the House.

4.57 pm

I am glad to follow the hon. Member for Tynemouth (Mr. Trotter), as we both represent parts of the North-East. He will no doubt agree with me that in form the Bill is objectionable and unsatisfactory. In substance, depending on how it is treated, it can be either a triviality that is alien to present circumstances, or a serious threat to the industry. From what the Minister has said, it seems more likely to be the latter.

The Minister's Back Benchers, however, seem to be less than enthusiastic about the Bill and the hon. Member for Tynemouth was more obscure than enthusiastic. During the Debate on the Address, the hon. Member for Southampton, Test (Mr. Hill) spoke about the Bill. He appeared to take the view that it is frivolous, and said that privatisation was a very long shot and that we cannot privatise British Shipbuilders simply by selling off the warship yards, and then expecting a fairy godmother to take up the merchant ship building yards.

There have been virtually no export orders for naval work for a long time. We are thus concerned with contracts for the Ministry of Defence, which are worked out between BS and the Ministry of Defence. If, because of the orders that may arise out of the Falklands war, these warship yards are made privately profitable, that would be no less than obscene.

Nearly all the merchant shipbuilding yards are in the North-East. There is only Govan outside. Sunderland Shipbuilders would not expect a fairy godmother. Court Line, which made considerable investment before nationalisation, went bust. Austin and Pickersgill would not expect a fairy godmother. The accounts of British Shipbuilders show the money that it needs for support.

Indeed, merchant ship building has no immediate future unless, as the Minister conceded, there is public support comparable to that received by the shipbuilding industries in other countries. The Minister referred to delivery dates. I must tell him that he is out of date. Delivery dates are now an embarrassment—ships are being delayed because their owners do not want delivery. The industry is unattractive to private investment and, if the Government begin privatisation, the yards will be written off. It will be claimed that investment will not give an adequate return.

It is agreed that British Shipbuilders has a good record. It has an efficient and effective management. John Parker was previously with Austin and Pickersgill. He, with many others, has made a substantial contribution to British Shipbuilders. Labour relations have been transformed. But in spite of that, there have been heavy and continuing losses in manpower. This is continuous. Since April 500 jobs have been lost in the yards on the Wear, and consequently almost twice as many outside the yards. My hon. Friend the Member for Jarrow (Mr. Dixon) will no doubt point out that the Tyne has suffered a catastrophic collapse in ship repair work.

Merchant ship building must have a certain capacity in order to exist. Its present capacity is the minimum for Britain. The industry is under threat. There has been a dearth of orders, with order books down £100 million compared with 12 months ago. The British fleet is declining at an alarming rate—more than one-quarter of the fleet has disappeared during the past 18 months and the position is rapidly deteriorating. Only recently we were accustomed to talk about things being all right after the early 1980s. Now we talk about the mid-1980s. We must give more support and assistance to British shipbuilding.

I have been unique in always taking the view that it is more important to concentrate on shipping than shipbuilding, even though I represent a shipbuilding constituency. We must look to Japan to see how it developed shipbuilding and then shipping. Years ago, as a young man, I wrote a plan for shipbuilding. I said that there would be between 40,000 and 80,000 redundancies. I was regarded by many of my colleagues as ridiculous in anticipating substantial redundancies. I was right. Indeed, my figures were a gross underestimation of what eventually happened. I saw the beginning of world competition. I argued then that we would have to provide reserve capacity, which demanded from the Government a new location of industry policy. We needed to provide alternative comparable work in shipbuilding areas. I remember the feat performed by Sunderland when war broke out and the yards were manned by people who had been unemployed for many years. If we are concerned with the national interest, we must provide for such eventualities. We should have altered our approach.

I emphasise again the importance of shipping. I have always said that the nationalisation of shipbuilding would do nothing to stabilise the demand for ships. To concentrate on shipbuilding alone was unwise—the top priority should have been shipping. I recommended aids and controls and a reorganisation commission and we have made a great deal of progress since then. There has been the Geddes report and also that of Booz-Allen, which was far too much neglected.

However, I also recommended that there should be a fact-finding committee, drawn from both sides of the two industries, supported by people with industrial and public experience. That would have created an awareness of our national responsibility for the two historic industries—shipbuilding and shipping. I envisaged that from such a committee we would obtain a maritime policy.

It is significant that when the Select Committee met British Shipbuilders and listened to Mr. Atkinson, it recommended that there should be an interdepartmental working group to formulate maritime policies. In reply, all that the Government do is talk about the free market and the introduction of the Bill. I am trying to be non-controversial. We should study how, for instance, Japan has organised shipbuilding and shipping. It is a great pity that the recommendation was not accepted by the Government. I am trying to convince the Government to accept something that will give those concerned on both sides of both industries an opportunity to formulate maritime policy.

During recent months Japan has gained three-quarters of the world's shipbuilding orders. North Korea is offering ships at ridiculous prices. We cannot tolerate this. I agree with Mr. Atkinson's views about Europe, and we must deal with Europe. It is nonsense to talk about free trade in such circumstances, or about Britain's interests. We have no particular interest in the development of shipbuilding and shipping in Japan and the Far East.

I am told that scrap and build has not been discussed in the EEC for three years and that there was considerable scepticism when it was discussed. I am concerned not with that, but with it being discussed again. The shipping fleet is in a far worse condition than it was three years ago. There has been a considerable amount of breaking up in the merchant fleet. We have heard about what has happened to the British fleet. We need to investigate scrap and build again. It might be an attractive proposition.

It is agreed that the merchant fleet had an important part to play in the Falklands battles. If that is so, we should now be thinking about a sensible investment policy for the British merchant fleet. We should also be thinking about a strategic shipping reserve. It might be an official part of the Royal Fleet Auxiliary. That would mean ships being equipped with defence features. We should consider the conversion and part use of the present fleet for that purpose or, alternatively, the construction of ships with those features. They would be built in British yards. There is nothing to stop us from doing that. We could work out with British shipowners suitable assistance terms.

I have no wish to be critical about the machinery of credit and aid to which reference has already been made. We recently negotiated cover for two ships from Ethiopia, which were desperately needed in Sunderland. I have a great respect for the Department of Trade and the Export Credits Guarantee Department, but something more can be done. I have been told repeatedly by Mr. Kimber that we need to improve and expedite the present procedures, but we also need flexible financial packages and special terms when buyers are from less-developed countries. The Minister should not look surprised because it can be done and it is done. It is done by the Japanese, the Germans and, not surprisingly, the French.

We have taken advantage of aid. Sunderland yards benefited through orders from India a long time ago. More can be done and more must be done. We must sit down and think out some form of inducement for British owners to place orders in British yards. We shall not get anywhere by discussing privatisation, which can only distract and upset those working in the yards. We want the capacity to build a Navy and the merchant shipping that is required, and to sustain them.

I am grateful to my right hon. Friend for giving way. I am deeply interested in his point about the negotiations for the building of two ships for Ethiopia by Sunderland Shipbuilders. He will recall, as I do, the problems with which Sunderland Shipbuilders was confronted because of what appeared to be an unnecessarily long hold-up by the Department of Trade in releasing the resources available through ECGD.

Is there not a lesson to be learnt there? British Shipbuilders at Sunderland was at its last gasp to maintain employment, largely, presumably, as a result of the unnecessary delays in releasing the capital resources to which it was entitled through ECGD. Does my right hon. Friend agree that there is a lesson to be learnt about coordination between those two Departments?

I agree with my right hon. Friend I have great respect for ECGD. It has done a good job and has responded in the past to appeals made by British shipbuilding. Nevertheless I agree with my hon. Friend that we must learn from these experiences and learn quickly.

We need a national interest in British shipbuilding. I use those words not in the cynical way in which they appear in the Bill but in a real sense. British shipbuilding and British shipping are two historic industries on which we greatly depend, particularly if we should ever be involved in war, as we found in the Falklands. We must stand by these industries. They are making a great effort to recover in difficult circumstances. They want our confidence and they do not want to be distracted by the matters contained in the Bill.

5.15 pm

I agree very much with the important point made time and again by the right hon. Member for Sunderland, North (Mr. Willey