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Volume 129: debated on Wednesday 9 March 1988

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To ask the Chancellor of the Duchy of Lancaster if he will make a statement on progress made in discussions of the European Commission's proposals entitled "Shipbuilding—Industrial, Social and Regional Aspects".

Our discussions in the relevant European Council of Ministers on regional measures within the programme known as RENAVAL are well advanced. I have stressed to the Council how important I believe it to be that we should make rapid progress. The Commission's proposals on other aspects of its programme have yet to come to Council. The Commission seeks to assure me that work within the Commission is well in hand.

Although help to enable new businesses to go to shipbuilding areas is to be welcomed, will the Minister assure us that it will in no way be a sop to allow a further rundown in British shipbuilding? May we be assured that the money will not be a substitute for the financial support that the industry needs if it is to survive and play an essential role in Britain's industrial future?

I am anxious to get support from the Community for shipbuilding areas as quickly as possible. Obviously, we need the encouragement of other businesses in such areas. Looking back, no one can doubt the extent of the Government's financial commitment to British Shipbuilders. At the moment, its external financing limit is £180 million, which is about £20,000 for each employee working in the yards. As I told the House when I announced that figure last year, it is a heavy figure, and the outlook for British Shipbuilders is still difficult.

Will the discussions include the inducements offered by many European companies to attract custom and orders away from British shipbuilding and repair yards?

We have agreed on a European sixth directive, which is meant to impose limits on the extent to which any Government within the European Community can give inducements to win orders. It is the British Government's view that the sixth directive should be adhered to, to stop pointless and wasteful competition, with taxpayers in each country pouring money into loss-making orders.

Will the Minister take this opportunity to repudiate the report that appeared in The Guardian a few days ago to the effect that the Government are contemplating removing all help to British shipbuilding? That would mean reneging on the sixth directive. It would also cause utter devastation in shipbuilding areas such as the one that I represent.

Obviously, I have to keep in close touch with the trading position of British Shipbuilders because of the very large sums of money that are involved, as I explained to the hon. Member for Gateshead, East (Ms. Quin). We have taken no new decisions about the future of British Shipbuilders, but the position of the business has to be kept under review while it is in such a difficult state.

Will my right hon. and learned Friend confirm, first, that the worldwide shipbuilding industry is in a state of extreme recesssion? Secondly, while I welcome his answer to an earlier supplementary question, will the Government strive to make certian that all the EEC countries conform to that directive once it has been signed and agreed and that there are no hidden subsidies from our EEC partners?

The shipbuilding industry throughout the world is in a pretty parlous state, with major lay-offs and closures taking place in Japan and in Western Europe. Although there is some prospect of the market improving, there is a general lack of orders to match the present world capacity of shipbuilding. I agree with my hon. Friend that we must stop unfair competition breaking out within Western Europe. We seek to adhere to the sixth directive and the Commission seeks to endorse it. The last complaint received was against ourselves and the French.