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Polish Government Shipbuilding Contract

Volume 387: debated on Thursday 24 November 1977

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3.23 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what proportion of the loan or credit promised to the Polish Government for the building or equipping of their ships will be spent in the United Kingdom.

My Lords, more than 90 per cent of the estimated cost of constructing these ships will be incurred in the United Kingdom.

My Lords, why is there such reluctance to let the British shipowners know the detailed terms and arrangements that have been entered into so that they can assure themselves that they are not likely to be disadvantaged as a result of this arrangement? Are the terms that have been given to Poland available for British shipowners and builders in this country? Is the noble Lord aware that when his right honourable friend made his euphoric speech at the Labour Party Conference and said that it would bring business to our shipyards, the figure then was £150 million? It was then reduced to £130 million. It is now suggested that it is down to £115 million, and some responsible newspapers have even suggested that it may fall to as low a figure as £70 million. What is the truth? Why cannot a clear statement be made so that the people involved may know what it is all about and British interests can be properly safeguarded?

My Lords, British interests will be properly safeguarded. British Shipbuilders have offered to supply British owners with the same ships at the attractive prices which the series production of this large order makes possible.

Secondly, the noble Lord, Lord Harmar-Nicholls, must realise that a contract of this type must contain a great deal of confidential information, because it is between two contracting parties who would naturally wish to keep it secret. The changes which have been made since the period of the Labour Party Conference are clearly changes that took place during those negotiations.

My Lords, when the noble Lord was asked on 16th June at Question Time whether the financial arrangements would be published, he replied "Yes". Will the Government now publish those arrangements in order to reassure the British ship owners that there is no possibility that this Polish deal, which it is hoped will bring some relief to British shipbuilders in a difficult time, will place them at a disadvantage vis-à-vis their foreign competitors?

My Lords, perhaps I misunderstood the noble Lord's question. However, I remember answering the particular Question to which he refers. First of all, finance for the sale of these ships comes from three sources. In the first place, British Shipbuilders are receiving a grant from the Shipbuilding Intervention Fund. This has the effect of reducing the sale price of the ships. The ships are being sold to a company resident in Poland, jointly owned by the Polish Steamship Company and British Shipbuilders, on normal credit terms. That is the only Government credit for the sale. It is being guaranteed by the Export Credit Guarantee Department in the normal way and is in conformity with our international obligations. British Shipbuilders have, in addition, raised finance from commercial sources. That is the basis for the financing of this particular contract.

The contract complies with the OECD understanding on credit for ships and the EEC Commission has informed the Government that it does not wish to raise any objection. The whole of the transaction is within OECD and EEC understandings on this matter. I repeat that British Shipbuilders have offered to supply British owners with the same ships at the attractive prices which the series production of this large order makes possible. If they ask for different sorts of ships they will have to have a different price. However, British shipbuilding interests are safeguarded.

My Lords, I found the noble Lord's answer a little difficult to follow. Is the noble Lord really going to carry out the undertaking that he gave to me in answer to a Question which I tabled on 16th June last, when he said, in effect, that everything would be publicised? Is he aware that I am, of course, in contact with the General Chamber of Shipping which is extremely interested in this matter? Will he now implement the undertaking that he gave to me last June which is very important? I should like to know quite definitely in terms of "Yes" or "No".

My Lords, I do not know how I can say "Yes" or "No" to a lady on a complex matter such as this. I thought that I had given a very full answer. If the noble Baroness could, by putting down a Question, indicate where I have failed to satisfy her, I shall try again.

My Lords, is it a fact that the Polish Government shipbuilders won an order from India and have farmed on to us the order for ships which we are heavily subsidising?

My Lords, I have no knowledge of negotiations between the Poles and another nation. However, the noble Lord is quite right. If we did not have this order, it would have gone to some other nation to the detriment of our shipyards.

My Lords, I should like to revert to the point that I made. The noble Lord, Lord Winterbottom, said that these financial arrangements would be published. Is he able to tell us whether part of the financial arrangements will be published in addition to what he has said today—which is very little though good as far as it has gone?

My Lords, first of all, it is obviously not in the national interests to state the exact grant received from the Shipbuilding Intervention Fund, because every transaction of this type will be subject to negotiations with foreign shipbuilding lines, and naturally we do not want to show our hand before we start playing. Secondly, the transaction is within the guidelines of the OECD and EEC. It is funded normally and guaranteed normally.

My Lords, is my noble friend aware that some of us who have listened to the cross-fire of derogatory questioning, think that a little praise should be given to the Government for having the initiative to employ our skill once more in the great game of shipbuilding. We are proud of the fact that at least the Government have kept their promise in this direction.

My Lords, I am grateful to my noble friend. About 8,000 man years of work have been provided to this country by this contract.

My Lords, I should like to ask the noble Lord, Lord Winter-bottom, a non-derogatory question. Which of the figures which my noble friend Lord Harmar-Nicholls quoted as being the value of the contract, is correct?

My Lords, the figure published at the end of the negotiations is the correct one.

My Lords, knowing that the noble Lord has given an assurance that the exact figures will be published, would he not agree that such as have appeared in the Press are mostly confusing. Does he not believe that this confusion leaves in many people's minds an impression that a definite subsidy is involved? In view of the current important international negotiations with regard to the MFA and GATT, does it not appear that unless this is set out very clearly it will generate the danger of retaliation in many quarters?

My Lords, I tried to show that we have not broken any rules. Naturally there will be competition, but we play the competition within the existing rules. This is a complex subject and hardly one on which I can satisfy the House during Question Time. If noble Lords table an Unstarred Question, or some other method of discussion is arranged, I shall be glad to take part in it.

My Lords, is the Minister aware that to hide behind the excuse of confidentiality undermines confidence in our own industry? There is a real feeling that as a result of this deal there will be unfair competition in the shipping world, which will be to the disadvantage of our shipowners. It is only by giving a clear statement on what it is all about that we can remove that suspicion and demoralisation which will flow as long as confidentiality allows it to exist.

My Lords, the attitude of the noble Lord, Lord Harmar-Nicholls, is somewhat petty. Obviously business must be conducted in confidence. Is the noble Lord in favour of totally open Government? I should have thought that the House was glad that this country has had a major success in winning a very significant international contract.

My Lords, would the noble Lord support Inc if I asked a Private Notice Question on the subject next week? Could I have an answer then?

My Lords, why is it quite right that Parliament, which provides the money for subsidies, should not know how much the subsidy should be? Surely this goes to the basis of English constitutional Government. It is no good the noble Lord shaking his head. Can we have an answer?

My Lords, is the noble Lord aware that those of us in this House and in another place who are aware of some of the details and the background to this contract believe that it is totally uneconomic? Therefore, could the noble Lord assure us that it is economic? Could he ask his right honourable friend the Prime Minister not to interfere in future contracts of this nature by announcing them before they are signed, thereby reducing the negotiating power of the British team?

My Lords, would the noble Lord agree to an Unstarred Question in order that this can be discussed in detail, so that the country knows what it is all about?

My Lords, I can repeat only what was said earlier. It is a deal which will provide work. The economics of it must not be forgotten. Our shipyards are in a precarious position and the provision of about 8,000 man years of work at this moment may keep in existence shipyards that may otherwise go under. If the noble Lord wants to table an Unstarred Question, the noble Lord is a free man and can do so.