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Mr. Newton : The question whether the cost of any particular proposition is greater or smaller than £45 million does not arise in circumstances in which we did not judge that any of the bids would provide a viable future for the yards.
I have no reason to suppose that the factors that the hon. Gentleman mentioned were a significant factor in
Column 328what has happened--and it is not merely a question of my judgment. I considered the advice that was given by British Shipbuilders, on the basis of independent financial advice that it had received, and it seemed clear that the proposals that had been put forward were not sufficiently strong financially to provide a secure future for NESL. There was even some doubt about where the money that was to be paid for the yards was to be found.
Mr. Peter Thurnham (Bolton, North-East) : There is a long tradition of shipbuilding on the Wear. Will my right hon. Friend confirm that, if there is any prospect of its profitable continuation, there is nothing to stop a new enterprise being formed to bid for the £48 million of maintenance which he has just announced? Should the people of the north- east not take heart from the outstanding achievements of British Steel in Cleveland, which was the winner yesterday of the Institution of Mechanical Engineers Willis Faber prize for manufacturing efficiency?
Mr. Newton : In general, the turnaround in many of the areas that have been affected in previous years by substantial steel closures is certainly an encouragement to those who, understandably, will feel depressed by today's announcement.
Mr. Bill Michie (Sheffield, Heeley) : May I first express my sympathy to the workers in Sunderland? I say that because I spent my working life in Sheffield in steel and engineering and saw the trauma and misery created by the demise of the steel industry there. I listened to the Minister this afternoon saying that other enterprises will come forward, other investments will take place and people will be retrained. We had skills in Sheffield and Sunderland. We shall finish up with opportunities to man turnstiles at football stadiums and to sell ice cream in the summer. The young, who should have had skilled jobs, will operate in Macdonald's, selling hamburgers. How can the Government justify the youth training scheme on the grounds that there is a shortage of skills, when the skills are there now in Sunderland? The will is there and the power is there, but the problem is that the Government do not have the guts to fight international pressure.
Mr. Newton : I do not believe that the hon. Gentleman would have put his question in that way if he had recently been to the north-east, seen the new factories going up, spoken to the people who are undergoing training for the new jobs and talked to those in the Northern Development Company or the urban development corporations, or to those who are concerned with the Newcastle initiative. They can see the effects of their efforts on the ground.
Ms. Hilary Armstrong (Durham, North-West) : Many of us have personal knowledge of the skills, the development of those skills, the learning of those skills and the practice of those skills by many workers in the yards. The town of Consett is in my constituency, and it suffered a similarly devastating blow. The Minister knows that the jobs that have been created in Consett--welcome though they are--have not replaced or redeveloped a skill base, and have therefore not given the town and its surrounding area the confidence that there is skilled and productive work for the next generation. That is what the people of the north-east want and what the people of the north-east deserve. They have given their all to build this country. [Interruption.] The hon. Member for Stockton, South
Column 329(Mr. Devlin) may not think that they have given their all, but I know that they have and that they have the work and the skills to be proud of. What will the Government do to ensure that we receive such development? Throwing money is not enough. Proper planning and development and Government orders to that region are needed. Mr. Newton The hon. Lady is obviously right to say that the mix of jobs that comes in the wake of changes of this kind, and the mix of skills that they require, will not be precisely the same as those of the jobs that they have replaced. That is an inescapable part of the process of change. I do not believe that the general point that she sought to make stands up against the background of experience of the north-east in attracting new industries, such as motor cars, electronics and many others. They may not be the old skills of shipbuilding, for example, but they are the skills and products that will be in demand in the future.
Mr. Elliot Morley (Glanford and Scunthorpe) : Whatever new industries may be attracted, the closure of the Sunderland yard strikes at the very bedrock of our manufacturing industry and the impact goes much further than Sunderland. Towns such as mine that have steel plate mills will be affected. Now that the steel industry has been privatised, the Government appear to have washed their hands of its future role but what surprises me is that the Government can write off billions of pounds in privatisation programmes--£5 billion for British Steel alone--yet cannot find the money to protect the jobs in the important industry of shipbuilding in Sunderland.
Mr. Newton : Perhaps it tells one something about some of the economic difficulties that this country experienced, especially during the 1970s, that the hon. Gentleman can describe as the bedrock of the economy, of this or any other area, an undertaking that has persistently lost money, to the extent of hundreds of millions of pounds overall, and £100 million at NESL alone, in a short time. That is no basis for employment in an area.
Mr. Roland Boyes (Houghton and Washington) : Will the Minister accept that his disgraceful statement today is a devastating blow to Sunderland? Conservative Members have demonstrated that the Government simply do not care. Several Conservative Members have made me angry by talking about it being a sad day for Sunderland. For between 2,000 and 5,000 workers, it may be a sad lifetime. Many of them will never work again.
The Minister said that a number of jobs would be created. I ask him to investigate that. Every pit in my constituency has been closed--two quite recently. How many jobs have been created in the Houghton end of my constituency by British Coal Enterprise Ltd. to absorb the jobs of people who have been made redundant and who are on the dole queue? Has the Minister any idea of the magnitude of youth unemployment in the borough of Sunderland? Month after month, 6,000 or more youngsters have no proper jobs and the three unemployment offices have had between 40 and 50 vacancies. What will happen to children in Sunderland? Where will they obtain jobs when another 2,000 jobs have been taken away?
I never expected to hear the Minister's statement today. I wrote him a letter about the matter recently. I pay tribute to my hon. Friends who have shipyards in their constituencies for their efforts in trying to retain them. They have swallowed a lot in accepting some form of privatisation, yet the Minister declares the death of the yards in Sunderland. That is unacceptable, and the Minister should be ashamed of himself.
Mr. Newton : The main thrust of the hon. Gentleman's question was about the prospect of future jobs. The best thing that I can do is to repeat that the Nissan investment alone has already created well over 1,000 jobs, with nearly 2,000 more expected during the next few years, which is roughly the number of people employed in NESL, excluding Sunderland Forge Services. I do not suggest that there is a neat equation for the people involved, but it is a good illustration of the scope for new jobs and it is only one example of the current growth in the north-east.
Column 331North East Shipbuilders Ltd.
Mr. Bob Clay (Sunderland, North) : I beg to ask leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that should have urgent consideration, namely, "the decision by the Government announced today to close North East Shipbuilders Ltd."
The matter is obviously specific in the light of the Minister's statement. It is urgent because, unless the House can call the Government to account within the next few hours, the orders that could come to that yard will no longer be available. The statement should not be allowed to stand. We must also try to stop the devastating demoralisation that is already flowing rapidly through the area that I and other hon. Members represent.
The House should examine carefully some of the statements made by the Minister. It is not true that the recent bids for privatisation were properly examined. I know from personal experience that one bidder was refused meetings with the Minister's financial advisers and accountants, despite the fact that for weeks previously the other bidders had plenty of opportunity to discuss the matter and plenty of information. How can he say that there was a serious assessment? How can the Minister say that none of the bids would have been acceptable to the European Community when the Government never put a formal proposal to the EC? The House should debate the matter in detail. If, as the Minister says, the EC would have closed the yard, the Government should have told the EC that they were not prepared to close it.
Many specific matters about the conduct of this case should be discussed. For example, advice given in good faith by a civil servant to a bidder turned out to be wrong, but it was too late for the bidder seriously to revise his proposal. This afternoon the Minister rubbished British Shipbuilders and said that it was incapable of running the
Column 332yard any longer, yet he relied on its judgment--rightly or wrongly--to assess whether the yard should stay open. It is nonsense. This is a wicked decision that should be debated by the House immediately. We should not allow the Government to run away from the decision that they have made. They should be called to account, and we should be able to debate the shambles and the tragedy that they have perpetrated this afternoon.
Mr. Speaker : The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely, "the decision by the Government announced today to close North East Shipbuilders Ltd."
I have listened with concern to what the hon. Gentleman said and to the exchanges in the House this afternoon, but, as he knows, the Standing Order prevents me from giving reasons to the House. I regret that his application does not meet the criteria laid down under Standing Order No. 20 and I cannot, therefore, submit his application to the House.
Mr. Alan Williams (Swansea, West) : On a point of order, Mr. Speaker. Of course, I do not challenge your ruling, but you will have heard the depth of feeling about this catastrophe for the people of the north- east. As the Leader of the House is present, and as this is a Government decision, may I prevail upon you to ask him to allow time early next week for us to have a full debate? Perhaps he can make a proper statement announcing the time of that debate in tomorrow's business statement.
The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham) : Further to that point of order, Mr. Speaker. I recognise the importance of the issue and the strength of feeling. I undertake to have discussions, through the usual channels, to see whether we can find a way of proceeding that will be satisfactory to hon. Members on both sides of the House.
Mr. Paul Flynn (Newport, West) : I beg to ask leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that should have urgent consideration, namely, "the decision of the authorities to allow the vessel SS Mediterran Frigo to leave Newport docks following a drugs raid."
The matter is urgent because that vessel is now on the high seas, without a customs officer on board, after only one of its three holds was searched. About 48 hours ago, a quantity of drugs with a street value of £2 million was discovered on board the vessel. It is the third time that drugs have been discovered in Newport docks without a single arrest having been made.
The matter is specific because customs officers are inhibited by present laws from seizing any vessel with a weight of more than 250 tonnes and from conducting thorough investigations because they are liable to pay compensation for perishable cargoes that deteriorate. That ship has a cargo of bananas, which will deteriorate rapidly. The matter is important because of the terrible damage done to many lives by those who traffic in drugs. By allowing customs officers to be inhibited in this way, we have created a position whereby the ship is heading for a port in Belgium, from which there is great difficulty in extraditing suspected offenders--we have had recent experience of that--and which is soft on drug traffickers, with a maximum sentence of two years for such an offence. Are we not encouraging drug trafficking by encouraging people to use big ships carrying perishable cargos heading for ports in Belgium and Holland? In the Gracious Speech the Government said that they would "continue the fight against international terrorism and against trafficking in drugs."
By allowing that vessel to leave swiftly after such a brief investigation in Newport, are we not creating a charter for drug traffickers?
Mr. Speaker : The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely, "The decision of the authorities to allow the vessel SS Mediterran Frigo to leave Newport docks following a drugs raid."
I listened with great concern to what the hon. Gentleman said about this matter, but I do not consider that it is appropriate for discussion under Standing Order No. 20 and I cannot, therefore, submit his application to the House.
Mr. Tim Devlin (Stockton, South) : On a point of order, Mr. Speaker. The statement that we have just heard was timed for 3.30, and at exactly the same time the Government announced, at a press conference across the road in the Department of Health, the results of the inspection of Cleveland social services department. Members from the north such as myself and my hon. Friend the Member for Langbaurgh (Mr. Holt) would
Column 334have liked to be present for both. Will you use your good offices to ask the Government not to put on important business relating to the north-east in two locations at the same time? If they do, Opposition Members will be able to raise spurious points about our absence in the House.
Mr. Speaker : I have considerable sympathy with what the hon. Gentleman has said, but it is no part of my responsibility to dictate to the Government whether they should have made two statements or one statement, or what they should do outside the House. I am sorry that I cannot help the hon. Gentleman.
Mr. Frank Cook (Stockton, North) : On a point of order, Mr. Speaker. You will already be aware that there was a press conference at 3.30 pm this afternoon relating to the social services inspectorate's report of the arrangements in Cleveland concerning child abuse. I am a Member of Parliament representing Cleveland constituents, yet I was informed of that press conference only at 26 minutes past three today, when I was planning to be in the Chamber for the bright and breezy announcement concerning North-East Shipbuilders. As the custodian of the proceedings of the House, are you not of the opinion that such matters should be brought to the House rather than be announced at press conferences, of which relevant Members are informed only four minutes before they begin?
Civil Servant (Letter)
Mr. David Winnick (Walsall, North) : On a point of order, Mr. Speaker. May I ask your guidance on a matter of public interest. The background to the matter is the letter that appeared in The Guardian today from an official in the information department of the Foreign and Commonwealth Office. I understand that that official has been suspended. As this is undoubtedly a matter of public interest, what steps can be taken to get the Prime Minister or the Foreign Secretary to answer the serious valid allegations made in that letter? Now that the official has been suspended, we should have a statement as soon as possible from the Prime Minister or the Foreign Secretary.
Mr. Tam Dalyell (Linlithgow) : Further to that point of order, Mr. Speaker. Is it entirely a question of tactical advice? Is it not more that the House of Commons should be treated properly? It is most extraordinary for a senior official--we have looked him up in the Foreign Office list and he seems to be a second secretary--to write such a letter, giving not a private address but the address of the Foreign Office information department. In the circumstances, should not the House of Commons at least be told the background before other people rush to judgment? There is also an element of urgency about this case, so why should the House wait and wait?
Mr. Dennis Skinner (Bolsover) : Further to that point of order, Mr. Speaker. There is another way of examining the matter. At the weekend, the press were informed of the junior Health Minister's views about eggs and salmonella poisoning. As a result, at the earliest possible opportunity on Monday the Secretary of State for Health had to come to the Dispatch Box to explain away his junior Minister's comments. That matter may or may not be as important as the issue that has been raised in The Guardian today. It is true that the official concerned is not an elected Member of the House and that he is not a junior Minister. One thing is certain--he never will be now. Nevertheless, the fact remains that he is a servant of the state, working in a Government Department, and has said something of great importance regarding the Prime Minister's conduct. If it is right that a Secretary of State must be trotted out every time his junior Minister opens her gob, is it not right that a Minister should explain to the House why it is that a senior official of his Department has said important things about the way in which the Government are running their business?
Mr. Alan Williams (Swansea, West) : Further to that point of order, Mr. Speaker. You, Mr. Speaker, may not have a copy of the letter published in The Guardian , but it comes from the Ministry's information department. The Minister is responsible to the House for the activities not only of junior Ministers but the whole of his Department. When a Ministry's information department issues a statement as unusual and as important as the one in question, the Minister concerned surely has a duty to the House to explain it.
Mr. Dalyell rose --
Mr. Speaker : Order. No. About 50 right hon. and hon. Members wish to take part in today's Second Reading debate, and I shall have to place a limit on the length of speeches. The hon. Member for Bradford, South (Mr. Cryer) has not put down his name for that debate, although he may hope to catch my eye, and he is therefore taking time away from his right hon. and hon. Friends. However, I shall hear his point of order if it is important and if it is a matter for me.
Order for Second Reading read.
Mr. Speaker : I repeat that about 50 right hon. and hon. Members have asked to take part in this debate. I propose limiting speeches made between 7 and 9 o'clock to about 10 minutes, but I hope that right hon. and hon. Members called before 7 o'clock will also have regard to that time limit.
The main purposes of the Bill are to establish a National Rivers Authority responsible for the control of water pollution, water resource management, flood defence, fisheries and navigation ; to provide a new statutory framework for setting river quality objectives and other standards, and set out effective means of enforcing these standards ; to transfer the utility functions of the water authorities to new limited companies, and to provide for the terms of their appointment, and for the sale of shares to the public towards the end of 1989 ; to provide for the appointment of the 29 statutory water companies to continue supplying water in their existing areas, and to allow them to convert to plc status if, with the support of their shareholders, they so choose ; to provide a clear legal framework for the duties, functions and powers of appointed companies, updating and amending water and sewerage law ; and to provide for the appointment of a director general of water services to keep the provision of water and sewerage services under review, and to protect the interests of customers.
The Bill applies to England and Wales. It is the Government's intention to introduce on Report a limited number of amendments relating to drinking water and the protection of the water environment in Scotland. The Scottish Office has consulted on those proposals. They will not change existing arrangements for the ownership and regulation of water supplies in Scotland.
Preparing for privatisation of the water industry convinced us that we needed the National Rivers Authority. There is a distinction between the utility services of the water authorities--trading activities that can be better managed in the private sector--and the need to regulate in the public interest. Regulation should not be done by those who have a financial interest in the matters to be regulated. As the Select Committee on the Environment said, "Gamekeepers should not be poachers as well."
It has been a glaring defect hitherto that water authorities combine the regulatory and utility functions. Those responsible for the treatment and disposal of sewage effluent should not also have the task of regulating pollution and prosecuting their own customers. This major advance puts right an inherent weakness in current arrangements. In this case, public ownership has disguised the truth and failed to protect the public interest. It is another nail in the coffin of that flawed ideology of the Labour party.
Column 337There has been general welcome for our proposals for the NRA, and I will say a few words about its powers and role as set out in the Bill. The water authorities have been drawing up schemes of organisation for the regional bodies which will, with the passage of the Bill, become part of the NRA. They are well on course to set up those bodies by 1 April 1989. I congratulate the water authorities on the work that has gone into those schemes of organisation, and I am grateful for the expert advice and assessment contributed by the NRA advisory committee, under the chairmanship of my noble friend Lord Crickhowell.
The NRA will be a strong and effective body, comprehensively equipped to regulate all discharges to rivers, estuaries and coastal seas up to three miles out. The Bill provides a statutory framework for water quality objectives. The NRA will advise on statutory quality objectives that I, as Secretary of State, will set. The authority will monitor and enforce them. It will be able to grant or refuse effluent discharge consents. It will be able to set up water protection zones to protect water sources in designated areas from pollution by such substances as nitrates and pesticides. It will have powers to prevent and remedy pollution. On the "polluter pays" principle, it will be able to charge for discharge consents and to recover the costs of dealing with pollution incidents.
That regime of improved standards, which the NRA will supervise, will be transparent and public. I shall be accountable to the House and to Parliament as a whole for the standards set for the authority to achieve. For the first time, the public will have a clear measure of what those standards are.
The NRA is widely acknowledged as a major advance. Even the Opposition grudgingly support it. It is a product of our move towards privatisation. It comes as no surprise when the opponents of the Bill turn round and say : "In that case, since you've got the NRA, why privatise the water and sewerage undertakers?" I shall give the House four good, detailed reasons why that is the right thing to do. First, private ownership has long been a feature of the water industry. The statutory water companies have been in existence for a long time. There are 29 of them, responsible for one quarter of our water supply. They are privately owned. There have been few complaints about them. If the private supply of a public utility is anathema to the Labour party, why did it not take the opportunity to nationalise it during its periods in office? I assure the hon. Member for Copeland (Dr. Cunningham) that it will not have another opportunity.
Dr. John Cunningham (Copeland) : That is such a boring old canard that it is barely worth a response. The Secretary of State gave the game away in his opening comments when he described them as "statutory water companies". He knows that they are not private enterprises. They simple act as agents for the regional water authorities and their activities are heavily circumscribed in law. That is why we did not nationalise them.
Mr. Ridley : The hon. Gentleman is stretching logic too far. They are owned by private shareholders. The capital is supplied by the private sector. They are statutorily limited to the geographical areas in which they operate and
Column 338they are statutorily controlled as to their dividends and the amount that they can put to reserve. In every other respect, they are totally analogous with private sector companies. They have been privately owned for a long time, so that is not much of a point.
Mr. Tim Devlin (Stockton, South) : In view of the objects of the Bill, if at the end of the process we create a number of privately owned water companies which are statutorily defined, will that not be acceptable to the Opposition?
The Bill provides a procedure for statutory companies wishing to convert to plc status.
Economic regulation based on price control, rather than dividend limits, will provide them with a stronger incentive for efficiency and a stronger basis for comparative competition. However, the statutory water companies have performed their functions in private ownership without it even being an issue hitherto.
The Government will announce later their decisions about any special shares which may be required in the water industry. However, the conditions which enable competition in management to take place must not also allow undue concentration. It is vital that people should feel that they have a local water company, with those running it living and working locally. It is also vital to maintain yardstick comparisons. If the regulator is to know the scope for efficiency improvements and the possibilities for the best management to deliver exacting environmental and water quality standards at a lower price, there must be an adequate number of independently owned and managed companies to afford a range of comparisons. That is what comparative competition means.
The water plcs will be directly comparable with each other in the services that they provide. Shareholders, financial markets, commentators, the director general of water services and the customer will be able to make comparisons between each of the companies. Privatisation will clarify the costs that each company faces in order to meet its measured objectives.
Mr. Ridley : From those comparisons, it will be possible to judge performance and for the regulator to get his price control more accurate. Therefore, I shall later be bringing forward proposals, in conjunction with my noble Friend the Secretary of State for Trade and Industry, to ensure that our arrangements take full account of the need to preserve comparative competition.
The third reason for privatising the water authorities is to give them scope for innovation and diversification. That is exemplified by the French water companies, which the hon. Member for Bradford, South (Mr. Cryer) just mentioned and which seem to cause such alarm to Labour
Column 339Members. Why do the French want to buy our water companies? Perhaps they have been successful worldwide because they have practical experience of water supply in the private sector and have successfully diversified from that base.
Perhaps there is a lesson for the future of our water companies in that the strengths and diversity of the privately owned French companies has enabled them to dominate the world market. Some have an annual turnover as great as £5 billion. In addition to water supply and water treatment, they compete successfully, among other things, in markets for municipal services, housing, communications, construction, manufacture and cable television.
Our nationalised water authorities have not been able to develop their expertise and experience in the same way. We have missed out on that world market hitherto. No Government have ever allowed--or could allow-- nationalised industries such freedoms. By providing a home base which encourages enterprise, diversity and initiative, I believe that we have the opportunity to create companies which can even outdo the French in capturing the world market in water supply.
Mr. Richard Livsey (Brecon and Radnor) : The Secretary of State is making great play of the position of French water companies. Is he aware that there is huge variation in water prices throughout France? In Dax in south-west France water costs FF2.90 per cu m, in Paris it is FF5 per cu m, and in Angers it is FF10.50. Surely such an intolerable situation should not be used as an example. Does he feel that those disparities could occur in Britain with the plcs?
Mr. Ridley : I am afraid that I cannot confirm the hon. Gentleman's prices. He obviously has more opportunity to check out such matters on the ground. I cannot answer for the French system of price regulation, but what I am proposing to the House is a system of price regulation which will ensure that the prices in each area reflect the economics of supply and the need for investment in improvements. Therefore, privatisation will, for the first time, give an incentive to innovation and efficiency and a new freedom to allow companies to follow the industrial logic of their own development both vertically and horizontally and to compete overseas.
Dr. Cunningham : Is the Secretary of State happy about the depths of the penetration of French water industry companies into the British water industry in view of his hopes for the future? Is it true, as has been reported in the newspapers, that Mr. Patrick Brown of the Department of the Environment has been hinting in the City and elsewhere that further penetration by French water interests is unacceptable? If that is so, on what legal authority have such indications been based?
I shall now give the fourth reason why privatisation must be right. If we are to enable our companies to innovate and diversify, they must have access to capital markets for the capital investment needed. Until this Government took office, nationalisation had constantly restricted and restrained that. Between 1974 and 1979, when the Labour Government gave up control of the economy to the International Monetary Fund, the water authorities suffered an overall reduction in capital
Column 340spending of one third in real terms. Within that total, the Labour Government halved expenditure on sewerage and sewage treatment. Since then, we have conducted a considerable catching up exercise. Investment has increased by more than 50 per cent. in real terms since 1980. We have doubled the programme in cash terms to £1.2 billion this year, and will increase it to £1.43 billion next year. The dirty man of Europe is indeed sitting on the Opposition Front Bench. To some extent, I exonerate Opposition Members. It was not deliberate--it was not because they meant to, as the hon. Member for Bootle (Mr. Roberts) admitted a few weeks ago--but because their financial incompetence prevented them from achieving even that basic water cleanliness that we all seek. The proof that public ownership cannot generate the necessary capital investment to protect the environment has been supplied in ample measure by the Labour party.
Dr. Cunningham : In view of his extraordinary claims about expenditure, how does the Secretary of State explain the fact that in 1977- 78, the last full year of the Labour Government, total capital expenditure by English and Welsh water authorities was £1,064 million? On the public works deflater, a decade later--after 10 years of the present Government--it was £1,187 million, a slight increase, but in each of the intervening eight years the figure was lower than it was in the year when Labour left office. The right hon. Gentleman has got his figures very wrong.
Mr. Ridley : If the hon. Gentleman wants somebody to arbitrate between us about figures, I suggest that it be the hon. Member for Bootle, who was a member of the Select Committee on the Environment which published the figures in its report and showed quite clearly-- [Interruption.] My hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi) has a copy. If the hon. Gentleman disputes the figures, I inform him that I am only quoting them.