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Patrick Ryan

3.31 pm

Mr. John Fraser (Norwood) (by private notice) : To ask the Attorney- General if he will make a statement on the decision of the Irish Attorney- General in relation to the extradition of Patrick Ryan.

The Attorney-General (Sir Patrick Mayhew) : In my answer to a private notice question on 1 December, I told the House that the Irish Attorney-General was still considering the warrants that the Metropolitan police had sent to Dublin--first, by facsimile on 25 November and then by hand on 26 November--and the additional documentation which I had sent to him on 25 November. I had at that time not heard from Mr. Murray about them other than the telephone conversation on Monday 28 November, the content of which I reported to the House.

At about 5.30 on the evening of 1 December, Mr. Murray transmitted to me a total of 20 questions relating to the statements of law and fact that I had sent to him on 25 November. The information requested was supplied the following day. Yesterday, 13 December, Mr. Murray announced that he had on the previous day advised the Commissioner of Garda Siochana not to endorse the warrants for execution. He also announced that, in respect of the charges in two of the warrants, he had formed the opinion that there was, on the part of the relevant prosecuting authority, a clear intention to prosecute and that such intention was founded on the existence of sufficient evidence. These are the requirements specified in the Irish Extradition (Amendment) Act 1987.

In relation to the charges in the other two warrants, Mr. Murray had not found it necessary to reach any final conclusion, because he had concluded that, were Patrick Ryan to be extradited to Britain, it would not be possible for a jury to approach the issue of his guilt or innocence free from bias. This was by reason of what he described as the extreme nature and extent of the prejudicial material published. Additionally, he said :

"the charges which have been brought against Patrick Ryan are of a most serious kind and they should be investigated by a court. The Criminal Law (Jurisdiction) Act 1976 provides a means whereby certain serious offences committed outside this jurisdiction may be tried here. Such a trial may, under Irish law, take place before a court of three judges without a jury. Heavy penalties are prescribed by Irish law for those offences."

Mr. Murray had informed me personally of his decision a few hours earlier.

For my part, I find this outcome extremely disappointing and the reason given for it regrettably offensive. The reason is also singularly surprising, as speculation about the fairness of any resulting trial by a jury in England is not one of the functions which the Irish Attorney- General is directed by this very recent Act to undertake. I readily acknowledge that the question is one for Irish and not English law, but I also note the doubts in this regard expressed today in leading articles in The Irish Times and Irish Independent.

At all events, yesterday morning, I informed Mr. Murray that I rejected his thesis that Patrick Ryan would be denied a fair trial. Juries in England are invariably instructed that they must decide the case only on the evidence that they have heard and seen in the trial. In every appropriate case--that is to say, cases of any notoriety--they are directed to disregard whatever they may have

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heard or seen elsewhere. In my experience, juries heed those directions scrupulously, with the fairness that one expects in the ordinary men and women of our country. Whatever may have been published anywhere--and before yesterday, Mr. Murray had at no time raised with me any anxiety about any publication--I am entirely confident that, if and when Patrick Ryan were to come to trial in England, there would be no significant risk that such publicity would affect a jury's ability or will to try him fairly.

As to the possible trial of Patrick Ryan in the Republic of Ireland, as my right hon. Friend the Prime Minister said yesterday, we do not absolutely exclude that, but only two of the four charges seem to be covered by the Criminal Law (Jurisdiction) Act. Additionally, there would be grave anxieties over the security of witnesses whom we could not compel to go to the Republic and, if the case accordingly failed for insufficiency of evidence, we could not subsequently try Patrick Ryan in our own jurisdiction.

These are major disadvantages inherent in an option that we had every right not to prefer to that of extradition.

Mr. Fraser : It is a pity that some of the words used by the Attorney-General were not fortunate and have not helped the matter any further. Is it not one of the lessons of the affair that we could do without public, intemperate and hectoring manners, particularly those of the Prime Minister? Is it not much better for pre-trial processes not to be conducted under arc lights but dealt with as they would be in this country, quitely and without publicity?

Does the Attorney-General agree that matters have not been helped by the unexpected passing of the issue to the Irish Government by the Belgian Government? Does he further agree that the affair has not been helped either by trial by newspaper which has been fed by outbursts by the Prime Minister and by a grave error of language by the hon. Member for Hampshire, East (Mr. Mates), who used words which were adopted by the Prime Minister-- I understand that he withdrew those words the following day, but the damage had been done by then--or by a press briefing by the Crown Prosecution Service? All this raises the problem of prejudice to a jury. Will the Attorney-General confirm that he has been advised by the Irish Attorney- General of his concern about the problem of prejudice to a jury as a result of these matters being canvassed in public and in rather strong language before any action has been taken?

Opposition Members certainly want to see a proper judicial investigation of alleged terrorist offences, and that depends on the co-operation and good sense of the Government. Will the Attorney-General now calmly and, if necessary, privately confer with Mr. Murray with a view to a trial in Ireland of the issues, as the Irish Attorney-General has decided that two prima facie cases should be investigated by the Irish courts?

In other recent notorious cases, the Government have not been afraid to use the jurisdiction of overseas courts. Surely the right thing to do now is to adopt the jurisdiction of the Irish courts and to have the matter brought to trial as speedily as possible.

The Attorney-General : I am sorry that the hon. Member for Norwood (Mr. Fraser) finds anything intemperate or otherwise unsatisfactory in the language that I used to respond to his question, but I do not think that he can apply that sobriquet to the word "offensive" in

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the context in which I applied it. The reason why I suggest that is the reason that led the right hon. Member for Plymouth, Devonport (Dr. Owen) to make his intervention yesterday.

I agree with the hon. Gentleman that pre-trial issues are not helped when they are dealt with under arc lights. That is the principal reason why the British Government objected to the Irish Extradition (Amendment) Act 1987, which confers that jurisdiction upon the Irish Attorney-General and obliges him to come to conclusions on matters of English law. Inevitably, controversy is inherent in that procedure. I agree with what the hon. Member for Norwood said about the Belgian Government's contribution to the affair. I think that the British Government's opinion about that has already been made clear.

I reject the assertion of the hon. Member for Norwood that anything that my right hon. Friend the Prime Minister said would cause any prejudice to proceedings. She was entirely entitled to say what she did, no doubt expressing it with feelings that are widely shared throughout the country.

The hon. Member for Norwood referred rightly to the generous as well as immediate retraction that my hon. Friend the Member for Hampshire, East (Mr. Mates) made the next day. He made clear the context in which he used the words which he retracted. We all have an obligation to be careful in the House, and I believe that it is met. It is plain from what the Attorney -General for Ireland said in his statement, and in a letter that he was good enough to send to me just beforehand, that he believes that prejudice has been incurred by matters that have been published. I have made it clear in what I have said in answer to the hon. Member for Norwood that I am confident that, if and when Patrick Ryan were to come to trial in this country, there would be no significant risk at all that any publication of any material would have any detrimental effect upon the ability or the will of a jury to give him a fair trial. That is required in this country and it is received. I agree that good sense is needed to try to get sensible extradition arrangements established, as they were under the reciprocal legislation of 1965 between our two countries. The hon. Member for Norwood asked about the Criminal Law (Jurisdiction) Act 1976. I repeat that I have no objection to using that Act in a proper case. A fortnight or three weeks ago, I asked the Irish Attorney-General to prosecute under that Act in a case called Sloane. As I hope I made clear, there are serious difficulties in this case. I shall come to a conclusion upon them as soon as consultations with the Metropolitan police and others are completed.

Mr. Ivan Lawrence (Burton) : When our anger has died down at the insult to the British system and at the absurdity of the suggestion that British juries, among which are often many Irish citizens, are incapable of coming to a fair decision when reaching a verdict, will we not be left with two questions : first, how determined are the Southern Irish Government to root out terrorism ; secondly, how will this absurd gesture improve the prospects for the Anglo-Irish Agreement?

The Attorney-General : My right hon. Friend the Prime Minister has made it clear that we wish the Anglo-Irish Agreement to continue, and that it will continue. I note

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and share the opinions which my hon. and learned Friend has expressed about the reflections upon British juries in this case which are contained in the Irish Attorney-General's statement. It is right to say that, apart from English citizens, Irish citizens who are resident in this country frequently serve upon our juries. I prefer to take at their face value the expressions of intent by the Irish Government, including the Irish Attorney-General, that it is their desire to take effective steps against terrorism. I must observe, however, that yesterday's decision is an obstacle rather than anything that facilitates a firm attack upon the terrorism that concerns us all.

Mr. Merlyn Rees (Morley and Leeds, South) : Is it not the case that, as a result of a tragedy of errors on both sides of the Irish sea, reinforcing their attitudes about our justice and ours about the Irish system which have continued for about 500 years, a man against whom there are serious charges, as agreed by the Irish

Attorney-General, is allowed to go free? Would it not be better now to stop posturing on both sides and use the Criminal Law (Jurisdiction) Act, which I piloted through the House with the agreement of both sides and which is now on the statute book, to give the Irish the chance to bring the man to trial? The Attorney-General should discuss the problem of witnesses and their safety in Dublin and give them a chance to bring the man to trial. We may get hot under the collar, but there are those on both sides of the border, and especially in the North, who have suffered from violence over 20 years. They are not amused by our attitude. They want something done about men of violence, and the appropriate legislation is there to use.

The Attorney-General : I have yet to find anyone who finds anything in this connection amusing. It is certainly very exercising and it causes great anxiety. I agree that it would be a tragedy if anyone who was sought to be charged with, in the words of the Irish Attorney-General, very serious offences were not brought to trial. However, it is not quite as simple as that. Obviously I must consider the security of witnesses. That is very important. I have made it clear that I see great advantage in using the Extradition (Amendment) Act 1987 in a proper case. Those matters must be considered carefully.

One consideration which might occur to all hon. Members is what might be said and how we would feel if, however tragically, a witness who was sent down there suffered serious injury or death in circumstances where we were left only with that option instead of extradition which we considered ourselves entitled to ask for. Those matters must be considered in a sensible and unbiased way, and that is the approach that I intend to adopt.

Mr. James Kilfedder (North Down) : Will the Attorney-General refuse to accept the lesser option of a trial in the Irish Republic in this case because in the circumstances it would be regarded as acceptance of what the Attorney-General described as the offensive allegation that Patrick Ryan would not receive a fair trial in this country? Would it not be much better therefore to wait until he should come here for his perhaps terrorist activities and then he could be arrested and charged?

The Attorney-General : The hon. Gentleman is aware that we are referring to someone who is suspected of those activities and whom it is sought to charge. I understand

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what lies behind the hon. Gentleman's question, but I do not think that it would be right to say that, simply because we have been denied extradition, we will give up any attempt to prosecute this man--having him prosecuted in Ireland. I do not think that that would meet the criterion of good sense that has been urged upon me. However, other matters must be considered and I hope that I have made them clear. For example, if at a trial in Dublin through any insufficiency of evidence this man was acquitted where otherwise he would have been convicted, we should be prevented from trying him here if ever he appeared in this jurisdiction.

Mr. Robert Maclennan (Caithness and Sutherland) : Does the Attorney- General recognise that many of the people who will not accept the Irish Attorney-General's view that a fair trial is not possible in this country none the less regard the participation by Members of Parliament and the Prime Minister in a hue and cry while the Attorney-General was considering these matters as, to put it no higher, extremely unhelpful? They also recognise that, if he were making judgments of this kind in a similar situation, he would resent political utterances about a judicial matter. Will he therefore treat this matter in the way in which the Irish Attorney- General said it ought to be regarded--as unique and not something which is to be the foundation of our relations on extradition matters in future?

The Attorney-General : I very much hope that this case will be unique in certain important respects. Plainly it will not be allowed to affect relations between our two countries. That would be absurd. I reject any assertion that my right hon. Friend the Prime Minister took part in or led a hue and cry. Faced with some of the barracking to which she is so frequently exposed, perhaps she has to raise her voice and doubtless she expressed her views with feeling. However, in that regard I do not believe that she is to be criticised.

Mr. Alistair Burt (Bury, North) : Does my right hon. and learned Friend agree that, whether or not Patrick Ryan is guilty of any offence, his reported statements make it clear that he cares little for this country or its well-being? Is it not essential that we prevent what would be his greatest victory--to drive such a wedge between London and Dublin that effective dialogue would stop? Without proper dialogue, there would be no opportunity to repair the misunderstanding and, above all, no opportunity for future extraditions.

The Attorney-General : The whole House shares my hon. Friend's constructive approach to this matter.

Mr. Eric S. Heffer (Liverpool, Walton) : Does the Attorney-General agree that, by publishing the full statement by the Irish Attorney-General, The Daily Telegraph did a great service to the people of this country who had an opportunity to study the statement, which I believe to be both moderate and interesting?

Does the right hon. and learned Gentleman further agree that we must not assume that someone is guilty until he has been found guilty? Already today in the House the gentleman in question has been called a terrorist, yet the matter has not yet been brought before a court. On that basis, is not the Irish Attorney-General correct to ask how

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anyone of Irish origin can expect a fair trial in this country without first having the opportunity to come here and not be accused by the press and hon. Members of being a terrorist when there is no proof of that?

The Attorney-General : The hon. Gentleman is right to say that it is fundamental to our system of law that everybody is presumed to be innocent until he is found guilty. Every jury is instructed in that fundamental principle. The sad aspect of the Irish Attorney-General's statement is his supposition that a jury in the case of Patrick Ryan would not abide by that fundamental principle. That is why I found the statement offensive. It is a matter of extreme importance, and it is not in the faintest degree justifiable to say that no Irish person can come to this country and receive a fair trial.

Mr. Ivor Stanbrook (Orpington) : Does my right hon. and learned Friend derive any wry satisfaction from knowing that in at least two cases the warrants were found to be impeccable, contrary to what was alleged by Opposition Members at the time? Does he think that the Irish Attorney- General acted properly within his own law in deciding the matter on grounds other than those laid down in the relevant law of the Republic?

The Attorney-General : I must correct my hon. Friend on one small matter : not two but all four of the warrants were without criticism. On the separate ground of whether there was sufficient evidence to warrant a prosecution, the Irish Attorney-General found that there was. He found it unnecessary to reach a conclusion on the other two cases because, in his view, on no charge could Patrick Ryan expect a fair trial. I have forgotten my hon. Friend's second point, so perhaps he would repeat it.

Mr. Stanbrook : I asked about the grounds on which the Irish Attorney-General refused our application.

The Attorney-General : I am grateful to my hon. Friend I have already said that I found it surprising that the Irish

Attorney-General had denied the application on the ground of fair trial. Although the Extradition (Amendment) Act 1987 is a recent piece of legislation, it does not set out a ground that the Irish Attorney-General should be satisfied that there is a likelihood of a fair trial, but it does tell him the various matters to which he should put his mind.

That point was brought out in today's two leading articles to which I referred. The Irish Independent states :

"For, in coming to his conclusion, the Attorney General has claimed as a basis something which is not in fact part of any of our laws on extradition --that extradition should not be carried out if a fair trial is in doubt. To that extent he has made an interpretation of our laws--a function which is, rightly, reserved to our courts. It should have been a more proper procedure to have endorsed at least one of the warrants, allowed the case to go to court and provide an opportunity for an Irish judge to decide if, in fact there was justification for refusing to extradite on the grounds of prejudice in Britain."

Mr. Peter Archer (Warley, West) : Whether he agrees or disagrees with what Mr. Murray has said, will the Attorney-General confirm that Mr. Murray was not casting doubt on the fairness of United Kingdom courts but was saying that, after the extensive coverage and comment based on official sources in London and the

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Prime Minister, no jury, however fair, could approach this matter with an open mind? Are there not lessons to be learnt from that?

The Attorney-General : I am happy to confirm that the Irish Attorney expressly made it clear that he was not casting doubts on the system but was giving his mind to the likely outcome of this case. He did not refer to the Prime Minister. I am not aware of the publication of any matter that is complained of as coming from official sources. Plainly there are lessons to be learnt, but the principal lesson is that there is a strong case for reviewing the Extradition (Amendment) Act 1987 and the procedures which it sets out. We have already made representations on that and we should renew them.

Mr. Ian Gow (Eastbourne) : Since my right hon. and learned Friend has confirmed that the ground on which the Irish Attorney-General refused the request for extradition is not one of the grounds contained in the Extradition (Amendment) Act 1987, has he considered the possibility of taking action in the Irish courts for a judicial review of the decision of the Irish Attorney-General? Is he aware that the review for which he called is one which is most unlikely to take place by the Irish Government? Despite that, can he assure the House that at the meeting of the intergovernmental conference today such a request will have been made by our Secretary of State attending it? Finally--

Mr. Speaker : No.

The Attorney-General : I cannot give the assurance for which my hon. Friend just managed to ask before he was silenced. In my reply, I said that this was a matter for Irish, not English, law. I do not have any comment on my hon. Friend's initial suggestion.

Mr. Norman Buchan (Paisley, South) : Is it not nonsense to believe that it is possible for any jury to be wholly insulated either from factual or apparently factual material circulated or from an atmosphere? In that situation, is it not proper that the person named should be tried under Irish legislation? Would it not be helpful for all of us if the Prime Minister would remember that she is a Prime Minister and would speak as a Prime Minister with restraint and propriety, not as some young skinhead representative of the young Tories?

The Attorney-General : I am not aware of anything improper that the Prime Minister has said in this regard. A reason why she has been Prime Minister for nearly 10 years is that she reflects so accurately the feelings of so many British people. I have noted the suggestion that there should be some intra-European court for deciding these matters, but I reject the premise that juries cannot be expected to be impartial and unbiased whenever there happens to be some political connotation in a criminal trial. The purpose of juries is to try crime, not politics, and that is what they succeed in doing.

Mr. William Cash (Stafford) : Does my right hon. and learned Friend agree that this is not merely a question of English or, indeed, Irish law but to some extent may be a question of canon law? Although he may not be versed in matters of canon law, does he agree that those of us who are Catholic would personally like to see Mr. Ryan removed from his present residence and released to the appropriate authorities?

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The Attorney-General : I am not sure which appropriate authority my hon. Friend has in mind, or quite how immediate that release is intended to be. As I have quite enough to contend with on my own patch, I shall leave these matters to my hon. Friend.

Mr. Stuart Bell (Middlesbrough) : The Attorney-General has yet to direct his attention to the statement made by the Irish Attorney-General yesterday, in which the Irish Attorney-General said that he had called the right hon. and learned Gentleman on a previous occasion in relation to a previous warrant and had expressed his concern at the prejudicial effect of press statements. If that message were given by the Irish Attorney-General, was it taken to heart by the British Attorney-General, and did he so advise the Government before the Prime Minister came to the House with her inflammatory and prejudicial statements?

The Attorney-General : I do not propose to add to what I have already said about my right hon. Friend the Prime Minister's intervention. In the case of McVeigh in May this year, Mr. Murray telephoned me to express his anxiety about the activities of the media and in particular of a television crew outside Portlaoise gaol after McVeigh had been released in a case in which Mr. Murray had authorised the backing of the warrants. That was in marked contrast to this case. On no occasion over the 13, or however many, days that passed did Mr. Murray alert me to any anxiety that he had about any publication of any kind.

Mr. Henry Bellingham (Norfolk, North-West) : Further to the question of my hon. Friend the Member for Eastbourne (Mr. Gow), does not the Taoiseach's claim that this matter should be decided purely on legal grounds look pretty hollow because it is obvious that the Irish Attorney- General's decision was political? If the EEC is serious about combating terrorism, is not what we need a new harmonised extradition system covering the whole of the EEC?

The Attorney-General : I believe that I have sufficiently expressed my response to the decision of the Irish Attorney-General. I do not claim that it was a political decision. It is sufficient to say that it was, in my respectful belief, a wrong decision, for the reasons that I have given. I am not persuaded, although this is not a matter for me, that there is any advantage to be had in a centralised European system, because, after all, we are looking at some individual systems of law, and we need to keep it as simple as we can.

Several Hon. Members rose --

Mr. Speaker : Order. Important though this matter is, we are due to have a very important debate on British Shipbuilders, in which there is considerable pressure to take part.

Mr. Tam Dalyell (Linlithgow) : On a point of order, Mr. Speaker, and for the protection of the House. It was within your hearing that the Attorney-General, in answer to a question, gave as a reason for the Prime Minister--

Mr. Speaker : Order. This is a continuation of questions. I am sorry that I was not able to call the hon. Gentleman. He will have to try on another occasion.

Mr. Dalyell : On a point of order, Mr. Speaker.

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Mr. Speaker : Order. I am not hearing it. I have already said that an important debate, on British Shipbuilders, is to follow.

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British Shipbuilders

4.2 pm

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Tony Newton) : I beg to move

That this House notes with approval the progress which has been made towards returning to the private sector the shipbuilding yards and other facilities owned by British Shipbuilders ; notes also that, despite every effort, it has not proved possible to establish a viable basis for continued shipbuilding at North East Shipbuilders Ltd. ; and warmly welcomes the measures proposed by Her Majesty's Government to encourage new enterprise and employment opportunities on Wearside.

Mr. Speaker : I have selected the amendment in the name of the Leader of the Opposition.

Mr. Newton : I think that it will be most helpful to the House if I open the debate by concentrating on the major issues at not too great a length, in view of the numbers wishing to speak, and then, with the leave of the House, respond at the end to the specific points that hon. Members will no doubt want to raise.

It is important first to say something about the wider background, which is, of course, the difficult condition of the world shipbuilding market over a long period. In particular, in the early 1970s, the worldwide effects of the huge increases in oil prices produced a sharp reduction in shipbuilding demand, at just about the same time as earlier massive investment in Japan and the developing programme of investment in South Korea were bringing about a huge increase in shipbuilding capacity.

The extent of the problem can perhaps best be illustrated by the simple fact that in 1987, even after very considerable reduction of capacity had taken place, less than 10 million compensated gross tonnes of new ships were delivered by an industry whose worldwide building capacity is something like 18 million tonnes. In other words, the industry worldwide had facilities that could build nearly twice as much shipping as anyone was willing to buy. The effects of that have, inevitably and inescapably, been felt throughout the world. The debate will understandably focus especially on the position in Britain, where employment in merchant shipbuilding fell from 45,200 in 1977 to 11,300 in 1987, a loss of nearly 34,000 jobs. But the context in which that figure has to be viewed is one in which, in the same period, France lost 21,000 jobs out of 30,000, Germany lost more than 26,000 jobs out of 39,000, the Dutch more than 17,000 jobs out of fewer than 21,000, the Swedes more than 15,000 jobs out of fewer than 17,000, and the Norwegians nearly 14,000 jobs out of fewer than 18,000. The Japanese industry lost more than 100,000 jobs from the 1977 base of 164,000.

In the past two years, Sweden has abandoned the production of larger merchant ships, and its two major yards have been converted for other industrial uses. France has carried out a major restructuring, cutting from five significant yards down to one, with more than 5,000 job losses. Germans yards have shed some 6,000 jobs in that period. Japan has completed a major restructuring of its merchant shipbuilding industry, which involves substantial capacity cuts--since 1985, direct and sub-contract employment in Japanese yards has fallen by almost 50,000 people.

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Even the Koreans are not immune from the problems presented by low demand for new ships and continuing huge over- capacity. Their single largest yard is currently employing only half the people that it was designed for.

There is no reason to suppose that the problem of overcapacity in shipbuilding is suddenly about to disappear, as had earlier been hoped. I can best illustrate that by referring to the forecasts of the Association of West European Shipbuilders, of which British Shipbuilders is, of course, a member. In 1984, in its last report on this matter until recently, it suggested an average annual building requirement of 12.7 million compensated gross tonnes between 1984 and 1990, and 18.5 million CGT between 1990 and 1995. As the House will realise from the figure I gave earlier about total world capacity in 1987, that would have meant a demand in the first half of the next decade roughly equal to the industry's capacity in 1987.

The latest AWES forecast, in a report published only three months ago, now puts average annual demand between 1990 and 1995 at only 12.5 million compensated gross tonnes, and suggests that even in the second half of the next decade, demand will not recover to the extent previously predicted for the first. Moreover, the Japanese assessment of the likely course of demand is in line with those forecasts. Whatever may be said--we have said it before and will say it again--about the uncertainties of forecasting, I think that the House will agree that there is no basis here for the view that the problem of excess capacity is about to go away, and that all that is needed is to find a way to tide things over until the good times return. These, then, are the problems with which successive British Governments, like other Governments throughout the world, have been wrestling. The previous Labour Government nationalised the industry in 1977, in the hope and belief that this would provide a good framework within which to conduct the necessary restructuring and create a viable shipbuilding industry. It would be hard for anyone to argue that those hopes have been fulfilled, or show any real signs of being fulfilled. Since vesting day in July 1977, some £2 billion of public money has been put into British Shipbuilders in one form or another, without achieving what we would all wish to see. Indeed, that figure includes losses of £650 million just on building ships, of which only £250 million represents permitted subsidy under the agreed rules of the European Community.

The recent position of NESL itself perhaps illustrates the position most starkly. In the past five years, it has completed no contract to cost, and the total subsidy on shipbuilding contracts has averaged 50 per cent. of the building costs incurred. In the past three years, it lost £100 million through operating losses over and above intervention fund subsidy of a roughly similar amount ; and in the last full year for which we have figures, it lost £56 million on a turnover of £69 million.

The present Government--I simply state this as a fact, of which the House is already aware--take the view that the better course, in the light of this experience, is to seek to return the industry to the private sector, subject, where appropriate, to the availability of subsidy within the rules agreed in the Community--the so-called sixth directive.

Mr. A. J. Beith (Berwick-upon-Tweed) : As the Minister has criticised so strongly the management of British Shipbuilders for the chain of losses that he has just

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described, why has he relied so heavily on that management's advice about the viability of the bids now being considered for the Sunderland yards?

Mr. Newton : British Shipbuilders management, as the people who have been running the industry on the Government's behalf, are an appropriate source of advice for us to seek, without our necessarily always and unalterably accepting that advice. The very experience that British Shipbuilders management has had in the difficulties that it has experienced in recent years puts it in a position to judge the difficulties that others are likely to have when they are confronted by what are, frankly, optimistic bids.

Mr. Bob Clay (Sunderland, North) : May one drew the conclusion from the answer given by the Minister to the hon. Member for Berwick-upon-Tweed (Mr. Beith) that because, according to the Government, British Shipbuilders could not make a success of the industry, it may have been induced into the position where it finds it difficult to recommend that anyone else can do so? Is not that the logical contradiction and the true position?

Mr. Newton : It is neither a contradiction nor a logical position to adopt. As I said to the hon. Member for Berwick-upon-Tweed (Mr. Beith), British Shipbuilders experience of accepting, on what has turned out to be, at times, a dramatically over-optimistic basis, contracts that have incurred substantial losses or have collapsed disastrously--as happened with the Danish ferry contract--puts it in a good position to make judgments when others come forward with what are, in my view, overoptimistic bids. I have no doubt that the hon. Member for Sunderland, North (Mr. Clay) will make a number of points to which I shall have to respond, should he be fortunate enough, as I hope he will be, to catch your eye, Mr. Speaker.

The naval shipbuilding yards were sold between 1984 and 1986. The process of selling those yards primarily concerned with merchant shipbuilding--or rather, those that were part of British Shipbuilders, since there were already a number of smaller privately owned yards--has been in train since earlier this year, following my predecessor's statement to the House on 18 April. It is that process of selling the merchant shipbuilding yards belonging to British Shipbuilders that has led to today's debate.

Taken as a whole, that process is being carried through with considerable success. As I told the House in my statements of 14 November and 7 December, at the outset British Shipbuilders owned shipyards at Govan, Sunderland, Appledore and Port Glasgow, together with the Clark Kincaid marine engine builders at Greenock and a services subsidiary, Marine Design Consultants, at Dundee and Sunderland.

The Govan yard has been successfully sold to the Norwegian company, Kvaerner Industries. It is making Govan the centre for its gas-carrying ship technology, with a programme of work taking the yard well into the 1990s. Negotiations for the sale of the Appledore yard in Devon are at an advanced stage. It is set to become part of the Langham Industries group--I hope, around the turn of the year. Clark Kincaid at Greenock should similarly be sold shortly to the management buy-out team. I am particularly pleased, that Clark Kincaid will build the engines for the first two gas- carrying ships that Kvaerner is building at Govan.

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Negotiations with Ailsa Perth for the sale of Ferguson have got off to a good start. There is a reasonable chance that the sale will be completed by early February. The terms of all those disposals are now under consideration by the European Commission.

Finally, as the House will recall from my statement on 7 December, I have accepted British Shipbuilders recommendation that the preferred bidder for Marine Design Consultants should be the team led by its managing director. I hope that that sale will be completed early next year.

Five of the six main undertakings owned by BS have either been successfully returned to the private sector or are well on the way to being so. Those five undertakings account for nearly two of every three of the 6,500 people employed by British Shipbuilders when my predecessor made his statement on 18 April.

The exception, which will no doubt be the main focus of attention in this debate for that very reason, is North East Shipbuilders Limited at Sunderland. The House may feel that it is not surprising that it should have proved far and away the most difficult--and in the event, in our view, impossible--to secure its future, given the facts that I have already recounted about its record in recent years, together with the collapse of the Danish ferry order which was originally seen as its life line. That does not alter the fact that it is a major disappointment, and I do not pretend otherwise to the House. However, it was not for want of effort by Ministers, by officials, or by British Shipbuilders itself--whose chairman travelled many thousands of miles following up any possibility offering even a glimmer of a more successful outcome.

Our determination to find a way forward for NESL, if we could, is clear from our willingness to allow successive extensions of time for possibilities to be explored. Interested parties were originally asked whether they could bid by the middle of August. When the response indicated that there was little prospect of satisfactory bids being received on that time scale, a deadline was set for the receipt of bids by the end of September. At a late stage in the evaluation of those bids, when one of the bidders sought to modify his bid, further time was allowed to take account of that. When none of those bids proved to stand up, but nevertheless there was reason to believe that other possibilities might still produce a solution, further time was allowed, until the end of November, to establish whether any of those possibilities could produce proposals that would give a firm basis for detailed negotiation, leading to our overriding requirement of a viable future for the yards.

In the course, of that process there were discussions with more than 15 bidders or possible bidders, including a number of other overseas interests. Unhappily, none of those appearing to offer the best prospects, and in particular the necessary financial backing to overcome the difficulties I described, produced bids or proposals offering a prospect of successful negotiation. Those that produced bids or proposals did not, in the Government's judgment in the light of the advice of BS and of their financial advisers, offer the basis of a viable future for merchant shipbuilding in the Sunderland yards. As I told the House last Wednesday, in our view, none of the latest proposals provided evidence of sufficient financial resources, given

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the major uncertainties of the shipbuilding market. None gave evidence of sufficient work for the future. All would have involved levels of subsidy which, in one case in particular, could have faced difficulties under the sixth directive.

In reaching that judgment, we took full account of the widely canvassed possibility of a substantial order for general cargo ships for Cuba. On that, two main points must be made. First, as is all too clear from the figures I gave earlier, there is no guarantee that such an order can be secured in the face of the international competition that exists in a situation of considerable over-capacity. Secondly, it is, in our judgment-- and I accept that it is a matter of judgment--highly unlikely that those ships can be built at a price that the Cubans will be willing to pay without Sunderland's incurring further losses, even after allowing for the maximum subsidy under the European rules.

Given those doubts, to have accepted a proposal that effectively depended on such an order, especially from a bidder whose financial solidity was itself unacceptable, would have been no service to the people of Sunderland or to anyone else. That is why, reluctantly but firmly, we came to the conclusion that I announced to the House last week. We believe the right course now is to concentrate on building a new industrial future for Sunderland.

I announced last week a package of measures designed to assist those who will be made redundant in the coming weeks from NESL and to promote alternative employment in the town. One of the main elements in the package is the proposed enterprise zone, offering rate relief for 10 years for new developments, a simplified planning regime and 100 per cent. capital allowances on new industrial and commercial development. That enterprise zone will provide a major new incentive to companies to move into the area, as has been the experience with zones in other areas.

The Northern Development Company is already on record as having said that an enterprise zone will significantly improve Sunderland's chances of attracting inward investment. I also announced that English Estates would be providing 220,000 sq ft of high-quality factory space, at a cost of more than £7 million. I should make it clear that I expect English Estates to have provided a substantial amount of factory space by this time next year.

The third main element in the package of measures for Sunderland, which I mentioned last week, is £10 million for the encouragement of new enterprise and employment opportunities. Half of that sum will be devoted to counselling and retraining assistance for the Sunderland work force. It is our intention that no one will have to leave NESL without having had access to the expert advice on new job opportunities that will be provided by the services offered by my right hon. Friend the Secretary of State for Employment. That advice will be offered in one-to-one interviews, with the aim of ensuring that an individual's existing skills are fully assessed in relation to available jobs.

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