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great deal of public funding to make up the shortfall in Sunderland's employment problems. It would take three whole Nissans to solve the problems to which the closure of this shipyard has added so hugely.

Sunderland is a handsome, lively town which has united with great spirit in the fight for the shipyards. That spirit has not been recognised by the Government. They owe Sunderland a tremendous debt. The first way to discharge that debt is to seek, even now, a continued future for some shipbuilding in Sunderland; the second is to offer far more to Sunderland's future than they have done so far. 6.27 pm

Mr. Julian Brazier (Canterbury) : I am sorry to have missed the bulk of this debate, but I was engaged elsewhere. Many of those present came to the successful parliamentary maritime group session with my right hon. Friend the Chancellor of the Duchy of Lancaster, and I should like to return to many of the points that I know have been raised. I firmly believe that the Government have made the right decision on Sunderland but that nevertheless they must look carefully at their future policy on shipyards and shipping.

I used to work for a company which had more than 50 shipyards worldwide in its client base. I visited several of them, and one where I worked was Swan Hunter shipbuilders in the north-east. The reasons why the shipyards' customers, the shipping companies, have turned down so much do not relate to anything temporary that will disappear overnight or in the next few years, although there may seem to be a glimmer of light on the horizon. In a world of oil pipelines, fewer oil tankers are needed. In a world of containerisation, there are not vast numbers of ships tied up loading and unloading for long periods. The sad fact is that, around the world, there are mothballed and semi-mothballed yards, which will come straight back on stream as soon as the first sign of an upturn is seen, and I admit that there are signs of a temporary upturn. Many of those yards enjoy considerable subsidy, which will ensure that prices remain low. The Government are right to take the view that it is absurd to say on purely regional grounds that we should keep the shipyard going in those market conditions. They have adopted a sensible attitude towards Sunderland shipbuilders. The substantial sum of £45 million that they have put forward will go a long way towards filling the gap that must be filled with modern competitive industries of the sort on which my hon. Friends have touched so well.

There are, however strategic and military reasons for believing that we must keep a minimum base of shipbuilding, just as we need to keep a minimum strategic base in shipping. We know of the number of ships that we needed in the Falklands crisis, and that other crises may require more ships over a longer period, as well as substantial ship repair, ship conversion and other facilities. For this reason, it is essential that, just as the Government have defined a strategic core for shipping, they define a strategic core for shipbuilding and ship repairs. Inevitably, because of subsidies paid to shipbuilding industries in other countries, such a strategic definition will involve subsidies-although not, I hope, on the scale that we have had. If there is no subsidy, what happened in Sweden, where what were arguably the most efficient shipbuilding companies in Europe disappeared, will happen to the remainder of our shipyards.

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The way to apply this core principle may be to look particularly hard at the dual capability naval shipyards, of which Swan Hunter is an example. If the intervention funding available to the small residual core outside the naval sector were to be available to these yards as well, with the baseload of work for the Royal Navy and the Royal Fleet Auxiliary, they would be well placed to survive almost any storm in the market.

In a nutshell, we must strike a balance. There is no point in trying to keep yards going for regional reasons where there is no hope for the future. However, we must keep a small basic core of shipbuilding, just as we must keep a core of shipping. This will mean defining that core and being willing to continue to subsidise it. 6.31 pm

Ms. Joyce Quin (Gateshead, East) : When the closure of North East Shipbuilders Ltd. was announced to the House last week, the reactions were emotional and the atmosphere was highly charged. Two emotions predominated- -anger and sadness. I share both. There were many reasons for the anger expressed last week, particularly since the statement had been widely leaked in advance, which undermined many of the arguments that we wished to make. There was also anger at the outrageous decision to close a modern yard that had not just the possibility but the probability of a multi- million pound order. We were also angry that the closure seemed to stem simply from the Government's political dogma, and that the Government had been determined to force through change in ownership at the worst possible time, when the negotiations for the Cuban order were taking place. That decision merely added greatly to the delays and uncertainties of the situation.

There was also anger because the Government did not seem to have explored every possibility, and because the EEC made no formal presentation of a rescue bid. Like others, I have been closely linked to the shipyards in Sunderland, in my case because, since 1979, I have represented the area in the European Parliament. When I was first elected, there were some 27,000 shipyard workers in Tyne and Wear. Seven years later there were fewer than 7,000 and today there are fewer than half that number.

Throughout the period of decline, we were told that restructuring was necessary and that we needed a restructured industry that would be slimmed down and capable of competing. In the process, workers, particularly in the Sunderland yards, undertook many sacrifices. There were dramatic changes in working patterns, such as the development of flexible methods of working, and a great deal of modernisation of the yards. Now, we see that all that sacrifice was to no avail. That explains some of the anger and the reactions on Wearside.

Throughout my nine years as a European Member of Parliament, I was keenly aware of the lack of action by the Government and the EEC when they were confronted with the determined and cut-throat competition from the far east. It has not helped that we have had so many different Ministers with responsibility for shipping over this time, or that even in this crucial period, we have had another change of Minister. It has also not helped that in the EEC there has been little in the way of a shipbuilding policy worthy of the name. The only policy has been one of

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limiting state aid by the EEC countries to their respective shipyards. That policy has been inadequate to ensure that Britain and Europe survive the years of shipbuilding slump and will be in a position to pick up orders.

The EEC has adopted a negative approach, which has been aided and abetted by our Government. Over the past nine years, there have been few negotiations on shipbuilding between the EEC and Japan and Korea. Although great concern has been expressed about the unfavourable trade balance between the EEC and the trading countries of the far east, shipbuilding has been a low priority in all those discussions. The latest issue of the publication European Report says that, once again,

"negotiations led by the European Commission with Japan and South Korea to re-organise the world shipbuilding market have come to a standstill."

That standstill is nothing new, because it has existed for the past nine years, and even more so recently, when such discussion was vital for the future of British shipbuilding industry.

The redundancies and restructuring sacrifices made by those in the EEC shipbuilding industry have been unequally shared out. Recently, the Minister admitted to me in a letter that we had lost more shipbuilding jobs than any other EEC country. Capacity in certain European countries has been reduced much more dramatically than in others, despite the existence of supposedly fair EEC rules. The shipbuilding world is not a chivalrous business. It is dependent on political will and decisions by politicians, just as much as on the efforts of business men. For that reason, we feel that the British Government and the EEC have let us down by not defending the industry and ensuring its future.

Furthermore, the demise of shipbuilding takes place at a time when we have a record balance of payments deficit and when that deficit is dramatic in manufactured goods. What is the Government's response? Simply to close down a superb manufacturing facility in Sunderland and run the shipbuilding industry into the ground. This is a disgraceful record.

Throughout the debate, the Government have suggested various palliatives, or bandages, for the wounds of the shipbuilding industry. I know, from experience in the EEC, of the money that is available there to help the shipbuilding areas, and that would have been available for Wearside and the whole of the north-east simply because of the redundancies that have already taken place. The closure of North East Shipbuilders Ltd. is irrelevant to that. We would have earned a large slice of money to help that area, irrespective of the closure.

Other hon. Members have mentioned the different points of view held in the Government's ranks. There is a clear division between various members and supporters of the Conservative party who are interested in maritime policy and shipbuilding and those who, unfortunately, have been particularly powerful in the Cabinet and who have taken the opposite view. It is a great tragedy that the wrong side has won the argument.

Two or three months ago, I accompanied my hon. Friends the Members for Sunderland, North (Mr. Clay) and for Sunderland, South (Mr. Mullin) for discussions with the Minister's predecessor. On that occasion, we presented him with a book entitled "Sunderland--the Town where Ships are Born". Unfortunately, we did not realise that we were making that presentation to the man who would be responsible for Sunderland becoming

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known as the town where shipbuilding died. The Government's decision is disgraceful, and it is one for which they will be blamed for a long time to come--not only in Sunderland and in the north east but throughout the country.

Dr. Norman A. Godman (Greenock and Port Glasgow) : On a point of order, Mr. Deputy Speaker. As the Minister referred to my constituency on a number of occasions during his opening speech, I wish to know why I have not been called to speak--particularly in view of the fact that one hon. Member who was called honestly admitted he was not present in the Chamber for most of the debate.

Mr. Deputy Speaker (Sir Paul Dean) : I regret that a number of hon. Members wishing to speak have not been called, and that the hon. Member for Greenock and Port Glasgow (Dr. Godman) is among them. I suggest that he might seek to intervene during one of the wind-up speeches.

6.41 pm

Mr. John Garrett (Norwich, South) : We have been discussing an industrial tragedy--a tragedy not only for Sunderland but for every region of the country. It has been a deeply serious debate, with my hon. Friends making their analysis of the causes of North East Shipbuilders' closure and its consequences for their constituencies. In an outstanding speech, my hon. Friend the Member for Sunderland, North (Mr. Clay) asked many important questions of the Minister, particularly in respect of the Cubans' latest proposition, which I hope the right hon. Gentleman will answer.

There is no doubt that the Government contributed to the closure by concentrating on seeking private owners for the yards in pursuit of their privatisation ideology rather than on helping the yard to obtain orders and assuring its production continuity. One of our concerns is the lack of any Government strategy or policy for merchant shipbuilding, other than to get it out of the public sector by any means, as quickly as possible.

In a memorandum submitted on 14 June to the Select Committee on Trade and Industry, British Shipbuilders observed :

"We are concerned that there is apparently no policy concerning the merchant shipbuilding industry or indeed the whole maritime infrastructure of the United Kingdom. This is in no way concerned with the question of either public or private ownership." British Shipbuilders also made the point that shipping policy should be an integral part of national maritime capacity, and clearly it was right to say so. British Shipbuilders' opinion was that merchant shipbuilding worldwide was on the brink of an upturn for the 1990s, as has been said many times during the debate.

In his evidence to the Select Committee, the chairman of British Shipbuilders said that his view of the upturn was based on the fact that seaborne trade was at a 10-year high and on the increase in freight rates. He remarked that a new generation of efficient modern ships is needed to replace much of the present world fleet. The re-equipment of the Sunderland yard placed it in an excellent position to take advantage of an upturn.

On 28 June, the then Chancellor of the Duchy of Lancaster told the Select Committee :

"I think there is plainly some improvement in the market, yes I think I do accept there is a change."

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He referred to the scope for replacing aging vessels throughout the world. But now it suits the Government to play down the upturn. When all the signs are right, only then do the Government decide to end merchant shipbuilding in a modern, competitive yard.

Ministers talk of £1.8 billion being sunk into British Shipbuilders, but they know that the cost of merchant shipbuilding was about one third of that total. They maintain that all such subsidies are unacceptable. It is a pity that they do not apply the same economic logic to the farm subsidies that they so generously support. The Government's decision itself incurs enormous costs. Two thousand jobs will be lost in the yards, and for every job lost there, three will go in sub-contracting and service industries. There is also the indirect multiplier effect of the loss of spending power in the local community. At least one job in retailing banking and services is lost for every two redundancies in manufacturing. Therefore, in an area of 20 per cent. unemployment, one is confronting job losses totalling about 10,000.

I turn to the Government's programmes for creating employment in Sunderland --what the Financial Times called a "palliative package". We know something about enterprise zones because last year the DTI published an evaluation report on them. We know that, in the 23 enterprise zones, most of the jobs created were transfers from their local economies--and that most were transfers from areas of high unemployment. Only 12 per cent. of enterprise zone firms were in high-tech industries, 40 per cent. of the new jobs were unskilled, and the cost was £30,000 per job. More than one quarter of the jobs were in retailing and distribution, and the retailing jobs were created at the expense of local city centres. All that is revealed in the Government's own report.

The last thing that Sunderland's redundant skilled workers need is the building of yet another shopping experience or more low-paid, unprotected jobs in retailing or warehousing. The zone cannot, anyway, be established before next April, and it will be long after that before any new jobs appear. Whatever economic development takes place, it will not use shipyard workers' skills or the equipment that is in the yards.

Over the next three years, about £5 million will be made available to encourage new enterprise in Sunderland. That is a paltry sum. With a balance of payments crisis, and record--and still rising--interest rates, there has hardly ever been such an unpropitious time to start new enterprise. We all know that new firms are acutely sensitive to interest rates. Another £5 million will be made available over three years to assist NESL's present staff to retain and to find new jobs. Retrain for what? From where are the new jobs to come? Will the Government assist local organisations to produce an inventory of available skills and help to find a substantial employer willing to use them? Or will the Government trust to market forces to produce sufficient small firms and new starts to provide employment? One of the most interesting exchanges in the Select Committee concerned national industrial policy. British Shipbuilders' chairman made the modest proposal that there should be a maritime policy for Britain, encouraging British shipbuilders to have ships built in British yards, and that there be a forum in which maritime interests could discuss such issues with the Government. He said that no such regular forum existed. There is no such forum, there is no such policy, and there is no strategy.

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We have instead a series of financial expedients, which The Guardian of 9 December described as "Young's dream come true" : "Lord Young, the Trade and Industry Secretary, yesterday saw come true his dream of ending his department's role as sponsor to what he sees as British industry's lame ducks' and creating a Department of Enterprise Closure of the NESL shipbuilders was the last big obstacle to establishing his new-look department."

Other Governments defend their shipbuilding interests, but ours sells them out. The Minister in the other place had no intention of saving the yards. The decision was delayed simply because the Prime Minister was giving support to Polish shipyard workers. The closure was a forgone conclusion, and the Secretary of State was determined to kill off NESL so that he could create his new-look Department of Enterprise--or is it Department of Advertising? I am never sure. The Government have betrayed thousands of shipyard workers and the national interest in an act of gross incompetence and folly. 6.48 pm

Mr. Newton : In view of the closing remarks of the hon. Member for Norwich, South (Mr. Garrett) I must flatly deny that there is any truth in his suggestion that the decision I reluctantly and regretfully announced last week was a forgone conclusion, or that the Prime Minister's visit to Gdansk played the part suggested by the hon. Gentleman and by one of his hon. Friends earlier.

We have been seeking a way forward for the yards within the terms that we set out. In my opening speech, I went to some lengths to describe the various processes through which we went and the various points at which time extensions were allowed to explore further possibilities. I make that absolutely clear. I shall not speak further on that point, because if I do, it will prevent me from replying to points on which hon. Members seek replies.

Dr. Godman : I am grateful to the Minister for showing his characteristic courtesy by giving way to me.

May I point out to the right hon. Gentleman, with regard to his remarks about Clark Kincaid and Ferguson, that the negotiations concerning the buyers at Clark Kincaid are proceeding apace. However, I must say to him, in all seriousness, that the negotiations concerning Ferguson at Port Glasgow are deeply worrying. I have been informed that the shop stewards have been denied a meeting with representatives of the preferred bidders, Ailsa Perth of Troon. If such an impediment has been placed in their way, will the Minister do what he can to bring the two parties together?

Mr. Newton : The hon. Gentleman has put his point fairly. I hope that he will accept from me that this is the first that I have heard about a difficulty of that kind. There have been a number of occasions when, in advance of the naming of a preferred bidder, there has been some controversy about whether it would be appropriate for representatives of the work force to talk to the various possible bidders, but the general understanding has been that any preferred bidder would wish to talk to the work force in whatever way seemed most appropriate. I have certainly not sought to discourage that. I shall not

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comment further in my immediate response, but I shall look at the point that the hon. Gentleman has raised on behalf of his constituents and be as helpful as I can--in the spirit in which he raised the question.

The hon. Member for Dagenham (Mr. Gould) asked me a number of questions, which interrelated to a significant extent with points that were made subsequently by the hon. Member for Sunderland, North (Mr. Clay). He asked me whether the closure proposals for NESL had been notified to the European Commission. The answer is yes. To allow an orderly rundown in activity and to make redundancy payments, we have already notified our intention to pay closure aid at NESL, by way of redundancy payments to the work force and assistance with retraining and job creation.

The hon. Member for Dagenham asked me whether the notification was reversible. I am not sure whether "reversible" is the right word, but it would be possible to renotify to the Commission. Several Opposition Members, including the hon. Member for Sunderland, North, made that point. There is one problem on which those hon. Members may care to reflect. The hon. Member for Sunderland, North made a proposal, and I once again pay tribute to the ingenuity with which he has acted on these matters in recent weeks and the tremendous effort he has put in. However, it is not clear to me how far it is a proposal from him which the Cubans are considering, or how far it is a proposal from the Cubans, which is, properly, for British Shipbuilders or the Government to consider. I am advised that no such proposal has been received--which is not to say that the Government would not look at it were it received. I hope that the hon. Gentleman understands what I am saying.

The point I want to make is that the proposal made by the hon. Member for Sunderland, North would itself involve the entire existing work force being made redundant ; that is a difficulty on which I want him to reflect. The hon. Member proposed that, after renotification, the work force would be re -employed--he hopes--on some completely new basis to start up the yard again with only one third of the current work force at Sunderland, and that is the best hope that he would hold out.

Manifestly, any process of renotification that called into question the capacity of British Shipbuilders to pay redundancy payments within the terms of the overall notification to the European Community would present considerable difficulties, as the work force at Sunderland would not want to have any question marks raised over the payments that they were expecting in those circumstances. I do not make that point to shoot down the hon. Gentleman's proposal. The hon. Member for Dagenham asked me to say whether we would negotiate in terms of a proposal on those lines. I should prefer to say that we shall consider any proposition put to us, in the way that I outlined in my statement last week. I said that we had hopes of finding a buyer for Sunderland Forge Services, which employs a significant part of the work force at Sunderland, and that I would ask British Shipbuilders to explore possibilities that appeared to exist in respect of Pallion, rather than Southwick, for a possible use that had connections with shipping--that is, conversions and repair, rather than building. In that same spirit, I will not seek to rule out anything. That would not be in the spirit in which I have been carrying out my responsibilities.

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However, I must say that I would not be prepared to run risks with the other disposals that have been notified to the Commission as part of an overall package. I must point out to the hon. Member for Dagenham that they have been notified together simply because it is obviously sensible for the Commission to look at our position in respect of British Shipbuilders as a whole. That does not--I repeat not--in any sense mean that any individual proposal is dependent on any other individual proposal that has been put to the Commission at the same time. I am not prepared to do anything that might jeopardise other disposals, on which we have made such good progress, or the package of measures for Sunderland.

Following any proposition put forward by the hon. Member for Sunderland, North, there would be a large number of redundancies at Sunderland and it would be necessary to take action to ensure new jobs and new enterprise in the town. I should not want to risk that. The hon. Member for Sunderland, North, gave some indication of his proposition in a message to my office yesterday, but in the circumstances in which he has put it forward, I am not in a position to give any undertakings about the future availability of intervention fund aid for several reasons--some of which I have touched on in the past few minutes.

I can say to the hon. Members for Sunderland, North and for Berwick-upon- Tweed (Mr. Beith) that I can and shall do everything possible to ensure that no options are prematurely blocked off--by, for example, the immediate disposal of equipment in the yards--although I cannot give precise undertakings about the length of time. The Tyne and Wear development corporation, for example, is commissioning a study of possible future uses for the yard, for marine or non-marine purposes, and that must be taken into account. I shall certainly ensure--I deliberately choose general terms --that no precipitate action is taken that blocks off a possibility for using the yards in a productive way as part of the general aim of promoting employment in Sunderland. I hope that that general observation will be welcomed.

Mr. Clay : Will the Minister give at least one commitment? Will he say that he has not entirely ruled out renotifying the Commission that there may be a continuation of shipbuilding at Southwick whatever reduction in the intervention fund next year is consequent on that? Will he at least not rule that out entirely?

Mr. Newton : I have used the phrase "rule out" in some of what I have said, but not in the specific terms that the hon. Gentleman has described. I shall not be as specific as the hon. Gentleman has pressed me to be, simply because I am not prepared to run risks with the package, which we are determined to press ahead with for Sunderland as a whole. Nor am I prepared to jeopardise the successful sale of other yards around the country with the good prospects that exist in those places for the future of the work force. It would be irresponsible for me to run such risks in response to the question that the hon. Member for Sunderland, North has asked me.

It has, inescapably, been impossible for me to comment on all the points that have been raised, including many of the detailed complaints made by the hon. Member for Sunderland, North. Finally, I must say to the hon. Member for Dagenham and other hon. Members that it is quite ludicrous to

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suggest that this means the end of merchant shipbuilding--let alone shipbuilding--in this country. There will still be more than 30,000 people employed in shipbuilding. British Shipbuilders accounts for a very small part of shipbuilding employment as a whole. There will remain not only important civil yards, such as Govan, but military yards with substantial merchant shipbuilding capacity. Should demand arise for ships that can be sold at satisfactory prices, we could and would turn towards it. No one--not even the hon. Member for Sunderland, North--has suggested that the whole of shipbuilding employment in Sunderland can be retained. In those circumstances, we shall need new enterprise and new jobs in Sunderland, and that is what we are determined to bring about.

Question put, That the amendment be made :--

The House divided : Ayes 227, Noes 290.

Division No. 16] [7 pm

AYES

Abbott, Ms Diane

Adams, Allen (Paisley N)

Allen, Graham

Alton, David

Anderson, Donald

Archer, Rt Hon Peter

Armstrong, Hilary

Ashley, Rt Hon Jack

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Beckett, Margaret

Beggs, Roy

Beith, A. J.

Bell, Stuart

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Buchan, Norman

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Ron (Blyth Valley)

Canavan, Dennis

Cartwright, John

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Cox, Tom

Crowther, Stan

Cryer, Bob

Cummings, John

Cunningham, Dr John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Douglas, Dick

Duffy, A. E. P.

Dunnachie, Jimmy

Eadie, Alexander

Eastham, Ken

Evans, David (Welwyn Hatf'd)

Ewing, Harry (Falkirk E)

Ewing, Mrs Margaret (Moray)

Fatchett, Derek

Faulds, Andrew

Field, Frank (Birkenhead)

Fields, Terry (L'pool B G'n)

Fisher, Mark

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Forsythe, Clifford (Antrim S)

Foster, Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galbraith, Sam

Galloway, George

Garrett, John (Norwich South)

Garrett, Ted (Wallsend)

George, Bruce

Gilbert, Rt Hon Dr John

Godman, Dr Norman A.

Gordon, Mildred

Gould, Bryan

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Win (Bridgend)

Grocott, Bruce

Hardy, Peter

Hattersley, Rt Hon Roy

Healey, Rt Hon Denis

Heffer, Eric S.

Henderson, Doug

Hinchliffe, David

Hogg, N. (C'nauld & Kilsyth)

Holland, Stuart

Home Robertson, John

Hood, Jimmy

Howarth, George (Knowsley N)

Howell, Rt Hon D. (S'heath)

Howells, Geraint

Hoyle, Doug

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Hughes, Sean (Knowsley S)

Hughes, Simon (Southwark)

Hume, John

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