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Mr. Speaker : I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts :

1. Appropriation 1989 Act

2. Finance Act 1989

3. Pesticides (Fees and Enforcement) Act 1989

4. Representation of the People Act 1989

5. Electricity Act 1989

6. Dangerous Dogs Act 1989

7. Human Organs Transplants Act 1989

8. Fair Employment (Northern Ireland) Act 1989

9. Extradition Act 1989

10. Law of Property (Miscellaneous Provisions) Act 1989 11. Continental Shelf Act 1989

12. Associated British Ports (Hull) Act 1989

13. London Regional Transport (No. 2) Act 1989

14. Hayle Harbour Act 1989

15. Queen Mary and Westfield College Act 1989

Eastern Europe

Question again proposed, That this House do now adjourn.-- [Mr. Patnick.]

9.40 pm

Mr. Donald Anderson (Swansea, East) : I wish at the outset to congratulate the hon. Member for Hampstead and Highgate (Sir G. Finsberg) on his distinguished leadership of our delegation to the Council of Europe, a sentiment which will be supported by my hon. Friend the Member for Wentworth (Mr. Hardy) who spoke eloquently earlier. I was rather puzzled by the addition of the subject of the Western European Union, which is rather less relevant to eastern Europe, but the hon. Member for Ruislip-Northwood (Mr. Wilkinson) tried skilfully to keep within the terms of the debate. I also welcome the Minister of State, the hon. Member for Warwickshire, North (Mr. Maude) to his first foreign affairs appearance. He will be aware that press reports, malicious as ever, claim that he shares the Prime Minister's hostility to the European Community. I am sure that he will do his best to disprove any such suggestion.

The Council of Europe has a chequered history. According to its foundation article, it was

"to achieve a greater unity between its Members for the purpose of safeguarding and realising the ideals and principles which are their common heritage, and facilitating their economic and social progress."

Ernest Bevin disliked it. He said that when that Pandora's box was opened, all sorts of Trojan horses would come out. It was established among the plethora of post-war international organisations as the best level of European co-operation attainable at the time. It continued, even though at times it gave the impression of having lasted longer than was justified by the role that the member countries were prepared to afford to it--in short, no one had the heart to end it.

I recall in 1959, when it was the 10th anniversary of the Council, the Council of Ministers' deputies and other


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delegates were suggesting a means of commemorating that anniversary. Some suggested a new palace in Strasbourg and others suggested a statue to Paul-Henri Spaak. The wise Irish delegate was alleged to have suggested meekly that there should be five minutes' silence.

Having once been the desk officer at the Foreign and Commonwealth Office responsible for the Council of Europe, I confess that it is fair to say that for at least part of its history it was searching for a role. From time to time Governments, for their own purposes, have tried to breathe new life and energy into it, just as in the early 1960s, for example, after the failure of the first Gaullist veto, the British Government tried to breathe new life into WEU. I am confident now, as hon. Members who know the Council of Europe better than I will agree, that it has discovered an enhanced and valuable role even greater than the technical conventions, which themselves are important, and the key work that it has done in human rights through the convention, the commission and the court.

What is the enhanced role that the Council can now play? Perhaps one should first clarify what it cannot do, and I was surprised at the tirades of freemasonry from members of the Council against the right hon. Member for Old Bexley and Sidcup (Mr. Heath). It was not the blue heath, as my hon. Friend the Member for Wentworth suggested--the blasted heath might be a more appropriate simile. One can appreciate why feathers were ruffled, as the right hon. Gentleman's views were clearly somewhat outdated when he suggested that the Council was no more than a talk shop and

"a useful forum for discussion and nothing more."

I concede that he played down the positive contribution that the Council would make. In mitigation, however, he went on to say, as the second leg of his criticism, that the Prime Minister's new-found praise for the Council of Europe raised questions as to

"whether the British Government want to weaken the Community rather than strengthen it."--[ Official Report, 14 July 1989 ; Vol. 156, col 1269.]

In other words, there were grounds for suggesting that the signals given by the Government in their recent enthusiasm for the Council suggested a diversionary tactic for avoiding European Community obligations and giving a wrong signal, which could be added to others, in respect of our commitment to the Community. That is a serious point. There has traditionally been insensitivity towards the Community, as was illustrated by the recent changes in the Foreign and Commonwealth Office and by yesterday's speech, showing a lack of patience, by President Mitterrand.

Of course the Council of Europe's social charter is important, but it is not obligatory on those who have signed it. It is essentially declaratory and is wholly different from the aims of the European Community social charter as promulgated by Mr. Delors and others. It is fair to say that President Gorbachev exaggerated what the Council could do when he spoke at the Palais de l'Europe on 6 July. He spoke about the pan-European community of the next century and about Europe from the Atlantic to the Urals. Is that anything more than rhetorical nonsense? Is he seriously suggesting that the Soviet Union can be split into two, into its European and Asian halves? When President Gorbachev talks about the "common European home", is


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he conveniently forgetting that a large wall with watchtowers on the greater part of it runs through the parlour of that home?

Sir Geoffrey Finsberg : The hon. Gentleman has told us that he was a desk officer at the Foreign Office, so he surely recalls that Turkey is a member of the Council of Europe and that a substantial part of Turkey is in Asia. Perhaps a precedent has been set and the hon. Gentleman's comments about the Soviet Union may not be so accurate as he might wish.

Mr. Anderson : Yes, I shall say a few words about Turkey. I believe that Metternich said that Asia begins at the Landstrasse Hauptstrasse from Vienna, which might irritate some of our Hungarian friends and others, but perhaps I had better not open the vast volume that is Turkey at this stage.

Having said that, it is only fair to respond to the Gorbachev initiative and say that as yet there has been an inadequate western response to the vision that he put before the Council.

The right hon. Member for Old Bexley and Sidcup was at least partly correct in the criticisms that he made during our recent foreign affairs debate. The Council of Europe is a vehicle for

intergovernmental co-operation through Ministers and Ministers' deputies. Of course, the consultative assembly was initially just that--a consultative assembly--bringing together parliamentarians, but as the catalogue of achievements set out so well by the hon. Member for Southampton, Test (Mr. Hill) has shown, it has developed into something much more. It now has a new role at a time when the super-power hegemony in both eastern and western Europe is diminishing and when western European countries are growing closer together and, paradoxically, eastern European countries are moving further apart.

I stress to the Government that the Council is not and cannot be an alternative to the European Community, but it has special capacities which the European Community does not have, due to its membership and its role. Like a well-tried brand of beer, the Council can reach places which the European Community cannot. With the accession of Finland in May, all the countries of western Europe--all of democratic Europe--are part of the Council. The process is being completed. I welcome the opening to the East that is shown by guest status which, I understand, is analogous to the observer status that is possible under statute.

I welcome the enormous and impressive work that the Council has done in conventions. It is clear that there is a need for cross-frontier East-West co-operation in the areas to which my hon. Friend the Member for Wentworth referred, such as the environment, drugs, terrorism, television and the other areas that have been mentioned. I welcome the initiatives that the Council has taken in bridge building in eastern Europe, the Mediterranean and the middle east. It is an example to other institutions, and can be considered a core body. It is at the centre of a constellation of other relationships, and sets a precedent for Turkey's relationship with the core or inner group--the European Community.

Human rights and the commitment to them must be an essential prerequisite of any relationship with the Council


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of Europe, and that is consistent with the reasons for its establishment. I was therefore glad to see that adherence to the Helsinki process, and the conference on security and co-operation in Europe, was designated necessary to the new guest status and so has put a sine qua non on that relationship.

I am struck by the pace of change in eastern Europe. I lived in Hungary in the early 1960s, and I contrast that experience with an experience I had on 15 March this year, when I watched a procession of Hungarians of all ages and classes on their new national day, as opposed to the November national day. Last Sunday, I had a telephone call from a Hungarian friend--Rozsik Gabor--who said that he had just won a by-election against the official candidate. That is the first victory by an opposition candidate since 1947, and gives some indication of the pace of change in central Europe.

The Council of Europe embodies the wider European tradition, which is based on the Judaeo-Christian ethos. Human rights are fundamental to the ideals of individual liberty and common culture. Yes, the Council of Europe is limited, but it is valuable. It can help to re-establish those traditions, and it does not deal just with technical matters such as conventions--it is a valuable political tool. The Council becomes more necessary as the super- powers reduce their role in Europe. As my right hon. Friend the Member for Llanelli (Mr. Davies) said, central Europe needs to be redefined. The future role of Germany, both politically and economically, within central Europe needs to be redefined. The German question is back on the agenda.

We should be true to those traditions. When we consider the valuable role that the Council can play, we should not be sidetracked from those principles of individual liberty and pluralism which were fundamental to the founding fathers of the Council in 1949. 9.52 pm

The Minister of State, Foreign and Commonwealth Affairs (Mr. Francis Maude) : I am glad that my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) raised this important matter. It is appropriate that he should have raised issues relating to the Council of Europe in its 40th anniversary year--of which he is as proud as the rest of the House. Britain was one of the founding members of the Council of Europe and we remain committed to the principles on which it was founded.

My hon. Friend has given, and continues to give, magnificent service to the Council of Europe, and to the Western European Union. He has been a member of the assembly since 1983, and has been leader of the all-party delegation since 1987. I should like to take this opportunity to pay a warm and sincere tribute to his distinguished leadership of that delegation, and to his colleagues in the delegation, who work so hard in the service of the House and of the Council.

I should also like to thank all right hon. and hon. Members who have wished me well on my debut. It is not quite my debut in a foreign affairs debate, but it is as a Foreign Office Minister. I have, of course, participated in rather more debates about European Community directives at a late hour than I like to think about, and matters relating to the Community are by no means new


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to me. Nevertheless, I look forward keenly to an expanded role, and I am glad of the opportunity to respond to the debate at this especially auspicious time.

If the way in which the debate has been conducted is any indication of the way in which debates are conducted in the Council of Europe--and I am sure that it is--we have some idea of the Council's important role. Members from both sides of the House debate important matters in a serious, well- informed and measured way. That bodes very well for the future of both the Council and the Western European Union. I am a newcomer to these matters, and I shall look to my hon. Friend and his colleagues for help and guidance.

We are witnessing momentous changes in eastern Europe. A year ago, reform in Poland was stagnating. No one could then have foreseen that by now Poland would have had its freest elections since the Communists came to power after the war ; nor could anyone have foreseen that the result would be an impressive victory for Solidarity, which the Communist party--to its great credit--accepted. We all hope that the local elections, due in 18 months, will be fully free.

Great changes are taking place in Hungary as well. The hon. Member for Swansea, East (Mr. Anderson) referred to a member of an opposition party winning a by-election : a small sign, but one of considerable significance. The reburial of Imre Nagy in June was also a potent symbol of change, and the Hungarian leadership's commitment to introducing a multi-party system is greatly to be welcomed. Hungary, too, now has its round table, and may well be the first eastern European country to hold fully democratic elections. These are historic steps forward. The post-war period has been a difficult and tragic time for eastern Europe, but we must be realistic. Even for the peoples of Poland and Hungary difficult times still lie ahead, but the crucial point is that they are increasingly in control of their destinies. They have real choices to make, and their decisions will have enormous significance, not only for them but--we hope--for the rest of eastern Europe. Let us also not forget the less fortunate nations whose Governments have yet to go down the path of reform and greater freedom, but there is pressure for change in all those countries, and in the end it must prevail.

As has been said, the Council of Europe has an important role to play in this time of change. That was clearly recognised by the Committee of Ministers in the political declaration adopted on 5 May. I wish to refer particularly to the parts of the documents that concern relations with eastern European countries : they concentrate on the co-operation that can encourage greater openness and respect for human rights and contribute significantly to reform and democracy. It must be right, however, for the Council of Europe, in developing further links with the eastern Europeans, to follow the appropriate course for each country.

We must take full account of the actual process of reform in those countries when agreeing new forms of co-operation. We must look for real achievements and not for empty rhetoric, and co-operation must aim to support the reform process. We endorse that aim, and will support increased co-operation where there is substantial work to be done.

It is equally important to follow the guidelines set out in the political declaration. Each case must be judged on its merits ; there is no virtue in pursuing contacts for their own


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sake. There can be no question of giving a Council of Europe "seal of approval" to countries that refuse to embrace proper reforms. As has been said, the parliamentary assembly of the Council of Europe has also played an important role in developing links between the Council and eastern Europe. On 11 May, the assembly unanimously approved a resolution which, as we have heard, set out special guest status in the assembly for certain east European assemblies. In June the assembly decided that Poland, Hungary, the Soviet Union and Yugoslavia should be granted such status. Delegations from those countries were able to take their seats in the assembly for the visit of President Gorbachev in July.

I understand that, as I think the hon. Member for Swansea, East (Mr. Anderson) suggested, special guest status will be comparable to the rights that delegations with observer status enjoy. Of course, only Israel currently has that status. As I understand it the delegations will be able to speak at the assembly with the prior approval of the committee concerned. I must echo the notes of caution sounded by my hon. Friend the Member for Hampstead and Highgate, who was rapporteur of the assembly's political affairs committee. He emphasised that the credentials of those legislative assemblies requesting such status should be strictly examined each year to ensure that they fulfil the conditions for participation. Of course we hope for further and wider ranging reforms in eastern Europe, but we must also be vigilant to ensure that there is no regression. It is not just in the European assembly that the eastern Europeans have shown an interest. Member states have agreed that both Hungary and Poland can accede to the European cultural convention. That is one of a number of Council of Europe conventions that are open to ratification by non-members, and the Soviet Union has likewise expressed interest. Other non-members may also pursue this line. We will, of course, have to consider all cases on their individual merits, and ratification must depend on the country's ability to meet fully all the requirements of the convention. There remains the question of closer association with--and possibly membership of--the Council of Europe, but this must depend upon a degree of democracy and a respect for human rights which is consistent with the Council's founding statute. Such conditions do not yet exist. There is a danger that an excess of enthusiasm might lead to the dilution of the Council's important basic principles, a cornerstone of which is the European convention on human rights. We look forward to the day when some of these countries can fulfil those obligations ; and the sooner the better.

Some hon. Members, including my hon. Friend the Member for Ruislip- Northwood (Mr. Wilkinson), spoke about the development of links between the Western European Union and eastern bloc countries. Although the Council of Europe seems to be a more appropriate body than the WEU for increasing links with eastern Europe, the WEU assembly can play a useful role in talking to parliamentarians and to other opinion formers in the Soviet Union and other eastern European countries. It is good news that the assembly has already begun exchanges with the Supreme Soviet. I hope that these can be developed in future, and perhaps expanded to take in equivalent bodies in other such countries--notably, perhaps, Poland and Hungary.


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I have seen the assembly's report of 3 May this year on the development of East-West relations and western European security. Since the publication of the report, there have been a number of developments that the authors would surely welcome--notably the conclusion of a successful NATO summit at the end of May, which included agreement on a comprehensive concept of arms control and disarmament. That document provides a coherent and imaginative basis for the development of the Alliance's role in both protecting security and improving East-West relations through arms control. There has also been the presentation on 13 July in Vienna of proposals by NATO for reducing the number of combat aircraft, helicopters and United States and Soviet military personnel. This followed the tabling of proposals in March on reductions in tanks, armoured troop carriers and artillery.

All these developments illustrate the way in which the western Alliance, including the WEU members, are vigorously pursuing a reduction in conventional forces in Europe. The initiative lies firmly with the west, and we look to the eastern countries to respond constructively when the talks are resumed in Vienna in September. We shall, of course, continue to follow these events closely within the WEU in the run up to this autumn's ministerial council meeting. It remains the key aim of the WEU to promote the Alliance's cohesion and the maintenance of credible deterrent capability, with full United States and Canadian participation, at a time of rapid change in eastern Europe. It also remains a key aim to ensure that arms control will enhance stability as well as reduce force levels. Within that framework, I hope that the assembly will make its own very special contribution to increasing links between East and West.


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As I have said, the main focus for building links between East and West should be the Council of Europe. It was indeed appropriate that President Gorbachev should visit Strasbourg in the Council's 40th anniversary year. The Council of Europe is not just some comfortable club. It embodies our most fundamental values. Those values must not be compromised.

Mr. Wilkinson : Will my hon. Friend bear in mind that a good NATO ally, in a key strategic location, that fulfils all the criteria for membership--Turkey--has formally applied to join the WEU? In the Council, will my hon. Friend try to persuade his opposite numbers to listen favourably to Turkey's wish to accede in full to the Brussels treaty and join the WEU? That would be greatly to the benefit of the organisation.

Mr. Maude : I hear what my hon. Friend says. He will appreciate that I am new to these matters and I hope that he will forgive me if I do not respond fully to that point. I shall look carefully at what he has said.

Adenauer, that great European statesman, subscribed to the two virtues of unity and freedom. He would have welcomed the changes in eastern Europe today, and the role that the Council and the WEU have played in them. He, too, would have counselled us today--as he did in his own lifetime--that freedom must come before unity ; unity yes, but freedom first. Those who wholeheartedly adopt the values of the Council of Europe will welcome fellow inhabitants of the common European house.

This has been a valuable opportunity to debate the merits of the Council of Europe. I am grateful to all those who have taken part in the debate. I am well aware of the hard work that they do and of the distinguished contribution that the Council of Europe makes. I urge them to continue to pay it good attention. I assure all of them that the Government take extremely seriously what the Council of Europe does.


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North East Shipbuilders Limited

10.7 pm

Mr. Bob Clay (Sunderland, North) : I am thankful for the opportunity to raise with the House what I and many of my hon. Friends regard as a major national scandal. It is not some regional, parochial matter or one that concerns simply an important national industry : it is a matter that in many ways exposes the most appalling incompetence, and concerns issues of great constitutional importance to the relationship between the Government and the European Commission.

I shall start simply by stating what are by now irrefutable facts about the reality of what has happened. On the River Wear are the shipyards of North East Shipbuilders Limited, regarded as technologically the most advanced in Europe. Many other shipbuilding nations consider them to be the most enviably advanced merchant shipbuilding yards. We have a highly skilled, superb work force, mainly either languishing on the dole or working on short-term contracts away from the town, their home and their families. Two organisations are willing, here and now, to purchase those shipyards. Both had clear signals earlier this year that the Government and British Shipbuilders were open to offers. Both have made it plain that they do not require any intervention fund subsidy on future contracts should they acquire the shipyards. Both have orders ready to place immediately in the yards. These are orders on their own account, as both are shipowners. We are not talking about orders from a third party. The ship-owners are prepared to place orders in the yards, if they secure the purchase of them, and it is now an undeniable fact, contrary to the Government's expectations last year, that the market for merchant shipbuilding is rapidly increasing throughout the world. The market for the categories and sizes of ship that the Wearside yards build is increasing even more speedily.

It is ironic that we are hearing literally daily from ship-owners and ship brokers in Europe and other parts of the world of the increasing difficulties that they are having in placing contracts in any yards. The cutting continued for so long that Europe and many other parts of the world are moving towards serious under-capacity. We have superb yards, willing buyers, no requirement for public subsidy, a privatisation process that started at the instigation of the Government, two owners with massive financial resources and no one querying their ability financially to sustain the yards in any opening or teething period. How can it be that the yards remain closed and that the Government refuse to allow them to reopen? As the pathetic saga has unravelled, the Government have been forced to say that they got it wrong. They have done so in a mealy-mouthed way. They can no longer dispute, despite their persistent refusal to accept this earlier, that there is clear, statistically undeniable evidence of an upturn in orders. That vindicates the position that Opposition Members took last year, when we argued that, although we were opposed to privatisation in principle, if the Government wanted to persist with privatisation they should at least get the timing right. We argued throughout that an upturn in the market was coming and that it would be logical to privatise a yard that had orders and could take more orders rather than a yard that was facing


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difficulty with an existing order and had nothing else on the order book. How right we have been proved about that.

There is plenty of evidence that the Government got it wrong last year about possible new ownership. Early last year the directors of North East Shipbuilders Limited drew up their own plans to rationalise the yard--it would have been a painful process--and to retract to an efficient one-site operation with one outfitting facility and one shipbuilding yard. The board of British Shipbuilders rejected the plan on the ground that it was too late to commence it because the Government had already begun the privatisation process. I ask the Minister to tell us whether the decision of British Shipbuilders to reject the proposal of NESL's directors was the result of Government instructions or advice.

As last year unfolded, it became clear that another bizarre matter had been misunderstood and that the Government had got it wrong. A document was deposited in the Library by the right hon. Member for Braintree (Mr. Newton), who is now the Secretary of State for Social Security, which sets out the Government's record on some of the unfortunate matters to which I have referred. The document sets out the Government's account of how it all happened.

At the end of the second page, and as part of the explanation of why the Government were in such a rush to privatise NESL, there appears the following sentence :

"This applied especially to any bidder interested in the possible series of orders from the Cuban shipping company Mambisa." What was meant by "this applied"? Intervention fund support was likely to be reduced after 31 December 1988. It was therefore important, we are now told, in the Government's view to have a prospective purchaser in place by that date so as not to lose a little intervention fund support on the Cuban order. It is extraordinary for the Government now to say that the urgency of securing that Cuban order was a critical factor in the timing of privatisation-- particularly since, only months before, the right hon. and learned Member for Rushcliffe (Mr. Clarke) told the House repeatedly that the Cuban order did not exist. That is something else that the Government got wrong.

The Government also said that there were no serious bidders for NESL last year, yet they now say that one should not be suspicious about the way in which the West German bidder, Egon Oldendorff, came into the picture this year, when it was around as a serious bidder all last year. How can the Government say, on the one hand, that last year there were no serious bidders, and, on the other, that a bidder now regarded as fairly serious was around last year too?

The document placed in the Library by the right hon. Member for Braintree (Mr. Newton), to which I referred earlier, makes mention of the Government's belief, in respect of bids made this year, that "Against the experience of the previous autumn, shipbuilding proposals seemed unlikely."

In other words, the Government restated their view that after last year's experience, it seemed unlikely that shipbuilding proposals would emerge during the stay of execution in the first six months of this year. The Government were wrong again. There were two substantial bids. That might explain why, when the


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Government were confronted by not one but two serious bids, they found themselves in a state of shock and did nothing for a considerable length of time.

It is extraordinary that the Government should state in a document deposited in the Library that they did not expect any serious shipbuilding proposals this year, when the chairman of British Shipbuilders, Mr. John Lister, repeatedly expressed the view last year that a probable outcome of the whole sorry scenario would be that serious bidders would wait until the yards' closure was announced before moving in to buy--in the mistaken belief that they would be able to obtain their assets more cheaply and easily. How wrong the Government were. Nevertheless, that view was persistently, if not publicly, expressed. The Government must have been well aware of that view of the chairman of British Shipbuilders, so it is extraordinary that they should now plead that they never expected any such thing to happen.

The Government's most serious error was their understanding of the European Commission's attitude in the event of a renotification by the Government of the reopening of one yard, or both yards, in the light of a serious bidder coming forward. How did the Government get all that wrong? I shall briefly run through some of the key dates this year. Bids were not made suddenly in June or July this year. At the end of January, the Anglo-Greek bidders wrote to British Shipbuilders expressing interest in shipbuilding in Sunderland and asking to visit the yards immediately. On 22 February, the Anglo-Greek bidders met British Shipbuilders and announced that they wanted to buy the yards. On 9 March, they wrote again, referring to the meeting of 22 February. On 6 April, after wondering what else they had to do, the Anglo-Greek bidders made a formal offer, subject to contract.

According to a written answer I received from the Minister today, on 13 April the West German bidder expressed interest too. Finally, on 10 April a senior civil servant spoke to a senior official of the European Commission. The document in the Library states clearly that the difficulties that have now arisen over British Shipbuilders' commercial borrowing were not mentioned in the 10 April discussion. The document also reveals that, on 11 April, bidders were informed of difficulties that might arise with the European Commission. There are two different versions of that development. Certainly bidders were informed that, if they wanted to continue receiving intervention fund subsidy, there would be problems with the European Commission. But at least one of the bidders believes that it was informed that if it did not want intervention fund subsidy there should not be a major difficulty. It is not just one of the bidders who believes that to be the case, but British Shipbuilders, which was selling the yards. It also takes the view that it was only much later in late June that it was made clear that even a non-intervention funded bid could produce considerable difficulties.

It is interesting that, after the first formal discussion between the Government and the Commission, a discussion that should have taken place much earlier, advice to bidders about difficulties that could arise with the European Commission was never even put in writing. A written answer that I received today confirms that that advice was only given orally. What an extraordinary way


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for the Department of Trade and Industry to behave. But how convenient that it was only given orally, because now we can only take one or the other side's word for it and we shall never know precisely what advice was given, as there is no written documentary proof of it.

On 17 April, the Anglo-Greek bidders, in response to whatever advice they were given, put in a further offer making it clear that they did not want any subsidy. On 3 May the West German bidder did the same. Even on 7 June, when the right hon. Member for Braintree gave evidence to the Select Committee on Trade and Industry, there were only the slightest hints, if one really read between the lines, that a serious difficulty would arise with the Commission from a non-intervention funded bid.

Finally, on 27 June, the right hon. Member for Braintree met Sir Leon Brittan, the Commissioner responsible for competition, and discovered that it was alleged that the Commission would reopen the whole question of what happened last December and would, if the British Government renotified it of a reopening of the yard, place in the way serious obstacles that would effectively make it commercially impossible for anyone to take on the yards.

We are not talking about an act of God. This was not due to the weather. I am not particularly interested in whether responsibility lies 100 per cent. with the EC, 100 per cent. with the British Government, 50 : 50 between the two or any proportion that anyone likes to devise. It lies 100 per cent. in some proportion between the two--no one else.

It is extraordinary that people were told that the Government were open to offers, that they received offers and that weeks and months went by. This is a serious case of commercial misrepresentation. If people are told that it is possible for them to buy something and if they then come forward and meet all the commercial requirements only to be told that a sale was not possible in the first place, that is commercial misrepresentation. It is about time that we stopped the pathetic business of the European Commission saying that the Government should have known all along and the Government saying that the European Commission never told them and that they did not know what to ask anyway. One or both of them should own up. If the Commission is right now, the Government must have been wrong then, or vice versa.

The crucial matter is that of unsubsidised bids. On 8 February the hon. Member for Braintree wrote to me. His words are clear and they have been quoted before. He talked about the difficulties that would arise if bidders wanted intervention funding, and he said : "My comments are of course related to the issue of subsidised shipbuilding. Should anyone wish to purchase some or all of the Sunderland facilities for shipbuilding without any form of assistance, that would entail only the negotiation with BS of acceptable terms for acquiring the facilities in question."

We now have the pathetic spectacle of Ministers and civil servants scurrying around trying to work out how to explain that. We are being told that subsidy in that case did not necessarily just mean the intervention fund ; it meant the strange mechanism whereby, if the yard reopened, British Shipbuilders' past losses, accepted by the Commission last December, could be regarded as triggering off commercial debts that would be imposed on a new owner of the yard. If that is the case, it would have been impossible to sell the yards in the first place. If the Government are saying that what they meant by "subsidy"


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in February was that a new buyer would inherit £90 million worth of commercial risk with the yard, the yards were unsaleable, and bidders should have been told that. In that case, the letter should have been rewritten as follows : "My comments are, of course, related to impossible shipbuilding. Should anyone wish to purchase some or all of the Sunderland facilities by invoking a miracle, that would entail only the negotiation with British Shipbuilders of acceptable terms for acquiring the facilities in question." It is nonsense. The commercial misrepresentation went back long before this year. In a sense, if what the Commission is now saying is correct, it was never possible to sell the yards. We are told that British Shipbuilders' losses were so great that its accounts and the subsidy that had already gone in until the end of last year were so far in breach of the sixth directive that something had to close. Let us put it this way. If the Government had gone to the Commission in December and said, "We have a buyer for the Appledore yard in Devon, we have a buyer for the Ferguson yard on the Clyde, a buyer for the Clark Kincaid engine works and also a buyer for Sunderland"--much bigger than the rest of the operations put together--what would the Commission have said? Would it have said, "That's okay ; fine ; get on with it," in which case the logic must be that the Commission cannot object to Sunderland reopening now? The Commission's objection to Sunderland reopening now must surely mean that it was going to insist on a pretty substantial closure of some kind last December. The Government must have known that all along. They could have done the correct thing and refused to accept that the Commission had a right to close British shipyards. If they did not want to do that, they could at least have done the honest thing politically and said, "We accept the Commission's rights to impose closures on us. We shall now choose which yards to close and which of the remainder to put up for sale." Instead, they put the whole lot up for sale, knowing that they could not sell all the yards. That was commercial

misrepresentation as well.

The Government nearly got away with it. What went wrong was this : the hidden agenda last year was to close Sunderland because it had no orders. Then something very embarrassing happens. One of the world's biggest shipping lines, Mambisa of Cuba, wanted to place what would then have been the biggest merchant order in the world with Sunderland, because it thought that Sunderland was a very good shipyard from which it had had many good ships in the past. The then Chancellor of the Duchy of Lancaster pretended that the Cubans were not there ; he pretended that they wanted unreasonable terms ; he pretended this and pretended that, but the Cubans just would not go away. It was extremely embarrassing and it prolonged the whole business.

Let me get back to what is happening now. The Government's failure to allow the reopening of the yard revolves around the attitude of the European Commission--that, at least, is the excuse that they are using. But in addition to the European Commission, we have a European Parliament made up of elected representatives. A deputation from Sunderland, which included me, went over to Strasbourg a couple of days ago, and there is now a resolution before the European Parliament, which was laid by Alan Donnelly, MEP for Tyne and Wear. It

"Calls on the Commission to withdraw any contemplated actions that deter the Government of the United Kingdom


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from proceeding with a sale of Sunderland shipyards to buyers who wish to utilise these facilities for shipbuilding purposes and who do not require Intervention Fund support on future contracts." That resolution has been presented to Henrique Baro n Crespo, the new President of the European Parliament, who has said to me and to others in the deputation that he hopes that the resolution will receive sympathetic and serious attention from the Parliament. I am sure that it will, and, moreover, it is a Parliament which is looking to assert more authority vis-a -vis the unelected Commission. Perhaps the British Government will say that the European Parliament is a meaningless and irrelevant institution and a waste of time and money. Unless they say that, they must accept in logic that if the European Parliament passes the resolution after due process, the European Commission may take some note of it. If the European Commission takes notice, the obstacle which, according to the Government is the only thing standing in the way of the reopening of the yards, has been removed. I hope that the Government can give us an assurance tonight that, as long as the European Parliament is considering the matter, they will do nothing to break up the assets or even sell the assets of the yards to anyone other than a shipbuilder until the European Parliament has had the opportunity to express its view to the Commission.

Furthermore, when I refer to the Commission, it is clear that the Commission is not embodied solely in Sir Leon Brittan. We were told over the past two days that at least one other Commissioner seriously questions Sir Leon Brittan's judgment in relating the Sunderland enterprise zone to a renotification of reopening the shipyards. Whatever Sir Leon Brittan may propose to the rest of the Commission, he will need nine votes to get his proposal through--if it goes to a vote. The Government should bear that in mind, because they have been far too ready to accept that as one Commissioner, who may be the lead Commissioner in the matter, is apparently presenting obstacles that is a good enough excuse for them to throw up their hands and say, "We can do nothing more about this."

The Government have got away with this extraordinary situation because it revolves around historic incidents and very technical European directives about an industry which, although it is important, is sadly regarded as rather regional. It is not a clapped-out sunset industry, it is a high- technology sunrise industry and the country will rue the day that it loses the industry. Nevertheless, the issues are historical, technical and complicated. They are woven with incompetence and deceit. Sadly, the national media in this country have for some reason not grasped what is happening.

Therefore, I must provide a metaphor to explain the sheer scale of the scandal and lunacy : a patient lies in a bed. He does not have an incurable illness or disease. However, he is profoundly sick and on a life-support machine. Misdiagnosing hunger as a duodenal ulcer, the surgeon operates and cuts out the appendix by mistake. One inappropriate drug regime after another has produced more and more catastrophic side effects.

It transpires that the doctors have been reading the wrong text books which, in any case, were in a foreign language that they did not really understand. So obsessed are they with their absurd remedial measures that they will sacrifice the patient to test the cure.


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The chief nurse is frequently drunk. Most of the competent medical staff have fled the asylum for early retirement or other jobs. The hospital manager--or the manager up until a few days ago-- is a decent well-meaning soul who has developed quite an attachment to the patient. From time to time, he intervenes to stop the final fatality occurring. Unfortunately, he has little idea of the reality of the hospital's extraordinary environment beyond his own office door, other than an occasional embarrassed visit to the sick room. Even when he begins to suspect that something has gone profoundly wrong, he cannot face the consequences, let along decide how to put matters right.

The hospital manager's secretary really runs the show. He is an extremely clever man, but is showing some signs of schizophrenia. So carried away has he become with demonstrating his administrative genius that he often forgets that the purpose of it all is to return patients to health.

The hospital room has become a nightmare. The patient's family sends for a second opinion. Having overcome the hospital's misdirections about its location, and after, on several occasions, being asked to come back next week, the new doctor eventually examines the patient. "Basically," the doctor says, "the patient should be fed rather than starved. Stop the drugs and try some exercise. I will take the patient away and I am pretty sure that I can effect a cure. I will nurture the patient and give him a new life. I will charge no fee for this responsibility and I will ask for no support in future. Indeed, I will pay you generously if you will allow me to take your patient away and care for him." "Sorry," says the hospital, "It is against our rules unless we switch off the life support machine."


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