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Shipbuilding (Wearside)

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Patnick.]

9.44 pm

Mr. Bill Etherington (Sunderland, North) : I want to speak tonight about the one remaining shipyard on the River Wear in Sunderland. Sad to say, it is mothballed now. A certain air of mystery and a certain amount of misunderstanding surround this whole business, which is why I am pleased to bring it to the attention of the House.

Earlier today, I was in South Shields, at a function organised by the RMT union : the function was organised on behalf of the seamen's campaign known as Save Our Shipping. At the meeting, it was pointed out that the British merchant fleet is now 20 per cent. of the size it was in 1979. That statistic coincides almost exactly with the running down of the British shipbuilding industry.

Recently, an early-day motion on the subject of British shipping and Government intervention was tabled and signed by 70 Conservative Members. I only wish that they would all vote with the Opposition ; then we could reverse the seemingly irreversible drift towards the decimation of our merchant fleet and of our remaining shipyards. My predecessor, Bob Clay, was the Member for Sunderland, North when the last two shipyards on the Wear came under threat in 1988. I pay tribute to his attempts to keep at least one of those shipyards open. The best site on the river, the former Thompson shipyard--capable of launching ships of 100,000 tonnes draught carrying capacity--was sterilised by the Tyne and Wear development corporation. As most people know, the corporation is an arm of Government and carries out Government instructions on how localities are to be run.

Unfortunately, it was decided to build a university campus on the site, and on the site of the adjoining wharf, an excellent fitting out yard. The river is therefore almost denuded of shipbuilding capacity, and the one yard that is left, run by Pallion Engineering Ltd, has been mothballed. It is about a mile and a half up the river and it cannot produce such large ships anyway. It is nothing like as good a site as the Thompson site would have been.

In 1957, when I started serving my apprenticeship as a fitter at the Austin Pickersgill yard at Southwick, there were no fewer than seven shipyards on the River Wear--all extremely viable. Because the old merchant fleet was to be gradually replaced at the time, it appeared that there were many years of work to come. All that started to collapse in the 1960s, however, and eventually only two yards were left--one of them, Pickersgills, the most modern yard in Europe. It built the famous SD14 cargo ships, which were acclaimed throughout the world for their quality and utility.

Nevertheless, the quality did not seem to stop the yard closing. It became obvious that the EC, together with the British Government, was determined to get rid of all shipbuilding capacity on the River Wear. Bob Clay was active in trying to keep open some remnant of the industry, and he was instrumental in setting up what became known as Pallion Engineering. This was a fairly unusual company, in as much as 75 per cent. of it was owned by a Greek shipping conglomerate, Tycoon Marine, which was registered in Liberia : beggars cannot be choosers. The other 25 per cent. was owned by a works co-operative known as an ESOP--an employee share ownership plan.

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Well-wishers put their money into the concern on behalf of the workers ; it would have been nice if they had had some return for their good work, because their motives were of the best philanthropic kind.

It took almost two years to get agreement that the Pallion yard would be leased for a period of 10 years for a down payment and also a peppercorn rent. I had heard of a peppercorn rent, but only once have I seen a lease that mentioned that the annual rent would be one peppercorn. Not being a lawyer, I thought it was a derisory term, but we live and learn.

Eventually, it was agreed that the yard would be leased and that at the end of the 10-year period it would become the property of the conglomerate. I know Bob Clay and others who worked tirelessly in the campaign, including my hon. Friend the Member for Darlington (Mr. Milburn), who was the convener of the campaign to keep the yard open, and Jacquie Apperley, who is now my research assistant and who also worked with Bob Clay. Everyone was under the impression that there would be no shipbuilding, ship repair or maritime work for five years and that at the end of five years the position would be re-examined. There was a strong possibility that, by then, it would be possible to continue with some shipbuilding work. I have spoken to numerous people, and what happened subsequently was quite amazing. The yard staggered on ; it was always run on a shoestring, yet the Greeks probably put more than £1 million into the yard to maintain it as a going concern so that should there be an upturn in trade it could be utilised.

As the end of the five-year term approached, the Greek shipowners made it obvious that they wanted to use their property to carry out some ship repair work. They produced a business plan which would have led to the employment initially of perhaps 250 people, eventually increasing to 600 or 700 people.

When I was approached, the yard had lain dormant for many years. Bob Clay had left the scene for reasons I do not know and, together with my hon. Friend the Member for Sunderland, South (Mr. Mullin), I had several meetings with the management of the yard to appraise what was going on. It was never a very happy scenario. The yard was staggering from one crisis to another. There was a little prefabrication work and it was possible to employ 80 or 90 people at the most, but eventually that work dried up and the Greek shipowners reluctantly put the yard on to a care-and-maintenance basis. At that time, we became aware that they wanted to carry out ship repair work. Following the meeting that my hon. Friend the Member for Sunderland, South and I had with the yard management, I wrote to the Minister and asked for his assistance in trying to get the terms relaxed or varied in such a way that at least some ship repair work would be done. That point is paramount for the owners and it should carry some weight.

The shipowners said that if they could refurbish six to eight ships, it would provide two or three years' work and would make the yard viable. They made the point forcefully that they were not looking for financial assistance from the Government or from what is now the European Union. They also stressed that if the yard was not allowed to carry out the work it would not be carried out within the European Union, and would probably go outside what was then the EEC to some other foreign country.

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They stressed that this would not in any way affect the other yards and ship repair facilities within the Community.

In all our discussions, everyone took the view that there would be no difficulty in getting that agreed. When I wrote to the Minister on 13 July last year, he replied that meetings were in progress between two of the directors, one representing the ESOP and one representing the Greek shipowners--Canon Brian Hales and Alan Dickinson--and the regional officials of the Department of Trade and Industry in Newcastle. The Minister said that he would write to me again following the outcome of the talks.

At that time, we also sought the assistance of the MEP for the region, Alan Donnelly. He eventually arranged a meeting for us in Brussels. Originally, it was to have been with Karel van Miert, the Commissioner ; as it happened, he was not available, and we saw one of his senior civil servants who had advised him on the subject. We understood that we were meeting someone with a certain amount of knowledge and prestige.

We met on 22 December last year--that is, the two directors Brian Hales and Alan Dickinson, Alan Donnelly, Askar Petersen, the EC civil servant, and me. We had a long and constructive discussion. The civil servant told us that, if we couched the application in terms of ship repair, it should be possible to obtain sympathetic consideration from the Commission. It was not the best time to be travelling : I did not particularly enjoy coming back on Christmas eve through airports. I do not do much flying in any event, and that was rather a burden. Nevertheless, I felt content that we had made some progress. At the meeting, it was agreed that Alan Donnelly, Karel van Miert and his civil servant would arrange a meeting with the directors and people in the EC to try to make some progress. On 10 January, I wrote to the Minister to explain what had happened, and again asked for his assistance. My hon. Friend the Member for Sunderland, South and I wrote again on 1 February to ask for a meeting. On 24 February, I received a reply refusing the meeting and saying that there was no point.

As always, the Minister's reply was very polite but somewhat daunting. It read :

"Thank you for your letters of 10 January and 1 February about the prospects of re-opening the former Pallion shipyard in Sunderland for the purpose of ship repair.

You asked whether it is correct that the terms on which the Sunderland yard was leased to Pallion Engineering precluded its use for shipbuilding, ship conversion and ship repair until 31 January 1999. I can confirm that that is indeed the case.

With respect to Mr. Petersen's remarks last December, my officials have established that there had been no softening of the Commission's policy on ship repair. Mr. Petersen left open the possibility of ship repair because of his unfamiliarity with the detail of the 1988 agreement which wound up North East Shipbuilders Ltd."

Mr. Chris Mullin (Sunderland, South) : Are we not all unfamiliar with the detail of that 1988 arrangement ? One of the useful things that the Minister could do tonight--if he were listening, which he is not at the moment--is make clear the details of that arrangement, or at least agree to put them in the Library. Over the years, it has proved particularly puzzling. I recall that it even puzzled the Lord President of the Council-- or, at any rate, he did not know about it until after he should have. It is good to see him here this evening. We are all puzzled about that agreement- -and we would like to see it, would we not ?

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Mr. Etherington : I thank my hon. Friend for his intervention. As I said earlier, he has been actively involved in the matter. In what is now the city of Sunderland, it does not matter very much where any manufacturing output is ; people in his constituency are affected, and we have tended to take a joint approach.

My hon. Friend is right to say that we are all unfamiliar with the details. Perhaps some of us are more unfamiliar with them than others. I was very unfamiliar with them : all I had to go on was hearsay. I had no direct inkling of what had gone on. I shall return to that shortly. I intend to quote from another rather disturbing letter.

The letter continues :

"I am sorry to disappoint you but I am sure that you will agree that, in these circumstances, there can currently be no question of re-opening the Pallion yard. For that reason I do not think that it would be useful to hold a meeting."

We should bear in mind that only nine months before that talks were being arranged between the regional officials of the Department of Trade and Industry and the yard management, presumably to see what could be clarified. It had not been clarified by December when we went to Brussels and it was only finally clarified on receipt of the letter from the Minister dated 24 February.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed , That this House do now adjourn.-- [Mr. Patnick.]

Mr. Etherington : I am a little puzzled about that procedure, Mr. Deputy Speaker.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : The hon. Gentleman should simply carry on speaking. We have just dealt with the 10 o'clock business motion.

Mr. Etherington : I thought that it might have been meant as a bit of a sprag in my wheel, but it is obviously of no real consequence. You will recall, Mr. Deputy Speaker, that I mentioned the letter that I wrote in July to which the Minister replied by stating that talks were going on within the region. All the dealings that I have had with our MEP, the Commission and the management of the shipyard have given me the impression that the regional DTI officials were supportive and encouraging. However, as is often the case, we do not have anything in writing to that effect.

I have another letter which pre-dates the Minister's response to me last August. It is from Karel van Miert of the Commission of the European Communities to Bishop David Jenkins. We all appreciate what Bishop Jenkins is doing within our region to try to alleviate the high unemployment and other social problems. I will not read it all, but the relevant parts state :

"The British government committed itself to the irreversible nature of the closure"

referring to the Pallion yard

"for a period of not less than five years."

That is what everybody understood. It went on :

"The agreed closure date was 27 January 1989. In 1991 the Commission approved the sale of the yard to Pallion Engineering', after having been informed that a clause was included on the contract prohibiting its use for shipbuilding, ship conversion and ship repair until 31 January 1999.

The Pallion yard is still in the first five year period (ending 27 January 1994). After that period and before ten years, the Commission would have to give its prior approval to the eventual reopening of the yard."

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I do not think that I am alone in being confused. I hope that I have not made the confusion any worse by my speech tonight. I am rather puzzled.

While those gyrations are taking place, we have problems in my constituency. We have lost the last colliery in County Durham. It may be reprieved if private enterprise takes it over. That is a bitter pill for me to swallow. It is a little like Hobson's choice. We do not see a week go by without some group of people becoming unemployed or put on short-time working. Despite what we are told about the strenuous efforts being made in the area, the unemployment level remains about the same as it has been for the past three or four years. New jobs are being created, but they are unable to keep up with what we are losing.

I should have thought that a Government who were committed to, I will not say full employment, but perhaps less unemployment--that is what they say-- might have been a little more constructive in their offer to provide jobs in my constituency. As I have stated already, the work will not affect the overall position within the European Union.

I have written to the Minister on a number of occasions and I keep getting the reply that this is a matter for the European Union--a fact of which I am only too well aware. All I have asked is for the Minister and his Department to say, "Yes, we back the people of Sunderland. We will go to the Commission and ask whether something can be done". That is what it is all about : the Minister should ask whether there can be a variation.

The proposal that has been put forward is very good ; there can be no doubt about that. But I get the impression that there is some ambivalence. The regional office of the DTI is saying one thing and the Minister is writing letters to me which say something entirely different. We want to know where we stand. I do not want to spend another 18 months running about unnecessarily, and I do not want to waste another European trip, perhaps next year, seeing some Commissioner about getting something changed and knowing full well that the matter has been decided before I go.

In this short speech, I have given the Minister the opportunity to reply-- my hon. Friends might have something to say about this matter also. As a former shipyard worker, I have seen the River Wear slowly destroyed, I have seen our merchant shipping fleet slowly denuded, and I have watched the number of seamen dwindle. I am always conscious of the fact that the National Union of Seamen was formed in Sunderland, which has a very proud tradition of shipbuilding and seamanship.

I get the impression that the Government, through the Tyne and Wear development corporation, have sterilised the river. It now seems more important to provide flash, yuppie-type university campuses than to produce jobs, enabling people to make a meaningful contribution to society and the economy.

The site that has been chosen could hardly be worse. Even before the university has been built, we face a problem with traffic. As the Tyne and Wear development corporation, in its wisdom, has decided to build student accommodation on the other side of the river, perhaps we will see a reincarnation of the ferry service that was ended

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some 25 years ago. Those are the sorts of planning decisions from which we seem to be suffering. It is a very sad state of affairs. I want to know exactly where we stand. I ask the Minister : will he join us in trying to put some pressure on the European Union to see whether we can get the shipyard operating and perhaps see a return of some semblance of shipbuilding on the River Wear, or are we to allow our assets to go to waste ? The Greeks will not wait another five years. The yard has been standing idle for five years and they have invested a lot of money in it--as have other people. Something must be done in the reasonably near future.

There is work available ; we are not talking about chasing orders. The orders are there in black and white, which is more than I can say for what we will get from the regional branch of the DTI. In those circumstances, I make that request of the Minister and I hope that he will respond to it.

10.7 pm

Mr. Chris Mullin (Sunderland, South) : This is the situation : a fine facility--one of the best of its kind--is lying idle in Sunderland. It has survived the bulldozers only through enormous efforts, led by our colleague Bob Clay, the former Member for Sunderland, North. The company which holds the lease on the facility owns a large fleet of ships which it wants to repair there. There is an agreement with the EC, the details of which have never been fully disclosed to us, which appears to say that no ships can be built at the yard for five years but that the situation is reviewable after five years.

Therefore, for the last five years all who have been associated with this matter have laboured under the illusion that, come the end of the five years, we might persuade the EC--we always thought the EC was the source of the difficulty--to allow this company to start using the Pallion yard to repair its fleet of ships at no cost to public funds. But what happened ? When my hon. Friend the Member for Sunderland, North (Mr. Etherington) went to the EC before Christmas, the EC still seemed to be under the impression that there was a possibility of opening the yard for ship repairs. We came back and discovered that the problem did not lie with the EC but with the Department of Trade and Industry. It appears that the terms that the DTI has imposed on the Pallion yard are stronger than those demanded by the EC. That is the source of our frustration. As I said in my intervention, it would be most helpful if the Minister could disclose the details of the 1988 agreement.

My hon. Friend the Member for Sunderland, North quoted a letter from Karel van Miert to the Bishop of Durham. It clearly refers to a period of not fewer than five years, which implies that the matter was at least renegotiable and that there was a window of opportunity at the end of those five years which are now coming to an end. However, everything that we hear from the Minister and his Department suggests that it is absolutely impossible and that nothing can be done until 1999 when, as we all know, it will be far too late. We should like to hear that the Minister is going to help us in our efforts and is going to back Britain, and that the next time it will not be a question of the Member of the European Parliament, Alan Donnelly, and my hon. Friend the Member for Sunderland, North going cap in hand to Brussels, but that a Minister could also come to try to

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persuade the EC to allow us to use the fine facility for the purpose for which it was created, because the work is available. I cannot stress too strongly the fact that the work is there and would involve no public subsidy. We cannot understand why the DTI appears to be more anxious than the EC to close the facility. I want to hear not only the explanation but what the Minister is going to do to resolve the issue.

10.11 pm

Mr. Don Dixon (Jarrow) : I congratulate my hon. Friend the Member for Sunderland, North (Mr. Etherington) on securing this Adjournment debate. It is a very important subject, certainly to the people of Sunderland. I also congratulate my hon. Friend the Member for Sunderland, South (Mr. Mullin) and support the representations that they have both made to the Minister.

I know a fair bit about the Sunderland shipyards as I have worked in almost every yard on the River Wear. I worked at Bartrams, Pickersgill, Laings and Thompsons. I have worked on oil tankers, cargo boats, refrigerator ships and the SD14s which were successfully built by Pickersgills. They were well known across the world and did a tremendous amount of good for the shipbuilding industry in this country. I worked on the Timeroo Star which was built at Bartrams and 200 joiners worked alongside me, insulating the holds and chambers between the decks. I do not know how many houses would have to be built to employ 200 joiners, but such employment was available on the River Wear at that time.

Sunderland was always known as the biggest shipbuilding town in the world. Now that it has city status, it has no shipbuilding, which is a tragedy. Sunderland, or the Wear, cannot be separated from the Tyne. It has always been called Tyne and Wear--the county council was called the Tyne and Wear county council and my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) did a tremendous job as its deputy leader for a long time until the Government abolished it.

Unlike my hon. Friend the Member for Sunderland, North, I stayed in the shipyard while he left to take a cushy job down the pits.

Mr. Etherington : It cannot have been that cushy a number or my hon. Friend the Member for Jarrow (Mr. Dixon) might have done the same thing, although there are not many shipwrights down the pits.

Mr. Dixon : I thank my hon. Friend for that intervention. He has more faith in the EC than I have. Since I was elected to the House in 1979, every debate on the EC has involved discussion of a maritime policy. We have talked about getting orders for more ships for the shipyards to build. We have talked about a scrap and build policy. Indeed, the European Union has been talking about scrap and build since 1977 and it has not made a decision yet. My hon. Friend the Member for Sunderland, North has far more faith in the EU than I do. The Government must take the decision and they must act on behalf of shipbuilding in our areas.

I certainly support the representations made tonight by my hon. Friend the Member for Sunderland, North. My hon. Friend the Member for South Shields (Dr. Clark) and I have the same problem on the River Tyne. There is a shipyard up the river, Swan Hunter, which, as the Minister knows, is just hanging on. It would be a tragedy if that yard

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was to go. I am sure that hon. Members on both sides of the House would support the retention of shipbuilding on the River Tyne. When we talk about Sunderland shipyards and the 10-year embargo that the EC imposed, to which my hon. Friends have referred

Mr. Mullin : It was supposed to be a five-year embargo, but that is the question. It was either a 10-year embargo or a five-year embargo, but we do not know.

Mr. Dixon : That embargo was certainly discussed widely when Sunderland received an amount of money to create enterprise zones and so on in the area. Sixty years ago in 1934, Jarrow was one of the biggest shipbuilding towns in the world. Ships used to come into the old Palmers yard as iron ore and leave as complete ships. It was closed in 1934 by an organisation called Shipbuilding Security Ltd. That was an organisation of shipbuilders, ship owners and bankers who decided that there was too much shipbuilding capacity in the country, so it closed yards and put embargoes on the building of ships. Those embargoes used to be for 40 years, such as in Jarrow. Views on shipbuilding have not changed a great deal in 60 years.

One of the yards where I worked for a considerable time on the Tyne, Hawthorne Leslies, is now a housing estate called Hebburn village. We built some of the finest ships in the world at that yard. That is the tragedy of shipbuilding in our area. I certainly support my hon. Friends the Members for Sunderland, North and for Sunderland, South and I know that we have the support of those hon. Members who have stayed for the Adjournment debate. There are not many such audiences for an Adjournment debate and it is because of the importance of the subject. My hon. Friend the Member for Darlington (Mr. Milburn) was involved in the campaign to save the Sunderland shipyards for a considerable time before he became a Member of Parliament. I hope that the Minister will take on board what my hon. Friends have said and do something about saving Sunderland shipyards because it is vital. The entire Tyne and Wear area depends a great deal on shipbuilding and I hope that our representations will be taken up by the Minister tonight.

10.16 pm

The Minister for Industry (Mr. Tim Sainsbury) : I well understand the concerns for Tyne and Wear and for the shipbuilding tradition of the area which have been expressed by the hon. Member for Sunderland, North (Mr. Etherington). I congratulate him on securing the Adjournment debate and his hon. Friends the Members for Sunderland, South (Mr. Mullin) and for Jarrow (Mr. Dixon) on their comments. The hon. Member for Jarrow has a double reason to comment from his long experience and involvement in the industry and, even if the hon. Member for Sunderland, North opted for the cushy job later, he did serve his apprenticeship with Austin and Pickersgill. All hon. Members are aware of the long and distinguished history of shipbuilding on the Tyne and on the Wear.

It may help if I put the situation into the context of the privatisation of the shipbuilding industry, which was an objective of the incoming 1979 Conservative Government. The vehicle created to achieve privatisation was the British

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Shipbuilders Act 1983, which allowed the Secretary of State to direct British shipbuilders to dispose of special assets or subsidiaries. As hon. Members will be aware, the war shipbuilding yards were sold in 1985 and 1986. Of course, that is another story, especially in connection with the present situation at Swan Hunter. Due to the worldwide depression in shipbuilding, which existed then and, as hon. Members will know, has persisted, the merchant shipbuilding yards were not sold until later. By May 1988, many of the smaller yards and the engineering facilities had been sold or closed. By then, support given by the Government to British Shipbuilders since the inception of BS in 1977 had amounted to almost £2 billion with no foreseeable return to sustained viability. It was therefore decided that subsidies should cease for BS and that the remaining companies be closed or sold.

In June 1988 the remaining yards were Appledore Shipbuilders, Govan Shipbuilders Ltd., Ferguson Shipbuilders and North East Shipbuilders Ltd. Buyers were found for the first three yards and, as the House will know, all three remain in production today. Sadly, however, it was not possible find a buyer for North East Shipbuilders Ltd. NESL was formed in February 1986 through the amalgamation of two British Shipbuilders companies, Sunderland Shipbuilders Ltd., which operated at Pallion, and Austin and Pickersgill Ltd., which has also been mentioned. A third yard, North Sands, was used for fitting out the ships built at the other two yards. In 1977, the yards employed between them some 7,500 people, but when closure was announced in December 1988, employment had fallen to about 2,000.

After the yards were put on the market in 1988, the original deadline for bids was extended from September to October 1988, because of various problems with contracts then current. That series of extensions demonstrated how hard my right hon. Friend the Leader of the House, who was then the Secretary of State

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton) : The Chancellor of the Duchy of Lancaster

Mr. Sainsbury : I am sorry ; my right hon. Friend was then Chancellor of the Duchy of Lancaster, not Secretary of State. The series of extensions shows how hard he tried to find a buyer and to keep the thing going--with the help of Mr. Bob Clay, then the Member of Parliament for Sunderland, North. But the vital ingredients that were absent were customers and the likelihood of profitable business for the yard.

Further evidence of the efforts that were made is the fact that another extension, to the end of November, was given following rejection of the previous unsatisfactory bids, to allow a further expression of interest by a consortium led by Bob Clay. However, the bids were judged by British Shipbuilders and ourselves not to provide the basis of a viable future for merchant shipbuilding at Sunderland, and in December my right hon. Friend, who was not only the Chancellor of the Duchy of Lancaster but the Minister for Trade and Industry, announced the closure of NESL and the institution of remedial measures.

To facilitate the completion of a ferry contract, it was announced that British Shipbuilders would keep the yard intact until at least the end of June 1989 to allow any other

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potential interests to come forward. Four positive proposals emerged over that period, two involving shipbuilding operations and two non-shipbuilding operations. Again, regrettably, the shipbuilding bids were not seen as viable because of the continuing depressed state of the shipbuilding market and the fact that they would not be eligible for intervention fund money.

Furthermore--here we come to the role of the European Commission--the Commission suggested at the time that if shipbuilding were resumed at NESL it would mean the reinvestigation of the whole British Shipbuilders remedial package, which had been agreed and which was beginning to be put in place. It would have been most undesirable if the Commission had disallowed it.

When it became clear that closure was inevitable, the Government negotiated with the Commission and secured an aid package worth some £45 million to assist those who would be affected. The major elements of that package, which had to be approved under Community competition rules, were an enterprise zone, which will last until the year 2000, a radical retraining programme and the establishment of Wearside Opportunity, a business-led team specialising in training and development grants for small firms and in the promotion of Sunderland generally.

I realise that some hon. Members may not always agree with everything that the Tyne and Wear development corporation does, but I believe that it has achieved a great deal for the area. At that time, it extended its Wearside activities in redeveloping the riverside, and it will remain in being until 1997. Its most recent development, the Doxford Park site, is nearing completion and will provide a hi-tech business environment for new investment. English Estates, as it then was, provided a substantial number of industrial units at Hylton riverside, on the site of an old colliery.

Labour Members, especially the hon. Member for Sunderland, North, have described what they saw as the confusion surrounding the arrangements that accompanied the closure and the agreement to the substantial aid package. However, when the Commission agreed to the closure of North East Shipbuilders and to the remedial package, it was acting in line with its policy at the time, which was to reduce excess capacity. It perceived that only in that way would the industry be able to return to normal competitive conditions. After negotiation, we agreed with the Commission to close the site permanently for all shipbuilding activities. The Commission interprets permanent closure in this context as meaning that no shipbuilding, ship conversion or ship repair should take place for five years. It may be that the confusion has arisen from what follows from that. In this connection, I shall pick up the point made by the hon. Member for Sunderland, South. For the next five years--this was provided for in the original agreement with the Commission--no such activity would take place without the consent of the Commission. That lasts until 1999.

From approaches that the hon. Member for Sunderland, North, the Member of the European Parliament for the area and others have made to the Commission, hon. Members will know that the Commission is very conscious of continuing over-capacity in the European merchant shipbuilding sector and that the Commission, in conformity with the agreement originally entered into, will not permit any shipbuilding, ship conversion or ship repair to take place at Pallion. That is the unfortunate situation.

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The agreement was an absolute ban for five years, followed by a continuing ban unless the Commission agreed to relax the rules. Labour Members, particularly the hon. Member for Jarrow, will know that it has been very difficult indeed and has taken a great deal of time--much longer than I should have wished--to get out of the Commission a very limited agreement in respect of Swan Hunter. That reflects the problems that the Commission envisages arising if it were to open up one of these agreements. Opposition Members are no doubt aware that the whole shipbuilding industry of the European Community was substantially restructured and that over half the total capacity throughout the Community was eliminated during this period in an attempt to bring capacity more into line with demand.

Mr. Mullin : What representations has the Minister or his Department made to the European Community with regard to the question of another look at this agreement after five years ? We get the impression that the Department takes a much harder line than does the EC. That is what concerns us.

Mr. Sainsbury : I assure the hon. Gentleman and all other hon. Members that that is not the position. My officials and I have had a continuing series of discussions with the Commission to see whether, at any time, there would be a likelihood of a change in its attitude. On the basis of my personal discussions with Commissioner Van Miert and of the numerous meetings in which my officials have taken part, I am well aware of the fact that the Commission takes a very strong line on this point because, as the House knows, there continues to be over-capacity in the European shipbuilding industry--indeed, in the world shipbuilding industry. We have all been waiting for some time for the revival of demand. It has continuously been forecast as being about two years away, but, so far as I can see, it remains two years away, although a number of authorities still expect it to come. There is a desperate shortage of orders and there continues to be over-capacity.

Mr. Jim Cousins (Newcastle upon Tyne, Central) : Does that mean that the Minister would support an application for the use of these facilities for ship repairing ?

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That is the practical possibility on offer. It is that proposition, and no other, which the people of Sunderland ask the Minister to support.

Mr. Sainsbury : If I had any indication that there might be a softening of the Commission's attitude, yes, but, from my discussions with Commissioner Van Miert and from the continual contact between my officials and the relevant parts of the Commission, I know that the Commission is very firm in its view. The ban applies not just to shipbuilding, but, as I have explained, to ship conversion and ship repair. That, I am afraid, continues to be the position.

It was unfortunate that Mr. Petersen's remarks of last December gave a misleading impression. I am afraid that the reason is that Mr. Petersen was not fully conversant with the situation.

Mr. Etherington : I should like to put a fairly blunt and straightforward question to the Minister. In view of what he has said, will he write to the Commissioner and ask for a meeting involving himself, the interested Members of Parliament from the area, the company, the Euro Member of Parliament and the Commissioner to see whether some progress might be made ?

Mr. Sainsbury : I am always happy to make approaches. I shall do so yet again when I next see the Commissioner. Indeed, I might take up the hon. Gentleman's suggestion. I shall also investigate the possibility-- there may be questions of commercial confidentiality--of placing a copy of the agreement in the Library of the House. That might help to explain the position. Although it is not up to me to do so, I can only apologise on behalf of the Commission for the fact that it was the cause of confusion.

I wish that we could see an upturn in demand. That would change the attitude and enable

The motion having been made at Ten o'clock and the debate having continued for half an hour, Mr. Deputy Speaker-- adjourned the House without Question put, pursuant to the Standing Order. Adjourned at half-past Ten o'clock.

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