Select Committee on European Communities Twenty-Third Report


12 May 1998

  By the Select Committee appointed to consider Community proposals, whether in draft or otherwise, to obtain all necessary information about them, and to make reports on those which, in the opinion of the Committee, raise important questions of policy or principle, and on other questions to which the Committee considers that the special attention of the House should be drawn.


11165/97; (COM(97) 469 final) Proposal for a Council Regulation establishing new rules on aid to shipbuilding

  1.    The Government's Explanatory Memorandum on the proposal to reform state aid to shipbuilding, dated 4 November 1997, stated that the establishment of "a new European Union shipbuilding regime after the expiry of the Seventh Directive[1] ... will be subject to discussion during the next 12 months with the aim of adopting it for implementation on 1 January 1999". The Select Committee took the decision to conduct an enquiry into this subject in December 1997 and the Department of Trade and Industry was so informed in January 1998.

  2.    In February 1998, just as the enquiry started, we elicited an indication from the Department of Trade and Industry that the Government were intending to take the proposal to the 7 May Industry Council, but that indication was coupled with doubt as to whether Member States would then reach political agreement. On 12 March 1998 the Committee received unofficial indication that the Government were pushing for political agreement at the May Industry Council and that there was a good chance of achieving this.

  3.    This put the Committee in a dilemma, since clearly a full enquiry could not be completed prior to the 7 May Industry Council. The Committee therefore had to decide whether to drop the enquiry immediately or to take very limited evidence with the aim of lifting the scrutiny reserve by way of a letter to the Minister before the 7 May Industry Council or continue with a full enquiry, therefore maintaining the scrutiny reserve beyond the 7 May 1998. The Chairman of the Select Committee on the European Communities wrote accordingly to John Battle MP, Minister for Science, Industry and Energy, on 27 March (Appendix 3) to which the Minister replied on 2 April 1998 (Appendix 4).

  4.    The first official notification the Committee received of any change of timetable was in that letter from the Minister. In his letter the Minister stated that he appreciated that it "would have been more helpful if we notified you direct of our revised timetable", a statement the Committee found deeply unsatisfactory. The Minister went on to apologise for the "misunderstanding" that arose over the Government's timetable. The Committee does not accept that this was a "misunderstanding" and sees this as part of a continuing attitude to Parliamentary scrutiny which at best can be described as careless, and at worst cavalier.

  5.    In the circumstances the Committee decided to cut short the enquiry. Its conclusions, based on the limited evidence received, are set out in a letter to the Minister (Appendix 5). This letter lifted the scrutiny reserve on the proposal in time for the 7 May Industry Council.

  6.    During the course of the enquiry into reforming shipbuilding aid in the European Union we also took some evidence on the shipbuilding industry in the United Kingdom. There are currently around 26,000 people employed in shipbuilding, shiprepairing and related industries in Great Britain (Q 83). Some of what we found painted a rather dismal picture.

  7.    The Confederation of Shipbuilding and Engineering Unions (CSEU) were more confident than others about the prospects for the British shipbuilding industry. They believed that the position of British shipbuilding had changed dramatically over the last decade and was now "a high-tech industry, it has been largely re-equipped and the good yards are very, very good ... and can compete, we believe, with the rest of the world on an even footing" (QQ 81-2). Despite this, there were problems with shipbuilding in the United Kingdom, in particular there was no forum for tripartite discussions, between unions, employers and Government, on shipping matters, "none whatsoever" (Q 100). The CSEU promoted the creation of a Minister for Shipping or with shipping responsibilities to highlight shipbuilding as part of government policy. Under the current rules, regional aid for shipbuilding was being stifled by the Government and was blamed for the loss of orders in recent years (Q 105).

  8.    Three Quays Marine Services Limited stated that the "demise" of the shipbuilding industry in the United Kingdom meant that it was no longer possible to continue to recruit its principal design engineers and naval architects from the United Kingdom. The loss of the skill base in the United Kingdom was now "irretrievable" (Q 149). It would be difficult to maintain the shipping industry in the United Kingdom if shipbuilding was allowed to decline further (Q 185). British Maritime Technology thought that, historically, research and development in the British shipbuilding industry was still quite strong but questioned whether this could continue without a thriving shipbuilding industry (Q 58). The Shipbuilders and Shiprepairers Associates expressed concern that, under the proposed regime, the Government would make adequate resources available to yards in support of their research and technology, innovation and environmental compliance activities.

  9.    The Committee supports calls from those witnesses who sought a more coherent policy in respect of shipbuilding and ship repairing in the United Kingdom. In particular, we believe that the Government should co-ordinate and promote shipbuilding policy across relevant departments, including the Ministry of Defence. Further, we share the concerns expressed by witnesses that there is no forum for the various parties involved in shipbuilding to exchange views and co-ordinate policy within the United Kingdom. We therefore urge the Government to set up a framework to bring together those parties involved in shipbuilding and ship repair in the United Kingdom. This should include employers, employees, those involved in research and development as well as shipbrokers and owners. Only with a coherent and co-ordinated approach can the United Kingdom sustain a shipbuilding industry that can compete worldwide.

  10.    The membership of Sub-Committee B (Energy, Industry and Transport), which conducted this enquiry, is given in Appendix 1. Witnesses are listed in Appendix 2. The letter from Lord Tordoff to the Minister, dated 27 March 1998, is printed in Appendix 3. The letter from the Minister to Lord Tordoff, dated 2 April 1998, is printed in Appendix 4. The letter from Lord Tordoff to the Minister, dated 1 May 1998, which sets out the Committee's conclusions on the proposal, is printed in Appendix 5. The evidence is printed with this report.

  11.    The Committee considers that this proposal raises important questions to which the attention of the House should be drawn, and makes this Report to the House for information.

1   Seventh Council Directive (COM(95) 3094) on Aid to Shipbuilding which expires 31 December 1998. Back

previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries

© Parliamentary copyright 1998