POLITICAL COMMENTARY

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HUGH MACPHERSON

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'What we must do,' said t ie po

backbencher just before Monday s statement, 9s to find some formula to get John Davies off the hook.' He was not a government sup- porter but a solid Labour man who had spent a lifetime on the Clyde, and realised that the best service he could offer his con- stituents was to accept the most reasonable parcel that Mr Davies could produce. Natur- ally enough this wisdom did not wholly commend itself to his colleagues who bel- lowed with all the spontaneity of an Ameri- can audience at a TV comedy show as soon as the Secretary reached the part of his state- ment which said, 'The government has de- cided therefore that nobody's interest will be served by making the injection of funds into the company ...' without waiting for the last qualifying phrase 'as it now stands.'

Curiously enough there is a substratum of agreement between Government and Opposition but before that can be explored some extremely difficult questions will have to be answered. A highly sensible govern- ment backbencher such as Kenneth Baker has made the point that the Government could have little confidence in the ability of the management of ucs to forecast its long- term future when it seemed unable to fore- cast a week ahead. Mr Davies complained, and if he is right with some justification, that he was only warned of the crash forty-eight hours ahead. But what of the Government's representation on the board through the In- dustrial Reconstruction Corporation? With 49 per cent of the company indirectly in the hands of the Government why were they not alerted to the gravity of the situation—or at least of the lack of information about the situation—before it was allegedly sprung on them?

Mr Davies claimed in Tuesday's debate that it was impossible to know the true financial situation until the beginning of last week. Mr Wedgwood Berm, on the other hand, said that the Company was obliged to supply monthly reports of its financial state. Certainly the deficit figure of £28m announced on Tuesday by the Provisional Liquidator leaves no doubt about the horrendous nature of the Company's fin- ances. The key questions are: Who should have known the true facts. and when?

Mr Benn's explanation why he did not nationalise tics when the Labour Govern- ment was pouring in more than £20m is feeble. The truth is that such a move would have been electorallv unpopular. One also suspects that the Wilson govern- ment wanted to keen a' few options open to slim down tics, difficult as it would be for a Labour government to take such action in the party stronghold of Scotland. Certainly the last government had little doubts about the decayed state of the British shipbuilding industry both in financial and technical man- agement. During an earlier crisis at Cammel Lairds, which was bailed out by the IRC and now has shown a profit of £829,000 in the first four months of this year, a Cabinet meeting was held to consider the position. Lord Shackleton inquired if the fault lay with the technical or financial management,

to which Mr Wilson gave the rep y, 'It's the difference between the flea and the louse'.

Obviously the prospect of taking over the management of vast inefficient organisations, beset by trade union difficulties, whose demise would make the area in which they were located an unemployed wasteland had little appeal to the last administration since each closure would be directly laid at the feet of the government. Having refused to accept direct responsibility, even for yards which subsequently became profitable such as the Laird Group, it is simply playing poli- tical games to demand that a Tory govern- ment should do so.

If the Opposition are less than direct in dealing with the problems of t cs than the Government seem to be playing the same game. Whilst they deny that they are pre- pared to use unemployment as an economic weapon to further their political philosophy the facts simply do not bear that denial out. By refusing to allow the yard credit guaran- tees from November to February of this year it must have known that a cash flow crisis would result—although it must be said that Mr Davies has said that the problems run deeper than that of temporary liquidity, and for the truth of that assertion we must wait for the report of the provisional liquida- tor who would normally, in Scotland, report within two months. It is a little disingenuous innocently to ask why the banks have not been prepared to advance money to tics when the evidence before them includes a refusal of the Government to have enough confidence to guarantee the company's credits.

Yet even if the true situation of the com- pany was sufficiently in doubt last Novem- ber to refuse guarantees there was still a very hard-headed argument for advancing enough money this week to see if the company was really on the turn in its present form. The last government carried out a study of how much money was involved in social security and redundancy payments with large-scale closures of the kind which must now come in tics. It arrived at the figure of approxi- mately £l million per thousand redundancies in the first year and three quarters of a million per thousand in each subsequent year. That was not at present-day prices. The Secretary of State for Scotland said in

a television interview on Monday that the

tolerable level of unemployment acceptable in the yards could be as high as 2.000 out of the work force of 7,500. With the reduc- tion in sub-contracting work in ancillary industries that could cause an addition to the unemployment figures of well in excess of six thousand which would be more costly to maintain from state funds in less than a year than the subsidy the company requested. It would have been cheaper, in the short run, to have paid out the £6 million.

In fact informed government back- benchers, notably those with city connec- tions, seemed to be well aware of a plan to redesign the pattern of shipbuilding on the Clyde. and this has had confirmation in Mark Arnold-Forster's piece in the Guardian on Tuesday which quoted from a pre-elec- tion plan drawn up by Nicholas Ridley, who is now an under-secretary at the DTI. Accord- ing to the Guardian piece, Mr Ridley recommended that 'a Government butcher' should 'cut up Upper Clyde Shipbuilders and . . . sell cheaply to Lower Clyde and others the assets of tics'. This plan, naturally enough, is frowned on by the Labour party who see good government money spent on reconstruction of profitable parts of tics being used to subsidise private industry when it buys the assets at knockdown prices. (Mr Ridley recommended that the Government holdings should be sold 'even at a pittance'.) For all that, experienced Labour MPS recog- nise that the only long-term future for the Clyde lies in linking sections of the upper reaches to the more dynamic companies further down the river, although they would not accept Mr Ridley's language on his modus operandi. That is the substratum of agreement. Just as the Opposition would be grateful to the present government for re- moving Mr Scanlon's tanks from Mr Wilson's lawn on the question of industrial relations, so it would rather cope with the employment problems of the West of Scot- land after the Conservative party has incur- red the odium involved in closing down part of the shipbuilding industry.

Conservative backbenchers are pleased at the way Mr Davies has handled the prob- lem and it must be said that he dealt with his difficult Monday statement in the House with considerable aplomb—alas, only to fall flat' on his face in Tuesday's debate when he mixed up the quotes from Mr Benn's which his Department had lovingly compiled. For all his ineptitude in the Chamber. he avoided the two extremes which are unacceptable to the party in its present mood : there was no further direct injection of state capital and there was not the acceptance of a ruthless Powellite approach which might have drastic social consequences. (Mr Powell compared tics to the Canadian prairie wolves which are fed by tourists in the summer and die of starvation in the winter—but he forgot to mention -that wolves attack in packs when they are starving.) The Ridley plan is work- ing nicely and if the lame duck is not exactly sunk it is having,tlie odd, leg amputated.