The Cabinet Papers banner

The Geddes Committee and nationalisation

The Geddes Committee

With the rise of foreign registration under 'Flags of Convenience' in the 1960s, the market for ships changed. A large proportion of ships built in Britain were registered in foreign countries. At the same time, as British shipbuilders became increasingly uncompetitive, British owners increasingly purchased abroad. It should be noted, however, that in 1967 Britain still had the world's largest merchant fleet.

The Geddes Committee was appointed in 1965 to consider how greater competitiveness could be achieved through changes in organisation and methods of production. However, before the Committee reported, the decline of the industry was confirmed by the financial difficulties of the Fairfield Shipyard. The government provided financial assistance in an attempt to prevent the collapse of the company.

The government sought consolidation in a number of industries. The report argued that in order to take advantage of opportunities for growth, individual shipyards would need to be joined in groups. This would enable the effective sharing of resources for research and development, and the construction of very large ships and tankers. It recommended the formation of large groups based in Tyne, Wear and Tees, the Clyde and Belfast. In 1966, the Geddes Committee found that British prices for tankers and bulk carriers were uncompetitive. The Committee also found that because of inefficiency and poor industrial relations, British ships took longer to produce and deliver than those of foreign competitors.

Shipbuilding Industry Board (SIB)

Having accepted these recommendations, the government set up the Shipbuilding Industry Board (SIB) to oversee the proposed reorganisation. Substantial finances were made available to cover reorganisation. The government agreed to guarantee low interest loans that banks advanced to owners purchasing British ships. The measures were incorporated in the Shipbuilding Industry Act 1967.

These measures assisted the industry in obtaining more orders. Some failed, however, to take account of escalating costs, entering into unprofitable contracts during the late 1960s. A number of large companies, including Cammell Laird, Upper Clyde Shipbuilders and Harland & Wolff, ran into financial difficulties. The decision to assist these companies was contingent upon their financial viability and the potential social and political consequences of closure. Assistance for Upper Clyde Shipbuilders was part of Edward Heath's 'u-turn' on free market economic policy in 1972.

Nationalisation

In spite of these measures, British shipbuilding continued to decline. During the mid-1970s, the Labour government considered nationalisation of the industry to save it from collapse. Nationalisation was carried out under the Aircraft and Shipbuilding Industries Act of 1977.

Content