Anger at Government Refusal to Help Govan

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Byline: GAVIN MADELEY;ALLAN HALL

THE Government provoked anger last night after it refused to bend European laws to save up to 3,000 shipyard jobs in Scotland.

The Govan shipyard on the Clyde is part of the British-based Sealion Consortium which is bidding for a vital [pounds sterling]1billion Ministry of Defence contract to build six roll-on, roll-off ferries.

But without Government intervention the contract is almost certain to be awarded to a consortium which would build the vessels in a German shipyard.

German yards benefit from massive state subsidies.

MoD sources confirmed last night that the unnamed consortium had undercut others by as much as 15 per cent.

European Union regulations dictate that the MoD must award the contract to the lowest bidder.

A Downing Street spokesman ruled out any extra help, saying: 'The award of this contract will be a commercial decision. While we are doing everything we can for British shipbuilders, there are rules about these things and it is important that we observe them.' Three other groups are competing for the contract, at least one of which is thought to be basing their offer on using low-cost German shipbuilders, including two former east German yards.

East German yards were hugely subsidised under communism and enjoyed considerable reinvestment in the early 1980s. The German government can subsidise all its yards under rules dictated from Brussels to the tune of nine per cent a year of all contracts.

But major German investors enjoy an additional tax sweetener to help offset production and development costs. At present, major concerns with outstanding orders in Germany totalling [pounds sterling]9billion are enjoying tax breaks over one year of some [pounds sterling]650million.

Scottish Nationalist MSP Nicola Sturgeon accused the Government of abandoning Scottish shipbuilding.

She said: 'This contract has got to be awarded on a strategic decision. If Labour presides over the death of shipbuilding in Scotland they will never be forgiven for it.' Glasgow Hillhead MP George Galloway said: 'Perhaps it is time to lose a little of our reputation for always obeying the letter of European law. …