New ship contract awaits DTI seal

Industry minister Stephen Byers is under pressure to help finance a £344m deal which could see the first new cruise ship built on Merseyside for more than 40 years.

Cammell Laird has signed a contract to build two 28,000 tonne vessels for Luxus, a recently formed cruise ship consortium.

But the deal is conditional on support from the Department of Trade and Industry.

The company wants to split the work on the Luxus ships between its Merseyside, Tyneside and Teeside yards, with Camper and Nicholson - the Gosport yard it bought six months ago - providing luxury fittings.

It will only secure the contract if the DTI grants shipbuilding intervention funding, amounting to up to 9% of the cost of the vessels, and provides ship mortgage finance guarantees to Luxus's bankers.

News of the Luxus deal, which covers construction and later refitting of the vessels, comes only a week after Cammell Laird failed to secure a £300m government contract to build roll-on roll-off ferries.

The company's main business has until now been ship repairing and conversion. It has only just returned to shipbuilding with a contract for two £5m Norwegian ferries. A Cammell Laird spokesman said work on the Luxus vessels would start within weeks of a deal with the DTI and would take about 33 months to complete. It would protect thousands of jobs at the yards.

Frank Field, the former Labour minister whose constituency covers Cammell Laird's Birkenhead yard on Merseyside, is pleased with the developments.

He said: "This shows that what was thought to be an old industry, which was written off, can again be at the forefront of our export drive.

"The ball is now in the government's court. I call Stephen Byers' office at the end of each day to ask where we are with the shipbuilding funding and the export guarantee.

"Now the deal has been signed we need this approval as soon as possible."

Kevin Rowan, GMB northern region spokesman, said: "Cammell Laird is a very profitable yard and Luxus has shown a lot of faith in it. It is about time the government demonstrated their support and hopefully they will.

"This is a huge contract and would be tremendous news for the region.

"If Cammell Laird continues to get the level of work it is getting now then this contract will create an extra 1,000 jobs."

A DTI spokeswoman con firmed that it was looking at the deal and would be giving it "urgent attention".

The Harland & Wolff yard in Belfast had been in the running for the Luxus order.

But when it accepted £50m of Royal Navy work, it no longer had the capacity to build the cruise ships.

The Luxus ships, each with 400 berths, will be fairly large - about the size of a cross-channel ferry.

They will however be much smaller than the QE2, the 1,777 berth cruise ship built for Cunard at Upper Clyde Shipbuilders in 1967.

The last cruise ship built on Merseyside was the Windsor Castle in 1960.