Reid 'aware of Govan's plight'

Dr Reid addressed the conference in Edinburgh

Scottish Secretary, John Reid, has told trade union leaders he is "well aware" that a contentious Ministry of Defence ferry contract is important for the future of a Clydeside shipyard.

His statement was made to delegates at the annual conference of the Scottish Trade Union Congress, in Edinburgh.

He said the "fullest consideration" would be given to the bid for the £200m MoD order by BAE Systems' Govan yard.

But he warned that the final decision would be made within the laws set down by the European Union.

Because the six ferries will be used largely for commercial purposes, economic and not national security factors must come into play.

That means rival bidders - a German shipbuilders which says it can complete the order at half the price of Govan - is in a better position to win.

Dr Reid said it would be "politically dishonest" to ignore the laws of the EU while demanding that others should respect them.

Judged on delivery

Earlier, STUC president, Matt Smith, told delegates that in these days of "cheque book democracy", trades unions provided an essential defence for decency.

People in Scotland cared about who provided their public services, whether it was hospitals, houses or schools.

Work continues on other contracts

The Scottish Executive and the parliament would be judged on their delivery and improvement, Mr Smith added.

Dr Reid's speech follows a week of heated debates over who should be awarded the contract - the German bidders or the former Kvaerner Govan shipyard.

The question of whether to support home-based workers or go for the cheapest foreign option has put the UK Government under enormous pressure.

Dr Reid is the first of three leading Labour politicians to address the Edinburgh meeting. Trade and Industry Secretary, Stephen Byers, and Scotland's First Minister, Donald Dewar, will come under the spotlight later in the week.

Cabinet decision

News broke on Sunday that the final decision on the winning bid will be made by the entire British Cabinet rather than the MoD.

It is thought that Govan may be able to secure part of the £200m contract, which could be worth up to £1bn with spin-offs and refits.

A campaign has been launched to win the contract

As well as the Govan issue, Dr Reid spelled out the government's commitment to delivering jobs, equal opportunities and social justice for Scotland.

Away from the conference hall, union leaders say the UK Government should step in and help Britain's manufacturing industries.

John Wall, of the MSF union, said: "We are not interested in putting our begging bowl out to anyone. But we insisting on a partnership between industry and government.

'Unholy mess'

"We want that relationship on a level basis and in order for that to work properly we need to have financial clout. There has got to be intervention from government."

Meanwhile, at Westminster there have been heated exchanges over the uncertainty surrounding the Govan shipyard.

During the House of Commons defence questions the Liberal Demcorats defence spokesman and Fife North East MP, Menzies Campbell, described the government's conduct regarding Govan as an ''unholy mess''.

The Defence Secretary , Geoff Hoon, refused to be drawn on where the ferry contract would be placed