Hopes of bringing forward naval contracts to save more than 1,500 shipbuilding jobs on the Tyne were dashed by a Government minister yesterday.

Defence procurement minister Lord Bach said the Government had "no solution" to the problem of falling orders faced by the industry in the North.

And he ruled out any financial aid to support Swan Hunter when its Wallsend yard runs out of work in 2006 in a move attacked by politicians and unions as "a slap in the face" and likely to cost the region much-needed skills.

The blow came as new figures showed a massive slump in the North's employment rate - at a time when it is rising across the rest of the country.

The Government's failure to support Swan Hunter follows a series of job losses on the Tyne.

Offshore engineering group Amec mothballed its Wallsend yard with the loss of 500 jobs earlier this year after work ran out.

And ship repair group A&P Tyne closed one of its yards with the loss of 46 jobs this month after orders fell.

Shipbuilding boss Jaap Kroese had previously warned he would mothball the Swan Hunter yard and axe the workforce because of a two-year gap in the order book - unless more Government work is provided.

But Lord Bach yesterday ruled out moving multi-million pound Ministry of Defence contracts forward to safeguard Swan Hunter.

The minister said: "We have a tight programme ahead of us, and it is hard to see how any programmes could be brought forward. Our policy will remain as it is."

Swan Hunter's current contract to build the £160m Largs Bay and Lyme Bay sister ships for the MoD runs out in 2006. And a 10-year order to help build two £2.9bn aircraft carriers for the Navy will not start until at least 2008 following a series of delays.

Lord Bach - speaking at a national naval conference in Gateshead yesterday - said: "State aid for shipyards in Britain is not something that we are looking at. There have been no discussions on this subject, and we do not feel it is an answer.

"We do understand the concerns of industry. But we have no solution to this difficult problem."

Kevin Rowan, TUC regional secretary, said: "It is to be hoped that the Government will not take a short-sighted view with Swan's.

"I believe it is within the power of the Labour Government to bring contracts forward and to make sure that the vital skills, jobs, and capacity on the Tyne is preserved. Too many important jobs have been lost on the Tyne in recent memory."

Euro MP Martin Callanan said last night: "The Government are Swan Hunter's biggest customer and should take some responsibility for providing aid, even if it is not financial, when so many jobs could be lost. This is a slap in the face for Swan Hunter after its slavishly loyal support of the Labour Party - and by implication a slap in the face for the whole shipbuilding industry."

Mr Kroese remained bullish despite yesterday's announcement, saying he still hoped to find a stop-gap to keep the yard open: "Swan Hunter is looking towards offshore engineering work as a solution to the work gap, and we remain confident that work can be found to keep the yard in good shape in time for the coming contracts.

"There is so much work for the next decade that we have to be around."

Newcastle East and Wallsend MP Nick Brown, who has long campaigned to save Swan Hunter jobs, said he was meeting Geoff Hoon in the coming weeks to discuss the shortfall in the order books.

"The defence industry, including the shipbuilding industry, needs the MoD programme to be marshalled in a much more orderly way. I hope to have a meeting with Geoff Hoon very soon to discuss these very issues and although I haven't heard what Lord Bach said, the procurement order programme needs to fit in with our domestic industrial capacity."

He was backed by neighbouring Newcastle Central MP Jim Cousins who urged the Government to consider Swan Hunter's recent plans for decommissioning ships more urgently. He said: "It is in everyone's interest that the UK builds up the capacity for decommissioning instead of the ships being exported huge distances across the world, and this would also help the current problem at the yard."

A Ministry of Defence spokesman, however, warned it was also down to shipbuilders to change their approach. He said: "The Government is committed to a strong, healthy and globally competitive shipbuilding industry in the UK. The MoD is relying upon the UK shipbuilding industry to deliver the huge procurement programme of new ships for the Royal Navy. The MoD is developing a strategy which seeks to form a more coherent relationship with the shipbuilding industry in order to manage this programme."

The Journal: Today's Voice of the North

Page 2: Shipyard boss to help with his own money