§ Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Popplewell.]
§ 10.8 p.m.
§ Lord John Hope (Midlothian and Peebles, Northern)
In accordance with the traditions of this House I must first declare my interest and say that I am a director of a shipping company. I wish to direct the attention of the President of the Board of Trade to a state of affairs in the Baltic and Scandinavian timber trade that is doing a great deal of damage to the British shipping industry, particularly to the intermediate or handy sized tonnage, that is tonnage between say 1,000 and 4,000 tons.
I have no time to go into the pre-war conditions in this industry. They will be familiar to the President. I need not remind him of the difficulty under which the industry laboured as against the Scandinavian undercutting before the war, the load line regulations and so on, or dwell at length on the heavy losses that this part of the shipping industry suffered during the war. It may be of 166 interest if I remind the House that the present British tonnage of this size of vessel is probably some 20 per cent. below the 1938 figure at this moment and that foreign tonnage of the same size has not in fact declined as much. So far as post-war conditions are concerned, the Scandinavians are still in receipt of considerable taxation relief as against our industry in this country. So far as the war damage to the British industry is concerned, that has not yet been made good.
Two years ago the Ministry of Transport appealed for timber-carrying vessels to be built. Instead of the Government doing anything serious to follow up that appeal and to help it to fruition, unfortunately one Department of the Government have gone about the matter in precisely the opposite way. We have the somewhat ridiculous spectacle of one Ministry, the Ministry of Transport, having appealed for these vessels to be built, while a Department of another Ministry, the Board of Trade, makes it virtually impossible to respond to that appeal. That Department is Timber Control.
I would remind the House that, of course, His Majesty's Government are the sole purchasers of soft woods. What has happened? Why are owners finding it well nigh impossible to respond to this appeal? It is mainly for two reasons. Timber Control is frustrating the industry. First, Timber Control seems to insist on depressing freight rates to a level which is uneconomical for owners in these days of very high building and operating 167 costs. Secondly, Timber Control is refusing to agree to reasonable charter party terms.
I shall give two examples of what is being asked for in these charter party terms. For instance, requests are made for definite loading and discharging times, and, secondly, there are demands for demurrage when a ship is detained through no fault of the owner. An interesting point is that the specific terms, these two examples which I have given, were granted by the Ministry of Transport when that Ministry was controlling shipping. Why in the world should they not be granted by Timber Control now? Indeed, in refusing to give this protection to the ships, the charter parties in the Baltic and Scandinavian timber trade are exceptions.
The attitude of Timber Control in this matter is very different from that of other Government Departments. For instance, their attitude is different from that of the Ministry of Food. It is the first good news I have heard about the Ministry of Food for four years, but it happens to be true that they are being extremely reasonable in this matter, and so are Iron and Steel Control. They are both much more accommodating in every way than Timber Control. It would also appear from the facts that the Ministry of Transport is thoroughly dissatisfied with Timber Control. The Ministry of Transport has some Scandinavian ships which the Scandinavians have been able to time charter to the Ministry of Transport for long periods at rates which certainly give a far better return than British owners could earn. It is significant that these Scandinavian ships are not being fixed for timber cargoes but for such cargoes as iron ore and so on. That alone entitles me to suggest the inference that the Ministry of Transport is thoroughly dissatisfied with Timber Control and it recognises the attitude of British shipowners in this matter as essentially reasonable, because it shares that attitude.
How has Timber Control responded to the appeal of the industry for meeting their points with a little more sweet reasonableness? Their response appears to be the chartering of German ships, and in fact six of these ships have been chartered for June, the last of them 168 having been chartered today. A further result of the obstinacy of Timber Control is, of course, that the current timber programme must be in a certain amount of danger of unfulfilment, and the situation will not be improved by the heavy congestion which is likely in the relevant ports later in the season. It is perfectly true that shipping is now virtually decontrolled, and I recognise that, but all one can say is that this particular case and this kind of hardship, for that is what it is, shows up clearly the limitations of the control so long as the Government persists in bulk purchase.
Finally, I want to ask whether the Government want to help this vital part of British industry on to its feet or not? If it does, then I would appeal to the Government either to drop bulk purchase in this connection or to give a square deal and some definite encouragement to British owners to place orders for this handy size type of tonnage, rather than specific discouragement. I have tried as best I can to confine myself briefly and essentially to the facts as I know them to be, and it is only because I believe that this matter has reached such a serious impasse that it merits Ministerial attention at the highest level that I have asked the Minister to come to the House and answer this Debate. I hope very much that we shall get an answer that will give some definite hope to the British shipping industry in what is a moment of great danger to its future.
§ 10.18 p.m.
§ The President of the Board of Trade (Mr. Harold Wilson)
The point which has been raised is, of course, one of considerable technical interest, and I quite agree with the noble Lord the Member for Midlothian and Peebles, Northern (Lord John Hope) that it is a matter of great importance both to the shipping trade and the timber trade whether the timber trade is to be conducted under conditions of bulk purchase or private purchase. The noble Lord declared his interest in this matter, and in so doing implicitly declared his great knowledge of the subject, and therefore much of what I should wish to say to the House in reply will certainly not be new to him. I think that, as he has done me the courtesy of giving me a very full account of what he wanted to raise, and, secondly, as he has put the whole case as fully as 169 can be done in the short time available to him, it is right that I should attempt to answer him fully, even at the cost of repeating many things with which he will be all too familiar.
During 1947 and 1948, British ships were directed at fixed rates of freight and these fixed rates were costed by the Ministry of Transport on certain assumptions of time and expense, and Timber Control had logically to give undertakings to British shipowners which were unusual and supplementary to the usual conditions of charter, in order to ensure that ship-owners in those control conditions were safeguarded against heavier outgoings than had been contemplated when the freight rates were fixed. Of course, as the hon. Gentleman knows, these special conditions did not apply to foreign shipping because foreign shipping was not subject to direction, and Timber Control continued to charter on the usual conditions of charter and rates of freight which, in many cases, fell very considerably below the British fixed rates.
Then, in November last, as the hon. Gentleman has said, British shipping was, for all practical purposes, decontrolled, and fixed timber rates were abolished. At that point, the Chamber of Shipping sought the collaboration of foreign shipowners to press not only that these special conditions to which I have referred should continue, but also that they should apply equally to British and foreign shipping because, of course, flag discrimination is contrary to policy. My Department felt that we could not justifiably intervene—all the reference has been made to Timber Control, but, of course, that is not a separate policy of Timber Control; it is a control approved and carried out under the Raw Materials Department of the Board of Trade—in the revision of standard charter party conditions which had been freely negotiated in pre-war days between representative bodies of shipowners and merchants.
§ Lord John Hope
Of course, the right hon. Gentleman will remember than in pre-war days conditions were quite different. Shipowners knew which was the port of loading and which was the port of discharge. Those conditions have not yet returned.
§ Mr. Wilson
I know, and I shall come to that in a moment. I want to make 170 the point that at this time when we are in the position of bulk purchasing, to which the hon. Gentleman has referred, and to some extent acting in a position of trust to those who may hereafter be called upon to do private purchasing as and when it returns, we do not want to prejudice the position by any arrangement made by us at the present time; we do not want to take action which would influence any future review of charter conditions by the two bodies of traders concerned. In any case, I think it would have been undesirable for Timber Control to have committed itself to charter party conditions in which foreign shippers did not subscribe in contracts with the Timber Control. The control, therefore, reported the views of the Chamber to the Timber Trade Federation and advised the Chamber to review their arrangements with the Federation which, in pre-war days, would be the normal way of settling it.
But the Control did agree, as the hon. Gentleman knows, to guarantee the speed and cost of loading where conditions had not yet settled down. The situation is very far from settled, but it is more settled in certain countries than in others—for instance, in Finland. These undertakings were given both to British and foreign shipping. But in any other country where conditions had become reasonably stable it was felt that shipowners should now be able to take into account the normal risk of trading under the usual party conditions when negotiating rates for the employment of their tonnage in open market conditions. Timber Control also agreed to continue the practice of discharging ships free of cost, and this, of course, made calculations considerably easier when the shipowner was estimating his voyage cost.
What the hon. Gentleman has raised—and I think he would agree with this—is a long standing difference of view between the shipowners representing one interest, and he made it quite clear that he was speaking from the shipowners' point of view, though, to be fair to him, he also said this was very much concerned with the appeal made by the Ministry of Transport for the increased laying down of keels for timber carrying vessels——
§ Lord John Hope
Of course, the Minister will recognise that I am speaking 171 as a Member of the House of Commons and not as a delegate of any industry or trade.
§ Mr. Wilson
I fully recognise that. I think the hon. Member will agree that there is an honest and sincere difference of opinion and that the point of view he has expressed represents one of the two views which might be held on the position. I speak not as a delegate from Timber Control but, of course, as the Minister responsible and, to be quite frank, particularly representing the other point of view no less sincerely and no less honestly. This main difference of opinion is that charter parties usually provide for loading and discharging according to local custom, except in the case of pit props, for which it is usual to guarantee a fixed speed of loading though not of discharging. Shipowners have for many years pressed for loading and discharging time always to be fixed by charter party while timber merchants, on the other hand, have been contending that uniformity is impossible in such a diverse trade.
It would be very difficult for me tonight, particularly in the changing conditions of trade, to lay down what should be a permanent solution to this difference of opinion as between the shipowners and the Timber Trade Federation, and conditions may arise in which this will be settled as between them without any of what the hon. Member considers the unfair position of there being a Government monopolist on the one hand dealing with competitive shipowners on the other hand. But, in recognition of the special conditions of trading which prevail today, Timber Control have adopted freight differentials to compensate shipowners for differing conditions at loading and discharging ports in the hope that this would make the task of estimating voyage costs relatively simple.
The rates of freight, of course, are not fixed by Timber Control as they used to be fixed when shipping was controlled, but shipping is engaged from time to time at freight rates which are established by the normal working of open market competition among shipowners and the charterers, and, of course, Timber Control cannot offer rates higher than owners are willing to accept and at which, in fact, a very heavy volume of 172 tonnage has been chartered. It is a fact that Timber Control charters ships outside the British trade and, in fact, they are chartering ships wherever they can be found, but certainly it is not the view of the Government that British shipowners are less able to meet competition than foreign owners when conditions of contract are equal.
I recognise that this is a highly technical matter. Although I am glad that the hon. Member has raised the matter, it is extremely difficult to deal with it in this way on the Adjournment. I should, of course, be very glad to arrange any meetings that the hon. Member would like to have with myself or my colleagues, for him to meet my hon. Friend the Secretary for Overseas Trade and, of course, representatives of Timber Control, when it might be possible to thresh out rather more fully some of the points which he has raised. I think he will find that Timber Control have a full answer, but the points would be more easily discussed under those conditions.
§ Lord John Hope
Naturally, I am obliged to the right hon. Gentleman for his offer to talk this over with me. May I ask him whether he does not agree with me when I say that British owners are really "up against it" in this matter? It is not a question of being unreasonable and trying to make more profit, but a question of trying to make enough profit to make the thing work at all. The right hon. Gentleman is going to drive them clean out of business if he goes on with this attitude.
§ Mr. Wilson
I agree it is not a case of these people being rapacious or trying to get an undue amount of profits, but on the other hand I should not like to commit myself or the Government to the view that they will be driven out of business. I prefer that this thing should be looked at in the light of the figures, as I suggested to the hon. Member.
§ 10.29 p.m.
§ Captain Marsden (Chertsey)
I think my hon. Friend the Member for Midlothian and Peebles, Northern (Lord John Hope) put a very fair question to the President, and the President, in a lot of verbiage, seems to have talked all round without giving any definite answer whatsoever. This question of the purchase of timber or, that in which I am more 173 particularly interested, the shipping of timber which has been purchased, has long been a matter of great interest to many hon. Members of this House. What the right hon. Gentleman has not told us is really the crucial point; that is, how is the timber purchased.
There are two methods of purchase. One method is to purchase the timber "free on board"—that is to say, placed on board a ship at the point of loading, in which case, the chartering of the ship is the affair of the purchaser. In that case, we, as purchasers, can every time insist on a British ship being used, or a ship which is chartered by us. If, on the other hand, it is purchased by the c.i.f. method, that is, "cost insurance free," the seller has the right to nominate a ship, to load the timber on that ship, and to take it to its destination for unloading in this country.
These are the two points about which the President of the Board of Trade has said nothing. What we ask, and I personally have asked for many years on many occasions, is that our timber should be purchased "free on board" and that we should dictate the ship into which it is 174 to be loaded. But we get no encouragement from the President of the Board of Trade that that will be the case.
§ Mr. Wilson
I hope that the hon. and gallant Member will not take umbrage at the fact that I did not deal with the point which I know he has put on a number of occasions. I should be glad to deal with it upon any occasion when he is fortunate enough to be able to raise the matter upon the Adjournment. But to-night we were dealing specifically with the terms upon which Timber Control charter ships. Certainly I shall reply to the hon. and gallant Member in so far as I can do so in the half minute or so which is available to me. We have on every possible occasion tried to buy in the way he has suggested, and I think that the hon. and gallant Member will find that, in the negotiations with Russia and with other countries, we have pressed the point which he has raised to-night.
§ Adjourned accordingly at Twenty-eight Minutes to Eleven o'Clock.