HC Deb 30 May 1957 vol 571 cc685-715

6.50 p.m.

Mr. John Cronin (Loughborough)

I beg to move, in page 10, line 14, to leave out "two-fifths" and to insert "three-tenths".

The purpose of the Amendment is very simple. The Clause doubles the investment allowance for shipping, and the Amendment is intended to increase it by 50 per cent. instead. All hon. Members feel some prejudice in favour of the shipping industry. A ship is always a graceful and pleasing thing to see and we, with our seafaring traditions, always feel kindly towards ships and the shipping industry generally. It appears, however, that a wave of marine enthusiasm has swept through the Treasury and, in the process, has swept the Chancellor of the Exchequer off his feet. The Chancellor is not always very generous with public money. Old-age pensioners, people who receive National Assistance, and war pensioners would all come to that conclusion, but here we have a case when he has actually doubled the benefit given to a limited section of the country's industry.

I say at once that I fully appreciate that the shipping industry is of enormous importance to the country's economy, and that it is obviously going through some difficulties, but those difficulties, as I propose to show, are very far from unique. There seems to be a case for a very careful examination of the position of the shipping industry before it receives this very substantial benefit. The Committee has a particular duty here thoroughly to scrutinise the Government's Clause, particularly as it will cost £11½ million a year, and the Chancellor has objected to several laudable Amendments moved from this side of the Committee which would cost very much less than that. The shipping industry will receive from the Chancellor a unique benefit. It has already, up to this time, been receiving a 20 per cent. investment allowance, and now that benefit, which itself is for all practical purposes unique, is being doubled.

All of us will concede that the shipping industry has difficulty in replacing its ships in times of inflation and high taxation. Nobody is seriously contesting that. We all know that the shipping industry is faced with a situation where shipbuilding costs have increased by 7 per cent. a year on average since the war, and are still increasing. But these difficulties are by no means the difficulties of the shipping industry alone. There are many other industries which are having great difficulty in replacing their capital equipment for the same reasons of continuous inflation and the problem of finding money out of taxed profits. To argue the present difficulties of the shipping industry does not in itself provide a justification for this generous concession by the Chancellor.

It has been widely mooted that foreign owners have particular advantages in being able to register their ships under flags of convenience; in other words, by registering their ships under the flags of Liberia, Panama, Honduras, or Costa Rica, they virtually escape all taxation. This, obviously, gives foreign shipowners an advantage in competition with British shipowners.

But, once again, I would remind the Committee—indeed, it is self-evident—that this advantage accrues to any industry which has as its headquarters a country where there is little or no taxation. The disadvantage to British shipowners is shared by all British industries which have to compete against industries in other countries where taxation is either non-existent or very low.

The Committee must, therefore, consider seriously why the shipping industry was given this almost unique advantage. Why not the textile industry also, for instance? The textile industry has to compete with other countries where taxation is very low, and it has the same difficulty in replacing its capital equipment out of taxed profits.

Mr. Gerald Nabarro (Kidderminster)

Is the hon. Gentleman really suggesting, since he mentions textiles, that it would be practical sense to take up the Kidderminster carpet industry and put it in West Africa or some other British Colonial Territory because of a tax advantage? Are there no other considerations?

Mr. Cronin

I take the hon. Gentleman's point.

The shipping industry has a unique mobility in its capital equipment. But I must point out that it can use this mobility only with the consent of the Treasury, except in certain very limited respects. As the hon. Member for Kidderminster (Mr. Nabarro) has just pointed out, shipping firms can move, for instance, to Bermuda, set up a registered office there, and escape British taxation, but they can do that, according to Section 468 of the Income Tax Act, 1952, only after obtaining permission from the Treasury. Presumably, the Treasury would not give such permission in an instance where it would be so clearly to the national disadvantage. In fact, I think it was only about two months ago that a large shipping company did apply for such Treasury permission and was, very properly refused.

The only alternative to setting up a subsidiary in Bermuda, with Treasury permission, is to set up a completely new business, with less than 50 per cent. of the shares being held by the British company. That involves immense legal difficulties, and it has one very practical difficulty in that such a company could not remit dividends to British shareholders without losing all the benefits of lower taxation. It is, therefore, most unlikely that British shareholders would agree to such an arrangement. I suggest to the Committee, therefore, that the threat of the flight to Bermuda is, at most, a very dubious one, and shipping companies cannot force the Chancellor to take action on their behalf by using that threat.

We have spoken of higher rates of taxation in this country, but we are by no means unique in having high rates of taxation. In Sweden, Denmark and Norway taxation is very high. I think that the Chancellor would agee, if he investigates the matter, that in Norway shipowners are taxed much more highly than they are in this country. Yet there has been a steady increase in the Norwegian merchant fleet since the war.

Mr. Nabarro

I am sure that the hon. Gentleman does not wish to mislead the Committee. It is true that the standard rate of taxation in Norway is higher than it is here, but the depreciation provisions accorded by the Norwegian Government to shipowners are very much better than they are here, and that is a great advantage to the shipowner in Norway.

Mr. Cronin

I accept the suggestion that the depreciation position is more convenient in some ways, but eventually there must come a time in all depreciation provisions when the effect is equivalent; so the advantage can be only for a certain length of time.

7.0 p.m.

We must also consider what will happen to the very large subsidy that the Chancellor is proposing to give to the shipping industry. Ostensibly, this investment allowance will be used to obtain new ships. Where are these new ships to be built? British shipyards now have their order books full for the next seven years. In parenthesis, I do not regard that as a matter of particular credit to them, because British shipyards are now occupying an increasingly smaller percentage of the world's shipbuilding. It would, however, be out of order for me to pursue that aspect.

To what purpose will this investment allowance be devoted? Will it be spent in buying ships in Great Britain, or in Holland, Germany or Japan? That is a very relevant point when we consider the handing over of this handsome financial advantage.

We then turn to the financial health of the shipping industry. I do not want to weary the Committee with figures, but I have details of some of the larger British companies and they show distinctly a healthy financial tendency. One finds in all of them that there has been a steady increase in profits year by year. In one case, a prominent shipping company announces results today in the Financial Times from which one sees that the trading profit has nearly doubled.

I do not suggest that all shipping companies have doubled their profits in the last year, but there has been a steady, healthy increase and shipping shares, recently at least, have reached a record high level. Does the Chancellor know of any unemployment in the shipping industry? Does he know of any ships being laid up? Is there any evidence at all that the shipping industry is in serious financial ill health? The Committee must seriously consider what will be the effect of the Clause and of this generous concession on the finance of shipping companies generally.

I make no claim to be a statistician of any kind, let alone on shipping matters, but I consulted The Times of 17th April this year, in which there appeared an article entitled "Tax Relief for Replacement of Ships", written by The Times Shipping Correspondent, who, presumably, knows a good deal more about this problem than most of us here. I should like to quote from this article.

I should like the Chancellor to pay particular attention to this passage, because it would be very helpful to the Committee if he could either confirm or refute the figures which are given, or produce alternative figures to throw more light on the subject. This is the passage and I consider it to be important: …it is possible to arrive at the statistical conclusion that, assuming a continuance of the 40 per cent. allowance and an increase in ship prices of slightly over 7 per cent. annually (which is roughly what it has been since the war) an owner with a fleet of five ships replacing every four years would have 95 per cent. of the cost of replacement out of tax-free profit…. An owner with fewer ships would be less well placed, while one with more would be comparably better off …". I should like the Committee to consider this seriously. Here, quite clearly, is a suggestion that a small fleet of ships will have its replacements met to the extent of 95 per cent. from tax-free profits that is, assuming a continuation of a 7 per cent. increase in shipyard prices every year.

Is it wise to assume that that serious inflation of shipbuilding costs will continue? Supposing it does not, shipping companies can have enormous financial advantages. The figures I have quoted apply to a small company with only five ships. A large company with many more ships will have a very substantial advantage. If the figures are accurate, it will be able to make replacements every four years to the extent of more than 100 per cent. from tax-free profits. That indicates that the Chancellor is behaving with rather more generosity than the situation requires.

I have put forward points which are very relevant to the Clause and these are all questions which require careful answer. The Chancellor is not usually very generous with public money and I hope that he will now give us an explanation of what he is doing in this case.

Colonel Sir Leonard Ropner (Barkston Ash)

The hon. Member for Loughborough (Mr. Cronin) has not explained to the Committee that the result of his Amendment, if accepted, would be to restrict the investment allowance to 30 per cent. instead of the 40 per cent. proposed in the Clause. In other words, it seems to me, the hon. Member and perhaps some of his right hon. Friends desire a much smaller alleviation of those conditions which certainly encourage, and in some cases compel, British shipowners to make use of flags of convenience, the very thing about which the hon. Member was complaining in his misinformed, misdirected and altogether unhelpful remarks.

I do not want to be rude to the hon. Member, but I suggest that a Member who represents Loughborough and who, perhaps, has no direct knowledge of the shipping industry, should not attempt to deal, as the hon. Member tried to do, with the economics of the shipping industry. I shall have more to say about the hon. Member's remarks.

Mr. Harold Wilson (Huyton)

This is a dangerous doctrine for the hon. and gallant Baronet to advance. Does not he know of the considerable rows on the whole question of the levying of ship money in inland towns about 300 years ago? There is a great deal of argument about whether the question of ships is a matter purely for seaport constituencies. Surely, the hon. and gallant Member will agree that all hon. Members should make the most careful scrutiny of all proposed changes in taxation, as of all proposed changes in Government expenditure. I hope that he will not pursue his argument too far.

Sir L. Ropner

I tried not to be rude to the hon. Member for Loughborough, but the right hon. Gentleman tempts me to withdraw any such intention. I can now say more bluntly that the hon. Member for Loughborough made an exhibition of himself and that anybody who knows nothing about the economics of the shipping industry should not attempt to deal with the matter in debate.

Mr. Douglas Jay (Battersea, North)

For our enlightenment, can the hon. and gallant Baronet tell us whether he is speaking as somebody interested or not interested in the industry?

Sir L. Ropner

I thought the right hon. Gentleman knew, as, I think, every other Member of Parliament knows, that 1 am connected with the shipping industry. I have said so on a score of occasions in the House. I am sorry that I did not mention it again at the beginning of my speech. I certainly intended to do so later in my remarks.

On more than one occasion, I have had cause to remind hon. and right hon. Members opposite not only that the shipping industry is highly competitive, but that the competition is completely international. To some extent at least, I think that meets the point made by the hon. Member for Loughborough when he asserted that the shipping industry was not in any way a unique industry. It certainly is.

It may be true that a few passengers prefer to sail in ships flying their own national flag, but the vast majority of passengers and all the shippers of cargo, whether dry or oil, speaking generally, and other things being equal, really do not consider at all either the colour or the design of the jack which flies from the gaff at the stern of the ship. Consequently, British ships are in direct competition in all the free markets of the world, and throughout the world with the ships of all other nations. If, therefore, British shipping is placed under some disadvantage peculiar to ships flying the Red Ensign, the British shipping will suffer. The inevitable result will be not only a decline in the number of British ships, or at any rate, a rapid fall in the proportion of world tonnage which is British-owned, but, in addition, we shall find that foreign ships will become more efficient, more modern and more able to compete successfully, especially if the rates of freight continue to decline.

All this is happening, and moreover has been happening for some years. For British shipping, vis-à-vis its foreign competitors, has suffered and is now suffering from one handicap peculiar to itself, and that handicap is, of course, the crippling effect of direct taxation, which extracts from the industry sums of money which should be available for building new ships or modernising existing fleets.

Now I come to another point which was raised by the hon. Member for Loughborough, for there is an apparently paradoxical consideration which enters into this question. It is that the greater the prosperity enjoyed by shipping, the greater is the handicap imposed on British shipping. I think I can explain that in this way. If the rates of freight in all world trades were so low that the ships of no nation earned any profits, if, in other words, there were no profits to tax, then the comparative level of direct taxation as between this country and our foreign competitors would be completely immaterial.

But when profits are high—and the hon. Member for Loughborough was at least right in this respect, that at periods during the last few years profits have been high—and when foreign competitors are allowed to retain those profits with which to build new ships, while British companies, through the operation of Income Tax and Profits Tax, are prohibited from accumulating the necessary reserves with which to acquire new tonnage, then British shipping falls behind, and inevitably falls behind.

Month after month and year after year, high taxation is doing that which the submarines, neither of the Kaiser nor of Hitler, were able to achieve, namely, sweep the Red Ensign from the seas. It is a slow and perhaps unspectacular business, but it is very certain, and it is happening today. Some of my younger friends on both sides of the Committee may regard me as elderly, if not old.

Mr. Nabarro

Certainly not; young and virile.

Sir L. Ropner

However that may be, I myself have been connected with the shipping industry sufficiently long to see the British Mercantile Marine reduced from over 40 per cent. of world tonnage to something less than 20 per cent.

7.15 p.m.

Mr. H. Rhodes (Ashton-under-Lyne)

I respect the hon. and gallant Baronet's great knowledge of this subject, but I should like to ask him this question. Does he think that a 40 per cent. investment allowance will stop this process of the Red Ensign being swept off the seas? Is the 40 per cent. allowance enough?

Sir L. Ropner

I was going to come to that point, but I think I can say that if it is not enough, it is at least something, and that anything in the right direction is acceptable to the shipping industry, for the reasons which I am trying to point out.

I was pointing out to the Committee the really fearful fall in the proportion of British tonnage to world tonnage during a comparatively short time. If I may give one more figure, it is in regard to tanker tonnage. In as short a period as the last twenty years, British tanker tonnage has increased by 130 per cent., while world tanker tonnage has increased by no less than 210 per cent.

Now I come to the point about which the hon. Member for Ashton-under-Lyne (Mr. Rhodes) questioned me. It is because Clause 13 goes some way towards relieving British shipping of the burden of high taxation that British owners and British seamen welcome the proposal to increase the investment allowance from 20 per cent. to 40 per cent. There is at least one hon. Member opposite—and for all I know the debate on this Amendment may show in the next few minutes that he is supported by other hon. and right hon. Members opposite—who wants to cut that proposal from 40 per cent. to 30 per cent.

Why do they want to do that? Is the hon. Member for Loughborough content to see our share of world shipping growing ever less? Does he agree—and perhaps some right hon. Gentleman opposite will answer this question—that high taxation is the cause of that, or do hon. and right hon. Members opposite think that British shipowners have suddenly become incompetent or British crews lazy and inefficient? Does the hon. Member for Loughborough know the value of the British Mercantile Marine as a dollar earner, and do hon. and right hon. Gentlemen opposite remember that in two world wars the merchant seamen and the ships in which they sailed saved this country from starvation and defeat, and suffered pretty grievous casualties in doing so? Does not the hon. Member for Loughborough want our ships to compete on level terms with our foreign competitors? Does the employment of our seamen or the men who work in our shipyards mean nothing to hon. and right hon. Gentlemen opposite? if the hon. Member and his 'hon. Friends divide the Committee on the Amendment, we and the country will know the answers to these questions.

Mr. Cronin

The hon. Member made some very sweeping generalities and certainly quite a strong emotional appeal, but cannot he produce some figures and facts to support his argument? So far, we have had only assertions.

Mr. Rhodes

If the process of sweeping our fleet from the seas has been going on for so long—and the figures quoted by the hon. and gallant Member for Barkston Ash (Sir L. Ropner) of tanker tonnages are very significant—will this 40 per cent. initial allowance stop that process or not? It is quite easy for people who know how to run ships to go to Bermuda, or wherever they can find the accommodation, and obtain money from the New York bankers to start a new company. It would appear that a £100 company started in a place like Bermuda would just do the job. I want to understand the implications of this matter, and I hope that the hon. and gallant Member for Barkston Ash will throw some light on it.

Let us suppose that freight rates go down and there is more intensive competition from the people who already have their ships on the seas. Suppose that those ships have been written down in value and those people are able to compete on the basis of cost with our people here. What is to prevent this process worsening, especially if we go the whole length, as many people would like us to do, and enter the European Free Trade Area?

If hon. Members take the trouble to read the Economic Survey of Europe they will find strong arguments on this subject showing that America and countries like Germany are very keen about the Free Trade Area because of the chance that will be offered to increase the importance of the Rhine Delta. All the facts and the figures stated in that Survey are worth reading.

I do not see how we will stop this trend by giving shipowners a 40 per cent. investment allowance, If we give them 40 per cent. they will be coming back for a further 10 per cent., 20 per cent. or 30 per cent. I feel rather gloomy about the whole matter. If we are to have any ships at all sailing under the Red Ensign they will have to be publicly owned. [Laughter.] It is all very well for hon. Members opposite to laugh. I am simply stating what I think is the trend, and I do not see how a 40 per cent. investment allowance will stop this trend. Neither do I see how the reduction of 10 per cent proposed in the Amendment could possibly affect this process.

I shall not vote for the Amendment, because my view is that it is only playing with the problem. I believe that the trend will go on and become even more serious and that it will have to be tackled on the basis of a national emergency not only in relation to shipping, but also in relation to the facilities in this country for unloading ships.

I cannot get out of my mind the fact that, although we have had better and faster ships built since the war, liners before the war made five complete journeys to Australia and back in two years, but now, with all their modern advantages, they cannot make five round journeys in less than three years, If our ships are taking 50 per cent. more time to make these journeys I reckon that this is a national emergency and that 10 per cent. one way or the other, whether an increase or a decrease, in the investment allowance will make no difference.

Mr. Douglas Marshall (Bodmin)

I should like to speak briefly against the Amendment. In nearly twelve years' membership of the House of Commons I find this one of the oddest Amendments that Her Majesty's Opposition have ever put on the Notice Paper. The hon. Member for Loughborough (Mr. Cronin) was in rather a dilemma, because by proposing to decrease the investment allowance from 40 per cent. to 30 per cent. he was immediately agreeing that the principle as applied to shipping was not exactly the same as that applied to other industries. The hon. Member for Ashton-under-Lyne (Mr. Rhodes) said that the investment allowance was not enough.

Mr. Rhodes

No, I did not. I was only asking whether it was enough.

Mr. Marshall

The hon. Member gave the impression that it might not be enough.

Mr. Rhodes

It may not be.

Mr. Marshall

The hon. Member went a stage further and said that the British Mercantile Marine should be nationalised.

Mr. Rhodes

Oh, no. The hon. Member should not talk so silly. I was posing a perfectly straight question: is the investment allowance enough to stop this trend? There is no need to argue round the subject. If the allowance is not enough, let us give more, but we can give so much that it becomes 100 per cent. and then the public might just as well own the industry.

Mr. Marshall

The hon. Member now suggests that if the investment allowance is not enough it should be made more at a later date.

Mr. Rhodes

I do.

Mr. Marshall

I agree, and I hope that my right hon. Friend the Chancellor is taking due note that if he is able to raise the investment allowance in a later Budget he will have the support not only of his hon. Friends, but also the support of the hon. Member for Ashton-under-Lyne.

Mr. Rhodes

Up to 100 per cent.

Mr. Marshall

My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) has given the facts and figures. As far as I can gather, there was only one thing which he did not say, but which might be said for the sake of the record. The total tonnage of dry, cargo vessels trading under the British flag is not as great now as it has been. Perhaps that should be noted, apart from the percentage difference in world tanker tonnage which my hon. and gallant Friend mentioned.

As far as I could see, the argument of the mover of the Amendment impressed me that he was arguing, and doing so remarkably well, for the Clause as it stands. If he reads what he has said, he will find that his argument stands well to the Clause and argues well against his own Amendment.

7.30 p.m.

Mr. Nabarro

I have been concerned in debates upon shipping matters in this Chamber for a number of years. This evening we have listened to two of the most discreditable speeches from the Opposition benches which Socialists have ever made during a Finance Bill. They are in direct contradiction to the principles expressed by their own leaders when they sat on these benches in 1951.

When I listened this evening to the speech of the hon. Gentleman the Member for Loughborough (Mr. Cronin) I asked one of my hon. Friends to obtain for me the OFFICIAL REPORT for a late and lengthy sitting on the Committee stage of the Finance Bill on 8th June, 1951, when, it will be remembered, the Socialist Government had decided to withdraw nearly all the capital allowances then in being, namely the initial allowances, at a rate of 40 per cent., due to the exceptional demands of the rearmament programme. All initial allowances were therefore withdrawn save that special provisions were retained for shipping.

Mr. Jay

Quite right.

Mr. Nabarro

I am glad that the right hon. Gentleman says "Quite right." I am about to quote his right hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards), who was then Economic Secretary to the Treasury. This is what he said: During the Budget debates, although little anxiety was expressed about the suspension of initial allowances in general, a number of hon. Members referred to the exceptional case of shipping. On the Second Reading of the Finance Bill, my hon. Friend the Financial Secretary "— That was the right hon. Gentleman the Member for Battersea, North (Mr. Jay), whom we are also pleased to see in his place— said that, in view of the special importance and circumstances of shipping, it had been decided that we would put down an Amendment at this stage of the Bill excepting from the suspension of initial allowances any expenditure on the provision of a ship even though it may have been made after 5th April, 1952, on account of ships that were actually in course of building on Budget day."—[OFFICIAL REPORT, 8th June, 1951; Vol. 488. c. 1451 and 1452.] Later initial allowances for all ship construction were retained and it gave voice to the then opinion of the Socialist Government that shipping occupied a special and exceptional place in our national affairs and our economy. Does the hon. Gentleman wish to interrupt?

Mr. Rhodes

If I may say so, there is hardly a subject on which the hon. Member for Kidderminster (Mr. Nabarro) has not spoken at one time or another and posed as an expert, but I cannot say that I am taking his points now. There has never been any question on this side of the Committee that the shipping industry is a special case. Of course it is. We want to know how special, how big, the investment allowance needs to be to keep ships flying the British flag.

Mr. Nabarro

If the hon. Gentleman will curb his impatience for a few moments, I will tell him in my own way exactly how special a position is being created for shipping by my right hon. Friend in the terms of this Finance Bill.

In my mind the supreme importance of the shipping industry from a practical point of view is that it contributes earnings in the order of £450 million annually to our balance of payments and our national economy. That is a contribution bigger than that of any other single industry, and it ought to have paramount consideration in time of peace, as in time of war, for the reasons expressed by my hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner).

A great deal has been said' about flags of convenience and British companies transferred to Bermuda. In fact the Bermuda case is a single one, a somewhat exceptional one, and, with great respect to the opinions expressed earlier, a relatively unimportant one. What is of major importance is what is happening with the increase in the tonnages in flags of convenience that are being registered in such countries as Liberia, Costa Rica, Honduras and the remainder. I quote, because it will lead to the point about the amount of the capital allowance, which is the subject matter of this Amendment—

Mr. Rhodes

Investment allowance.

Mr. Nabarro

I said "capital allowance". The hon. Gentleman is so ignorant of these matters that he evidently thinks an investment allowance—

Mr. Rhodes rose

Mr. Nabarro

No, let me finish—

The Temporary Chairman (Mr. H. Hynd)

If the hon. Member does not give way, the hon. Member for Ashton-under-Lyne (Mr. Rhodes) must resume his seat.

Mr. Nabarro

I will give way in a moment. The hon. Gentleman is so ignorant of these matters that evidently he does not know that a capital allowance for tax purposes may be either an investment allowance or an initial allowance.

Mr. Rhodes

All right, I will take the hon. Gentleman on. He has charged me with being ignorant about this. Let me explain to him the difference between the initial allowance and the investment allowance. On this basis it is 140 per cent. If it had been on the basis of a 40 per cent. initial allowance it would still have been 100 per cent., as the hon. and gallant Gentleman the Member for Barkston Ash knows full well. That is why this is known as an investment allowance, which is totally different from an initial allowance.

Mr. Nabarro

The hon. Gentleman continues to teach his grandmother to suck eggs. I am well aware of the difference between an investment allowance and an initial allowance, and I will deal with this point in a few moments if he will contain himself.

Mr. Rhodes

Come on, get on with it.

Mr. Nabarro

I was saying, Mr. Hynd, when the hon. Gentleman started to bawl at me from his place on the bench, that the Annual Report of the Chamber of Shipping of the United Kingdom brought out very well this point about the significant increase in flags of convenience by these non-maritime Powers, in its statement for 1956–57: …a critical analysis was made of the reasons for the ever-increasing number of vessels registered in Panama, Liberia, Honduras arid Costa Rica. By mid-1956, the total tonnage registered in those countries had increased to 10.4 million gross tons. as compared with 8.7 million gross tons in mid-1955. Particularly remarkable was the growth of Liberian tonnage from 4 million tons in the middle of 1955 to over 5½million tons by the middle of 1956. This last addition, which included over I million tons in six months, is rather more than the increase in the whole United Kingdom fleet over the past five years.

Mr. Rhodes

So what?

Mr. Nabarro

I am coming to that in a moment. I wish the hon. Gentleman would allow me to do so. I listened to him in silence.

Sir Frederick Messer (Tottenham)

That is a change.

Mr. Nabarro

In fact, in a period of six months Liberia, a non-maritime Power, added more tonnage than the United Kingdom had added in ten times as long a period.

The hon. Gentleman asked, "So what?" The answer to his intervention is that the reason for this phenomenal increase in Liberian tonnage is the fact that owners registered there are paying no taxation, excepting only a tiny registration fee, whereas the average amount paid in direct taxation by a shipowner registered in the United Kingdom is of the order of 50 to 55 per cent. In such circumstances of grossly unfair competition, it follows that unless my right hon. Friend takes, first, unilateral action and, secondly, highly discriminatory action in favour of the United Kingdom shipping industry, the Red Duster will indeed he driven from the seas in the course of the next few years.

Now I turn to exactly how effective is the action of my right hon. Friend in this Budget. I advocated during my speech in the Budget debate and again on the Second Reading of this Bill that there should be a total depreciation allowance over five years for ships which. I thought, would give a bigger advantage than the treatment proposed by my right hon. Friend. It is a debatable point whether the formula I then advanced or my right hon. Friend's formula would give the greater advantage to shipping. Much must depend on the nature of the fleet of ships concerned and how many ships are plying for a particular shipping company.

I consulted the financial director of the P. & O. line and asked for his views on my right hon. Friend's proposition. The P. & O. line is the biggest shipping business in the world, and the financial director of it might be expected to understand very thoroughly the taxation provisions that my right hon. Friend has enunciated. This is what he wrote to me: At present on the replacement value basis 49 per cent, of the cost of a ship can be written off after the first five years and when the 40 per cent, investment allowance is added, a total of 89 per cent. of the cost of a ship can be charged against profits in the first five years of its life. In addition, however, the ship owner will still have 51 per cent. of the cost available "— The 51 per cent. is arrived at by the deduction of 89 per cent. from 140 per cent.— to write off in the future, whereas under a depreciation system on a straight five-year basis "— which I had advocated— he would be only able to write off a total of 100 per cent. over five years. There is no doubt. therefore, that the owner of a single ship would feel that he is better off with a 40 per cent. investment allowance than he would be under an alternative system. I believe that if it is the case—and the financial director of the P. & O. Line might well be relied upon to state the case clearly—that under my right hon. Friend's provision of allowing, a 40 per cent. investment allowance, 89 per cent. of the total capital cost of the vessel can be written off against profits in the first five years' and, in addition, the shipowner will have a hedge against inflation of the 40 per cent. investment allowance on the cost, being the difference between 100 per cent. and 140 per cent., during the length of life of the ship.

That is a major contribution, indeed, made by my right hon. Friend to the grossly unfair practice inherent in the system of flags of convenience registered in the non-maritime countries oversea, if this Amendment were accepted, then the 89 per cent. to which I have referred would become 69 per cent. and would make the British shipowner considerably worse off in competition with flags of convenience.

Mr. Rhodes

Seventy-nine per cent.

Mr. Nabarro

I am sorry, it was a slip of the tongue. It is 79 per cent.

I cannot believe that this is a serious Amendment by Her Majesty's Opposition. I cannot believe that any responsible leader of the Socialist Party would willingly and intentionally move in the House a financial measure which they know to be highly detrimental to our most important industry and our most important earner of foreign currency.

I would wager that they will not divide on this issue. They dare not divide on it. We could hold them up to scorn all over the country, whether as representatives of inland constituencies, like myself, or representatives of shipping constituencies, like my hon. Friend the Member for Sunderland, South (Mr. P. Williams). On either hand, we could hold them up to scorn and derision for their attack on our most important industry and the generous, highly discriminatory and very valuable concession which my right hon. Friend is rightly proposing to give to the shipping industry in this Budget.

7.45 p.m.

Mr. Paul Williams (Sunderland, South)

I do not intend to delay the Committee long in supporting the Chancellor and opposing as vigorously as I can, but briefly, this thoroughly mischievous Amendment. As my hon. Friend the Member for Kidderminster (Mr. Nabarro) has just said, if one looks at this in a partisan sense, the party opposite is doing itself no good in trying by the Amendment to restrict the competitive ability of the most fundamental and most important of all our industries.

The Amendment has, perhaps, one value in that it has given to the Committee an opportunity to pay tribute to the British Merchant Marine, to the companies and to the men who operate the ships. It has given those of us who appreciate the industry a chance to discuss its merits. The regrettable thing is that, as in many debates on Finance Bills, few people have in fact shown an interest in the British Merchant Marine. Indeed, it might well be said that the only time respect and tribute is paid to the British merchant fleet is in time of war, in time of peril and in time of crisis. There is one exception to that.

That is the action which has been taken by the Chancellor in the Bill. As my right hon. Friend has just said, it is highly discriminatory and highly satisfactory. I believe that there should be two main objectives for the Chancellor whenever he turns his mind to shipping matters. They should be to enable the companies to replace their fleets so that the British Merchant Marine has the best, the most efficient and the most economical ships in the world. But replacement is not enough. My hon. and gallant Friend the Member for Barkston Ash (Sir L. Ropner) mentioned the decline in the percentage of the world fleet which is registered in the United Kingdom. Over a very short period of time, the percentage of the world fleet flying the Red Ensign has declined from 40 per cent. to 19 per cent. These are the most vital figures which have been quoted in this short debate.

The other point which my hon. Friend the Member for Bodmin (Mr. D. Marshall) mentioned was that the dry cargo tonnage registered in the United Kingdom is smaller today than it was before the war. The Chancellor has been courageous, but there is one question which the hon. Gentleman the Member for Ashton-under-Lyne (Mr. Rhodes) asked and which I think is relevant: does this alteration go far enough? It is a question which cannot possibly be answered with any ultimate conviction in a debate like this. We may see the answer over a period of time. If it is not enough, then it will be within the power of my right hon. Friend in a subsequent Budget to do something more. I believe that the Committee should reject as firmly as it can this mischievous and misleading Amendment.

The Economic Secretary to the Treasury (Mr. Nigel Birch)

We have had an interesting although slightly acrimonious debate on this subject, but I think that the measure of agreement in the Committee is rather greater than might appear on the surface. We are all agreed that this is a unique industry which deserves and must have special treatment. That is admitted by implication in the Amendment.

We are, also, all convinced of the national importance of the industry and we know that our relative share of the shipping of the world has declined since before the war—the actual total volume of shipping has gone up slightly, but our relative share has gone down slightly—and we all agree that this industry is inevitably subjected to the full blast of competition and, in particular, competition from ships sailing under flags of convenience.

I thought that the hon. Member for Loughborough (Mr. Cronin) treated that question a little lightly in comparing a ship sailing under a flag of convenience —a Liberian ship, let us say—with a factory producing goods in Liberia. It is not quite the same thing, because the ship is competing upon absolutely equal terms with our own ships; it does not have to export something from Liberia to this country.

Not only have we felt the blast of competition from flags of convenience; it has been necessary in the Budget to exclude the shipping industry from the provisions of Part IV, dealing with overseas trade corporations. That is necessary, because of our taxation agreements with various other countries. It is clear that in periods of rising prices the cost of replacing capital assets is an onerous one and it is particularly onerous in the case of the shipping industry, because capital costs relative to operative costs are higher than in most other industries.

That brings me to my last point—the question whether my right hon. Friend has selected exactly the right figure. Very careful thought was given to this question. We were certain that we had to take special steps about the shipping industry, and it was decided that an investment allowance was the right way of taking those steps. My right hon. Friend obtained the best advice that he could and thought about the question very carefully. We believe that the figure we have selected is the right one, and that 30 per cent. would be too low. It is not something upon which any human being can pronounce definitely, because we cannot foresee the future, but upon the evidence which is available we think that it was a reasonable figure to pick, and we believe that it will be of the greatest benefit to our Mercantile Marine.

Mr. Jay

I hope that the hon. Baronet the Member for Barkston Ash (Sir L. Ropner) will not mind my making a few remarks upon this subject, if only because I represent not the Midlands, but a constituency which borders on the estuary of the Thames. He seemed almost to think that the Committee ought not to discuss this subject at all. But to do credit to the Chancellor, I imagine that he did not decide to adopt this proposal without pausing to think about it, at any rate for a short time. It was quite right for my hon. Friend to move the Amendment, in order that the Government might make out a case for conceding fl 1 million worth of tax relief to one industry. It is the duty of the Committee at least to examine a proposal of this kind.

Like many other hon. Members, I start with a rather strong prejudice in favour of any case made out by the shipping of shipbuilding industry. That is partly because we all remember the appalling depression which both industries suffered in pre-war years. In addition, I agree that it is almost impossible to over-estimate the value and importance of the shipping and shipbuilding industries as national assets.

First, there are the earnings of the shipping industry, in the shape of invisible exports, and the sales of old ships abroad, which also contribute to our balance of payments. Then there are the sales of new ships by the shipbuilding industry. It is also true, as the Economic Secretary has said, that the shipping industry has a special problem in that the cost of new ships is so high a proportion of the total value of its operations. It was for precisely those reasons that in 1951, as I well remember, we decided to grant this special concession of continuing the initial allowance in favour of the shipping industry.

Despite all these arguments, however, it does not necessarily follow that any concession, of any size, is, therefore, justified. I think that the Economic Secretary was quite right to point out that we are riot discussing whether the Red Ensign should be swept from the seas; we are merely discussing whether an investment allowance, which is already a special concession to the industry and is standing at 20 per cent., should rise to 30 per cent. or 40 per cent.

That is a matter of judgment, but when we are considering that question it is reasonable to cast our eyes—as the Chancellor must have cast his eye—upon the fact that the shipping industry notably, but also the shipbuilding industry, are also earning extremely high profits today. I do not think that the hon. Baronet would deny that. It is also true that the shipbuilding industry is not suffering from any lack of orders. It has full order books for many years ahead. I imagine that what prevents the shipbuilding industry from increasing production at the moment is not a lack of orders but a lack of yards, and, perhaps, steel.

It is the shipping industry and not the shipbuilding industry which will benefit directly from the £11 million worth of tax relief which is here proposed. It therefore does not seem to me to be irrelevant to consider the fact that, as compared with pre-war days, the shipping industry has shown a larger rise in profits than any other industrial group in this country. When I was considering this matter in 1951, figures were laid before me which showed that that was in fact the case, and we had seriously to consider whether, in spite of all these other arguments, there was a justification for this special concession.

Mr. Nabarro

Without accepting the right hon. Gentleman's proposition that the rise in profits of the shipping industry has been inordinately large during the post-war period, I would point out that he must relate his argument to the comparative cost of replacement in the postwar period as compared with the pre-war period. This cost is higher, comparatively, than is the case in any other industry; in fact, it is nearly five times as high as it was before the war.

Mr. Jay

That may well be so. Nevertheless, whatever the level of costs may be the fact is that the profits earned are at a remarkably high level. Again, to do the Chancellor credit, I should imagine that he considered that fact before coming to a conclusion. The hon. Baronet would probably agree that shipping shares have risen more in the last year than any other group, other than oil shares, which seem to be free of all the limits and restrictions which affect other shares.

Sir L. Ropner

I do not want to make another speech, but one or two of the remarks which the right hon. Member has just made are some weeks out of date.

Mr. Jay

The hon. and gallant Member may be more up to date than I am in that respect. Nevertheless, before the Committee agrees to this provision I thought it desirable that the Government should make out a case for this very special and substantial concession.

I thought that the Economic Secretary went some way towards making out a case. He made a good point when he said that the concession in the later part of the Bill, in the matter of overseas trade corporations, does not apply to those industries, although I did not feel that he made a wholly convincing case for going as high as 40 per cent. I would have liked to hear the case argued rather more fully. I do not feel that this is a matter of principle, however; it is a matter of judgment, and for that reason I would certainly not advise my hon. Friends to press the Amendment to a Division.

Amendment negatived.

Motion made, and Question proposed, That the Clause stand part of the Bill.

8.0 p.m.

Mr. Leslie Hale (Oldham, West)

I promised the Chancellor of the Exchequer that from time to time during the debates on the Finance Bill I would make a few desultory observations to guide him in his consideration of taxation, and this seems to be a likely place and a proper opportunity to make one or two remarks.

I spent a pleasant but not very restful morning in the greenhouse potting tomatoes, and cogitating; and if anyone should say that this is a little late in the season for potting tomatoes the answer is that with the present Purchase Tax on gardening implements I am not able to afford to acquire the necessary implements to produce the tomatoes my wife would like me to produce.

Under the intricacies of this Clause, in about five years' time the s. s. "Double Subsidy" will be setting off from Southampton on a voyage to the Southern Seas for the purpose of bringing back stacks of tomatoes which could have been grown in my greenhouse and by every person with a bit of glass in Aston, Ashby de la Zouch and Oswaldtwistle and other important places in the country.

We have a policy under which we build a ship which may carry out a load of retired shipowners wishing to settle in southern spots to avoid taxation and which will come back filled with tomatoes, and probably containing Mr. Noel Coward with another patriotic play after his period of hibernation has ended. It will steam into Southampton, consuming oil which came through the Suez Canal, and the whole area of Covent Garden will be filled with supplies of tomatoes which, if we took the Purchase Tax off gardening implements, I could have grown myself. Some people may think that I am a curious individual—I sometimes think so myself—and wonder whether there is something wrong with my mind, because I express an individualist point of view. But it is impossible to come to the conclusion that I am the only insane Member of the House of Commons, and sometimes in the circumstances I am led to believe that I am the only sane one.

If we are considering the question of shipping and the necessity of a priority in cargoes, one might think that when the Minister, or the Economic Secretary, talks about the competition of flags of convenience—some of which actually are in the British Empire anyway, because Bermuda approximates to that position—they were going to do something about it. Why do we tolerate flags of convenience? Why do we have our ports open to flags of convenience? The matter was considered by the International Labour Office a year or two ago and it reported that action should be taken, but no action has been taken by the Government.

Now we come to a much more important consideration. I had the good fortune to be supplied with a copy of the first number of Shipping News—I believe that is what they call it—a magazine issued by the shipowners, presumably at the expense of the Chancellor, because now the Chancellor of the Exchequer provides the money for almost every motor car and paper published. They state in this magazine that the concession is welcome. They agree with the Chancellor that it will not cost anything this year, because we cannot build any ships this year. They go further and say that it will not cost the Exchequer anything next year, because the shipyards are so full that at the moment they cannot accept any more orders. Therefore, if we are to have ships built in Great Britain, orders cannot be accepted for a year or two yet and so the Chancellor will have £11 million or £12 million surplus next year to use to reduce the taxation on my gardening implements.

Mr. P. Williams

Orders can be accepted, but ships cannot be laid down.

Mr. Hale

I do not mind orders being accepted. I am making the point that when the Chancellor says that it will cost I 1 million or £12 million next year he has not examined the situation because orders cannot be executed next year, which brings us to this point: is the Chancellor encouraging ships being built abroad? Is the investment allowance to be applied to ships built abroad? Is this really an attempt to set up a foreign shipbuilding industry at the expense of the British Exchequer? If not, the proposals of the right hon. Gentleman make nonsense. He says that it will cost £11 million or £12 million next year. The shipping authorities say that it cannot cost anything, and that even if orders are accepted they cannot be executed. That brings us to the next point which is a matter of some importance.

It is true that the United Kingdom today still has the largest active merchant shipping fleet in the world. It is equally true that over these last few years it has risen by a much smaller proportion than almost any other fleet. During the last four or five years the West German merchant shipping fleet has doubled itself and the Japanese fleet has greatly increased—

Mr. Frank Tomney (Hammersmith, North)

It has almost trebled.

Mr. Hale

I accept that statement from my hon. Friend without dubiety.

On the other hand, our fleet has gone from 18 million tons to about 19 million tons over four or five years. That is a serious matter. Of course, it is not the most serious matter. The most serious matter is that the British shipbuilding industry has ceased to be the largest in the world. Today the Japanese shipbuilding industry is the largest in the world. Time after time our attention is called to the economic advantages of losing a war instead of winning it. Time after time we find Germany and Japan have jumped ahead in almost every industrial activity and we are having to face competition from them. That is not because they lost the war but because both nations have had the sense not to have armaments, which has enabled them to make a rapid economic recovery. Now that we are forcing armaments upon them for their own protection, perhaps they will advance a little less rapidly.

Surely in this situation it is the shipbuilding industry which needs help. Surely it is the shipbuilding industry which needs an investment allowance. If we cannot execute the orders we have; if there is a delay of twelve months before we can lay down a ship; if there is not the plant and equipment available to increase their industry in the same way as Japan has done, one would have thought that an investment allowance would have applied. That is why I think it fair to ask the Chancellor whether his intentions in this matter are strictly honourable, and whether he proposes to give allowances to companies who have their ships built abroad. If that be so it is a monstrous thing.

Mr. Jay

In order that we may get the facts clear, may I ask whether we are right in assuming, as I assume, that the investment allowance will be applicable to ships built abroad?

Mr. Birch

I think that part of the confusion of the hon. Member for Oldham, West (Mr. Hale) arises from the fact that normally ships are paid for by instalments and this investment allowance could be used for instalments due after the Budget date.

Mr. Hale

We are back to what I was cogitating about in the greenhouse, this quite monstrous proposal that a shipowner may say, "I will go to Japan to get my ship built cheaply, and come back to England and say, I want a special concession from the Exchequer, not merely the special concession I have been having, which has been removed from almost every other investment except scientific research and fuel. but a double special allowance so that I may spend it employing Japanese labour to build my ships'." That is monstrous, and the Economic Secretary should tell us whether the Government have applied their minds to this, or whether the problem has not occurred to them.

The shipowner will say, "I cannot help it, It appears that a concession is to be given under a Tory Government which does not look like lasting long, and so I shall have to place an order quickly to get the concession. As I cannot get an order accepted by a British shipyard, I am forced, notwithstanding my patriotism and my desire to serve my country, to get my ship built abroad." I ask the Economic Secretary to consider this. If the Government come to this House within seven days and say, "We are increasing the deposit for the hire purchase of motor cars, in other words. we shall stop people buying British motor cars, but we are going to give a subsidy to people buying foreign ships", that is fantastic.

We come to another question on this matter, which is important. There is no definition of "ship" in the Bill. If I buy a second-hand foreign ship do I get the investment allowance on it? If I buy a foreign ship which has been adapted from one kind to another, do I get the investment allowance? I certainly would, had I bought a factory in the days when an investment allowance applied to factory machinery. I would have then got the investment allowance on secondhand machinery as well as on new machinery. I suggest to the Economic Secretary that this is one of the questions to which he ought to be able to give an answer "on the nod". Here we are, giving 40 per cent. taxation relief on the possibility of buying foreign ships, and the possibility of buying foreign ships is very substantial indeed.

Although the American merchant fleet is listed at 28 million tons in the official list, 14 million tons of that, approximately—various figures are given—is represented by the "mothball fleet" in the Great Salt Lakes and elsewhere, which is not being used. So anonymous was this mothball fleet that Her Majesty's Government's advisers had not heard of it at the time. They said we could not possibly go around the Cape because there were not enough oil tankers. It was only when Mr. Foster Dulles called attention to the mothball fleet that we realised there were 14 million tons of perfectly good shipping tucked away in the United States. Surely, the time has come when the Economic Secretary might tell us whether the investment allowance as the Clause is drawn—I submit that as the Clause is drawn it does—would apply to the purchase of a mothball ship from the Great Salt Lakes in America.

Mr. Birch

It would not apply.

Mr. Hale

Why does not it apply? I have had some experience of this matter, although I have not been a shipowner. I say frankly that I accept the proposition of the Economic Secretary, and that if I buy a ship it will be on the instalment system. I have negotiated for other businesses, and I know that if I had bought an existing business, with machinery in, when the investment allowance was in force years ago, I should have got the investment allowance on the second-hand machines. It was not limited to new machines.

Mr. Jay

I am sure that my hon. Friend is right. The Clause actually says: … provision of a ship. I presume that that includes a secondhand ship.

Mr. Hale

I am always astounded at the rarity of the occasions on which I am wrong. The Economic Secretary ought to consider this proposition, because I do not think the Chancellor intended to give the investment allowance to ships built abroad. The whole tenor of the argument which he put in the Budget speech was that it was an attempt to give genuine help to the British shipbuilding industry. Shipbuilding is important in any island, and in this island it is probably more important than anywhere else in the world. No one resents some concession provided it is reasonably and sensibly given and applied.

The Economic Secretary was tempted to say that there is more or less full employment on the Tyne and the Clyde, and there was no need to restrict our orders to the Clyde; but there has been a definite contraction in the shipbuilding industry compared with its palmy days. There is definite room for expansion. The Clyde is still one of the dominating centres of the industry. That is one of the things which we can say about Scotland with complete generosity and accuracy. No doubt my right hon. Friend the Member for South Shields (Mr. Ede) will say very much the same sort of thing about the Tyne, but the Clyde is turning out more at the moment" in terms of tonnage and number of ships. The Tyne is building a smaller number of ships than the Clyde.

Mr. Ede (South Shields)

I must not be taken as accepting my hon. Friend's views on this matter. He has been looking at me very menacingly several times and I wondered what he was leading up to. I am not accepting what he said.

Mr. Hale

I do not want to fall out with my right hon. Friend. I recognise the fervour of his local patriotism for South Shields. The Clyde has at the moment some claim to be regarded as the largest and most successfully manned industry in the United Kingdom, but there is room for expansion. We are told that it is only in the last few weeks that, at long last, Japan's shipbuilding industry has caught up with the shipbuilding industry of the United Kingdom in terms of total tonnage. Are we to believe that the answer of Her Majesty's advisers is that we should apply the subsidy to ships built in Japan? If so, it is a proposal which is utterly indefensible in the circumstances.

There ought to be consideration of how far there should be conditions as to terms of employment in the manufacture of the ships on which the investment allowance is to be given. When I first went across the Atlantic in a banana boat in 1945 I took the trouble to look at the accommodation for the crew. We have made some amendment to the law relating to accommodation for the crews of merchant ships, but if we are to give Government subsidies we ought to lay down conditions as to the terms of employment and conditions of accommodation of the men who work on and man these ships. Conditions in the older ships are utterly deplorable and disgraceful.

8.15 p.m.

Mr. Ede

I did not intend to speak but, as representing one of the great shipyard constituencies, I must express my support, in part, with what my hon. Friend the Member for Oldham, West (Mr. Hale) has said. The deplorable thing about the shipyard industry is that we have not reopened the yards that were bought up by Shipbuilding Securities Limited between the two world wars and which were then condemned not to produce a ship for forty-two years. It is astounding that we should pay subsidies to ships produced in foreign shipbuilding yards when we are not using any of the acreage of shipyards that were in existence in this country at the beginning of this century.

We have never managed to get together again the men who were dispersed from the shipyards in those disastrous days. Even during the height of the war, we were unable to reassemble them. I hope that there will be a feeling in this Committee that if subsidies are to be paid on new ships we should make every effort to see that the shipyards of this country which have been closed shall have the opportunity, if the sites are still available, once again to ply this important craft. If we get into any further trouble we shall have the same need for home-produced ships as we have had in both of the two world wars.

Mr. P. Williams

No doubt the right hon. Gentleman will recognise the validity of the point that however much one might wish to expand the production of ships, and however sound his argument might be about reopening the yards which were closed, the key at the moment is steel. While there is a shortage of steel, we could open yards round the whole coast of Britain but could not produce another ship.

Mr. Ede

I am not sure who was speaking about the shortages that were responsible for some of our difficulties, but I then interjected the word "steel". I think that it was my right hon. Friend the Member for Battersea, North (Mr. Jay), and he at once accepted the point and added it to the point that he was making. I hope that the hon. Member for Sunderland, South (Mr. P. Williams) does not want to tempt me to get out of order by referring to the way in which the Government have dealt with steel.

Mr. F. H. Hayman (Falmouth and Camborne)

I would reinforce the argument presented by my right hon. Friend the Member for South Shields (Mr. Ede) about giving subsidies to ships built in foreign yards. There is an important ship-repairing industry in my constituency and recently considerable redundancy occurred there because ships were being sent to foreign yards for repair. Presumably, shipbuilding and ship-repairing go together. If we are to pay subsidies out of British taxation to help foreign yards, surely the Government ought to think again. I hope they will.

Mr. Birch

In answer to the right hon. Member for South Shields (Mr. Ede). there is a new Clause on the Notice Paper—(Provision for special capital allowances on certain expenditure incurred in connection with shipbuilding, ship repairing and the provision of port facilities)—which we shall be discussing later. I think that any discussion on what could or might be done about the shipbuilding industry better wait until we reach that new Clause.

The main point raised by the hon. Member for Oldham, West (Mr. Hale) was the question whether only new ships would receive this allowance. If he will read the governing subsection of Clause 13 of the Bill and Section 16 of the Finance Act, 1954, he will see that that refers to new plant. This is not a subsidy, but investment allowance and would not have anything to do with subsidies for repairing ships.

Question put and agreed to.

Clause ordered to stand part of the Bill.