§ 2.42 p.m.
§ Mr. Eric Ogden (Liverpool, West Derby)
Mr. Speaker, may I, first, thank you for the opportunity of bringing before the House this important, complicated and vital matter of the challenge which faces our own British merchant service from those ever-increasing numbers of foreign merchant vessels using flags of convenience. We may sometimes forget that Mr. Speaker is himself a Member of Parliament with constituency interests. I must confess that I had in mind the close connection between yourself, Mr. Speaker, and the port of Southampton when I asked for this debate. I will not say how many times I had to make applications before my hopes were realised.
In a debate between a back bencher and a Minister it is a great help to know that the Minister has a real knowledge of the subject under discussion, and while my hon. Friend the Minister of State has had high responsibility for the Royal Navy and he may miss the halcyon days of swinging in a boatswain's chair between two destroyers—which I had the opportunity of doing—we on this side of the House and, I believe, those on the other side, too, welcome the fact that he has a great knowledge of the Merchant Navy and is the Minister responsible at the Board of Trade for that service. As part of the Christmas spirit I notice that the Opposition Front Bench looks a little more formidable at the moment by the presence on it of the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor).
A "former naval person", the late Sir Winston Churchill, believed that it was upon the Navy, under the providence of God, that the safety and well-being of these islands chiefly depend. [HON. MEMBERS: "Nelson."] Nelson may have said it first, but it was repeated by Sir Winston Churchill. I say that it was Sir Winston Churchill who believed that, and I think that in this case Sir Winston was right; and if Nelson was right as well, I have no great complaint against Nelson on that score. If they both said it, what they said is valid today. I like to believe that in that reference, although 1538 he was referring mainly to the Royal Navy, he also included the Merchant Navy, particularly in regard to our well-being in peace and war.
We have had this last year two examples of the terrible cost to this nation when the merchant fleets have been prevented from bringing home our food and raw materials and taking abroad the results of our skills and industry. The spirit of Christmas may have difficulty in finding its way into the Palace of Westminster and this Chamber, but we know, and many millions outside should also be aware, that it would be a very poor Christmas indeed if we had to rely entirely on the food we grow and the raw materials we have here at home.
Certainly we can, and should, use our resources and expand them, yet we shall always need our merchant fleets to bring us the riches of the world beyond our shores that we cannot produce for ourselves. The golden caravans of Samarkand never saw one-tenth of the riches which have passed through our ports to make this a better Christmas and a better New Year than we would otherwise have had.
The British merchant fleet, owned, registered, operated in and from the United Kingdom, carries much of this import and export trade, carrying its own flag, the Red Ensign, the old "Red Duster", over the oceans of the world. The majority of the world's shipping carries the flags of countries with which those ships have close links of trade, of registration, or of operation, but—and it is a very big "but" that is growing even larger—more and more ships fly the flags of countries with which they have only the remotest connection. Their flag is only a flag of convenience to secure for their owners unfair advantages in taxation, and the avoidance of other regulations with which genuine shipping from genuinely maritime countries have to comply. More than one-tenth of world shipping now fly flags of convenience— the nearest thing to piracy, in my opinion, since the "Jolly Roger". I think that everyone can recognise that to have standards of safety and seamanship is good, and that it is necessary to follow those acceptable standards.
In world shipping today the merchant fleets total 182 million tons gross. They have increased over the past year by 1539 roughly 10 million tons—almost 11 million tons. Included in this total are 64,198,000 tons gross of oil tankers, representing 35.3 per cent, of the world fleet, compared with 35.2 per cent, in 1966 and 34.3 per cent, in 1965. The number of ships of 50,000 tons gross and upwards has risen during the year from 71 to 118, including an oil tanker increase from 67 to 105. There are also nine ore and bulk carriers in this category.
I hope that this record of growth will continue. Certainly, there is a record total of ships on order at the moment. The total order book of the world's shipyards reached a record figure of 39,550,636 tons gross in September. I take the figure from Lloyd's Register of Shipbuilding Returns. This was 4,203,383 tons more than at the end of the previous quarter. Almost every country showed an increase in its total order book. There were 1,882 steamships and motorships totalling 13,395,785 tons gross under construction throughout the world at the end of September.
There has been more investment in shipping. There is an increase of 50 per cent, in investment by the shipping industry in 1967 forecast by the Board of Trade in its annual survey of British industrial investment. The survey shows that while it is difficult to forecast the amounts to be charged to capital expenditure the forecast is based on firm indications. The future of shipping is never certain. There have been great challenges and changes, but it seems that the future of shipping is to be treated in the same adventurous way as it was in the past.
The Chairman of the Cunard Steamship Company, talking about the future of shipping, said this:The days of individual lines operating on their own are rapidly disappearing. There will inevitably be a painful period of transition in human terms as well as financial. For the future the pattern is already discernible— larger groupings within both British and international shipping, larger ships, in many cases spending most of their time at sea and not in port, lower overhead costs ashore, a better service for our customers, fewer people working the ships, perhaps, but a better future and better conditions for the numbers of people that the shipping industry can actually employ.Mr. John Lunch, the Director of Finance and Commerce of the Port of 1540 London Authority, had this to say about the forecast for the future as regards our trade with Common Market countries:Trade with Common Market countries will double by 1980. Creation of a simple door-to-door freight service would allow the international trader to reap great benefits. International containerisation could be virtually a new business system.Mr. Lunch went on to say that he considered that, whether Britain joined the Common Market or not, trade between the two areas would reach 20 million tons by 1980. Of this, 14 million tons would be handled in containers, and 3 million tons would pass through the Port of London.
Speaking about future competition, Mr. Douglas S. Tennant, the General Secretary of the Merchant Navy and Airline Officers' Association, said that shipping was a highly competitive industry which suffered from a great deal of unfair competition. He went on to say that young men now going to sea were entering an era of change and challenge. They would feel the impact of automatic devices which were being increasingly used in ships. This would lead to increasing efficiency, but would also have an impact on manpower needs of the future. Seafarers, therefore, had to be equipped by training and education to take such changes in their stride. He said that he wanted to see his members become, by training and education, not only officers of ships but also qualified to be directors of shipping companies.
British shipping is a real investment, and the Report of the Committee of Invisible Exports makes it quite clear that, among the service industries which play so great a part in our balance of payments, the shipping industry alone is responsible for at least a quarter of our invisible balance of trade.
Of all the countries engaged in shipping, the greatest fleet making use of a flag of convenience is that of Liberia. Liberia has the largest merchant fleet in the world, and Britain has dropped to second place. The Liberian fleet totalled 22,597,808 tons gross, and the British fleet 21,716,148 tons gross at 1st July of this year. Liberia's fleet increased by almost 2 million tons during the year to July, while the British fleet increased by only 174,000 tons. Very few of Liberia's ships are genuinely Liberian. Most of them are really American or Greek 1541 owned, but, unfortunately, Lloyd's does not provide a great many details of them. The largest fleet increase during the year was recorded by Japan, whose fleet has almost doubled since 1962.
Liberia also tops the list of oil tankers, with a total of over 12 million tons, which is an increase of more than 800,000 tons during the year. Next comes Norway, and Britain follows, third. Liberia is also top of the ore and bulk carrier list, with a total of over 5 million tons gross. The population of Liberia is about half a million more than that of the City of Liverpool, but she now has the largest merchant fleet in the world. As I have said, most of her ships are owned by American and Greek companies who use the system to avoid taxation and various other regulations to which the ships of genuine maritime nations are subject.
Recently, Liberia made her fourth attempt to secure a seat on the Council of the Inter-Governmental Maritime Consultative Organisation. Fortunately, the maritime countries in I.M.C.O. would not allow this to happen, and it failed. Undoubtedly, I.M.C.O. has done good work. It was involved, for example, in the recent consultations about traffic lanes in the Channel.
It is time that something drastic and effective was done about this flags of convenience racket, and it is only Governments who can do it. In 1958, the United Nations Conference on the Law of the Sea adopted the principle that there should be a "genuine link" between a ship and the State, whose flag she flies. The Merchant Navy and Airline Officers' Association's General Secretary was a member of this country's delegation to the conference. In addition, the International Labour Organisation, in which seafarers also play their part, drew attention to the social implications of the "genuine link". It is high time that the principle of the "genuine link" was strictly and effectively applied by this Government. If that were done, the fleet of Liberia would vanish overnight. Having regard to past, present and future casualties among flags of convenience ships, of which the "Torrey Canyon" affair is but one incident, I hope that our Government will raise the issue with I.M.C.O. and its member Governments.
There are also political implications, but I shall not dwell upon those today 1542 because I want to speak mainly of operating difficulties. I know that there is no easy and speedy solution to the problem. Anyone associated with the shipping industry knows that it requires cooperation from all the maritime nations, as well as the initiative of our Government. If we did not know that already, I am sure that my hon. Friend will tell us so when he replies.
We are entitled to ask if the Government are fully aware of the dangers of the situation. We are entitled to ask if they are seeking the closest co-operation with our own Merchant Service and shipping industry. We are entitled to ask the Government to work for the closest cooperation with the maritime nations who also suffer from these flags of convenience operators. We expect the Government to take the lead in working for a halt in the growth of this menace and then its reduction, until the oceans of the world are free for honest men in honest ships flying honest flags.
§ 2.56 p.m.
§ Mr. Simon Wingfield Digby (Dorset, West)
The House should be grateful to the hon. Member for Liverpool, West Derby (Mr. Ogden) for raising this subject, which I wish we discussed in the House very much more often.
It is a sad day for this country to know that the size of our merchant fleet has now been topped by a flag of convenience. There is no doubt about the extent of the problem, but it is harder for us to specify exactly what the Government should do. It is fairly easy to see the difficulties, because shipowners operating from this country work for an extremely low return, which is usually summarised as about 2 per cent.
There are certain taxation disadvantages, though here I must give the Government their due because, in the 1965 Finance Act, some concessions were made to shipping. The practical advantages of the British flag are not what they used to be in earlier days, when we had a larger Royal Navy and a bigger fleet. All this adds up to the encouragement of people to use flags, of convenience, which is a serious matter.
In the few minutes at my disposal, I want to go beyond that and draw attention to the recent Report of the British Exports Council on Invisible Earnings, which the hon. Gentleman mentioned in 1543 passing. It contains an important section about shipping, to which I have endeavoured to draw the Government's attention.
The fact remains that, although we are the world's greatest importers and although we import too much, as we know from our recent debates, and it is a buyer's market, we are not using shipping under the British flag nearly enough for those imports which we can ill-afford. Taking our imports by weight, only 35 per cent, comes in British ships, whereas 45 per cent, of our exports go out in British ships. Surely it is not beyond the wit of the Board of Trade to do something to encourage importers bringing in these goods to use our shipping very much more. Another important import is timber. Between 4 and 5 per cent., or £70 million worth, of timber coming into the country from the Baltic, often under very favourable exchange rates, comes in foreign rather than British ships. We do not have to look very far to see why it is that the British merchant fleet does not get all that it might seem to deserve.
This excellent Report on invisible earnings ends up with certain recommendations which, in our present situation, I hope that the Government will take seriously. I must draw to the Government's attention the fact that the fourth of these recommendations is that they should do more to resist flag discrimination and subsidies abroad. I believe that there are ways in which this can be done. I know that the Minister will say that we are in danger of discrimination, but I do not think that that is really the whole answer. I believe that much could be done to encourage ships to register under a British flag.
I hope that after this short debate we shall see some action taken by the Government, particularly at this time, to try to give a little more help and encouragement to British shipowners.
§ 3.0 p.m.
§ Rear-Admiral Morgan Giles (Winchester)
I, too, would like to congratulate the hon. Member for Liverpool, West Derby (Mr. Ogden) on raising this important and extremely topical subject today. The quotation which he gave in the earlier part of his speech, and which is very true today, dates not from Sir Winston Churchill, nor Lord Nelson, but 1544 back to Charles II. In those days the Royal Navy and the Merchant Navy were part and parcel of the same organisation. In fact, the Royal Navy consisted of merchantmen who were armed for their own self-defence. This is a lesson for us in the present day.
I agree very much with the hon. Gentleman's plea that the Government should pay attention to the many difficulties of one sort and another, which he has outlined, which face the merchant navy. I believe that a tribunte is not sufficiently often paid to the Merchant Navy and all that it stands for. Not everybody realises the extent to which the nation is utterly dependent, both in peace and in war, on the 100-plus merchant ships which reach the ports of this country from abroad every day of the year.
The immense contribution which the Merchant Navy makes to our balance of payments has been mentioned, but a point of real importance which I should like to emphasise is the need for continually cementing the bond between the Royal Navy and the Merchant Navy, and I urge the Minister, who is on familiar ground in this respect, to chase up his right hon. Friend the Secretary of State for Defence and get a little more clearly across to the personnel of the Merchant Navy what consideration is being given to organise and protect them, particularly in wartime convoys, antisubmarine warfare—
§ Mr. Speaker
Order. I know the hon. and gallant Gentleman's enthusiasm, but he must come to the subject of the debate.
§ Rear-Admiral Morgan Giles
I am surrounding the problem of flags of convenience with the other problems which confront the Royal Navy, but, in view of your Ruling, Mr. Speaker, I shall pass on from the importance of aircraft carriers. I hope that this will not be lost on the Minister.
There is an important point which has not been made about these flags of convenience. A certain amount of criticism has been heard, particularly in the United States, about ships flying the Red Ensign trading in the port of Haiphong. I am not sure of the exact statistics, but it is certain that some of these ships are plying under flags of convenience of a particular sort. These are ships which, 1545 in the early 'fifties were, in effect, sold to the Chinese Communists, but because of regulations in Hong Kong at the time were chartered indefinitely, and I think that they are chartered now, for one dollar a year.
They are using this rather specialised form of flag of convenience to go around the oceans and trade into Haiphong, and are thereby bringing considerable disrepute on the Red Ensign and everything for which it stands. I hope that the Minister is aware of this, and will be able to say something about it when he replies to the debate.
I think that everyone will agree that the Merchant Navy has earned a unique reputation throughout the world over many years. It has a unique reputation for its ships, for its management, and for its officers and men. I am sure that the whole House would like to see the Government doing everything in their power to ensure that the Merchant Navy is in a position not only to maintain, but to enhance, its reputation as time goes by.
§ 3.5 p.m.
§ Mr. Edward M. Taylor (Glasgow, Cathcart)
Mr. Speaker, it might be appropriate to mention a subject which you raised, namely, our great appreciation of the staff of the House. We all appreciate the courtesy, consideration and patience shown by members of the staff, particularly in view of the late hours which we sometimes work and the difficulties which they encounter. We sometimes take them for granted, and perhaps at this time of the year it is appropriate to express our gratitude and appreciation to them.
We are all grateful to the hon. Member for Liverpool, West Derby (Mr. Ogden) for raising this subject. We have had the benefit of the well-informed views of my hon. Friend the Member for Dorset, West (Mr. Wingfield Digby) and my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan Giles). This is a very interesting problem, but also a very serious one. Reference has been made to the extent to which we are dependent on the British fleet, and also to the great advantages which we receive from it by way of invisible earnings.
1546 It is rather unfortunate that the main reason for these flags of convenience is the high burden of taxation which is imposed, not just by us but by all the great trading and maritime nations. The growth of flags of convenience fleets is very alarming indeed. For example, I understand that Liberia has only one ship which can effectively be called her own, the "William S. Tubman", which was named after the country's President, but there are about 1,500 ships of more than 500 gross tons, about 15 per cent, of the world's tonnage, which are registered in that country. The most recent figures which I have are those issued in June, which showed that more than 24.8 per cent, of the world's tanker fleet was registered in Liberia, Panama and the Lebanon, and that about 17 per cent, of the entire world fleet was registered in these countries.
One thing which is of special interest is that the so-called advantages of flags of convenience are not available to British shipowners. United Kingdom shipowners, even if they wished, could not resort to the device of registering ships outside the Commonwealth, because the Merchant Shipping Act lays down that a ship may be registered as a British ship only when she is owned by British subjects, or, as the Act saysbodies corporate established under and subject to the laws of some part of Her Majesty's Dominions, and having their principal place of business in these Dominions.Apart from that, if ships are registered in Bermuda or elsewhere. British companies may establish a separate company there, but they are precluded by Section 468 of the Income Tax Act, 1952, from transferring assets from the United Kingdom to that company without the permission of the Treasury. Furthermore, any dividends which might be remitted from Bermuda to a parent company in the United Kingdom would be subject to United Kingdom taxation.
In the United States the position is quite different, and Mr. Erling Naess, who operates a large fleet of tankers, has claimed that about half of the American-controlled tanker fleets sail under the flags of Panama, Liberia and Honduras. Much of the other part of Liberia's fleet is financed by the Americans, but controlled and operated by Greeks and Italians.
1547 To each United States company, where the wage levels imposed by their merchant marine are so high, the advantages are considerable indeed. The registration fee in some of these countries is just over 1 dollar 20 cents per net ton, and the tax is only about 10 cents per net ton. The main reasons why these vessels are registered in these small countries are, first, the burden of taxation. In Liberia it is very small—a registration fee of 1 dollar 20 cents per net ton, and an annual tax of 10 cents per net ton. In countries like America and Britain, the taxation burden is extremely heavy. There is a more serious problem, that of profitability, and, as my hon. Friend said, the British merchant marine is faced with difficulties at the moment because of low profitability.
The other factor is the high cast of maintaining ships, and the Americans have the highest costs in the world. Those who operate flags of convenience fleets state that the reason is largely strategic. In case of war, the United States would need a large reserve fleet. This could not be maintained in competition with other countries if they did not have flags of convenience, unless there was the alternative of a substantial subsidy. At least if there were a subsidy it would be straightforward and open, and would have the advantage of not damaging other countries.
It may be that for strategic reasons the United States wants to have a reserve fleet of tankers under flags of convenience, but it is doing damage to marine countries like ourselves. On the other hand, some of these flags of convenience fleets are growing because the companies are able to retain profits for new ships and reserves and, as1 my hon. Friend the Member for Dorset, West has said so often, this is one of the main problems of British shipping: at times of high profitability the companies cannot plough back these profits to build up their fleets, and at times of low profitability the matter is irrelevant.
Liberian flags of convenience fleets and others in a similar position are able to retain much of their profitability, which can be used for new ships and reserves. British shipowners, despite all these difficulties, have been doing well in building up their fleets and keeping up to date, 1548 but this is a continuing burden, and a growing one.
One point must be made, especially in view of the Prime Minister's comments at the time of the "Torrey Canyon" disaster. It would be very misleading to think that those ships which fly flags of convenience are old, battered hulks which are not suitable for ocean voyages. No less than 85 per cent, of Liberia's fleet consists of ships which are ten years of age and under. It has a large, modern tanker fleet. The "Torrey Canyon" was registered 100 per cent. Al at Lloyds; the master was very experienced, and the manning was not open to question. The owners were a subsidiary of a reputable oil company, and the ship had previously been chartered by the British Petroleum Company. It was not a cut-rate job. The rate was established in the open market. A British ship was not available.
In those circumstances, many people in the shipping world, including the Chamber of Shipping and some of my hon. Friends, were surprised by the Prime Minister's comment that flags of convenience could be used to economise on the cost of imports and to increase oil profits. This might be so in some cases, but it was not so in the case of the "Torrey Canyon", and it would be unfair to imply that ships operating under flags of convenience are all old and substandard. It is true that many people are concerned about old Liberty ships but, generally speaking, the majority of fleets flying flags of convenience are modern and progressive.
I was interested to read an article on standards in the Sunday Times on 2nd April, 1967, which stated that flags of convenience countries have all been brought within the safety agreements negotiated through the Inter-Governmental Maritime Consultative Organisation, and Liberia has signed I.M.C.O.'s agreement on oil pollution.
A fair point put by my hon. Friend the Member for Dorset, West and the hon. Member for West Derby was: what do we do about it? It is a serious problem. Unfortunately, we cannot dictate to the world what should be done about these problems. What can be done? One answer would be retaliation—perhaps to take action against ships 1549 flying flags of convenience. Hon. Members on both sides of the House in the past have pointed out that this would involve enormous difficulties and would not be in our interest, since we have a large fleet which goes to every port in the world. Retaliation could bring reverse retaliation, and we might be retaliated against. It is not a practicable proposition, and not one hon. Member has suggested it today.
What we must do is to make it more attractive for our own shipping companies by providing the maximum encouragement and incentive to our own fleets to register in this country. It is interesting to note that in 1959 the Greek Government—now going through some difficulties—had a very serious problem, because they found that almost all their ships were being registered under flags of convenience. They therefore adopted a "welcome home" policy and provided substantial tax advantages to shipowners who registered their ships in the homeland. In 1959 the Greek fleet grew by 500 per cent. That is a point worth noting.
It is not simple to register British ships under Hags of convenience, as can be done in the United States and in Greece. On the other hand, we are in stark competition with companies operating major merchant fleets and which have major tax advantages. Something must be done, and I believe that the answer is more encouragement to our own merchant marine.
My hon. Friend the Member for Dorset, West pointed out that the budget of the Chancellor gave an excellent concession to our shipping companies, which was very much appreciated. It showed that the Government had knowledge of the problem, and were concerned about it. But they have not done enough. More must be done. I hope that the message which the Minister will send out in response to the fluent and well-informed speech of my hon. Friend the Member for Dorset, West and the hon. Member for West Derby will be a message of hope for British ship-owning companies which will enable them to look to the future with the same confidence as they have done in the past.
§ 3.16 p.m.
§ The Minister of State, Board of Trade (Mr. J. P. W. Mallalieu)
It is a great pleasure for me—
§ Mr. Speaker
Order. The hon. Member requires the leave of the House to speak again. This is one debate.
§ Mr. Mallalieu
I am sorry, Mr. Speaker.
By leave of the House, it is a great pleasure to begin my second speech today by joining the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) in what he had to say about the staff of the House. I say this in the presence of an hon. Friend who is very much senior to myself. We know the strains and stresses to which we have subjected the staff during the years, and I am delighted that recently those strains and stresses have begun slightly to diminish. This is an excellent procedure, and I hope that we shall continue it throughout our proceedings on the Finance Bill and on other Measures of the kind on which, in the past, we have spent so many hours.
With a little hesitation, I want to follow the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) in one particular, namely, the tribute that he paid to the Merchant Navy. At Christmastime many members of the Merchant Navy will be far from their homes—perhaps at sea—where things are not always comfortable. It would be nice for this House to send them a message of good will and a thank you for the wonderful service which the Merchant Navy, since the days of Charles II, has given to the nation.
My hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) has done a great service in allowing the House to ventilate this question of flags of convenience. What I have to say about it may be somewhat disappointing to him, but it is as well that we should get the whole issue into perspective.
It is true that the size of the fleets of the flags of convenience countries has been growing. I believe that the latest percentage figure is 17 per cent. Liberia and, very much below Liberia, Panama, are the principal flags of convenience fleets. I am not sure that I agree with the hon. Member for Dorset, West (Mr. Wingfield Digby) that it is a sad thought when the Merchant Navy is passed by the flags of convenience counting registered fleets. I have a feeling, like the league tables and so on, that we discussed earlier in the day.
1551 What matters for us is to have an efficient and adequate Merchant Navy and the fact that, because of the convenience of these flags to those other nations, another nation has been able to rise above ours in terms of numbers— but this does not mean that our real position as a mercantile nation has deteriorated. What are the advantages—
§ Rear-Admiral Morgan-Giles
Before he leaves this point, would the hon. Gentleman confirm that he would like to see the Merchant Navy not only efficient and adequate but profitable?
§ Mr. Mallalieu
Yes, I would like to see anything British profitable.
Why do people use flags of convenience? They do not have to pay taxation on profits which are retained in the country of origin and there is the advantage—if it is an advantage—of their being bound by no national laws or agreements on seamen's wages. It is for the latter reason that so many of these ships are United States ships, because of the high wages demanded there. This is probably why—although I think it unlikely—the bulk of the remainder are of Greek origin.
Our attitude is that we subscribe to the 1958 Convention on the High Seas, which requires a genuine link between ownership and the country of registration and that the Government of the flag which the ship carries should exercise supervision and control. Another view of successive Governments for many centuries is that we want to maintain, as far as possible, a liberal shipping policy, in the sense of each ship being free to go where trade demands. This is an enormous advantage to a country like ours.
Hon. Members have said how difficult it is to solve the problem. What should we do? We do not like flags of convenience, but we would advocate international action to get rid of them only if there were strong reasons affecting our national interest. One could be the question of safety, with which the hon. Member for Cathcart dealt very fairly. Both Liberia and Panama and, for all I know, those countries which make less considerable use of these flags, subscribe to the international convention about safety at sea and the load lines, and provide that ships 1552 are inspected, as some of ours are, by one of the classification societies. The majority of these ships are new, and I am certain that, whatever advantages they find in taxation and so on, the owners would never allow these immensely valuable properties to be placed in the hands of people unfit to run them.
I agree entirely with everything that the hon. Member for Cathcart said about the "Torrey Canyon". It was a first-class ship with a first-rate crew and an experienced master. I still hold up my hands in disbelief at, and am completely unable to explain, what happened on that bridge. It had nothing to do with flags: it was an aberration. If I had appointed the Board of Inquiry, which I did not, I would have appointed a psychiatrist as one of its members. Therefore, there is no argument at present in favour of acting on grounds of safety.
Another reason might be gross undercutting of wages by these fleets. The wages paid under the Liberian or Panamanian flag are certainly lower than those under the United States flag. So are the wages paid under the Red Ensign. There is already complete comparability in wages among the European maritime nations and the owners under the flags of convenience. This was not true in the past, when there were good grounds for sharp union complaint. I believe, however, that this is no longer true.
The third possible reason for taking action would be if our shipowners were at a serious disadvantage. This was true years ago, certainly, when the flags of convenience owners could use their tax-free profits to build their new ships, but, as the hon. Member for Dorset, West mentioned, some changes were made in the Finance Act, 1965, and it is now possible for our owners to spread their depreciation as they choose and also to attract investment grants. Even so, although the competitive position may not be exactly comparable, our men are on reasonably equal terms—
§ Mr. Wingfield Digby
I was hoping that the hon. Gentleman would refer to the ability of our importers to do more than at present, when they are importing only 30 per cent, by weight in our ships, and that he would say that more could be done in that respect to help British ships.
§ Mr. Mallalieu
I take the point. The hon. Gentleman mentioned timber from the Baltic, which is a specialised trade. Although we do not have much of that trade, we do have more of iron ore and other bulk cargoes in which we specialise. As he said, anything that can be done without appearing to discriminate, to induce our importers to use British bottoms, the better it will be for our Merchant Navy.
I am grateful to my hon. Friend for having given us the chance to discuss this issue. If there were cause—primarily affecting British interests, but, in terms of safely, affecting the interests of the whole world—for seeking international action, we should do so, but, for the reasons which I have given, I do not think that it is necessary at the moment.