HC Deb 30 March 1983 vol 40 cc417-41

Motion made, and Question proposed, That this House do now adjourn.—[Archie Hamilton.]

8.27 pm
Mr. John Prescott (Kingston upon Hull, East)

The House has had few occasions to debate the important merchant shipping industry, which is now, on any definition, in crisis. There was a debate in July 1981, when my hon. Friend the Member for Hackney, Central (Mr. Davis) raised the subject of flags of convenience and the threat to the world shipping trade, and British shipping in particular. We had an Adjournment debate on 25 November 1982 when the right hon. Member for Taunton (Mr. du Cann) spoke about the Merchant Navy fleet and its strategic value after the Falklands conflict. I understand that no Government time has been provided for a debate on the Merchant Navy.

The Government may argue that the Minister has been involved in discussions with the owners and trade unions on all aspects of the industry to formulate his view about the crisis facing merchant shipping. On 18 March, the Minister gave what I believe to be the Government's considered view in rejecting the views put forward in joint consultations by the industry and the trade unions. One can assume, following that reply of 18 March, that the Government now have a considered view of what they believe is the best policy to deal with the catastrophic decline of the Merchant Navy.

The Minister having now formed his view, will he ensure that the Government provide time to debate this important industry? I am fortunate tonight to have more time for my Adjournment debate than is normally expected. Had other Members known that more time would be available, they would have come to debate the issue this evening, but they may have been put off by the thought that only half an hour was available for the debate.

There is a need for a full-scale debate on the Merchant Navy, first, because a crisis faces the industry—a crisis of which everyone is aware—and, secondly, because there is a clear division between the views of the Government and of the industry. There is a difference of view between the Government's policy towards the British merchant fleet and that of the Opposition. Since 18 March, there has been a difference between the Government's professed view and that of the industry, in which I include both the unions and the employers. The combined view of the industry and the Opposition is that if the Government continue with the same policies, we can expect only a further collapse and decline in this important strategic industry. Indeed, the industry has already expressed the view that if the policies continue, the present 900 ships—there were 1,200 ships when the Government came to office—will decline to 600 by 1985. Over the past four years the number of ships has declined by about two a week. If the present policies continue, by 1985 the number of ships will have declined by about six a week. The sale of the famous Ellerman Line this week emphasises the continuing decline not only of individual ships but of shipping companies with long traditions.

The catastrophic decline is well catalogued. I shall quote the figures given by the Under-Secretary of State for Trade in reply to an Adjournment debate on 25 November 1982. In 1966, the British fleet stood at 27 million deadweight tonnes; in 1975, it was 52 million deadweight tonnes; and in 1982 it was 32 million deadweight tonnes. That represents almost a 50 per cent. decline in the tonnage of the fleet since 1975. It is not difficult to understand the reasons for the decline. Adjournment debates have recorded the views of the Government and of Members on both sides of the House.

It is agreed that a depression in world trade clearly affects world shipping, but the interesting fact to note, as the Minister will acknowledge, is that since 1970 the world's fleet has grown, and has continued to grow, and world trade has continued to increase. However, along came the slump, which brought with it over-capacity.

As the Minister told the House, freight rates have collapsed by 50 per cent. since 1981. The Minister, of course, referred to bulk trade rates, not necessarily to the conference line rates for liner cargoes. The decline in liner freight rates has occurred less primarily because shipowners, despite all their rhetoric about free trade, maintain a conference system to guarantee a higher price to the shipper to maintain continuity of service. They actively intervene to protect themselves against the full effects of market forces and competition.

If fleet growth has occurred as a result of the free market philosophy, as the Minister would have us believe, and that is the sole principle which determines whether fleets decline or increase, the major factor, so often quoted by the Minister, is that it depends on the costs of the fleets. He appears to think that that means crew costs.

Let us examine the growth of fleets from 1970 to 1980. Liberia has doubled its fleet and is now the largest ship-owning country. Panama has increased its fleet by 10 times, and Greece by five times. Those countries all share the obvious feature of flags of convenience. In Europe, France, Italy, Japan and Denmark have increased their fleets, but, peculiarly enough, they all have a higher cost structure and, in some cases, higher manning levels than the British fleet. Therefore, it cannot be said that crude costs and manning levels have led to the decline of the British fleet. European countries whose fleets have declined include the United Kingdom, West Germany and Norway.

There has been a growth in the Soviet fleet. Although it amounts to no more than 5 per cent. of the world's fleets, that fact invokes great anger from the Minister. He does not feel the same anger about the flag of convenience fleets that amount to 30 per cent. of the world's fleets. But, of course, the Russians are in a class of their own. Their fleet doubled between 1970 and 1980. I shall refer later to the difference in the Government's attitude to what they see as the Russian threat and the flags of convenience fleets.

We must reject the view that the decline has come about because of high crew costs and manning levels. The British merchant fleet has gone through considerable change. There has been technological change with the development of bulk traders, tankers and containers. There has been a decline in the cargo liner ships, the tramp ships and other traditional ships of the 1960s and 1970s. Bulk traders are now the predominant influence in the voice of the shipowner. They have always been divided between their different interests, and that has been reflected in the nature of their demands upon the Government. Current demands from industry are largely influenced by bulk traders, yet conference line controls do not apply to that area where the free force of the market has its greatest effect. That is why the Minister so often mouths high crew costs as the predominant factor in the fleet's decline.

Manpower changes have occurred because of the technological changes and the decline in world trade. I first went to sea in 1965, when there were 150,000 seamen and officers. That number fell to 70,000 in 1975, and it is 50,000 today. There are 4,000 seamen on the dole, waiting for jobs.

The employment of British seafarers does not relate only to ships with the British flag. Because British registered vessels are registered under the British flag, it does not mean that they are British-owned and crewed by British residents. The ownership of ships under the British flag by foreign companies has increased from 21 per cent. in 1970 to 53 per cent. in 1980.

Lord Rochdale examined the industry in 1970 and said that we may have to intervene if foreign ownerships began to increase. His worst fears have been realised. It is unfortunate that we have a Government who profess to be non-interventionist and firm believers in market forces.

With this decline we have been unable to guarantee enough ship orders for our shipyards or to provide sufficient jobs for British seafarers. There has been a collapse of investment, with catastrophic effects on the shipyards. Investment by owners is now 65 per cent. of the 1975 level. It is probably the lowest home shipbuilding orders of any national fleet. The earnings of the British merchant navy fleet have fallen to such an extent that we now pay more for the services from shipping than we earn from them. Less than 50 per cent. of the trade in the United Kingdom is in British ships.

I think we all agree that there has been a catastrophic decline. I take the point that the Minister has made in previous debates that there was a massive increase in the fleet in 1975 and that therefore one should take an earlier date to get the matter into proper perspective. I do not accept that, because even the total figures show a decreasing share of the world tonnage by the British merchant service. The effect of that decline, both in world percentage and total tonnage, has not been dictated simply by free market forces.

If we ask people in the industry why we have reached this stage, even taking into account the depression in world trade, what they say is radically different from what the Government say. The industry says that trade is determined not simply by free trade; other matters affect trade. Therefore, it seeks financial support, such as cash investment allowances. For many decades shipowners have said that they believed in free enterprise, but in reality they have always received considerable subsidies. It is interesting to note that in a reply from the Minster, referring to subsidies, he mentions no "new" subsidies. However, a considerable amount of money is poured into the British merchant fleet.

An interesting study carried out by the UNCTAD conference on flags of convenience compared the financial incentives of registering in a flag of convenience country with those of registering in developed countries. The financial incentives in the subsidies given in developed countries and those that could be acquire through the tax haven approach in flags of convenience countries were not so different. The real advantage of flags of convenience lay in manning and certification, being able to change from one company to another, not having to comply with company regulations—something that the Minister has mentioned in past debates—and the requirements to observe proper and adequate safety standards. That is what one acquires with flags of convenience. They are not necessarily financial incentives, although clearly there must be a positive financial incentive.

I note that the owners want some form of intervention, but they want it to be qualified. They asked the Minister—a willing servant in this respect—to intervene with the Russian fleets. It is said, for example, that Russia has 90 per cent. and Britain only 10 per cent. of the trade between the two countries. The same argument about a proper share applies to trade between Britain and Poland in the Baltic. Indeed, a shipowner was pleased to tell a number of Labour Members recently that there is now a 50–50 share in the trade between Poland and Britain. For the past 10 years we have been saying that it is the role of the Government to ensure that share. We in the Labour party call that planned trade. That is our policy. Yet that shipowner welcomed it, only a few weeks ago, as something new. The Government reject an interventionist role of that nature. It is a role that they do not want to play.

The Government made it clear in their reply to a parliamentary question on 18 March that they reject the two different approaches by the two sides of industry as to how to deal with the problem. The National Union of Seamen, in its excellent document "Heading for the Rocks", which I know the Minister has received, along with papers from the discussion groups that he set up, refers to a highly interventionist and protectionist role, with planned trade and public ownership. The Government's response was clearly spelt out in their answer in Hansard on 18 March. They said: The Government have no intention whatsoever of setting up in any form a nationalised shipping line; nor of paying operating subsidies to maintain the fleet at a given uncommercial size. Furthermore, they have no intention whatsoever of bringing in controls to require United Kingdom shippers, whether nationalised industry or private sector shippers, or foreign shippers, to use any percentage whatever of United Kingdom shipping contrary to their commercial judgment. Furthermore, this Government have no intention whatsoever of setting up a cabotage regime for United Kingdom ports."—[Official Report, 18 March 1983; Vol. 39, c. 290.] That is interesting when one bears in mind that in a debate the Minister said: The present Soviet practices are not proper commercial practices and they pose a threat to fleets such as our own, whose operations are properly commercial … Soviet wages tend to be about one third of comparable Western rates."—[Official Report, 25 November 1982, Vol. 32, c. 1112.] The Minister said that he intended to open negotiations in February with the Soviet Union to renegotiate trade and change the imbalance of United Kingdom-Soviet Union shipping operations which was 90 per cent.–10 per cent. in the Soviet Union's favour. I do not know whether the Minister will tell us whether he has achieved that. I should like to let him into a secret. It is called intervention. It is called planned trade. One intervenes because of lower wages which, according to the Minister, are unfair. They may happen to be a little higher than flags of convenience wages in some cases, but in those cases the Minister recognises it as a free competitive market. How does he live with that difference? Is it simply because one is a Russian flag and another is apparently a more friendly flag of convenience country?

The Government were not prepared to increase Asian wages despite an agreement between the industry and the Labour Government to increase the terrible wages paid to Asians on British ships, where there is racial discrimination in the amount of money that is paid to white and brown people. The Minister refuses to do anything about it. That is a little hypocritical, when he talks about the level of wages affecting the decline of our fleet.

Mr. Clinton Davis (Hackney, Central)

Does my hon. Friend agree that although we initially encountered some opposition from India, Pakistan and Bangladesh to the proposals to which my hon. Friend referred, it was clearly the Labour Government's view that if those Governments wished to protect their economic position and had it within their power to operate a clawback system in regard to taxation, that was the right policy to pursue, and the Government should have insisted upon it?

Mr. Prescott

I fully agree with my hon. Friend. I congratulate him on the work that he did when he was a Minister in the Labour Government in bringing about that agreement.

That is the way in which to determine wage rates on foreign ships. They should be applicable according to the flag. One country should not be able to dictate the rate of wages for its nationals who are employed under another country's flag. That principle is simple enough. It is up to the Government to use it. The Minister may know that the union has given notice that the tradition in the industry of a maritime agreement that has allowed that practice to continue will finish within six months. That practice on British ships will end.

In his reply, giving his proposals for solving the problems in the industry, the Minister said: Protectionism and cargo reservation is growing elsewhere in the world. It must be halted and then reversed both for the sake of the United Kingdom and world trade. Over two thirds of our international freight earnings come from cross tradings". That analyses the problem, but the Government are actively involved in developing protectionism. While both the Administration and the industry were backward in the UNCTAD agreements about the 40:40:20 formula, the Government have played a part in developing the Brussels package which is about protectionism and an agreement with the Third world countries about how we will share trade.

The Government are playing an interventionist role. Even though developed countries may have a free market philosophy, the Governmet will still intervene in world trade. In the written reply on 18 March the Government also said: the United Kingdom is regarded as such a long-time upholder of the principles and practice of open trading that for the United Kingdom to abandon open trading for protectionism would start a rapid move towards protectionism around the world—greatly to the damage of the United Kingdom. The Government have endorsed a protectionist role in the Brussels package and the UNCTAD agreement. They have intervened with Russia and no doubt with Poland to get an agreement. Presumably they will seek to implement the UNCTAD agreement so that the Third world can play a part in developing free trade.

At the same time as expressing these views about free trade, the Government have been passing laws to protect British companies from giving information to the American Federal Maritime Commission about costs imposed on goods coming from America to the United Kingdom or going from the United Kingdom to America under the conference line system. The House rushed the legislation through almost overnight to protect our people from an inquisition by private enterprise in America. Government actions in many fields are hypocritical.

In response to the industry's request for more subsidies, the Government take the view that Government subsidy blunts the incentive to create the necessary, truly commercial, competitive edge."—[Official Report, 18 March 1983; Vol. 39, c. 290–91.] Although the Government take that view, they have done as much as the previous Government in pouring out a considerable amount of money in subsidy in one form or another. They are prepared to wreck the industrial base by removing subsidies, more in an ideological fit of passion.

The Government have made it clear that they are non-interventionist, but, when we consider what they are proposing, we see that they are playing an interventionist role in selected areas. They are not prepared to give new subsidies, although the money given to Cunard for the Atlantic Conveyor must have involved subsidies. Much must be going too through free depreciation.

The Government put themselves up as free market philosophers and say that they are not prepared to intervene. That is clearly nonsense, as shown by the examples I have given. What is more aggravating when we are looking for a consistent approach from the Government is that the Department of Trade and other Departments are actively involved in interventionist policies. In other spheres, such as textiles, the Government are bringing before the House protectionist measures time and time again to stop the flow of imports and to defend the industry. The same policy is being followed to a certain extent in the shipbuilding industry.

The Ministry of Agriculture introduced a measure on shipping, about which I assume the Minister was consulted, although he was not in attendance. The problem facing the Ministry of Agriculture was that Spanish trawlers, with Spanish seamen, were, as it saw it, pinching British fish. Within 24 hours, the Ministry of Agriculture put through the House a measure requiring that only British crews—because of community law it could not say British crews, but that is what it meant—will now be employed on British ships. That was active intervention to protect British capital and jobs by another Department involved with ships without any representation or statement from the Department of Trade. That principle is no different from that called for by the National Union of Seamen. It falls on deaf ears at the Department of Trade but on far more receptive ears at the Ministry of Agriculture, Fisheries and Food.

The Minister professes belief in free trade but ignores it in areas in which the Government wish to take protectionist action. The Minister's clear role in intervention is clear from the other question that he answered on 18 March. On that occasion, he maintained that Government intervention was necessary because, he said, 1 believe that the decline of the British Merchant Navy can be halted and reversed. He then let us into the secret of how that could be done. He said: United Kingdom crew manning levels, in far too many cases, are as much as 25 per cent. or more higher than those of European competitors—European competitors with high technical and safety standards, and with the extra crew costs, conceded over the years, such as reductions in tours of duty entailing heavy repatriation expenses which, taken together, have multiplied the number of men that need to be employed to fill one seagoing job."—[Official Report, 18 March 1983; Vol. 39, c. 292.] As a result of union negotiations, men no longer have to spend 12 months or two years at sea but can get home to see their families after three months. Of course that involves extra cost, but apparently the Minister expects us to give it up to save our merchant fleet. In other words, we must reduce our social standards and aspirations to the lowest level—that dictated by the market.

The Minister says that we must stop pressing for higher manning levels beyond those required for safety and stop seeking other crew-related improvements, but he ignores the crucial question of what constitutes safe manning. I hope that we shall hear from the Minister about that today. I presume that in coming to the conclusion that manning costs pay a major part he has compared them with his concept of optimum costs. Perhaps he will give us some examples. When I challenged him at Question Time, he said that his comparisons with fair crew costings related not to Panamanian or other flag of convenience fleets but to the Norwegians. I hope that he will support that with examples as I have sought the necessary information to make the same fair comparison. The Minister has in fact embarked upon an attempt to alter manning requirements, a number of which are laid down in the Merchant Shipping Acts, especially the requirements about certification—procedures which are less readily observed by flag of convenience fleets but which play a major part in the far better safety record of this country compared with the flag of convenience countries and Norway.

With regard to Norway, I have figures from various authorities and I shall await with interest the Minister's comments. It is clear that some Norwegian manning levels, especially in the 1,600 to 2,000-tonne area, are much higher than current British levels. I do not know whether the Norwegians intend to reduce their levels to ours, but in this context the Minister should bear in mind the difference in manning levels between the Irish and the British on the Union Star. The manning level on the Union Star under the Irish flag was 25 per cent. lower than that required under a British flag. The inquiry in Cornwall will show that the manning level was inadequate, as is already clear from the evidence given at the inquiry. Inadequate manning can lead to death and disaster with greater losses of seafarers and ships. Proper manning standards are vital to safety in these matters, and they are equally crucial on flag of convenience vessels.

The Norwegian manning proposals are not readily accepted by the trade unions in Norway. Indeed, trade unions from all over the world met in London last week and agreed to unite against the imposition of the Norwegian manning standards. They believe that they are, in some cases, lower than for flags of convenience and will lead to similar safety problems.

One considerable difference between the Norwegian approach and that of the Minister is that the Norwegians have announced that there will be a manning committee which will take account of ships' safety. Is the Minister prepared to set up such a committee to consider whether cuts in manning will affect safety? I assume that he asked himself such a question when he considered manning. I find the announcement in today's The Times startling. It says: Sproat to examine manning of ships. We have been informed today that: The Department of Trade has begun a detailed investigation of Britain's 900-strong merchant fleet in an attempt to prove to shipowners and unions that the industry is seriously overmanned. Did not the Department of Trade have such information when it made its conclusions of 18 March? Has it only just decided to conduct an inquiry? I have heard of making the judgment before conducting an investigation, but we assumed that when the Minister came to the House he had all those facts to hand and had discussed the issue with the owners and the unions. It is amazing that it has been announced today that he will set up an inquiry. That alarms everyone in the merchant fleet as the inquiry has been set up to convince the owners and the unions that the industry is overmanned. Apparently, the Minister is convinced. If that is so, has he come to that conclusion on practical information and if he has, why does he not present it for us all to see? We know what the inquiry is about—intervening on behalf of the owners to cut costs. It will be resisted strongly.

The Minister has not compared the manning levels of Panama and Liberia with ours. Moreover, it is no use giving us Norway's levels as it is not yet at the Liberian and Panamanian manning levels. We must see what happens to safety at those manning levels. The Minister should consider ship losses. In 1970, world losses were 600,000 tonnes whereas in 1980 it increased to 2.3 million tonnes. We now lose four times as many ships as we did in 1970. That has nothing to do with the weather. It is the result of deliberately sinking coffin ships for insurance purposes, the deliberate expansion of fleets and the failure to enforce safety standards. Ships sink all around our coasts and no one seems to give a damn about whether British or any other seamen are involved and no one carries out any investigations.

The researches of John Ruben shows that Panama now loses 64 ships a year. That is more than one each week. Greece loses 55 ships a year, Norway 10, Germany nine and the United Kingdom nine. Strict maritime control such as we have in our industry have led to a high safety record but flags of convenience lose four times as many ships as the average for OECD countries and eight to 10 times more than the traditional European fleets.

Flags of convenience, with their manning standards, substandard management and substandard nations which do not enforce proper standards, lead to the deaths of many thousands of seafarers—all in the name of free trade. What guarantee can the Minister give that, if we reduce ourselves to those standards, we might not experience exactly the same conditions and loss of life among our seafarers?

The Minister must give us much more convincing evidence about the difference in crew costs. The industry has always argued with the unions about crew costs. However, Malise Nicolson, who is the president of the General Council of British Shipping said: The CBGS accepts the criticism that in some cases UK crew costs are higher than those of European competitors but a levelling of these costs will not halt, let alone reverse, the decline of our fleet. The basic fact is that the crew costs for European ships in general are hugely undercut by crew costs of the developing world whose seafarers do not seek such high standards of living. The Government's answer is to cut the standard of living not only of seafarers but of workers in many other industries. It is the old Tory party fully at work.

What really incensed us was the Minister's reply to a question from the hon. Member for Bristol, North-West (Mr. Colvin) on 18 March. The hon. Gentleman asked the Minister whether he proposes to take any further measures, in addition to those already announced, to reduce the cost burdens imposed on the shipping industry by regulations. The Minister replied: In order to increase the competitiveness of the Merchant Navy, I have been considering the costs involved in proposed regulations relating to the occupational safety of seafarers. I have postponed the requirement in regard to aluminium ladders of access to and from ships until 1 April 1984. Part of the solution to this great slump in our industry is to reduce the provision of aluminium ladders. The Minister went on: I am proposing … to replace the requirement to apply a slip-resistant surface to open deck areas used regularly for transit … to reduce the required lighting levels in certain areas aboard ship to those recommended by the International Labour Organisation. Those proposals will reduce the safety cover of seafarers in an industry that has 35 times more accidents than manufacturing industry, and four times more accidents than the mining industry, which is considered to be very dangerous. The Minister's contribution to the decline in shipping is to reduce safety considerations, despite his Department's reports having recommended those safety measures in the 1960s, 1970s and as late as 1978. The course upon which he has embarked will increase the death and accident rate.

I have said a great deal this evening, but I wish the Minister to consider carefully his answer to the hon. Member for Bristol, North-West, paragraph (iv) of which states: Not to apply the regulations to United Kingdom ships bare-boat chartered to foreign operators."—[Official Report, 18 March 1983; Vol. 39, c. 292.] Does that mean that the ship can carry a British flag and be divorced from its obligations under our legislation if it is chartered to a foreign operator? If that is true, it will be a green light to foreign operators to obtain a British flag, with all the advantages that that has, without having to observe the traditional safety considerations of the British shipping industry. It is another green light to reduce yet again the proportion of British shipping.

I know that the Minister has received a reply from my general secretary—Jim Slater— of the National Union of Seamen, making it clear that his reply to that question undermines the safety regulations of the industry and gives a green light to an industry that has relied on recommendations instead of statutory requirements. However, my hon. Friend the Member for Hackney, Central introduced statutory regulations for access. The union has always believed that safety considerations should be taken away from the Department of Trade and put into the hands of the Health and Safety Commission. That commission controls many Departments, such as the Ministry of Agriculture, Fisheries and Food, and there has been a decline in accidents. However, Departments that control safety are subject to commercial pressures. The Minister's reply proves conclusively that the Department has cut safety regulations in response to commercial pressures.

I do not understand how the Minister could have said that, when only a few days previously the Under-Secretary of State for Employment said, during a debate on health and safety: I assure the House that the Government are determined to ensure that we have an effective health and safety system. There is no truth in the scare stories that the Government intend to destroy what has been set up. The existing system has an all-party basis and we intend to keep it that way."—[Official Report, 11 March 1983; Vol. 38, c. 1112.] The Minister meant the health and safety legislation. He could not speak for the Department of Trade, but we have protested to the Department of Employment and referred it to the Health and Safety Executive because of the reduction in safety in an industry that has the highest rate of accidents and deaths.

The Government's answer to the decline in the merchant shipping industry seems to be that it can be stopped by the Government playing a non-interventionist role, a belief in the free market system and, presumably, further discussions with the industry. However, the industry will not want to discuss the matter further with the Government if these are the terms.

The Minister has had a letter from the general secretary of my union, making it clear that if he believes that the solution to our problems lies in reducing manning requirements, cutting safety standards and causing more death and accidents, and that that is the way forward for our industry, that is not acceptable. There is no point in having any dialogue with the Government. They are embarked on their course to cut costs at the expense of the safety of manpower in the industry. They have rejected the summary and recommendations of the NUS in its report "Heading for the Rocks", calling for intervention, planned trade and public ownership supported by the Labour party programme. I accept that the Government did not find that acceptable or palatable, but I find it objectionable, as I hope that the House will, that the Government wish to stop the decline in the fleet by building on the backs of injured and killed seafarers, and by reducing safety standards. That is unacceptable and is resisted by all unions, officers and ratings and, one would hope from the remarks made by the owners, all in the industry who refuse to go back to the conditions of the 19th century.

9.11 pm
Mr. Clinton Davis (Hackney, Central)

I apologise on behalf of my hon. Friend the Member for Batley and Morley (Mr. Woolmer), who normally speaks on shipping matters for the Opposition. for his unavoidable absence.

I congratulate my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) on having the good fortune to be able to raise this issue on the Adjournment and on speaking with that characteristic bluntness and common sense that is girded by great expertise. I hope that the Minister will take to heart some of my hon. Friend's comments.

I willingly pay that tribute to my hon. Friend, because he and I have had the pleasure of working together in the Department of Trade, he as Parliamentary Private Secretary to the Secretary of State for Trade. He made a powerful contribution to the discussions that took place over shipping during the period that he was in that position.

There are a number of common denominators that must mark any debate on shipping at the present time. One is that the merchant fleet is still of monumental importance to this country, as an island nation, for defence, trade and foreign earnings. A second common denominator is that the merchant shipping industry and its seafarers made a major contribution during the Falklands Islands campaign, although what happened was infintely less than satisfactory and was an unhappy augury for the future, because, as the Merchant Navy and Airline Officers Association has reported; there were grave causes for disquiet during that campaign. I declare an interest in this, as I am an honorary member of that association.

The Minister is aware of this problem because of the evidence submitted to him by the association. Under the heading "The Merchant Navy in Defence", it said: It appears that the Department of Trade experienced difficulty in finding the necessary vessels, and from press reports it is apparent that there was a shortage of sea transport. We do not believe that the optimum level of fleet support for the Task Force was capable of being found from the United Kingdom That has never been rebutted, so perhaps the Minister will take the opportunity to comment on that. It went on to say: It is ironic that the United Kingdom registered fleet was unable to provide the number of vessels needed. In one case, Bermuda registered tonnage was chartered from a company which at the same time had a ship trading with Argentina. It is nothing short of a scandal that companies which evade the tax and legal obligations of United Kingdom registration should be considered sufficiently loyal to be trusted with a role in the Task Force. The Minister must answer that point tonight, because he has not answered it hitherto.

The third common denominator is the tragedy of the merchant fleet, which is in marked decline. I shall again put on record, as part of the background to this debate, the catalogue of disaster that has occurred since May 1979. The number of ships has fallen by 32 per cent.; tonnage has fallen by 36 per cent.; and more than 550 ships have been sold abroad, many to flag-of-convenience operators who are now in competition with the remainder of our fleet. In 1982 alone the number of ships fell by 13 per cent. and tonnage by 16 per cent. At the end of January this year, 16 per cent. of our registered fleet was laid up—four times as much as at the end of Jauary 1982. That is a sad situation. It is almost a situation of despair, yet the Minister's contribution has been primarily to attack the trade unions.

The Minister has been extremely abrasive during Question Time. If abrasiveness, arrogance and unwavering conceit were substitutes for policies, our merchant fleet would be doing very well under his guidance. Instead, he lives in a make-believe world. In this regard he apes the Prime Minister. It is never he who has a shred of responsibility for the disaster that has befallen the merchant fleet; it is always the international recession, the evil of trade unionism and the greed of seafarers.

The Minister lives in a world of slogans and very little common sense. He asserts unequivocally that market forces must determine the shape and size of the British merchant fleet. That is what he told me in answer to a written question only the other day. If the fleet is left to those market forces, how does the Minister perceive that it will be able to recover when the shipping markets improve? As I have already said, our ships will have been sold abroad or scrapped and our industry will simply be unable to cope with the competition. How will he replace the qualified seafarers? How will he deal with the institutions that train them? By then many of those institutions will probably have disappered or, at least, have been substantially run down.

The Minister's is a world of negativism. He rejects the ideas, based on considerable skill and expertise, that have been put forward by both sides of industry, and, in turn, he is rightly condemned by both sides of industry. For him there is no real argument about public ownership having a public stake in the shipping industry, simply a rejection of that argument, and similarly with subsidies. He says that there is no departure from market forces, which dominate his thinking and have proved to be so catastrophic to the industry thus far.

The Minister's is a world of bare assertion, though not necessarily the naked truth. In a debate initiated by the right hon. Member for Taunton (Mr. du Cann), the Minister said of defence: Our assessment is that defence needs can still be met. This matter is at the heart of our current review of what lessons to learn from the Falklands".—[Official Report, 25 November 1982; Vol. 17, c. 1111.] It is only an assessment that we can still meet our defence needs. That does not exactly have the ring of confidence.

Let us test what the hon. Gentleman has to say about the adequacy of the fleet for defensive purposes. What does he think should be the level of the fleet to be consonant with our defence requirements? What size of fleet, what type of ships and how many trained personnel are required? What is the position likely to be in five years, for example? Has the hon. Gentleman any idea what it will be if the current rundown of the fleet continues? What research is being undertaken by his Department, by universities or within the industry?

There are many lessons to be learnt from the Falklands, including the contribution that our seafarers have to make in future. However, there is no place for them on the Shipping Defence Advisory Committee. Tributes to the seafarers trip off the hon. Gentleman's tongue—it is easy to make them. He has paid glowing tributes, and rightly so, to the heroism of the merchant seamen who went to the Falklands, but why cannot they make a contribution to the Shipping Defence Advisory Committee? Is their expertise of no concern to the hon. Gentleman?

The committee is concerned with adaptations to new and existing ships to ensure that they can fulfil a role as a defence factor. It seems that the hon. Gentleman and his colleagues at the Ministry of Defence consider the merchant seafarers to have no place on the Committee.

Another example of the Minister's negativism is that he is taking no action on flags of convenience, except in respect of those ships which are substandard—

Mr. Prescott

Or Russian.

Mr. Davis

The hon. Gentleman would not call the Russian fleet a flag of convenience. It is of interest that there is a tremendous contradiction between the way in which the Minister approaches the threat of Soviet shipping—I believe that it is a peripheral threat because it engages in unfair competitive standards—and the threat posed by flags of convenience. Why does the hon. Gentleman not condemn the unfair competitive standards of flags of convenience, such as lower wage rates, unsafe conditions on board ships and inadequate training? My hon. Friend has recited a catalogue of unfair standards. In flags of convenience there are often lower safety levels in ships which are not substandard. I hope that the Minister will comment on lower safety levels, as distinct from substandard ships.

Mr. Dennis Skinner (Bolsover)

The Minister does not care.

Mr. Davis

What is the Minister doing to implement a proposal which I put to IMCO in 1977, and which was taken up, to establish a marine safety corps to Third world countries to develop higher safety standards? Is he pursuing that with the International Maritime Organisation?

My hon. Friend referred to the answer that was given by the Minister on 18 March. What consultation did he engage in before coming to the conclusion that the regulations could be changed in the way that he set out in his answer? Does he think that seafarers have no role in consultations which directly touch their everyday lives? If no agreement was reached about those matters, perhaps he would be kind enough to explain why. What was the view taken by the unions, or does he not care about that either?

I suggest that the Minister is playing a dangerous role here, because he is playing with people's lives and he does not attach enough importance to that. He is imbued with the doctrine of market forces. For generations Britain has taken a pride in the application of sound safety standards, even if they reduce competitiveness marginally. In the past Conservative Ministers have played a noble role in upholding that tradition, but this Minister seems determined to change it without consultation—almost unilaterally.

Mr. Prescott

The Minister is determined not only to change it, but—we await his reply—apparently without proper examination. He examines matters after he has reached his conclusion.

Mr. Davis

The Minister sets up working parties and all sorts of things, evidently, as my hon. Friend said, having reached his conclusion in advance. He must justify far more than he has in his written answer the peril—the increased peril—that will be faced by seafarers.

My hon. Friend has deployed powerful arguments in his indictment of the Minister, and I support them. I want to put several questions to the Minister and he will have plenty of time to answer—one hour and five minutes. First, is he satisfied with the research that is being done within and about the shipping industry? Second, if he is so satisfied, why is he unable to reply to the question that I put to him on 14 March and which I think is of some moment? I ask him how many owners had flagged out tonnage from and into the United Kingdom registry in annual periods from May 1979 onwards. His answer was: I regret that the information requested is not available."—[Official Report, 14 March 1983; Vol. 39, c. 68.] It is a matter of considerable concern to the British shipping industry to know what is happening about flagging out. If the Minister cannot answer, it is utterly shameful.

Third, has the Minister made a decision about the establishment of a think tank for the industry as was proposed by the Merchant Navy and Airline Officers Association? If not, why the slothfulness? Why cannot he get on and make a decision? That is of particular importance if there is a dearth of adequate research in the industry, as I believe to be the case, which, if anything, has become worse over the past three years, although I do not entirely blame the Government for that.

Fourth, why should there not be a higher level of United Kingdom flag involvement in the Norwegian sector of the North sea, when it is abundantly plain that Norwegian involvement in the British sector is vast by comparison with ours in the Norwegian sector? How would it possibly affect our interests in the cross trades if we were to take seriously what has been happening? It is a one-off matter that affects our relations with Norway and the Minister ought to be doing something about it. Indeed, how does he reconcile that inertia with the countervailing action that has been taken by his colleagues in the Department in introducing the Protection of Trading Interests Act 1980 in order to take protective action against the United States?

Fifth, what are the Government proposing to do about the report on the employment of non-domiciled seafarers, to which my hon. Friend referred?

Mr. Donald Thompson (Lord Commissioner to the Treasury)


Mr. Davis

Is it absolutely nothing? A consensus was reached in the industry on this matter in order to eradicate an injustice based on racism, about which the Minister apparently cares little or nothing.

Sixth, why should training costs continue to fall on British industry to a much greater extent than happens in other countries? If the Minister is so worried about Britain's waning competitiveness, what is he prepared to do about that?

Seventh, why does the Minister reject so peremptorily the provision of investment assistance, subject to proper safeguards and conditions, as submitted by the MNAOA and the National Union of Seamen?

Eighth, why is the Minister so dismissive of the contribution that can be made by the British seafaring unions? When I went to the Department of Trade, I had no more knowledge than the Minister. It was as well to listen to people who had a lifetime of service in the industry—the owners and the trade unions. The Minister began extremely well by convening a tripartite meeting at Windsor, which was regarded as a very good augery for the future. He listened to the contributions, and my understanding is that he was impressed by the contributions that were made by both sides of industry.

The tragedy is that the Minister has departed from that. There has been nothing like it since. Why is the Minister not prepared really to open the doors of his Department so that a proper debate can take place? The industry is at crisis point. Instead, the Minister has shrugged aside the trade unions and insulted them at every turn, and the suggestion that they are responsible for the decline of British industry is deeply resented. It is not too late to change, and it is never too late for anybody to admit errors. I have made many errors. I have not always agreed with the trade unions, by any manner of means. Sometimes they were right and I was wrong, and sometimes the owners were right and I was wrong. It is worth listening, because the unions have something worth while to say.

The Minister said in a statement on 18 March that he would set up a regular form of tripartite discussions with the Government. The General Council of British Shipping and the seafaring unions have told the Minister that they would welcome a continuing and regular form of tripartite discussions with the Government. He said: I regard this as a constructive suggestion."—[Official Report, 18 March 1983, Vol. 39, c. 291.] That is fine, but the hon. Gentleman must prove that he is prepared to listen to other people. There is no point in having tripartite discussions if the Minister's ears are closed because they would then be just a formality.

Mr. Prescott

When the answer was given by the Minister, the unions had not been subjected to the offensive response on the other matters. That has conditioned their response to further discussions, as the Minister knows from a letter from the unions.

Mr. Davis

My hon. Friend is right. I was present at Question Time on 21 March. The Minister was offensive—I put it no higher than that—to the trade unions. If the Minister expects the unions to play a role in tripartite discussions, which I trust will take place, he must be a little more flexible, a little more realistic and a little more understanding of the role that they can play.

Lastly, what will the Minister do to staunch the flow of ships from the flag?

The Labour party proposed in the Merchant Shipping Bill in 1978–79 taking steps in clause 31 to stop undesirable foreign takeovers that were prejudicial to the national interest. The Conservative party stopped that when we lost the vote of confidence.

The Government have proposed nothing. I do not say that the injunctive effect of those proposals would have been a panacea by any manner of means, but it could have made a contribution to the problem now besetting the British shipping industry. The Minister must get the idea out of his mind that the crisis has developed solely because of the trade unions and the seafarers or that it is perhaps solely due to a joinder of matters, such as that factor and the international recession.

Of course the international recession has a part to play, and it is true that everyone is suffering, but that is no reason for inaction on the Minister's part. The hon. Gentleman has introduced a note of real confusion about manning costs. That is my judgment and that of the president of the General Council of British Shipping, Mr. Nicholson, who has rightly said that the Minister is seeking to compare our manning costs with those of flags of convenience and Third world countries. There is no way in which those two sets of costs bear comparison. Indeed, in his heart, the Minister knows that. Therefore, he has a lot to answer for, not only to me and to my hon. Friend the Minister for Kingston upon Hull, East, but to the nation and those on both sides of the industry who have given years of dedication and devotion to it. So far, the Minister's answers have been found grotesquely wanting.

9.37 pm
Mr. Don Dixon (Jarrow)

I should like to emphasise some of the points made by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) about flags of convenience. I have worked on ships sailing under flags of convenience and I can verify that safety conditions or regulations leave a lot to be desired. My hon. Friend the Member for Hackney, Central (Mr. Davis) referred to the Falklands issue. I asked the Minister a question about two container ships that were transferred from the red ensign to flags of convenience at the time of that dispute so that they could carry on chartering or trading with the Argentine. I received a parliamentary answer that was typical of the Minister, saying that, as they had a charter to trade, all was well.

I am concerned because, as my hon. Friend the Member for Kingston upon Hull, East has pointed out the British merchant fleet has declined in the past seven years from 1,636 to 900 vessels. I come from an area with one of the best marine and technical colleges in this country, if not in the world, yet no training is taking place. If the reason for the decline in the British merchant fleet is the world recession, we shall not have the trained seafarers to sail the ships that will be needed for trade when, if ever, we get out of that recession.

West Germany has the same problem as this country, yet according to Lloyd's List of Tuesday 10 February it has increased training for seafarers. Lloyd's List states: West German shipping continues to place great emphasis on training qualified personnel. In all some 557 businesses concerned with shipping offer 1,737 training places. In 1982, 465 apprentices were accepted, an increase of 16 per cent. compared to 1981. In Britain, the training colleges are being closed—south Tyneside faces that problem.

Mr. Prescott

And Hull.

Mr. Dixon

One of the most obscene articles I have ever seen appeared in The Times on Tuesday, 15 February. An article by Barrie Clement entitled "BSC is bypassing own ships" said: Foreign ships are being chartered by the British Steel Corporation while three of four of its own British-crewed vessels are laid up … But the corporation says it has no intention of changing its present policy to use its own vessels and other United Kingdom ships whenever it is commercially feasible to do so. The corporation has laid up three bulk ore carriers and has six foreign vessels on long-term charter; two are Norwegian, one of which sails under the Panamanian flag; another is French; two are registered in Hong Kong and one is German-owned but registered in Liberia. The British Steel Corporation, a nationalised industry, is laying up its own British-built ships and chartering flags of convenience ships. That is obscene and the Minister should do something about it. I have no doubt that he will not. He should ensure that the British Steel Corporation uses British-crewed ships.

The Select Committee on Industry and Trade held a long session on the state of the British shipbuilding industry. In recommendation 5 of its report, it suggested that there should be co-ordination on shipbuilding and shipping between the various Government Departments. We look forward to such co-ordination. Britain must be one of the few countries in the world which has no maritime policy.

In Committee on the British Shipbuilders Bill, when we tried to discuss defence orders with industry Ministers, we were told that defence order had nothing to do with them and that we should discuss the matter with the Ministry of Defence. When we discussed the merchant shipping fleet, we were told by industry Ministers that that had nothing to do with them and was a matter for the Department of Trade. We need a co-ordinated maritime policy. When one considers that 98 per cent. of our trade enters or leaves Britain by sea it is essential not only to have a merchant fleet but the capacity to build and maintain it. I hope that the Minister will answer the questions asked so ably by my hon. Friends tonight. I hope that the Minister will be able to do something because the industry is in a parlous state. The sooner the Minister gets off his backside to do something positive about it, the better it will be for all concerned.

9.43 pm
The Under-Secretary of State for Trade (Mr. Iain Sproat)

I share with the hon. Member for Kingston upon Hull, East (Mr. Prescott), with other Members and with many of the public, great concern about the United Kingdom merchant fleet. That concern has been with me throughout the time I have had responsibility for shipping matters and naturally formed a major part of the response to the question I posed to the General Council of British Shipping and the seafaring unions about the lessons of the Falklands campaign and the future of the Merchant Navy.

The hon. Member for Kingston upon Hull, East said that he hoped that there would be time for a full-scale debate about the future of the Merchant Navy. I would welcome such a debate and I am rather surprised that the Opposition have not made one of their supply days available for it. I look forward to debating this important subject at rather greater length than is possible this evening.

I must repeat what I have said previously—that the adequacy of the merchant fleet for defence purposes is kept under continual review by my right hon. and hon. Friends. In the considered opinion of the Ministry of Defence, the merchant fleet remains capable of meeting defence plans. I cannot emphasise that point too strongly. Although, after careful consideration, I rejected the two elements put to me—subsidy and protectionism—-that does not show any disregard for the health of the industry. On the contrary, I rejected them because they would have worsened rather than improved the position.

Mr. Clinton Davis

We know precisely what the Ministry of Defence has said, and what it must necessarily say. But what evidence does it have for saying so, in the light of the submissions from the unions about the inadequacies that occurred during the Falklands crisis—not only in the availability of shipping but in the training that took place between the Merchant Navy and Royal Navy to deal with everyday tasks that had to be fulfilled?

Mr. Sproat

Everything that the unions and the General Council of British Shipping have said on that matter has been taken fully into account in reaching the conclusion that the Merchant Navy is fully capable of meeting our defence plans.

It is often alleged that direct subsidies by other countries to their merchant fleets give them an unfair advantage. The hon. Member for Kingston upon Hull, East (Mr. Prescott) implied that. Apparently, subsidies are the reason for the growth of those fleets, and the lack of subsidies the reason for the decline of our fleets. It is said that we should introduce subsidies.

Yet direct operating subsidies to shipping are not common throughout the world. It is true that many shipbuilding industries receive large subsidies, but it would be a mistake to see them as subsidies to shipping industries. On the contrary, those subsidies are, to a considerable extent, responsible for the excess tonnage in the world and the unrealistically low level of freight rates.

To try to nullify the distortion caused by shipbuilding subsidies through introducing operating subsidies, thereby adding further distortion, would be not only extremely expensive but ineffective. It would inevitably lead to the introduction of subsidies by yet other countries. It would give no lasting benefit, but would merely place yet another burden on the already over-burdened taxpayer.

Mr. Prescott

The Minister obviously did not listen to what I was saying. Admittedly, I made a somewhat lengthy speech, but I did not argue for operating subsidies. Indeed, I have always argued against intervention money for shipbuilding. We can intervene in more effective ways to secure traffic. Pouring in additional money has never been part of my argument.

Mr. Sproat

It may not have been part of the hon. Gentleman's argument this evening, but it has certainly been part of the argument that members of his union have put forward. It is an important argument. That is why I wanted to answer it directly this evening by saying that I reject it.

The extent to which the arguments on subsidies are fallacious are matched by similar fallacious arguments often on protectionism. There is, of course, widespread pressure for protectionism. In developing countries, widespread limitations on the freedom of shippers to choose the vessels to carry their liner cargoes do indeed exist, but the extent that it has reached can be easily exaggerated. Among the developed countries, which generate most of the world's liner cargoes, cargo reservation is very much the exception. The role of the United Kingdom must be to join hands with those countries which are working to resist the spread of such practices, not to adopt them ourselves.

I should be failing in my duty to the merchant fleet if I ceased to hammer home the importance to our fleet of the crosstrades. It is an argument that I have given the House before, as the hon. Member for Kingston upon Hull, East was good enough to mention, in reading out many of the splendid answers to questions which I have been giving the House recently. Of course, many in the shipping industry accept that argument, but it would appear that there are also others, as we have heard in the House this evening, who do not accept it. Therefore, I should like to explain it again, because it is so important.

United Kingdom shipping depends crucially on the crosstrading opportunities open to it. Over two thirds of its freight earnings come from trading between foreign countries. This is only possible because shipping worldwide is still to a considerable extent open, but in spite of this, we could be sure that if we denied competitive access to our cargoes to other countries' shipping, they would deny it to ours. We should then have contributed to a slide into protectionism that would harm our shipping interests greviously. For all our position as a trading nation, we just could not protect and sustain a fleet of the current size, despite the decline that has occurred, merely on the carriage of our own national trade. We could not do it, and the. House and the industry must face that fact. Those who urge the Government to turn towards protectionism in shipping are, in reality, whether they realise it or not, asking it to put at hazard the cross-trade shipping responsible for two thirds of our freight earnings, and all the jobs that depend upon those earnings. A protected fleet would be a smaller fleet.

Mr. Prescott

It is a crucial argument, and I do not deny it. Will the Minister tell us which countries he thinks would be a countervailing force if he were to adopt these policies? Norway gets much more from its crosstrades and has been able to maintain a protectionist interest around its own coasts, as we have seen in the North sea, with the development of maintaining its supply ships.

Mr. Sproat

The hon. Gentleman does me the credit of saying that this is a serious argument, as indeed it is. I ask him to accept that many countries, certainly in the developed world, are under pressure at the moment to go further down the protectionist road—for example, the United States. Many forces in the United States are urging greater protectionism. I well remember reading a speech by Ambassador Brock in Washington last January, when he said that if any other country were to go further down the protectionist road they—the Americans—would be forced to go further down that road.

Mr. Prescott

What about the Jones Act?

Mr. Sproat

The Jones Act is coastal trading. We are not talking about coastal trading, because the two thirds of British freight earnings that come from cross trading does not include cabotage within the United States. I would certainly like to see the Jones Act removed—we all would, of course—but that does not affect the argument that I am making now, which is that, if we were to go more protectionist, the United States would go even more protectionist than it has gone under the Jones Act. Furthermore, it is not true to say that there are overt statutory protectionist pressures on the supply vessels in the Norwegian sector of the North sea.

I have personally been into the matter in the greatest detail with the Minister for Commerce and Shipping in Norway. He has been over here. My officials have been with his officials. The fact is that, although the proportion of British supply vessels in the Norwegian sector of the North sea is very low—that is why I opened up the matter—it is not because there are overt or statutory protectionist measures by the Norwegian Government. On the contrary, the Norwegian Minister for Commerce and Shipping has said time and again that he would deplore and does deplore any such protectionist attitudes. Over the years, the protectionist attitudes of previous Socialist Governments in Norway have generated such an atmosphere of non-statutory protectionism that this has happened. There is absolutely no statutory protection of supply vessels in the Norwegian sector of the North sea, for the very good reason, which by implication the hon. Gentleman adduced, that over 90 per cent. of Norwegian freight earnings come from cross trading, as opposed to 68.2 per cent. in this country. Therefore, the Norwegians have even greater reason for believing in open trade. Only last week the Norwegian Minister, Mr. Skauge, whose sterling efforts to keep maritime trade as open as possible I warmly applaud, not only discussed with me the present situation there but reaffirmed Norway's commitment to open trading policy.

I shall go on from that important digression. We cannot discuss the freedom of shipping as if it affected shipping alone in this protectionist argument. We cannot do so. We are an island trading nation. We must rely on efficient shipping services, which of course means internationally competitive shipping services. I am convinced that we have to preserve international competition in shipping if in the long run we are to preserve international free trade in the merchandise that those ships carry.

Indeed, the arguments about protection and free trade are at bottom the same in shipping as in manufactured goods. Industries claim protection in the hope of perserving employment. Protection cannot do so in a general sense. The most that it can do is to shift unemployment from one industry to another, thereby generating further claims for further protection.

Our shipping industry is a national asset because it has built up a worldwide profitable trading position. That is its distinctive contribution to the national welfare. It would cease to be a national asset and would become a national liability if it had to rely on subsidies or protection, because either of those expedients would throw the burden of its problems onto other industries, and insult the maritime traditions of which the industry and the House are proud.

In keeping with that realistic approach, we must continue forcefully to argue the advantages of open trading in international and bilateral forums. It is in the nature of international shipping policy that it is not widely publicised. Complex international negotiations do not thrive by being thrust under a political spotlight.

However, it is hardly relevant to the debate on protectionism to give an account of what we are doing. I should like to do so now. For example, recently the United Kingdom played a leading role in establishing a system within the EC for monitoring the presence of non-commercial eastern bloc shipping on certain major routes serving the United Kingdom and other EC ports. We played the leading part in the development of the EC's common position on the United Nations liner conference code, to which the hon. Gentleman referred, although he got it the wrong way round by saying that the Brussels package was protectionist, whereas in fact it is the most we can do to open up trade as far as possible. We continue to play a major part in negotiations seeking to apply similar free trade principles in shipping relations with countries outside the Community.

Very importantly, we played the leading part in getting agreement on the Paris memorandum of understanding whereby 25 per cent. of all foreign ships coming into the ports of 14 European nations have been and are being monitored for safety standards since last summer and, if necessary, held up until deficiencies discovered are put right. This will probably prove to be the most important single measure to improve safety taken this century; and will certainly do far more than misconceived campaigns against open register.

It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hogg.]

Mr. Sproat

Especially important are our relations with the United States of America. The maritime countries of Europe and Japan, which form the consultative shipping group, have recently been holding discussions with the Americans on the dangers posed by all forms of protectionist shipping policies, and the need for reciprocal guarantees of competitive access to each others 'trades. For all the market economy countries involved in these negotiations, preserving efficiency in the seaborne transport of our goods to and from their markets is just as important as the quest for efficiency in manufacturing industry. That efficiency cannot be preserved except through competition, and I believe that we have an opportunity this year, in concert with our trading partners, to secure a more firmly assured future for competitive conditions in world liner shipping. This Government intend to make the most of that opportunity.

In my view, the future of our shipping industry can be assured only by its efficiency and ability to compete in world markets, and efficiency can be achieved and preserved only through competition. There are those who still see the roots of our decline in the competitive advantages that flags of convenience or open registers are alleged to obtain from substandard vessels and cheap labour. Whoever talks abour open registers in this country must ask himself very carefully, "open to what?" Many people mean by flags of convenience, or open registers, any register which is open to foreign investment. Some people find it hard to remember that some 45 per cent. of the British Merchant fleet is beneficially owned abroad. If open registers were banned, 45 per cent. of the United Kingdom fleet might vanish overnight, and 45 per cent. of the jobs with it. It would be madness to wound and destroy ourselves in this way.

Mr. Clinton Davis

If, as the Minister says, there is such a vast amount of foreign capital invested in British ships, and presumably in British crews, how does he reconcile that with the argument that our manning costs are so impossibly high?

Mr. Sproat

Our manning costs are indeed, unfortunately, uncompetitively high in too many cases. What I am seeking to do is to make our merchant fleet more competitive so that we can ha1t the decline of the fleet, whether by vessels beneficially owned abroad or by vessels beneficially owned in this country. Of course, manning levels are not the only factor. We have a very good tax regime for merchant vessels, but the one has to be traded off against the other. What worries me is that the fleet is declining because the uncompetitive element is gaining the upper hand and owners are not finding it possible to operate as they did in the not too distant past under the conditions which are imposed upon them.

When I saw the hon. Member for Kingston upon Hull, East rising when I referred to flags of convenience or open register, about which he had been so critical, I wondered if he was about to explain to us why his Government did absolutely nothing that I can recall to stop this practice. We have had the Parliamentary Private Secretary at the Department of Trade in the Labour Government—I had forgotten that—and the Labour Under-Secretary of State for Trade going on this evening about the evils of open registers, although I do not believe what they said. If they thought that the system was so evil, why did they not do something about it when they were in power? It is the most ludicrous form of hypocrisy to try to shift the blame on to someone else for aspects about which they themselves did so little when they were in power.

Mr. Prescott

Will the Minister give way?

Mr. Sproat

No, I must get on because my hon. Friend the Member for Northampton, North (Mr. Marlow) is seeking a further debate that I am anxious to answer. I have given way three or four times already and my hon. Friend is beginning to get that pale and restless look. I do not want it to become any worse.

Mr. Dixon

What the Minister has said is quite untrue.

Mr. Sproat

It is a convenient deception—

Mr. Prescott

Will the Minister give way?

Mr. Sproat

—and for that reason a popular one—

Mr. Prescott

On a point of order, Mr. Deputy Speaker. I should like your advice. If a serious accusation is made in the cut and thrust of debate, have hon. Members the right to reply to it?

Mr. Deputy Speaker (Mr. Ernest Armstrong)

If the Minister is not giving way, the hon. Gentleman must resume his seat.

Mr. Sproat

I have listened for well over an hour to Opposition speeches attacking the Government on issues about which, to the best of my recollection, the Labour Government did absolutely nothing—certainly nothing effective.

Mr. Prescott

We are trying to tell you what we did, you arrogant man.

Mr. Sproat

I propose to get on, so that my hon. Friend the Member for Northampton, North can introduce his extremely important debate before the House has to close down for the night.

It is a convenient deception, and for that reason a popular one, to suppose that all open register vessels flout international safety requirements. Those that do ought to be dealt with, can be deal: with and are being dealt with through international agreements on port state action of international safety standards. It is wrong to attribute to open registers the competition from the comparatively low wages of Third world crews. Crews from many developing countries can man vessels of any register competently and safely at wages which, though low by the standards of developed countries, are high by the standards of their home countries.

Clearly, wage costs for crews from developing countries will continue to pose difficulties for our fleet, just as they do for those of other developed countries, but much of our competition is from developed countries themselves—a point that the hon. Member for Kingston upon Hull, East failed to face when he opened the debate.

We should certainly be able to meet that competition, but how can our merchant fleet organise itself to do so? What is needed in this area is for management and unions to deal effectively with unnecessarily high operating costs, such as the overmanning which far too often puts our fleet at a competitive disadvantage. I say that there are far too many cases because we have taken a wide sample of comparative costs and have found that in too many cases our vessels are overmanned by comparison with the best of our European competitors.

Mr. Prescott

Will the Minister give examples?

Mr. Sproat

The absurd allegation has been made that I am urging reductions in manning below acceptable safety levels or adopting the numbers and standards practised by some flags of convenience countries. That is just not true. I am not saying that. I am saying that in many cases, although not in every case, we are overmanned by comparison with many north European crews, such as those of Norway, Germany and Belgium—countries which have exemplary safety standards. In some cases, the difference is as much as 25 per cent.

Mr. Prescott

Give us some examples.

Mr. Sproat

Those unnecessary costs are compounded—

Mr. Christopher Price (Lewisham, West)

On a point of order, Mr. Deputy Speaker. Is it in order for a Minister to rabbit on from a departmental brief and refuse to give way to Opposition Members who really understand these things?

Mr. Deputy Speaker

The hon. Gentleman knows that that is not a point of order for the Chair.

Mr. Sproat

Not only is it not a point of order for the Chair. As the hon. Member for Lewisham, West (Mr. Price) has been here for only about five minutes, it is not a point of order for anyone.

Mr. Dixon

Will the Minister give way?

Mr. Sproat

These are some of the factors behind our competitiveness—

Mr. Dixon

On a point of order, Mr. Deputy Speaker. I was under the impression that when an Adjournment debate began early it would continue until 10.30 unless a further Adjournment debate was put down before 8 o'clock, in which case, if the first Adjournment debate folded before 10.30, the second could then take place. Am I to understand that the Minister is now trying to hurry this Adjournment debate because his hon. Friend put down another subject before 8 o'clock?

Mr. Deputy Speaker

I am not responsible for the length of the Minister's or any other hon. Member's speech. If this Adjournment debate finishes before 10.30 pm, we shall get on to the next one; if it does not, the House will adjourn.

Mr. Dixon

Do I take it that, when the Minister finishes, this Adjournment debate finishes? Cannot other hon. Members continue and answer some of the points the Minister has made?

Mr. Deputy Speaker

We shall see about that when we get to it.

Mr. Sproat

Thank you, Mr. Deputy Speaker. I am trying to give the maximum number of hon. Members the opportunity to air the maximum number of issues. My hon. Friend the Member for Northampton, North applied for another Adjournment debate early this evening. He is entitled to have it if possible.

Mr. Prescott

On a point of order, Mr. Deputy Speaker. I thought that my hon. Friend the Member for Jarrow (Mr. Dixon) made the point that an hon. Member must apply for another Adjournment debate before a specified time. The Minister appears to be under the impression that he should conclude his speech to make way for someone else to have another Adjournment debate—

Mr. Deputy Speaker

Order. I understand that the hon. Member for Northampton, North (Mr. Marlow) made his application before 8 pm in accordance with the usual procedure for a second Adjournment debate. We have not yet reached the second Adjournment debate; we are still on the first one.

Mr. Sproat

The hon. Member for Kingston upon Hull, East spoke about safety. The Government have a responsibility for safety at sea, part of which is to ensure that safety and environmental regulations are realistic and appropriate. I continue to keep them under review.

The House will know that I have recently taken several initiatives. I shall give two examples. [Interruption.] The hon. Gentleman says from a sedentary position that—

Mr. Prescott

Sedentary? The Minister will not give way.

Mr. Sproat

I have already given way three or four times. The answer is yes. It has been discussed and it has been agreed. Yes. I hope that that will satisfy the hon. Gentleman.

Mr. Prescott

No, it does not.

Mr. Sproat

First, I have set up two working groups that include representatives both of shipowners and unions. They are to study ways of removing unnecessary cost burdens concerning equipment and crew accommodation when ships transfer from a foreign flag to the United Kingdom flag. Such transfers are in our national interest. The working groups' aim is to facilitate those transfers by avoiding unnecessary replacement of foreign equipment which complies with adequate but different standards.

Secondly, I have examined the programme of regulations that we have made, or are proposing to make, to protect seamen at work aboard ship. As a result, I have agreed to some changes to reduce cost burdens which promised little or no benefit. That accords fully with a recent approach from the National Maritime Board, which represents both sides of the shipping industry, that any further occupational health and safety regulations should be subject to cost-benefit analysis. I must emphasise that that marks no departure from the undertaking that I gave to the House on 6 April last year to ensure that seafarers should, as far as conditions afloat permit, enjoy a level of protection which is no less than that afforded to workers ashore under the Health and Safety at Work Act 1974. To that end, we continue to work closely with the Health and Safety Commission and the Health and Safety Executive. I can assure the House that efficiency is not being sought at the expense of safety.

A Government cannot reverse the fortunes of the shipping industry alone when the conditions within which the industry operates and the costs it has to meet are not set by the Government, but it would be wrong to overlook the way in which successful counter-inflation policies have given direct help to the shipowner in keeping down his operating costs. As I have said, I am now engaged in a wide ranging exercise to remove as many costly regulatory burdens from the industry as is consistent with safety. No British Government that I know of have done more to lessen the load of regulations within the bounds of safety.

Protectionism and subsidy will not help. It is the efforts of those involved in the industry that will safeguard their own future in an open trading environment. The ability of the Government to contribute is therefore limited, but I am anxious that we should do what we can that is sensible. There have been tripartite discussions before. The Government stand ready to help the two sides of the industry to identify where and how costsavings can be made, if they wish it and if they accept that the responsibility for action lies with them. I hope that those involved do not adopt such an entrenched position that we cannot talk again. We owe it to the merchant fleet, to those engaged in it, to the country as a whole and to our maritime heritage to do so.

I was especially sorry to read in today's newspapers that the National Union of Seamen will withdraw on 30 September from its agreement with the General Council of British Shipping permitting the employment of foreign ratings on British ships, with the apparent intention to pressure British shipping lines to dismiss foreign ratings and to replace them with British ones. Yet again we encounter the fallacy that a failure of international competitiveness can be cured by such means, but actions that raise the cost of operating British ships—

Mr. Prescott

Will the Minister give way?

Mr. Sproat

—will mean fewer jobs, not more. I hope that the National Union of Seamen means it when it says that it wishes to stem the decline of the British fleet. I believe that it does, but it can demonstrate that only by striving to reduce the cost of operating under the British flag, not to raise it, as this and, sadly, so many of its actions have tended to do.

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