British Shipping Industry

HC Deb 17 December 1984 vol 70 cc30-72

4.1 pm

Mr. Michael Colvin (Romsey and Waterside)

I beg to move, That this House recognises that the shipping industry is not only of great importance to the United Kingdom's trade and commerce, but also to the United Kingdom's defence needs and North Atlantic Treaty Organisation commitment; notes with concern the decline of the British merchant fleet in terms of tonnage and share of world markets; and asks Her Majesty's Government to state its policies for helping the industry to improve its international competitive position. Both the constituencies that I have had the honour to represent have strong maritime connections, and that is one reason for choosing the state of our Merchant Navy as the subject for my private Member's motion. The other is that since the Conservative Government took power in 1979 there has been no opportunity, in either Government or Opposition time, for a general debate on an industry which is crucial to this country's economic prosperity and its strategic defence.

It is true that we have had Adjournment debates about the Merchant Navy, and I pay tribute to the hon. Member for Kingston upon Hull, East (Mr. Prescott), who had an Adjournment debate on this subject in March 1983. I am sure that the House will also applaud my right hon. Friend the Member for Taunton (Mr. du Cann) for initiating his Adjournment debate on the Merchant Navy in October 1982, for the general way in which he has spoken up on behalf of the merchant shipping industry and for the way in which he drew attention to the state of our merchant fleet during the recent debate on the Royal Navy. The House will also salute my right hon. Friend the Member for Taunton for taking over the chairmanship of the all-party merchant shipping group, which has just come into being, and not a moment too soon.

I am afraid that apart from those debates and occasional "quickies" on small matters of shipping legislation, the Finance Bills have offered the best opportunities to say things about shipping. Perhaps that underlines the importance of fiscal policy for this vital industry. It is a pity that all the Treasury Ministers who were here a moment ago, and to whom many of our remarks this afternoon will be directed, are not here to listen to this debate.

The debate is necessary because the British merchant fleet, in spite of being one of the world's most modern and efficient, is declining at the rate of about two ships per week, which could nearly extinguish it by the end of the decade. Cruise ships and ferries may be doing all right, but by the year 2000 we may have a fleet which consists only of cruise ships and ferries, and that would not be good enough for our trading position. As recently as 1966 our fleet was the largest in the world, representing 12.5 per cent. of world tonnage.

When I first went to Bristol as a candidate in 1975, our merchant fleet was still at an all-time, but somewhat exceptional, peak. However, our position in the international league table was then already beginning to slip because our overseas rivals, often with massive state aid, were outgrowing us and adding to the excessive world tonnage. For the last decade the gap between available tonnage and cargoes has been steadily widening. Symbolic of the mounting shipping surplus is the fact that two of the earliest ships which I saw use the new Royal Portbury dock in Bristol, which were recently launched OCL container ships, were laid up because there was no demand.

As I look out from the Waterside part of my constituency across the Solent, I see the horizon blanked off by the huge hulk of the Burma Endeavour standing idle in Southampton, not on account of the industrial dispute in the docks, although there is plenty of that, with dockers determined to scuttle the port of Southampton, their jobs and the jobs of many of my constituents who are working in the dock-related services, but because there is no economic demand for its 500,000 tonnes oil-carrying capacity. It is cheaper for BP to pay £1 million a year in wages, maintenance and mooring fees to keep her idle in dock.

Therefore, I hope that today I can, first, convince the House that Britain needs the Merchant Navy. Secondly, I shall explain why our share in world shipping is down to 3 per cent. and still falling fast. Thirdly, I shall try to suggest what we should be doing to halt and perhaps reverse this dangerous downward trend.

Why do we need a Merchant Navy? In answer to that question I shall quote from a pamphlet entitled "British Shipping—the Right Course", of which I am the joint author with Mr. Jonathan Marks, a shipbroker, a good Tory and one day, I hope, a Member of Parliament. In the introduction to the pamphlet we said: Britain's economic prosperity depends on our success in international trade. It generates a third of our national income and employs a corresponding part of our workforce. As a major exporting and importing nation, it is essential for us to have free access to world markets to sell our goods and services. It is equally vital to be able to purchase raw materials and finished products abroad. We need the freedom to invest overseas and to attract foreign capital into Britain. No other leading industrialised country has so clear a stake in open trading markets. The prosperity of our country rests upon this foundation. Our shipping industry is of critical importance in sustaining Britain's competitive performance in these world markets. The comparative advantages which a British-owned and registered fleet once enjoyed have made it one of the largest national flags and made a major contribution to our overseas earnings. Even now, an industry which employs more than 45,000 officers, ratings and cadets on about 800 vessels, which earns about £3.5 billion per annum and which in total contributes a surplus of £1 billion to the balance of payments each year is clearly vital to our economy. Threats to its prosperity constitute a danger to our long-term interests.

Our shipping industry is now in a state of crisis. The advantages which we once enjoyed in supplying shipping services have long since ebbed away and our fleet has shrunk accordingly. The world recession has compounded our problems. It has cut British shipping traffic with disproportionate severity. It has been argued that if our fleet continued to decline at the present rate it would be impossible to mount another Falklands expedition and could cast doubt on our ability to fulfil our NATO commitments.

While this has been happening, we have seen the growth of unfair competition. We have seen Governments in developing countries build up their fleets. We have seen moves by our overseas competitors towards protectionism and even more state subsidies. We have seen the massive growth of the Comecon fleet, which, as well as being part of the Soviet Union's naval might, is in a position to wage economic war on this country. Nor should we forget that it is our maritime tradition that helps to make the City of London what it is. Sink our merchant fleet and untold damage will be done to the maritime service industries such as insurance and the Baltic Exchange, ship forwarders and travel agents which today provide worldwide services to shipowners everywhere. They are very important, too.

There are many reasons why we need a merchant fleet, and it is important and appropriate to mention at this stage three independent organisations which think likewise—the Nautical Institute, the Greenwich Forum and the British Maritime League—and pay tribute to the work that they have done and are doing to broaden and to deepen the debate on merchant shipping.

It is not surprising that voices have been raised within and without the shipping industry calling for drastic action to prevent a further decline of our fleet. One purpose of this debate is to ask the Government what they are doing to bring forward maritime policies which will halt and reverse that downward trend.

Before looking for remedies, it is important to examine the reasons for the decline. There has been no shortage of analyses, but diagnosing the ill is very much easier than prescribing a cure.

The British Maritime League has completed the most recent in-depth study in response to a request from my hon. Friend the Parliamentary Under-Secretary of State. The league rightly concludes that the main underlying cause of our fleet's decline is the impractibility of trading fairly in a market which is no longer governed by economics alone. Our competitors will do anything to survive when far too many ships are chasing far too little cargo. I know that it is a clichè, but it is the old case of Britain playing cricket while the rest of the world perform karate.

More specifically, the causes of the decline of our fleet can be either international, over which we have no direct control, or national, over which Britain — the Government or the shipowners or the unions — have some significant influence. The causes also apply either generally to the whole of the British merchant fleet or to particular sections of it.

Internationally, the world recession has reduced the demand for seaborne trade, and the debts of many developing countries and also the Comecon countries have put a high priority on acquiring foreign exchange. Our trade with Europe has grown at the expense of long-haul trade. Shipping requirements have been grossly overestimated by Governments, shipowners and banks. There were, for example, too many tankers in the early 1970s before the oil crisis, and too many bulk carriers in the late 1970s. The growth in protectionism is both national and international and includes national subsidies, direct and indirect, national flag discrimination or preference, national Government interference in conferences, multilateral and bilateral financial aid to developing countries for shipping projects and, of course, the UNCTAD 40–40–20 liner code for freight. More efficient ships have been introduced. There has been a growth in competition from flags of convenience, with lower taxation, minimal regulation, lower crew costs and, in some cases, less costly safety standards.

Another international cause for the decline of our cargo liner fleet is the development of the Trans-Siberian railway, which is now taking an increasing share—nearly 30 per cent. —of the trade between Europe and the far east.

Further threats to our liners are, first, the growth of the massive Taiwanese Evergreen and United States lines' fleets, which will be operating round-the-world container services outside the conferences; secondly, the increased practice of cargo reservation by countries such as Latin America, India and Sri Lanka; and, thirdly, reserved cabotage exercised in various forms by France, West Germany, Greece, Spain, Italy, all the Comecon countries, the United States, Canada, Australia, Japan, Finland, India — at least we can beat the Indians at cricket, even if we cannot beat them at shipping —Panama and most countries in south America and southeast Asia. The list is a very impressive one —[Interruption.] I am glad to see the hon. Member for Kingston upon Hull, East here now. I was paying credit to him earlier in my remarks.

To sum up, it is a very inhospitable and unfair market in which British shipowners have to compete, and we cannot afford to have any self-imposed handicaps. I know that it is dangerous to generalise, but it is nevertheless true to say that shipowners, both British and foreign, choose to fly the Red Duster because of the fiscal policies and tax regimes of successive Governments, and they have registered elsewhere—or "flagged out" as it is called—because of excessive operating costs, particularly crew costs. Until recently there were extreme cases where British crews were twice as expensive as Chinese crews, not only because of wage levels, but because of the related welfare payments — the so-called social wage which owners have to meet. British ships also tended to be overmanned, and it is greatly to the credit of the seamen's unions that at least on new ships our manning levels are now comparable internationally.

I cannot be as complimentary about the Government. Until recently our fiscal policies and tax regimes were an incentive to "flag in". Now it is quite the reverse. In his 1984 Budget my right hon. Friend the Chancellor of the Exchequer did his best to torpedo what was left of the British-registered fleet. Apart from adding to crew costs by removing overseas tax relief, he ended the 100 per cent. first-year allowance coupled with free depreciation. Admittedly, thanks to some tough talking during the passage of the Finance Bill, the Government recognised that shipping was a special case and introduced instead free depreciation on a 25 per cent. writing-down allowance, but this is thought by shipowners to be totally inadequate when compared with what other western European Governments are doing to increase their financial support for their shipping. The Red Duster is now being put at a competitive disavantage against nearly every other fleet.

With due respect to my hon. Friend the Parliamentary Under-Secretary of State, I think that there is a very good case to have the debate answered by a Treasury Minister. Indeed, I should like to see my right hon. Friend the Chancellor of the Exchequer at the Dispatch Box. I do not suppose that he would be able to say very much, because we have to accept that between now and Budget day he is in purdah, but I hope that he will read the debate and take action on what is said during it.

Mr. John Prescott (Kingston upon Hull, East)

That is true of every Department.

Mr. Colvin

We shall hear what my hon. Friend the Parliamentary Under-Secretary of State says. We are looking for action by the Department of Transport, too.

It is appropriate, therefore, that in suggesting policies to halt and, if possible, to reverse the decline of our merchant fleet I should start with fiscal policies. Even if the General Council of British Shipping has slightly overplayed its hand in years gone by, I believe that its new proposal, which formed part of the industry's submission to the Government for the 1985 Finance Bill, for a 50 per cent. ship allowance on new and secondhand ships in addition to the 25 per cent. writing-down allowance should be considered most seriously. There are other proposals on balancing charges, consortium group relief, the business expansion scheme and overseas earnings tax relief. I know that they sound a lot, but they do no more than bring us into line with some of our main overseas competitors.

On manning, I have paid tribute to the way in which seamen have helped to improve productivity. Of course, most of the reductions that have already been made through the joint efforts of shipowners and unions are in discretionary manning. It needs the Department of Transport to adopt a more innovative and flexible attitude towards statutory manning levels, particularly for officers, if further progress is to be made.

I welcome the recently agreed research into manning and technology which the Department of Transport is sponsoring, and the efficient ship project, at present the subject of a feasibility study being sponsored by the Department of Trade and Industry, could show us how to make further progress in combining high technology and lower manning, and Britain is very good at that Related to manning are the subjects of regulation and safety. Britain has taken a lead in improving safety at sea. In 1959 we helped to set up what is now the International Maritime Organisation and have consistently applied safety standards which are stricter than those required by the IMO convention. As a result, the casualty rate for British-registered ships is now only one eighth of that of the world fleet for similar ships. That is good, and it is very welcome, but many of the requirements, both for safety and other equipment, may be unnecessarily restrictive and saddle British operators with unreasonable additional costs. Mr. Iain Sproat, when he was Minister, began to get to grips with this problem, but the task of removing petty regulations is far from complete and remains a major deterrent in terms of money and time to owners and operators wishing to "flag in" and sail under the Red Duster. We also want to see the rules tightened and enforced internationally to prevent our overseas competitors sacrificing safety in order to cut costs and therefore to underquote us.

I have mentioned the unfair protectionist policies of many of our overseas competitors. Unfortunately, our partners in Europe are among the worst offenders. Two things have happened which might help to put that right. The first is the appointment of Mr. Stanley Clinton Davis as Transport Commissioner. Those of us who knew him in this place will welcome the arrival in that office of someone with such knowledge of transport matters. The second is the publication by the European Commission of its comprehensive paper outlining a possible common shipping policy. Our shipping industry has already welcomed that and I do too. It is long overdue.

Shipping is excluded from the competition articles of the treaty of Rome. That is why the Commission's proposal to open up existing restrictions within the Community concerning cabotage and cargo reservation is welcome. I understand that it is also to make proposals for defending British and Community shipping from protectionist measures and unfair practices in other countries throughout the world, particularly the Eastern bloc and the developing nations. How about subjecting the Comecon fleet to a quota system for calls at European ports if those countries continue to refuse to allow European ships to call at their ports?

Can my hon. Friend the Minister tell us whether Her Majesty's Government support the view that if we in Europe could get our house in order and adopt a common policy toward the rest of the world we could negotiate from a position of far greater strength for the open trading system upon which the prosperity of our shipping industry depends? For example, the Brussels package, which was a European response to the UNCTAD liner code, will go a long way towards securing access to the crucial cross trades for British shipowners.

The United Kingdom cannot deal with the problems of unfair competition single handed. If we reacted against protectionism by closing our ports to liners of the offending countries, it would do us no good at all unless the ports of Rotterdam, Antwerp and Le Havre were also closed. There is obviously a role for the Community here, but I hope that it will be a constructive one, aimed at keeping trade open, rather than retaliating against the outside world. Can my hon. Friend tell us how the Government will react to the idea of a common shipping policy?

One target for united European action is the United States. I understand that a dialogue on a broad range of shipping policy issues has been going on for two years now between the United States and the Consultative Shipping Group, which includes the European countries and Japan. That dialogue has been mainly concerned with preserving free access to trades in the liner shipping sector in the face of protectionist restrictions in other countries. Is it not about time that we started straight talking with the Americans about the repeal of the Jones Act, which reserves all their cabotage for their ships?

It is not, of course, all gloom and despondency in every sector of our shipping industry. The cruise liner business is reasonably healthy and ferries are doing well, thanks to the growth of trade with Europe, which has hit our deep sea cargoes. Until recently the offshore oil market has been a growth sector, with the British offshore support fleet of some 150 vessels now accounting for nearly 20 per cent. of the United Kingdom-owned and registered fleet. But British supply-shipowners are extremely dissatisfied with their position vis-a-vis foreign flag supply boats operating in the North sea, particularly our Norwegian allies.

At any time one would find that, out of 180 supply ships in the United Kingdom sector, about 40 per cent. would be flying a foreign flag and half would be Norwegian. Contrast that with the position in the Norwegian sector where, out of about 80 ships, rarely more than a couple fly a foreign flag. Today there is only one British flag ship in the Norwegian sector, and that is beneficially owned in Norway.

Two financial inquiries have been carried out in recent months, one by the joint shipowners and the other by the joint Governments. Why are Norwegian ships able to offer lower rates? If it is true that the Norwegian financial assistance gives them the edge over the British, surely our financial system should be changed. At least, British shipowners should be given the chance to requote for business in the Norwegian sector.

Before concluding, I want to mention briefly the conference system, registration and defence. I am sure my hon. Friends will agree that the idea of the liner conference system—in effect, one of cartels—is anathema to our free market economy ideas. But we are dealing with a business which is neither free nor fair. Therefore, any immediate tinkering with the system would quickly lead to disaster, with the break-up of much of our fleet and the consequent loss of influence world-wide.

The conference system is still needed to ensure stability and regularity in the provision of liner services. However, I am critical in my pamphlet of the way in which conferences have repeatedly increased rates without consultation. How does my hon. Friend feel about the conference system? The House would particularly like to hear whether the idea that was being canvassed a little while ago on loyalty arrangements is still being pursued. That was, in effect, that no individual shipper could be required to put more than 70 per cent. of his custom with the conference in order to qualify for the rebate available in many trades in return for loyalty.

I noted that the Department of Transport recently issued a consultative document on registration suggesting changes in the criteria for registration under the United Kingdom flag. That contains valuable proposals for regularising the position in relation to Commonwealth countries where we have no jurisdiction. I hope that the Government will legislate along those lines. Will they go further and establish a register of ships owned by British companies, but registered under foreign flags, so that at least we know the real size of the British beneficially owned fleet? Most importantly, perhaps, will the Government stand firm against demands from the developing countries that open registries should be outlawed?

Lastly, I want to mention the Merchant Navy's defence role, which was touched on during the recent debate on the Royal Navy and about which the Under-Secretary of State had just given evidence to the Select Committee on Defence. Is today's British flag fleet really adequate for our defence needs? We were only just able to assemble 54 merchant ships in 1982 to support the 53 Royal Navy ships in the Falklands task force. Even then, some of those had to be chartered foreign flag carriers. Will my hon. Friend tell us today what he told the Committee last week? Will he also say something about the Government's review of future requirements for merchant ships in support of defence plans? As there is now general agreement that if the decline of our fleet continues our defence capability will be greatly weakened, what kind of arrangements will the Government be prepared to make when gaps in our strategic reserve are identified?

Even if the Government can requisition foreign ships to make up any gaps in our own provision, what will they do to ensure that we have an adequate supply of trained British crews to man such ships when foreign nationals are not prepared to face hostilities? Can the Government cross their hearts and echo the words of G. W. Hunt in 1875, who said: We don't want to fight, but, by jingo if we do, We've got the ships, we've got the men, we've got the money too. What has my hon. Friend to say about that?

Our Merchant Navy is a big and somewhat technical subject for debate. I have spoken for far too long already. Nevertheless, I have left a multitude of items for hon. Members to cover.

Mr. Bryan Gould (Dagenham)

I have been listening with great interest and some sympathy to what the hon. Gentleman has had to say, but does he not find it surprising —I certainly do—that neither of his hon. Friends who represent Southampton is present in the Chamber to hear what he has to say?

Sir David Price (Eastleigh)

I represent part of Southampton. Eastleigh now includes the Woolston ward of Southampton.

Mr. Colvin

The intervention of the hon. Member for Dagenham (Mr. Gould) does not do him credit. My hon. Friends the Members for Southampton, Itchen (Mr. Chope) and for Southampton, Test (Mr. Hill) have repeatedly taken part in debates, and I am sure that they will be in the Chamber later to participate in this debate.

With the exception of the hon. Member for Dagenham, who has made a facetious intervention, I thank those hon. Members present for their patience and their supportive noises during my speech. The decline of our merchant shipping industry from the pre-eminent position that it occupied so recently is truly a melancholy story. Our fleet faces extinction, and we should be fighting for its survival at least as passionately as we fight for the preservation of the whale. The trouble is that it is not until the species is about to be extinct that anyone takes any notice. My right hon. Friend the Secretary of State for Transport and my hon. Friend the Under-Secretary of State now face a challenge and an opportunity. If they fail, and if our merchant fleet disappears, they, like the Cheshire cat, may disappear too—the only differences being that there will be no smile left behind.

4.31 pm

Sir Paul Bryan (Boothferry)

I declare my interest as deputy chairman of Furness Withy and Company Ltd. I start by congratulating my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his choice of subject, which is not only important but under-debated.

I shall not recite again the figures that tell the sad story of our merchant fleet since 1975. The reason we Members of Parliament are debating shipping today is that each one of us is deeply concerned that the fleet has fallen in size, is still falling steeply and is expected to fall still further. Britain is now losing merchant ships at a greater speed than at the height of the second world war. They are victims not of torpedoes but of ever-rising costs, far eastern competition, and subsidised shipbuilding which makes ships too cheap to buy and thus leads to a surplus that in turn means uneconomic rates and cut-throat competition.

That general situation was exacerbated by the oil crisis, which led to a recession and to countries drawing their oil supplies from fields nearer home, thus making large tankers redundant. No one has escaped the biggest shipping slump for 50 years. Even the spectacularly successful Hong-Kong shipowners, Y.K. Pao, C. Y. Tung and Frank Chao have reduced their ship numbers and diversified into property, container terminals, support vessels for oilfields and so on. The great BP and Shell tanker fleets are a fraction of their former size In those worldwide conditions the British fleet, with its high costs, was bound to suffer more than most. Many famous shipping names have disappeared. Others such as British and Commonwealth and Furness Withy have been selling off ships during the past five years at an almost hectic speed, and have diversified into other areas. P and O has had to write off £77 million in its balance sheet in respect of gas carriers.

However, there is a brighter side to the picture. For example, 20 per cent. of the merchant fleet—150 ships in all—is servicing North sea oil and other more distant oilfields with some of the most sophisticated ships in the world such as the Orelia, which was fitted out on Humberside and is now in the Persian gulf. We lead the world in luxury cruising. The commissioning of the Royal Princess took one back to the launching of the Queens, except that, regrettably, the Royal Princess was not built on Clydebank. The Atlantic Conveyor, a third generation combined container roll-on roll-off ship is about to join the Cunard fleet. As my hon. Friend the Member for Romsey and Waterside has said, the ferries are also prospering.

Nevertheless, the ugly truth is that new tonnage on order for the United Kingdom fleet is running at an annual rate of about 200,000 tonnes—in other words, at less than the tonnage of just one very large crude carrier. With dropping ship prices and plenty of modern ships on the market, there is no temptation to build anything but specialist ships.

So much for the past and present. What of the future? The bulk carrier and tanker trades are still depressed, but over the past few months, after a vicious struggle in the north Atlantic, the liner trade has been moving into profit in most parts of the world. But just as the horizon begins to brighten storm clouds loom up in the shape of 14 huge new container ships almost twice the size of what is at present considered large, which are owned by United States lines, and of an even bigger fleet of new container ships of slightly smaller size from the Evergreen line of Taiwan.

Both of those lines are starting round-the-world services, increasing world container capacity by about 40 per cent. Whether or not those huge ventures prosper, they must have a devastating effect on rates and hence on the profits of the main world container lines, such as OCL of Britain, which are preparing in various ways to meet this challenge.

We are moving into a world of huge investment in which only the strongest will survive. It is against that background that the Government have to make their Budget decisions and industry must make its business decisions. The main firms in the industry—Cunard, P and 0, British and Commonwealth, Ocean and Furness Withy—are not heading for bankruptcy. They are firms with access to capital and they have to decide how to invest it. In recent years that investment has inevitably been in the direction of diversifying away from shipping.

The Government, in turn, will have to decide whether shipping really is to be a special case, with no guarantee that fiscal measures will stop the rot. My hon. Friend the Member for Romsey and Waterside has described the fleet's tremendous commercial value, which goes well outside the industry itself. But another obvious justification for Government action might be defence, and an inquiry is already promised. This is surely unnecessary. The General Council of British Shipping is already deeply involved with Government in contingency planning for defence purposes, both in respect of NATO and nationally. There are also two Standing Committees dealing with this issue, and three statistical studies are now in progress.

We shall duly be told that the Merchant Navy is adequate for a Falklands-type operation. But we know that the whole British defence set-up is ideal for such an operation. We probably have the most efficient forces in the world, but they are small and—owing to lack of conscription, recent wars and, in the case of the Navy, a waning merchant marine — we lack reserves. In the Falklands, casualties were light and reserves were uncalled for. We had to use only our crack troops, and the mix of our Merchant Navy, with its accent on cruise ships, ferries and RO/RO ships was particularly suitable. It is in a more protracted campaign, in concert with our allies, that our reducing merchant fleet with its corresponding reducing core of trained personnel will be found wanting.

None of that was taken into account at the last Budget, when, for the first time, shipping lost its status as an exceptional case. By Committee or Report stage of the Finance Bill, even the Treasury was slightly frightened at what it had done and some small concessions were made. However, by then confidence in the industry was badly shaken.

At that time the Chancellor's no-distortion rule was new and shining bright. Since then student grants, pensions and the like have shown that nothing in this political life can remain rigid and survive. Every other country of any consequence is supporting its shipping in one way or another. When Britain did that foreigners invested in our fleets as a flag of convenience. Now the opposite is true. Our shipping is actually discriminated against since it cannot enjoy regional grants, enterprise zones and the other titbits offered to land-based industries.

The GCBS has made its proposals and my hon. Friend listed some of them. In my eyes the most important of these is a ship allowance. To enable companies to write off their ships more quickly, in addition to the 25 per cent. writing-down allowance, there should be a 50 per cent. ship allowance for new and second-hand ships.

The underlying argument is that the continued existence of a substantial British merchant fleet is of sufficient national importance to warrant special assistance. The Chancellor may find help given discreetly through the tax system repugnant. He knows that if the new tax rules are bent even slightly for shipping, he will be besieged with special cases.

If the Chancellor can be persuaded that assistance is required, it may be better if the arguments are discussed openly and any resulting subsidy is explicit. A shipping allowance would come exactly into that category. It would show that the Government were convinced, without doubt, of the importance of shipping. It would do something to restore confidence in the industry.

4.41 pm

Mr. Donald Stewart (Western Isles)

I congratulate the hon. Member for Romsey and Waterside (Mr. Colvin) on his good fortune in the ballot and on fixing on the merchant service as his subject. I had begun to think that the future of the British merchant marine was a minority interest in the House, although a number of hon. Members, such as the right hon. Member for Taunton (Mr. du Cann) and the hon. Members for Jarrow (Mr. Dixon) and for Kingston upon Hull, North (Mr. McNamara), have recently made speeches on the subject.

I am surprised at the Government's attitude because the merchant fleet plays a vital part in defence. Even if the Government were indifferent to the trading and employment aspects of the subject, the connection between the merchant fleet and defence should be in the Government's mind.

The disappearance of the fleet is startling. "Disappearance" is a fair word. People of my generation remember how thin the lifeline was in the early 1940s. My war service was in the Royal Navy, so I am not scratching my own back when I pay tribute to the vital link that the Merchant Navy provided. When one recalls that, one is more than ever surprised at the Government's lack of interest in the erosion of the merchant fleet. We experienced a great humiliation in the Falklands war when we had to charter foreign merchant ships to make up the numbers.

Once we had 50 per cent. of the world's commercial shipping. We are now down to 700 ships or a tonnage of 21 million. The Greeks have more than five times that number in their merchant marine. In 1975, we had 1,614 ships or a 50-million tonnage.

Ships have disappeared to take up flags of convenience for various reasons. I refer to lower taxation, lower manning levels or odd watchkeepers' certificates —where they exist—as opposed to the British mariners' certificate which is demanded under the Red Ensign. Reduced safety regulations elsewhere are also an attraction, but it is a mistake to think that all ships sailing under flags of convenience have lower standards. Some of them are up-to-date.

A restriction applies to our coastal trade. Our so-called partners in the Common Market bar our shipping from their coasts while we have no recourse to the same practice here.

On the invisibles side, the decline of the United Kingdom fleet between 1980 and 1983 reduced the trade balance on sea transport by £1 billion. That is confirmation of what I and some other hon. Members have said for a considerable time—that the Government do not appear to care about the merchant fleet. Their lack of concern has cost the country £1 billion.

In addition, the Chancellor is withdrawing fiscal aid and putting the competitive position of the merchant service at an even greater disadvantage. As the hon. Member for Boothferry (Sir P. Bryan) said, the last Budget did considerable damage to the merchant fleet when it proposed the withdrawal of depreciation allowances.

The position of our seamen was made worse in the same Budget by the withdrawal of the allowance on foreign earnings. That can mean as much as £10 for an able-bodied seaman and up to £40 a week for senior masters. Seamen who work outside the country incur extra expenses; they are away from their homes and do not enjoy the amenities available to people living in the United Kingdom.

That ill-judged imposition will inevitably lead to a demand for bigger pay increases. That will make the position even worse. It will reduce the Merchant Navy's competitiveness, although the Prime Minister told me recently that that was essential for the continued existence of the fleet.

I hope that the Minister will convey to the Chancellor what I have said about the availability of fairer allowances for depreciation and restoration and the overseas earnings allowance.

For a maritime nation, the Government's indifference is astounding. In the last war the deep-sea trawling fleets and experienced seamen were the backbone of the navy. That has gone. The only reserve of trained seamen is in the merchant fleet. Any maritime nation neglects that at its peril. The problem has received little attention in the House. It involves trade, employment and defence. If we neglect those matters, the United Kingdom will be placed at a disadvantage.

4.48 pm

Mr. Roger Stott (Wigan)

It might be convenient if I intervene briefly now. I do not have a declaration of interest to make other than happy memories. I am not a vice-chairman of a shipping company, but I am an ex-able seaman. I joined the Merchant Navy 24 years ago when the size of the British fleet, of the shipbuilding industry and of our port industry was very different. It is a sad reflection on Government policy that we have reached such a terrible state in our shipping, shipbuilding and ports industries.

I thank the hon. Member for Romsey and Waterside (Mr. Colvin) for choosing the plight of the British merchant fleet as the subject for debate today. As he has already reminded us, it comes at an important stage in the development of the decline of British shipping. Unless we take some drastic action, this once proud maritime nation may have no maritime fleet left.

Two years ago, the National Union of Seamen—of which my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) is the only sponsored Member of Parliament—produced two documents which outlined the dramatic decline of the British merchant fleet. One was entitled "Flags of Convenience" and the other "British Shipping: Heading for the Rocks." I recommend the Under-Secretary to read them both.

It would appear that singularly little action has been forthcoming from the Government on the state in which Britain currently finds itself. That inaction has provoked a storm of protest from the General Council of British Shipping. I note that in the brief that it sent us today it commented that the 1984 Budget was a disaster for United Kingdom shipping.

Mr. Jim Slater, the general secretary of the NUS, wrote to the Prime Minister on 8 November spelling out in the plainest terms —one might say with a touch of mess deck language — the dramatic decline of Britain's merchant fleet, and suggesting remedies to halt that decline.

In the business section of The Sunday Times on 2 December, Philip Beresford and John Huxley wrote an article entitled "Britain's abandoned ships." No doubt the Minister read that. There was also an article in The Guardian by Andrew Cornelius entitled "Facing a fight to the death." That graphically outlined the problems being faced by British shipping. Given the state of British shipping today, it [...] hardly surprising that the hon. Member for Romsey and Waterside, together with his colleague Jonathan Marks — who I understand is a shipbroker and member of the Conservative party —should publish a report entitled "British Shipping—the Right Course." I reiterate that the House should be grateful to the hon. Gentleman for choosing the subject of shipping for today's debate.

I shall do the hon. Gentleman the honour of discussing the report of which he was co-author. I have read it. The report attempts to analyse the reasons for the decline of the fleet and makes recommendations for halting and reversing that decline. Much of the analysis echoes the examination by the NUS of the problems of the United Kingdom shipping industry. Despite some hysterical and factually incorrect sections on manning, collective bargaining and trade unions, the report makes a worthy contribution towards getting the Government to give serious consideration to shipping.

The General Council of British Shipping has reacted to the report in an extremely hostile manner, because it attacks two of the fundamental elements of protection for existing companies involved in shipping — the conference system and the fiscal reliefs peculiar to shipping. It is clear that the authors of the report believe that the GCBS and the shipping companies have, on the one hand, looked for every form of advantage available, including the elimination of competition, but, on the other hand, have publicly espoused free competition.

I believe some of the suggestions in the report to be wrong, but some of its recommendations are certainly worth pursuing. Some of its comments are a direct criticism of the Government's performance thus far. The hon. Gentleman and his colleague outlined graphically the decline of the British fleet and set out certain measures to halt that decline. I shall not bore the House by detailing them, but I subscribe to many of them.

In addition to the points made by the hon. Gentleman in his speech, there has been a process of concentration through the merger of shipping groups, diversification by shipping companies into other areas and a build-up of foreign ownership. Apart from manning restrictions, which I believe to be factually incorrect, the factors mentioned in the report were also identified by the NUS in its pamphlet in 1982. The report demonstrates a belief that the United Kingdom can act alone against these trends. It implies that support for existing shipping companies would not be in the nation's interests.

I wish to quote a number of passages from the report. It states: the temptation to go behind the fence to reach bilateral agreements with the developing countries in order to buttress the position of established companies must be resisted … If we succumb to [this temptation] we head towards complete regulation of shipping … the survival of the British merchant marine depends upon the creation of a broader base of entrepreneurial ship-owners, free from unnecessary and burdensome fiscal and regulatory constraints, and thus in a position to face fair competition and the changing trends of the shipping markets of the world. Government should use its powers to create a fairer environment for international competition.

Mr. Colvin

roseߞ

Mr. Stott

I shall give way in a moment.

Acknowledging that the British people play cricket while other countries play karate the report's basic solution is that everyone should persuaded to give up karate and play cricket. That reveals a very slim grasp of the realities of international trade and the commitment of other Governments to protect their interests, rather than the fixation of a single ideology, which I understand from the report is based upon unfettered competition—

Mr. Colvin

rose—

Mr. Stott

The hon. Gentleman should be patient.

Mr. Colvin

The longer that the hon. Gentleman continues, the more I shall have to answer. He criticised the idea of a wholly regulated market, which is precisely what the bilateral agreement between Britain and Sri Lanka would lead to and which would be anathema to the whole principle of free trading.

The hon. Gentleman failed to acknowledge that in the NUS paper and brief, which I have read, the NUS recommended a totally controlled environment. It wants to control everything. It would nationalise everything—the shipping lines, the shipments, the forwarding agents, the docks and the shipbuilding companies. The whole lot would be integrated on a national state-owned basis. The NUS thinks that that would solve the problem. But it would not. It would lead to retaliation from our competitors overseas. The hon. Gentleman must appreciate that the cross trades are vital to our shipping industry. If we do anything to weaken our position, we will fire the equivalent of more than one Exocet at our fleet.

Mr. Stott

With respect to the hon. Gentleman, I do not know to which pamphlet he has referred. The NUS document does not mention the nationalisation of shipping companies. It certainly mentions a firmer degree of Government control, and I go along with that. Prior to the election the Labour party produced a document referring to a national shipping line. I do not think that the hon. Gentleman will find what he has suggested in the NUS document.

The hon. Gentleman is not a reluctant critic of the role of the Government. His report states: A long-term policy for British shipping is hard to detect. If there is an official view on the structure of the industry, on its tax regime, on its requirements for registration and regulation, it has yet to be made public as a coherent whole. That is absolutely right.

The report continues: A general view has been promulgated neither by Ministers nor officials on the structure of the industry. Again, the hon. Gentleman is spot on.

The report is critical of a lack of any real regulation over the conferences. It states: Despite a political belief"— that is the belief of the hon. Gentleman and his friend— that the conference system is ripe for reform … we have accepted the argument that any immediate dismantling of the system would quickly lead to disaster with the break up of much of the fleet and a consequent loss of influence worldwide. The pamphlet sets out certain suggestions in respect of the conference decisions. I subscribe to the recommendations, which are absolutely right.

The hon. Gentleman talked about cabotage and state aid and said that the Government should be prepared to go to the European court, if necessary, to ensure that other EEC countries do not breach the treaty of Rome on cabotage. The report makes a dramatic leap from having ended cabotage in Europe to pressing the United States Government to abandon cabotage and reversing Government-generated cargoes to United States flag ships. The demonstrates degree of naivety. The chances of getting Greece to abandon cabotage are extremely remote, especially now that it is the dominant shipping industry within the EEC. Italy is trying to obtain EEC approval for a package of credit measures that would encourage Italian shipowners to order new ships in Italian yards. The United States Government have categorically stated that they will not alter the principles of the Jones Act, which provides for United States cabotage.

The blind faith of the hon. Member for Romsey and Waterside in free trade leads him to confuse the ideal world of free trade and entrepreneurial endeavour, which he would like to see, with the real world of shipping. Cabotage exists and will continue to exist in the real world.

Mr. Colvin

When I suggested that it was about time that we talked seriously with the Americans, I went on to explain that we are already taking that approach. As is stated in my pamphlet and as I said earlier, we shall be more capable of acting internationally to try to remove some of the unfair practices of competing nations if we act jointly with our European partners. That is why my question to my hon. Friend the Parliamentary Under-Secretary of State was so important. I referred to the shipping policy document that has been produced by the commissioners and I to Mr. Stanley Clinton Davis, who was an Opposition spokesman and who is now a Transport Commissioner. Mr. Davis should be in a strong position to be able to do something about cabotage and the evolution of a common shipping policy. We can tackle the problem of unfair competition elsewhere in the world only if we act in concert with our European partners. I hope that the hon. Gentleman will endorse the idea of a common shipping policy. If he does not, he will sign the death knell of the British merchant fleet.

Mr. Stott

What a tangled web we weave. I do not subscribe to what the hon. Gentleman has said. I do not think that we are likely to achieve any common cause with our European partners, for the reasons that I have outlined. I cannot envisage the Greeks, the Italians, the West Germans or the French agreeing to what the hon. Gentleman proposes. I redirect the hon. Gentleman's mind to a document produced by the NUS in 1984 in which it proposed that, in the first instance, coastal shipping should be regarded as domestic transport. It suggested that it was valid for every nation to reserve its coastal trade for its own flagged ships. However, if the EEC were to adopt new regulations within the terms of the treaty of Rome, it would be more appropriate to lift restrictions within the Community but to reserve the coastal trade to vessels registered within EEC states than to abandon coastal shipping to all comers. That is a proposal that would probably find acceptance.

I support the attack of the hon. Member for Romsey and Waterside on the Government's taxation measures. That attack has been taken up by others, so I shall not rehearse his arguments on taxation. However, it greatly concerns the shipping industry that it is not treated in a way that would encourage it to keep British ships under the British flag.

The hon. Member for Romsey and Waterside has repeated the analysis that is set out in the document produced by the NUS on registration by acknowledging that foreign investment represents about half the ownership of the United Kingdom fleet. However, rather than seeing this as a source of insecurity and questioning more deeply why United Kingdom investors have been reluctant to put their money into shipping, the hon. Gentleman suggests that the development of a coherent shipping strategy depends on foreign investment. Surely he is aware that the whims of foreign investors are influenced by factors outside the control or influence of the British Government. The abandonment of United Kingdom shipping to their whims hardly demonstrates a commitment to ensure that United Kingdom shipping recovers from its current appalling decline.

The report of the hon. Member for Romsey and Waterside draws attention to the need to ensure that substandard vessels do not obtain British registration without complying with British safety standards. That is to be applauded. However, the suggestion that more inspection work should be delegated to private sector classification does not make for an adequate system of ensuring that common safety standards are met and maintained.

The hon. Gentleman's pamphlet can be applauded also for its call that eligibility to register vessels should be confined to those over whom jurisdiction can be exercised. However, that contradicts other statements which support flags of convenience operators. Countries which operate the flag of convenience arrangement offer a major attraction, because they do not exercise effective jurisdiction.

The hon. Member for Romsey and Waterside referred to manning. The hon. Gentleman would not expect the Opposition and the NUS to agree to, participate in or countenance levels of manning which would clearly be unsafe. He would not expect us to allow the status of our seamen to be undermined by reducing wages and conditions to levels at which other seamen have to operate. The status of our seamen is a cost to the industry and it is one that the industry has to bear. We cannot, will not and should not be expected to agree to the lowering of the standards that our seafarers have obtained through negotiations with shipowners. We cannot allow that to happen.

The hon. Member for Romsey and Waterside was right when he mentioned the role of the merchant fleet and the defence of the nation. The defensive role of merchant shipping has long been recognised and supported by the Opposition and the NUS. It is to be welcomed that others adhere to the union's position. However, the hon. Gentleman's pamphlet seems not to take into consideration the link between shipping, shipbuilding, ship repairing and Government support in maintaining a defence capability. It is important that we recognise the link.

I apologise to the House for spending some time responding to the issues that the hon. Member for Romsey and Waterside sets out in his pamphlet. I thought it only right to extend to him the courtesy of demonstrating that I have studied his pamphlet and taken some care in trying to understand what he has written and said. A number of sections are flawed, and I cannot agree with the conclusions that he has drawn in those respects; but his pamphlet and the suggestions that he has made, together with the debate that he has initiated, are to be greatly welcomed.

The decline in British shipping is serious. There is a general recognition throughout the House of that fact. In the last decade, the British merchant shipping fleet has declined from 50 million tonnes to 20 million tonnes. During the past 10 years, the number of seamen working on British ships has been halved to about 37,000. During the past two years, the balance of payments contribution from merchant shipping has been cut in two. The reason is simply that there are too many ships chasing too little cargo. Unfortunately, that is a fact of life.

We have heard and shall continue to hear the appropriate plaudits for our merchant seamen. With some regret I have to say to the Under-Secretary of State that the tax relief measures for our seamen undertaken last year by the Chancellor of the Exchequer in his Budget were a pretty poor reward for their service in the Falklands war. I hope that, if the Under-Secretary of State has some influence with the Chancellor of the Exchequer he will tell him that that measure went down badly in the shipping world, and certainly with those brave men and women who manned our merchant fleet during that crucial time.

Our merchant fleet is in bad shape. The Government have presided over 4 million of our citizens on the dole and over our industrial decline. Will they preside over the sun setting on the Red Ensign? I very much hope that that will not happen. The House expects the Under-Secretary of State to recognise that there is serious trouble ahead unless the Government do something about it.

5.11 pm

Mr. Edward du Cann (Taunton)

Following the admirable precedents set by the right hon. Member for Western Isles (Mr. Stewart) and the hon. Member for Wigan (Mr. Stott), I should like immediately to congratulate my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his choice of subject. This debate was certainly timely, and I should like to congratulate my hon. Friend on the excellent speech to which we had the pleasure of listening. I much appreciate the kindly things he said about the all-party parliamentary maritime affairs group and appreciate his consistent support of that body.

I have a single statement to make and a single question to put. I believe that I shall make common cause with the hon. Member for Wigan, my hon. Friends the Members for Romsey and Waterside and for Boothferry (Sir P. Bryan) and the right hon. Member for Western Isles. Indeed, I should be surprised if the House is not unanimous in these matters.

Britain is faced with an alarming decline in her merchant fleet which is now assuming crisis proportions. That is undoubted. The present condition of Britain's merchant navy is the Achilles heel of our economic and defence policy. The question that was posed immediately by my hon. Friend the Member for Romsey and Waterside was: what do the Government propose to do about it? The need for action now — action this day, as Winston Churchill used to say—is undoubted.

Every right hon. and hon. Member who has participated in the debate so far has given the facts. In 1967, the British fleet was the largest in the world; by June 1983 it had dropped to eighth place in the world league, and it is still declining. What is worse, during the past three months no orders for merchant ships have been placed in British yards. Picking up a point made by the right hon. Member for Western Isles, in 1970 Britain had 160 distant water trawlers, last year it had 10, and this year it has none. The loss of trained seafarers is now running at a rate of 5,000 officers and men a year. Educational and training establishments are being closed, and the cadet schemes are virtually extinct. In 1970, the annual number of entrants of engineering cadets was about 1,000; last year it was 70. It does not matter which aspect of the scene one examines —the picture as a whole is horrifying.

It is possible to say that there is a world surplus of ships and shipbuilding capacity and a world recession, as my hon. Friends the Members for Romsey and Waterside and for Boothferry pointed out. Of course that is true, but it is only part of the story. Since 1945, world trade has grown eightfold—with 99 per cent. or more carried in ships. As my hon. Friends have pointed out, other nations have substantially expanded their fleets. They include China, Korea and, not least, as my hon. Friend the Member for Romsey and Waterside pointed out, Comecon and the Russians.

Soviet Russia is now a formidable maritime state while, in comparison, the United States is a naval power only. The Soviet naval fleet is now larger than the British fleet. Russian warships are second in number only to those of the United States. The Soviet submarine fleet, with 400 ships in service—a new submarine completed every 40 days—is larger than the one Dőnitz commanded, which so nearly brought our country to its knees in the 1940s. The Russian fishing fleet—also used from time to time for military purposes—is the largest in the world, as is the Russian fleet of ice-strengthened ships. The Soviet Union's hydrographic capability is by far the greatest in the world while ours—potentially the finest in the world — is disgracefully neglected, as I have often complained. I cannot get out of my mind the words of Admiral Gorshkov: Soviet seapower … has become the optimum means by which to defeat the imperialist enemy and the most important element in the Soviet arsenal to prepare the way for a Communist world. It is not unimportant to ponder those words while we are in the midst of this successful visit, which I greatly welcome, by Mr. Gorbachev.

What about our friends and allies? It is a fact that the United Kingdom's merchant fleet is declining faster than that of any of our allies in NATO or in the European Community. We can, therefore, safely deduce that the dominant cause of the decline of our Merchant Navy is not the recession but the way in which our country has reacted to it.

It has been common ground among every right hon. and hon. Member who has spoken in this debate that a national shipping capability is vital in peace time, for numerous good commercial reasons — for instance, its direct contribution to our balance of payments, which is still running as high as £1 billion a year, although, as the right hon. Member for Western Isles pointed out, it had gone as high as £2.5 billion in 1974. Such capability is vital for the security of availability of cargo space, and for some control over freight rates. After all, 98 per cent. of our trade goes by sea.

It would surely be extreme folly to be exclusively or nearly dependent on foreign carriers and to put Britain's life support system in the hands of our competitors, or perhaps even our enemies. This process has already gone pretty far. I cite three instances, one of which was given by my hon. Friend the Member for Romsey and Waterside when he pointed out that, of 180 supply ships in the British sector of the North sea, only about 100 fly the Red Ensign. Clearly, that is different from the Norwegian sector, as my hon. Friend rightly said. Secondly, believe it or not, three quarters of our oil and gas from Sullom Voe in the Shetlands is carried in foreign ships. Thirdly, in total, less than one third of our imports are now carried in British registered ships. Some may think, as I do, that the process has gone too far already, but there are many indirect reasons for supporting a substantial British Merchant Navy capability. A thriving and substantial British merchant fleet is the key to and basis for a British shipbuilding industry, a British ship repairing industry, a prosperous marine engineering and equipment industry, and substantial invisible earnings in the City through brokerage, insurance and so on.

London is currently the world maritime centre. I believe it to be of great benefit to the United Kingdom that we should maintain that position. In an emergency our national merchant fleet, as the hon. Member for Wigan said, is, in effect, Britain's fourth arm of defence. Its military task is to transport men and supplies; its economic task is to keep our people fed and supplied. Besides that, as the right hon. Member for Western Isles and my hon. Friend the Member for Boothferry said, it is the Navy's reserve of manpower. Adverting in particular to what the right hon. Member for Western Isles said, a comparison with the years gone by that he and I remember is interesting. In 1934, there were 200,000 British men at sea upon whom the Navy could call for reserves. Today, there are a mere 45,000 All those benefits to the United Kindgom economy and employment are at risk. They should not be. They need not be. My hon. Friend the Under-Secretary is a great friend of mine whom I much admire. He is serving our country well in Government. I must tell him that in the face of the most worrying circumstances I regard the inertia and complacency of successive Governments as intolerable. I remember raising the subject on the Adjournment in November 1982 The Minister then replying, who is not now in the House, said that he shared the concern that was expressed. He further said that he would come forward in the almost immediate future with some measures. Nothing happened. Now, even the OECD is sounding a clear warning in its publication "Maritime Transport" which states: OECD Governments . .must take a more active part in shipping and can no longer rely on the resolution of problems between shippers and ship owners while limiting themselves to the role of observers". Those are wise words. Someone said to me the other day that he thought the attitude of successive Governments to the provision of the Merchant Navy was the equivalent of the man who leant out of a window halfway up a skyscraper to watch a man falling from the top. As the man who was falling went past him he said, "How are you getting on?" The man replied, "So far, so good." The Government cannot any longer just stand by. What is the right course for Ministers? I do not believe that policy is difficult to decide. I believe that all in the House would agree upon it. We should declare loudly and certainly that Britain needs its Merchant Navy. We should accept that the Government have a responsibility to provide the political, diplomatic and fiscal climate in which shipping can survive and prosper.

Now to practical proposals. In the past 25 years—I am sure that we would all agree — shipping has advanced technically, it would seem, about as far as practicable. What with megaships, containerisation, integration with land transport and a substantial reduction in crew numbers, it is right to claim that the industry has done its part. Now, it seems, is the time for Government to back the United Kingdom commercial effort. I say now —I am sure I speak for the whole House—how much the presence of my right hon. Friend the Secretary of State for Transport to listen to part of the debate is welcomed.

What does Government backing of the United Kingdom commercial effort mean? I believe that what it means, above all, is all Government Departments acting together. We have listened to a torrent of complaints—I believe entirely justified—about the changes introduced in the last Budget by my right hon. Friend the Chancellor, with depreciation and tax allowances for seamen being removed. He could not have hit the industry a harder blow than he did with those two measures.

One is entitled to ask what consultation there was with the Department of Transport before those measures were introduced. What is the Department doing, on its own account, to influence other Government Departments to stop the chartering of foreign ships? What are we doing chartering foreign ships when so many of our seamen are out of work? Adverting to a point that has been made several times already, and which is in the minds of us all, I do not recall seeing Swedish, Danish and Norwegian ships in the Falklands when the Exocets were flying around. Out duty is to support our people.

Like my hon. Friend the Under-Secretary and my right hon. Friend the Secretary of State, I believe in the virtues of competition, but what our shipping companies are facing in world markets, as my hon. Friend the Member for Romsey and Waterside said, is anything but fair competition. For instance, five European Community countries ban United Kingdom ships from their coastal waters while we allow free access. That was a point brilliantly brought out by my hon. Friend the Member for Eastleigh (Sir D. Price) in a question to the Prime Minister a little while ago. Whatever the method is for dealing with it—we have been arguing across the House about it—why do we allow it at all? Why do we allow such a state of affairs to continue? A further 25 nations actively discriminate against British shipping using their ports although, again, their ships use our ports without hindrance. Why do we allow such things to happen?

Discrimination, to which my hon. Friend the Member for Romsey and Waterside referred, can take many forms. I have a note of about 68 different examples, many by developing countries. It is particularly odious when developing countries discriminate against British shipping when United Kingdom-financed cargoes are being delivered to their shores. Governments all over the world disregard the virtues of fair competition. It is therefore incumbent upon my right hon. Friend the Secretary of State to ensure that the Government mount a determined political and diplomatic offensive to counter discrimination.

Retaliation may even be called for. In my view, it is justified in the context of the United Kingdom's present employment position. We should have the courage and realism to do it. Since quotations have been the order of the day, not least from my hon. Friend the Member for Romsey and Waterside, who gave a particularly appropriate one, perhaps I could quote John Stuart. Mill who said: In labouring for one's own country in the right principle we labour for all humanity. What we need, in a sentence, is a national maritime policy designed to defend and advance the British industry and the British interest. We want that campaign carried forward with imagination and pertinacity. That is the message that will come from the debate. We look to the Government to provide it. I have every confidence that my right hon. and hon. Friends will take that initiative. Heaven knows, in the national interest, it is badly needed.

5.27 pm

Mr. Ted Garrett (Wallsend)

The hon. Member for Romsey and Waterside (Mr. Colvin) spoke one significant sentence of which I took note. He claimed that British shipping was facing extinction. That is nothing new for the House to hear. Hon. Members have been saying year in, year out that shipping was facing extinction, but successive Governments have done little or nothing about it. That is a sad fact, but one which we must accept.

On Friday morning I shall be at the Swan Hunter yard in Wallsend. I shall be on board the Atlantic Conveyor to have a final look at that ship before it goes on its maiden voyage. Unfortunately, that is the last merchant ship on the river Tyne, as the hon. Member for Tynemouth (Mr. Trotter) will confirm. It means that for the first time since the 1930s no commercial shipbuilding will be taking place on Tyneside, and it does not seem as though there is any possibility of receiving any orders within the near future. Therefore, not only merchant shipping but commercial shipbuilding is facing extinction.

My hon. Friend the Member for Wigan (Mr. Stott) asked the Minister a series of questions, during which he placed his finger on the dilemma that faces us. In the House there are basically two distinct political philosophies: one is the virtue of free competition, and the other is the principle of state intervention. Some would call it Socialism but I prefer to call it state intervention. That is the dilemma. The shipping industry is facing the same dilemma as the cotton, textile, machine tool and steel industries and the fishing fleet—I could go on and on. We have not resolved the dilemmas of those industries. For that reason, this country faces a desperate situation with regard to its productive and manufacturing basis.

The Government have distanced, and continue to distance, themselves from those problems. Because of a lack of state intervention, or at least a move by the Government of the day towards a more careful analysis of the problems, we continue to drift. The chances of any good coming out of today's debate are not great, because of the basic philosophy of the Prime Minister herself, so ably backed by some members of her Cabinet. She has often said that one cannot solve a problem simply by throwing money at it. The root cause of the problem is how we finance the British shipping industry in the context of the role that it performs, as has been said by Conservative Members, including the hon. Member for Romsey and Waterside. We are no nearer an answer to the problem than we were when I started my political career in the House some 21 years ago.

I am proud to represent Wallsend in the north-east. There are strong and traditional maritime instincts in that area. People not only built the ships, but sailed in them. The port of South Shields, which my hon. Friend the Member for South Shields (Dr. Clark) has the honour to represent, suffered the largest loss of life among men lost at sea in both world wars. Men have also been lost in peacetime, sailing in ships that have provided the lifeline to our nation.

There are training facilities and technical colleges. There is one at Southampton, and one on the north-east coast, at South Shields, where men have been trained for service in the Merchant Navy—marine engineers, radio operators, deck hands and, of course, officers. When they went to sea, those men performed good jobs. They learnt traditional skills, and when their service ended they came ashore to play a highly valued role in industry because of their skills. The mere fact that there will be fewer vacancies for the positions that I have mentioned means that the skills referred to repeatedly in the House over the past few months will go. Is it any wonder that the recently reconstituted Engineering Council has decided to run a series of advertisements emphasising the role of engineering skills, which are so essential to this country's future?

In our shipping industry, this country has been to the fore in introducing regulations to improve safety, and these are being applied more and more in other nations' merchant ships. However, at the end of the day we must believe in ourselves and ask whether we want a shipping industry. The answer is still unclear.

Admittedly other countries are in a worse state than we are, but some are better off. I should like to refer to China. It is appropriate that I should do so, because this afternoon the Prime Minister left on a very important mission to China. China recognises that there is overcapacity in shipbuilding and has delivered a pledge not to disrupt world shipbuilding markets any further. China has told international shipowners and builders that for the time being it does not intend to become a major shipyard power. If that is so, one of the items on the Prime Minister's agenda, in addition to signing the agreement on the future of Hong Kong, should be to ascertain whether there is a market in China and, if so, what aid we can give British Shipbuilders or the private sector to obtain orders from that country.

Some five or six years ago I attended a lunch in the City of London given by the General Council of British Shipping. The then chairman was Peter Walters, who is now the head of British Petroleum. He forecast that there would be a surge of orders by British shipowners because of the aging of the British Merchant Navy. Regrettably, that has not happened, yet the prospects in other countries for more shipbuilding orders are not too bad. It would be foolish to think that no ships are being built anywhere. Many ships are being built in other countries, and we must look more thoroughly at the market; for example, in India.

It is estimated that one third of the Indian merchant fleet of over 10 million tonnes deadweight will be due for replacement by modern fuel-efficient container ships during the seventh plan for the years 1985–90, according to informed sources in New Delhi. I might be straying from the motion, but I am sure that people in British Shipbuilders will read the debate, and I should like them to bear in mind that there is a market there and they can go out and get it. Just as I make no apology for asking for public assistance to get those orders, so I make no apology for asking for direct intervention to save the British shipbuilding industry.

It is often said that if one is a Socialist there is some doubt about whether one is as patriotic as those in the Conservative party, who make great claims to patriotism. But where is the patriotism? It should be applied in view of the simple fact that the British merchant shipping industry is essential to the defence of this country. There is a lack of patriotism by Conservative Members who have to make the decisions about whether we are to have a shipping industry. We cannot carry on just letting industries decline. That has to stop, in the interests not only of the people whose livelihoods are affected but, more importantly, of the whole nation.

Conservative Members who have participated so far in the debate have shown a remarkable awareness of the problem facing the industry, and they have displayed a certain amount of courage when they have had the temerity to criticise the fundamental policy that motivates the Government. If they can change that policy, they will get total support from the Opposition.

5.39 pm

Mr. Neville Trotter (Tynemouth)

The situation is indeed grave. Britain's historical background to its maritime traditions and links is so great that it is staggering that two thirds of the Merchant Navy has disappeared in just nine years. Given that the history of the United Kingdom has been built up on our maritime endeavour, that is indeed staggering. I can only reflect that as a country we have failed to give more attention to the staggering decline in one of our great historical industries simply because employment in it has not been concentrated in particular parts of the country.

I believe that the man in the street—whether he lives at the seaside or inland—believes that Britain needs a Merchant Navy and that there is increasingly national concern about the decline in, and even the collapse of, this industry.

One newspaper recently published interesting figures about the size of individual companies. My father worked for P and O before the war, when I remember that it had more than 200 ships. That was a long time ago, but today P and O has just 24 ships. Furness Withy has 13 ships, Ellermans six, and British and Commonwealth only four. I appreciate that some of these companies are also members of container consortia, but these figures represent a staggering reduction in the British fleet. It is right that the House should debate this subject today, and I join in the congratulations to my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on choosing it.

Other hon. Members have referred to the reasons for this decline, one of which is the fall in coastal trade. Coastal traffic has practically ceased as a means of communication. In the days when the hon. Member for Wallsend (Mr. Garrett) and I were at school, the Tyne was crowded with colliers taking coal to the south. Nowadays that coal goes to power stations near the collieries and is conveyed by electric line to the south of the country.

Britain now trades far more with Europe, and consequently less of our home trade is taken on long-distance journeys by sea. Less oil is now brought into the country from overseas. Every 1 million tonnes of additional output from the North sea means that one tanker fewer is required. Some tankers are still needed to carry oil from some of the wells to the ports, but the oil also comes ashore by pipeline, and we should contrast the demand for tankers to bring the oil ashore from a few miles out in the North sea with the demand required to bring it around Africa from the Gulf. That sector has also witnessed a great fall in demand.

Container ships are now being made more efficient than the ships they replaced. As well as being larger, each spends only a short time in port. In the old days the ships spent a long time in port, but those days have gone because container ships unload in 24 hours and are off again. One such ship now does the job of seven or eight of its predecessors.

The world depression has also had an effect on our trading situation. The first effect was on the tanker industry, when a flood of cheap ships from the low-wage shipyards of the far east were bought up in vast numbers. Having destroyed the tanker market, those shipyards began to construct bulk carriers, with the result that that sector was also destroyed. We have heard earlier in the debate about the way in which the container business is in turn about to be affected by a vast over-expansion in the number of container ships. Huge fleets of new container ships are ready to come into service in the near future, and one of the sectors that is still doing quite well will be badly affected.

World trade by sea has grown by 28 per cent. in 14 years, but in that time the tonnage of ships available to carry the trade has more than doubled. That has had an appalling effect on freight rates, which are now lower than six years ago. While 1984 was a bad year for world shipping, and for western shipping in particular, it looks as though 1985 will follow the same sad pattern.

Several hon. Members have referred to the defence implications of the Merchant Navy, and it is on that that I wish to concentrate. The developments in the Falkland Islands a couple of years ago dramatically focused attention on the requirements for the Merchant Navy. There is, however, a danger that as time passes we shall lose impetus. It is, therefore, with relief that I congratulate my right hon. Friend and his colleagues in the Ministry of Defence on setting up an inquiry into the adequacy of the Merchant Navy in a war or crisis. I hope that that inquiry will investigate "out of NATO area" operations as well as operations in the north Atlantic. Should some terrible circumstances again require Britain to act alone—God forbid that it will ever happen—we shall have to look to our own resources. We shall be unable to count on our NATO allies in that situation.

During the Falklands crisis, 20 product tankers were sent south to support the Royal Navy. At that time, BP had 25 or 30 such ships in its fleet. I understand that now it has only eight, far fewer than would be needed to support another Falkland Islands operation. There has been a particularly critical fall in the number of specialist ships.

Some figures about shipping requirements in the event of a crisis in Europe are freely available in America—though not perhaps in this country. I understand that 1.5 million men would be flown across the Atlantic, but their equipment would have to come by sea. Further, 8.5 million tonnes of stores plus 10 million tonnes of fuel would have to be brought across the Atlantic. That would require 2,000 shiploads a month. On top of that, a similiar requirement would be needed to maintain the civilian and industrial life of Europe. These are enormous figures, and it is right that the Government should now be inquiring into the continuing capability of the Merchant Navy to play its part in dealing with such a crisis.

Manning would be a particular problem in a crisis. The number of our people at sea has nearly halved in the last 10 years, and is falling at the rate of about 5,000 a year from its present level of 41,000. As we have heard, the number of cadets recruited is also causing great concern. At one time, 1,000 cadets a year were recruited, but it is now a fraction of that number. Therefore, we shall be unable to produce the officers of the future.

It is no good having ships available under flags of convenience which could be requisitioned at a time of crisis if there is no one to man them. It could well be that the existing foreign crews would refuse to sail into particularly hazardous waters, and we might have to rely on our own sailors.

Given the present state of oversupply, with 1,400 surplus ships laid up in the world's ports, it is easy to acquire a second-hand ship cheaply. It is therefore important to do everything we can to maintain the safety of international shipping operations. I very much welcome the recent increase in the number of port inspections. There are now about 10,000 inspections a year, and the need for them is highlighted by the fact that well over 13,000 defects were discovered. No fewer than 430 ships inspected were detained or delayed because they had serious deficiencies. That was 6 per cent. of all the ships inspected. Clearly, that effort needs to be maintained.

The main cause of the problems in the British Merchant Navy is the protectionism of the developing world, which uses its own fleets to gain hard currency and to develop an industry. Those countries gain great advantage from their cheap labour. There is no doubt that this will be a permanent problem for Britain and the other western ship-owning countries. The same applies to much of manufacturing industry, but the problem is highlighted at sea.

Recently I spoke to the manager of a foreign-owned company which still operates from London. On ships registered under the Red Ensign, crew costs account for two thirds of the income, while on ships registered in Liberia or one of the other flags of convenience countries the crew costs account for only one third of the income. That kind of difference highlights the great problems when operating under the Red Ensign, as we all wish.

Turning to specialist ships, the difference in crew costs is not so much a factor. Crewing costs can be the least of the requirements when providing a complex service, whether it be container ships, gas carriers or other specialist vessels. Countries such as Britain are still able to compete in providing ships of that kind.

What can we do for the future? We can try to be more efficient. We can cut crews. I do not believe that this will in itself solve the problem, but we have to do all we can to be as efficient as possible. In recent years there have been quite dramatic falls in the size of crews. A ship which a few years ago had a crew of about 60 has been replaced by a ship with a crew of 31. That in turn will be replaced by ships which are now being built for crews of about 21. Japan is talking seriously about operating large ships with crews as low as 12. Technology will bring further changes in the manning of ships. However, that will not deal with the magnitude of the problems that have been outlined in the debate.

If I may deal with subsidies, I do not believe that British shipowners seek to be subsidised. However, they say with great justification that they are at a disadvantage compared with other western operators and even more with the countries of the eastern bloc which pay no regard to normal commercial factors. I trust that my hon. Friend the Under-Secretary of State for Transport will refer in his winding-up speech to the discussions that have taken place with the Soviet Union on the passenger cruise liner sector of the industry, which has been so harmed by competition from the non-profitmaking, subsidised Soviet merchant navy, the size of which has been so well portrayed by my right hon. Friend the Member for Taunton (Mr. du Cann) who, again, made a strong case for the Merchant Navy.

What can we do to provide our shipowners with at last the same financial assistance as is given by their western competitors? I support fully what has been said about the negative nature of the Budget changes that have been made this year and the suggestion made by the GCBS that the fleet should be allowed, in addition to the 25 per cent. writing-down allowance, a 50 per cent. ship allowance for new and second-hand ships. Nothing less than that will encourage the investment that is so desperately needed.

The hon. Member for Wallsend referred to the fact that he and I have been invited to go on board Atlantic Conveyor later this week. It is sad indeed that we should these days be talking about individual new ships, not fleets of ships. One ship today is a great achievement for both the shipbuilders and the shipowners of Britain. It is indeed tragic that when Atlantic Conveyor sails there will not, for the first time in centuries, be a merchant ship being built on the Tyne. We must do everything we can to encourage shipowners to continue to invest. The financial state of their industry is so bad that they cannot invest without tax relief. If they are not asking for operating subsidies they should at least be given tax relief. The lack of incentive and of help to our shipowners makes Britain unique. It needs to be put right.

I come to the problems of navigation, and the ports around our coasts. They have the greatest effect upon the British Merchant Navy since it is the British Merchant Navy that uses our ports most. Pilotage is a matter that deserves a separate debate. I welcome the recent publication of a Green Paper on that difficult subject. Ships coming to this country can be charged £12,000 for light dues, whereas if they go to continental ports they pay nothing at all. This leads to ships avoiding Great Britain and to traffic being diverted from our ports to western European ports, with goods being brought on to Britain on cross-Channel ferries. This results in a further adverse effect upon our deep-sea shipping fleet.

I was at Southampton recently. It was a sad sight. That great port has eight container channels. Not one container was to be seen there. The whole trade of the port has gone. While that is harmful to Britain and surely disastrous for Southampton, it must certainly also be bad for the British Merchant Navy if ports of that magnitude are closed down by the lunatic action of the labour force. I say to my hon. Friend the Under-Secretary of State for Transport that the dock work labour scheme must be given further attention by the Government in the interests of those who work in the industry as much as of those in the Merchant Navy.

One of the problems is the lack of co-ordiation between Ministries. That is not through any lack of goodwill or intent. It is just the result of the history of Government in this country. I do not believe it to be sensible that the vital question of labour relations in the ports should not be handled by the same Ministry as deals with the Merchant Navy.

The efficiency of ships can be helped by improvements in fuel efficiency and design. I welcome the efficient ship project, which the Government are supporting, but I repeat that there will be no investment in new ships unless there are Budget changes. The inadequacies of the present system must be put right in the next Budget.

I believe that this will not be the end of the matter for this House. A maritime league has been formed in this country, consisting of eminent people who deal with every aspect of maritime life. It will continue the battle for the Merchant Navy. There is a maritime affairs committee in the House. It is on an all-party basis and is chaired admirably by my right hon. Friend the Member for Taunton. It will not go away, either.

I am sure that we shall return to this subject. The message that has to go out from our debate today is that as a first step the Treasury must accept the need to give assistance in the next Budget to our shipowners. It is absolutely vital that this message should be taken on board.

5.57 pm

Mr. Stephen Ross (Isle of Wight)

I am pleased to follow the hon. Members for Tynemouth (Mr. Trotter) and for Wallsend (Mr. Garrett), because I know a little about the technical college which trains Merchant Navy officers and personnel at South Shields. Until recently my daughter taught there. She conveyed to me the depressing nature of the rundown in numbers and the virtual closure of that college, which has played such a great role over many years.

I, too, congratulate the hon. Member for Romsey and Waterside (Mr. Colvin) on choosing this subject for debate. It is important that we should discuss these matters—in particular the dramatic decline in the strength of our Merchant Navy and the continual rundown of our shipyards.

As has been mentioned, since 1975 the number of ships in our merchant fleet has more than halved. The number has gone down from 1,600 to only 700. Between 1977 and 1980 about 24,000 jobs were shed in British shipyards, and many more have disappeared since then. More shipyards have been closed and there have been continual lay-offs. A great number of lay-offs are taking place at the moment, not only in the north-east, but in Southampton, at Vosper Thornycroft, a very modern shipyard which I believe should never have been nationalised. No new orders at all were received by British shipyards between July and September.

However, I welcome, as I am sure the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) also welcomes, the recent order which has been placed by British Steel for a bulk carrier at Harland and Wolff. My inspection of Harland and Wolff leads me to believe that it is as superbly equipped a shipyard as any in the Western world. That at least is one piece of good news. Every effort must be made to keep Harland and Wolff in operation.

Fiscal measures relating to taxation would help the shipowners of this country. I shall not repeat what has already been said. I support the GCBS proposal for a 50 per cent. ship allowance, not only for new but for secondhand vessels.

The "British Shipping Review 1984" says that Norway, Denmark and Japan provide extended periods of finance for up to 10 or 12 years, with initial grace periods of two to three years. While those schemes may have been devised to help domestic shipbuilders, obviously British shipowners have had some benefit from that. There is a host of examples of the sort of help given in West Germany, the Netherlands and many other parts of the world.

Does this country really want to opt out of owning a merchant fleet or building any more ships? Some operators in the City believe that we cannot compete and that, therefore, we should order all our ships from Taiwan—I have seen the very impressive shipyard there—Japan or Korea and perhaps merely fit out ships in this country.

That view was put to me by a City shipowner— I shall not name him—when I suggested where he might order his new ferry. The Under-Secretary may guess where it will be operating to and from. The Robb Caledon yard had just closed, and it seemed to me that such an order would be a great opportunity to reopen the yard. He said that I must be mad if I thought that he could get a ship built on competitive terms in a British yard. He said that the order would go perhaps to Scandinavia, but probably to the far east and that all that a British yard could do would be to fit out the ship.

That view is far too defeatist and must be resisted. The Government must help. I welcome the establishment of the all-party maritime affairs committee under the distinguished chairmanship of the right hon. Member for Taunton (Mr. du Cann), who spoke so knowledgably earlier. However, we are late on the scene. As a member of the committee, I pledge that we shall maintain the pressure until we see an upturn in our merchant fleet.

I congratulate the Government on facing reality in their Green Paper on maritime pilotage. That remark will probably not go down too well in my constituency, because a number of pilots live there, but the Government cannot opt out of the compensatory redundancy payments that will inevitably arise. The Green Paper says: The Government propose that as a matter of mechanics the cost of the scheme should be met from a levy on harbour authorities, which would be recoverable from a special charge on shipowners. We made a previous attempt to get some sense into pilotage, and it was accepted that 600 or more pilots might be made redundant. At that time, it was thought that redundancy payments would average about £80,000 per pilot. The shipowners said that they could not meet such sums, and it is hardly likely that they will be able to do so today when the situation is so much worse. There is a case for what the Government have set out in the Green Paper. However, the terms will have to be generous if we are to get a sensible settlement. A three-way split between the state, port authorities and shipowners is surely the right way forward.

Like other hon. Members, I am depressed by what I have seen across the water from my constituency, in Southampton. The actions of some dockyard workers and their colleagues in that port are, as was said earlier, sheer lunacy. They have put in jeopardy the jobs of too many innocent bystanders, whose livelihoods depend on a vigorous, modern, well-run port complex. Many Southampton operators have moved to Felixstowe, and one has even gone back to Liverpool. Perhaps we should give a cheer for Liverpool, but if Southampton has put itself in the same league as Liverpool, I deeply regret it.

Southampton has all the advantages: excellent facilities, four tides a day, and so on. Regrettably, the workers have committed suicide, and they have taken many pilots, tug owners and launch supply operators with them. That has had an effect in my constituency. Even taxi drivers in Southampton complain bitterly. The whole economy of Southampton has been affected.

A new attitude is required if we are to put matters right. We need a competitive port with a sustained record of industrial peace. Otherwise, shipowners from abroad will not come to our ports. We need to make proper use of modern technology and end overmanning, though with adequate redundancy terms.

As has been said repeatedly in the debate, we need the Government to provide a more sympathetic tax regime and financial help over the next few years similar to that which is so readily available to our competitors. We want fewer crippling charges imposed on shipowners and a determined effort to encourage people to buy British and to repair ships in British yards.

I tried today to get a copy of the evidence given to the Select Committee on Defence by the Under-Secretary of State for Transport, but I gather that it has not yet been published, so we cannot read what was said. The hon. Gentleman was dealing with the role of the merchant fleet in support of the Royal Navy in times of crisis, and what I have heard secondhand is not reassuring. Therefore, I hope that the Under-Secretary will say more about the issue when he replies to the debate.

I welcome the inquiry that is to be set up, but it is far too late. We know what the inquiry will show, and if we wish to save our merchant fleet we must take action now.

6.6 pm

Sir David Price (Eastleigh)

I shall not follow what the hon. Member for Isle of Wight (Mr. Ross) said about the problems of the dock industry in Southampton, though we could have a fruitful debate on that subject alone.

I join other hon. Members in congratulating my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on his success in the ballot and on his choice of subject. It must be clear to my hon. Friend the Under-Secretary of State for Transport that the House is disturbed by the decline in the size and scope of the British merchant marine.

Various figures have been bandied about, but I prefer the simpler and more homely statistic that our fleet has been declining by two ships a week—we have seen the fleet stealing away into the mist—and it is continuing to decline.

Every hon. Member has asked the simple question: is it in the national interest that there should have been such a decline and that the decline should continue? The answer from every hon. Member has been a firm no.

The message from the debate is that, although we all have our own solutions, we agree that in the national interest the present situation must not continue. In saying that I must declare an interest, because my constituency, which surrounds Southampton and includes a corner of the city, is deeply involved in the shipping industry and I have professional contacts with the industry.

No hon. Member has yet discussed the Government's policy as they have stated it. It has been suggested that the Government do not have a policy but I know that they have one, because it was spelt out to me by my right hon. Friend the Secretary of State for Transport in reply to a question from me earlier this year. My right hon. Friend told me: The Government will continue to fight strenuously for the widest and fairest possible opportunities for British merchant shipping to compete in the shipping markets of the world. The industry's future will depend mainly on the use it makes of those opportunities, and thus on the enterprise of our shipowners and seafarers. These have always been the main factors in the industry's fortunes."—[Official Report, 9 July 1984; Vol. 63, c. 375.] How far have the Government succeeded in achieving the laudable objective set out in the first sentence of that answer?

The annual report of the GCBS states: Non-commercially operated shipping from Soviet bloc countries continues to cause major problems in many important liner trades and in the UK cruise market by grossly undercutting British and other Western operators. There should be an agreement with the NUS about that. I am sure that Jim Slater would agree that the Soviet bloc has been undercutting.

The report continues: Moreover, in the liner trades, a deluge of new tonnage is about to fall on the market. Highly subsidised either by the shipowning or shipbuilding country, in some cases operated by companies based in countries which restrict access to their own trades, these ships will operate almost exclusively as cross-traders. Many will be manned and operated from relatively prosperous newly industrialised countries, where trade unions show modest aspirations for their members. Hence they will have substantial cost advantages over operators from European countries of comparative affluence." I speak as a former Minister at the Board of Trade, and it is clear to me that that in ordinary language means dumping. We must therefore use some form of antidumping legislation against them. I am without doubt in favour of action. Obviously, the action is better done if we can do it on a European basis. I am glad to tell the House that from my information the Commission of the European Community is well seized of that matter and is well on the way to producing a shipping policy to put before the Council of Ministers. I commend what I have seen of it in draft form.

The Secretary of State for Transport (Mr. Nicholas Ridley)

I only wish to say I received it on Wednesday and that I agree.

Sir David Price

When my hon. Friend replies to the debate, I hope that he will support what is being proposed in Brussels. Broadly, the message is that the time has come when we must collectively take action against unfair competition, and that it is better done collectively than individually. Therefore, I hope that the Government will give the new policy their full support.

In the meantime, European countries would be in a better position to take such action if they lived by anti-discrimination within Europe. Many hon. Members, especially my right hon. Friend the Member for Taunton (Mr. du Cann), referred to my efforts this summer to demand action against our so-called partners in Europe for not allowing free access to their coastal waters. My hon. Friend the Member for Tynemouth (Mr. Trotter) suggested that there had been a great decline in coastal shipping. I remind him that coastal shipping round our own coasts carries in terms of tonne-mileage 2.8 times more freight than is carried by rail. It is second only to transport by road as the main United Kingdom carrier of freight. I commend to the House the figures that I received in reply to a question that I put to my hon. Friend the Parliamentary Under-Secretary of State on 25 June. Coastal shipping is increasing, not declining, largely because of the moving of oil products.

Mr. Trotter

I referred to the 1930s, when there were between 50 and 70 colliers on the Tyne, and at a small port like Blyth between 30 and 40. Now the figures would be two or three for that particular trade.

Sir David Price

There has been an increase in fuel technology, and in those days there were no large coastal refineries. What we have lost in coal we have gained in oil. I repeat that coastal shipping is the second most important method of moving freight around our kingdom.

With regard to the extension of the Community to include Spain and Portugal, if we have free cabotage for British shipping within the EC, the Atlantic ports and the whole of the northern Mediterranean coast will be open to our coastal traders. That would be a great bonus to British coastal shipping. When my hon. Friend replies, I look forward to repeated assurances in addition to those which he has already given me that in the Council of Ministers we shall fight for British rights of coastal access.

I deal next with other forms of appropriate Government aid within the context of free trading and an open seas policy, which the industry and I support. I agree with many of my right hon. and hon. Friends that the Chancellor's measures in the last Budget were not helpful. I hope that some effort will be made to reverse them. It is perfectly legitimate to ask for appropriate tax treatment of capital in the next Budget. The Minister knows that the industry has been making representations about that. I know that this is not the occasion to advance detailed arguments, but I hope that he will give the general idea a fair wind. Similarly, current shipping costs are largely crew and fuel costs. The impact of crew costs can be assisted through favourable taxation treatment. I shall not develop the point further.

My hon. Friend the Member for Tynemouth referred to the problem of lights, and the hon. Member for Isle of Wight commended, as I do, the new proposals on pilotage. However, there is a problem of charges. In a perfect world it is right that the charges should be borne by the industry, but in an imperfect world the industry finds them hard to bear, especially as none of its competitors must bear them. That point is not fully appreciated. The main users of lights are not the merchant fleet, but private yachtsmen. Merchant ships are so well equipped with navigational aids that they need lights less than they did in the past. Therefore, I hope that my hon. Friend will consider further the lights problem.

My hon. Friend the Member for Tynemouth wisely said that the Merchant Navy is the fourth arm of defence. However, both its size and mix are matters for its effective support of the Royal Navy. Even more critical is the time scale of the decline both in absolute terms and in the mix of the fleet. I suspect that the admirals who do their sums assume that what is on the books now will be on the books in four years' time. However, given the trends that many hon. Members have described to the House, that cannot be a certain assumption.

There is also the question of flagged-out ships which may be under beneficial ownership from this country. There is no certainty whether the crews of those ships will be available in an emergency. That deserves more study than it has so far been given.

Thought should be given to providing some sort of financial arrangements to companies which commit their ships to the Ministry of Defence, similar to that which exists for people — a ship version of the Royal Naval Reserve. There should also be a form of bounty for reserved ships. That would be a legitimate way of giving a little modest help to British shipping companies at this difficult time.

The decline of the British Merchant Navy has reached disturbing proportions. It must be halted and reversed. I invite the Government so to do. Although this is Christmas time, I do not ask the Government to emulate Santa Claus, only to be wise men.

6.18 pm

Mr. Don Dixon (Jarrow)

I congratulate and thank the hon. Member for Romsey and Waterside (Mr. Colvin) for initiating this important debate. The hon. Member for Tynemouth (Mr. Trotter) talked about the colliers on the river Tyne. I can remember colliers, Blue Star boats, city boats and tankers lying three or four abreast, but now there are virtually no ships to be seen.

My area designs, builds, sails and maintains ships. The Royal Navy cannot be divorced from the merchant fleet, nor the capacity to build and maintain the fleet. I agree with the right hon. Member for Taunton (Mr. du Cann) that we require a maritime policy. We have asked for a maritime policy on many occasions in the House, and the Select Committee on Trade and Industry recommended it in 1981. Britain must be the only maritime nation that has no maritime policy.

I was born in Jarrow, which was a shipbuilding town, and from the day I was born I was meant to work in the shipyards, just as someone born with a silver spoon in his mouth is meant to go to Eton. My grandparents and father were shipyard workers, and I was always being told how important seagoing was. I was told a tale about a Mr. Jenks who used to deliver manure by horse and cart. He did so, despite the arrival of gas turbine motor cars, jet aircraft and spaceships, because he discovered that with his horse and cart he could deliver manure with an economy and a certainty that pleased his customers and repaid him. Manure for the fields of England and food and goods for the rapidly increasing number of under-fed people in the world need neither missiles, spaceships nor jets; just a safe and certain means of transport so that the cost can be kept as low as possible.

If Mr. Jenks' horse became a Pegasus and grew wings, it might be able to lift about 15 lb of books from the Table and carry them through the air. However, if we taught the horse to swim, it could probably tow 50 or 60 hon. Members through the sea. Horse power is extremely important. It is important to realise that it could take 15 lb by air, but 9,000 lb by sea.

The need for a navy stems principally from the possession of a merchant fleet and the need to ensure that merchant ships have unhampered passage through the world's sea routes. General Galtieri taught Britain a lesson about the importance of surface ships and a merchant fleet; 54 merchant ships were in the task force that went to the Falklands. Everyone, from the Prime Minister upwards, or downwards—it depends how one looks at it—realised the importance of our merchant fleet. Yet, since the Falklands crisis, there has been a reduction of 200 ships in the merchant fleet. During the NATO exercise Operation Lionheart we had to charter foreign vessels.

There has been much publicity recently about the Royal Princess, which was built in Finland. It was a tragedy and a disgrace that British Shipbuilders did not tender for that ship, which is one of the finest passenger ships sailing the oceans.

Many hon. Members have mentioned the fact that the 1984 Budget was a disaster for United Kingdom shipping. The first thing that the Treasury should do is to put that right by introducing 100 per cent. fair share allowances and free depreciation, not by removing the 25 per cent. tax relief for seafarers, as is promised in next year's Budget.

In 1975, the United Kingdom fleet had 1,600 ships and a dead weight tonnage of 50 million. Now it has 700 ships and a dead weight tonnage of 18.5 million. To maintain it at that level would require new orders for 1 million tonnes every year. If new orders for 1 million tonnes were placed in British shipyards, we would not have problems such as we have in the shipbuilding industry. As the hon. Member for Romsey and Waterside said, for the past nine years we have been losing two ships a week. That has happened not simply because of a decline in freight orders, but because of containerisation and the fact that British trading patterns have become increasingly dominated by Europe. For many years I worked on refrigerated vessels that took fruit and meat from Australia, New Zealand and South America, but those ships no longer come to our shores.

When the merchant ships returned from the Falkland Islands bands were playing, Rule Britannia, Britannia rule the waves. If the Government do nothing about the decline in the shipping industry we will not even break the waves, let alone rule them.

The hon. Member for Romsey and Waterside, referring to protectionism, said that, while Britain was playing cricket, the rest of the world is engaged in karate. As an ex-boxer, I would say that, while Britain is fighting according to the Marquess of Queensberry's rules, the rest of the world is engaged in all-in wrestling. We do not have an open market. The Government must do something about the decline in shipping, shipbuilding and engine-building industries, which are important to an island nation. In a world two thirds of which is covered by water and 98 per cent. of whose trade is carried by sea, it is important that something be done immediately.

6.25 pm

The Parliamentary Under-Secretary of State for Transport (Mr. David Mitchell)

I am glad to have the opportunity of responding to the motion that was so ably moved by my hon. Friend the Member for Romsey and Waterside (Mr. Colvin). In the terms of his motion, he recognises the importance of shipping to our trade and our defence, and the importance of our fleet in its own right. I agree with him. It is overlong since the House gave time to this important industry. It is perhaps surprising that the Opposition have not chosen the indusry as the subject of an Opposition debate, so I am doubly grateful to my hon. Friend for choosing this subject. The motion follows his recent valuable contribution to the debate about the future of the United Kingdom merchant marine in the document produced by the Centre for Policy Studies entitled, "British Shipping — the Right Course." The hon. Member for Wigan (Mr. Stott) paid tribute to that document, although he did not agree with everything that it said.

The Government naturally share the concern expressed in the debate by hon. Members on both sides of the House about the decline of the United Kingdom merchant fleet. It has been a cause of understandable concern to me and my colleagues, as I know it has been to seafarers and their unions, the shipowners, the General Council of British Shipping, and to others concerned with our island's interests and our maritime history.

The decline in the merchant fleet looks especially dramatic if it is measured against the exceptionally high figure to which the fleet had grown in 1975. It may be useful to the House if I restate some basic facts about our fleet. Its high reputation, the skills that are brought to bear by the officers and men who man our ships, and the high calibre of the ships are all known and give us a world-wide reputation. But it is perhaps sometimes overlooked that, despite the decline, the United Kingdom fleet is the seventh largest in the world. That puts us well above our natural position in relation to our total trade. Among European fleets we rank as third, and within the EC as second. Therefore, although I recognise fully the deep concern which the Government share about the decline in the fleet, it is right to put it in perspective.

My hon. Friend the Member for Romsey and Waterside was right to draw attention to the various roles in which the merchant fleet is involved. It is clear from the debate that the House shares his anxiety in three areas: first, in terms of enabling us to carry on our import and export trades where we are so dependent on the sea and ships for bringing in and taking out so much of our trade; secondly, the vital area of defence, which several hon. Members mentioned; and, thirdly, the realisation that the United Kingdom fleet is a major national asset, a major investment, a source of jobs and an industry in its own right.

Perhaps I may mention the projections about the rate of decline of the United Kingdom fleet. My hon. Friend the Member for Romsey and Waterside referred to projections that would lead to the fleet's being extinguished. The General Council of British Shipping has suggested that the 700 vessels which now form the United Kingdom-owned and registered fleet will have fallen to 400 by 1986. Others, further projecting the current rate of decline, declare that by the year 2000 there will be no United Kingdom fleet. Even the hon. Member for Wigan who spoke on behalf of the Opposition, referred to the time when there would be no fleet left. It is far too simplistic just to extrapolate the recent level of the decline and suggest that there is an inevitable progression to the sort of figures that have been spoken about. I do not demur from the concern expressed by my right hon. Friend the Member for Taunton (Mr. du Cann) about this matter. He is chairman of the all-party maritime group, and I hope that we can have discussions about this matter.

My hon. Friend the Member for the Isle of Wight (Mr. Ross) will know that I am not responsible for shipbuilding. However, does he not recognise some inconsistency when he complains about uneconomic freight rates, because of the glut of shipping, in the same breath as he calls for subsidies for shipyards to build more ships, even in his constituency? The truth is that the fleet is not a single fleet; it is many separate fleets. For the House to judge the seriousness of the decline, where it comes, where the shoe is to pinch and what the causes are, we need to look more closely at the different mini-fleets that make up the total of the United Kingdom merchant marine against the background of the changes in our pattern of trade, which themselves lead to a different demand pattern for our fleets. For example, the change to membership of the Common Market has meant that a much larger proportion of our trade is no longer long distance, to the Commonwealth, but is on short haul from the east coast to European ports.

I commend to the House the analysis of the reasons for the decline given by my hon. Friend the Member for the Isle of Wight. He analysed brilliantly, as one might have expected from his experience of the industry, what is going on. He said that seven or eight ships of the old fleet are now replaced by one container vessel. That is one of the many signs of the extent to which there are forces at work that are not within the control of any Government and that are leading to a decline in the number of vessels.

The development of containerisation has meant fewer and larger ships with smaller crews, and the oil crisis of a decade ago has had a dramatic effect on the pattern of the oil trade. For example, 55 per cent. of all the tonnage lost over the last decade—the largest proportion of all reductions in the United Kingdom merchant marine—has been in tanker tonnage. That has not been through any failure on the part of the Labour party when it was in government or of this Government. Principally, the tonnage has fallen because the world trade in oil shrank with high prices and we became self-sufficient from North sea oil being brought ashore by pipeline.

The huge surplus of tankers looks as if it may be coming to an end. One can contrast that with what has happened with regard to containers. We have one of the largest container fleets in the world, but Evergreen and United States Lines are proposing giant, round-the-world, minimum stop operations, which will present a huge challenge to our fleet. The prospect of a freight war developing, with massive surplus tonnage, is horrifying. My hon. Friend the Member for Boothferry (Sir P. Bryan) referred to its devastating potential.

I hope that my right hon. Friend the Member for Taunton will accept that there are many complex factors at work in the decline of our fleet. Happily, roll-on/roll-off and ferries are operating in a more buoyant and steady market, which shows that, while the total size of our fleet has declined and some further decline is on the cards, it would be wrong to extrapolate the figures of the past decline and assume that we shall end up with nothing.

The Government's strategy falls into three parts, all of which were referred to by my hon. Friend the Member for Romsey and Waterside. First, there is the need of our island for ships to import and export goods; secondly, there is our defence strategy; and, thirdly, there is the help and encouragement that we can give to our ship operators. The House may expect me to start by saying that we must have a fleet of a given size to be able to carry goods to and from the United Kingdom, but that is not the case. Our fleet is important because of the jobs and the overseas earnings that it provides in itself. However, in terms of our imports and exports, the important factor, which relates directly to our competitive position and therefore to our national need, is that we should have efficient shipping services, able to get in and out of our ports with the minimum of burdens, to enable our exporters to compete. That is true in the changed pattern of trade, as so much of it lies with Europe. Our principal competitors are in Europe where they have land frontiers, while everything that we have has to be dragged across the sea and through our ports.

In this connection, it is important that we should minimise the burdens that are imposed on our shipping industry and those who use our ports. We have a continuing dialogue with the General Council of British Shipping about the burdens imposed by the Government, and we are seeking to do what we can to minimise them. For example, the cost of lighthouses and buoys around our shores is an expensive burden, amounting to £43 million a year, which is paid by ships using our ports. For some time, shipowners and the Public Accounts Committee have expressed concern as to whether the money was being most effectively spent. I am pleased to be able to tell the House that Trinity House has now invited the Government to nominate four business men to serve on the reformed Lighthouse Board, which has responsibility for this function under Trinity House.

Mr. Jonathan Sayeed (Bristol, East)

Does my hon. Friend accept that there is a case, in equity, for those charges falling not just on shipowners? My hon. Friend the Member for Eastleigh (Sir D. Price) mentioned that these facilities are used most by yachtsmen, and the whole country benefits from having a safe maritime regime. Is it not possible for this cost to fall on the Exchequer rather than directly on shipowners?

Mr. Mitchell

On the total burden of lighthouse costs, Trinity House will welcome the addition of four distinguished business men on to the Lighthouse Board, which is involved with the administration of the service. That should lead to an assurance to the shipping community that there will be good value for money in the handling of the money that goes into the fund.

My hon. Friend raises a different point, which concerns not the totality of the expenditure, and therefore the totality that would be raised, but the distribution of it as between the commercial shipping, shipping and yachtsmen. We have identified this as a significant problem. There is an apparent unfairness about it. I understand the misgivings that the GCBS has expressed on this matter. We have commissioned a firm of management consultants to look into matter, and I expect to have its report early in the new year. I shall report to the House on what its recommendations are. I hope that my hon. Friend will recognise that that will cover the points that he raised about yachtsmen.

Mr. Donald Stewart

In view of the comparatively small sum involved, and as the whole rescue service is borne by the Royal National Lifeboat Institution, it would be a welcome contribution if the Government would bear the cost of lighthouses and buoys.

Mr. Mitchell

It would be nice for all of us if the Government had a bottomless pit out of which they could finance endless numbers of goodies. We would not then need to argue late into the night the relevant merits of spending money on kidney machines or lighthouses. However, in many sectors it has long been established that it is right and proper — and in this regard it has happened under all Governments—for the users of the service to pay for it rather than the general taxpayer. If that is a view that the right hon. Gentleman feels should be debated when the report is received from the consultants, I have no doubt that he will initiate an opportunity to do SO.

Another burden is that of pilotage. I welcome the support of the hon. Member for Isle of Wight (Mr. Ross) for our proposals for the reform of pilotage in the United Kingdom. I am also grateful to my hon. Friend the Member for Eastleigh (Sir D. Price) for his support.

Pilotage is another very substantial cost which has to be paid by ships coming to and going from our shores. It is quite right that we should give the highest possible priority to ensuring the safety of vessels coming in and going out of our ports. In a Green Paper that we published at the end of last week, we announced significant changes which will make for a more cost-effective service while in no way endangering the safety of vessels. It will give to the ports responsibility for pilotage as one of the services provided within ports. These proposals are being cautiously welcomed by the General Council of British Shipping and by Trinity House, which sees it as a new challenge as it will be able to tender for the work around our coasts. Concern has been expressed by the pilots themselves, and I look forward to hearing the response of the British Ports Association.

Another burden to which attention has been drawn is the cost of moving ships into the United Kingdom flag. A good deal of work has been done to reduce that cost and to make it possible for vessels to flag-in more easily. But my hon. Friend the Member for Romsey and Waterside referred to further barriers, and I shall be grateful if he will write to me about them so that I can look at them more closely.

A number of the hon. Members drew attention to the tax position of British fleets. I shall ensure that what they said is drawn to the attention of my right hon. Friend the Chancellor of the Exchequer.

My hon. Friend the Member for Romsey and Waterside also asked me about conference loyalty arrangements. We have given much thought to the proposal that the postponed EEC competition regulation should prohibit conferences from enforcing loyalty arrangements in respect of more than 70 per cent. of shippers' custom. In our consideration we have taken account of the many views expressed to us, but I can now announce that we no longer intend to pursue this proposal.

Widespread anxiety has been expressed about our defence needs. I have been asked whether we would ever again be able to mount that which was done at the time of the Falklands in terms of merchant marine support for the Royal Navy. I have been asked about our NATO reinforcement ability and the needs of the Ministry of Defence. The hon. Member for Wigan referred to the cross-party recognition of the importance of these matters. We should seek where we can to ensure that these matters are not unnecessarily involved in the party political dogfight.

There is a continuing dialogue between the Department of Transport and the Ministry of Defence, in which the latter identifies its needs, and my Department has the task of ensuring that those needs are supplied. At the moment there is no reason to suppose that we are unable to supply those needs in one way or another. But that begs the question about what will happen in the years ahead if the decline in our fleet continues. For this reason, we have obtained from the Ministry of Defence its forecasts of its needs at varying times over the next few years and in 1992. Having its detailed analysis, we are now going out to consultants. A contract has been placed to see whether the vessels required at those forward dates will be available.

Should we find that some years ahead we are unlikely to meet particular needs, various possibilities are open to the Government. We have long-standing plans for collaboration with our NATO partners, and it is possible that they could help. However, it is not simply a question of the United Kingdom-registered fleet being available. In addition to the United Kingdom fleet of about 800 vessels, we have requisitioning powers in respect of 400 vessels registered in our overseas dependencies and 250 further vessels which are flagged out but beneficially owned by the United Kingdom. That makes a total of 1,450 vessels.

Sir David Price

Although they could be requisitioned, will my hon. Friend bear in mind that their crews are not British subjects in the ordinary sense of the word? With the changing policies of some of those countries, it is doubtful whether they would be available.

Mr. Mitchell

I am grateful to my hon. Friend for reminding me of that. I had made a careful note that he and other hon. Members had referred to it as a matter that I must take back and look at more closely with my officials in the Department. I undertake to do that.

Mr. Sayeed

Beneficial ownership has been discussed a number of times. The suggestion is that those 250 ships flagged out but under our beneficial ownership could be used by us. I and many others who understand flagging out believe that that is by no means certain. We doubt whether our Government could get their hands on those ships, because it is not certain that the minority partners would necessarily let our Government get their hands on them or that their crews would want to go to war under the British flag. That being so, it is extremely optimistic to assume that 250 ships that have been flagged out will be available in time of conflict.

Mr. Mitchell

There may be some which are not available. There may be others which are in far off parts of the world and will not be immediately available. But my understanding is that in law we have the power to requisition. However, that does not detract from the perfectly valid point of my hon. Friend the Member for Eastleigh about crewing these ships. I was about to say to him that it is one of the benefits of this overlong delayed debate that hon. Members have been able to draw attention to important matters that we must take in hand.

Mr. Garrett

In Exercise Lionheart last autumn there were huge successes, but one of the failures related to the mobility of our shipping. It was difficult to get the right types of ships for the right vehicles and with the right storage and necessary speed to get them over to mainland Europe. Can the hon. Gentleman assure the House that this matter is receiving serious consideration? In an emergency it would be of vital importance.

Mr. Mitchell

The hon. Gentleman is right, but perhaps I can reassure him about it. In order not to interfere grossly with the holiday traffic and the ferries on their daily commercial routes across the channel, they were not requisitioned. The exercise was conducted using other vessels. But obviously people would not be going abroad on holiday at times of tension.

Mr. Richard Ottaway (Nottingham, North)

My hon. Friend said that the Government did not wish to disrupt holiday traffic. Will he make inquiries to discover how many British shipowners were even approached to see whether their vessels were available. I know of one vessel which was laid up and which would have been perfect for Exercise Lionheart. It could have been used, but the owners were not approached.

Mr. Mitchell

I am grateful to my hon. Friend for raising that matter. I shall make inquiries and write to him. However, against the fact that we required 49 vessels to support the initial Falklands operation, the fear that out of the 1,450 vessels that we have power to lay our hands on we would not be able to find that number does not seem to me to be borne out.

Should shortages emerge in the future, we could purchase ships for addition to the Royal Fleet Auxiliary. There are a number of other options, some of which it would be inappropriate to dwell on here. The aim of the surveys that we have set in hand is to discover whether there will be shortages of specific types of vessel, and I have no wish to prejudge the findings. It would be for us to consider how best to meet any such shortages in specific areas, rather than to do something about the generality of our fleet on defence grounds.

A vital part of the debate related to the huge United Kingdom investment in our fleet, the importance of its overseas earnings and the jobs which it provides. A fundamental choice has to be made between whether we are for protectionism or free trade. Countries will choose whichever of those two policies suits their national needs. There may be some, with a small national fleet which they are ambitious to see grow, which feel that it makes sense to go for cargo reservation and suffer the disadvantage of higher freight rates on their exports. But if, like us, a country has a large fleet—far too large for its national trade—an open market across the world is needed in which to deploy that fleet. We are certainly in that camp, as my hon. Friend the Member for Romsey and Waterside stressed.

Some 58 per cent. of our fleet's earnings come from the cross trades. We must have fair and open markets to provide that opportunity. Indeed, I pray in aid the words of the greatly respected president of the General Council of British Shipping who, on taking up his post, said: So what should be done? Do we want Government subsidies or protectionism? No, gentlemen, we do not. I believe that is a route which we should only seek to follow if all else fails." I concur with that view.

Dr. David Clark (South Shields)

I have been very patient. I accept the thrust of the Minister's argument, but Norway is an even better example than the United Kingdom in cross trades. How can the hon. Gentleman justify one British vessel in the Norwegian section of the North sea and 48 Norwegian vessels in our section?

Mr. Mitchell

I shall come to that point. I am glad that the hon. Gentleman has raised it.

The hon. Member for Wigan asked about the inspection of substandard vessels. I agree that that is important. We exercise port state control strictly and I have initiated a considerable tightening up of that. It is effective in deterring people from bringing substandard vessels to Britain.

The Department of Transport is engaged, with the help of other Government Departments, in seeking to ensure that the number of markets closed to us is kept to a minimum so that our fleet has the maximum trading opportunities. In terms of value, we reckon that only between 10 and 15 per cent. of total international seaborne trade is now subject to reservation. That is to say, between 85 and 90 per cent. is free, open and available for our ships to operate in. Certainly we keep up constant pressure in one way or another against those who seek to close the markets to us. That is most often successfully achieved by acting in co-operation with other countries. For example, talks have been going on between the United States and the Consultative Shipping Group. Those are designed to hold back the tide of protectionism where it stands today, and to ensure that there is no further creeping protectionism. That can be achieved only by acting together.

The hon. Member for South Shields (Dr. Clark) referred to Norway and the fact that there is only one British vessel operating there. One of the biggest single reasons for that is that Norwegian vessels are not required to take a pilot, but British vessels are. That has two disadvantages. The first is financial. To have to pay £200 on entering and leaving port in a competitive market is not peanuts. Far more important is that an oil rig requiring a supply vessel needs to have it immediately when the weather is right. If a vessel has to wait for a pilot, it will not be much cop as a potential bidder for a contract. Recognising that, at the suggestion of the GCBS I went to Norway and had long and frank discussions with its Minister. He came back here and we completed our discussions. The Norwegians have now waived that requirement in respect of United Kingdom supply vessels operating out of Norwegian ports.

Another important area is the EEC. The time has long passed when it should have developed a shipping policy. There have been enormous benefits to European countries from larger trade in goods as a result of membership. Such a policy should have applied to services in aviation and shipping, and it has not. We have been putting on as much pressure as we possibly can in recent months to try to get it to do just that. My hon. Friend the Member for Eastleigh is right to refer to the importance of that area and of cabotage and all the unfairnesses thrown up from open access to our coastal ports for other European countries while some at least close theirs to our fleet. We cannot with equanimity allow that to continue.

The Commission, under considerable pressure from us, has at last produced its memorandum. We are waiting to see its terms, which I understand were agreed by the Commission last Wednesday. We look forward to pressing the Council of Ministers to bring that policy to a successful conclusion because it will provide fairer trading and competition within Europe.

It is not for the Government to run ships; it is for our shipowners and merchant mariners. They have had a tough task, and I praise them for the way in which they have tackled it. It is the Government's job to seek to ensure fair trading opportunities. On that I am never satisfied, but we are working on it and more progress has been made than hon. Members may recognise, particularly in relation to a joint response to protectionism by the United States and the OECD countries. I hope that in January we shall sign an agreement committing the signatories to act together against any new protectionist devices which may emerge. We attach importance to early progress on the Commission's memorandum on a shipping policy in Europe and on a competition policy as part of it.

We shall ensure that there are sufficient vessels to enable us to fulfil our defence requirements. There certainly are at present, and forecasts have been made for the years ahead. We have taken steps, such as I have spelt out to the House, to limit the burdens imposed by the Government on vessels using our ports.

I do not claim that the Government have all the answers. There is a considerable pool of wisdom in the House on this subject. It is important that Ministers should listen, and I have done so carefully. I shall consider equally carefully the points that have been made. I again express my gratitude to my hon. Friend the Member for Romsey and Waterside for having introduced the motion.

6.57 pm

Mr. Colvin

In the remaining few minutes I want to thank my hon. Friend the Under-Secretary of State for his reply and also to thank those hon. Members who have participated in the debate, a feature of which has been the measure of all-party support for demands to improve the lamentable state of our Merchant Navy, and the awareness of the fact that if the present trend continues and the number of our ships continues to drop Britain will be in dire straits not only from an economic point of view, but from the point of view of our strategic defence.

I was pleased to note that my right hon. Friend the Secretary of State was present during most of the debate. I trust that he has taken copious notes of some of the points that have been made. In particular, I was impressed by what my hon. Friend the Member for Boothferry (Sir P. Bryan) had to say about the way in which some of the bigger companies have pulled out of shipping. That highlights the essence of the problem mentioned by my hon. Friend the Under-Secretary of State in his reply to the debate.

It is not the Government's job to run the shipping industry. It is their job to create the economic climate in which shipowners can prosper. That that climate has not been present of late is the reason for so many companies going out of shipping. I wish that it were possible to see the size of our merchant fleet maintained, but until we change the economic climate and encourage people to come back in, we are on a loser.

With that in mind, I am pleased that the GCBS, in its presentation to the Chancellor, has drawn attention to the need for allowances to be made available on secondhand ships. While we lament the state of the shipbuilding industry, there are nevertheless as many ships now laid up around the world as would constitute the whole output of our shipbuilding industry in one year.

I have no time in which to refer to the other remarks of hon. Members. The motion called on the Government to state their policies on merchant shipping, and my hon. Friend the Under-Secretary of State has done just that. We may not be satisfied with all his replies, but he has, nevertheless, stated the Government's policies, and I therefore beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.