HC Deb 10 May 1984 vol 59 cc1066-7
2. Sir Anthony Meyer

asked the Chancellor of the Exchequer what representations he has received on the effect of the withdrawal of overseas earnings tax concessions on British merchant seamen.

The Financial Secretary to the Treasury (Mr. John Moore)

I have met representatives of the General Council of British Shipping and the seamen's unions. I and my colleagues have received some 300 letters from seafarers and their families.

Sir Anthony Meyer

Is my hon. Friend aware that the withdrawal of the overseas tax concessions will result in a net reduction in the incomes of many merchant seamen? In view of the acceleration that this may give to the already alarming decline in the size of our Merchant Navy, will he consider trying to find some way of extending to merchant seamen the concessions enjoyed by British overseas residents, who have to be abroad for only 302 days to qualify for full relief?

Mr. Moore

I am aware of the difficulties facing our shipping industry. We all have respect and sympathy for seafarers, but I hope my hon. Friend will appreciate that it would be difficult to ask the tax system—that means taxpayers—specifically to seek to help a particular work force. To that extent, we must get the figures in perspective. We are talking about 3+ per cent. of the total wage costs of the shipping industry, which is about half of 1 per cent. of the industry's total costs. We must get that figure in perspective. It does impact negatively on seafarers.

Mr. Donald Stewart

In view of the Chancellor's avowed intention to reduce tax levels, is not it inconsistent that an able-bodied seaman in the next tax year may lose £10 per week of income? That figure will rise to £35-£40 for senior masters. Is the Minister aware that that will put us at a disadvantage with our competitors in other merchant navies? Can the Chancellor at least make an increase in the fixed allowance to take into account the fact that these men are away from home most of the year and lack the social and educational advantages that other members of the community enjoy?

Mr. Moore

I shall not try to answer all those points, but I remind the House that the combined effects of the Budget in 1984–85 on a married rating who is on average pay and is spending 200 qualifying days away, will result in an increase of £1.10 per week. I recognise the difficulties, but the reliefs were the product of high marginal tax rates which were sought to be relieved in this way. No one in the House wants to see reliefs of this sort, as opposed to people being paid properly by employers.

Mr. Cormack

Why cannot members of the Merchant Navy be treated in the same way as members of the Royal Navy?

Mr. Moore

My hon. Friend is right to draw attention to the fact that members of the Royal Navy do not benefit in any way from these reliefs. In fact, the reliefs affect only 45,000 of the 65,000 members of the merchant marine.

Mr. Parry

Is the Financial Secretary aware that one of my young constituents—a seaman—will lose more than £500 a year because of the proposals? Is it not disgraceful that seaman—men who work abroad to earn their living—are bracketed with the idle rich who spend half their time on world cruises or in their villas abroad?

Mr. Moore

Nobody is seeking in any way to deny the respect that we all have for the seafarers of our country. However, the reliefs were introduced at a time of high marginal rates, to help the export drive in 1977. The abolition of those high marginal rates has associated with it the removal of reliefs that are not now regarded as necessary. I remind the House of the figures in relation to an average able seaman, who is earning £155 per week. The combined effects of the Budget will mean a difference to him of £1.10 per week.

Mr. Maclennan

In view of the representations that have been made from all quarters of the House, and the undesirability of the work of our merchant seamen passing into the hands of merchant seamen of other countries over whose conditions of employment we have so little influence, will the Minister undertake to reconsider the matter and, if necessary, to treat merchant seamen as a special category?

Mr. Moore

The House has spent a long time trying to remove special categories from the tax system. I draw to the hon. Gentleman's attention the fact that whether our seamen work for foreign or United Kingdom flags the tax system relates to their residency, and equal tax systems apply.