HC Deb 22 January 1986 vol 90 cc423-30

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

11.47 pm
Mr. Dick Douglas (Dunfermline, West)

Before dealing with the subject of this Adjournment debate, may I say that I understand that the Minister who is to reply to the debate has been elevated to Minister of State. I hope that that augurs well for the quality of the reply that I shall receive.

I propose to raise the subject of the implications for the United Kingdom merchant service of the decision by British Petroleum Shipping to end direct employment of its seagoing personnel. This is the latest and one of the highest profile issues to affect the viability of the United Kingdom's merchant shipping capacity. The issues involved affect the Government's role as a shareholder of the parent company. Despite their tendency to privatise, the Government still have a 31.7 per cent. holding in British Petroleum. However, they show an apparent lack of concern for strategic and conventional merchant shipping and for the need to maintain highly skilled seafarers. They also show a lack of concern for the maintenance of good industrial relations.

The White Paper, "The Falklands Campaign: The Lessons", referred to the crucial role of the Merchant Navy. Eight of the ships owned by British Petroleum went to the Falklands. I understand that two others were involved but did not go to the Falklands.

The Defence Select Committee, of which I am a member, examined these issues and reported in May 1985. We were anxious about the availability of merchant shipping to meet possible defence needs. I shall not detain the House by quoting the report extensively, but paragraphs 15 to 17 are crucial and concern registration. Paragraph 15 says: In our view potential legal and political difficulties may make it unwise to rely on the total which the Department of Transport believes to be available for requisition. We drew attention to the disparity between what the Department thought was available in times of emergency and shipping strictly under the United Kingdom flag.

Since 1975, there has been a continued diminution in the size of the United Kingdom flag fleet. I am relying not on statistics made available to the Select Committee but on the General Council of British Shipping review of 1985. In December 1975, there were 1,614 United Kingdom-owned and registered ships of 500 gross registered tonnes and over, and deadweight tonnage of 50 million. In December 1980, that had fallen to 1,141 ships or 35.6 million tonnes deadweight. It fell again to 647 ships or 16.6 million tonnes deadweight, by June 1985. That is a dramatic decrease which should worry us all.

In their wisdom, the Government commissioned a report from the Seagroup—part of Lloyd's of London Press Ltd. —which gave projections of the United Kingdom flag fleet from 15984 to 1992. I shall not bore the House with the statistics. I simply want to know whether the 30 BP ships that are to be manned out to three agencies in particular are in the Seagroup report? If they are, BP Shipping's action undermines the report's view about the availability of ships in times of emergency.

Training suitable manpower also worries us, but I shall now consider good industrial relations. I appreciate that there is some merit in the company's view. It makes the claim, in a press release, that, by opting for agency manning and taking other actions, it will be able to match more closely the competition of independent operators However, this decision, announced to the press on 8 January, was not one that had had a long period of gestation and consultation with the trade unions. I am reliably informed that the trade unions received this information by letter just minutes before it was announced to the press. That is not the behaviour that I would expect from any industrial company of any magnitude, and certainly not one in which the Government are a major shareholder.

I am not negotiating for the National Union of Seamen or the National Union of Marine, Aviation and Shipping Transport Officers. However, I am sure that the unions, having taken cognisance of the fact that the company had lost £160 million in the past five years, would have been alive to the company's difficulties and only too ready to sit round the table to try to reach a mutually advantageous arrangement.

It is surprising that the company has gone for manning agencies. It has produced some figures showing the difference in cost. I quote from table 10, in a report issued by the International Transport Federation, but with figures issued by BP itself. It shows that there can be considerable cost saving from United Kingdom officers and ratings, including pension and social security payments. The cost per 225,000 tonnes dead weight tanker would be £790,000 a year.

The report also gives some agency manning figures, which are worth examining. A Filipino company would cost £450,000 per ship. One United Kingdom manning company would cost £423,000, another United Kingdom company £470,000, and yet another £554,000. Therefore, if BP wants to go for manning companies, why does it not discuss with the unions the possibility of going for United Kingdom companies? Why is BP going for the company on which it has decided? I severely disapprove of BP Shipping's decision. I believe that it has gone to manning companies so that it can directly attack the trade unions.

I quote from a document issued by Dorchester Maritime Ltd., one of the companies suggested by BP. Clause 8, on industrial relations, says: The Seafarer undertakes not to involve any industrial organisation in any dispute arising from the terms of this contract or arising from any practices on the vessels without first consulting the Company either by telex, telegram or letter and allowing the Company 30 days in which to give written replies. Further should any vessel be boycotted through any action by an industrial organisation or any of their affiliates, the Seafarer shall not assist or recognise such industrial organisation as having any authority or control over the Company, the vessels or the crew onboard and will act accordingly.

That strenuous provision effectively prevents a trade union from operating on behalf of its members. I am reliably advised that that clause is against the spirit and intention of convention 98 of the International Labour Organisation, to which I understand the United Kingdom Government are a signatory.

Dorchester Maritime Ltd. also states that the seafarer has to agree to provide his services to the Company on any nominated vessel trading on a worldwide basis. The Company has the right at any time to assign and/or transfer the Seafarer from one vessel to another.

The intention is that, although British Petroleum Shipping will continuing to own the vessel and it may be under the United Kingdom and/or British flag—there are important strategic, defence and other distinctions—there is nothing to prevent such a seafarer from being transferred to vessels flagged by foreign Governments or companies. There are severe implications for the control of manpower in the future.

The legal basis of the document is extremely questionable. It says: This agreement shall, in all respects, be governed and construed in accordance with the laws of Bermuda and in the event of any dispute between the parties howsoever arising the Bermuda court shall have exclusive jurisdiction. I am reliably told that in other agreements, where the parent company is registered in Switzerland, the law applying will be that of Switzerland.

The Minister has some severe points to answer in the debate. We know what has happened to the British flag. We know what has happened in terms of manpower and training. We see from the evidence given to the Select Committee by the British Maritime League that since 1974 there has been a loss of 100 vessels and 5,000 seafarers per year. Those are dramatic declines. We are concerned about the availability not just of manpower but of highly skilled and trained manpower. It is not sufficient just to man the ships, because, as we all know, ships are getting more complicated and the training of cadets and others must be taken into consideration.

Were the Government informed prior to the actions of BP Shipping? If so, what was the Government's response? Did they give any view of the strategic implications or the implications for manpower? What is the effect of those changes in terms of flag, management and crews on the Sea group report? What are the training implications of the decision? What are the Government going to do about British shipping? Are they bringing in proposals or are they leaning on the Chancellor of the Exchequer, in the interval between now and the Budget, to correct some of the damage that the Government's fiscal policy has done to British merchant shipping? What views do the Government express on the abrogation of convention 98 of a vital United Nations organisation, the ILO? If the Minister checks, he will see that seven of those ships went to the Falklands. Those ships were manned by British seafarers—all good men and true. A little over three years ago, the ships and the men went to the Falklands in what the Government considered to be the national interest. Are the Government content to ask those seafarers to sign such an odious, despicable agreement? The National Union of Seamen and the other unions require an answer tonight. That is vital. I earnestly await the Minister's reply.

12.5 am

Mr. Roger Stott (Wigan)

rose—

Mr. Deputy Speaker (Sir Paul Dean)

Does the hon. Gentleman have the agreement of the hon. Member for Dunfermline, West (Mr. Douglas) and of the Minister to intervene?

Mr. Stott

Yes, Mr. Deputy Speaker.

I am grateful to my hon. Friend the Member for Dunfermline, West (Mr. Douglas) for allowing me to intervene briefly in this important debate.

Notwithstanding the tremendous contribution that my hon. Friend has made to the debate, I am sure that he and I, and my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), agree that this is an unsatisfactory way of dealing with a major issue concerning our British merchant fleet. It is a tragedy that my hon. Friend the Member for Dunfermline, West has had to raise such an important issue on the Adjournment of the House. It is an indictment upon us that we are debating it in a quarter of an hour, in a Back Bencher's time on the Adjournment.

All that I wish to say in my brief intervention from the Opposition Front Bench is that we are wholly dissatisfied about the way in which the matter has been dealt with. My hon. Friend has raised many important questions, which the Minister will have about 10 minutes to answer. That is not his fault; it is the fault of the procedures of the House.

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

It is the hon. Gentleman's fault.

Mr. Stott

It is not my fault. We are discussing an important issue in an unsatisfactory way.

My hon. Friend the Member for Dunfermline, West told the Minister of State that he is in possession of a document provided by one of the management agencies that presumably will take over one of our major fleets—British Petroleum Shipping, in which the Government have a major shareholding. It is wholly unsatisfactory in terms of industrial relations and manning agreements and in regard to the law. If British seamen have any dispute with the company, their only recourse to justice is by going to a court in Geneva. If the newly appointed Minister of State tells me that he is satisfied with that way of conducting our business—asking seafarers of this great maritime nation of ours to seek recourse in the courts of Switzerland—we have come to a pretty poor pass.

I am grateful to my hon. Friend for raising the matter. I give notice to the Government that we shall find a more appropriate opportunity to return to the subject.

12.8 am

The Minister of State, Department of Transport (Mr. David Mitchell)

The hon. Member for Wigan (Mr. Stott) deplored the fact that this matter was not given more than half an hour in which to be debated. There is ample opportunity, if the Opposition wish, to use some of the time at their disposal for this purpose. If they genuinely feel as strongly about it as the hon. Gentleman suggests, no doubt he will make an opportunity to follow up the matter in that way. In any case, he has shortened the amount of time for me to respond to the debate.

It is perhaps unusual for a Minister to welcome the opportunity of a debate on a commercial decision by a private company, but the issues raised by the present case are of national interest, and it is appropriate that the hon. Member for Dunfermline, West (Mr. Douglas) should bring them to the attention of the House.

First, let me clear out of the way the red herring of British Petroleum being a company with a large Government shareholding. It has been the policy of successive Governments, of all parties, not to use their rights as ordinary shareholders to intervene in the company's commercial decisions. We have made no change at all in that.

British Petroleum Shipping gave prior notice to the Government, at separate meetings with the Department of Transport, the Ministry of Defence and the Department of Energy, of the announcement about its future operations, which it made on 8 January. My understanding of the situation is that after losses of £20 million in each of the last two years, and as much as £160 million over the last five years, BP Shipping is to hand over the responsibility for manning its bulk fleet of 30 vessels—13 crude carriers, 16 product carriers and one LPG carrier—to three international agencies, but the vessels will remain under the management and operational control of BP Shipping.

It is also expected that many of the vessels currently United Kingdom registered will gradually be transferred to Bermudan registry, that is, they will continue to fly the British flag. [Interruption.] BP's specialist fleet of offshore support vessels will remain under United Kingdom registration, with manning in the hands of a United Kingdom agency. [Interruption.] If the hon. Member for Kingston upon Hull, East (Mr. Prescott) will stop interrupting from a sedentary position, he will find that I shall deal with the points if I have time.

BP Shipping's 1,690 seagoing staff will be given early retirement and redundancy terms but will be offered jobs by the manning agencies. Apart from those who choose to leave the sea, it is expected that most seafarers will continue to serve in BP's fleet. BP Shipping's reason for taking these steps is the simple one of survival. Despite reductions of more than 50 per cent. in ships and staff since 1980, it has continued to make losses at the rate of £20 million per year in the last two years. It has found the operation of the two non-BP-crewed vessels that it has had on the Bahamian registry to be satisfactory, and £350,000 per ship per year cheaper. With such savings, it has a chance of matching the competition of independent operators more closely and operating profitably in the long run. Without them, it does not. The hon. Member for Dunfermline, West must recognise that the fundamental choice is between having vessels crewed in a way of which he does not approve and having no vessels at all.

The differences in operating costs arise because for its own crews BP has to pay national insurance contributions, train cadets, make contributions towards pension schemes and, because of substantial leave entitlements, employ considerably more seafarers than are actually at sea at any one time. Manning agencies outside the United Kingdom are likely to have to make much smaller welfare payments to the state, they incur no training or pension costs, and directly at least they do not pay for leave. [Interruption.] If the hon. Member for Kingston upon Hull, East would stop interrupting from a sedentary position, I should be able to reply more clearly to his hon. Friend.

The move to agency manning will not itself affect BP Shipping's plans for the growth of its offshore support operations. The continued existence of a pool of BP marine expertise will also allow the expansion of the management and maintenance services which BP Shipping offers other shipowners and shore-based industries.

Of course, there are some aspects of the move that are of considerable concern. The loss of vessels from the United Kingdom register—even to a dependent territory register—is a matter of some regret. The ships remain no less an asset in time of war—and I shall revert to this—but the decline of our registered tonnage tends in time to reduce our influence in the conduct of maritime affairs. To the seafarers themselves it is, of course, a matter of real significance. They are faced with the loss of a range of benefits carefully negotiated in happier days, but the alternative for most will be no employment at all at sea, and I understand that the overall remuneration package that will be offered to them is viewed by many of them as attractive.

What other problems does the change involve? There is one aspect that gives us cause for special concern—the implications for the future training of United Kingdom merchant seamen and officers. BP Shipping has over the years made an outstanding contribution to the maintenance of the corps of United Kingdom seafarers, but it is not realistic to expect any commercial company to carry the burden of training on behalf of wider interests.—[Interruption.]

Perhaps the hon. Gentleman would allow me to continue. He will not accept yes for an answer. I agree with the point that he made earlier about the problems of training. The closure of BP Shipping's training facilities comes at a time of increasing anxiety over the future supply of men for the United Kingdom merchant marine. Management agencies may be able to meet today's demands for United Kingdom officers and men, but they are not themselves engaged in training, and we have to ask ourselves whether they will necessarily be able to find British replacements as ex-BP seafarers come up to the age of retirement. [Interruption.] Perhaps the hon. Gentleman will allow me to continue, I have just two minutes left and I want to answer the questions that he asked.

In the longer term, this is an issue of significance for the defence of the country and as well as for standards in the industry generally. My Department, together with the Ministry of Defence and the General Council of British Shipping, has begun to look into the availability and training of seafarers, and this decision by BP Shipping means that particular attention will read to be given to training.

I should like the House to be quite clear that the fact that over a period BP Shipping will be transferring bulk carriers to the Bermuda registry has in itself no direct implications for defence. These vessels will remain under the ownership and control of BP and will be available for requisition in time of tension or war by use of the Royal prerogative as readily as if they had remained on the United Kingdom register. These vessels will be on the Bermuda register, but will continue to fly the United Kingdom flag.

The company has made it clear that no change in the pattern of its trading operations is contemplated. It will continue to operate in the north-west Europe area, and will remain available for defence purposes should the need arise. Bermuda-registered vessels are required to have United Kingdom citizens as senior officers and, as we know, BP Shipping hopes that sufficient other members of the crews will accept the new employment terms to ensure that British crews continue to man these vessels as at present.

Mr. John Prescott (Kingston upon Hull, East)

The hon. Gentleman is reading a press release.

Mr. Mitchell

It is all very well for the hon. Gentleman to say that I am reading from a press release. His constant interruptions are causing me to have difficulty in reading my own writing.

The hon. Gentleman asked whether the Seagroup report included these BP vessels. The answer is yes, but of course the vessels will remain fully available in the circumstances covered by the Seagroup report. The hon. Gentleman rightly points out that the vessels will fall into a category which has been identified as likely to be in relatively short supply for defence support purposes. The Ministry of Defence—

The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at seventeen minutes past Twelve o'clock.