Motion made, and Question proposed,
That a sum, not exceeding £4,503,563,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending 31st March 1989 for expenditure by the Ministry of Defence on personnel costs etc. of the Armed Forces and their Reserves and Cadet Forces etc., personnel costs etc. of Defence Ministers and of certain civilian staff employed by the Ministry of Defence on movements; certain stores; supplies and services; plant and machinery; charter of ships; certain research; lands and buildings; sundry grants; payments abroad including contributions and subscriptions to international organisations and grants in aid.—[Mr. Ian Stewart.]
§ Mr. Michael Mates (Hampshire, East)
It cannot often fall to the lot of one Back Bencher to have the good fortune to open two debates in the House in as many months. I am sure that most of my hon. Friends will agree when I say how glad I am that, as I rise for the second time, I do so in an air of considerably less controversy than the last time I found myself opening a debate in this House.
I am grateful to the Liaison Committee for recommending this estimate for debate today and I am extremely grateful to my Committee for the hard work it put in to the report that we published a short while ago and that is relevant to the debate. I must say, having said how grateful I am to it, that I am wondering where its numbers are now. They were due to be here, but perhaps they have heard the sound of my voice for too long in Committee to want to listen to it again. I am also grateful to the Select Committee on Transport, which is chaired by the hon. Member for Glasgow, Shettleston (Mr. Marshall), for its excellent report on the overall state of the merchant fleet. Our report looked only at the defence implications of the decline that has been taking place in that fleet.
"I told you so" is never an edifying remark to make, but where the defence role of merchant shipping is concerned, there must be many people who are qualified to make it, not least our friend and former colleague Sir Edward duCann. He spoke out on this matter for many years in this House and warned of the consequences of the decline that was taking place. As long ago as 1980, when I was first appointed to the Select Committee on Defence, we voiced our concern about the strategic importance of the British and NATO merchant fleet and the implications of their decline. In the 1983 Parliament, the Defence Committee again and again highlighted the importance of merchant shipping to our defence capability and warned of the possible effect of the crisis then facing our merchant fleet. The Defence Committee's fourth report of this Session appears on the Order Paper today and in it we bring the story up to date. The House will see that we find no reason to come to conclusions any more optimistic than those of our predecessors.
1265 I can be brief in introducing this debate because our views are set out in the report, but I shall pick out some of its themes. First, the fulfilling of the defence requirement for merchant shipping must be set against a background of the continuing decline in the British merchant fleet. As we note in paragraph 13 of our report, the previous Defence Committee took evidence on this subject in 1985 and it put to Ministers the prediction made by the General Council of British Shipping for the following two years. In reply we were told that that prediction was too pessimistic and that the methodology was wrong. However, the decline has continued at pretty much the rate forecast by the General Council of British Shipping. There may be a temporary remission now as the Department of Transport has claimed, but the trend is still downward.
Second—I am happy to say this—although there is little actual shortfall in ships in the categories required by the Ministry of Defence—security considerations prevented us from going into great detail in our report—the squeeze on those assets is inexorable. In paragraphs 40 to 47 we identified the categories in which there are particular or potential problems. They include fishing vessels for mine counter-measures, product tankers, dry cargo freighters, which are being replaced by container ships and which are much less useful and less flexible for carrying military equipment, and, with the advent of the Channel tunnel, roll-on/roll-off ferries.
Third, we are extremely worried that, in a time of tension or war, the military demand on available merchant shipping for the transatlantic reinforcement of Europe, for the reinforcement of Europe from the United Kingdom and for the direct support of the Royal Navy will leave few assets for the task of economic shipping. That would be vital in a period of tension or war and the Merchant Navy would be required to bring in the supplies to keep this country going and our people alive.
Elsewhere in our report we draw attention to potential manning problems. The availability of British personnel to man ships used for British defence purposes is most important. However, not only is the number of British seafarers declining steadily, but the numbers joining the Merchant Navy are lower than ever before. We examined that matter in paragraphs 54 to 60 of our report and we find that trend extremely worrying. We also point out that other NATO countries would have difficulties in finding the ships that they would have to provide and we expressed our surprise that NATO has not taken more vigorous action about such trends before now.
Although many of our conclusions relate to the needs during a period of tension or war, there is a regular requirement for shipping for use in exercises. I do not believe that I am the only person who was disappointed that, for the major tri-service exercise, Purple Warrior, which took place in late 1987, the Ministry of Defence had to charter Danish vessels, ally in NATO though Denmark is. As we say in the report, it would surely have been of greater benefit to our long-term national security if British shipping earmarked for requisition in conflict had been chartered for that major exercise, even if the cost had been slightly greater.
Since the Defence Select Committee in the last Parliament began looking in detail at the defence requirements for merchant shipping there has been some recognition within the Government of the practical problems of providing the right shipping in the right place at the right time should the worst happen and we were 1266 faced with a major crisis or hostilities. I am not sure how far that realism has progressed. In the course of our inquiry we asked the Department of Transport what would happen if a foreign owner of a United Kingdom registered vessel trading outside NATO waters refused to make his ship available. Somewhat to our surprise witnesses told us that they envisaged that the Royal Navy could be called on for assistance—but I think that by that stage the Royal Navy would have a few other tasks on is plate.
It is not our task as a Defence Committee to make comments or recommendations on ways of reversing the decline in the merchant fleet. However, what worries us is that there appear to be aspects of Government policy that lack drive and, above all, co-ordination. That is why we repeat in paragraph 73 the recommendation of our predecessors that these things should be co-ordinated and directed by the highest level of Government. Our views can be summed up in the words of paragraph 66 of the report and I can do no better than to end my remarks by quoting it:The ready availability of adequate merchant shipping resources represents a very significant element in the make-up of deterrence. The lack of such resources represents a grave deficiency in our ability to deter. The availability of merchant shipping for defence purposes is governed by three key factors—the number of UK flagged ships, their accessibility when they are needed and the availability of a pool of British seafarers to man them.We believe there are grounds for concern on all three counts, and in asking the Government to examine closely what we have said I hope that these concerns will be addressed, because, although there is no crisis yet, the trend is the most worrying aspect of all. The last thing I want is to return to the House this time next year and say that there are areas in which we simply cannot do the task.
§ Mr. John McWilliam (Blaydon)
I am grateful to the hon. Member for Hampshire, East (Mr. Mates) for his speech. I also thank him, as a member of his Committee, for his humour, forbearance and integrity as we went through these matters.
This is yet another unanimous report from our Select Committee. That is important because it means that we are interested in the facts, rather than what some of us might wish—or others might not—to be the case. Robert Burns said:Facts are chiels that winna ding.Roughly translated, that means that one cannot ignore the facts when they exist.
One of our problems was getting at the facts. Paragraph 8 of the report, dealing with statistics for the merchant fleet, shows the problems that arise because of different statistical bases and different ways of including or excluding vessels. For example, I fail to see the relevance of including dredgers in ships available to us in times of war. Perhaps we shall need to dredge out a harbour, but presumably we keep our harbours well dredged out now so as to get near them.
What are the facts? The Select Committee on Transport was told that there were 410 United Kingdom registered merchant ships of more than 500 gross registered tonnes. But we were given the figure of 906. That poses an immediate problem.
What about the sort of ships that we want, and the roles we expect them to play? First, there is transatlantic 1267 reinforcement from Europe. We have a 30-day commitment to such reinforcement, and I shall return to that issue. Then there is reinforcement of continental Europe from the United Kingdom. Most of the American forward-base supplies are in this country and must be moved from here to continental Europe. Next comes direct support of the Royal Navy. There are few ships equipped to do that—there are some ro-ros and other bits and pieces that could be used, but some of them are not up to the standards that we would expect, for various reasons. There is also the category of economic shipping. In a crisis, this country would still have to exist.
We tried to deal with all these problems, but our considerations were not helped by two things. One was the lack of an agreed criterion of which ships to count; the other, I am sorry to say, was the problem of calculations about attrition. We have tried to discover whether we can have a support convoy system of the sort that we should have for reinforcement across the Atlantic. According to the MOD, we will not. It is calculated that somehow or other all Warsaw pact hunter-killer attack submarines will be bottled up to the north of Iceland, Scotland and Norway. That is a difficult argument to sustain, given that they are not all there anyway. In any sudden period of tension there is no reason why they should suddenly all head for home and then be bottled up. The logical conclusion is that that will not happen. So the sort of attrition figures that we are dealing with were quite different from those that the MOD seems to be considering.
We are worried about what is happening. because the numbers do not add up. It seems that categories of shipping such as stern trawlers, deep-sea trawlers and oil-rig supply vessels can be used fairly quickly in emergency roles. But we are worried because we do not have the right number of vessels. The number of bulk carriers that we have seems to keep falling. In the report, we make the point that the slowdown in that fall appears to be more of a remission than a cure of the trend. I come from Tyneside and I can say that there is no sign of the sort of vessels that we need being built, or of the sort of facilities that we need to build them being maintained. We must keep that clearly in mind when we are considering this report.
It gives me no great pleasure to talk about this subject. I was educated at Leith academy, which was established in 1452 for the education of the sons of mariners, and it taught the skills of mathematics and navigation. It fed candidates for deck officers, cadets, and candidates for marine radar, radio and electronic officers to the nautical college. My school is still there but Leith nautical college is not, and the manpower that we need is not being trained. We are dangerously short of the skilled seamen and officers that we need to man our ships in the sort of situation that we are talking about.
Our merchant marine has served us well through two world wars. In both wars, the convoy system was said to be unnecessary but suddenly it was necessary. If there was any major conflagration in central Europe it would be necessary again. The same mistakes have been made again and again and we should learn from our history. We are 1268 told that everything is all right and that somehow or other we will have the ships. But somehow or other is not good enough.
I repeat the famous words by Robert Burns:Facts are chiels that winna ding.The facts are there, and it is up to the Minister to assure us that the Government are taking active steps to ensure that we will have the capability to sustain on a conventional basis any future war in central Europe. If the Government cannot say that, then they are admitting something that they have not admitted before, that they have given up any idea of a conventional war being sustainable in western Europe and would have to move very early to the nuclear alternative.
I have two daughters who I hope will raise their own families. I hope that my daughters' children will have families and I find that nuclear alternative deeply disturbing. Because of our inactivity, the nuclear threshold has obviously come down. I want to hear from the Minister what he proposes to do to raise the nuclear threshold so that I can be confident that my children and the children of other hon. Members can look forward to the future. On the basis of the information in front of us, I have no such confidence, and I look to the Minister for reassurance.
§ Mr. Ian Bruce (Dorset, South)
I asked a question in the House the other day and declared an interest because my brother works in a nuclear power station. After all the trouble I have taken to try to get into The Daily Telegraph I suddenly found myself in the Commons sketch column. I shall declare an interest at the beginning of this speech because for five days prior to arriving here on Monday I was the guest of Her Majesty's Navy bouncing up and down in the north Atlantic. I enjoyed some very good food and got to know a little more about the Navy.
One of the great advantages of those five days was that I had to eat my meals with the officers and ratings and during our off-duty hours we spent much time talking about all the aspects of present day naval warfare. One of the most gripping things we learnt about was the worry of the Navy that our merchant fleet may not be up to the job if there is a war.
We have a standing Navy and it is an expensive asset for us to maintain. It is essential that it be maintained but there is a certain amount of the chicken and egg argument about it. The Navy has a clear role to protect merchant shipping, but what is its role if we have no merchant shipping to protect? Our Navy cannot do its job unless it has merchant vessels to call on. The Falklands war clearly demonstrated that the flexibility of being able to call upon our merchant fleet was essential for prosecuting that war.
As we see security in Europe becoming stronger and the threat of a land war reducing, we have to take into account the fact that we might have to use our naval resources and our Merchant Navy in a peacekeeping role in areas where we would not expect to use it. Our Merchant Navy would be essential. The excellent report gives clear figures about the reinforcement of our NATO commitment and about getting American forces to Europe. Many people who know about the vast amount of money spent by the Americans on their forces forget that 90 per cent. or perhaps more of the manpower available to fight a land war in Europe comes from European nations. Everything else that the Americans would have to bring into such a 1269 war would have to come by air or by sea. We would be in an extremely difficult position if we did not have merchant vessels available to do that.
Merchant vessels have military roles. We saw that in the Falklands war because one of our aircraft carriers had been a container ship and it worked very well. Most of the systems that are now being supplied to the Navy are in boxes. That applies to missile, radar and communication systems which are often designed to use a container that will fit on a ship and give it the flexibility to play its role in a specific aspect of our defence.
For many years the merchant service has provided our basic manpower. The hon. Member for Blaydon (Mr. McWilliam) spoke about the role of the merchant shipping fleet in training the manpower that we need. The town of Weymouth is in my constituency and contains an enormous number of people with merchant shipping experience. Over the years many of them have been made redundant and have had to find other careers, other ways of earning a living. Their children are no longer being sent to naval colleges and that resource of merchant shipping experience will not last much longer.
We have to start to think again about where we go from here. Our merchant fleet is depleted and we must proceed to a healthier position. We seem to have abandoned the idea that the United Kingdom will ever again be a great shipbuilding nation. Many products of Britain demonstrate that with the right economic climate and improved productivity we can start to compete with other nations. I would never say that we should close the door on any industry and would welcome a regime under which shipbuilding could start to grow again. Employment is important and shipping in all its forms can have a valuable effect on our economy.
On the Front Bench there are two excellent Ministers from the Department of Transport and the Ministry of Defence, but it is deficient in that there is no one on it from the Treasury. Tiny little non-states in most parts of the world have provided tax regimes to persuade our ship owners to re-register their ships. Surely it cannot be beyond the wit of the Treasury to work out a scheme by which we can bring those merchant vessels back under our own flag. It is noticeable that the decline has stopped temporarily. Perhaps that is because the Armilla patrol is doing a successful job of protecting British ships in the Gulf and it therefore becomes a plus factor to have a ship with a British flag on it. The Navy depends on a merchant fleet to support it, and that merchant fleet appreciates having the best Navy, man for man, in the world. We should he asking the Chancellor of the Exchequer to think seriously, before the next Budget, about what he can do to bring vessels back under our flag.
The cost of light dues and of using United Kingdom ports needs to be considered. Opposition Members, on their packed Benches, may not like me saying this, but I believe that the national dock labour scheme prevents us from being as economic as we should be in our ports. I do not want to attack the ports. I want more people to be employed in Weymouth port, instead of the dozen or so who are currently employed there. We want to see more people employed in the ports and I want to see the removal of, or a great change in, the national dock labour scheme.
I have touched on a number of subjects in a random way, but I believe that there is a future for our merchant fleet. We must always take into account the fact that our 1270 merchant fleet is part of the defence of the realm. We are willing to pay a high price for the defence of the realm and we cannot do that job without proper merchant shipping.
§ Mrs. Ray Michie (Argyll and Bute)
I am glad to have the opportunity to contribute to the debate. I wish to commend the Chairman and his Committee on the production of the report.
The Government are now highly vulnerable, not only because of the rundown of the merchant fleet and the decline of the shipbuilding industry, but also because recent criticism from the Select Committee on Defence and others relating to the fragile size and preparedness of the Royal Navy surplus fleet means that the cumulative effect has worrying strategic implications. It is extraordinary that a Conservative Government should have neglected a defence issue of this nature. There is not much point in having a seamless robe of deterrence if the conventional end, like the merchant fleet aspect, begins to look increasingly threadbare.
A number of Select Committee reports chronicle the worsening situation. We know from the last war that the role of the merchant fleet has been and is vital in transporting essential materials, such as food and supplies, to our country. Now, as part of Britain's role in the NATO defence plan, it would carry divisions of the United States army to Europe. Both those operations would have to take place at the same time and it is difficult to imagine how that double task could be achieved, given the drastic decline in United Kingdom flagged vessels.
One of the dangers with the decline of the fleet is that it weakens the potential to deter. Not only do we need a good many merchant vessels and a good many trained seafarers to sustain the country, but, just as important, we need to convince a potential enemy that we can sustain a conventional war of any length. As has been said, it is now highly doubtful that the United Kingdom could mount a Falklands-style operation again. The Conservative Government take great pride in their strong stand on deterrence in nuclear matters, yet they appear at best slipshod in naval deterrence. The Soviet Union does not need to be able to read semaphore to observe the United Kingdom merchant fleet weakening fast. The Government appear content to shrug their shoulders indifferently. That is simply not good enough.
There is also a shortfall in special categories of shipping, for example, fishing vessels for mine countermeasures. The decline in the fishing fleet has resulted in a shortage of large stern trawlers available for that purpose. I believe that there are now only about five such vessels. Even the decline of the fishing fleet has a knock-on effect on our defence capabilities. I have a particular interest in that because, in my constituency, we have an excellent fishing fleet and we build fishing vessels.
The far-flung nature of the Merchant Navy means that a numerical sufficiency of ships is not necessarily the practical and accessible number of ships. The scope for double-counting the availability of a dwindling fleet is considerable. The demands on merchant shipping for transatlantic and economic shipping, as well as for defence purposes, would lead to impossible competition for the same resources. How can we easily get back ships. many of which would need refitting, from the other side of the world and make them available for defence purposes?
1271 The same applies to the availability of men to man ships in an emergency. The report warns of a continuing decline in the recruitment of new cadets and trainees. Trained seafarers are vital because foreign crews cannot be a substitute for United Kingdom personnel in a time of strife. It would be simply impossible to train large numbers of United Kingdom seamen to man requisitioned ships, if they could be obtained, to deal with an emergency.
Hon. Members have talked about a shortage of skills, but that is not universal throughout the United Kingdom. I know very well that there is not a shortage of skills and knowledge and that there is an honourable tradition of seafaring in the Merchant Navy in the Highlands and Islands of Scotland. During the last election, I came across many men who had been laid off and lost their jobs in the Merchant Navy. It was with great sadness that they came to me and said, "What are the Government doing to our once proud merchant fleet?"
The number of United Kingdom flagged ships has declined rapidly, leaving a smaller and smaller pool on which to call in times of emergency. It is a sad story. There has been a decline from over 1,600 ships of 50 million deadweight tonnes in 1975 to no more than 645 ships of less than 17 million deadweight tonnes owned by British companies at the end of March this year.
There is no point in the Government waving the flag over national defence when there are now so few ships sailing with the flag at their masthead. Virtually nothing has been done to encourage investment in shipping. The need for a proper fleet would give our shipbuilding industry a much-needed boost.
Although the Government's help for training and repatriation of crews and the concession on income tax for seafarers serving on ships trading largely outside the United Kingdom are welcome, it is all too little and could be too late.
The Government should consider, in conjunction with the Department of Transport, the need for a Merchant Navy strategic reserve contract under which owners would receive substantial compensation and a crew-related allowance payable in respect of each British seafarer employed by United Kingdom owners regardless of flag. Such measures are needed if the fleet is not to shrivel into insignificance, or at least to a level where it is impossible to provide the essential requirements.
The real question is whether it matters to Britain that there should be a significant British presence in the world's merchant shipping fleets of the next decade. If the answer is yes, it lies within the Government's influence. The Government's failure to act could lead to Britain's failure in time of war.
§ The Minister of State for the Armed Forces (Mr. Ian Stewart)
The House is grateful to the Select Committee on Defence for the valuable report that we are debating this evening. I should like to add my appreciation on behalf of the Government for the work that has gone into producing such a useful document.
The report rightly draws attention to anxiety over the consequences of the decline in the size of the British merchant fleet in recent years. That, as my hon. Friend the 1272 Member for Hampshire, East (Mr. Mates) has said, has also been the subject of a recent report of the Select Committee on Transport.
The Government will give detailed written responses shortly to both reports. I do not want to anticipate the details of those, but rather to cover in general terms some of the main issues that those reports raised, particularly concentrating on that which is covered by the title of the Defence Select Committee's report—the defence requirement for merchant shipping.
My hon. Friend said that he recognised that there is no crisis yet. The Government recognise the importance of the subject and we are determined to ensure that there will not be a crisis.
Before I go any further, let me respond on one point to the hon. Member for Blaydon (Mr. McWilliam). He suggested that there are no plans for a system to protect transatlantic reinforcement and resupply as necessary. I should make it clear that there are well-developed plans for naval control of shipping which are regularly exercised and they include the use of convoys when required.
§ Mr. McWilliam
I am particularly grateful to the Minister for making that point because that was not the point made by the Ministry of Defence spokesmen to the Select Committee when they were specifically asked about that very question. If the hon. Gentleman is now saying that there are plans for convoy systems, suitable escorts and the kind of anti-submarine measures that need to be taken, I am sure that the House will be grateful, but so far that evidence has not been given to us.
§ Mr. Stewart
I am glad to have been able to reassure the hon. Gentleman. Although one cannot go into details in such matters, the plans that I have described are in place.
The Royal Navy and the Merchant Navy have a long history of working together and that is a two-way process. The Navy has an honourable tradition of maintaining the freedom of our ships to trade around the world while our merchant ships have invariably played a vital role in supplementing and supporting the Royal Navy in times of war. I want to say a quick word on the first part of that two-way process following the remarks of my hon. Friend the Member for Dorset, South (Mr. Bruce).
Since 1980, the Armilla ships have accompanied a great number of British ships through the Strait of Hormuz and in the Gulf. The House may be interested in the latest figures. In 1987 there were 405 movements of British shipping in that area accompanied by Royal Navy ships. In 1988 so far there have been over 350 movements, so we are already nearly up to the total of the whole of last year.
During that time British warships have accompanied about twice as many merchant ships as those of all other Western countries with navies in the Gulf put together. That is a record of which we can be proud. I should like to take this opportunity of expressing my appreciation, having visited them on occasions, of the devoted and skilful service of our sailors in that difficult and dangerous task.
Let me now deal with the availability of merchant shipping for defence needs. That has two clear dimensions—first, the direct requirements of the United Kingdom and, secondly, the collective NATO responsibilities which, generally speaking, is the transatlantic dimension of the question.
1273 In crisis or war, merchant shipping has four main roles, which I shall list, not in order of importance—first, to support the reinforcement of Europe from the United Kingdom; secondly, to support the operations of the Royal Navy; thirdly, together with our NATO allies to assist in the transatlantic reinforcement of Europe by the United States; and, fourthly, to resupply the civil economy of the European countries.
I emphasise first the direct needs of the United Kingdom, because the Ministry of Defence is primarily concerned with the first two of those tasks in that context. We identify the military requirements and the Department of Transport takes the lead in identifying and making available civil shipping to meet those requirements. The other two requirements are collective NATO tasks across the Atlantic.
I refute what the hon. Member for Argyll and Bute (Mrs. Michie) said about there being insufficient ships in the British merchant fleet or that the Government were not concerned with that. The opposite is the case. Of course, the decline of the British merchant fleet has been a matter of anxiety to us all. But let me stress at the outset that at no time has the supply of ships fallen below that needed to meet British national defence needs. In general, for the reinforcement of Europe from the United Kingdom and the support of the operations of the Royal Navy, we have a comfortable margin of vessels available from the United Kingdom and dependent territories. However, I accept that the margin is tight in some categories of vessels.
For example, we are closely monitoring the position of cross-Channel ferries. I agree with the Select Committee that cross-Channel ferries will continue to be important for reinforcement planning. But I remind the House that our NATO partners have large, modern roll-on/roll-off fleets which will be able to give assistance and we would not have to rely solely on our own resources.
It was suggested that there was something wrong in having a continental ferry or two involved in the Purple Warrior exercise rather than our own. The reason for that was that our ferries were all busily occupied, but that was not the case with all the continental ones.
§ Mr. Martin O'Neill (Clackmannan)
I was interested in the Minister's comment concerning exercise Purple Warrior and the reasons why British ships were not used. Does he deny that one of the other reasons was that British ferry companies' charges were too high?
§ Mr. Stewart
Yes, because the reason was that British ship operators in that category were not interested in offering their ships at an economic price. They were already engaged on satisfactory tasks of another kind, whereas there was a surplus among some continental countries, which we then drew upon.
§ Mr. Stewart
No, I refute the hon. Member's remark. If he thinks that we should pay whatever rate is necessary for British ships that are fully occupied, against the availability of foreign ships from NATO countries, I fundamentally disagree. That would not be in our interests.
I turn to the subject of fishing vessels, of which there are now relatively few suitable for mine counter-measures. We expect to be able to use North sea support vessels, whose adaptation for that purpose is feasible, and of which 1274 adequate numbers are available. Transatlantic reinforcement and civil resupply is a matter of some concern to us. It is a problem that affects the NATO Alliance in general and is not specifically British. The number of product tankers and large bulk cargo ships is particularly tight. NATO is currently examining ways of increasing the availability of vessels for transatlantic reinforcement, particularly in the early stages.
The report notes that at a time of war NATO nations would pool vessels of more than 1,600 gross registered tonnes for civil resupply of food and raw materials. In many cases, other countries have not assessed their wartime needs. However, resulting from a British initiative, NATO has now embarked on a study of the supply and demand for civil resupply, and I am glad that it has done so. That study is designed to establish the extent, if any, of the shortage of civil resupply vessels, and I hope that it will be completed by the end of next year.
In addition to NATO's specific study on that subject, it also has a planning board for ocean shipping that keeps regularly under review assets available for Atlantic reinforcement and for fuel supplies to Europe on a continuing basis. I do not for one moment wish to belittle the problems posed by the merchant fleet's decline. We all want to see an industry that is prosperous and that can meet our needs in an emergency or in war. However. I wish to stress three points. First, the phenomenon is a general Western one, and the problems posed by it are NATO-wide and are not confined to this country. Secondly, although we must not minimise the problem, we must not exaggerate it. There are signs that we have been experiencing not a secular, long-term trend of decline but the reverse slope of a considerable build-up of tonnages that occurred a decade or more ago, which created unmanageable overcapacity in the industry in recent years.
Recently, there have been encouraging signs in regard to the British-owned fleet. One key event for the shipping industry in 1987 was, in the words of the director general of the General Council of British Shipping,The stabilisation of the size of the British-owned fleet of trading vessels after many years of decline.Within the overall figures, there has been a marked shift between registers, but in the short-term at least there are other indications that the United Kingdom-owned fleet will continue at roughly the same level, although not necessarily on the same registers. The British fleet is now slimmer, but I have no doubt that it is also more efficient. Recently, certain United Kingdom companies have been showing their confidence by placing orders for new ships to be registered in the United Kingdom, or elsewhere in the British registry system. In 1987, new orders by tonnage were higher than in 1986, and they rose again sharply in the first quarter of 1988. There has also been secondhand buying since the turn of the year.
Perhaps the most encouraging sign of all is the movement in freight rates over the past two years. At the bottom of the cycle two years ago, at the end of the first half of 1986, the composite index stood at 85. By the end of 1986 it had risen to 95, and after the first half of 1987 it stood at 131. By the end of last year the index had increased to 176, which was no less than twice the level it had been 18 months previously. The figures now available for the first quarter of 1988 show that the index has risen to 234, which is more than 30 per cent. up again on last year's figures.
1275 I strongly reject the suggestion that the Government have not given, or are not giving, enough priority to these issues. Let me pick up a point made in paragraph 73 of the report. My right hon. Friend the Prime Minister made it clear in an answer to my hon. Friend the Member for Eastleigh (Sir D. Price) a week or so ago that she personally has been examining regularly the implications of the decline of the British merchant fleet.
We cannot simply encourage shipowners to invest in or retain uneconomic tonnage; that would only aggravate the problem. But we have done many other things. We are negotiating agreements with "flag of convenience" states to minimise any legal difficulties in obtaining use of British-owned vessels on their registers. My right hon. Friend the Secretary of State for Transport announced this very afternoon that we have signed a memorandum of understanding with the Bahamas under which the Bahamas agree to allow British ships to be made available to Her Majesty's Government in the event of crisis and war, and that is an important step. We have also negotiated comprehensive agreements for access to smaller ships such as coasters owned by our NATO allies, which might be needed at short notice.
My right hon. Friend the Chancellor, far from being unmindful of this matter, announced in the Budget that, in the case of ship chartering, the business expansion scheme limit on the finance that can be raised by a company in any one year will be increased from £500,000 to £5 million. We now propose that that higher limit should be extended to companies operating their own ships.
In addition, we have developed comprehensive war risk insurance arrangements for ships on both British and foreign registers. Such arrangements would encourage neutral states in particular to trade with the United Kingdom and other NATO allies under the threat of war or in time of hostilities. All those measures should help with the availability of vessels.
§ Mr. Terence Higgins (Worthing)
Will my hon. Friend comment on the extent of subsidies provided by other EEC countries? As those countries are constantly complaining in other contexts about the evils of subsidies, why can we not take positive and definite action to speed matters up? The delay is not tolerable.
§ Mr. Stewart
I am fully aware of the point that my right hon. Friend has made. I have to say, in the presence of my hon. Friend the Minister for Public Transport, that this is a matter for his Department rather than mine, but if unfair competition can be demonstrated we shall want to pursue it.
§ Sir Geoffrey Johnson Smith (Wealden)
As the Minister for Public Transport is present, perhaps he will tell us later, if he cannot do so now, what, if any, representations have been made on the point raised by my right hon. Friend the Member for Worthing (Mr. Higgins).
§ Mr. Stewart
My hon. Friend tells me that we must have specific facts on which to base our judgments, and detailed information is difficult to come by. I have no doubt, however, that my hon. Friend the Minister for Public Transport would more than welcome any further information that would enable the matter to be followed up.
1276 The question of crews and manpower has already been raised. As the Committee's report acknowledges, we have taken useful measures in the Merchant Shipping Act 1988 to assist with the cost of training and repatriation. We are also setting up a Merchant Navy reserve with a potential membership of up to 5,000, which we hope will come into being next year.
Since the Defence Committee published its report we have announced an important change in the foreign earnings deduction for tax purposes, which should help both seafarers and shipowners. It will come up next week when the Finance Bill goes on Report. We broadly estimate that it would exempt another 7,000 deep seafarers from tax, making 11,000 exempt in all. It would be equivalent to up to 15 per cent. of crew costs, which should help to ease pressures on shipping companies' operating costs, making it more competitive for them to operate ships from the United Kingdom and to employ United Kingdom crews.
Let us not forget that, despite the decline in recent years, there are about 35,000 British seafarers—more than half the size of the sea-going and land-based manpower of the Royal Navy.
The message is clear. The Government take seriously the implications for defence of the decline that has taken place in the merchant fleet, but there is no cause for despondency. As a result of the measures that we have already taken, the industry is in better shape than it has been for some time. Our national defence requirements certainly can be met. We are in the lead in addressing the problems in the context of the wider NATO Alliance.
I welcome the report. If I have any general criticism of it, I think that the Committee underestimates the potential impact of the many measures that we have already taken, once they are fully in operation. In addition, it is clear that since the Committee took its evidence and prepared its report, there have been further accumulating signs to suggest that the shipping industry is beginning to pull out of the trough of the mid-1980s.
In paragraph 14 of the report, the Committee states:we suggest it would be premature to regard the arrest in the decline as anything other than a temporary remission.With the new information that is now available, especially the remarkable figures on freight rates that I have quoted, there are grounds for believing that that may be too pessimistic an assessment.
My hon. Friend the Member for Hampshire, East asked us to look closely at the problems described in his report. I can assure him that we have done, and we shall continue to do so. But I also hope that the measures already taken will serve to reassure him of the Government's commitment to ensure that the concerns that he and others have expressed are not realised.
§ Mr. Martin O'Neill (Clackmannan)
It is an unhappy coincidence that we are debating a report on the merchant fleet's contribution to our national defences on a day when many of the ships are co-operating with the Royal Navy and the Fleet Air Arm in a humanitarian exercise in the North sea. That merely serves to underline the close co-operation between our merchant marine and all the services that we have at our disposal in peace and in war.
The Chairman of the Select Committee, in his characteristically helpful manner to the Government, glided over some of the more critical elements in the 1277 Committee's report. Certainly he did not quote some of the paragraphs containing criticisms that might be more difficult for the Minister to wriggle out of.
Nevertheless, I wish to pay tribute to the hon. Member for Hampshire, East (Mr. Mates) and his colleagues for producing yet another frank, useful, constructively critical report on the defence of this country under the stewardship of the Minister and his colleagues. We owe them a debt for the manner in which they addressed the problem, which enables us to consider matters systematically this evening.
It is broadly agreed that the purposes of a merchant fleet in respect of defence are fourfold: the transatlantic reinforcement of Europe, the reinforcement of continental Europe from the United Kingdom, the direct support of the Royal Navy and economic shipping—the civil traffic which brings fuel and supplies to the United Kingdom. Some of those involve the use of the same craft, so we have to be very careful to avoid the overlap of competing claims on our resources.
The report, in setting out those tasks and analysing the effectiveness of our capability to meet them, has served to underline what many of us have spoken about in defence debates and service debates generally during the past few years. The Chairman of the Select Committee paid tribute to one of his former colleagues, a former Chairman of the 1922 Committee, who repeatedly came back to these matters in his capacity as chairman of the all-party maritime group.
It is no consolation to read in 1988 a re-run of what we said in 1983 or 1985. Paragraph 70 sums up concisely what many of us feel when it states:The optimism of the … official evidence to our predecessors has been demonstrated to have been unjustified; in fact, the 'worst case' forecasts about the likely size of the UK merchant fleet in the late 1980s have been realised.The report outlines the confusion both in the Ministry of Defence and between the MOD and the Department of Transport about how many ships we have available. The much-criticised fiddling of unemployment statistics seems nothing compared with the mess that the Government have got themselves into on counting ships. I do not know whether it is because of the movement of ships or because people get seasick when they think about them, but they certainly seem incapable of finding a basis for comparison. Within the confusion there may be some method in the madness.
In February 1988 the Transport Select Committee was told that there were 410 ships, but by May the figure had decreased to 402—hardly bearing out the assertion that the decline had been arrested. In May 1988, the MOD told the Committee that the number was not 410 or 402, but 906. However, when we look at this more carefully—the forensic skills of the Committee must be praised—we find that the reason for the difference is that different criteria were used. The Department of Transport had included only the trading elements, while the Ministry of Defence had included United Kingdom-registered non-trading craft in excess of 500 gross registered tonnes.
Until 1986 the weight threshold was 1,000 gross registered tonnes, but in 1987 and 1988 the threshold was not 1,000, nor even 500, but 300 gross registered tonnes. The Minister did not touch on the reasons for the confusion and I hope that when he has had more time to think up a reply to the Committee we shall receive an adequate response, not only about fiddling the figures, but 1278 about the clear attempt to distort the statistics and to fool the Committee—an exercise in which the Government and their officials have singularly failed.
§ Mr. Ian Stewart
Naturally we shall produce the explanation which the hon. Gentleman seeks. But if figures are requested by a Committee, they are given in the context in which they are asked. There is no difference between the figures understood by the Ministry of Defence and the Department of Transport. A problem arises from the disaggregation of figures into small groups because the Ministry of Defence looks not only at the total number of ships, but at the number of ships in a particular category to deal with a particular task. The information that the hon. Gentleman seeks about the reconciliation of these figures will be available.
§ Mr. O'Neill
I am grateful to the Minister, but if we were to look at each category, we would end up with the same story—one of decline and confusion. I shall riot delay the House. Suffice it to say that it is nothing short of criminal for the Government to seek to inflate figures by including craft which are either inappropriate for defence purposes or are already committed to naval use, such as the 38 royal fleet auxiliary craft. Little wonder that there is a note of desperation in paragraph 31 of the report, which says that there is aneed for clear understanding and a consistent approach in the use of statistics.That is what the Committee said. The confusion over the use of shipping is even more serious when we realise that transatlantic and economic shipping, both of which are critical, require the same product tankers.
Paragraph 38 of the report states:it must be apparent that once the UK had fulfilled its commitment to provide transatlantic shipping. the number of UK-flagged vessels available for civil resupply would be minimal.The report identifies other areas of concern with which hon. Members have dealt, such as the dire shortage of large stern trawlers for mine counter-measures and the problems caused by the fact that all available craft are accounted for by the Armilla patrol. The Minister has the support of all hon. Members when he pays tribute to the effective role that the Armilla patrol plays in accompanying ships in very dangerous waters. I use the word accompanying, which the Minister used, I am pleased to note, but which has slipped out of the Prime Minister's vocabulary. The conditions for the men are very uncomfortable and trying and the Opposition are happy to join the Minister in paying tribute to them.
The Minister should have told us what he believed to be the significance of the Committee's suggestion about the possibility of entering into some understanding with the Norwegian navy to see whether training and practice facilities could be established for existing support craft in the North sea. As I have said, they are playing a sterling role in tragic circumstances. I hope that the Minister will address that problem because it seems, sadly, that the Armilla patrol will be in the Gulf for some considerable time. It would be a dereliction of duty by the Government if they did not explore other opportunities to provide our merchant sailors with proper training in mine countermeasures as soon as possible, not least because if something happened while the Armilla patrol continued in the Gulf, we would have no mine counter-measure facilities available to us in the short term.
1279 The number of product tankers of between 2,000 and 60,000 deadweight tonnes declined by 55 per cent. from 1984 to 1986. Most seriously for the actions that we have in mind, when we study the report and consider the work to be done by product tankers of around 20,000 dead weight tonnes we find that that is where the decline has been greatest. Those tankers were most valuable at the time of the Falklands. That is the critical size of craft about which we have most cause for anxiety and I hope that the Government will address that problem.
We can be more hopeful about cruisers. Shell, one of the main owners of cruisers, has retained all-British crews, although BP has crews with some non-British nationals. The question of the dry cargo freights is very serious. We have the critical problem of transporting large and heavy military equipment, which does not fit easily into containers and the modular arrangements that are part and parcel of container ships. We may need more craft to transport the equipment that has to be brought across the Atlantic, and it will take some time for those craft to be adapted for that purpose.
The Minister spoke about cross-Channel ferries and said that we would have access to a number of foreign ferries; that may be so. He should have spoken about the fears expressed about the decline in the number of craft that will result from the completion of the Channel tunnel. Although we have access to craft in the Channel and in Europe, where our allies are close by, there is the vexed problem of the location of many craft throughout the world. The hon. Member for Hampshire, East referred to that problem.
About 35 per cent. of United Kingdom mainland registered shipping is beneficially owned abroad. When asked how these ships would be brought back, one of the Minister's hapless officials—I choose my words carefully—who is a deputy secretary, said:It would depend on where the ship was, but no doubt the Royal Navy would be called upon to assist.I can imagine the Royal Navy being rather busy doing other things at that time, especially if its ships were in inconvenient locations in other parts of the world. That does not seem to have been at the forefront of that official's mind when answering questions. I hope that when the Minister gets around to reading the report—which, God forbid, the same official may produce—he will look at that comment and ensure that we are given a better answer.
We shall leave aside the images of the British Navy commandeering ships in foreign ports and acting in a way that some Governments would consider near-piracy. The most serious issue is probably the location of our crews. In the last Defence Question Time but one, the Secretary of State for Defence admitted in answer to my question that this was probably the single most pressing problem. Estimates have shown that in recent years there has been a 50 per cent. drop in the number of officers and a 42 per cent. drop in the number of ratings. More serious is the information that the number of cadets decreased from 5,197 in 1981 to 727 in 1986 and that last year only 180 people joined the service for training. Unless there is a dramatic reversal in the medium and long term, there will be insufficient numbers to man a much reduced fleet. The Defence Committee makes that point. The facts are incontrovertible.
1280 I welcome the provisions of the Merchant Shipping Act and the target of 350 cadets per annum. The support to be given for that training is to be applauded, but we shall have to ensure that it is enough. We must take account of the point made in paragraph 56 of the Committee's report that, as long as a career in the Merchant Navy is seen as unattractive, there is little likelihood of an increase in numbers. It is not enough to provide more money; there has to be a major selling job. Some parts of the country have long Merchant Navy traditions, and the hon. Member for Argyll and Bute (Mrs. Michie) paid tribute to her constituents. Many people joined the Merchant Navy because there was little else for them to do in their part of the world. We all know that unemployment has traditionally been the best recruiting sergeant. In the 1990s, as the dip in the birth rate in the 1970s and early 1980s is reflected, there will be a demand for youth labour. There may not be the present level of youth unemployment. It will be incumbent on ship owners to provide much more attractive conditions in terms not only of the image of the Merchant Navy but of the profession's career structure.
Many British ships are crewed by non-British nationals—people from the far east, including Hong Kong, and from Comecon countries. Those men may not, to say the least, be depended upon in a time of conflict. It is dangerous to assume that those men will go to sea and wish to fight on our behalf. I would like to think that they will, but that is not a calculation that we can necessarily make. After 1997, people from Hong Kong will no longer be citizens of the British Commonwealth. That matter must be dealt with seriously and carefully and I do not believe that the Merchant Shipping Act and the changes in taxation will necessarily solve it.
We can see from paragraph 62 of the report that it came as a surprise to the Committeethat it has taken so long for the Atlantic Alliance, and in particular the United Kingdom with its long maritime tradition, to recognise a grave and worsening defect in strategic capability.The Government's proposals are not so radically different from those that Ministers and officials offered the Committee. I say that not because I wish to carp and criticise, but because I believe that the Government would be deluding themselves if they considered that their proposals would make that much difference. The Committee said:they offer only marginal prospects for improving the situation.The Minister's additional proposals do not go anywhere near as far to deal with the problem.
The Committee has attacked the optimism that has been described as demonstrably unjustified. It also noted that the worst case scenarios have been realised. The measure of the Committee's despair was shown by the fact that, in extremis, it turned to the Prime Minister to take charge. However, the fox has been shot on this occasion, because we have been told that the Prime Minister has been keeping an eye on it and that it has been one of her major concerns. She can barely sleep at night because of her anxieties about the Merchant Navy. We believe that the Prime Minister's anxiety might be of some additional assistance. If it is, so much the better.
The requirements are clearly set out by the Committee—and, with respect, they are not for the Prime Minister or her Ministers of State—and they concern the availability of merchant shipping for defence purposes, which is 1281 governed by three factors—first, the number of flagged ships; secondly, their accessibility when they are needed; and, thirdly. the availability of a pool of seafarers to man them. Those three factors require us to look at the ownership of our merchant fleet, to find ways of returning ships to the British flag, and to increase the size and capacity of our fleet. We must find better tax and social security regimes to encourage young people to go to sea. All those things must be carried out quickly or the next time we discuss such a report we will be discussing not our merchant fleet but an obituary on it.
§ Miss Ann Widdecombe (Maidstone)
I am grateful for the opportunity to speak in the debate, but as other hon. Members wish to speak I will try to be brief.
I too congratulate my hon. Friend the Member for Hampshire, East (Mr. Mates) and all the members of the Defence Select Committee on their report. I also congratulate my hon. Friend the Minister and the Government on their measures to counteract the decline of the merchant fleet. Although my remarks will be somewhat critical of what is happening, they in no way diminish either my gratitude for those measures or my respect for the deep thought that has gone into them.
The fundamental point to remember is that the British merchant fleet must play two roles. It can be called upon to play a wartime role, but during the long intervals of peace in between it essentially plays a merchant and economic role. Therefore, it must be subject to economic forces. The decline that has occurred during the 1980s is not because the Government have allowed that decline, or for any other Government inspired reasons. Rather it is because economic factors have led to a contraction in merchant shipping in general. Those factors include the move towards containerisation, the wages and taxes prevalent in the United Kingdom, and the fall in oil imports.
Such factors, or other economic factors, will always influence the size of the merchant fleet. That is why I do not wholly share the optimism expressed by my hon. Friend the Minister of State for the Armed Forces. Although I am perfectly happy to say, "Yes, the terrible decline, not just of the 1980s generally, but especially of the past three years during which there has been another substantial decline, may well have been arrested," and I am even quite happy to say, "We may see the shipping industry improve somewhat," that does not mean that we shall not enter a future period of adverse economic factors. If that happens, we are moving from too weak a base to sustain that base. That is my principal worry.
Concern has been expressed this evening about the differences in the figures that have been supplied. Going back even a few months and looking at the Government's own defence estimates, there is enough evidence to provide a terrible warning. It is said that if it is necessary to requisition vessels from the merchant fleets across NATO, 1,642 available vessels will be required. We are told that all those would be needed. A reserve is not built in to the strength of the available fleet. I repeat that all of them would he needed.
We are too dependent on the good will of those operating foreign registers and on the geographical dispersal of all those ships at the time they are needed for us to have any room for manoeuvre. A slight improvement 1282 in the size of the merchant fleet will not mean a major improvement in the base from which we operate because we should already have slightly more ships than we can foresee needing, and not simply an adequate number of ships.
The decline is well known and the statistics do not need detailed rehearsal. However, it is worth noting that in the past five years stern trawlers, fishing trawlers, cargo vessels, liners, roll-on/roll-off ferries and tugs have all shown a substantial decline. A slight arrestment of that decline will not supply us with a good base for the future.
Furthermore, we were told at the time of the defence estimates that there was an estimated deficiency of 2,000 to 3,000 officers and 2,000 to 3,000 ratings should we have to call up all those ships at a time of emergency. Although I congratulate the Government on their efforts to increase the number of cadets recruited into the Merchant Navy, that deficiency nevertheless exists.
It is not enough to say that the fleet may be smaller but that it is more efficient, because this is one area in which numbers are crucial. We must have a certain number of ships to call on in an emergency and one may have to have them in given locations. It is not enough simply to have an efficient fleet; there must be enough ships, men and equipment to call upon and to call up fast, efficiently and with complete certainty. I am not convinced that we have that base or that the measures that have been taken so far—although I welcome them—are such as to enhance it for the foreseeable future. They certainly will not do so in the medium term.
We need to address ourselves to the somewhat unfair competition that we face and to address much more closely the question of subsidies and what other countries are doing. I echo the regret expressed by my hon. Friend the Member for Dorset, South (Mr. Bruce) that there is not a representative of the Treasury present because the role of the Treasury is crucial.
No matter what the difficulty of trying to combine an economic and efficient force with the uneconomic factors against it, we must accept that we must do so even if it means an element of subsidy. I would welcome some further elucidation from my hon. Friend the Minister of State and our right hon. Friend the Secretary of State for Transport about what we are planning to do in the next five years, not to maintain our base, but substantially to enhance it so that in a few years' time we do not see in the defence estimates the age-old statement, "We will need all these ships"; we should see, "We shall need most of these ships."
§ Mr. Julian Brazier (Canterbury)
My hon. Friend the Member for Maidstone (Miss Widdecombe), in her very eloquent speech, set out the difficulties in the market place which have led to the shortages of shipping. I must reinforce what she says, having worked, most recently last summer, for a shipyard which specialised in ship repair. The situation in the shipping markets is desperate, and unfortunately, in the United Kingdom, for a number of reasons, it is likely to get worse in some areas.
To mention just one reason that came up earlier in the debate, it is absurd not to recognise that the Channel tunnel will inevitably lead to a very significant decline in the number of ferries. I do not say that against the Channel tunnel; the decision has been made on that. We are looking 1283 at a world shipping market with grotesque oversupply in some categories of ships, in which almost every country in the world is now subsidising its merchant navy.
The Soviet Union is very conscious of the importance not just of merchant shipping but of every category of supposedly civil vessels. All of them are centrally planned and co-ordinated: their fighting navy, their merchant vessels, their ubiquitous fishing fleets and, indeed, the research vessels which nominally belong to various Soviet universities. To mention just one category of supposedly civil ship, they are producing large numbers of ice-strengthened dry-cargo ships for use along their northern coastline. Many of those ships are built outside the Soviet Union, in, for example, Finland. In all cases they have strengthened hoists so that they can carry heavy weapons on their decks. In many cases the larger ones are nuclear driven and some are even fitted to carry hovercraft for transporting goods to shore. I need hardly say that their secondary role in war would be all too obvious.
The same applies with civil aviation, and the debate is supposed to be about civil aviation as well as shipping. Many Aeroflot aircraft are designed to have a secondary war role. They have strengthened floors so that heavy equipment can be put into them and they are convertible, in some cases, for use for parachuting, the Soviet Union having eight airborne divisions.
Two basic aspects have come up time and again in the debate—two reasons why we should be concerned about the Merchant Navy and the civil aviation fleet. One is direct support for the fleets and the RAF in time of war, and the other is the wider economic needs of the nation.
On the direct support side, I put it to my hon. Friend the Minister that there is enormous scope for cost-effective use of civil assets in a secondary military role. With the Atlantic Conveyor we see a small example of the sort of thinking that could be used here. This extends, however, far beyond the larger merchant vessels. There are many other examples of civil assets that could be used in a secondary military role with a very small amount of money spent up front: a lot of our civil engineering equipment, for example, and many civil aircraft.
Eighteen months before the Falklands war we were given an opportunity to fit some TriStars being sold to British Airways with equipment that would have made them available in a secondary role for air-to-air refuelling. The cost of doing it in advance would have been very modest, but the idea was turned down.
More important than that are the economic needs of the nation, which have been mentioned time and again in the debate. I cannot stress sufficiently that the Soviets recognise this. They are subsidising their cargo vessels, which can compete against us very effectively because they are subsidised. Almost every country in the free world is subsidising its merchant navy to some extent.
My hon. Friend the Minister stressed the problems with subsidies within the EC. In fact, of course, the EC's fleet, as a proportion of total world shipping, is falling. Outside the EEC large subsidies are provided. Two years ago I visited the largest shipyard in Venezuela and it provides enormous subsidies for its merchant fleet.
As an enthusiastic supporter of Adam Smith, I wish to God that there was a way in which we could maintain our merchant fleet without looking for artificial subsidies and 1284 supports of one sort or another. But our merchant fleet will be squeezed out if we are unwilling to subsidise it. I do not wish to pooh-pooh or thrust aside the steps that the Government have taken. The measures in the Merchant Shipping Bill are welcome, especially the late amendment on cabotage. I hope that the powers in that Bill will be used by the Secretary of State for Transport. Of course, it is sensible to have a merchant naval reserve and the enlargement of the business expansion scheme from £500,000 to £4 million is a welcome measure. They are modest measures, however, compared with what most other countries do.
A rollover relief which would enable our shipowners to re-equip would be extremely valuable. It would also enable our ships to become vastly more competitive. Sweden, for example, suffers from the problems of extremely expensive crews. By re-equipping its fleet with modern vessels, which can survive on small crews, the Swedish navy is becoming extremely competitive despite its high labour costs.
One of the difficulties that we face is that the cost of Third world crews is a great deal less than the cost of British crews. We cannot contend with some of the reasons for that, but, to be frank, a number of Third world ships, manned by Third world crews, have health and safety standards that would be unacceptable on a vessel using British seafarers. We could go some way to solving that problem by considering removing the national insurance contributions of British seafarers who spend a large proportion of the year at sea. The Select Committee on Defence and the Select Committee on Transport have published extremely effective reports and they highlight the serious problems that we face because of the potential shortage of vessels in a time of tension and war. That shortage could imperil our ability to keep ourselves going under the threat of war. The potential effect of that shortage would be to diminish the conventional stance of our armed forces. I do not believe that we will solve the matter by making it an MOD responsibility. Civil defence is not an MOD responsibility and for a long time it has been effectively organised by the Home Office. I welcome the increase in the civil defence budget.
The problems faced by our merchant fleet will be sorted out only when we have one Minister with clear responsibility for all aspects of shipping and, dare I say it, shipbuilding. That Minister should be in the Department of Transport and he should be responsible for monitoring the defence aspects of merchant shipping, as he would be the only man who would have authority to do something about it. He should be answerable to the House on that matter.
We need a proper co-ordinated policy that takes into account tax, employment and trade factors and a Minister who is answerable to the House for all those matters. We will then have a shipping policy that meets the needs of the nation and, God save us, our potential needs in war.
§ Sir Geoffrey Johnson Smith (Wealden)
It is probably rather rash of me to say anything at this late moment in the debate, which has been attended by so many hon. Members who are great experts on this matter. However, I do not want the moment to pass without congratulating my hon. Friend the Member for Hampshire, East (Mr. Mates) on his skilled chairmanship—and thanking the members of his Committee. I assure him that when I go 1285 abroad as chairman of the military committee of the NATO Assembly I find the reports that he and his Committee have produced immensely valuable, not only in a British, but in a NATO context—none more so than the report on this subject.
My right hon. Friend the Secretary of State has a difficult task, not least because he must face up to the issue of scarce resources. Many military demands apart from those that are the subject of this debate are made on us. He is also faced with the ambiguity of NATO's defence policy, about which I have listened to a great many briefings. NATO does not speak with a voice that makes it easy for us to carry out a single-minded policy of reinforcing the forces that we already have. No one is quite sure whether we will reinforce before or after hostilities have started.
If I had more time I should use extracts from the report by the Select Committee on Defence—specifically from the excellent memorandum submitted by Mr. F. E. C. Gregory of the department of politics in the university of Southampton. To judge from some briefings, one might imagine that we were going to fight world war I all over again, with great convoys steaming across the Atlantic—or even world war II. Many people would dispute that. In the memorandum, Mr. Gregory quotes distinguished people such as one of our former Chiefs of the Defence Staff, Lord Carver:Unless reinforcements and supplies reach this side of the Atlantic before hostilities start then I have not much hope, whether they come by air or sea, that they will he very relevant to the situation.Others, too, have made the point. As one United States army officer put it, the next waris going to he … a come as you are war.This sort of ambiguity makes it extraordinarily difficult.
§ Sir Geoffrey Johnson Smith
I am glad to see the hon. Member for Clackmannan (Mr. O'Neill) nodding his agreement.
Apart from the numbers of surface vessels of the Royal Navy, we should also consider that the effectiveness of our forces does not depend on numbers but on the extent to which such vessels provide effective modern weapons systems. My hon. Friend the Member for Dorset, South (Mr. Bruce) made the interesting point that in the Falklands war we were able to clip on to our merchant ships—thereby making them extremely effective—container boxes that contained modern effective weapon systems. I discovered at first hand the other day, when visiting the Westland-Augusta project in Italy, that helicopters such as the EH101 could greatly increase the value that could be given to our ships by strengthening the Royal Navy's efforts to deal with anti-submarine warfare. We might concentrate our attention on that aspect rather than—as we too often do—on the numbers of merchant vessels that we have.
I hope that as these arguments are developed—we have not reached the end of them—we shall hear rather more about what the agreed strategy is and about how we can make our existing ships more effective by using more effective up-to-date weapons systems.
§ Mr. Mates
This has been a useful debate and I congratulate all hon. Members who have taken part in it. It has been an extraordinary debate too, in that hon. 1286 Members from both sides of the House have spoken with one voice—a voice of concern. The House seems to be entirely unanimous about this and, to be fair, the Minister was by no means complacent.
It was apt for some hon. Members to remind us that perhaps deterrence starts with strategic nuclear weapons but finishes at the lowest level with conventional troops and civilian shipping, without which total deterrence looks less credible. It is back to the old phraseFor want of a nail, the shoe was lost.While this may not be a very romantic part of the whole of the Western Alliance's deterrent, it is nevertheless crucial.
The dilemma is evident and is mentioned not only in our report, which looks just at defence, but in the Department of Transport report as well. For economic reasons, some of which are understandable and some of which are less than attractive to contemplate, the fleet has been in a constant state of decline. That decline is not only in numbers and in deadweight tonnage, about which there can be no argument, but in the specific quality and type of ships that are most useful for defence purposes should we come to a period of crisis or tension that might lead to war.
My right hon. Friend the Minister has accused us in our report of being too pessimistic. In the report we say at some length that we do not think that the Government's optimism is justified. Those two remarks are there. We have been making these warning sounds for eight years, which is as long as the Select Committee on Defence in its present form has existed. It was one of the first subjects that we tackled because it seemed to us then to be an important element that was giving rise to concern. Successive Committees have come back to it no fewer than three times. If nothing else does, that shows, the House the consistency of our concern.
So far we have not been wrong. Our figures were brought out and we were told that we were wrong, especially three years ago, but the proof of the pudding this time round is that we were right and the Government were wrong. We were not working on the wrong figures. We had taken the right advice and the decline has proceeded, as we predicted. It gives me no comfort to say this, but I hope that it adds force to the fact that, whatever else we have done, we have produced a unanimous report right across all shades of opinion and have looked at this matter as carefully as possible.
If we have been too pessimistic no one would be more delighted than Ito own up to that if, as I suspect, we return to this matter next year or the year after. If the Government have been too optimistic I hope that the Minister will have the good sense to realise that he cannot put this problem off. It is serious and we have to keep watching it and keep our finger on its pulse.
Inevitably, my right hon. Friend the Minister and his colleagues in the Ministry of Defence are looking at much more crucial and immediate matters such as the size of the surface fleet, for example. Had we been discussing the report on that he and I could have had a rather more rigorous debate. I think that this report takes us a good distance down that road.
The problems of the future procurement of aircraft, tanks and all the other things must gravely concern the Ministry of Defence because it does not have the funds to match the commitments put upon it. The Ministry has our sympathy about that. This matter is bound to be neglected, not least because, as my hon. Friend the Member for 1287 Canterbury (Mr. Brazier) said, it is one of those things that falls between the stools of two Departments and therein always lies a danger. One Department is looking towards the other. The Department of Transport says that the merchant fleet is its business, but that it is not really interested in defence, only in the economic side. The Ministry of Defence says that the merchant fleet will be needed only if we go to war and that the Department of Transport is looking after it.
One of the more important recommendations that I hope will be taken up and considered across the board is co-ordination between Departments. We must ensure that this, above all, is monitored properly. If the Minister says that we have rung the alarm bells too loudly, I am prepared to be judged on that, but the most criminal thing of all would be to ignore the alarm bells until the fleet had declined to such an extent that it was too late to do anything credible about it and thereby damage the deterrence on which we have spent so much time and effort.
§ It being Ten o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to paragraph (5) of Standing Order No. 52 (Consideration of estimates) and the Order this day, to put forthwith the Questions necessary to dispose of the proceedings on Estimates, 1988–89 (Class I Vote 1, Class IX, Vote 1 and Class X, Vote 1).
That a sum, not exceeding £4,503,563,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending 31st March 1989 for expenditure by the Ministry of Defence on personnel costs etc. of the Armed Forces and their Reserves and Cadet Forces etc., personnel costs etc. of Defence Ministers and of certain civilian staff employed by the Ministry of Defence on movements; certain stores; supplies and services; plant and machinery; charter of ships; certain research; lands and buildings; sundry grants; payments abroad including contributions and subscriptions to international organisations and grants in aid.