Merchant Fleet: Tonnage (Hansard, 20 February 1985)

§ Lord Grimond
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ Lord Brabazon of Tara
My Lords, the United Kingdom registered merchant fleet of ships of 500 gross tons and over at the end of 1965 was 26.7 million deadweight tons and 22 million at the end of 1984. No official forecasts are made for the future size of the fleet.

§ Lord Grimond
My Lords, is the noble Lord aware that the British Merchant Navy has fallen from 10 per cent. of the world fleet to 3 per cent? Indeed, the fall has been very much steeper since 1975. Only two new merchant vessels for registration under the British flag have been laid down since last July, excluding placements for the Falklands. The British flag is becoming known as the flag of inconvenience rather than convenience. Without pre-empting the Budget, will the Government give us an assurance that they will look at the taxation position as it affects British shipping? Also, will they explain how they expect this country to be supplied in the event of war?

§ Lord Brabazon of Tara
My Lords, the question of fiscal taxation is obviously a matter for my right honourable friend the Chancellor. I am aware that he has received representations, as he did last year, but I must ask the noble Lord to await the Budget. Regarding the possibility of emergency and war, my department is at present engaged in three studies in respect of shipping requirements in these times and we are employing Lloyd's Sea Group consultants to carry these out. The first is for the future supply and demand position up to 1992 for bulk shipping—those are tankers and dry bulk vessels—taking into account United Kingdom non-military requirements in times of emergency and war. The second is the same but for general cargo ships. The third is a joint study with the MoD to ascertain whether the United Kingdom fleet will be able to meet defence requirements over the next five years and to 1992.

§ Lord Shinwell
My Lords, is the noble Lord aware that those of us who are familiar with this subject are becoming very depressed at the situation? Is he aware that unless something constructive is done by the Government in particular, perhaps in conjunction with ship owners, the unions concerned, shipbuilders, people who work in the docks and so on, we shall no longer be able to be a maritime nation? That is a very serious situation. Something has to be done. What is the cause of it? Is it restrictive practices? Is it excessive competition? Will the noble Lord take note of what has happened to the Southampton Docks recently? As a result of a change in the management and administration, it is back to form again. The same could be done about Liverpool, the London Docks and elsewhere. I plead with the Minister and with the Government to give this matter as much attention as is possible; otherwise, as I say, we can no longer claim to be a maritime nation.

§ Lord Brabazon of Tara
My Lords, of course the matter of the docks is rather different from the tonnage of shipping. I know that the Government are concerned. We are also very pleased that there has been a change at Southampton recently. I think it is important to remember that tonnage is not the only matter at which one should look. Although around 87½ per cent. of tonnage is comprised of tankers and bulk carriers—where there are very competitive freight rates at the moment and our share of this tonnage has fallen considerably over the years—in fact they contribute only 40 per cent. of earnings, whereas 12½ per cent. of tonnage, comprised of cargo liners, containers and passenger ships, contributes 60 per cent. of earnings. The tonnage in this category has remained fairly stable in recent years and this is where we must look to for the future.

§ Lord Underhill
My Lords, I hope the Minister's reply does not indicate some degree of complacency over the serious situation which the noble Lord, Lord Grimond, has outlined in his question. May I ask the Minister to tell us a little more about this inquiry? Is it an inter-departmental inquiry? Alternatively, will the National Union of Seamen and the General Council of British Shipping be involved in the inquiry? Is it not a matter that may best be dealt with by a Select Committee of the other place conducting a detailed inquiry? What steps are being taken on an international basis, bearing in mind that we are confronted with all types of competition, including financial advantages given to our European partners in connection with their shipping?

§ Lord Brabazon of Tara
My Lords, I do not think I can really say any more about the study (rather than inquiry) which we have put in motion and which, as I have said, is being done for us by Lloyd's Sea Group consultants. In regard to international competition, we do not favour protectionism. We believe that a freely competitive environment is in the best interests of shippers and ship owners and we shall take whatever action is necessary to protect these interests. The overwhelming majority of world markets are open. What we can do, in concert with our European partners, is to try to fight protectionism against us and them. We are doing what we can there. We have set up 571 a consultative shipping group with the United States. This is making progress on agreement to preserve competition and we are now considering how to take this further.

§ Lord Chalfont
My Lords, will the noble Lord not agree that the experience of the war in the South Atlantic demonstrated, if it needed demonstrating, that a strong merchant fleet is essential for the successful operations of the Royal Navy in war? Will he accept that the progressive decline of the British merchant fleet is causing grave disquiet to those of us who are mainly concerned with the defence of this country in time of war?

§ Lord Brabazon of Tara
My Lords, I should agree. That is why we have started this study in conjuction with the MoD about future defence requirements.

§ The Earl of Onslow
My Lords, can the noble Lord give us a little clarification on this? He said in his first Answer that the Government made no forecasts of the size of the fleet after 1990. He then went on to say that he was going to do a study on defence numbers up to 1992. How are the two statements reconcilable?

§ Lord Brabazon of Tara
My Lords, we do not make any official forecast for the future size of the fleet. We shall obviously have to look into this while the study is taking place.

§ Lord Cledwyn of Penrhos
My Lords, as this is a matter of great interest to the House, I wonder whether the noble Lord can say a little more about the study? I assume that this has been commissioned by the Department of Trade. Can he say what the terms of reference are and when it is likely to be published? Will it be published so as to be available to this House and another place, and will debates be possible thereafter?

§ Lord Brabazon of Tara
My Lords, as I said in an earlier supplementary, the study is being conducted by the Department of Transport, the third part of it in conjunction with the MoD. The results are likely to be available to my right honourable friend the Secretary of State in the middle of 1985, but I cannot say at this stage whether or not they will be published.

§ Lord Cledwyn of Penrhos
My Lords, will the noble Lord be good enough to say what are the terms of reference?

§ Lord Brabazon of Tara
My Lords, as I stated in an earlier supplementary, the terms of reference are, first, to study, in respect of requirements in times of emergency and war, the future supply and demand position up to 1992 for bulk shipping—that is, tankers and dry bulk vessels—taking into consideration United Kingdom non-military requirements in times of emergency and war. The second is the same but relates to general cargo; that is, cargo liners, containers and passenger ships. The third, as I have said, is a study together with the MoD to ascertain whether the United Kingdom fleet will be able to meet defence requirements over the next five years and into 1992.

§ Lord Cledwyn of Penrhos
My Lords, is the noble Lord aware that the terms of reference are really inadequate in these circumstances. Does he not agree that the terms of reference should be extended to times of peace, the reasons for the decline and the possibility of expansion?

§ Lord Brabazon of Tara
My Lords, in times of peace, there has obviously been a great change in world trade over the last few years. There has also been the emergence of competition from less developed countries whose crewing costs are considerably below those of our own. In a situation such as that obtaining at the moment, when freight rates are very competitive, the marginal cost difference is very important.

§ Lord Nugent of Guildford
My Lords, is my noble friend aware that there is great interest in this topic? Will he be good enough to ask his right honourable friend the Secretary of State whether he will consider publishing this report when it is completed?

§ Lord Brabazon of Tara
My Lords, I definitely give that assurance to my noble friend.

Lord Paget of Northampton
My Lords, is there not a simple answer to this question? It is that ships which comply with what we regard to be necessary for safety and manning cannot compete with ships that do not, and until we put our foot down and say that ships which, by our standards, are unsafely equipped and unsafely manned will not be admitted to our ports then we shall not be giving our Merchant Navy a chance.

§ The Lord President of the Council (Viscount Whitelaw)
My Lords, I feel that the noble Lord has had a very good run. He has put his point of view. It is time, I think, in spite of the importance of this Question—we can come back to this matter—to move to the next Question.