HL Deb 24 November 1987 vol 490 cc540-8

3.13 p.m.

The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Brabazon of Tara.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 1 agreed to.

Clause 2 [British ships]:

Lord Brabazon of Tara moved Amendment No. 1: Page 2, line 5, ("registered") insert ("in the United Kingdom").

The noble Lord said: At the same time I shall speak to Amendments Nos. 2 and 3. These amendments will enable us to keep within the ranks of British ships until 1st July 1997 those ships which are registered in Hong Kong, where the law on registration presently based on the 1894 Act is to be put on an entirely new footing before the colony reverts to China. I beg to move.

On Question, amendment agreed to.

Lord Brabazon of Tara moved Amendment No. 2:

Page 2, line 10, at end insert— ("( ) the ship is registered under the law of a relevant overseas territory: or").

On Question, amendment agreed to.

Lord Brabazon of Tara moved Amendment No. 3: Page 2, line 19, leave out subsection (2).

On Question, amendment agreed to.

Clause 2, as amended, agreed to.

Clause 3 [Persons qualified to be owners of British ships]:

Lord Gray of Contin had given notice of his intention to move Amendment No. 4: Page 2, line 38, leave out ("and").

The noble Lord said: There is, I understand, the intention to take a fairly large group of amendments together here and we are to discuss Amendments Nos. 4 to 8, 10 to 13, 20 to 23, 25, 29 to 36 and 106. In view of this and the fact that my noble friend Lord Mottistone was to have moved the first of those amendments, Amendment No. 4, but is unfortunately unable to be with us at this stage, though he will be joining us later in the proceedings, I have undertaken to move this amendment on his behalf.

Since then, however, I have been advised by the General Council of British Shipping that it is now satisfied with the amendments in this grouping tabled by my noble friend the Minister, and therefore I do not propose to waste the time of the Committee in either speaking to or moving this amendment. It might be to the advantage of all of us if we heard the Minister describe in rather more detail what he has on offer so that your Lordships' Committee can make its own decision.

[Amendment No. 4 not moved.]

[Amendment No. 5 not moved.]

Lord Brabazon of Tara: moved Amendment No. 6:

Page 3, line 6, at end insert— ("(4) It is hereby declared that a person who is not qualified under subsection (1) above to be an owner of a British ship may nevertheless be one of the owners of such a ship if—

  1. (a) a majority interest in the ship (within the meaning of section 4 below) is owned by persons who are qualified to be owners of British ships; and
  2. (b) the ship is registered, in accordance with the provisions of that section, under Part I of the 1894 Act.").

The noble Lord said: At the same time I shall speak to a rather large group of amendments. They are Amendments Nos. 6 to 8, 10 to 13, 20 to 23, 25, 29 to 36 and 106. I am grateful to my noble friend Lord Gray of Contin for his remarks about the need for these amendments and about the fact that the General Council of British Shipping is satisfied that its wishes are met by the Government's amendments. But I should now like to give a little bit of background to the Committee on what all this is about.

I referred in my Second Reading speech to the importance of foreign investment in the British shipping industry. The standard route for that is for a foreign or Commonwealth company to establish a subsidiary here which is entitled to place ships on the United Kingdom register. That route will continue to be open under the Bill, and we welcome the investment and employment which it brings.

But the 1894 Act affords another route for foreign investment from certain countries. These amendments are designed to offer a modern counterpart to that second route, consistent with our concern to secure more effective jurisdiction over UK registered ships. The 1894 Act provides that a ship is entitled to be registered if wholly owned by qualified individuals or companies. But the Act counts as "qualified persons" not only British citizens and companies but also Commonwealth citizens and companies. This means that a Commonwealth company can place a vessel directly on the UK register without having to establish a subsidiary here. It also means that a Commonwealth company and a UK company can jointly own a ship on the UK register, each owning some of the 64 shares in the vessel.

The Bill as drafted puts an end to those arrangements, giving a much more restricted definition of "qualified persons" and limiting it to UK and dependent territory citizens and companies. These amendments, however, would temper that restriction. They do so by removing the requirement for a ship to be wholly owned by qualified persons, and providing for non-qualified persons (for example, Commonwealth or EC citizens or companies) to own a minority of shares in a UK registered ship provided that a majority of shares in the ship—that is, at least 33 shares out of 64—are owned by qualified persons and that our jurisdictional concerns are therefore secured. I might add that a similar provision is to be found in the Australian Ship Registration Act of 1981, which replaced the 1894 Act in Australia.

It is a truism to say that shipping is an international activity. Joint ventures with shipping companies of other countries are an increasingly important aspect of it. It is important to maintain the maximum flexibility in organising such arrangements, consistent with satisfying our jurisdictional concerns, so that there is no disincentive to such joint ventures utilising ships on the UK or dependent territory registers. I hope the Committee will agree to these amendments. I beg to move.

Lord Underhill

In accordance with the views of the noble Lord, Lord Gray of Contin, we likewise are prepared to support the government amendments. They provide for a majority holding, which is what all of us would prefer. Although there is a vast group of amendments we give them general support. At this stage I wish to thank the noble Lord for carrying out his undertaking to let us have Notes on Clauses much earlier than he thought would be the case, and also for his notes today explaining the new measures.

On Question, amendment agreed to.

Clause 3, as amended, agreed to.

Clause 4 [Entitlement to registration under Part I of 1984 Act]:

[Amendment No. 7 not moved.]

Lord Brabazon of Tara moved Amendment No. 8: Page 3, line 12, leave out ("wholly") and insert ("a majority interest in the ship is").

The noble Lord said: I have just spoken to this amendment. Therefore, I beg to move.

On Question, amendment agreed to.

Lord Underhill moved Amendment No. 9:

Page 3, line 13, at end insert— ("( ) It shall be a condition of entitlement to registration that persons employed on such a ship shall be citizens of the United Kingdom.").

The noble Lord said: It is argued that the removal of the obligation of registration under the 1894 Act and its replacement by an entitlement, as is proposed under the Bill, is helpful to the shipping industry. It is clear that this gives the shipping industry essential flexibility enabling owners to transfer ships from one register to another as circumstances arise.

If the obligation to register is removed will that not make it easier for ships to be registered outside the UK, and is there any advantage in making that provision? In any event, registration under either the present system or the proposed new arrangement does not carry any obligation whatever to employ United Kingdom nationals. The point of the amendment is that it shall be a condition of entitlement to registration that persons employed on such a ship shall be citizens of the United Kingdom. I beg to move.

Lord Brabazon of Tara

I am afraid that I cannot accept this amendment, because it ignores the basic realities of the industry and would impose a crippling increase in the operating costs of UK registered ships. Current law imposes nationality requirements on the master, mate and first engineer of UK registered ships. It is true that some other countries have more stringent nationality requirements, but many of them are now finding these requirements so expensive that they are seeking to circumvent them by establishing offshore registers. Our shipping industry has a long tradition of employing non-UK seafarers. The amendment gives no recognition, for example, to the part which Irish citizens play in manning our ships.

We are seeking to encourage companies to use crews resident in the British Isles through the financial assistance measures in Clause 26. I believe that that is the right way to approach the matter, but to require every single employee to be a UK citizen would raise costs very significantly. I can think of no surer way to drive tonnage away from the United Kingdom flag. I think this amendment would be extremely counter-productive as regards the numbers of ships on the UK register. I hope that the noble Lord will not wish to press it.

Lord Greenway

Would the Minister not agree that perhaps the real problem here and the crux of the matter against the amendment is that we are not training enough seamen at the moment and that we cannot find enough people to man our ships? Companies are often forced to seek employees from other countries in order to fill their ships.

Lord Brabazon of Tara

Obviously we shall come a little later in the course of the Bill to what we propose to do to assist shipping companies with training. As I said in my opening remarks, I hope that will encourage British shipowners to use British seafarers. So indeed should the measures that we shall come to later as regards repatriation costs. But even with those measures there has been a long tradition in certain shipping companies to employ foreign seafarers. I think particularly of cruise ships and passenger ships where many of the stewards are Indian and have always been Indian, so far as I know. If we sought to stop that happening those companies would very likely flag out.

Lord Underhill

I have listened carefully to what the Minister said. We want to have some benefit to the British seafarers in any registration proposals. The best course to adopt is to read very carefully what the Minister said. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Brabazon of Tara moved Amendments Nos. 10 to 13:

Page 3, line 18, after ("whom") insert ("the majority interest in").

Page 3, line 22, leave out ("a ship is wholly") and insert ("a majority interest in a ship is").

Page 3, line 31, leave out ("a ship is wholly") and insert ("a majority interest in a ship is").

Page 3, line 41, after ("section") insert— ("(a) one or more persons shall be treated as owning a majority interest in a ship if there is vested in that person or in those persons, taken together, the legal title to 33 or more of the 64 shares into which the property in the ship is divided, for the purposes of registration, in accordance with section 5 of the 1894 Act (there being left out of account for this purpose any share in which any beneficial interest is owned by a person who is not qualified to be an owner of a British ship); and (b)").

The noble Lord said: I spoke to Amendments Nos. 10 to 13 with Amendment No. 6. With the leave of the Committee, I shall move them en bloc.

On Question, amendments agreed to.

3.30 p.m.

Lord Gray of Contin moved Amendment No. 14:

Page 3, line 43, at end insert— ("(7) The Secretary of State may by regulation specify further requirements which must be satisfied in order for a ship to be eligible to be registered as a British ship, provided that ship was a specific type of ship. Such requirements may be—

  1. (a) requirements in connection with the implementation of subsections (2) to (5) or
  2. (b) in addition to the requirements so specified,
and appearing to the Secretary of State to be appropriate for securing that such a vessel has a genuine and substantial connection with the United Kingdom.").

The noble Lord said: Once again, this amendment is grouped with Amendments Nos. 17 and 19. With regard to Amendment No. 19, I wish to advise the Committee that it would not be my intention to move that amendment when we reach it because I have been advised that the drafting leaves a good deal to be desired. For that, I make due apology to the Committee. I propose not to move it but to look at it again, take further advice on the drafting and hopefully retable it on Report.

It may be that since it is grouped with Amendment No. 14 certain Members of the Committee may wish to comment on it. I should welcome that. but I should rather not move it at this stage.

The purpose of Amendment No. 14 is to provide the Secretary of State with powers to introduce restrictions on the registration of ships of a specific type or types where it may be thought appropriate to ensure that the British share of the beneficial ownership is of an appropriate size.

As those Members of the Committee who were present on the occasion of the Second Reading of this Bill will realise, it has been for a considerable time my great concern that British flag ships are being deprived of a great deal of business which in my view is their just right in the British sector of the North Sea. That has caused great irritation to the companies who operate there. They are irritated by the fact that there is such easy access in the British sector of the North Sea to flags of foreign countries, particularly Norwegian and American, which operate in our sector freely and supply the rigs and platforms which have been placed there.

This amendment is a modest and moderate one. It is of such a nature that I hope that my noble friend, who has been so helpful and co-operative up until now, will between now and Report think about what I have said and what I am going to say and perhaps be able to do something about it. The British share of the beneficial ownership is something which gives cause for concern. There might be appropriate ways of putting that right.

Many reasons could be given for such action. Perhaps I may mention just three at this stage. The first is that there may be grounds for suspecting what might be described as a "brass plate" type of registration, possibly of a short-term nature and therefore having no lasting benefit for the United Kingdom. There might also be a case in which the competitive sutuation is patently unequal. Finally, there might be a situation in which comparable restrictions are imposed on British companies or ships seeking registration abroad.

I asked at Second Reading what chance British vessels would have for trade if they were to try to encroach into the Gulf of Mexico, for example? There would be little sympathy or support for them. It is time we tried to take steps to protect our own vessels in our own waters.

The last three lines of the amendment are intended to ensure that no doubt exists about the ability to register a ship owned by any of the existing companies ultimately controlled from overseas which have already demonstrated a continuing commitment to the United Kingdom. As regards the British Offshore Supply Vessels Association, the amendment has the specific support of its members in that category. For example, Maersk, TNT and Zapata Gulf Marine have all been established in the United Kingdom for some years. They are part of the British shipping scene. All are aware of the amendment and are satisfied with it.

The amendment also has the support of the General Council of British Shipping. It will be noted—I am sure my noble friend has already done so—that the Secretary of State is not specifically required to act by the terms of the amendment. It is an enabling amendment and I shall be glad to hear what my noble friend has to say concerning it. I beg to move.

Lord Mottistone

I should like to support my noble friend. He has said all that needs to be said concerning the matter. I should like to take this opportunity to thank him for moving our joint amendments earlier and to thank my noble friend the Minister for his Amendment No. 6 which has enabled us to proceed with such speed. I do not suppose that it will be quite as good in the future.

Lord Carmichael of Kelvingrove

I should also like to support the amendment. Knowing the great experience of the noble Lord, Lord Gray, he is more aware than any of us of the feeling that we are always being left behind by unequal competition. He made the telling point that laissez-faire would not work if we sent ships to the Gulf of Mexico. This side of the Committee agrees with the General Council of British Shipping and the noble Lord, Lord Gray, that there is a strong case for the amendment. I hope that we shall have a comprehensive answer from the Minister.

Lord Geddes

In strongly supporting my noble friend who has moved the amendment, may I first apologise to the Committee that I was not in my place for the Second Reading of the Bill. Regrettably, I was out of the country at the time.

My noble friend Lord Gray has already mentioned the four specific companies which are long established on the British shipping scene but are not ultimately British owned. I must declare my interest in that I am a director of one of those companies and the chairman of its subsidiary which is the second of those companies.

Dealing with the larger of those companies in physical size, the company has been established in the United Kingdom since 1973. It employs in excess of 6,000 people. It is a major employer and growing with great speed within the United Kingdom. It seems to BOSVA and the General Council of British Shipping that it would be unjust to exclude such genuine British companies, even though they are subsidiaries of overseas companies. The same point applies to Maersk and to Zapata.

Perhaps I may also refer to Amendment No. 19. I am grateful to my noble friend Lord Gray for stating in advance that he does not intend to move that amendment. One reason may be that the drafting is deficient. With great respect, it is contradictory. If one takes the last three lines of Amendment No. 14 which is under discussion at the moment, as my noble friend has rightly pointed out it is intended to bring within the net those companies that have a genuine and long-standing British presence. If one then looks at Amendment No. 19, paragraph (c) as drafted is in contradiction to paragraph (d). I am not a parliamentary draftsman and I do not have the correct wording. However, the intention at Report stage would be to bring the two paragraphs together so that they read along the lines of paragraph (c) as it presently stands. However, the paragraph would then continue, as regards the grounds under which the Secretary of State might decline to register: to the absence of reciprocal trading opportunities for British ships of a similar type in the country of ultimate beneficial ownership of the ship unless there was a genuine and substantial connection with the United Kingdom, the vessel being of a specified type". If the amendment was drafted in that way, it would tie in closely with the wording and spirit of Amendment No. 14. I strongly support the amendment.

Earl Attlee

I support the amendment so succinctly moved by the noble Lord, Lord Gray of Contin. We must have reciprocity. Why should we allow everyone to come and take money on our section of the North Sea when our ships are specifically excluded from other sections of the North Sea? We must be fair about it. It is all very well for this country to say that we are a democracy, that we are open handed and that we allow everyone to come in and get money from our section of the North Sea when we are not allowed to get money back from other parts of the North Sea.

Lord Greenway

I should like to support the amendment. However, I think we must appreciate that the offshore industry is suffering, like so many other sectors of the shipping industry, from overtonnaging. That is perhaps partly to blame for the present situation.

On the other hand, I feel that the amendment addresses an anomaly regarding the countries that have had UK offshoots for a number of years. There might have been a problem in that regard and I think that the amendment overcomes it. So far as I am aware, two of the companies deal exclusively in offshore ships. The Maersk company is rather larger and has a number of bigger ships on the UK register as well. I do not think that that would be affected in any way. However, I should like to add my support for the amendment which has been put forward.

Lord Parry

The amendment is directed basically towards offshore rigs and vessels of that sort. The final line of the amendment, which specifies that such vessels should have a general and substantial connection with the United Kingdom, is one that appeals to me and one to which I shall be referring later in the context of the fishing industry off the Welsh coast. Therefore, I seek support in the Committee for that general contention.

Lord Brabazon of Tara

As my noble friend has explained, the purpose of Amendment No. 14 with which we are dealing is to make our registration policy more restrictive in certain areas than it is at present. It is true, as the noble Lord, Lord Parry, has said, that we are doing just that for fishing vessels. However, we do it against the background of the EC common fisheries policy which allocates a national quota to us and which we are safeguarding for UK fishermen. The amendment puts severe limitations on any foreign investment in the fishing industry.

We should think long and hard before changing our requirements for registration of merchant ships in this way. We have traditionally welcomed foreign investment in our merchant marine and the employment which it brings. Indeed my noble friend and my noble friend Lord Geddes have talked about the number of companies with foreign parents which are prominent in the offshore sector. My noble friend has said he has no wish to penalise them. Establishing requirements for a genuine and substantial connection with the UK that will not also risk excluding desirable foreign investment will not be easy; and the position of ships already on the register which did not meet any new requirements would need to be considered.

Nevertheless I have a good deal of sympathy with my noble friend and others who have spoken to this amendment. Indeed it is not difficult to gauge the feelings in the House either this afternoon. I am prepared, without commitment, to consider this proposal and to return to the matter at the next stage. I would obviously like to talk to my noble friend between then and now.

I turn briefly to Amendment No. 19, which, as my noble friend said, is an enabling amendment. This does not specifically require the Secretary of State to act. The grounds for refusing registration set out in the Bill are safety of the ship, the risk of pollution and the safety of crew members. This amendment introduces a new class of consideration, reciprocity and connection with the UK.

The issue of reciprocity raises great complications. It would move away from the present system where a ship is eligible to register if clear criteria are satisfied. It would require an investigation of beneficial ownership; an investigation of the policies of the country or countries where ultimate beneficial ownership lies; and a judgment about the balance of trading opportunities.

I need hardly remind my noble friend that the country which perhaps he is most wanting to get at would actually claim that it had reciprocal trading opportunities with us. I have been to visit it and met its minister twice to talk about this. In any case it is definitely that country's claim that its coast is open.

These are important questions, but the registration process is not the place to deal with them. We have powers to deal with foreign actions affecting shipping under Section 14 of the 1974 Act and we shall be improving them under Clause 36 of this Bill. As for a genuine and substantial connection with the UK, I have agreed with my noble friend that we will look at this very carefully and so there will be no need to add it in the second amendment which he proposes.

With those words I hope that my noble friend will withdraw the amendment at this stage. We will talk about it at Report stage if not before.

Lord Gray of Contin

I am most grateful to my noble friend for continuing his sympathetic approach to the Bill. I fully accept that he will take this away without commitment. It would be unfair to expect him to do otherwise at this stage. I shall certainly be available to talk with him at any time. I hope that between now and Report stage he will be able to frame an amendment which would be acceptable and indeed that the amendment might be put down by the Government. I seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Beaverbrook

I think this would be a convenient moment to take the Statement. I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.