The Merchant Fleet (Hansard, 20 February 1997)

§ The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen)
My Lords, the United Kingdom flagged fleet, along with those of a number of other developed nations, has declined in size for reasons that include changing trade patterns and the emergence of low-cost fleets from the developing world. We will continue to pursue targeted measures to create and maintain the conditions in which British shipping can prosper and compete in international markets.

§ Lord Clinton-Davis
My Lords, is that not a pathetic response? This Government inherited from the last Labour Government a fleet well in excess of 1,300 ships over 500 gross registered tonnes proudly flying the Red Ensign. Today, on the Government's own figures, it is 377 and is falling. Is the Minister aware that, at a time when there is a substantial upsurge in world shipping, there is a clear need for a strong, vibrant British marine force? Does he accept that this Government, through their neglect over the past 17 years, have failed the nation?

§ Viscount Goschen
No, my Lords; not surprisingly, I do not accept that for a moment. World trade patterns have changed considerably since then, including those of many other developed nations. One has only to see what has happened to France and Italy, to give just two 780 examples. We have seen a greater use of low-cost shipping from the developing nations. We have taken measures to address that problem. We have: clamped down on sub-standard shipping; addressed the factors that have caused companies to want to flag out from the UK; introduced targeted measures; increased funding towards the training of UK officers; deregulated; and put in roll-over relief, together with a number of other measures. They were implemented at the request of shipowners. We want to work with them to ensure the best possible conditions.

§ Lord Monkswell
My Lords, bearing in mind that the Prime Minister has located Britain at the heart of Europe, have the Government decided that we no longer need a merchant navy?

§ Viscount Goschen
No, my Lords, nothing could be further from the truth.

§ Lord Greenway
My Lords, does my noble friend agree that, while the figures on the Order Paper may appear dire, British-controlled shipping still represents some 11 per cent. of world shipping? While our interest in shipping may have declined somewhat over the years, is it not a fact that British shipping is far from dead and buried? Should we not take considerable pride in the fact that one of our oldest and most famous shipping companies is currently building the largest container ships in the world and is also among the top three cruise shipping companies—an area that has been among the most successful sectors of shipping in recent years?

§ Viscount Goschen
My Lords, the noble Lord is quite right. The UK-owned fleet is much greater than just the UK-flagged fleet. When one includes vessels from the Red Ensign group, including the Isle of Man, it now ranks eighth in the world.
The noble Lord is right to point out that various sectors of the UK shipping industry are prosperous, lean and efficient and compete well with the rest of Europe. One only has to look at the cruise industry, the ferry industry and container ships. In addition, our ports industry is much leaner and more efficient than it used to be.

§ Lord Clark of Kempston
My Lords, does the Minister agree that the noble Lord, Lord Clinton-Davis, is quite wrong in suggesting that there was nothing wrong with the economy in 1979 when the Government took over a nearly bankrupt country? But does he not agree that, as far as the shipping industry is concerned, the reduction in capital allowances for shipping has in fact contributed to the reduction in our shipping fleet? Would it be a good idea to have a look at capital allowances for the shipping industry?

§ Viscount Goschen
My Lords, that is a matter that shipowners feel very strongly about. Equally, we have introduced roll-over relief on capital allowances balancing charges, a measure which was sorely needed. We have also introduced the foreign earnings deduction for seafarers who spend up to 183 days in the UK. 781 We have put forward a number of measures. The shipping industry has welcomed them and now feels that the deregulated climate in the UK, coupled with the strength of the economy generally, is putting the industry in a good position to compete.

§ Lord Mackie of Benshie
My Lords, can the noble Viscount tell us how many ships flying flags of Liberia and other curious places are in fact owned by British companies? Is it the policy of the Government to deregulate down to Liberian standards in order to bring them back?

§ Viscount Goschen
My Lords, in an Answer to a Written Question from the noble Lord, Lord Clinton-Davis, I gave the details that the noble Lord seeks. Essentially, in 1996 there were some 514 ships owned by United Kingdom companies of 500 gross tonnes and over.
The fact is that the face of shipping has changed. Many companies from all over the world have flagged out. One should not necessarily seize upon Liberia as being a low-quality flag. We have high standards in this country and seek to impose them on other countries by a very strong policy of port-state control. We inspect some 30 per cent. of foreign-flagged ships that visit this country. We believe that this policy has been extremely effective in raising standards.

§ Lord Murray of Epping Forest
My Lords, does the Minister view with equanimity the fact that the Isle of Man has more British tonnage flying its flag than does the UK itself? Does he accept that this has nothing to do with comparative labour costs and everything to do with better financial and fiscal treatment? Is he aware that the Red Ensign, to which he referred, is not waving but drowning?

§ Viscount Goschen
My Lords, no, I certainly do not accept that. Indeed, I understand that there will be a number of foreign-flagged ferries coming on to the UK register shortly.
Companies appreciate the benefits of operating with the Red Ensign. We want to introduce as many measures as we can, consistent with safety and the investment climate here, to encourage owners to do that.

§ Viscount Runciman of Doxford
My Lords, is the Minister satisfied that the Government are doing enough to address the urgent and growing problem of the shortage of British seafarers, who are important not only for the British shipping industry but for a wide range of related shore-based industries and, not least, to the nation's defence?

§ Viscount Goschen
My Lords, I certainly believe that training is a key issue for the merchant fleet. We have introduced two schemes, the government assistance for training (GAFT) scheme, introduced in the late 1980s, and the development of certificated seafarers scheme. Between them, these two schemes have seen the number 782 of cadets coming into the industry increase more than three-fold since their introduction. No eligible cadet has been refused entry to the GAFF scheme.

§ Lord Clinton-Davis
My Lords, it is extraordinary, is it not, that the Minister can claim comfort from a situation which is nothing short of disastrous? His views are not shared by the Council of Shipping, the trade unions or anyone who actually knows about the situation. Is the Minister not aware that the plans which he says the Government propose to introduce are 17 years too late? The Government are running out of time, thankfully; unhappily, so is the British fleet.

§ Viscount Goschen
My Lords, I find that very difficult to accept. I understood that the Labour Party had launched a new initiative in connection with the merchant fleet and the measures that they would take forward. I examined that carefully and could see no additional resources pledged to address this point, no additional resources for training and no other concessions.
The Government are pursuing a range of highly targeted measures which the shipping industry welcomes. The fact is that there is a very competitive market out there. We do not believe that joining an ever-increasing spiral of state subsidies is the way forward.