§ Mr. Ernie Ross
asked the Secretary of State for Industry if he will list the types of assistance offered by the Government to win orders for British shipyards; and how these compare with the assistance offered by European Economic Community countries, Japan, and the United States of America.
§ Mr. Michael Marshall
The latest information available is set out in the following table:261W
Country (a) Aid to domestic shipowners(b) Aids to domestic shipbuilding (for home and export orders) Ireland Home credit scheme 80% over 8½ years at 7.5% interest. Subsidy of up to 30% of contract price (c) Italy Interest subsidy (50% of market rate) for loans up to 15 years) Production subsidy. Scheme has lapsed. Renewal under negotiation with EEC. Netherlands Investment subsidy of 15% plus investment premium of 5.5% (subsumed June 1979 under general investment aid scheme). Home credit scheme 80% over 8½ years, interest rate variable but not less than 8%. Production subsidy (maximum 15% of contract price) West Germany Subsidy of 12.5% of contract price. Interest relief subsidy (maximum 2 percentage points) Production subsidy of approximately £38m until end of 1981 Japan Home credit scheme. Government (Japanese Development Bank) Loan of 65–75% over 13 years at 7.15% interest with 3 year grace period. Further loan available from commercial banks, acting in conjunction with JDB, for 20–25% of contract over 8 years at 8.2% interest. Supplementary provision in certain cases for interest subsidies of 2.5–3.5% Nil United States of America Home credit scheme—guarantees for up to 87.5% of contract price available. Operating subsidies available to domestic shipowners in certain cases. Under the Jones Act foreign built vessels are excluded from US coastal trade. Registration under the US flag is confined to ships wholly owned by American citizens or companies comprising mostly American citizens. Production subsidy (maximum 50%) Notes on information provided (a) With the exception of the United States of America, all the countries Used are participants in the OECD Understanding which limits the terms of officially supported export credits. The current OECD terms are a maximum of 80% of the contract price to be repaid over a maximum of 8½ years, at an interest rate no more favourable than an effective rate of 8% (in some cases, including the UK, the actual rate is 7.5% plus certain charges). The OECD terms do not apply to credit given upon aid terms to developing countries. (b) Aid to domestic shipowners is subject to the scrutiny of the Commission under Article 8 of the Fifth Directive on aid to shipbuilding but there are no international agreements limiting the terms of officially supported credit which may be offered to domestic shipowners. Within the EEC such assistance must be available on orders placed in any EEC shipyard. In the UK assistance to domestic owners (the Home Credit Scheme) is restricted to ships built in UK yards (Industry Act 1972 Section 10) and thus discriminates against other EEC Shipyards. It comes within the EEC rules only on condition that the terms do no more than match those which a UK owner could obtain by ordering elsewhere in the EEC (ie OECD Understanding terms). Similar assistance is provided by France, Ireland and the Netherlands. (c) Scheme expired. Details of new scheme not yet available.