§ Sir Russell Fairgrieveasked the Minister for Trade what view he has reached on the representations made to him by the United Kindom shipping industry, following the Falklands campaign, regarding the future of the Merchant Navy; and if he will make a statement.
§ Mr. SproatI am grateful to the GCBS and to the seafaring unions for their thoughtful responses to my invitation to give me their views on the future of the Merchant Navy, following the Falklands war.
There was a very wide difference of view, often contradictory, between these responses as to what the Government should do to help the Merchant Navy. In order that the House may be fully aware of what the GCBS and the seafaring unions put to me in writing, I am placing copies of their submissions in the Library.
I am replying individually by letter to the GCBS and to the seafaring unions on their specific proposals. In these letters I shall deal in particular with the smaller, though still very important, matters which they raised with me, and in this answer deal only with their major proposals. I shall place these letters also in the Library of both Houses. I wish hon. Members to know exactly what has been proposed, and what has been accepted or rejected by the Government, and why.
The main strands of proposals, expressed in differing and sometimes contradictory ways by the different bodies, were, first, an extension of state control, state ownership, and protectionism, generally; and, secondly state subsidy. I am rejecting totally any new proposals in this area.
As regards the first, the House and the industry should be in no doubt that this Government have no intention whatsoever of setting up in any form a nationalised shipping line; nor of paying operating subsidies to maintain the fleet at a given uncommercial size. Furthermore, they have no intention whatsoever of bringing in controls to require United Kingdom shippers, whether nationalised industry or private sector shippers, or foreign shippers, to use any percentage whatever of United Kingdom shipping contrary to their commercial judgment.
Furthermore, this Government have no intention whatsoever of setting up a cabotage regime for United Kingdom ports. Nor do we intend to restrict the oil-related business in the United Kingdom sector of the North sea to United Kingdom vessels only. On the contrary, it remains the firm policy of this Government to maintain the open trading system in this country, and to press strongly other countries' Governments to liberalise their regimes and to open up their markets to United Kingdom shipping. Protectionism and cargo reservation is growing elsewhere in the world. It must be halted and then reversed for the sake both of the United Kingdom and world trade.
The United Kingdom shipping industry depends crucially on the opportunities offered to it by a world open trading system. Over two thirds of our international freight earnings come from cross-trading—that is, trading between two ports, neither or which is in the United Kingdom. These earnings, and the jobs they sustain, depend on the willingness of other countries to keep their ports open to British shipping, and they would not be so willing if we closed our ports to theirs. This means that a fleet protected by the Government, and dependent on the 291W cargoes the Government could reserve to it, could only be smaller than today's fleet and offer less employment, notwithstanding today's difficulties of world recession and world over-tonnaging.
Furthermore, just because some other countries get away with some other measures of protectionionism, it does not follow that the United Kingdom would also be allowed to practice protectionism at home but benefit from open trading elsewhere in the world. On the contrary, the United Kingdom is regarded as such a long-time upholder of the principles and practice of open trading, that for the United Kingdom to abandon open trading for protectionism would start a rapid move towards protectionism around the world—greatly to the damage of the United Kingdom.
As far as proposals for new subsidies for the shipping industry are concerned, the Government also reject all such proposals, whether they come from the GCBS or from the seafaring unions. British shipping must become competitive on a true commercial basis, and not fall back on new subsidies. Government subsidies not only mean that other industries have, in effect, to subsidise the shipping industry, but also Government subsidy blunts the incentive to create the necessary, truly commercial, competitive edge. Furthermore, the United Kingdom already has a very favourable tax regime for shipping.
For their part, the Government are responsible for regulating the industry in the interests of safety and the environment. They will ensure that the burden of regulation is minimised, and that decisive action is taken against unsafe foreign shipping in British ports. I have recently made useful reforms in both these areas, about which I have told the House in previous parliamentary answers. I am continuing to look for further ways in which, consistent with safety, I can reduce such burdens even further as part of my campaign to help the merchant fleet to become more competitive.
The Government are also responsible for international negotiations affecting the access of our merchant fleet to the world's shipping markets; and we shall continue to assist by opposing attempts to restrict the industry's ability to compete for trade worldwide. The common position of the European Community on the United Nations liner conference code, which will shortly be coming into force, is a major step in this direction: and the United Kingdom is playing a leading part in current negotiations to apply similar principles in shipping routes outside the Community.
The GCBS and the seafaring unions have all told me they would welcome a continuing and regular form of tripartite discussions with the Government. I regard this as a constructive suggestion. I shall shortly be inviting representatives of the various bodies to meet me to give me their views on how best such tripartite discussions could take place. I would see such discussions concentrating on ways of improving competitiveness by reducing operating costs.
I have also received from the GCBS and the seafaring unions helpful suggestions for improving the ability of the Merchant Navy to perform its important role in times of emergency and war. Consideration of them and of the scope for incorporating defence features in merchant ships is principally for my right hon. Friend the Secretary of State for Defence. Issues of defence planning arise not so much from the size of the fleet as from the characteristics of ships. The adequacy of the fleet for defence purposes 292W is kept under review, and detailed contingency plans are maintained. Despite the contraction, the merchant fleet remains capable of fulfilling these plans. Members of the NATO Alliance are pledged to pool their merchant shipping in the event of a war affecting the Alliance.
I believe that the decline of the British Merchant Navy can be halted and reversed. This will not be achieved by a feeble retreat into protectionism and subsidy. What is needed to reverse the current decline, and what can and should be done, is for management to perform its proper function and to deal effectively and urgently with the fact that United Kingdom crew manning levels, in far too many cases, are as much as 25 per cent. or more higher than those of European competitors—European competitors with high technical and safety standards, and with the extra crew costs, conceded over the years, such as reductions in tours of duty entailing heavy repatriation expenses which, taken together, have multiplied the number of men that need to be employed to fill one seagoing job. In this area alone there is substantial room for cost reduction to produce real competitiveness. It is up to management, not the Government, to sort out such crippling factors in United Kingdom uncompetitiveness and, by sustained analysis of the market, to select those areas of world shipping where a competitive United Kingdom fleet should still have an important role.
As far as the seafaring unions are concerned, they must face up to the fact that it is no use, on the one hand, bemoaning the decline of the merchant fleet while, on the other hand, too often pressing for high manning levels beyond the needs of safety, and pressing for other crew-related changes which contribute yet further to higher costs—higher costs which are themselves critically responsible for the very decline of the United Kingdom fleet that the unions so deplore.
The United Kingdom merchant fleet, and the jobs and prosperity that go with it, can be increased, but only if management and unions will unite in making the fleet more competitive—without the ultimately debilitating feather bed of subsidies or protection.