Merchant Navy (Hansard, 12 May 1983)

§ Mr. Sproat

I have today placed in the Library a copy of the speech I gave at the Mercantile Marine Service Association's annual general meeting on 4 May.

In my speech, I outlined four major ways in which the present decline of the merchant fleet could certainly be halted and reversed.

First, the fleet needs to be more competitive and more subsidies are not an answer: they would merely confirm the fleet in its commercial uncompetitiveness. Second, I rejected a feeble retreat into protectionism: the United Kingdom fleet already gets some 68 per cent. of its international earnings from cross-trades, and if we protected our trades, other countries would protect their trades against us, and that 68 per cent. would be gravely put at risk. Third, I showed that the United Kingdom fleet was in far too many cases seriously overmanned—25 per cent. overmanning was not unusual—vis-a-vis the best of our European competitors. I said this overmanning and other high crew costs, such as repatriation costs, were seriously undermining our competitiveness, and that this must be sorted out by the industry itself. I also listed the wide range of measures I had recently taken to reduce the Government's burden on shipping. Fourth, I said that the industry must make a sharp analysis of those parts of the world shipping market where a high-cost fleet like ours could still prosper because of its easier access to capital, its higher technology and skills.

I said that the only realistic strategy for the future is for all sides to put the good of the whole industry first, before vested interests, and agree on the ways necessary to achieve the goal of increased competitiveness. We have fallen behind others, and however painful the transitional phase, must make ourselves more competitive by comparison with the best of our developed world competitors.

Our competitors have not overtaken us by virtue of governmental subsidies. I outlined the subsidies that other countries enjoy in a similar speech I distributed at the MNAOA conference on 10 May 1983, which proves this point, and I am setting these out below: In the United States there is a range of measures including direct production aids to shipbuilding, home credit arrangements which are more favourable than OECD terms, and an operating subsidy; Belgium also has favourable home credit arrangements and grants operating subsidies; Sweden, too, operates favourable home credit arrangements as well as a recently introduced income tax rebate scheme which has the same effect as operating subsidies; Norway, too, has its own home credit arrangements and grants direct production aids to shipbuilding; Japan and. Greece have favourable home 406W credit arrangements; and France, Spain, Italy, and Brazil all have beneficial home credit arrangements as well as, direct production aids to shipbuilding.

I have concluded, therefore, that while the aggregate of varied subsidies, and other Governments' policies, around the world does, beyond dispute, have an effect on our competitive position, it is equally clear that it is not an excess of subsidy by other nations over that which we ourselves provide that prevents the United Kingdom merchant navy from doing better. It is not a major, nor even hardly a minor, reason for the superiority of those merchant navies at present larger than ours.

The main reason our fleet is declining is that it is uncompetitive vis-a-vis the best European fleets. The main constituent part of that uncompetitiveness is high crew costs. In my speech, I invited the GCBS and the seafaring unions to meet together with the Department of Trade to discuss ways and means of improving the position of the Merchant Navy.