British Shipping Industry

Part of the debate – in the House of Commons at 5:39 pm on 17th December 1984.

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Photo of Mr Neville Trotter Mr Neville Trotter , Tynemouth 5:39 pm, 17th December 1984

The situation is indeed grave. Britain's historical background to its maritime traditions and links is so great that it is staggering that two thirds of the Merchant Navy has disappeared in just nine years. Given that the history of the United Kingdom has been built up on our maritime endeavour, that is indeed staggering. I can only reflect that as a country we have failed to give more attention to the staggering decline in one of our great historical industries simply because employment in it has not been concentrated in particular parts of the country.

I believe that the man in the street—whether he lives at the seaside or inland—believes that Britain needs a Merchant Navy and that there is increasingly national concern about the decline in, and even the collapse of, this industry.

One newspaper recently published interesting figures about the size of individual companies. My father worked for P and O before the war, when I remember that it had more than 200 ships. That was a long time ago, but today P and O has just 24 ships. Furness Withy has 13 ships, Ellermans six, and British and Commonwealth only four. I appreciate that some of these companies are also members of container consortia, but these figures represent a staggering reduction in the British fleet. It is right that the House should debate this subject today, and I join in the congratulations to my hon. Friend the Member for Romsey and Waterside (Mr. Colvin) on choosing it.

Other hon. Members have referred to the reasons for this decline, one of which is the fall in coastal trade. Coastal traffic has practically ceased as a means of communication. In the days when the hon. Member for Wallsend (Mr. Garrett) and I were at school, the Tyne was crowded with colliers taking coal to the south. Nowadays that coal goes to power stations near the collieries and is conveyed by electric line to the south of the country.

Britain now trades far more with Europe, and consequently less of our home trade is taken on long-distance journeys by sea. Less oil is now brought into the country from overseas. Every 1 million tonnes of additional output from the North sea means that one tanker fewer is required. Some tankers are still needed to carry oil from some of the wells to the ports, but the oil also comes ashore by pipeline, and we should contrast the demand for tankers to bring the oil ashore from a few miles out in the North sea with the demand required to bring it around Africa from the Gulf. That sector has also witnessed a great fall in demand.

Container ships are now being made more efficient than the ships they replaced. As well as being larger, each spends only a short time in port. In the old days the ships spent a long time in port, but those days have gone because container ships unload in 24 hours and are off again. One such ship now does the job of seven or eight of its predecessors.

The world depression has also had an effect on our trading situation. The first effect was on the tanker industry, when a flood of cheap ships from the low-wage shipyards of the far east were bought up in vast numbers. Having destroyed the tanker market, those shipyards began to construct bulk carriers, with the result that that sector was also destroyed. We have heard earlier in the debate about the way in which the container business is in turn about to be affected by a vast over-expansion in the number of container ships. Huge fleets of new container ships are ready to come into service in the near future, and one of the sectors that is still doing quite well will be badly affected.

World trade by sea has grown by 28 per cent. in 14 years, but in that time the tonnage of ships available to carry the trade has more than doubled. That has had an appalling effect on freight rates, which are now lower than six years ago. While 1984 was a bad year for world shipping, and for western shipping in particular, it looks as though 1985 will follow the same sad pattern.

Several hon. Members have referred to the defence implications of the Merchant Navy, and it is on that that I wish to concentrate. The developments in the Falkland Islands a couple of years ago dramatically focused attention on the requirements for the Merchant Navy. There is, however, a danger that as time passes we shall lose impetus. It is, therefore, with relief that I congratulate my right hon. Friend and his colleagues in the Ministry of Defence on setting up an inquiry into the adequacy of the Merchant Navy in a war or crisis. I hope that that inquiry will investigate "out of NATO area" operations as well as operations in the north Atlantic. Should some terrible circumstances again require Britain to act alone—God forbid that it will ever happen—we shall have to look to our own resources. We shall be unable to count on our NATO allies in that situation.

During the Falklands crisis, 20 product tankers were sent south to support the Royal Navy. At that time, BP had 25 or 30 such ships in its fleet. I understand that now it has only eight, far fewer than would be needed to support another Falkland Islands operation. There has been a particularly critical fall in the number of specialist ships.

Some figures about shipping requirements in the event of a crisis in Europe are freely available in America—though not perhaps in this country. I understand that 1·5 million men would be flown across the Atlantic, but their equipment would have to come by sea. Further, 8·5 million tonnes of stores plus 10 million tonnes of fuel would have to be brought across the Atlantic. That would require 2,000 shiploads a month. On top of that, a similiar requirement would be needed to maintain the civilian and industrial life of Europe. These are enormous figures, and it is right that the Government should now be inquiring into the continuing capability of the Merchant Navy to play its part in dealing with such a crisis.

Manning would be a particular problem in a crisis. The number of our people at sea has nearly halved in the last 10 years, and is falling at the rate of about 5,000 a year from its present level of 41,000. As we have heard, the number of cadets recruited is also causing great concern. At one time, 1,000 cadets a year were recruited, but it is now a fraction of that number. Therefore, we shall be unable to produce the officers of the future.

It is no good having ships available under flags of convenience which could be requisitioned at a time of crisis if there is no one to man them. It could well be that the existing foreign crews would refuse to sail into particularly hazardous waters, and we might have to rely on our own sailors.

Given the present state of oversupply, with 1,400 surplus ships laid up in the world's ports, it is easy to acquire a second-hand ship cheaply. It is therefore important to do everything we can to maintain the safety of international shipping operations. I very much welcome the recent increase in the number of port inspections. There are now about 10,000 inspections a year, and the need for them is highlighted by the fact that well over 13,000 defects were discovered. No fewer than 430 ships inspected were detained or delayed because they had serious deficiencies. That was 6 per cent. of all the ships inspected. Clearly, that effort needs to be maintained.

The main cause of the problems in the British Merchant Navy is the protectionism of the developing world, which uses its own fleets to gain hard currency and to develop an industry. Those countries gain great advantage from their cheap labour. There is no doubt that this will be a permanent problem for Britain and the other western ship-owning countries. The same applies to much of manufacturing industry, but the problem is highlighted at sea.

Recently I spoke to the manager of a foreign-owned company which still operates from London. On ships registered under the Red Ensign, crew costs account for two thirds of the income, while on ships registered in Liberia or one of the other flags of convenience countries the crew costs account for only one third of the income. That kind of difference highlights the great problems when operating under the Red Ensign, as we all wish.

Turning to specialist ships, the difference in crew costs is not so much a factor. Crewing costs can be the least of the requirements when providing a complex service, whether it be container ships, gas carriers or other specialist vessels. Countries such as Britain are still able to compete in providing ships of that kind.

What can we do for the future? We can try to be more efficient. We can cut crews. I do not believe that this will in itself solve the problem, but we have to do all we can to be as efficient as possible. In recent years there have been quite dramatic falls in the size of crews. A ship which a few years ago had a crew of about 60 has been replaced by a ship with a crew of 31. That in turn will be replaced by ships which are now being built for crews of about 21. Japan is talking seriously about operating large ships with crews as low as 12. Technology will bring further changes in the manning of ships. However, that will not deal with the magnitude of the problems that have been outlined in the debate.

If I may deal with subsidies, I do not believe that British shipowners seek to be subsidised. However, they say with great justification that they are at a disadvantage compared with other western operators and even more with the countries of the eastern bloc which pay no regard to normal commercial factors. I trust that my hon. Friend the Under-Secretary of State for Transport will refer in his winding-up speech to the discussions that have taken place with the Soviet Union on the passenger cruise liner sector of the industry, which has been so harmed by competition from the non-profitmaking, subsidised Soviet merchant navy, the size of which has been so well portrayed by my right hon. Friend the Member for Taunton (Mr. du Cann) who, again, made a strong case for the Merchant Navy.

What can we do to provide our shipowners with at last the same financial assistance as is given by their western competitors? I support fully what has been said about the negative nature of the Budget changes that have been made this year and the suggestion made by the GCBS that the fleet should be allowed, in addition to the 25 per cent. writing-down allowance, a 50 per cent. ship allowance for new and second-hand ships. Nothing less than that will encourage the investment that is so desperately needed.

The hon. Member for Wallsend referred to the fact that he and I have been invited to go on board Atlantic Conveyor later this week. It is sad indeed that we should these days be talking about individual new ships, not fleets of ships. One ship today is a great achievement for both the shipbuilders and the shipowners of Britain. It is indeed tragic that when Atlantic Conveyor sails there will not, for the first time in centuries, be a merchant ship being built on the Tyne. We must do everything we can to encourage shipowners to continue to invest. The financial state of their industry is so bad that they cannot invest without tax relief. If they are not asking for operating subsidies they should at least be given tax relief. The lack of incentive and of help to our shipowners makes Britain unique. It needs to be put right.

I come to the problems of navigation, and the ports around our coasts. They have the greatest effect upon the British Merchant Navy since it is the British Merchant Navy that uses our ports most. Pilotage is a matter that deserves a separate debate. I welcome the recent publication of a Green Paper on that difficult subject. Ships coming to this country can be charged £12,000 for light dues, whereas if they go to continental ports they pay nothing at all. This leads to ships avoiding Great Britain and to traffic being diverted from our ports to western European ports, with goods being brought on to Britain on cross-Channel ferries. This results in a further adverse effect upon our deep-sea shipping fleet.

I was at Southampton recently. It was a sad sight. That great port has eight container channels. Not one container was to be seen there. The whole trade of the port has gone. While that is harmful to Britain and surely disastrous for Southampton, it must certainly also be bad for the British Merchant Navy if ports of that magnitude are closed down by the lunatic action of the labour force. I say to my hon. Friend the Under-Secretary of State for Transport that the dock work labour scheme must be given further attention by the Government in the interests of those who work in the industry as much as of those in the Merchant Navy.

One of the problems is the lack of co-ordiation between Ministries. That is not through any lack of goodwill or intent. It is just the result of the history of Government in this country. I do not believe it to be sensible that the vital question of labour relations in the ports should not be handled by the same Ministry as deals with the Merchant Navy.

The efficiency of ships can be helped by improvements in fuel efficiency and design. I welcome the efficient ship project, which the Government are supporting, but I repeat that there will be no investment in new ships unless there are Budget changes. The inadequacies of the present system must be put right in the next Budget.

I believe that this will not be the end of the matter for this House. A maritime league has been formed in this country, consisting of eminent people who deal with every aspect of maritime life. It will continue the battle for the Merchant Navy. There is a maritime affairs committee in the House. It is on an all-party basis and is chaired admirably by my right hon. Friend the Member for Taunton. It will not go away, either.

I am sure that we shall return to this subject. The message that has to go out from our debate today is that as a first step the Treasury must accept the need to give assistance in the next Budget to our shipowners. It is absolutely vital that this message should be taken on board.