Shipping Industry

Part of the debate – in the House of Commons at 10:19 pm on 5th March 1992.

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Photo of Patrick McLoughlin Patrick McLoughlin The Parliamentary Under-Secretary of State for Transport 10:19 pm, 5th March 1992

I congratulate my hon. Friend the Member for Dover (Mr. Shaw) on securing an Adjournment debate on this important subject. Those of us who know my hon. Friend are aware that he has taken considerable interest in this subject during his time in the House and that, on many occasions, he has lobbied Ministers about it.

I shall do my best to respond to the points raised by my hon. Friend. However, he is aware that my right hon. Friend the Chancellor of the Exchequer will make a statement next week and it is not for us to try to anticipate what may form part of that statement. A number of my hon. Friend's suggestions relate to fiscal matters, but obviously they are matters for my right hon. Friend the Chancellor.

As the Minister with responsibility for shipping, I can say that the Government fully recognise the important contribution that is made to our country by the British merchant fleet and by the men and women who serve within it. On the one hand, that fleet provides an economic contribution to the country from trade and invisible earnings and, on the other, it can be called upon to play an important strategic role in our national defence.

Given the constituency of my hon. Friend, it is not surprising that he dealt at length with the role of the ferry companies. I am tremendously impressed at the way in which those companies have improved their services. Nowadays, travelling on a ferry is like going on a mini-cruise. That bodes well for the future of the ferry industry, which will face competition problems.

My hon. Friend said that we are especially reliant on shipping as an island nation, and that is well known to us. We are reliant on it not only for trade, but for the carriage of passengers, particularly to the continent. There is no doubt that the channel tunnel will offer strong competition to the ferry operators. It remains to be seen how they will adjust to that competition, but it is clear that the major operators are already planning for the future with newer, larger ships and by offering improved facilities both on board and on shore. There is no doubt that the traveller —the consumer—has already reaped the benefit of that competition.

We should be proud of the status that we hold in the maritime world. If one looks beyond the headline figures of United Kingdom registered tonnage, it is obvious that Britain is still a key player in the shipping industry. In total, British individuals and companies have an ownership or management interest in ships totalling some 41 million deadweight tonnes—or six per cent. of total world tonnage. In addition, the City is home to many international shipowners as well as an important centre of maritime insurance. I doubt that that would continue to be so under any other than a Conservative Government. It is important to remember that when considering our future as a maritime nation and the future of our maritime industry.

The headquarters of the International Maritime Organisation is located in London. It now has 136 states as members. The IMO is a highly respected international body, responsible for maritime regulation. The siting of the IMO in London demonstrates Britain's continuing high standing within the maritime world. The IMO has made great progress in creating safer and cleaner shipping lanes throughout the world to the benefit of ship owners, seafarers, manufacturers, consumers and the environment.

I am proud to say that the United Kingdom has taken a leading role in those initiatives and has been prepared, where necessary, to take a very firm stand against the less rigorous attitudes which certain IMO members are sometimes tempted to adopt. We are, for example, currently and forcefully arguing against the suggestion that some countries may wish to dilute the provisional agreement, secured last year, to phase in new stability regulations for existing roll on/roll off passenger ferries. Those new regulations arise, of course, from the investigations carried out into the Herald of Free Enterprise disaster. To ignore the results of those investigations would be to show a completely unacceptable disregard for the safety of ferry passengers.

My hon. Friend should note that we cannot rule out the possibility of taking unilateral action on this front if satisfactory agreement cannot be reached at the IMO. I hope that that goes some way towards convincing my hon. Friend of the seriousness with which the Government take the whole issue of safety. We would not want to do anything that discriminated against British flagged vessels, so we would be looking at all vessels operating in British ports. The Government do not underestimate the importance of the shipping industry.

We appreciate that the size of the fleet has declined in the recent past. As my hon. Friend suggests, there are many reasons for the decline. Changing trading patterns, the emergence of new shipping powers, and the development of new, more sophisticated technology have all played a part. Nor is the United Kingdom alone in having been affected by those changes. Since 1981, the European Community as a whole has seen a decline of about 50 per cent. in gross registered tonnage.

At the same time, the industry is still recovering from the worldwide slump which prevailed for most of the last decade. That was a time of falling freight rates and over-capacity, partly caused by the subsidies which were poured into shipbuilding and encouraged investment in uneconomic tonnage, as my hon. Friend ably pointed out. Conditions have now improved, but fierce competition has led to major rationalisation in the industry. A number of companies have diversified into more profitable areas and some shipowners have left the industry completely.

Competition remains fierce, but a joint Government-industry working party which reported in late 1990 concluded that the British shipping industry was "now lean and fit" and prepared to meet the challenges of the coming years.

I have spent some time putting the position of the merchant fleet in context. I do not apologise for that. When people speak about the declining British fleet, it is too often forgotten that the British shipping industry remains vigorous and forward-looking,

It is essential that that message is stressed time and again, for we shall not get people to go into the industry if we hear nothing but doom and gloom and prophecies about things going wrong. A more forward-looking attitude, with a more confident case being put across, is welcomed by the industry. We are not complacent. We recognise that the continued decline of the United Kingdom register must have wider ramifications, and we have taken a number of positive steps to try to reverse that trend.

I mentioned earlier the joint working party which met in 1990. Its task was to examine the current state of the industry and to identify ways in which the competitiveness of British shipping could be improved. It reported its findings in September 1990, making five major recommendations which we and the industry are pursuing.

Good progress has been made. We have already introduced simplified procedures for the type approval of ships equipment. We have also consulted widely on officer nationality, and I hope to come forward with regulations very shortly.

On cabotage, the House will know that we have fought long and hard in the EC to bring about the liberalisation of coastal trade. We will continue to press the case, and we hope that it can be resolved during the current Portuguese presidency. If not, I assure my hon. Friend that, when the United Kingdom assumes the presidency later this year, the subject will be very high indeed on our agenda. It has been on the agenda for far too long. It is time it was off the agenda and agreement reached.

Other recommendations need primary legislation to amend the Merchant Shipping Acts. It is our firm intention to come forward with legislation at the earliest suitable opportunity.

Action on training is mainly for the industry. A training task force has been created to identify future manpower needs and to ensure that those needs are met. At the same time, the Government continue to offer financial assistance with the costs of training officer cadets and providing experienced officers with higher qualifications. The scheme has been extremely successful, increasing annual cadet recruitment from a serious low of 162 in 1987—I accept the point that my hon. Friend made about that—to more than 500 at the end of the last academic year.

The joint working party looked primarily at the economic aspects of the shipping industry. I briefly alluded to the defence role of the merchant fleet. That is a vital area which we have not overlooked. We all know what a vital role was played by our merchant ships at the time of the Falklands crisis, and I cannot pay too high a tribute to the skills and courage of the British seafarers who manned those ships.

It is understandable that concern should be expressed about the size of the fleet having declined since then. Hon. Members can, however, be assured that we monitor the fleet's capability to support our armed forces in times of crisis. My right hon. Friend the Financial Secretary announced that we were undertaking a thorough review of the subject. This has been a complex task, not least because of dramatic political changes that have occurred internationally. I assure my hon. Friend, however, that the subject is being given the full and careful consideration that it deserves.

Another subject that my hon. Friend raised was the growth of the so-called "flags of convenience". Those registers can and do offer an easy way out for shipowners who are, in some cases, prepared to compromise on safety matters in order to cope with increasing costs and competition. There is little doubt that the safety records of those vessels cannot compare with those on the United Kingdom register, and the matter is of considerable concern.

We have publicly condemned the low standards which some registers are content to apply and have called for action to address the problem. For example, the more rigorous use of port state control would go a long way towards improving the safety record of the international shipping industry, particularly if it were combined with effective sanctions. Port state control has already been used to good effect in the United Kingdom. We are the only nation that consistently exceeds the agreed target figure of inspecting 25 per cent. of foreign vessels visiting our ports. In 1990, we inspected 34·4 per cent., and we have set ourselves an internal target of not less than 30 per cent. a year. I look forward to that record continuing.

It has also been suggested that we should refuse access to British ports to vessels that do not meet the same standards as our own. Such an idea may seem radical and clearly needs further thought. However, although we fully support the importance of maintaining a liberal shipping policy, we consider that freedom of access to national waters must be backed by compliance with proper safety standards, and we are committed to ensuring that that principle is given practical effect.

I realise that many countries offer wide subsidies to support their national shipping industries. But it is clear that such policies have the negative effect of distorting the market and of encouraging investment in unprofitable areas. We have seen evidence of that in the 1970s and 1980s, when investment grants led to overtonnage and many of the problems from which the industry is only just emerging today.

Instead of matching subsidy with subsidy, we should prefer to see such distortions removed so that companies can compete on equal economic grounds. My hon. Friend should be assured that we are continuing to press through the appropriate bodies—the EC and OECD—for the removal of subsidies and unfair aids to shipping.

I give my hon. Friend an undertaking that we shall look carefully at monitoring the points that he asks us to monitor, and I shall write to him in the near future.