I congratulate my hon. Friend the Member for Sevenoaks (Mr. Wolfson) on his excellent speech on an important subject. My hon. Friends the Members for Lancaster (Dame E. Kellett-Bowman), for Worcester (Mr. Luff), for Ludlow (Mr. Gill) and for Hertford and Stortford (Mr. Wells), who listened to him, take a keen interest in this matter. My hon. Friend the Member for Gedling (Mr. Mitchell) is also present and he has told me of his specific interest in merchant shipping. They have greatly enjoyed what my hon. Friend had to say.
I hope that it is not too churlish to say that it is rather significant that there is not one member of Her Majesty's Opposition present to listen to this important debate on an industry that they purport frequently to hold dear. When push comes to shove at what is, after all, just after half-past 11, they cannot even find a Front-Bench spokesman to attend. When the crocodile tears are shed on future occasions, I shall remind the Opposition of how much they seem to care, in practice, about our merchant shipping.
My hon. Friend has a great future ahead of him in writing film scripts. His opening line of "Mayday, Mayday, Mayday" was dramatic enough and I am rather sorry that the Table Office chose to delete the rather dramatic title for the debate of "Death of the Red Duster" and substitute the anodyne, "Merchant Shipping". I hope to be treated to other examples of my hon. Friend's imaginative approach to this matter in the future. It certainly does a great deal to enliven our debates at this hour.
My hon. Friend made some important comments and I shall try to reply to some of them in the short time available to me. He quoted from the report of the Select Committee on Employment, which said:
the percentage of the Department of Transport's budget … devoted to shipping … is a telling example of how low down the list of the Department's priorities shipping stands.
If my hon. Friend will allow me to say so, that quotation is simply untrue, and it would be untrue even if the Committee had used the correct statistical data to support its conclusion.
I must make it clear to my hon. Friend that the Government are fully aware of the contributions that the British merchant fleet has made and continues to make to the country in times of peace and crisis. We are also well aware that there are associated maritime industries, which have grown up in the City, which serve the merchant fleet and which now exist to serve not only the British industry but the needs of a significant proportion of world shipping.
In the past, the British fleet developed and prospered by identifying opportunities and exploiting them. It should therefore come as no surprise that other nations, especially the newly industrialising nations, will follow a similar route in developing their own national fleets.
Inevitably, such competition will impact on the size and composition of our fleet. Over the past 20 years or so, we have witnessed a big reduction in British flagged and owned tonnage, and at the same time a significant restructuring which is reflected in the types of ships that now comprise our national fleet. But our experience is not unique. Other traditional maritime nations have faced similar and undoubtedly equally painful adjustments. Given that a large part of our shipping is international, we cannot insulate ourselves from international competition of the sort that I have described.
My hon. Friend was correct in claiming that we can all swallow hard and accept the consequences of fair competition, but it is a great deal more difficult to accept the pain caused by unfair competition. My hon. Friend had something to say about that which I thought was pertinent, but I hope that he will allow me to say that it is not the whole story. He gave the House some examples—and he was quite right—of areas in which some other European nations appear to offer more favourable practices, including fiscal practices, treatment of training and treatment of personnel, than perhaps is the case in the United Kingdom. I recall that the Select Committee report contains a tabulation listing the practices in each of the member states. I hope that I am not misrepresenting my hon. Friend when I say that he will undoubtedly have taken his information from that table. If he did, perhaps I may make it clear that there are also examples which tend to point in the other direction.
In Belgium, Denmark, France, Germany, Ireland, Italy, Portugal and Spain, seafarers are treated no differently from other employees for taxation purposes. By contrast, in the United Kingdom, seafarers who spend fewer than 183 days in this country in any 365-day period qualify for 100 per cent. tax relief on foreign earnings. Seafarers in Belgium, Denmark, Finland, Germany, Ireland, Italy, Luxembourg and Portugal, like their United Kingdom counterparts, make the same social security payments as other employees, and I know that some recent concessions have been made by France on this. As my hon. Friend will appreciate, we are seeking further clarification from the French Government on their move.
In Belgium, Denmark, France, Italy and Portugal, corporation tax is higher than the 35 per cent. levied in the United Kingdom. Of course, Germany's rate of 33·6 per cent. and the 35 per cent. levied in the Netherlands and Spain are exactly comparable with the United Kingdom. Unlike many other countries covered by the survey, we offer direct financial support for officer training. At present, that is in excess of £3 million a year—not, incidentally, the £0·7 million quoted on page 155 of the Select Committee's report. We also provide relief in the form of a subsidy of about £3 million per year to enable crews to be shipped or flown abroad to where they pick up the vessel.
In addition, as my hon. Friend the Economic Secretary explained during the debate on the Finance Bill earlier this year, shipping—together with the rest of industry—benefits from the Government's fiscal and monetary policies. While I am on this subject, I take the opportunity to acknowledge my hon. Friend's understanding that on the eve of the Budget he cannot expect me to say anything more specific on that matter; I aim to hold this office for at least another 24 hours, if not longer.
I have given those examples simply to demonstrate that there are two sides to the coin. My hon. Friend is right that there are some areas in which other European competitors appear to offer more advantage than that offered in the United Kingdom. As I hope that the illustrations I have given show, however, there are many ways in which the United Kingdom offers a competitive environment.
Our Government have evolved a package of measures tailored to suit the needs of our shipping industry. For example, training is high on our agenda, and that is entirely right. Some support measures serve only to distort the market and, as such, they represent unfair competition. It is that latter group that we targeted during our recent EC presidency, and which we shall continue to attack. I make no apology for that. We hope that our partners will be persuaded by our arguments. I do not claim that we are on the threshold of success, but there are signs that others are beginning to accept the force of what we say.
It is interesting to note that many of the EC countries which are often praised for the support that they give their national shipping have been unable to work the longed-for miracle. Within the Community, in the 12 months from 1 January 1992 to 1 January 1993, only France, Greece and the Netherlands could claim an increase in registered tonnage. All the other member states lost ground during that period.
I am sure that my hon. Friend will be the first to acknowledge that overt financial and/or fiscal support is not the only means whereby our competitors can gain unfair advantage. Over the years, we have made every effort to remove restrictions on trading opportunities. We were delighted that the debate on EC cabotage was brought to a successful conclusion during our presidency.
I shall not disguise the fact that the result was not so liberal as we should have liked. Nor do I ignore the fact that, regrettably, some member states are being selective in their implementation of the agreement. Nevertheless, even in its present form it is of considerable significance to British shipping and will open up new and potentially profitable opportunities, which will grow as the various derogations lapse. As I speak, my right hon. Friend the Secretary of State and my noble Friend the Minister for Aviation and Shipping met our EC counterparts in an endeavour to agree further measures, which we hope will redound to the benefit of the Community and, by extension, to our shipping industry, to those who work in it and to users.
It is of regret that many of the newer flag states regard shipping as a soft option and consequently pay little or no attention to their responsibilities. That is grossly unfair to seafarers, to passengers who sail on their ships and to manufacturers who, in good faith, entrust their cargoes to them. Nor is it fair to countries whose environment suffers the consequence of badly maintained vessels, or indeed those responsible ship owners, particularly those who fly the Red Duster, who maintain their ships to the highest standards at considerable cost in terms of time and money. The United Kingdom has recognised the problem and taken the lead in seeking remedies with like-minded Governments in the EC and International Maritime Organisation.
There are one or two points that my hon. Friend made on the detailed 100 per cent. ship allowance and roll-over relief that I have not been able to answer, together with his point about merchant shipping and defence. I hope that he will accept that the recent review allowed Ministers in the Ministry of Defence to announce that special measures on shipping were not considered necessary. If I may, I will write to my hon. Friend on any outstanding issues.