Lord Greenway
My Lords, I am grateful to the Leader of the House and apologise for being caught completely unawares. I am rather breathless but I am here.
We now return to the general transport debate, so ably introduced by the noble Earl, Lord Attlee, whose competence in many transport matters we have got used to over the years. I join other noble Lords in welcoming him to his new post.
So far we have talked about rail and roads, and no doubt we will talk more about those subjects, but I am now going to take your Lordships away for a breath of sea air and talk for a bit about the maritime side of the transport business.
We are an island nation and have always relied on trade for our well-being. Indeed, it was on the back of trade that our present greatness was built, and for many many years we were without equal in both shipping and shipbuilding. We are still an island and trade is still vital to our economy, with over 90 per cent of it involving a sea journey.
The introduction of the tonnage tax by the then Deputy Prime Minister in 1998 reversed a serious decline of the UK fleet, since when it has made a considerable recovery, increasing some sixfold. A number of big foreign companies have set up large UK operations and have placed quite a large number of ships on the UK register.
The recent recession hit shipping hard. The volumes coming out of Asia are starting to improve and rates are holding up, giving some cause for optimism, although I am sure that there could, and probably will, be further fluctuations before we return to the boom conditions that existed before the credit crunch.
However, this sense of optimism is under severe threat so far as the UK flag is concerned, as a very nasty squall is approaching over the horizon. Some of your Lordships may have seen a letter in the Daily Telegraph last Friday and an article by Libby Purves in the Times today. The letter in the Daily Telegraph was signed by 11 senior shipping executives in this country. The reason for their concern is an obscure regulation tucked away in the Equality Act, which was rushed through just before the election. I believe that it is coming up for implementation in October and, if brought in, it could compel quite a large number of UK flagship operators to leave the UK register, as it would compel them to pay UK wage levels to seafarers who are normally resident abroad.
For many years, those people have been paid lower wages than their UK counterparts but ones that nevertheless place them on a par with highly skilled professionals in their own countries. The arrangement goes back to the Race Relations Act 1976, from which shipping was granted an exemption. It was reviewed in 2003 when the amount of damage that it would do to the industry was realised. This new threat is indeed very severe, and quite a large number of owners—possibly up to 20—have indicated that, if the regulation is brought in, they will almost definitely remove their ships to another flag. As many as 172 ships—almost 50 per cent of the current UK fleet—could be affected. If the new rates apply only to ships within the European economic area, a smaller number of ships will be affected but it will still have a massive impact on UK Ltd’s shipping. Extra costs would arise out of it and could well impact on the jobs of 4,000 seafarers.
I hope that the Government will look at this matter extremely seriously. It would affect not only shipping but all the ancillary businesses in the City that rely on shipping and are still recognised as world leaders. I am talking of insurance, arbitration and shipping law. Many foreigners still prefer to use shipping law, so London must not lose its attraction. Many other places in the world, including Singapore and Dubai, are trying to increase their shipping centres, and anything that happens to damage our shipping will only benefit these new centres.
Yet another squall is coming over the horizon involving taxing non-domiciles, which I believe the Government are taking a further look at. Let me give an example of what can happen. Some years ago New York was a maritime centre to rival London, with many non-domiciled Greeks living and working there. The Americans decided to tax the worldwide interests of the non-doms, which resulted in all the Greeks upping sticks and leaving New York. They have never returned. We cannot allow that to happen here. A lot of Greek non-domiciled shipping people have been resident here for many years but a number have already gone back to Athens. If any further detrimental change is made to the tax regime for non-doms, UK shipping would suffer a very great loss. It does not just affect immediate owners. Greek shipping businesses are very complex; there are a lot of family trusts, so not only the up-front people are affected but many of the families as well.
The Government must take strong note of two factors. We must preserve a decent UK-flagged fleet because on that hangs all our expertise in the City of London. That was why the International Maritime Organisation was based in London in the first place.
I shall say a few words about safety, which is part of today’s debate. One of the worrying things about shipping is manning levels. Shipping companies have been far too ready to cut their staff, which must have a detrimental effect. There are numerous instances of fatigue causing accidents. I believe that some measures are being taken to try to rectify that, but when so much capital is tied up in a ship and its cargo one must ensure that that ship is properly navigated and looked after. That issue needs to be looked at again. It is all very well relying on modern electronics but one cannot beat an extra pair of eyes on the bridge of a ship.
There is also concern about the dissemination of information within the industry. There was an incident this year when a container stack on a feeder ship collapsed. The investigation discovered that an almost identical accident had happened on a similar ship four years ago. The Marine Accident Investigation Branch had reported thoroughly on that accident but it appears that that knowledge had simply not reached the operators of the ship that was affected this year. That cannot be right and we must try to improve the dissemination of important safety information.
Another worrying issue regarding the international transportation of containers is the fact that there is no proper way of checking the weight of a container before it is loaded on board a ship. The shipowner has to take what the transporter of the goods says, and again in recent incidents when container stacks have collapsed, their weight bore no relation to the figures provided to the shipping company.
The enormous expansion in the number of wind farms, as mentioned in the first Question today, is also a safety concern for the shipping industry. In the earlier rounds of granting licences to developers of offshore wind farms, no one seemed to take shipping into consideration. It was intended to place some of them right across well used shipping lanes, which was obviously crazy. Things have since improved and developers now consult widely with the general lighthouse authorities. Inevitably, however, with the enormous increase in wind turbines offshore, we will increase the risk of an accident. If a gas carrier or large tanker is involved, one can only guess at the horrors that might arise.
I want to comment briefly on ports, which are the important interfaces between the shipping industry, shipping transport and inland transport. I am delighted that the Government have acted quickly to reverse the back-dated rates, which were affecting a large number of ports and people who operate within them. The system was quite iniquitous and I am delighted that they have taken that action. However, a few companies have gone bust as a result. What will happen about them? I fear that nothing will.
A number of new port developments have been given the go-ahead. Work is actually starting on the London Gateway, on the site of the old oil refinery just this side of Southend. It is an extremely large and important development, and with improvements in shipping and overall trade we will need such facilities when shipping gets back into its stride.
I could go on to talk about all sorts of different subjects, but I will not. I shall merely return to the fact that shipping is so important to this country that the Government must take note of the two issues I mentioned earlier. If we lose our UK flag, the whole of the back-up of maritime businesses could topple like a pack of cards. That is something that we cannot allow.