UK Maritime Sector

Anthony Mangnall Excerpts

Thursday 16th September 2021 Westminster Hall

[Mr Kevan Jones (North Durham) (Lab)]

I beg to move,

That this House has considered the UK’s maritime sector.

It is a pleasure to see you in the Chair, Sir George. May I first draw the House’s attention to my declaration of interests? I am also chair of the all-party parliamentary group for shipbuilding and ship repair. I thank the Backbench Business Committee for allocating time for the debate, and the 16 Members from across all parties in the House who supported the application.

It is right that we meet today, in London International Shipping Week 2021. This is an opportunity to discuss the maritime sector, which is worth some £46 billion to the UK economy, ranging from shipbuilding and ship repair to ship brokerage in insurance, in which we are world leaders. It is an opportunity to speak up for the sector, which we need to do. I am a passionate believer in a bright future for this country, and the sector supports 1 million more jobs than air and rail. Further, 95% of UK imports and exports are transported by ship.

During the pandemic, we took it for granted that we could order on Amazon or similar sites, and that the package would arrive, but few people consider how that package actually comes to their doorstep. I know Mrs Jones certainly does not give much thought to that. However, it is important, and other aspects are in play—48% of our food supplies come through the maritime sector, as does 25% of our energy needs.

The sector is vital to the resilience of our economy and is also a wide-ranging industry. Ports, for example, generate £600 million in private sector capital each year. It is a source of highly skilled, well-paid jobs. There is an important issue here across the industry, which is mentioned in the briefing note I received from the National Union of Rail, Maritime and Transport Workers: we must invest in those skills and ensure that we have not only individuals with the right set of skills, but the right numbers of workers. As the RMT quite rightly points out, its membership is an ageing population. It is important that we focus on that and make the sector attractive to young people as an industry to come into.

Internationally, the sector will be worth around £3 trillion by 2030 and it is a great source of exports from the UK. Indeed, many businesses throughout the UK are providing not only products for the marine sector around the world, but services. My own region, the north-east, has a long tradition of service industries working around the world. When the Dubai flight from Newcastle recommences at the end of November, marine engineers will be flying all round the world to service ships, but their companies are based in the north-east. It is important that we recognise that fact.

The sector’s problem, certainly in shipbuilding and in other areas, is that there is a view among the public that this is a smokestack industry—an industry of yesteryear. It is quaint that we are involved, but the sector is not the future. Well, nothing could be further from the truth. I do not know how we can do this—the debate obviously allows Members to highlight the issues—but we must promote the sector and say that it is not only important to our economy in the present but can be more important in growing our economy in the future. That is where the Government come in; they have a key role to play in.

Let me turn to the shipbuilding and ship repair sector, where there have been welcome moves by the Government, such as the national shipbuilding programme. We have a shipbuilding tsar—the Defence Secretary—and to be fair to him, I think he is committed to this, but does he actually believe that we can be a world-leading shipbuilding nation again? I think we can, with the right support.

It is a mistake to think that there is any shipbuilding industry around the world that is not reliant on the state—either directly owned by the state or provided with huge subsidies. We should not get into the mindset that if we have to put money into the shipbuilding and ship repair industry or help it with finance, that is somehow a bad thing. It is a good thing if we can grow the industry. The Koreans do not bat an eyelid at putting in huge amounts of money, nor do our European neighbours—the Norwegians, the French, the Germans or anyone else.

The other key issues are port infrastructure, which will be important, and skills. I will talk later about research and development, because the next thing that will change radically in this area is the green agenda. This country has an opportunity to get ahead and be world leaders there.

I welcome the national shipbuilding strategy, but we are still waiting for the refresh, which was promised in August. Its main emphasis—this is self-evident to anybody who knows the industry—is that the industry needs a drumbeat of work running through it. The strategy committed to a 30-year drumbeat of work, but we must ensure that that is a reality, and the Ministry of Defence, which is obviously constrained by the Treasury, is still not laying out that clear pathway for the industry. We saw that with fleet solid support ships, which I will refer to later.

There have been some welcome moves in defence and elsewhere, whereby people are looking at how the UK shipbuilding industry underpins prosperity. The Royal United Services Institute study of aircraft carriers said that 36% of the money that went in came directly back to the UK taxpayer in tax and national insurance, and that is not counting the knock-on effect of the local economic boost generated in those areas. We should not just look at the top line when we are considering contracts; we should look not just at the price, but at how that money comes directly back to the Exchequer.

We need a whole-Government approach to ensure that, when we procure ships, we look to the UK. There was an announcement last week or the week before about Border Force’s new cutters. The existing ones were built in Holland, and I think one was built in Finland or Estonia. That is a £200 million contract, and the default mechanism should be to get them built in the UK. If 30-odd per cent. comes straight back to the Exchequer, that is an opportunity.

A throughput of work is important because that allows industry and business to invest. It is a way to draw in capital to the industry. The problem is that the Ministry of Defence is still in competition mode, which no other country in the world is into, so we have a farcical situation with a fake competition going on between four consortia for the FSS contract. We had a great example of how to do it when we procured the aircraft carriers. Yes, there was a shotgun marriage between various UK yards to provide them, but it worked.

Let us look at those contracts. There was a lot of controversy about the cost, but the build was on time, on budget and world beating. There is nothing like it. We should be proud of that. That was an opportunity to get a consortium of companies together to produce world-beating ships, but what did we do? We broke up the alliance afterwards, which was absolutely shocking. It should have continued.

From the point of view of the taxpayer, should we give out contracts to various companies no questions asked? No, we should not, but we should have a partnership approach rather than competition. The partnership approach should ensure that we have a skills agenda and that we get value for money. Also, the partners put their own shareholder capital into the business. I was speaking to businesses this week at DSEI, the defence and security equipment international exhibition. They do that, but they want certainty. We have the strategy in a nice glossy document, but there is an old mindset of false competition. If we can get that drumbeat of work running through the industry, we will be world beating not only in providing great first-rate ships for our Royal Navy, but in being able to compete for work regarding other vessels. That will be key.

I am not talking about only the bigger yards. The Wight Shipyard Company, which recently won a Queen’s award for international trade, is a small company on the Isle of Wight that produces great vessels. Companies such as that should be the first call, rather than throwing contracts open to international competition, because no other country would do that. There is certainly an opportunity to look at that sector for Border Force ships. Again, that would give security to individuals.

We need some joined-up thinking. We need to ensure that the Treasury not only looks at every single contract, but that the work is there for the long term. The easiest thing in terms of the build programme would be to get on and order the FSS vessels. If we did that, we would have a throughput of work in Rosyth and other places, and we would retain skills. An important thing in the shipbuilding report is that if we are to retain skills or get an influx of new skills into the industry, we need a continuation of work. What we do not want is stopgap areas where we are not employing new apprentices and the workforce get older and older. That point was made by the RMT about its members who work on ships. Oversight is needed. What other skills do we need and in what areas? That is a role for Government as well.

[Anthony Mangnall (Totnes) (Con)]

I am sorry to interrupt. The right hon. Gentleman makes an excellent point about the skills that we need to create a workforce who can work in the sector. I am interested in his thoughts on retrofitting, because a lot of merchant vessels out there need to be retrofitted with modern technology that allows us to meet our green ambitions. That goes hand in hand with the way in which we want to train a new generation of skilled workers, especially on tackling climate change.

[Mr Kevan Jones]

The hon. Gentleman speaks with a great deal of knowledge, and he raises an interesting point. I think the understanding is that we cannot ever compete with the Koreans or others in the far east, because they will do the work cheaper. He knows as well as I do that the country that is doing more retrofitting than anywhere else is Norway. Let us be honest: Norway is not paying poverty wages to its workforce, and it has different overheads from other countries, so if Norway can do it, we can do it, but we need a strategy for that. I will come to green shipping in a minute, but the hon. Gentleman is right to say that there is a huge market. New green technology will come in, but a lot of it will be retrofitted to existing vessels.

That brings me to research and development. What we need from the Department for Business, Energy and Industrial Strategy is an R&D fund that is ringfenced for the industry, because that would ensure that we got the innovation we need. One area that I have spoken to several Members about is hydrogen, which will need a large amount of R&D. Some good companies are already doing that type of work, but we perhaps need to provide them with Government assistance and access to capital.

We have some great brains thinking about green technology in shipping, but I fear that we will get foreign investment coming in to buy out some of those companies and to provide the capital, but they will then take all that abroad. What we need to do—it can be done by the Government—is give support to the new technology here in the UK, so that we can retain not just the technology, but the jobs that will be done now and in the future in a host of areas in green shipping, as well as the new technologies that will come through. I accept that some of those might not work, but we should be brave enough to invest. It is not a great scandal if, at the end of the day, something does not work. It is important that that is done, which is why marine research and innovation need to be at the forefront of any initiative we undertake.

We have the maritime enterprise working group, but it remains on a non-permanent basis. I do not wish to criticise the Minister, because he is passionate about the sector, and about aviation as well. If I remember correctly, he is a bit of a plane spotter when it comes to knowing different types of aircraft. He announced the £20 million investment in the clean maritime demonstration competition, which he described as a turning point. That was welcome, and it is great that he did it, but he must get more money out of the Treasury for the sector. If we do not get more money to the sector, we will be at a disadvantage.

The opportunities are there. We talk about the carbon targets that we want to meet, which are good. If we do this right, however, we can get jobs out of it as well, so it is important that we invest now and that we ensure that the talk about net zero and so forth has some real teeth. It would be sad if we had new and innovative companies working in the sector, but the technology went abroad, and we ended up importing it or allowing other countries to develop it. That technology will be very important.

Within this new agenda, we must take a legislative stance as well. We are a world leader in working with the International Maritime Organisation and others on standards and regulations for the future. Those will be new concepts, so ensuring that we have regulations and international governance that are in our favour, not that of the Chinese and others, will be important. I do not underestimate the Chinese in particular, in terms of their wanting to have international rules that favour their industries rather than ours, so it is important that we play a key part in that process.

I will finish where I started. This is an industry of the future. We need to talk more about it, and we need to invest in it. Yes, the private sector involvement is hugely important, but if Government money and strategies can be put in place at the key point, they could be huge levers, not only to lever in more private sector capital, but to grow the sector. Perhaps we just need to say to people, “Just think when you are ordering things—how do they get to your doorstep?” That is the basis of it.

I am a passionate advocate for the sector. It is not yesterday’s industry; this is the industry of tomorrow. What it needs is a direct and clear strategy, and money behind it. Now is the time to provide those things.

--- Later in debate ---

[Anthony Mangnall (Totnes) (Con)]

I congratulate the right hon. Member for North Durham (Mr Jones) on securing the debate. It is curiously unique that we have not had many of these debates, but, going back through Hansard, we find that, all too often during London International Shipping Week, the topic is ignored. As a former shipbroker who worked in Singapore, then London and Nigeria, I really do believe I have seen some of the finer sides of the UK shipping industry and what it means to our economy.

I must start by saying what a fantastic opportunity this is to get together in this Chamber and see the common-sense agreement across the House about the value of the maritime sector—in coastal communities, ports, infrastructure and pay—and what needs to be done across the country to see it thrive.

I pay particular tribute and attention to the shipping services of this country. Although a significant proportion are based in London, I hope that colleagues will also reflect that across all four corners of the UK there are burgeoning businesses benefiting from the UK’s leading shipping services, whether that be in accountancy, arbitration, classification, consultancy, education, finance, insurance or legal—it is all based here. Be it in Singapore, Nigeria, Geneva or the middle east, people always talk of the UK as the capital of the shipping industry. This is something that we need to protect, not be complacent about; we must reflect on that and recognise that if we do not compete, if we do not challenge those around the world, we will lose our status.

I hope my hon. Friend the Minister recognises that this is a debate not for us to have a go at him, but for us to encourage him. We know him to be a highly energetic Minister to whom we offer a great deal of support to take this issue up. We also have what I believe to be a very ambitious maritime strategy, the 2050 strategy, which touches on several of the right points that have been raised in the debate. The third or fourth point in that report states that if we are not turbocharged and are not active in supporting and securing businesses in the UK, they will move abroad. Singapore and Geneva are competing every day to take businesses away from this country to be based in theirs.

Therefore, we must recognise the need to point out our failures, where necessary, to support our successes where available, and to look for opportunities that Government policy can support. The right hon. Member for North Durham talked about research and development, and I am so pleased that he did. We have rightly committed 2.4% of GDP to research and development in our manifesto, as Government policy. We talk about the invention of the telephone; I think now about the inventions we can put hand in hand into shipping services to allow us to tackle climate change, to look at the new inventions that will help us create a truly 21st century and green maritime sector that can be traded not just across the UK and our coastal communities, but across the world to be used by others.

I am particularly delighted that the right hon. Gentleman also talked about Norway. We are not necessarily expecting the UK to be building oil tankers and container ships, but we must look to try to retrofit vessels with new, high-end technology that allows us to capitalise on the work of the International Maritime Organisation and its ambitions for carbon neutrality by 2040. It is eminently possible and should go hand in hand with our levelling-up agenda.

We are home to companies such as Lloyd’s, the Baltic Exchange, Platts and numerous brokerages, two of which I have served with. I think they were probably rather pleased to see the back of me. However, there is a sense that this is an industry that is open to people from all walks of life. In some cases, there is no requirement for a degree, it can be entered into at any stage. When we talk about the levelling-up agenda, it is something that we must recognise as eminently achievable and that allows us to attract more people.

I have a few pleas to the Minister. We need to look at tax regulation and incentive schemes. We need to look at how our maritime flag is used both in the UK and abroad. We need to look at how we can champion maritime security. We need to talk more about supply chain resilience. We also need to think about how to get more people into maritime colleges. I am very pleased to say—and there will be an invitation to follow—that Noss on Dart in my constituency is setting up a maritime college within South Devon College, with the express purpose of getting people into the maritime sector at every level. There are opportunities coming up, and I would say there is broad thinking in further education colleges about how we can support this sector.

We have the history of being a very strong, globally leading trading nation with an extraordinary maritime history. We must return to that thinking, because it will help us in our ambitions of global Britain. It will help us in our ambitions as we join new organisations like the comprehensive and progressive agreement for transpacific partnership, which I hope we will be doing next year. It is perfectly fair to think of my hon. Friend the Member for Thurrock (Jackie Doyle-Price) as Helen of Troy—she could launch a thousand ships. That is what we should be aspiring to do in the years to come.

The motto of the Baltic Exchange is, “Dictum meum pactum”—my word is my bond—and we must be very conscious that there is huge opportunity for us to develop the sector, to support it, to grow it and to encourage people to enter it. We can, once again, rule the waves.