Supplementary Memorandum by NUMAST (FUS
I was extremely concerned to hear of the evidence
presented on Wednesday 17 March to the Committee's inquiry into
the future of British shipping. The apparent lack of consideration
given by Treasury officials to the critical importance of the
tonnage tax proposals is deeply disturbing. I hope the Committee's
report will reflect the urgency of the need for change in the
fiscal regime in which the shipping industry operates.
However, my central purpose in writing is to
set the record straight in connection with the evidence that was
presented on the issue of seafarers' Foreign Earnings Deductions.
In both the written and oral evidence tabled
by the Revenue, it was stated that the FED arrangements had been
introduced to provide "support for the use of UK crew on
UK-owned deepsea vessels which might be of strategic value in
time of war".
I must emphasise that no such reference was
made by the then Chancellor, Norman Lamont, when he announced
the concession in the 1991 Budget.
For the record, his statement read: "The
Gulf hostilities have reminded us of the important contribution
which our merchant navy can make to our defence. I recognise that
there is a strategic case for measures to encourage shipping companies
to draw their crews from seamen in the UK who would be willing
and able to serve in time of war".
The issue is of critical importance, given the
problems caused by the anomalies in the existing FED arrangements.
The intention of the concessionintroduced as a direct experience
of the Gulf Warwas to encourage the recruitment and retention
of seafarers. The sector in which they serve should be
immaterialnot least because of the mobility of labour within
the industry and the need to retain a "pool" rather
than a limited cadre.
I was also deeply shocked by the Revenue's statement
that the strategic defence need "is currently far from pressing"a
comment that beggars belief, given the facts of the decline in
the UK fleet and UK seafarer employment. Eleven years ago, the
House of Commons Defence Committee concluded: "The availability
of shipping for defence purposes is governed by three key factors:
the number of UK flagged ships; their accessibility when they
are needed; and the availability of a pool of British seafarers
to man them. There are grounds for concern on all three counts."
Given that the UK owned and registered fleet is now two-thirds
the size it was in 1988, I am sure, from comments made by Committee
members, that my concern on this point will be reflected in the
report. However, I believe it is important for NUMAST to seek
to ensure that evidence is accurate and based on fact.
18 March 1999