Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


Supplementary Memorandum by the Department of the Environment, Transport and the Regions (FUS 27A)

  I undertook to write to you to provide further information in response to a number of specific points raised by members of the Sub-committee.

  The Committee asked about the need for seafaring skills in the shore-based maritime-related sectors of the economy and I provided examples of some key employers in the City. The definitive source on this requirement is the study undertaken by the University of Wales on the UK economy's requirements for people with experience of working at sea. I attach two tables from this report which quantify the requirement by business category, distinguishing between the "essential" and "advantageous" employment of former seafarers. Of the total of 17,000 jobs filled by ex-seafarers, 70 per cent—nearly 12,000—fell into the category in which seafaring qualifications and experience were regarded as being essential. The great majority of these (87.5 per cent) were filled by former merchant navy officers with Class 1 certificates.

  The Committee raised in particular the stance of the Baltic Exchange. Whilst the Baltic itself has only a modest direct requirement for ex-seafarers, it has done much to promote Maritime London based on the City's unique ability to offer a "one stop shop" for maritime services and clearly recognises that other major service providers (eg.: Lloyd's Register) continue to rely heavily on the technical expertise of ex-seafarers. I can confirm that the Baltic has been very supportive of the policies set out in the Shipping Paper and, like the Institute of London Underwriters and Lloyd's Register, has already committed to contribute towards expanded seafarer training through the proposed Maritime Training Trust. We should not underestimate the importance of major shore-based maritime institutions leading by example.

  On the potential for transferring road freight to water, I quoted a target figure of 3.5 per cent of internal UK road traffic tonne-kilometres. This was based on a "roads to water" research project carried out in 1993 for the then Department of Transport. The research indicated that a shift to water would be only at the margin and would depend on the internalisation of the external costs of road haulage. The current Freight Facilities Grant scheme, limited to inland waterways, was not seen as an adequate tool to achieve this. That is why "Charting a New Course" makes an explicit commitment to extend the scheme to include coastal and short sea shipping. This is one of seven related actions to gain the environmental benefits of shipping, including government research into transport "track costs" and externalities, building on the earlier announcement of a wide-ranging review of the system for setting Vehicle Excise Duty rates for lorries to take into account external costs. Clearly, until all this work has been undertaken, it will not be possible to define more specific targets or timeframes.

  I promised to supply the annual breakdown of DETR's £18.6 million budget allocation for the Support for Maritime Training (SMarT) scheme for the 3-year period 1999/2002. This is, respectively, £5.3 million, £6.1 million and £7.2 million. These figures exclude additional funding of approximately £1.1 million per annum, made available by the Department for Education and Employment, in respect of the training of young people under the age of 18. As SMarT operates as a single scheme (unlike the separately budgeted former GAFT and DOCS schemes) there is no fixed allocation between the four categories of training support presently provided within the SMarT scheme. In the current financial year it is projected that about £3.3 million will be spent in supporting cadet training to the first certificate of competency; £1.8 million on junior officer training to second certificate; £0.3 million on ratings training; and £0.3 million on STCW conversion training support.

  The Committee will wish to note that the DETR SMarT 3-year budget allocation described above was made following the completion of the 1998 Comprehensive Spending Review and so predates the commitment, announced in "Charting a New Course", that DETR will provide sufficient long-term funding for the SMarT scheme to meet forecast demand in key training categories. If the industry succeeds in lifting annual cadet recruitment to the 1,200 level cited in the Shipping Paper, DETR's SMarT funding will expand considerably, particularly post-2002 when the higher cadet recruitment starts to flow through into junior officer second certificate training. However, until firm targets for trainee numbers and timescales are agreed with the social partners, following Government decisions on possible fiscal measures, it is not possible to quantify the longer term requirement for increased SMarT funding.

  You also asked about graduate recruitment and "fast track" training programmes. The Government supports both these initiatives and work will be taken forward in conjunction with the industry and training establishments through the newly established Training and Employment Catalyst Groups, set up to take forward this part of the "Charting a New Course" programme. Whilst graduate recruitment remains the exception at present, both Glasgow College of Nautical Studies and Warsash Maritime Centre, Southampton, are developing nautical and marine engineering degree programmes linked to the award of relevant seafaring certificates of competency. I understand that other colleges are considering similar programmes.

  I promised to provide the Committee with information on the effect of the Netherlands' maritime policy measures on employment. From 1996 to 1998, the Dutch maritime authorities recorded an increase in their shipping industry employment of 5,219 (23 per cent). In the same period the Norwegians, who also have a tonnage tax regime, recorded an increase in seafarer employment of 2,200 (14 per cent).

  Finally, you asked me whether the European Group on Business Taxation was looking at the tonnage tax, to which I replied that, to my knowledge, they were not. It has since been drawn to my attention that the German tonnage tax regime is listed as one of about 150 tax measures which are to be considered by the ECOFIN Group examining tax competition. I understand that the Group intend to report by the end of this year. I apologise for not being in a position to provide this information to the Committee at the time. However, the listing of the German tax regime does not change my view that it is difficult to see how tonnage tax regimes could be considered to have a harmful effect on economic activity in the EU. The European Commission's Maritime State Aid Guidelines, adopted as recently as 1997, explicitly admit the tonnage tax as a measure which does not distort or threaten to distort trade between Member States to an extent contrary to the common interest. Tonnage taxes have been introduced by the major European maritime nations of Greece, Norway, the Netherlands and Germany as a direct policy response to the unequal competition faced from elsewhere in the world. From all the evidence they appear to be operating with marked success. The Netherlands' scheme involves companies entering into 10-year tax commitments; the German scheme was commenced only as recently as 1 January 1999. I see no realistic prospect of these countries relinquishing their tonnage tax regimes, nor of the Commission reversing its maritime State aid policy stance in relation to them.

Glenda Jackson CBE MP

15 March 1999

TABLE 1

Estimated number of jobs which employers consider it is essential to fill with people with seafaring experience

Type of Employee—UK Seafarer
Other type of Employee
Business categoryDeck
Officer
ex MN
Engineer
Officer
ex MN

Officer
ex RN
Engineer
Officer
exRN

Other
MN

Other
RN
Foreign
ex-
seafarer

Non
seafarer


Total

Ports1,33646 231240 280561,730
Port services2230 0035 2100270
Towage/Salvage21895 7740 0140381
Dredging1824 01512 06075
Offshore148168 000 0100326
Pollution control512 2259 000116
Surveyors/Inspection294 1754190 0564 552
Cargo Surveyors555 000 05368
Classification191,000 21000 085001,971
Insurance014 000 00014
Banking00 000 0000
Ship/cargo Broking8826 000 000114
Ship chartering60 000 0309
P and I4810 000 00058
Loss adjusters00 000 0000
Legal750 1400 00089
Consultants918326 101030 2765901,629
Marine equipment79316 307949 000553
Shipbuilders/repair020 0020 00040
Federated Ship Co's332 3750067 0880 862
Non-Federated Ship Co's216 27600 500400 582
Ship management246322 2800 0140610
Crew management2118 000 00948
Ships agents124 000 00016
Charitable Institutions3 0000 000 3
Education and Training710 2122521 291600 1,013
Publishing70 000 0018
Miscellaneous87106 62204 23600641

Total5,2103,540 151256835 5581,15573 11,778

Source: Survey results.


TABLE 2

Estimated number of jobs which employers consider it is an advantage to fill with people with seafaring experience

Business categoryDeck
Officer
ex MN
Engineer
Officer
ex MN

Officer
ex RN
Engineer
Officer
exRN

Other
MN

Other
RN
Foreign
ex-
seafarer

Non
seafarer


Total

Ports17010 81358 5650184 837
Port services80 005 00013
Towage/Salvage7427 0020 070128
Dredging00 900 06015
Offshore590 0030 00089
Pollution control2821 2010 42067
Surveyors/Inspection39 12020 0234 89
Cargo Surveyors350 000 00035
Classification280 000 04086
Insurance270 2000 07054
Banking00 000 0000
Ship/cargo Broking880 007 03427156
Ship chartering00 000 0909
P and I1045 803 0335158
Loss adjusters214 000 00025
Legal1150 4000 077169
Consultants100118 000 10390267
Marine equipment20493 06969 100227888
Shipbuilders/repair089 029599 20100513
Federated Ship Co's106 350075 0180 234
Non-Fed'd Ship Co's138 0000 0200 158
Ship management956 1407 7410170
Crew management150 000 001530
Ships agents340 404 002163
Charitable Institutions0 0000 000 0
Education & Training4 00046 2980 87
Publishing01 000 0001
Miscellaneous532 32476 210149706

Total1,335903 1083691,209 157267699 5,047

Source: Survey results.



 
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