Examination of witnesses (Questions 143
WEDNESDAY 27 JANUARY 1999
and MR MARK
143. Good afternoon to you, gentlemen. I
wonder if you would be kind enough to identify yourselves for
(Mr Cobb) Good afternoon. My name is David Cobb,
I am the President of the Chamber of Shipping and Executive Chairman
of James Fisher & Sons, the Barrow based shipping company.
(Sir Christopher Morgan) I am Christopher Morgan
and I am Director-General of the Chamber of Shipping.
(Mr Cobb) I am John Lusted, I am the Deputy Director-General
of the Chamber of Shipping.
(Mr Brownrigg) Mark Brownrigg, I am the Shipping
144. Thank you very much. Mr Cobb, do you
want to make some general remarks?
(Mr Cobb) No, I do not, we will just pass ourselves
over to you.
145. Thank you. Can you tell me why do we
need a substantial British merchant fleet?
(Mr Cobb) 95 per cent of our imports and exports
travel by sea. We have a good shipping fleet, we think we should
have a better and bigger one.
146. So you do not think it is only to meet
our needs in respect of national defence?
(Mr Cobb) No, not at all. We are an enterprise,
we are commercial to the nth degree. Of course national defence
plays a part in it but we are a commercial operation.
147. Do we need a significant number of
(Mr Cobb) I believe we do. I will pass that over
to Christopher Morgan.
(Sir Christopher Morgan) Yes, I think certainly
we do. First of all, seafaring offers a tremendously challenging,
interesting and stimulating career for anyone who is young. A
career at sea is very, very special and it is very individual.
What we call the University of the Sea then prepares people later
on in their lives, perhaps when they are beginning to get older
and have families, to flow out of seagoing and into the shore
related industries where there are some 17,000 posts that are
waiting for them.
148. But supposing those shore-based industries
needed the sort of staff that you are talking about and for one
reason or another they were not available, would those industries
not have to train their own staff?
(Sir Christopher Morgan) I think that those industries
can do that to an extent but I do not think there is any substitute
for the experience that seagoing gives people.
149. Just testing the basic question about
why it is that the Chamber believes that we need a British fleet.
I suspect that everyone in the room would agree with you but I
just want to tease out the precise reasons for that to be the
case. 95 per cent of our goods come in and out of this country
by sea, how much of that is British flagged tonnage?
(Mr Brownrigg) It is harder to tell since a change
in EU statistics but it used to be in the order of 18 per cent
by volume and 35/37 per cent by value.
150. So a pretty low percentage. If that
is the case then why should it be necessary to preserve the British
fleet? If at the moment we are carrying less produce by British
flagged vessels in and out why do you need British flagged vessels
to do it in the future?
(Mr Brownrigg) Because we earn more than half
of our earnings in cross-trading away from the UK shore and, therefore,
we are a major earner of invisible earnings and we are good at
151. That is rather a different answer from
the one that we had which was that the main reason we wanted British
flags was because of British goods but what you are now saying
is that British shipowners make money through trading their ships
competitively around the world which is a rather different response.
(Mr Brownrigg) I think it complements it.
152. If that is the case that would mean
that if you increased the British flagged British fleet you would
increase the amount earned by British shipowners and, therefore,
the tax take to the Treasury?
(Mr Brownrigg) Correct.
Mr Gray: So it is
actually a business proposition. You are not saying that we want
it because Britain needs defending, you are not saying we want
it because we want to bring goods in and out of the country, you
are saying we want to increase the fleet and increase seafarers
because that is a good business proposition for Great Britain
Chairman: I think
we might perhaps ask questions of witnesses and let them make
Mr Gray: I was clarifying
what they were getting at.
153. I am sure you are now quite clear.
Do any of the witnesses wish to say anything other than yes?
(Mr Cobb) Not at all. We have said that we are
a commercial operation and that is what we are.
154. Mr Cobb, could you give us some examples
of the size of your organisation ten or 15 years ago and the size
of it now?
(Mr Cobb) We have talked about the size of tonnage
and deadweight tonnes. I will pass it over to one of my colleagues
but I would like to open to you and the Committee generally by
saying that the size of the fleet measured in tonnes is not a
fair value any more. A 300,000 tanker, and with respect we do
not have as many of them any more under our flag or under our
fleet, may make five trips a year, probably does not make any
money and employs 30 crew. A vessel like the ORIANA has maybe
800 crew, is only 70,000 tonnes on the books and is a very different
measured animal. Or a sophisticated cable laying ship which would
have 85 crew working laying cable around the world.
155. Would you accept the proposition that
your organisation, however you care to measure it, is not as large
as it was ten years ago and that the structure of your membership
has changed to put more emphasis on what I may call, as a lay
person, the coastal operations?
(Mr Cobb) We are certainly smaller, there can
be no doubt about that, substantially smaller than we were ten
years ago. Something in the nature of a 6,000 TEU container ship
which is also under our control or huge ferries operating in the
water, they are not really what one would call coastal.
156. Why do you think that contraction has
taken place? What would you say are the main factors?
(Mr Brownrigg) I think there have been various
factors which have been natural processes of rationalisation.
I am thinking particularly in terms of sophistication of ships,
improved technology and so on, the increase in the size of ships.
The basic facts are that the British fleet is now in registered
terms about one-tenth of what it was in 1980, in owned terms it
is about one-third but that though is deceptive for the reasons
my President has mentioned.
157. What are the main factors that have
contributed to that change? That is quite a dramatic change, would
you not say?
(Mr Brownrigg) Among the factors, and we would
say a major one, is the unfavourable operating and investment
climate in this country, particularly the employment and the fiscal
158. You say in your evidence that you are
in favour of a ring-fenced tonnage tax. I would like to ask you
what is a tonnage tax and how do you view that? How will it operate
do you think?
(Mr Cobb) Tonnage tax is well accepted now in
the European Union. We know that the Dutch, the Germans, the Norwegians
and the Greeks operate it and soon we expect also will the Danes,
the Swedes and the Fins. It is a levy system. It is a system of
so many pennies or so many guilders per tonne of ship that you
operate times the rate of tax within the country.
159. That is the formula. There was a little
doubt amongst our witnesses last week. Would you just repeat that?
It is the tonnage times the rate of tax?
(Mr Cobb) It is the tonnage times so many pennies
or so many guilders as the case may be, or deutschemarks, for
each tonne which has to be agreed with the treasury or with the
government, times the rate of Corporation Tax. That replaces Corporation