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


Examination of witnesses (Questions 143 - 159)

WEDNESDAY 27 JANUARY 1999

MR DAVID COBB, VICE-ADMIRAL SIR CHRISTOPHER MORGAN, MR JOHN LUSTED and MR MARK BROWNRIGG

Chairman

  143.  Good afternoon to you, gentlemen. I wonder if you would be kind enough to identify yourselves for the record?
  (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 Policy Director.

  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 British seafarers?
  (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.

Mr Gray

  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 the job.

  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 plc.

Chairman:  I think we might perhaps ask questions of witnesses and let them make the case.

Mr Gray:  I was clarifying what they were getting at.

Chairman

  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.

Mr Stevenson

  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 climate.

  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.

Chairman

  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 Tax.


 
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