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9 Nov 2004 : Column 205WH—continued

Seafarers' Employment

2 pm

Mr. Deputy Speaker (Sir Nicholas Winterton): Before I call the hon. Member for Hayes and Harlington (John McDonnell), let me say that he has been courteous enough to tell me that he has not been particularly well over the past couple of days. He has been suffering from flu and various associated things, and I am sure that everyone will understand if he needs to take a drink of water during his speech.

John McDonnell (Hayes and Harlington) (Lab): Thank you, Mr. Deputy Speaker. I have isolated myself in the corner to avoid passing any contagion to you or other Members.

I am grateful for the opportunity to raise this important issue on behalf of the large group of Members who have expressed concern about the tonnage tax and seafarers' employment. I should mention that my right hon. Friend the Member for Southampton, Itchen (Mr. Denham) is currently chairing a Select Committee, so he cannot be with us. However, he wants me to mention his support for the debate and for our proposals on reforming the tonnage tax. I should also declare an interest as the chairman of the RMT—National Union of Rail, Maritime and Transport Workers—parliamentary group.

It is important that we are debating this issue today, because the various Government reviews of the tonnage tax have reached a key stage. We hope that the Under-Secretary of State for Transport, my hon. Friend the Member for Plymouth, Devonport (Mr. Jamieson) will listen, as he always does, before taking away with him some of our messages about overall reform.

The United Kingdom is an island nation and is heavily dependent on ships for its trade, but the number of seafarers has declined dramatically in the past few years. The number of UK seafarer ratings has fallen from 30,000 in 1980 to fewer than 10,000 today. Furthermore, hon. Members on both sides of the House were recently shocked to hear the latest announcement by P&O, which intends to dismiss 1,200 UK seafarers as part of a wide-ranging review of its business. That will involve closing several key ferry routes.

Mr. Gwyn Prosser (Dover) (Lab): Is my hon. Friend aware that the present proposal for 1,200 redundancies in Dover and Portsmouth comes on top of 800 redundancies at P&O less than 12 months ago?

John McDonnell : I am aware of the overall figures and I am sure that my hon. Friend will want to comment later on the impact of those redundancies on his and other Members' constituencies. What all of us find   shocking, however, including the Leader of the Opposition, the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who has made representations on this matter, is the nature of the announced job losses. Rationalisation might be going on in the company, but many of us felt that at least there was an agreed process for taking it forward and that the company could be maintained in profit. We may return to that point.
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In December 1998, in response to the fall in the number of seafarers, the Government published a policy document entitled "British Shipping: Charting a new course", which outlined a series of policy measures to address the decline in UK shipping. One of the key objectives that the Government set themselves was to increase the training and employment of UK seafarers. The centrepiece of their measures was the UK tonnage tax, which was eventually broadly welcomed by all parties, all sections of the industry and all organisations representing seafarers. So, we had an agreed way forward.

Currently, the Inland Revenue and the Department for Transport are conducting a review of the tonnage tax. One of the matters being examined is whether there should be a firm link between the tax concession and the training and employment of UK seafarers.

The tonnage tax is a special form of taxation that has been introduced for the UK shipping industry. Several other countries have also introduced tax concessions for their shipping industry in recognition of the competitive nature of the maritime sector. Indeed, the British tonnage tax evolved as a result of the evidence provided to the Government about what other European countries were doing to support their industry. Again, employers and employee representatives' organisations alike provided that information and lobbied on the basis of it.

The tonnage tax is a significant concession to the industry and is worth about £35 million a year. Initially, the Chamber of Shipping said that the cost would be between £10 million and £15 million a year. The RMT believed that it would be considerably more, as did the   Government, who believed that it might cost between £45 million and £50 million. In fact, it has cost £35 million.

Shipping companies that enter the tonnage tax regime pay a notional tax levy according to the size of the company fleet, as opposed to the usual form of taxation, which is based on company profits. In addition to the lower tax burden, companies have far greater financial certainty, as they can plan in advance for the amount of tax that they will be required to pay at the end of the financial year.

When the tonnage tax was introduced, everyone believed that there was a real prospect of a win-win situation in which the industry would be made more competitive and tax efficient and that employment would increase. For many years, the UK shipping industry was in decline. That is not a new phenomenon: indeed, the Government deserve credit for taking time to consult industry representatives and formulating proposals to tackle the crisis in the industry.

As I said, the proposed policy measures were outlined in the policy document "Charting a new course", which pointed out that many ships deserted the UK flag throughout the 1980s and 90s and that thousands of UK seafarer jobs were lost. Estimates for 1980 put the number of UK seafarer ratings at 30,000. That figure has now fallen to less than 10,000. The Government and independent organisations have been trying to produce best estimates of how low that number could go. Many fear that a fall on the scale of that of the past two decades could mean that by the end of the next decade we would be left with no UK seafarers at all on British
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ships and elsewhere in the industry. That is a dismal prospect for a country, much of whose wealth was founded on the maritime trade.

Mr. Ivan Henderson (Harwich) (Lab): My constituency has a proud maritime history that dates back centuries. May I give my hon. Friend an example of the decline of our ship and seafaring industry since 1984? About 1,800 seafarers used to sail from the port of Harwich, but the number has now fallen to about 60. Is not that a sign that we must do something to retain what we have left and improve those numbers?

John McDonnell : Figures such as those shocked the Government into action and should motivate us to recognise that there is cross-party concern that the matter should be addressed. Cross-party work must follow the decision to retain a maritime industry. We must recognise that we are an island and thus do not want to become dependent on an industry that is controlled from other countries or other states. We must plan for the maintenance and development of a seafaring sector in this country.

Such figures have brought about today's debate. We can no longer stand by and watch the whole industry decline, observing its effect on particular constituencies and communities. Our experience relates very much to what is happening in the coal mining industry and the destruction of whole coal mining communities.

"Charting a new course" outlined a series of measures, but it is quite clear that the tonnage tax measure was very much the centrepiece of the programme to reverse the dramatic decline in numbers. There is little doubt that the tax has contributed to the   reversal of fortunes on the UK register, and the maritime unions of course welcome the increase in the number of ships on the register. However, those ships must also provide employment opportunities for UK seafarers. We have a paradox: there is an increasing number of ships on the UK register, but no increase in employment overall. Unfortunately, the majority of the new companies on the register fail to employ UK seafarers.

Before I move on to the substantive issue for debate, I want to mention that the increase in the number of   ships on the register is by no means as great as we expected. Between January 2000 and June 2004, the increase in the number of UK direct-owned and registered ships of 500 gross tonnes or more was just 57—from 241 to 298—which is hardly a dramatic return for the amount of money that is being invested in the tonnage tax.

Unfortunately, it is not a condition of entry to the scheme that shipowners register their ships under the UK flag, and current figures indicate that only 35 per cent. of UK-owned tonnage flies the red ensign. So entry to the tonnage tax scheme does not involve a requirement to register, although we accept that there is some incentive for it.

When the scheme was introduced, the seafarer unions pressed for a firm training and employment link for UK seafarers. The Government formulated a minimum training obligation, which required shipping companies
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to train one cadet for every 15 deck and engine officer posts in companies' effective officer complement. In certain circumstances shipping companies can avoid that requirement by making pilot payments in lieu of training to the Maritime Training Trust. That provision was intended for use only in exceptional circumstances, but unfortunately in practice some shipping companies have entered the scheme without training a single UK seafarer. That is contrary to the overall spirit of the charter for change and the introduction of the tonnage tax.

There is no compulsory commitment for seafarer ratings with respect to training or employment. The ratings' union, RMT, has pressed for a firm guarantee from the owners for a training and employment commitment, but that was not forthcoming. Instead, the minimum training obligation for ratings merely states that companies must review the feasibility of employing or training more UK ratings.

I want to correct a statement that my right hon. Friend the Deputy Prime Minister made on the Floor of the House of Commons. In response to a question from my hon. Friend the Member for Dover (Mr. Prosser) he replied:

that is ratings—

I am sure that my right hon. Friend did not want to mislead the House, but that was not an accurate statement, and the union's general secretary, Bob Crow, has written to the Deputy Prime Minister to say that at every opportunity the union has pressed the employers to seek training for ratings, and employment opportunities.

Far from training arrangements not being taken up   by the union, the truth is that they have not been forthcoming from the employers' side. That can be discussed elsewhere, and we can go through the details of the offers that have not been made and the opportunities that have been missed; but it is certainly not for want of the union pressing for offers or wanting to take them up.

It is still hoped that the Government's firm policy commitment, which it was estimated would bring about millions of pounds in subsidies to shipowners and a much improved environment for UK shipping, will be enough to generate increased employment for UK seafarer ratings and officers. However, it is quite clear from the practice of recent years that without any firm training obligation companies have simply ignored ratings training and employment—with the sole exception of ratings-to-officers training schemes.

Latest figures from the Department for Transport for decisions to opt into the tonnage tax regime show a total of 758 vessels. Of that total, 408 are on the UK register. The number of companies attracted by the financial benefits of the scheme has increased from an initial 15 in 2001–02 to a current total of 67 companies with ships entered in the scheme for 2003–04. Unfortunately, the number of UK seafarers employed has declined in the last two years. That decline has been witnessed in both officers and ratings, and runs completely counter to the
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Government's four key objectives on shipping policy, one of which was increasing employment overall for UK seafarers.

Although the Minister will no doubt tell me that training places for cadets have increased as a result of the tonnage tax, it is also true that the yearly increase is modest. Last year's intake of cadets was only 622 and this year's figure is expected to be no more favourable. Indeed, the requirements for the UK economy that were outlined by the university of Cardiff in 1996 and confirmed in later studies indicate that current cadet recruitment is only about half that required for sufficient seafaring skills to be available on shore. Even with the narrow gain from the tonnage tax, its overall impact on employment has been remarkably limited.

For UK seafaring ratings the picture is without doubt grim. Employment continues to fall, and UK seafarers are being replaced by low-cost foreign nationals. The number of UK ratings in the tonnage tax scheme has also declined. In addition, the number of UK ratings being trained has fallen to an historic low of about 50 per annum. In 1998, the number was about 200 per annum, so current numbers are completely inadequate. The fact that the Chamber of Shipping has failed to honour previous commitments to increase training for ratings and officers by 25 per cent. year on year also graphically illustrates the depth of the crisis that the industry faces.

It is also of profound regret that in the last few years the standards under the UK flag have declined. Increasingly, maritime unions are uncovering instances of appalling low pay on board ships registered in the UK. For example, the International Transport Workers Federation—the ITF—recently uncovered the case of Lapthorn Shipping, which operates UK-registered freight vessels between British ports and Ireland and Rotterdam, and pays Filipino crews less than £2 an hour. The crewing agent pays the seafarers $775 a month, which is not only less than recognised ITF minimums, but less than the minimum standards stipulated by the International Labour Organisation.

The Minister will be aware of the continued discrimination against low-cost foreign national seafarers under the amended Race Relations Act 1976. The low standards of employment that are evident under the UK flag are largely a result of the discrimination against foreign-national seafarers that is specifically allowed for under that legislation, which we have discussed in previous Adjournment debates.

The Minister will recall that when the Government recently reviewed the legislation, discrimination against seafarers on the basis of colour, ethnic origin or race was removed. However, discrimination on the ground of nationality has been allowed to continue. In fact, the removal of the other grounds for discrimination has made no difference whatever, as shipowners can continue to discriminate against foreign-national seafarers recruited abroad, through low pay and worse conditions.

Due to the increasing difficulties experienced by seafarers on UK-flagged vessels, the UK maritime unions have taken the unprecedented step of passing policy that allows for the declaration of a flag of convenience on certain UK-registered vessels, which was confirmed in July 2004 at a meeting of the ITF fair
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practices committee in Singapore. Never before in our history have British ships been identified under flags of convenience. That is a step back in employment and training practices of almost a century. I sincerely hope that the Minister agrees that standards on the UK flag should continue to be a concern and that taxpayers have every right to question the substantial sums of money that the Treasury has allowed the industry, in the form of the tonnage tax.

The concession has been worth more than £100 million since its introduction in 2000. I believe that concession can be justified, but only if we can demonstrate that there will be sufficient all-round benefits to the UK economy. The generation of employment opportunities for UK seafaring ratings and officers is obviously foremost among those.

When the Government published "Charting a new    course", additional training and employment opportunities for UK seafarers was one of the four key objectives set out in the document. It had been preceded by the White Paper on the future of transport in July 1998, which set out four aims for an integrated shipping policy, one of which was to increase employment for UK seafarers.

The urgency of the training commitment is also illustrated by the increasing age profile of UK seafaring ratings. The last available analysis was provided by the Chamber of Shipping in its manpower survey published in June 2002. It informed us that the average age for UK deck ratings is 43, and for engine room personnel, it is 43.3. That is broadly in line with similar research presented by London Metropolitan university in 2002 in the UK seafarers analysis. The London Metropolitan analysis found that 65 per cent. of UK deck ratings were over 40, and the figure was 62 per cent. for engine room ratings. Given that the level of training for seafaring rating positions has declined since 2000, the age profile will further deteriorate unless corrective action is urgently taken by the industry. It is not an industry in which we want an ageing population.

In the light of those developments, the RMT has submitted a detailed proposal seeking an employment and training link for UK seafaring ratings. An early-day motion signed by a significant number of Members has been submitted in support of the proposal for such a link. At the moment, shipping companies are enjoying the benefits of the financial concessions without delivering training and employment opportunities for UK ratings.

Mr. Greg Knight (East Yorkshire) (Con): What does the hon. Gentleman say to the arguments put forward by the Chamber of Shipping that an employment link on tonnage tax would deter shipping businesses from either coming to or remaining in the UK?

John McDonnell : As in the earlier debates about the development of the tonnage tax, it is a matter of getting the balance right. I suggest that the RMT proposal, which I shall outline shortly, gets that balance right. We need a firmer commitment for UK seafaring ratings and all cadets. We should not impede or overload the industry with financial burdens, but we should get some return from the £100 million that we are investing in it through the tax concession.

Mr. Ivan Henderson : The argument put forward by the right hon. Member for East Yorkshire (Mr. Knight)
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was used for many years as a reason for not introducing tonnage tax to encourage the employment of British seafarers. Is the right hon. Gentleman aware of the comments made by one Chamber of Shipping member, Lord Sterling, when the Government introduced tonnage tax? He said that this Government had done more for shipping than any other. Respect should be shown to the shipping industry by returning British seafarers to ships, as the Government have done by giving those concessions and introducing the tonnage tax.

John McDonnell : I understand my hon. Friend's concerns about previous statements that have not been matched by company actions. In this debate particularly, I want us to demonstrate our willingness to work in partnership with shipowners. However, partnership is a two-way street. We lobbied together for the tonnage tax and won that argument, admittedly with a sympathetic Government, but in return we expect what was originally envisaged as part of achieving those objectives for the industry. In reviewing the tonnage tax, it is not too much to ask for some return in terms of UK seafaring ratings jobs.

Mr. Prosser : Does my hon. Friend agree that some of the statements made by the Chamber of Shipping are not helpful, especially the idea that the seafarers' unions aim for an absolute connection between the tonnage tax and British seafarers' jobs? They have never sought that. No one is saying that each ship that has tonnage tax facilities should employ only British seafarers; we say only that it should be a fair proportion.

John McDonnell : It is true to say that the unions, particularly the RMT, are asking for an approach that recognises the long-term development needs of the industry. The industry is not just about delivering profits for shipowners; it is also about delivering employment, and forming a stable sector of the UK economy in the long term. It is not much to ask, in return for taxpayers' money, that shipowners should deliver their side of the bargain, at least with regard to employment initiatives. We want to return to that partnership approach. It is hardly revolutionary; nor is it a flagrant attack on the Chamber of Shipping.

The RMT seeks to introduce two separate commitments—one for training, and one for employment. Both the experience of NUMAST—the      National Union of Marine, Aviation and Shipping Transport Officers—and the figures on officers' employment demonstrate that the training commitment is not sufficient on its own. That is especially the case for ratings, when we consider that their training schemes are of much shorter duration than those of officers.

The RMT would include in the scheme a training and   employment link for UK ratings and seeks a commitment from companies training UK ratings that at least one in 15 of the total ratings employed will be from the UK. That is hardly revolutionary; nor is it an overwhelmingly costly demand. It is remarkably conservative. In fact, I am beginning to worry that Bob Crow is softening up—no; I take that back, in case
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he is listening. However, it is a remarkably conservative gesture; the proposal would be practical in the short term and could be built upon in the long term.

The training commitment is followed by an employment commitment. It is calculated on the same   basis as the training commitment—one in 15. Companies would be required to maintain the training commitment for at least the first three years of entry to   the scheme, and to continue training as and when required in order to ensure compliance with the minimum employment requirement. Again, the concept is training and topping up as required; it would show a spirit of good will, and a joint commitment to ensure UK employment.

I know from discussions that I have already held with the Minister that he is concerned that changes to the scheme should not place in jeopardy the gains made in respect of the increased number of vessels on the UK register. That is why the RMT proposals are extremely modest and reasonable—and extremely pragmatic and practical. Ideally, the RMT and NUMAST, and perhaps the Minister, would like all ships to be crewed entirely with UK seafarers. Why not? However, the proposal asks only for a minimum of one in 15 UK ratings. That is not unreasonable when we consider the generosity of the taxpayers' provision.

The Government deserve credit for introducing a number of measures that have boosted UK shipping, but they must recognise that more needs to be done to increase UK seafarers' employment, especially for ratings. So far, 165 MPs have signed the early-day motion calling for a firm link between the tonnage tax concession and increased employment for UK seafarers, ratings and officers. I hope that the Minister can advise us that, following his review, he will introduce such a link.

We look forward to the outcome of the review, and we hope that today's debate, which takes place as the review is coming to an end, will influence it in a practical way and that it will promote the development of UK seafaring and the stable long-term employment of UK   seafarers, which will provide benefits to many of our constituencies and to the UK economy.

Several hon. Members rose—

Mr. Deputy Speaker : Order. It is possible that Divisions could be called in the House during the course of our debate. I hope that hon. Members will agree that the sooner we can get back to the debate the better, so I suggest that if the Division bell rings, we should try to return within 10 minutes. If that proposal meets with the wishes of hon. Members, it would be helpful.

2.30 pm

Mr. Gwyn Prosser (Dover) (Lab): I should start by declaring a number of non-pecuniary interests. I am a member of NUMAST, the merchant navy officers' union. I am also a member of the GMB, which is trying to save jobs in Dover along with the other seafaring unions, and a long-time friend of the RMT and its predecessors.

The seafarers' union campaign has gone on for more than a generation. For 25 years it has tried to revitalise the British merchant navy. During my 20-odd years in
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the service, in which I sailed deep sea, coastal and cross   channel, I have been pleased to be part of that campaign. I remember during those difficult days wondering, along with the trade unions, whether any British merchant fleet would be left within a few years. We worried that the numbers of ships and the amount of British shipping activity would decline so much that it would drop over the edge and cease to exist. That would have been a sad story for a nation with such a proud history and proud heritage of ruling the waves and trading by sea.

We keep reminding ourselves in these debates that more than 90 per cent. of our trade still travels by sea. Some of us would like to see a lot more of the internal domestic trade carried by sea. There is much potential and lots to do, but we want to do it with a few more local jobs and a few more British seafarers' jobs.

During the 18 years of Tory Government, the merchant navy fleet was in continuous decline. The number of ships had fallen to just 226 by 1997. It was famously described as being on the point of oblivion. In the first years of this Government, the Chamber of Shipping and the trade unions lobbied hard for the introduction of the tonnage tax. My hon. Friend the Member for Hayes and Harlington (John McDonnell) referred to that in his speech. We wanted to arrest the decline of the fleet. We wanted to have more British registered ships and, we hoped, more ships under the red ensign, but we also wanted more British seafarers' jobs.

I was pleased to be part of the lobby that went to see Transport Ministers and Treasury Ministers. We spent a brief time with my right hon. Friend the Chancellor of the Exchequer trying to put across the idea that a little help for the industry could see a large return for British shipping and a few British seafarers' jobs. It was not a massive manifesto, but a modest request. At the time, we were convinced that if the Ministers agreed and the tonnage tax came into place, the decline in British seafarers' jobs would also be arrested and we could start building up our seafaring numbers again. That was not simply a matter of employing more British seafarers. Although I am partial in these matters, they are considered the best seafarers—be they officers or ratings—in the world. Everyone wants British seafarers, but I suppose that the Minister would say, "If they can afford them."

I have described the background to my involvement, and we also had some useful meetings in my ports committee to which we invited members of the Chamber of Shipping and the seafarers' unions. It was a joint campaign. We all wanted the same thing, and I felt that we all expected to get the same or similar benefits from it.

My hon. Friend described the rapid turn around in the size of the fleet that resulted from those changes and the sad fact that the reversal in the fortunes of the fleet has not been matched by a reversal in the fortune of British seafarers. He also referred to early-day motion 880 in my name and that of other hon. Members present. It contrasts the huge difference in the reversal in fortunes of British shipping and the industry itself with the pretty abysmal results for British seafarers' jobs.

There has been a bit of an advance in training places for officers, but even that is set at a low limit. The legislation states that there should be one training job
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for every 15 British seafarers employed on a particular vessel. That is pretty small beer, but such modest stuff is appreciated as it has had an effect. However, it does not guarantee employment for the cadet or trainee at the end of their training, and there are many anecdotal stories about people who have gone through the scheme and who were looking forward to a career in the merchant navy.

We should remember the background to the debate: the trades unions and the Chamber of Shipping—both sides of the argument—have been putting resources into gaining young people's interest in a career at sea, because within seven or 10 years there will be a serious skill shortage as the average age of the British seafarer is over 40. They are coming to the age at which they will retire and there is no fresh blood coming in. There is thus a paradox: both the industry and the Government recognise the need for new entrants to fill the gaps and the add-on value that can be generated by British seafarers who are reaching the end of their seagoing careers. Whether they are officers or ratings, they are a versatile group who have transferable skills and can turn their hands to other things. Their work is diverse, from running Lloyd's of London to supporting the fish market up the road. Training seafarers adds value, as one can see from the insurance market and sea and ship broking. It is not by chance that the shipping sector in the City is full of people with former seagoing experience. There are many good reasons for bringing back a link between the tonnage tax and taking on British seafarers and providing more berths for cadets.

I want to re-emphasise the issue of proportionality. No one would suggest that every ship that comes back into the tonnage regime as part of the registry will take on only British seafarers. That would not be sustainable; it would not happen. However, there should be some feedback, at least, and a quid pro quo.

We have heard about the dramatic drop in the number of seafarers, and I want to re-state the figures in terms of the proportion of UK seafarers on tonnage tax vessels in the past few years. Tonnage tax was first introduced in 2000–01, when UK seafarers at rating level were 49 per cent. of the total; the latest figures, for   2003–04 show that only 28 per cent. are British. I contrast the rising fortunes of Lord Sterling and the profitable sectors of the industry with the reducing fortunes of seafarers.

The story is not much better for officers: in 2000–01, 80 per cent. were UK seafarers, and by 2003–04 the figure had fallen to under 50 per cent. Those are pretty stark figures and we should note that the tonnage tax has not necessarily generated additional jobs for UK seafarers, because many positions already existed in shipping companies prior to the change in the regime.

At the Labour party conference this year—you will have missed that, I suppose, Mr. Deputy Speaker—the Chamber of Shipping put on a fringe meeting. I have made a point of going to every one of those fringe meetings since the Chamber of Shipping started coming to the Labour party conference. It has not always done that, but I have gone to every one at which it has had a   stand, and I have been joined by some of my colleagues here.

My hon. Friend the Member for Harwich (Mr.   Henderson) mentioned Lord Sterling's famous intervention, which I remember. His words—
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paraphrased, but almost to the letter—were that the Labour Government have done more in the past 18    months for British shipping than the last Government had done in the previous 18 years. That was the background to the introduction of tonnage tax, and why we expected some benefit for the trade unions and their members.

At this year's Labour party conference, the Chamber of Shipping entitled its meeting "Tonnage tax and the creation of British seafarers' jobs". I suppose it labelled it that way to try to pull a few more members into the audience. Given the facts and figures outlined by my hon. Friend the Member for Hayes and Harlington, such a title would be pretty ironic at any time. However, that meeting took place at the same time as P&O was announcing the sacking of 1,200 British seafarers, on top of the 800 British seafarers that it had sacked 12   months ago. That background made the meeting even more inappropriate.

Strong views were expressed on the floor of the meeting by officers, sailing ratings and members of the trade unions who had come along to see whether any good news could be related on the back of tonnage tax. From the floor we received stark evidence and stark views of the effect that tonnage tax has had on British jobs. It has been negative, not positive, and that is pretty certain.

I have been fortunate enough to follow my hon. Friend, who set out everything in clear terms. We have had the privilege of meeting the Minister about this very subject and have had correspondence on all the matters. The responses are all confined to a narrow channel, which concerns the wish to be flexible, to have a shipping industry that is open and receptive and can expand and grow, and for there to be no barriers to that. We do not want barriers; we want common sense and proportionality.

My hon. Friend referred to the ITF, which said that we would soon be at the stage at which the British flag—the red ensign of which we have all been so proud for so many years—will be described as a flag of convenience. A large proportion of the vessels that are shipping into the tonnage tax regime, but not under the red ensign, come from what I would describe as some of the saddest registries in the world. If someone registers a ship in such areas, they may get cheap registration, but they also get poor inspection and low safety standards, and that results in a poor safety record.

It is easy to correlate a ship's registry with the number of accidents occurring on those vessels. I had a quick look through the list today, and saw flags from countries such as Antigua, St. Vincent, Liberia, Panama and the Marshall Islands. When I was sailing on the deep seas under the red ensign, we would look at vessels from such registries and literally give them a wide berth. We would wonder whether anyone on the bridge knew where they were going or anyone in the engine room knew what they were doing.If we are not careful, we are in danger of being so flexible, open and receptive that we will allow the standards in our registry and those applying to the ships registered under the tonnage tax regime to reduce until we come to almost the lowest common
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denominator and have to share the low standards that I have described and that pertain under other flags of registry.

We look forward to the results of the Inland Revenue review. We want to continue the dialogue to find not a structure that straps all tonnage tax ships into 100 per cent. British employment, but a formula that recognises that if they are, in effect, receiving benefits from British taxpayers, British taxpayers such as British seafarers should enjoy some of the benefits too.

2.46 pm

Mr. Ivan Henderson (Harwich) (Lab): I did not intend to speak, but I think that it is worth while to give an example of how a town has been decimated by the loss of the seafaring industry. We are proud of the history of the maritime industry in my constituency. This year, we are celebrating 400 years of the royal charter, and most of the celebrations have centred on the maritime industry, which has had a part to play in the Harwich area for centuries.

Let me give some background. It was so important to have people training for the seafaring industry that my secondary school—it was then the Sir Anthony Dean school but is now the Harwich secondary school—provided seamanship training as part of the curriculum. For most people, there was a natural progression from school to sea, whether they worked on the catering side, on deck or as officers. They would go to the Gravesend training school in Kent. People could also work locally for Trinity House.

The problem that we suffered started in 1984, when the previous Government privatised Sealink. At that time, 13 British-flagged ships were travelling out of Harwich; now there are only two. As I said earlier, at   that time, we had 1,800 seafarers; now, there are just   over 60 left, going out of, I imagine, Harwich International port.

Until a few weeks ago, the company Stena Line, which now operates out of Harwich International, was threatening to get rid of more British seafarers and replace them with cheaper foreign labour. Fortunately, I managed to talk to the director of Stena Line and he has now stepped back from that and has said that there will be another two years of replacing seafarer with seafarer on one ship and another five years on another, so we have a breathing space. Perhaps other shipping companies will take that on board and do exactly the same. Let us have a breathing space and leave the existing seafarers on the ships, so that we see how we get on with regard to training issues and the employment of more seafarers.

In Harwich, there is the possible massive development of a major port if the proposal goes through the public inquiry. My hon. Friend the Member for Dover (Mr. Prosser) pointed out that many seafaring jobs are important for the future of shore jobs. Let us consider the experience in the dock industry. Most people employed on the docks have had seafaring time and some are ex-captains of ships. Indeed, the chief executive of Harwich Haven Authority is an ex-captain of a ship. We need the seafaring skills to continue, so that they can come ashore in future.

It is also important that we give future younger generations the opportunity to experience and enjoy a maritime career. We do not do that currently. We do not
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go into schools and offer seafaring as a career any more; that has not been an option because of the decline in the industry.

A few weeks ago, I took part in a scheme called "Get into maritime". It was headed by the Prince's Trust, which was working in partnership with Jobcentre Plus, Stena Line, DFDS Seaways, Trinity House and a maritime company in Ipswich called Fox's Marina. They all sponsored the scheme, which gave young people six days' experience of going to sea before putting them in the maritime industry for two weeks' work experience and giving them a taste of what the industry is all about. I met those young people after their six days spent tasting the adventures of going to sea, and they were really upbeat and wanted to go further in the industry. So, when the industry comes to us saying, "You want us to take on more seafarers, but they're not there," that is not true. Seafaring has not been offered in schools as a career for a long time; if it were, young people would come forward to get a taste of the industry.

As I said, I was not going to speak, and I shall not speak for much longer. Let me say on behalf of my constituency, however, that if the maritime industry were a building, it would be listed. Our country's maritime industry has a proud history; we can read all about it in the history books and see the famous people who have been involved in the industry over the years. It would be a disgrace for any Government to allow the industry to deteriorate and vanish from this country. The ships in my port have been given a temporary stay of execution for a number of years, but we need to ensure—with the help of the Government and the Chamber of Shipping—that the remaining jobs in my port are kept for future years. In that way, we can give other young people the opportunity to get a taste of what people have done in the maritime industry over the years.

2.52 pm

John Thurso (Caithness, Sutherland and Easter Ross) (LD): May I begin by expressing the hope that the hon. Member for Hayes and Harlington (John McDonnell) enjoys a speedy recovery to full health? I thank him for having stuck to his last and for being here to introduce the debate, because he did so exceptionally well. I appreciated the measured way in which he put the case and the fact that he made it clear that we are seeking a    balanced approach on which we can work in partnership. Had someone else introduced the debate, they may have demanded 100 per cent. British nationals on every vessel in the British fleet, which would have made it difficult for us to offer our full support. However, the measured way in which the hon. Gentleman put his argument allows us to support it fairly strongly. Indeed, I should say at the outset that I signed early-day motion 880 and encouraged as many of my colleagues as I could to do so.

In his closing remarks, the hon. Member for Harwich (Mr. Henderson) mentioned the proud history of the British merchant fleet, and we should bear that in mind. Three or four years ago, I had the singular honour of being asked to become the founder patron of the Caithness branch of the Merchant Navy Association. In preparation for the debate, I went to the association's website this afternoon and clicked on Scotland, only to
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discover that Caithness remains the only branch there. However, when I speak to some of the old sailors whom I meet and hear their tales about what they and their predecessors underwent in peacetime and in two world wars, I learn quite a lot. It is worth remembering that   36,000 seamen were killed in two world wars, which certainly puts the current number of about 30,000   ratings into perspective. With Remembrance day approaching, that should be at the back, if not the front, of our minds during the debate.

It is self-evident that the UK, as an island, needs a merchant fleet. The maritime industry will remain of the utmost importance. As has been mentioned, more than 90 per cent. of our freight by weight comes into the country by sea. A huge number of people are employed on passenger ships, which not only go across to the continent, but serve the northern and western isles and other parts of the United Kingdom. It is a matter of great regret that some of those jobs are now being threatened.

As has already been mentioned, we also have a coastal shipping industry, and I believe that that should be helped not only to continue but to expand. To those who are, like me, keen on the environment, using our coastal assets and resources for moving freight is important. There is much to be said for maintaining a sound merchant navy. That means making sure that British seamen and officers crew it. For those reasons, the Government were right to consider in 1997 what they could do to support the maritime industry. Without a shadow of a doubt the tonnage tax measures introduced in the Finance Act 2000 have made a significant contribution to rescuing the industry, and, certainly, to reversing its decline.

I was interested to note that the UK-based fleet has   increased to 15 million deadweight tonnes from 7.2   million in 2000 and that the flag tonnage has risen to 10 million from 2.4 million over the same period. If those figures are expressed as ratios, one third was flagged in 2000, whereas now two thirds are flagged. There has been some movement to flag, which is important.

With the introduction of the tonnage tax, the principle of a link between employment and the tax concession has already been made. Placing the training requirement in that context has already established the principle that there should be a return, and some link to employment. Therefore, the argument is not, to my mind, about the introduction of a new principle but about how far the principle should extend.

It is clear that there has not, in the relevant period, been a corresponding increase in employment of UK nationals in the fleet. The number of officers and ratings has been in decline, and projections about further decline have been made. However, unless something can be done, decline is predicted. There is a clear consensus in this Chamber and probably throughout the House that it is desirable to reverse that trend. The question is how to achieve that. In particular, would further links between the tonnage tax and employment increase employment or decrease the prospects for British shipping overall? As I have said, I have already signed early-day motion 880, so I clearly take the view that further links with employment will not damage the
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British shipping industry—particularly if they are introduced in the balanced and moderate way that is being espoused in the Chamber this afternoon.

The key issues include the employment of senior UK officers but not junior officers. The average age of officers in the merchant navy is 44, but 40 per cent. are over 50. Clearly, the moment is rapidly approaching when the number of senior British officers will diminish as those currently employed at sea either find shore jobs or retire. Finding employment for junior officers is also an issue. Cadet places are available and the training scheme has clearly increased the number of cadets undergoing training, but a lack of junior officer places for them to take up on finishing their training is a matter of concern.

It is a curious imbalance at a time when the world shipping industry is highlighting a worldwide lack of officers that, in this country, we cannot provide places for the junior officers who are being trained. That sends out the message to people who might be interested in entering the industry, "Yes, you can get trained but, no, we can't employ you at the end of the training." A cadet came to see me at a surgery in Invergordon about precisely that worry. He was employed but very unsure of his prospects, and he was certain that he would have to go abroad for much of the early part of his career to gain employment.

There is an imbalance between the training of officers and the training of ratings. In that regard, the training requirement has not been successful. We need measures that increase the training possibilities for ratings. The one-in-15 proposal made by the hon. Member for Hayes and Harlington is very conservative; that is the word that he used, but I never thought that I would find myself taking part in a debate in which the RMT's Bob Crow would be described as conservative.

Clearly, it is important that we find training for ratings; there is genuine consensus regarding objectives, but the problem is working out how to achieve them. Further links would strengthen employment without detracting from the ability of the shipping industry to act in a cost-effective manner. Let us consider, for example, the one-in-15 proposal for ratings. I believe that the rate for a deck hand from a foreign country may be as little as £2 an hour. Let us say, for the sake of argument, that a UK national in training is paid £5 an hour—there is a £3 an hour differential. If one took the cost of one in 15 at £3 an hour and came to a total cost for a voyage and compared it to the total profit generated through the tonnage tax concession, I suspect that one would find it a remarkably small percentage. It is a small return to ask for from a reasonably large concession, which has been effective.

I am reminded of debates that I attended in another place in which we discussed the minimum wage. That would have been in 1997 or 1998, when I was surrounded by employers who said that the minimum wage would decimate my industry—the hospitality and catering industry—and have appalling consequences. I was told that we would all be out of business within a   year or two. In fact, the reverse was true. The fact that    we introduced more reasonable conditions enabled more people to come into the industry, and allowed better employment conditions. For that reason,
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I supported the minimum wage as an employer and chief executive. I see the same long-term issue here. In the short-term, employers can say, "Oh dear, look at this cost that has come on us," but the industry should be looking at long-term trends and how we will get the necessary people into the industry in 10 years' time.

The hon. Gentleman will know from my comments that I stand fairly much in support of what he said so eloquently at the start of the debate. It would be impossible to have a British fleet that is manned 100 per cent. by British nationals. No one is asking for that. The balanced approach that is being asked for is a way forward, and I hope that the Government will consider it seriously. A British merchant navy consisting of no British merchant seamen is wholly unthinkable. We owe it to the proud tradition of which I spoke earlier to ensure that there is a proud future.

3.3 pm

Mr. Greg Knight (East Yorkshire) (Con): I    congratulate the hon. Member for Hayes and Harlington (John McDonnell) on securing this important debate, and join the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) in wishing him a speedy recovery. One would not know from his speech today that he is ill. He put his case very well, and spoke with eloquence and passion, as did the other Labour Members who spoke.

The shipping industry plays an important role in the economy of our island nation, especially with ever-increasing global trade. The case for a tonnage tax was first made in earnest back in 1997 by the Chamber of Shipping, and later by the Select Committee. I agree with the comment in the Treasury report that considered the possibility of a tonnage tax. It said:

Opposition Members certainly want the shipping industry to go from strength to strength. We supported the introduction of the tonnage tax and continue to support it—I believe that the decision on that matter was right.

The hon. Members for Dover (Mr. Prosser) and for Harwich (Mr. Henderson) made great play of the fact that this Labour Government introduced the tonnage tax. That is technically correct. However, I have no doubt that, had we been in office in 2000, when the case for a tonnage tax was focused and well made, we would have done the same thing.

Mr. Prosser : Does the right hon. Gentleman not recall that, for many years before 1997, the industry—the Chamber of Shipping and others—was pressing the Conservative Government to introduce a tonnage tax?

Mr. Knight : I think that the case developed. As it became focused and clear that worldwide pressures meant that the tonnage tax was a fair way to proceed, I have no doubt that a Conservative Government—had we still been in office—would have accepted that case.

Mr. Ivan Henderson : Will the right hon. Gentleman give way?

Mr. Knight : This is history, and I would rather look to the future, but I will give way again.

Mr. Henderson : The right hon. Gentleman probably would not remember the fact that, in my port, seafarers
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were replaced by Dutch seafarers on some of the main ships. That was because, in Holland, an incentive for ship companies to employ Dutch nationals had already been introduced. The previous UK Government, however, ignored the calls to go down the same road in helping our shipping industry to retain British seafarers.

Mr. Knight : I do not accept that point, because I had a conversation with the hon. Gentleman's predecessor just before I visited his constituency, and that issue was   raised. The issue was actively discussed in the Conservative party at the time.

I was pleased to hear that NUMAST and others who are concerned with the industry met at this year's Labour party conference. May I invite them to attend next year's Conservative party conference, when we will be the party of government? I will be happy to welcome them to our proceedings.

Today's debate has focused on the question of employment, but it is also appropriate to acknowledge the economic benefits that tax concessions have brought.

There has been a huge increase in seaborne trade over the past few decades. The number of tonnes transported more than doubled between 1970 and the end of the last century. The International Monetary Fund and the World Bank predict that world seaborne trade will rise   to 45,000 billion tonne-miles by 2012. As the hon. Member for Dover correctly said, international shipping is responsible for the carriage of 90 per cent. of world trade. It is therefore not surprising that the United Nations Conference on Trade and Development estimates that merchant shipping generates an annual income of more than $380 billion in the global economy.

Despite the success of the shipping industry and its importance to world trade, the number of seafarers has   been decreasing. It is understandable, therefore, that groups such as the RMT and NUMAST are campaigning to protect their members' interests. Indeed, NUMAST's campaign literature states that it is

Those are laudable aims.

Figures published by London Metropolitan university show that the number of UK seafarers fell from 30,000 in 1997 to 25,000 in 2001—the year after the tonnage tax was first announced—but that, by 2003, the number had increased to 28,000.

The campaigns being run by the RMT and NUMAST have been successful in raising the profile of the issue. I am sure that many hon. Members on both sides of the    House will have received postcards and other correspondence from constituents who are concerned about that matter. We know that representatives from NUMAST have met Ministers and I hope that when the Minister replies to the debate, he will be able to tell us what conclusions he drew from those discussions. NUMAST's principal concern, and that of hon. Members who have spoken today, is that although tonnage tax has led to an increase in British shipping, it has not led to a corresponding increase in employment opportunities for British seafarers. I understand from parliamentary questions tabled by my hon. Friend
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the    Member for Christchurch (Mr. Chope) that 12,500   seafarers are employed on ships in the tonnage tax scheme. Some 39 per cent. of all seafarers and almost 50 per cent. of the officers are UK nationals.

The White Paper, "Future of Transport", which was published in 1998, stated that two of the aims of an integrated shipping policy were:


The Government have been partly successful in delivering some of those aims, but there are questions still to be answered. Documents published by the RMT on the tonnage tax state that when the RMT expressed support for the idea, following the publication of the Department for Transport's policy paper "Charting a new course", it was expecting more than 200 new ratings to be trained under the new scheme each year. The RMT recently stated:

That is well short of the figure for which it was hoping. It continued:

It is not hard to understand its frustration.

It is important for us to recognise that global competition remains tight despite the growth of the worldwide shipping industry, and continues to force costs down. The Select Committee on Transport found that crew wages amount to as much as 70 per cent. of the cost of running a ship. It is therefore unsurprising that operators want to minimise those costs, although I am sure that we would all agree that cost savings must never be allowed to compromise safety. I know that many hon. Members have continuing concerns about that.

I believe that British officers and ratings are among the best trained in the world, and I agree with the hon. Member for Hayes and Harlington that it is important that we encourage shipowners to offer them opportunities. However, it is also important to remember that the president of the Chamber of Shipping, when giving evidence to the Transport Committee, said that

I am sure that none of us wants that outcome.

The Chamber of Shipping went further in its press release of 26 August this year, in which it said:

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The Opposition do not want shipping business to go overseas, with the consequent loss of related support jobs. I suspect that the Minister does not want that either. I wonder whether introducing a rigid link that tied tonnage tax to the employment of British personnel would be lawful under EU law. Will the Minister say whether he has considered that?

I look forward to hearing what the Minister has to say on this important issue. I hope that what he does say will give heart to officers and ratings. More importantly, I hope that it will not frighten away from these shores the job providers and wealth creators—the shipowners.

Mr. Deputy Speaker : The Minister of State will respond.

3.14 pm

The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson) : Thank you, Mr.   Deputy Speaker for the promotion. Alas, I am still the Under-Secretary, but I jolly well ought to have a higher rank. I must declare an interest. As well as being Under-Secretary, I am a member of the GMB.

I congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on securing this debate. I form the third part of a three-pointed parliamentary cross-party accord by wishing him an early release from his illness.

I am pleased to say that much of the public discussion on these issues has been promoted by the maritime trades unions, and I congratulate them on doing so. My hon. Friend asked me to take away his comments and consider them; I assure him that I shall consider carefully not only his comments but those of other hon. Members.

The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) reminded us that it will be Remembrance Sunday this weekend. I shall be in my constituency on that day. I shall remember not only those from the armed services who gave their lives but, at the huge memorial on Plymouth Hoe, the many merchant seamen who died. The latter gave their lives in large numbers on the Atlantic convoys and in other parts of the world, but I think particularly of those who died on the Arctic convoys. They lived through the most appalling conditions and died in the most dreadful circumstances. We must remember their contribution to our nation's liberation.

My hon. Friend the Member for Dover (Mr. Prosser) and others reminded us that, by weight, about 96 per cent. of all goods are imported and exported by sea. We have one of the longest coastlines in Europe—second only to that of Greece—and it is a sensitive coastline. We have to look after the environment, but it is also important to keep the safety of seafarers at heart. We share with the French one of the most dangerous and hazardous sea lanes in the world—the channel.

The issue is being discussed at two other forums. The right hon. Member for East Yorkshire (Mr. Knight) referred to the Transport Committee inquiry into tonnage tax; I gave evidence to the Committee in June, and we await the report with interest. The Inland
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Revenue's post-implementation review into the tonnage tax drew to a close in September, and I look forward to the Paymaster General speaking on that matter shortly.

A number of hon. Members, particularly my hon. Friends the Members for Harwich (Mr. Henderson) and for Dover, have strong constituency links with the sea, and so do I. I am instinctively attracted to the idea that   we should do everything possible to attract and retain UK seafarers on UK ships. We have a long and honourable seafaring tradition. The Government continue to take pride in all that has been achieved since 1997 in trying to reverse the fortunes of the UK fleet. The White Paper "British Shipping: Charting a new course" set out a comprehensive strategy to reverse the long decline of the UK shipping industry that occurred during the previous two decades.

In answer to a point made by the right hon. Member for East Yorkshire about protecting jobs, within the context of our membership of the European Union, those jobs would be available to people in the European economic area, not to UK residents only.

We now have a thriving and high-quality shipping register. I reject the idea that our register, either by flag or by tonnage tax, is a flag of convenience. It is not. The UK-registered fleet, with our flag, is the sixth largest in the world; and we are at the top of the Paris memorandum of understanding white list. That enables us to punch above our weight in the maritime world. Last week, I had the pleasure of attending the ministerial conference on port state control in Vancouver. I am pleased to report that the United Kingdom is held in extremely high regard on maritime matters. I do not know what sort of accolade it is, but I think that I am now one of the longest serving maritime Ministers in the world. That probably says more about how short a time the others serve than about how long I have served.

In considering whether to introduce an employment link into the UK tonnage tax regime, we must be aware that the issue is finely balanced. My hon. Friend the Member for Hayes and Harlington alluded to that. We want to improve opportunities for employment for seafarers, but we must be careful that, in doing that, we do not jeopardise the progress that we have made in reviving the UK merchant fleet. Increasingly, other countries are introducing tonnage tax regimes. The reduction of the relative competitiveness of the UK tonnage tax scheme might result in shipping companies electing to enter schemes in other countries or leave the UK flag. That would ultimately further reduce employment opportunities for UK seafarers and the shore-based staff who are so important, and, equally important, reduce our control over safety and standards. While we have a fleet of some size, we have some control over the quality of not only the ships themselves, but the employment conditions on board them.

From 2000, when the tonnage tax regime was introduced, to the end of June 2004, deadweight tonnage increased from 5.2 million tonnes to 12.3   million. There has also been a healthy trend in the profile of the register, towards larger and younger ships. Although the number of ships on the register might not be so large, some are very big vessels indeed, and carry a lot of goods and employ a considerable number of people.
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Although the tonnage tax has undoubtedly played an important part in the increase of the UK merchant fleet, it is only one of a package of measures. Other factors have also helped to create a highly favourable environment for UK shipping, including the registration reforms that the Maritime and Coastguard Agency instituted. We cannot say that there is a direct causal link between the tonnage tax and the growth of the register, but 54 per cent. of the ships in the scheme are UK-flagged, and the UK-registered fleet is the sixth largest in the world.

I should like to say a few words about the importance of the tonnage tax to the UK economy. London is the world's largest provider of maritime services. The UK is an attractive base for overseas ship managers, with the well known assets of the time zone, the language, stability and the culture. Overseas owners with agencies here sustain more than 4,500 jobs, contributing around £1 billion in overseas earnings and bringing work to City firms that specialise in services related to shipping. The introduction of the tonnage tax is important because of the support that it provides for our shore-based industries.

My hon. Friend the Member for Hayes and Harlington talked about shipping companies avoiding paying and the taxpayer making an investment. If we have given tax relief, it is taxation forgone, rather than an investment that the Government have made. If the tonnage tax regime was not attractive to a company, it could easily switch to somewhere else or decide not to come under our regime. That is why we have been so careful to ensure that coming under our tax regime is attractive to companies.

John McDonnell : What will attract companies to remain and to engage with the tonnage tax, and therefore to employ UK seafarers, is clearly a matter of balance. However, when Lord Alexander made the last independent assessment of the issue in 1999, he made clear his concern at the inadequacy of the commitment to the link between what we gain from the tonnage tax and the employment of UK seafarer ratings. We need to take heed of that independent assessment, because it has proved accurate.

Mr. Jamieson : If we can make that link in a way that ensures that we carry on getting ships on to our flag and under our tonnage tax regime but that does not damage our prospects, we will do just that.

Flags of convenience are usually for ships that will find a country where the inspection level is poor or little regard is given to it. If a ship comes on to our flag, it is given the most rigorous inspection by the Maritime and Coastguard Agency, and it would not be allowed to fly the UK flag if it did not meet those high standards. An assessment is made by the Inland Revenue as part of the process of identifying vessels and companies that qualify for tonnage tax.

The International Transport Workers Federation made an allegation about ships operated by Lapthorn, saying that they do not comply with parts of
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International Labour Organisation conventions 147 and 178. Those allegations were investigated by the Maritime and Coastguard Agency, which found that, with the exception of a few minor issues relating to ILO convention 178, the vessel was well maintained and had an apparently contented, motivated and industrious crew. If there is any evidence to suggest otherwise, I will be pleased to receive it and will pass it on to the Maritime and Coastguard Agency to ensure that a further inspection takes place.

Mr. Prosser : Is it not the case that a company currently registered in, say, the Marshall Islands—wherever they are—which elects to come under the tonnage tax regime rather than the registry and the flag, can maintain its standards under the original registry, which we all agree are second class?

Mr. Jamieson : But also, to come on to tonnage tax, the company would have to demonstrate that a large part was run from the United Kingdom. It could not simply come under our tonnage tax regime.

My hon. Friend made a sensible and pragmatic contribution to the debate, particularly in mentioning the one in 15 training commitment for officers. After three years, three lots of one in 15 make one fifth. So once a company has been under the tonnage tax regime for more than three years, the training commitment is more than one in 15. The challenge is finding jobs for those trainees.

My hon. Friend the Member for Harwich, as always a strong advocate for his constituency on maritime issues, made the powerful case for employing young people and set out the desperate need to replace some of the older generation working shore side. Young people need experience at sea if they are to be the best people to work shore side in the future. It is important to get people to sea so that they have the relevant experience to maintain the shore side industry, which is equally as important.

We have also seen an encouraging increase in seafarer training. The support for maritime training scheme—SMarT—has been running since 1998. It provides support for the training of officers and ratings, and has a budget of £9.4 million a year. There were 621 new starters during 2003–04. That is not enough, but it was an 11 per cent. increase on the previous year. We are doing all that we can to increase training, but we have started from a low base.

I am sympathetic to the idea of improving our flag and getting more vessels on to tonnage tax. I am also attracted by the idea of getting more UK people on board ships and working either as officers or ratings. It is not only vital for the merchant fleet, but for jobs on shore. We will look carefully to see how we can create an employment link that does not deter new ships from coming on to the tax or our flag.

Mr. Deputy Speaker : I thank the Minister for his reply to that important debate.
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