Examination of Witnesses (Questions 100-119)
23 JUNE 2004
MR BRIAN
ORRELL, MR
MARK DICKINSON,
MR ANDREW
LININGTON, MR
BOB CROW
AND MR
STEVE TODD
Q100 Chairman: What do you say to the
argument that there are still ratings jobs on short sea routes
but not on long sea routes?
Mr Crow: Well, Steve deals on
a day to day basis with our national shipping office.
Mr Todd: There are less and less
opportunities for ratings as we speak. By the day we are losing
more and more jobs and most recently we lost somewhere in the
region of 350 jobs down in Dover, most recently on the short sea
routes, and we are losing many in the Irish Sea and in the northern
North Sea, where we fail to offer opportunities for ratings.
Q101 Chairman: When we are told that
70% of the operating costs are wages, do you think that is a likely
figure?
Mr Todd: Well, in comparison with
other European nationals, ie German, Dutch, Danish and Swedish
seafarers, we are still quite reasonably cheaper in comparison,
so I do not think it is the cost at all.
Q102 Chairman: So you would think the
70% is an inaccurate figure, is that what you are saying?
Mr Todd: Yes.
Q103 Chairman: So what would you say
would be the percentage of operational costs would be represented
by wages? I am not going to hold you to it, but just a percentage.
Mr Todd: I would say it is less
than 50%.
Q104 Chairman: Less than 50%. Why do
we need to increase the size of our fleet and the number of our
seafarers?
Mr Crow: Well, number one, geographically
we are an island surrounded by sea and we have always had a proud
tradition of having a naval influence and we believe it is actually
essential, it is a core industry and we believe that all it boils
down to at the end of the day is the reason why these shipowners
want to flag our ships is by purely bringing in labour at cheaper
rates of pay. There is no question over the ability of our British
ratings doing the job.
Q105 Chairman: That does not quite fit
in with what Mr Todd said when he said that in fact we are still
cheaper than some other European nations.
Mr Crow: Well, we are still cheaper
than other nations, for instance—
Q106 Chairman: Then why should they seek
to bring in other European ratings instead of we who are cheaper?
Mr Crow: No, I am talking about
countries beyond Europe. For instance, I sit on the International
Transport Federation along with my colleagues from NUMAST and
we have got situations taking place there where there are people
working for £1.40 an hour, £2 an hour.
Chairman: I think it is unlikely we will
get ratings at that rate in this country, Mr Crow.
Q107 Miss McIntosh: I would like to ask
the same question of Mr Crow and Mr Orrell. In the RMT's submission,
Mr Crow, you argue for a prescriptive commitment to have an employment
link between the training under the tonnage tax and employment
of UK seafarer ratings. Why are you so keen to have a prescriptive
commitment when we have just heard that the MAERSK scheme, which
is voluntary, works so well as it does?
Mr Crow: It works well, for instance,
for those people who want to get up as far as some people who
have been going to officers, but for ratings it has not worked
at all. It has not produced any jobs at all and what we are saying
is that we commend the situation where people can be officers,
we commend the situation where people have got the ability for
an improvement of officers in the shipping industry, but the fact
is what we want is some of the tonnage tax purely diverted on
the basis of training to bring in ratings to provide a decent
level of experience and quality for people working on ships.
Q108 Miss McIntosh: If I could ask Mr
Orrell. Would you be in favour of a prescriptive commitment?
Mr Orrell: Yes. We believe that
there should an obligatory employment link and we are pragmatic
about having discussions on what that is. The reality is that
on the tonnage tax ships we had 70% of the officer population
back in 2002. We have now got 49% of the officer population and
yet there has been an increase in the overall total officer population
of 1,500. It would not be so bad if the officer population had
decreased with an increase overall if our numbers had increased,
but the numbers of officers have decreased as well. Some say it
is too early, but we do not. One thing I will say is that we are
not privy to what companies are on tonnage tax or not. When we
try and find out the information on what companies are part of
the tonnage tax we hit a brick wall because the Inland Revenue's
confidentiality rules apply and they will not tell us. Now, we
know that just under 50% of tonnage tax ships are not under the
UK flag. We know that just about 49% of officers are UK and we
believe strongly—and I will be the first to say we have
got it wrong if we are proved wrong, but we will not be proved
wrong—there are many companies on the tonnage tax that have
no intention of employing the people that they train. We know
that in order to try and get the officers into employment we need
to have junior positions for the cadets that are trained and we
believe if you have, for example, out of the 745 ships on the
UK tonnage tax half of those without UK officers on and we have
three officer requirement on every ship, then you are up to 1,000
new junior officer placements. If they train them up until the
chief mate and the second engineers certification under STCW,
they would then have access to an international market and that
is a difference with the officers and the ratings. There is a
critical international shortage of officers and an oversupply
in the international market of ratings and that is why the officers
can move there. We are actually training them not just for the
UK fleet but for the international fleet as well, but they are
getting less and less. So we believe that there is a need to have
a link. We do not believe we should frighten companies away. If
I may, just on the 620 cadets that are in line now, 60 cadets
per year more, by the way, than the 560 we were training before
the tonnage tax came in, which is an interesting point which I
can elaborate on if asked. The issue is that some companies will
go away from the tonnage tax if an employment link comes in, and
my view on that is, "Well, good riddance to you," because
if they go away they will not be recruiting the cadets and if
we have not got jobs for the cadets when they are trained we are
doing everybody a favour anyway, are we not?
Q109 Miss McIntosh: You have said also
in your submission that you would like to see the introduction
of an employment grant in the short sea sector and simplification
of the seafarers foreign earnings introduction scheme. In your
view, who should pay the employment grant?
Mr Orrell: We believe the Government
should pay.
Q110 Miss McIntosh: Over and above the
tonnage tax?
Mr Orrell: That is an issue that
the RMT, NUMAST and the Chamber of Shipping are at one on. A proposal
has been lying in the rooms of the Government for at least three
years now. The difficulty that we do have in the short sea trades—and
I can give one example of a ship owner and that is Everards, who
have tankers—they train their young people. As soon as they
get their dangerous cargo endorsements they go deep sea, and they
go deep sea because we have the foreign earnings deductions deep
sea, which was introduced to help keep a pool of UK seafarers
for strategic needs but it is not available under the current
arrangements for short sea. So we were looking for an employment
support system and the proposal for a short sea shipping grant
was that proposal.
Q111 Miss McIntosh: Thank you. Mr Todd,
you said on the record just now that you believe that UK ratings
are cheaper than many of other Europeans?
Mr Todd: I gave an example of
some where we are cheaper than some. Obviously there are other
European—
Q112 Miss McIntosh: So you are not the
cheapest in the market?
Mr Todd: Not the cheapest, no,
but we are not the dearest either.
Q113 Miss McIntosh: So is it because
of the oversupply that Mr Orrell referred to that you believe
there are fewer UK ratings on UK flag ships?
Mr Todd: I believe it is because
it is easier for shipowners to employ foreign nationals, non-UK
nationals and non-European nationals.
Q114 Miss McIntosh: Why should it be
easier, Mr Todd, because we have now got the tonnage tax. You
have just said you are about the cheapest in the market. Why should
it be easier for—
Mr Crow: The cheapest in Europe.
Q115 Miss McIntosh: No, I do not think
you are the cheapest in Europe, Mr Crow, for the reason you heard
me say earlier.
Mr Crow: What Mr Todd said was
that it was Danish, German, Dutch labour that was more expensive
than the UK. We are trying to get over the point, that is why
I did say to the Chairman that we have got situations where the
crews are being manned with labour throughout the world, the Philippines,
China, India, on £1.40 to £2 an hour.
Q116 Miss McIntosh: On UK flag ships?
Mr Crow: Yes.
Mr Todd: Yes.
Q117 Miss McIntosh: But the whole point
of the tonnage tax was to address the officers and the ratings.
The problem you face at the moment is that you have a surplus
of ratings on the market.
Mr Crow: Yes, but what is happening
is that British ratings are losing their jobs. The shipowners
are getting a tax subsidy and there is a double whammy to the
taxpayer because you have now go to pay social security to keep
British ratings on the dole.
Q118 Miss McIntosh: On the short sea
shipping question, if the Government is minded to bring in the
aggregate carriers to the short sea shipping why would you need
an employment grant, Mr Orrell? You went on to say in your answer
to my last question to you that you are arguing and RMT are arguing
to bring in the short sea shipping provisions, particularly the
aggregate carriers within the short sea shipping provisions. Are
you linking that to this employment grant I referred to, or is
that totally separate to the employment grant?
Mr Orrell: Well, it is a separate
issue. I know what you are referring to now. You are referring
to the extension of the tonnage tax regime to include aggregate
carriers that the Commission has approved as being possible but
has not been implemented yet. Yes, as Bob Crow has said, we are
actually in favour of the tonnage tax. How can I put it? I would
rather whinge about a fleet that has got more ships on it for
the jobs than be whinging like I have done professionally for
25 years when the fleet was disappearing in front of our eyes.
They are two completely separate issues. One is providing the
benefit of the tonnage tax to aggregate carriers. It does not
stop the issue of an employment link being relevant and the short
sea shipping grant that we were talking about was specifically
to address the flow from the short sea trades of UK people into
the deep sea trades to take advantage of the foreign earnings
deductions, which is a tax back, a tax resident where they do
not pay tax and they do not have that on short sea.
Q119 Mr Donohoe: So that I understand
the drop in employment rates, could I ask you how many members
you have in the category and what it was, say, ten years ago?
Mr Crow: In sea containers?
| 
