Examination of Witnesses (Questions 180-199)
23 JUNE 2004
MR DAVID
JAMIESON MP, MS
THERESA CROSSLEY
AND MR
PHILIP DONLAN
Q180 Chairman: Can we try "newer"
rather than "younger", do you think?
Mr Jamieson: Well, newer, younger,
younger ships. I like to think we are all young, Mrs Dunwoody.
Yes, it is a concern and that is why we have put in the training
connection with the tonnage tax because we wanted to make sure
that there were those people who were being trained firstly to
go onto the ships as officers but also in the longer term to provide
other parts of the industry, the shore-based industry. When people
leave the sea and go ashore we need people of competence who have
experience of sea in some of the shore-based industries as well.
That is why we brought this training connection in.
Q181 Miss McIntosh: Well, are you alarmed
it is not working, that the average age has gone up considerably
in a twenty year period?
Mr Jamieson: Well, it is working
in as much as we now have a very substantially greater number,
the figures I gave earlier on. We had 61 trainees back in 2000-01
and we have got 905 now. I think the weakness—and I am sure
you will want to come on to this—is whether or not and how
many of those people have been actually employed aboard the ships
and of course whether or not the people who have been trained
then choose to go aboard the ships. They may choose, of course,
voluntarily to go into some other job instead.
Q182 Miss McIntosh: Would the Department
be sympathetic to having a prescriptive employment link?
Mr Jamieson: Speaking from the
heart, if you like, I am attracted to that idea, the idea that
we put the link in, we have the training there, and then I would
like to see those people then employed aboard the ships, but we
have to tread extremely carefully.
Q183 Miss McIntosh: Minister, if I could
just put to you, if it is working in a voluntary capacity for
a company like MAERSK, why can it not work in a voluntary capacity
for ships abroad?
Mr Jamieson: Well, indeed. What
we need to do is to encourage some of the companies to take on
those trainees, and indeed many of them do take on the trainees
because there is not a huge supply of very skilled people. Of
course, the ones we have here, they speak the international language,
they speak English, they tend to be trained to a very high quality
and if the company is UK-based I think they will show a preference
for UK officers. Those in the tonnage tax who are also UK flags,
75% of the officers aboard those ships are in fact UK nationals.
Q184 Chairman: Is that still true, Minister?
Mr Jamieson: That is the latest
information that I had, Mrs Dunwoody. But the issue, I think,
is that if you bring in more and more conditions and potentially
put a financial load on to the owners of the ships, they have
the absolute freedom to move from the flag to another flag and
I am told they can do that within 15 minutes if that is what they
want to do. So what we have to do is to go along together on this
and make sure we get consensus and agreement because we have done
so much work putting this flag together and it would be extremely
easy to lose it by doing something that was precipitate. But on
the overall principle of it, I am attracted to it but we must
tread very carefully.
Q185 Mr Stringer: Minister, you said
previously that you had no jurisdiction on the payment of wages
on ships effectively, but is that not because the Government makes
a choice not to repeal section 9 of the Race Relations Act, which
allows discrimination on the basis of nationality?
Mr Jamieson: We implemented this
European Directive with much more rigour than I think any other
European country. I cannot remember exactly the details of it,
but nevertheless we implemented it more fully than other countries.
I think the difficulty here when we have this debate is that if
we had insisted that all of the UK flagged fleet had paid a standard
rate, which would be a UK rate, I am almost certain that our fleet
would have diminished now very substantially. What we have to
look at is—and this was the argument we looked at at the
time—how someone is paid, not in relation to the United
Kingdom but how they are paid in relation to where they actually
have their family and where they have to spend their money. What
we do know is that, for example, yes, some Filipino ratings are
paid less than UK ratings but in terms of their own country where
they are domiciled, where they are sending the money home to their
family, some of them are earning very good wages indeed in terms
of their locality. In fact we have figures here, for example,
and these are not ours, these are provided by the unions. The
Filipino able seaman on average is earning about $1,100 per month,
whereas a qualified nurse in the Philippines earns $130 per month.
So in fact although those wages are less than the UK seafarer,
they are very good in terms of the country of origin.
Q186 Mr Stringer: The point I was making,
Minister, is that we choose not to have the jurisdiction. It is
not that we do not have the jurisdiction, is it not, because we
are refusing to repeal section 9 of the Race Relations Act? I
understand that people in China and the Philippines get paid less
than British workers but it is within our choice to do that, is
it not?
Mr Jamieson: It is. We could have
made that choice and I have to say I agonised over this at great
length and had many discussions both with the unions and those
in shipping as well, but I think had we made that choice to have
that power we would have had the power but we would not have had
anything to have any power over because I do not think there would
have been any ships on our flag. It is all very well having the
authority to do it, but if all the ships had disappeared—
Q187 Mr Stringer: I understand the point,
Minister. So you considered it and there are no proposals to repeal
that part of the Act?
Mr Jamieson: As I say, after very,
very long and careful thought, I did not think at the time that
was worthwhile doing. The thing that really worried me as well
was that if those ships came off our flag, where we inspect—and
we inspect to make sure that the social conditions and the quality
of the ship and the actual safety for the people aboard the ship
is ensured—if they had flagged out, not only would they
have continued having their lower wages but they could have gone
to a flag that did not do the sort of inspections that our Maritime
and Coastguard Agency does and in fact we could have lowered the
conditions for many of those foreign workers aboard the ships.
Now, that was my concern and we had to find a balance between
the two.
Q188 Mr Stringer: How do you check that
tonnage tax companies are not avoiding the minimum training obligations
for ratings?
Mr Jamieson: Could I ask my official,
Theresa Crossley, to attend to this.
Ms Crossley: The training commitment
is monitored every four months by officials in the Department.
The companies under tonnage tax have to submit their figures,
which are checked against their commitment, the core commitment
they undertook when they first signed on to the tonnage tax.
Q189 Mr Stringer: So do you go and physically
check that they are carrying out those obligations or do you just
rely on returns from the tonnage tax companies?
Ms Crossley: We monitor by cadet
name.
Q190 Chairman: So you actually have a
proper factual record?
Ms Crossley: Yes.
Q191 Chairman: And unless they are actually
making up names you have to assume that is accurate?
Ms Crossley: Yes.
Q192 Mr Stringer: What is the percentage
of the companies that are out of compliance?
Ms Crossley: I think it is 16%.
Q193 Mr Stringer: And what are you doing
about that?
Ms Crossley: Where the companies
are in default we then follow up that default. They have to make
further declarations. They then have to prove that they are complying.
We cannot actually exclude them from tonnage tax, but we do follow
it through—
Mr Jamieson: But they also make
a payment in lieu of training, that is the point.
Ms Crossley: Yes, they do.
Mr Jamieson: So if we find that
they are not actually doing the training and that they have not
got these people on the list, they have to then make an equivalent
payment in lieu of training. So the cost is still the same for
them.
Q194 Mr Stringer: If they do not comply
at any stage they just have to make those payments?
Mr Jamieson: Yes, indeed.
Q195 Mr Stringer: There is no other penalty?
Mr Jamieson: I believe some of
the companies that do not feel they are in a position to do the
training themselves, maybe because they are such a small company
or their ships are inappropriate (for example very small vessels
are not actually very good for doing the training), what they
do then is they pay in lieu of that training and then the training
is done using that money by someone else.
Ms Crossley: If I could just add
to that. If they do not pay, then they are served with a notice
of non-compliance and to date we have not actually had to issue
a notice of non-compliance. That has not been necessary.
Q196 Mr Stringer: Thank you. Could I
move back to Mr Donlan. I was not sure from your answers, Mr Donlan,
whether the prime reason for having the review of the tonnage
tax now was the change in the EU regulations or if there was some
other reason?
Mr Donlan: No. Ministers gave
a commitment to review the tonnage tax at the time that the scheme
was being introduced in Parliament. They said they would review
it within a couple of years of it starting. The specific areas
they committed themselves to reviewing at that time was the position
of, I think, North Sea vessels, but they have also subsequently
given further commitments that they would broaden the scope of
that review. So we knew right from the start that we were going
to review it and Treasury ministers and the Department for Transport
announced a joint review back towards the end of 2002. However,
as Mr Brownrigg in particular was saying earlier on, this is a
pretty early stage to be reviewing all of the effects of tonnage
tax. Also, shortly after announcing the review we became aware
that the state aid guidelines were likely to be changed. So all
of this is brought into the original scope of the review so that
we can look at the past effects of the regime in terms of its
costs in particular and potentially look at some of the benefits
that might have accrued, the technical functioning of the regime
and how the regime should be taken forward and in that respect
the new state aid guidelines are incredibly important, so obviously
we are dealing with those.
Q197 Mr Stringer: Accepting that it is
at an early stage, when do you expect to report?
Mr Donlan: At the moment it is
just a bit too early to say when we can have all of this finished.
The revised state aid guidelines were with us in January of this
year. Discussions with industry on their effect are continuing.
I do not think the regime is likely to end up with one single
report. There will be things done whilst other things are continuing.
We have already mentioned the possibility that aggregate carriers
could be brought into the regime. That is one thing which could
happen earlier. There are some things that we know we cannot do
until next year's Finance Bill, where we have got to make changes.
Q198 Mr Stringer: Would you expect the
review to be finished by the end of 2005?
Mr Donlan: I would hope so.
Q199 Mr Stringer: I think what you are
saying is that the review will report in stages?
Mr Donlan: Yes.
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