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Power To Prohibit Provision Of Coastal Shipping Services Which Are Not British-Based

Volume 130: debated on Wednesday 30 March 1988

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`(1) The Secretary of State may by order provide for the provision of shipping services to which this section applies to be prohibited except where such services are provided from one or more permanent places of business maintained in the British Islands.
(2) This section applies to the following shipping services—
  • (a) the carriage of goods or passengers by sea—
  • (i) between ports in the United Kingdom, or
  • (ii) between a port in the United Kingdom and an offshore installation in United Kingdom waters, or
  • (iii) between offshore installations in United Kingdom waters;
  • (b) the carriage of passengers by sea on voyages or excursions beginning and ending at the same port in the United Kingdom, other than voyages or excursions which involve calling at any port or ports outside the British Islands (whether passengers disembark there or not); and
  • (c) shipping services (other than the carriage of goods or passengers by sea) which are—
  • (i) provided by means of ships operating out of ports in the United Kingdom (whether so provided within United Kingdom waters or not), or
  • (ii) provided within United Kingdom waters by means of ships operating out of ports outside the United Kingdom.
  • (3) An order under this section may make provision—
  • (a) with respect to the circumstances in which shipping services are to be regarded for the purposes of the order as being provided from one or more permanent places of business maintained in the British Islands;
  • (b) authorising the Secretary of State to issue licences sanctioning the provision of shipping services to which this section applies, notwithstanding that they are not provided as mentioned in paragraph (a) above, in cases where he is satisfied that there is no-one willing and able to provide the services in question as mentioned in that paragraph;
  • (c) requiring the payment, in connection with applications for such licences, of fees determined with the approval of the Treasury;
  • (d) exempting any prescribed class or description of shipping services from any prohibition imposed by virtue of subsection (1);
  • (e) authorising the Secretary of State, or a person appointed by him for the purpose, to serve notices requiring the production or furnishing of documents or information appearing to the Secretary of State or any such person to be necessary to enable him to determine such matters as may be prescribed;
  • (f) with respect to the manner of service of notices in pursuance of paragraph (e).
  • (4) An order under this section may—
  • (a) make different provision for different circumstances;
  • (b) make such transitional, incidental or supplementary provision as appears to the Secretary of State to be necessary or expedient.
  • (5) The provisions of an order under this section shall not discriminate between shipping services provided by different persons on the basis of the place of registration of the ships by means of which the services are provided.
    (6) Section 728 of the 1894 Act (appointment of inspectors) shall have effect in relation to—
  • (a) any order under this section, or
  • (b) any licence is sued by virtue of subsection (3)(b) above,
  • as it has effect in relation to any such regulations or licence as is mentioned in paragraph (b) of that section; but section 27 of the Merchant Shipping Act 1979 (powers of inspectors) shall have effect in relation to any inspector appointed by virtue of this subsection with the omission of paragraphs (f) to (h) of subsection (1) of that section.
    (7) The power to make an order under this section shall be exercisable by statutory instrument, but no such order shall be made unless a draft of it has been laid before and approved by resolution of each House of Parliament.
    (8) In this section—
    "offshore installation" has the same meaning as in the Mineral Workings (Offshore Installations) Act 1971;
    "prescribed" means prescribed by an order under this section;
    "shipping services" means—
  • (a) the carriage of goods or passengers by sea,
  • (b) services provided by offshore support vessels, and
  • (c) such other services provided by means of ships as the Secretary of State may specify in an order under this section;
  • "United Kingdom waters" means waters within the seaward limits of the territorial sea of the United Kingdom and waters in any area designated under section 1(7) of the Continental Shelf Act 1964.'.—[Mr. Channon.]

    Brought up, and read the First time.

    8.28 pm

    I beg to move, That the clause be read a Second time.

    With this it will be convenient to take the following: New clause 2—Enforcement of section (Powers to prohibit provision of coastal shipping services which are not British-based)

    '(1) Where—

  • (a) any ship is used in the course of the provision of any shipping services to which section (Powers to prohibit provision of coastal shipping services which are not British-based) applies, or
  • (b) anything is done on board a ship with a view to its being used to provide any such services,
  • and the provision of those services is prohibited by virtue of subsection (1) of that section and is not sanctioned by any licence issued by virtue of subsection (3)(b) of that section, then (subject to subsections (6) and (7)), the master and the owner of the ship shall each be guilty of an offence.

    (2) Where the ship—
  • (a) is chartered by demise, or
  • (b) is managed, either wholly or in part, by a person other than the owner under the terms of a management agreement,
  • the reference in subsection (1) to the owner of the ship shall be construed as including a reference—
  • (i) to the charterer under the charter by demise, or
  • (ii) to any such manager as is referred to in paragraph (b) above, or
  • (iii) (if the ship is both chartered and managed as mentioned above) to both the charterer and any such manager.
  • (3) Any person who—
  • (a) in connection with an application for such a licence as is mentioned in subsection (3)(b) of section (Power to prohibit provision of coastal shipping services which are not British-based) or
  • (b) in purported compliance with the requirements of any notice served on him by virtue of subsection (3)(e) of that section,
  • knowingly or recklessly furnishes information which is false in a material particular shall be guilty of an offence.
    (4) Any person who—
  • (a) without reasonable excuse (the proof of which lies on him) fails to comply with the requirements of arty such notice, or
  • (b) intentionally alters, suppresses, conceals or destroys a document which he has been required to produce in pursuance of subsection (3)(e) of that section,
  • shall be guilty of an offence.
    (5) Any person guilty of an offence under this section shall be liable—
  • (a) on summary conviction, to a fine not exceeeding £50,000;
  • (b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.
  • (6) It shall be a defence in proceedings brought under subsection (1) against the master of a ship to prove—
  • (a) that the master did not know and had no reason to suspect that, in the circumstances of the case, the provision of the shipping services referred to in paragraph (1) or (as the case may be) paragraph (b) of that subsection was prohibited by virtue of subsection (1) of section (Power to prohibit provision of coastal shipping services which are not British-based), or
  • (b) that the master had reasonable grounds for believing that the provision of those services was sanctioned by a licence issued by virtue of subsection (3)(b) of that section.
  • (7) It shall be a defence in proceedings brought under subsection (1) against a person other than the master of a ship to prove that, under the terms of one or more charter-parties or management agreements entered into by the defendant, the right to determine the purpose for which the ship in question was being used at the time of the alleged offence was wholly vested in some other person or persons party thereto (whether or not any such other person or persons had entered into a further charter-party or management agreement providing for that right to be vested in some other person).
    (8) Subsections (1), (3) and (4) apply to offences falling within those subsections wherever committed.
    (9) Proceedings for an offence under this section may be taken, and the offence may for all incidental purposes be treated as having been committed, in any place in the United Kingdom.
    (10) Proceedings for an offence under this section shall not be instituted—
  • (a) in England and Wales except by or with the consent of the Attorney General or the Secretary of State; or
  • (b) in Northern Ireland, except by or with the consent of the Attorney General for Northern Ireland or the Secretary of State.
  • (11) Any document required or authorised, by virtue of any statutory provision, to be served for the purpose of the institution of, or otherwise in connection with, proceedings for an offence under subsection (1) shall, where it is to be served on a person who was, at the time of the alleged offence—
  • (a) the owner of the ship in question, or
  • (b) such a charterer by demise or manager of that ship as is mentioned in subsection (2),
  • be treated as duly served on that person if—
  • (i) sent to him by post at his last-known address (whether of his residence or of a place where he carries on business), or
  • (ii) left for him at that address,
  • if the document is served on the master of the ship in question.
    (12) In this section "management agreement" has the same meaning as in section 29.'.

    The introduction of new clause 1 fulfils an obligation made in Committee. In the course of the consideration of this Bill, many hon. Members have referred to the great unfairness of the present situation on cabotage. The Government's primary objective on cabotage remains liberalisation throughout the European Community and we are vigorously pursuing this aim with member states. I am well aware, however, that we face an uphill task against entrenched opposition. I have decided that it would be prudent to have powers to take alternative action in case the Community negotiations do not lead to early success.

    The new clause introduces an anabling power for me to introduce a test of establishment for operators who wish to carry out cabotage in United Kingdom coastal waters. The test would apply equally to British and foreign-flagged vessels and would mean that, while non-British companies would still be allowed to compete in our cabotage trades, they would all have to be established in the British islands.

    If the power is invoked, operators wishing to do United Kingdom cabotage will have to ensure that they are providing shipping services from a permanent place of business in the British islands, not merely from an agency or trading as a "brass plate company". However, the clause enables me to issue waivers where I am satisfied that there are no established companies willing and able to provide a specified service.

    An order to implement the power would be subject to affirmative resolution. Before making such an order, I would consult interested parties. If the negotiations in the Community succeed, the power would then be revoked.

    As I announced to my hon. Friend the Member for Bristol, East (Mr. Sayeed) today, in answer to a parliamentary question, in 1986, the last year for which information is available, British-flagged shipping had over 70 per cent. of the total United Kingdom cabotage market by estimated value. The total value of the United Kingdom cabotage market was estimated at approximately £440 million, so it is a substantial business and the largest in the Community. I repeat that we would far rather open up other coastal traffic to British ships than introduce restrictions of any kind on our own coasts, but, if the Community negotiations are protracted with no early prospects of success, we need to be able and ready to level the present unevenness of the playing field.

    New clause 2 provides for the enforcement of new clause 1. Under this clause, the owner, master and charterer or other manager will be guilty of an offence where cabotage is provided in contravention of an order. Offenders will be liable to a fine of up to £50,000 on summary conviction and, on indictment, to imprisonment for up to two years and/or an unlimited fine. These are, of course, maximum penalties and it will be for the courts to decide the precise penalties in any particular case in the normal way.

    However, I recognise that the master of the ship may have believed in good faith that the shipping company he was working for was established or had been given a waiver for the cargo in question. I have therefore provided that, if the master can prove either of these circumstances, it will be considered a defence for the purpose of proceedings. We have also introduced a defence for charterers who can prove that at the time of the offence the ship was in fact chartered wholly by another person.

    These new clauses are long overdue and I invite the House to accept them.

    Hon. Members on both sides of the House will agree that these new clauses are long overdue, and that reflects no great credit on the Department of Transport. I agree with the hon. Member for Eastleigh (Sir D. Price) who put pressure on the Government to bring forward these new clauses. It is significant that debate took place both in the House of Lords and in Committee, yet it has taken until now to see what the Government had in mind. Although we would not intend to oppose the new clauses, we believe that they do not go far enough.

    In a written answer to the hon. Member for Bristol, East (Mr. Sayeed) today, the Secretary of State said that, according to the latest available figures, the total United Kingdom cabotage market amounts to some £440 million and that of that, some 28 per cent., or almost £100 million, is now dominated by non-British vessels, with all the consequences of loss of trade and loss of jobs for British merchant seamen.

    I have raised in the House previously the question of the Swansea-Cork ferry, the so-called Celtic Pride, which, far from being a matter of pride for the Celts, either in this country or in Ireland, should be more correctly named the Pride of Poland because it is a Polish vessel manned by Polish seamen. Inevitably, when Polish seamen are being paid wage rates massively below those paid to British seamen, the Poles become economically dominant on the line. Under the new clause, there will be nothing to stop the Polish operators simply registering a company in the United Kingdom and continuing to operate in our coastal waters.

    I hope that the Secretary of State will clarify the position on that matter, not because of its local significance, but because it is typical of the way in which we have allowed our coastal trade to be eroded and have allowed British jobs to be given up at the expense of those many British seamen who are no longer able to serve at sea as the opportunities no longer exist. The Secretary of State must take on board the fact that the Government have promised much on the issue of cabotage and have delivered little.

    I wish to refer to the Department of Transport press release No. 472. I doubt whether the Secretary of State possesses a copy, given that he did not hold that office on 29 October 1985, when his predecessor said, in a reply to the ever-assiduous hon. Member for Eastleigh, that he was pleased to announce that his Department had reached a satisfactory agreement with the Federal Republic of Germany.

    In the notes for editors which explain this wonderful agreement, the Secretary of State went on to explain:
    "Discussions have taken place between the shipping authorities of the United Kingdom and the Federal Republic of Germany about access by their shipping companies to each others' coastal cabotage and offshore trades."
    The German shipping industry has already had access to British waters since 1849, so we are involved in a rather one-sided negotiation. Nevertheless, if progress had been made, we would have welcomed it.

    The then Secretary of State went on to say:
    "Both sides recognise that the present position, in which German vessels enjoy full access to UK trades while UK vessels do not have reciprocal rights in the Federal Republic, was inequitable and should be rectified immediately."
    The press release went on to state that, as both Governments anticipate that
    "the proposal will receive relatively early approval by the Council of Ministers, it seems inappropriate for the German Government to take legislative action to deal with those particular problems".
    There are still barriers to British shipping in German waters. The press release issued by the then Secretary of State built up the hopes of the British industry, but it was bogus. Once again, the then Secretary of State promised much and delivered almost nothing.

    Opposition Members are worried about this issue because we have seen the mass destruction of the British merchant fleet. It is interesting to note that the General Council of British Shipping has now come out in favour of some restrictions on the right of access of non-United Kingdom shippers into British waters. The council concludes that at least part of the decline of the United Kingdom merchant marine has been due to the Government's inability to take action on this issue over many years. However, it believes that the present access of foreign vessels to British waters has done serious damage to the British merchant fleet.

    We are entitled to ask what the implications of the new clauses will be. We know, for example, that they will not give British vessels access to Greek, Italian, Spanish, French or Portuguese waters, from which British vessels are presently excluded. They will not stop fleets from those countries entering British waters. They will simply mean that they have to register under some kind of trading arrangement whereby a company is established in the United Kingdom. That is a minimal requirement on those operators.

    As a result, some non-United Kingdom shippers will he dissuaded from entering British waters because they believe that it is not particularly convenient to establish a brass plate company. The Secretary of State said that brass plate companies will not be allowed, but I am not sure what mechanism will prevent the establishment of such companies. Individual shippers may be dissuaded by the new regime, and if that is the case, then, insofar as it refers to trade for United Kingdom shippers, we will welcome it. Nevertheless, it does not prevent access by non-British shippers into United Kingdom waters.

    Over the past 12 months we have seen a further decline in the size of the British merchant fleet—an issue that has been raised many times by Labour Members. According to the Government's latest figures, in 1986 we lost 148 vessels off the British Isles part of the United Kingdom register, and in the first nine months of last year, we lost a further 30. The Government paraded that as some kind of triumph because the rate of the decline had diminished, but it is a disaster for those who work in the industry, and a disaster that could have been prevented.

    We are prepared to go along with these new clauses, not because we believe that they go anything like far enough but because anything is better than nothing. If it gives the Secretary of State some ammunition when he goes in to arm-wrestle with his opposite numbers in the Mediterranean countries or the Federal German Republic, all well and good, but it is a minimal amount of power for him.

    We have heard many times that agreement within the European Commission is imminent and that the British Government will leave no stone unturned until we have access to the costal waters of other nations, at least starting with the northern waters, and then in due course, they will solve the more intractable problem of the Mediterranean. However, there has been little movement. Unless we get an international framework within the European community and that transnational level of agreement, the British merchant fleet will continue to decline and the new clauses, partially welcome as they are will not stop that continuing decline.

    The Secretary of State may be congratulating himself on finally mustering enough courage to take some action, but it is now incumbent on him to take real action to protect British coastal traffic for the British fleet.

    As I have for many years been boring the House with the problems of cabotage, it would be extremely ungracious of me not to thank my right hon. Friend the Secretary of State for tabling these two new clauses. As those who serve on the Committee will know, I had a different form of new clause, possibly a little more vigorous or a little more threatening to our opponents.

    We would all agree with my right hon. Friend that the ideal is the traditional shipping policy of this country, which is open trade across the seven seas of the world, and that means open trade on our own coastline. This is where I must quarrel briefly with the Opposition, because they rather implied that there was a time when all our coastal trade was closed. It never was. It was always open. We want the same rights on other people's coastlines as we accord to them. I have rather more confidence than some Opposition Members that if we had that open access, we would get a far greater benefit for our seafarers than by closing access and picking up that 28 per cent. of our coastal trade which is in foreign bottoms. I sincerely believe that, and I think that Labour Members believe that too.

    To allay the hon. Member's worries, I make it clear that we share his view that proper access to the Mediterranean waters and to the waters of northern Europe would be in the interests of the British merchant fleet. However, we do not have that access and we shall not get it as a result of these new clauses.

    I do not despair of that. I am sure that any hon. Member who has read the treaty of Rome knows that it is clearly contrary both to the spirit and letter of that treaty for these other Community countries to deny British shipping the right to trade along their coastlines. That was recognised by Brussels when it introduced, in a sort of White Paper form although with a lot of green edges, its common shipping policy. The common rights of cabotage are clearly laid down in that policy. I ask that the other member countries adhere to the spirit and letter of that treaty. They are always asking us to do it, but let it be done on their side.

    8.45 pm

    In 1992 we are supposed to be having completely open trade between all member states, and we would be right to hold back on that until we are given the proper rights that are being denied to us by the other member states, with a few honourable exceptions. I hope that on every occasion our Ministers, not only my right hon. Friend the Secretary of State, who is sturdy in defence of British industry, will be active in bringing this to the attention not only of the Commission but of the Council of Ministers. Our aim must be that all European coastlines must be open to all European ships. I will not be satisfied, and nor will the House, with some coasts being more open than others.

    I too would like to welcome these new clauses and to put on record the House's congratulations to my right hon. Friend the Secretary of State on grasping so many nettles in this Bill. He has established in these two new clauses an important principle of licensing. Recent events have shown a need for tighter controls, and not just stiffer penalties. Therefore, I hope that my right hon. Friend will be giving an enthusiastic welcome to new clause 12 when we reach it.

    I am grateful to my hon. Friend the Member for Christchurch (Mr. Adley) for his first remarks, and I will come to his second remarks when new clause 12 is debated, which I hope will be soon. I also thank my hon. Friend the Member for Eastleigh (Sir D. Price). He is right to say that this situation existed for many years. It is a little hard of the hon. Member for Stretford (Mr. Lloyd) to criticise us and say that these measures are long overdue — I have used that phrase myself—because the situation has existed since at least the reign of George I. There have been one or two Labour Governments since then, so it is not entirely the fault of Conservative Governments that this has not been changed before now.

    I agree with the hon. Gentleman on the opportunities before us, apart from the general principle that the coast should be open to all if there is to be a common market after 1992. The total cabotage market in the Community is worth about £1,450 million, so the sheer mathematical opportunities open to us would be greater than those offered by closing our coasts to Community vessels.

    I am grateful for the persuasive arguments put by my hon. Friend the Member for Eastleigh in Committee and over many years. They have contributed greatly in persuading the Government to take this new stand.

    I am grateful for the hon. Member for Stretford's welcome for the new clauses. He raised a couple of points. The Swansea-Cork ferry is not cabotaged, as he will know. That is an international service between Ireland and Wales, so it would not be covered by any cabotage arrangements that might be made now or in the future. If he wants to give me details of the problems on that line I will examine them. Manning is another matter. The ship is under a United Kingdom flag and must abide by the requirements of the officer manning certification. If it became established, I can assure the House that brass plate presence will not be sufficient.

    I will not give details about the regulations that I would be minded to put forward. If we have to introduce them, they will be subject to affirmative resolution, and the House will have an opportunity to debate them in detail. However, I shall not show my hand tonight as to what they might be, because I hope that I shall not have to introduce them, although I may.

    We will not insist that the Secretary of State shows his hand, because it might be inappropriate, but perhaps he might answer a far more important question. When will he be minded to begin to show his hand?

    I intend to see what progress we can make during the period of the German presidency, then I shall review the matter again; we shall see. The hon. Gentleman is a little unfair to the German Government because in practice there are few restrictions, if any, on British ships doing cabotage in Germany. There is no longer a problem, or if there is, it is very small. In most respects the German market is now free, in practice, to British ships.

    I am grateful to the House for its reception of the new clauses. If we have to implement the provisions, we shall come forward with more details and the House will have an opportunity to examine them.

    Question put and agreed to.

    Clause read a Second time and added to the Bill.