Hansard

Shipbuilding

Volume 131: debated on Tuesday 12 April 1988

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Mr. Beggs

To ask the Chancellor of the Duchy of Lancaster what information is available regarding the level of subsidy or grant aid available from the relevant Government to those; (a) European shipbuilders in each EC country, (b) far east shipbuilders and (c) Brazilian shipbuilders who are perceived to be the main competitors of United Kingdom shipbuilders; and if he will make a statement.

Mr. Atkins

There is no direct support to shipbuilders in Japan or South Korea. I shall write to the hon. Member about Brazil in the light of inquiries now in hand.All assistance to the shipbuilding industry within the EEC has to conform with the framework established by the Council directive of 26 January 1987 on aid to shipbuilding (87/167/EEC) (the sixth directive) which came into effect on 1 January 1987 and will last to 31 December 1990. This directive ensures that both direct and indirect aids are taken into account and, in addition, establishes a ceiling on aid which is based on the monitored gap between the costs of the most efficient European shipbuilders and the prices quoted by the far east market leaders. The ceiling on aid in 1988 has again been set at 28 per cent. of the cost of building a ship. Member states wishing to establish support schemes for their shipping industries have to submit their proposals for approval to the EC Commission before putting them into effect. The following countries have had their schemes approved:

The United Kingdom

  • 1.
  • (a) Small merchant ships
  • (i) A maximum of 20 per cent. of cost for ships cosing less that £10 million reducing by three quarters of one percentage point for each £1 million reduction in the cost of build below £10 million;
  • (ii) Shipbuilders' relief of 2 per cent. of contract price.
  • (b) A maximum of 28 per cent. of cost, including shipbuilders' relief, for vessels costing more than £10 million.
  • 2. Credit terms, for both home and export orders, conforming with the OECD understanding on export credits for ships (ie eight and a half year loans at 7·5 per cent. interest per annum covering 80 per cent. of contract price).
  • 3. Loss of compensation in public sector yards.
  • 4. Regional development grants.

    • Denmark

  • 1. A home credit scheme allowing for 14-year loans (four-year grace period) at 8 per cent. interest covering 80 per cent. of contract price.
  • 2. Alternatively an aid scheme for ship owners offering, until the end of 1988, for deliveries at latest by end 1990, credit facilities for 80 per cent. of contract price running for 14 years (four-year grace period) at either 2·5 per cent. or 4 per Cent. per annum combined with an inflation guarantee linked to the net consumer index beyond 3 per cent. per annum (for 2·5 per cent. bonds) or beyond 1·5 per cent. (for 4 per cent. bonds).
  • 3. State guarantee free of charge to cover second mortgages, typically 30 per cent. of contract price, for small cargo vessels.
  • 4. Specific tax concessions concerning the use of capital from tax relief funds for investment in shipbuilding or conversion for ships.
  • 5. Specific tax concessions provided for accelerated advance depreciation at 50 per cent. for the two-year period 1987 to 1988 by investment of ships against 30 per cent. for investments in other capital goods.
  • 6. Exchange risk guarantee at 0-5 per cent. per annum for credit granted in foreign currencies.

    • Federal Republic of Germany

  • 1. Grants to shipowners of up to 12·5 per cent. of procurement costs for new building and up to 20 per cent. of cost for conversions.
  • 2. Tax concessions in the form of accelerated depreciation.
  • 3. Home credit and export credit schemes in accordance with the OECD understanding on export credits for ships.
  • 4. Guarantees for new building and conversions for second mortgages on ships under construction.
  • 5. Competition aid in the form of grants of up to 20 per cent. of contract value to meet aided competition from other member states and third countries.