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Merchant Fleet

Volume 227: debated on Monday 28 June 1993

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To ask the Secretary of State for Transport what proposals he has to encourage the growth of the British merchant fleet; and if he will make a statement.

The Government remain committed to creating a trading climate in which the United Kingdom shipping industry has the opportunity to compete fairly. In support of that, in the recent past we have taken a number of initiatives within the European Economic Community and in the International Maritime Organisation.

Does my hon. Friend accept that many of us involved in the British shipping industry welcome the recent initiatives taken by him and his colleagues? At the same time, does he accept that the British merchant fleet is still at a significant fiscal disadvantage compared with many of its competitors? Will he make representations to the Economic Secretary about such matters as first year capital allowances and rollover relief?

I am grateful for my hon. Friend's remarks about the sterling work that my right hon. Friend the Secretary of State has undertaken, and I am sure that the Economic Secretary will have noted his remarks about capital allowances and rollover relief. When one considers the economic framework within which British shipping has to compete, it is worth noting that corporation tax rates in Britain are the lowest of all the G7 countries and that low interest and inflation rates contribute towards creating a climate in which British shipping can compete.

Does the Minister realise that the British merchant fleet is now as low as 291? For all the commercial reasons to which he has referred, is there not also a strong defence reason for keeping a merchant fleet? Instead of paying lip service to stopping the merchant fleet from sinking, will he join us, and ensure that his colleagues join us in Committee, to ensure that something will be done to stop the merchant fleet sinking?

The hon. Lady will want to congratulate my right hon. Friend the Secretary of State for Transport because it was during his presidency of the Transport Council that resolutions were put forward allowing the Council to reach agreements on a common policy on safe shipping at the Luxembourg meeting on 7 June. That is a major step forward because sub-standard shipping is an urgent problem in terms of the safety of human life and the environment. That is where important results will occur, not least in narrowing the gap between the cost currently borne by the British shipping industry in enforcing high standards and the lower costs currently borne by countries that enforce regulations less rigorously. The hon. Lady may like to pay a little more attention to that.

I am grateful to my hon. Friend for spelling out the successful actions that the Government have taken to ensure safety in the merchant fleet. Does he agree that, however right it may be in principle, the policy of trying to achieve a level playing field with our European competitors has not yet delivered that for our merchant fleet? That is why Conservative Members also support fiscal measures to give the British merchant fleet a competitive position.

If we followed my hon. Friend's argument and offered as much state aid to our fleet as is offered elsewhere, we would enter the inevitable spiral of ever-increasing state aid to industry. That would not benefit our economy or any other economy. The answer must be to eliminate the state aids in other countries which currently distort the market.