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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 630
House of COMMONS
TAKEN BEFORE the
Monday 18 November 2013
Nigel Palmer, Jim Stewart and Mark Brownrigg
Mick Cash, Mark Dickinson and Don Cockrill
Dr Sarah Mander and Dr Paul Gilbert
Evidence heard in Public Questions 46 - 134
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Taken before the Transport Committee
on Monday 18 November 2013
Mrs Louise Ellman (Chair)
Examination of Witnesses
Witnesses: Nigel Palmer, Chairman, Maritime Skills Alliance, Jim Stewart, Chairman, Maritime UK, and Mark Brownrigg, Director-General, UK Chamber of Shipping, representing Maritime UK, gave evidence.
Q46 Chair: Good afternoon and welcome to the Transport Select Committee. Would you give your name and organisation, please?
Nigel Palmer: I am Nigel Palmer, chairman of the Maritime Skills Alliance.
Jim Stewart: I am Jim Stewart, chief executive of the port of Poole, chairman of Maritime UK and chairman of UK Port Skills and Safety.
Mark Brownrigg: I am Mark Brownrigg, UK Chamber of Shipping but also part of Maritime UK.
Q47 Chair: What do you think are the key challenges for the UK’s maritime sector over the next five to 10 years?
Jim Stewart: It is very important to recognise that the maritime sector is made up of a range of different activities. Maritime UK represents the port sector, the shipping sector and maritime services. They all face different challenges. Maybe I could start with the port sector. The challenges that we are facing, coming out of recession, are to ensure that we have an effective inland access from ports to markets within the UK. It is very important that we have an effective and efficient marine planning system. There are a number of issues relating to the new MCZs that are coming through. It is also very important that we have a proportionate and cost-effective understanding of how ports operate with regard to security and the ISPS code in the UK.
In terms of services, we have just had a very successful London International Shipping Week. London has traditionally been the centre for maritime services globally, but there is no doubt that that is being eroded as we see the development of economies in the far east, particularly in China. We are seeing other maritime centres coming forward. Singapore and Shanghai are eating into London’s traditional market. That is something that we need to address going forward.
Mark Brownrigg: From a shipping perspective-and some of this also applies to the business services sector in the City and elsewhere-what we really need from Government policy in the immediate and continuing future is predictability and stability. That may sound a little boring, but it is the message that is necessary to investors in this important sector-both in a fiscal context and an employment and training support context.
We need to see a focus on skills at sea, not just for the time when they are at sea but when they come ashore as well. We have some specifics that we can put forward in that area. We would also like to see a continuing predictability and stability in the context of the regulatory climate. Regulation is necessary in shipping in an international sense. It needs to be practical, timely and effective. There are then specifics that follow on from that, but that is probably enough.
Q48 Chair: Captain Palmer, is there anything additional that you want to add?
Nigel Palmer: As Mr Stewart has already said, the maritime sector is broad. It covers quite a wide area. If you look at the MSA, we cover just under 200,000 people across the whole of the industry working in the wet maritime sector. That is anything to do with ship operations. The deep-sea part of that takes up about 26,000 of those employees, but, in the particular context of those and their international competitiveness, it is important to emphasise the importance of the link to the tonnage tax for training. It has been a major factor in boosting the training in the UK. You have to recognise that we are competing not domestically for this but with other countries. You are already seeing others using taxation regimes as a tool to be competitive.
As has been said earlier on, our competitors in this market are not necessarily those from Europe. They are increasingly from the far east and emerging economies. In the past cost was their advantage, but these days cost is diminishing as an advantage as their economies evolve and they are improving in quality. We have to keep ahead of the game in order to maintain our competitive position.
Q49 Jim Fitzpatrick: I would draw attention to that which I have registered at the beginning of the meeting. I am a member of the Worshipful Company of Shipwrights. That is to avoid any conflict or confusion, given that I know several of the witnesses are also members, and so it is out in the open.
I know that the industry welcomed the Government setting up the Joint Committee across Government Departments to look at shipping in the round. Given that the Chair has asked about the challenges and the nature of the industry among ports, shipping companies, legal and financial services and all the different aspects, is there more that can be done to assist shipping, particularly within a UK context, in terms of providing employment, apprenticeships and training? Notwithstanding the progress of the publishing of the strategy, is there something that the Government could do particularly to assist the industry even more?
Jim Stewart: Yes, there has been a huge improvement in terms of the relationship between the maritime sector and the Government. This work was started by you, Jim, in your previous role within the previous Administration. We have taken that forward with the current Administration, and for the first time we now have regular meetings every three months, not just with the DFT but with a range of different Departments. Following this Transport Select Committee meeting, we are going straight off to a round table involving DFT, DCLG, BIS and DEFRA to talk about issues that the sector is currently facing. There is a lot more to be done. I do not think we can be complacent at all. We feel that we have made some huge strides forward.
From the ports’ perspective, we are particularly concerned in terms of port development and obstacles that might be put down before the ports industry as we are looking to bring developments forward. There are things like the habitats regulations. A lot of it emanates from Europe, to be honest. There are challenges that we face and we have to ensure that we are not hampered in our ability to provide facilities that the UK needs within the ports network by environmental legislation, which perhaps is not entirely fair and partial. That is where we are coming from in terms of the ports’ perspective.
Mark Brownrigg: From my perspective of the maritime services sector as a whole, we are in rather an exciting time. This cross-departmental working is something that a number of us have not seen happen in quite the same way before. Building out from a core of transport, trade, Treasury and Cabinet Office, and then on specific subjects moving out beyond that, as Jim has just explained, is something that is new and exciting. We are trying to establish mechanisms that can underpin this vital services sector for the long-term future in a way that will withstand the departure of enthusiastic individuals, whether in the position of officials or ministerial posts, and hopefully beyond elections. We are engaging with the major Opposition parties to try and engage on the whole question of what some might call industry strategy but what is currently called strategic partnership.
Nigel Palmer: From my perspective, over the last few years there has been a continuation of taking SMarT funding through between Administrations and carrying that through. Anything that improves the different Departments’ understanding of the way the maritime industry works and the fact that it is an international industry that is internationally regulated helps.
The biggest frustrations we have had over the last few years have been the delays in bringing in apprenticeships for ratings and advanced apprenticeships for junior officers. A lot of the hold-up was not EU or international legislation; it was the alternative completion conditions, for example, for the advanced apprenticeships. The problem was not the international legislation but the Skills Funding Agency’s fairly narrow interpretation of the UK’s domestic rules. It is a problem that has run through almost everything we have done on the training side. We put people away at sea on training and sandwich courses and they found it very hard to understand how it would work. Because it did not fit the standard model, then they nit-picked at everything. It just took two years longer than it should have done to get those systems in place. That meant that a lot of people who could have had jobs did not.
Q50 Chair: How did you resolve that issue?
Nigel Palmer: In the end, by persistence. That would be the best way of putting it. The thing that worries me is that, had we not been an industry that had been training for over 100 years and knew how to do it, we would probably have given up, if I am quite honest, because it was just so inflexible and so difficult. In the end, it was by going to fairly senior people and actually asking them to intervene. Eventually, and now, we are seeing a much more co-operative approach from the apprenticeship service to the work we are doing.
Q51 Chair: Could you tell us which Department the senior people were in?
Nigel Palmer: It was both DFT and BIS that we had to get together to sort it out. Every time you thought you had got it dealt with, then they came back with yet another problem. It just ran on and on and on. That caused a lot of delays and I think it is a great tragedy.
Q52 Karen Lumley: I want to go back to the ports issue. Bearing in mind the new port that opened a couple of weeks ago, do you think there is enough capacity and trade for all of our ports in the UK, especially those in the north of our country?
Jim Stewart: From the UK’s perspective, we currently have sufficient capacity. Going forward, as you say, there has been a new facility opened at London Gateway, but we have also recently seen new container facilities being built or planning-approved in Felixstowe, Southampton and Liverpool. From that perspective, it has been a tough three or four years for the ports industry. I won’t pull any punches there. It has been difficult and we have seen volumes fall with the problems we have had with the world economy.
Currently, ports are investing £300 million per year into new developments and new facilities in the UK. I believe that the UK ports industry is the largest and most efficient in Europe. We are dependent on ports for 95% of the UK’s international trade. It is of absolutely critical importance that we get it right. To answer your question, yes, I think we currently have sufficient facilities, but there is this concern that with other facilities-maybe not container facilities because that is only part of the mix-we see an opportunity in the marketplace and, by the time we have gone through all of the environmental issues, planning and possible public inquiries, it can take five years from inception to delivery of some of these facilities. In that time we are obviously missing out perhaps to some of our European competitors.
Q53 Karen Lumley: If nobody else wants to say anything, can I move on to that? With regard to getting stuff off the containers, do you think we have enough capacity on our railways to deal with the freight coming from these ports?
Jim Stewart: I think more can be done. I gave evidence at the Transport Select Committee just a few months ago on port access. There is investment going into rail. Over 50% of rail traffic is port-related, which might perhaps surprise some people. It is important not to lose sight of the fact that rail is only part of it. For a lot of the regional ports, and maybe the smaller ports, road links are even more important than rail links. We have 120 commercial ports in the UK, which is far bigger than any other European state. Some of those ports struggle with their road connections, and it is important that we sort out the pinch points in some of the regional ports.
Chair: We will shortly be publishing a report on that issue-maybe next week.
Q54 Mr Sanders: Maritime UK is very critical of Government strategy. I am interested to know which one area of current maritime strategy you would change.
Jim Stewart: When you say that Maritime UK is critical of Government strategy, I think we have been very pleasantly surprised at the progress we have made in the last 18 months or so in terms of pulling together the maritime strategies, reports for shipping and for maritime services. The job is not finished. There is a lot more to do, but for the first time people within the industry and certainly from overseas are seeing the Government and the maritime sector standing together. We hope that message will have a big impact on investment decisions from international shipping companies. The message is out there that the UK is open for maritime business. London International Shipping Week reinforced that message.
Q55 Mr Sanders: How much of your business is a consequence of membership of the European Union?
Jim Stewart: That is a big question.
Mark Brownrigg: That is a bit difficult to say. Others will know better than I what proportion of our economy is engaged in business with the EU. Shipping does not see boundaries; it is global, including within the EU. Some movements go through the EU as well as abroad, so it is very difficult to say that. The other EU states are clearly a major trading partner with the UK alongside other major trading partners across the world. So it is important.
Q56 Mr Sanders: It was just that Mr Stewart had said that the UK is the biggest port in Europe. It struck me that it is not the biggest economy in Europe, but it is the biggest port.
Jim Stewart: It is the biggest port sector-and that is because we are an island. France and Germany rely on rail and roads to a far greater extent than we do. From my own perspective, I run the port of Poole and I would say that 85% of the business we do within the commercial port is trading with other EU states, whether that is France, Spain, Portugal or the Baltic. Certainly from my own perspective, the European Union is critically important. It is our biggest market. That is less so with some of the other big container ports, which have deeper water and handle container ships coming from the States and the far east.
Q57 Martin Vickers: Mr Stewart, you mentioned a short while ago the various hurdles to port development such as the habitat regulations. You have since touched on planning. Representing, as I do, a constituency that includes Immingham and the South Humber Estuary, I am well aware of a number of developments that have taken considerable time to come to fruition as a result of that. You specifically mentioned the habitat regulations. Have you put specific proposals of what you would like to see changed to Government and have you had any response from them?
Jim Stewart: We have to live with the habitat regulations now, but, as I say, straight after this we are off for a round-table meeting looking at marine planning. We will be raising a number of issues there. Some of them relate to landside planning in terms of developments of new major infrastructure projects. We also have other issues with regard to the MMO introducing marine plans and MCZs being pushed through. We feel it would have been far more logical to complete the regional marine plans before designating MCZs. They are doing it the wrong way round, in our view. That is because of pressure from the European Union, as I understand it.
We think that Government are listening to our concerns. Obviously, the growth agenda is very much there at the forefront. We feel that shipping and ports are essential with the improvements to the UK economy going forward.
Q58 Martin Vickers: We keep coming back to EU regulations. You rightly say that because we are an island we are more affected. Are we disproportionately affected, and is it to our disadvantage when compared with other EU economies?
Jim Stewart: That is an accusation that is often made. It is my understanding that French, Dutch and German ports have exactly the same problems that we are facing. The key thing from our perspective, because we are an island economy, is that we are much more dependent on getting the port planning right, whereas in other EU states it is less important.
There is also the issue of the new port services regulations, which are being brought forward by the European Union. If you look at the UK ports sector, we have a mixed economy. We have privatised ports, trust ports and municipal ports. They sit alongside each other quite well. There is huge competition in other EU states. Port rates are set by the state and there is no competition at all. We feel that the port services regulations are trying to drive things through. They have problems in other parts of Europe and we are getting caught up in an adverse way because of their attempts to sort out difficulties in other EU states.
Q59 Jason McCartney: Whilst we are on the EU, the independent review of Government support for maritime training identified the demand for UK-trained seafarers at sea. I have an armed forces background and I am aware of the shortage of certain trained trades, particularly in the Royal Air Force in which I served. Does that shortage still exist? Are they being filled, as they are in other sectors, by trained seafarers from other EU states as in other sectors, or is it coping because of the same phenomenon?
Nigel Palmer: There are two parts to that question. As far as some of the senior positions go at the moment, we are seeing a lot of people being brought in from overseas. That, to some extent, is a legacy from the people who were not recruited in the 1980s, who would now be moving into the senior positions. They simply do not exist in this country so there is a hole that is moving through the system.
Q60 Jason McCartney: Is it any country in particular from overseas?
Nigel Palmer: Generally, they come from a number of labour supply countries such as India; Poland is a popular source as well, as is Croatia. There are a number of other EU and non-EU countries. There is a wide area from which they come because it is a very international industry. The same thing applies to British people, who work on an awful lot of overseas companies’ ships. It is a very fungible industry.
As far as trainees coming into the industry are concerned, since the introduction of the tonnage tax the numbers have increased quite considerably-about two to three times from the numbers that they were at. That has had and will continue to have an effect. Are there enough coming in? More would be better is the simple answer to that question. You have an industry that employs a million people. How much of that market do we wish the country to have? There has been a limit on SMarT payments. The recent increase is very helpful because that does provide the opportunity for another couple of hundred people a year if that funding is taken up.
There is a lot of opportunity. There are jobs available for those people who are qualified. I have spent my whole life in the industry; I think it is a great one to be in. It is getting young people attracted to it. It is an attractive industry now, and people have put a lot of work into making sure that young people see it as an opportunity to go into. Things are much better than they were, but they could be much better still.
Q61 Jason McCartney: Mr Stewart, could we have your views on that please, particularly with Poole in mind?
Jim Stewart: I would endorse what Nigel has said. It is important to recognise that a lot of people who join the merchant navy will want to come back ashore at some point. Ports rely heavily on master mariners and people who have been to sea taking positions within the MCA and the port sector, such as harbourmasters and that sort of thing. It is very important that the Government do all they can to encourage the production of UK seafarers.
Q62 Jason McCartney: Mr Brownrigg, what is your chamber doing in particular to let our young people know that there are these great careers available?
Mark Brownrigg: We have a strong merchant navy training board, which helps govern the standards and helps to agree programme with colleges. That is a tripartite group that is based within the chamber. It links with the unions and the colleges. We also have a careers service that works with that in this whole direction.
My position is very much aligned with that of Nigel Palmer. This is a very international industry. The challenge is maintaining a strong British caucus of skills within a very competitive industry, which has many countries that are providers of seafarers. There are some very specific things that can be done. I echo what was said about the additional amounts of money allocated to the SMarT funding programme. That reinstated what was taken away shortly beforehand, but none the less that is a good development. What I personally would like to see is a little bit more flexibility in the SMarT scheme to allow for growth in numbers of seafarers so that there would not be a budget limit. Of course, you can’t have something that is completely limitless, but it is something that could be flexible to respond to growth opportunities for new seafarers.
There is a very specific one relating to ratings in particular that we are taking to Ministers at the present time. That is to introduce an option as to how the tonnage tax training commitment is fulfilled. Currently, it is primarily directed towards officers or conversion trainees. There is a great opportunity, which has been on the table for a number of years and from the past Government as well, which would allow the training of ratings to be encouraged as one option for fulfilling the tonnage tax training commitment. I think there are some specifics out there on the employment and jobs front.
Q63 Chair: What proportion of cadets trained under the tonnage tax is still at sea?
Nigel Palmer: If you look at cadets, overall, who complete their training, according to the MCA’s figures from 2010-and I have not seen any others that would refute that-I cannot answer whether they are tonnage tax or otherwise, but 96% go on to get their first job at sea. It is a very high proportion who complete their training and do continue.
Q64 Chair: How many then stay at sea?
Nigel Palmer: It is a very difficult question. People have always moved between ship and shore employment. Some people stay at sea for the whole of their careers and others will do what I did. I spent 17 years at sea and then moved ashore. The average that people stay at sea really has not changed since the 1960s. It is somewhere between seven and 11 years, but that is an average. Some people stay for a few years and others stay for a lifetime.
Q65 Chair: So there are not any clear records of how long people stay.
Nigel Palmer: Record keeping is one of the issues we have as an industry. We are trying to improve it and there is quite a lot of work going on on that to track people through so that we do have decent statistics. One of the problems has always been the Data Protection Act. That has prevented a lot of the available data that the Government hold from being released even in anonymised form. We have spent five years trying to get some of the data out on some of the cadet completion rates.
Q66 Chair: What proportion of companies makes a payment instead of training?
Nigel Palmer: There are two answers to that question. It depends on whether you are looking at it overall or individually. Companies sell, buy and charter ships in and out. They may well go in and out of it for a short period during the year on an individual ship. With companies overall, somewhere between 40% and 50% at various times will make a pilot payment. If you look at the overall amount that pilot payments make of the total training burden, it is just under 5%.
Mark Brownrigg: The rules do not allow for planned payments instead of training except in exceptional circumstances. The amount of what we call "planned pilot" is less than 2%. Pilot is a default payment if a cadet leaves for whatever reason, personal or other reasons, or falls out of the system because they are not meeting the grades, or maybe a shipping company sells a ship. It is a default payment. The intention is that the training commitment should be met through physical, practical training.
Q67 Jim Fitzpatrick: I want to move the focus to domestic because we have covered a lot of international issues at the EU level and international competitiveness. I want to look at the road and rail connectivity issue, which a couple of you have mentioned, and ask a question about coastal shipping, which is a lot easier to say than short-sea shipping: I have tripped up over that phrase many times at the Dispatch Box. Is there scope for more? Are there opportunities, or is the charging regime such that road and rail are far too competitive for people to use coastal shipping as a way of moving freight around the UK?
Jim Stewart: The European Union often emphasises the fact that it wants to increase the amount of coastal shipping. It is not that easy to do within the UK. That is because of the geographical layout of the UK. You are never more than 100 miles away from the coast, whereas in other states you could be hundreds of miles away from a seaport.
The one thing we do have huge concerns about is the introduction of sulphur regulations, which the International Maritime Organisation will be bringing in in January 2015. Certainly from my port’s perspective, the ferry companies that operate within Poole are saying that it could increase their fuel costs by as much as 60%, which would be absolutely crippling. The sulphur regulations, I think, will certainly hamper short-sea shipping going forward, but it is something that we would like to see more of. Again, part of that relates to the connectivity of some of the smaller ports, which is poor.
Mark Brownrigg: The industry entirely supports the development of coastal shipping. It makes sense intuitively and when you look at it in more detail. It does depend on the population masses in different places in order to provide regular services. If you are talking about remote areas, then it is going to be harder to serve those by ships, which are quite large and carry substantial amounts. Despite all the efforts over the years to build coastal shipping, from a viewpoint of principle it is something that either has to arise or not arise in a market sense. We need to make sure, though, that any disincentives from using shipping are removed. The sulphur issue there is key.
Nigel Palmer: One other current example is that there has been discussion in the last few weeks about lorries on the road in London. Were river transport to increase as an alternative, there is a future training consequence of that. Anything along those lines needs to be properly thought through. The implications for training and the way that funding for training works need to be thought through as well.
Q68 Chair: Should the Government encourage more ships to be on the UK Ship Register?
Mark Brownrigg: Of course.
Q69 Chair: Are they doing enough?
Mark Brownrigg: The real economic value to the country is establishment of shipping businesses in the UK. From that will flow more use of the flag, more use of employment and a whole range of things. There will be more use of the supply chain in this country. It is the actual operation of shipping and the establishment of those businesses which generate that wider supply chain and the wider knock-on benefits.
What we have seen over the last 12 years is an expansion of the fleet beyond our wildest dreams, in a sense. The registered fleet is now something like five or sixfold what it was in 2000. That has been done without any mandated use of the register. It is being done and achieved by establishing the right climate for business in this country.
Q70 Chair: Why do some UK owners of trading vessels not use the UK Ship Register?
Mark Brownrigg: There are all sorts of reasons that people do not use one register or another. Again, we are talking about a global industry, and in some cases, if a ship is trading in Brazil or Qatar, for example, you may find that those countries impose certain flag requirements. It does not make much difference at the end of the day, except of course that we want a large register because that is important in terms of our influence in international bodies such as the IMO, in generating a level of standards and in regard to the legal systems that apply on board. The industry is entirely in favour of that, but we have to face up to the realities of that international industry, which means that different parts of the shipping operation, including the flag, will be in different places at different times.
Q71 Chair: We have heard concerns about the Red Ensign Group. Do you think it is right for the Government to give support to shipping registers of the various Crown Dependencies? We have heard some representations that the Red Ensign Group is a way of disadvantaging UK shipping. Is that something you would agree with?
Mark Brownrigg: I am not particularly sighted on this. All I know is that there is an historic convention whereby the UK Government has an oversight responsibility for the standards within the Red Ensign Group countries. My guess is that that has helped ensure higher standards in the world fleet over the years and decades.
Q72 Chair: Does anybody else want to comment on that?
Nigel Palmer: On the Red Ensign Group, people choose registers for all sorts of reasons. Sometimes it is just because that is the one they are used to and the one with which they have developed a working relationship. The Red Ensign Group all operate to essentially the same legislation and to pretty much the same standards. There is of course a difference in that some of them are EU flags and some of them are not, which does have a bearing on the selection of flag choice by some people. As I say, some of it is around what people are used to and which ones they find the best ones to work with. The cost differential between them is minimal.
Q73 Chair: The Maritime and Coastguard Agency have had significant cuts in their revenue budgets. Have those cuts affected their ability in any way that you are aware of? Does your silence mean no?
Mark Brownrigg: In the modern world, all organisations have to adapt to the situation of the times. There have always been areas where one can see failings in Government or even in industry organisation, and other areas where there is great success. It is a bit difficult to highlight. We have regular engagement and dialogue with the MCA to try and ensure that its product and delivery is suited to the modern day fleet. By and large, we are satisfied with that, but I will not hide that there are areas where we wish that service to be improved and to continue to be improved. Great strides are being made and have been made over recent times. It is just going to be a constant with us.
Q74 Chair: Does anyone else want to give us any examples of the problems you have encountered because of these cutbacks?
Jim Stewart: All I can say is that it has been a very difficult job for Sir Alan Massey, both politically and operationally, to restructure the MCA. However, my personal view is that he has conducted the review in an efficient manner and with great integrity. We have certainly not seen any reduction in the MCA’s efficiency or effectiveness in my port as a result of the changes that he has made.
Q75 Chair: Are there any concerns about carrying out safety inspections?
Nigel Palmer: I have to declare an interest. I was a former non-executive director of the MCA until the end of 2011. The MCA faces, as Sir Alan has said, a number of issues. One of the problems from which they suffer is ensuring that they can pay, certainly for their surveyors, competitive salaries in order to get the people whom they want. That is an issue sometimes with the Treasury and the way that pay mandates are sorted out.
I have to say that all of the people I have ever come across who work in the MCA, and the people who support them in the DFT, are hugely supportive of the industry and hugely co-operative in trying to ensure that it works as well as it possibly can. From a training perspective, the MCA has a clear role as the regulator. That is an interesting issue when you come down to look at some of the training problems. For example, the Skills Funding Agency does not recognise the MCA qualifications-the certificates of competency-as recognised qualifications within the English training system. You have all sorts of problems around areas like that. The MCA does an awful lot of work in trying to resolve many of those issues and helping the industry out. Do the cuts have an effect? It would be surprising if they did not.
The deregulation issues do cause problems. A lot of delays have occurred in a number of areas. We are a regulated industry, and we need to be a regulated industry in many areas. When new regulations have been proposed-there was one example over some of the TOTE qualifications that were being brought in-deregulation held up the implementation of that when it questioned the necessity for them. In a regulated industry, you need proper, sensible regulations that meet our international obligations. A huge amount of effort has had to be expended by both the MCA and the industry to get that message across.
Mark Brownrigg: I would like to echo that. We do need regulation. We are a worldwide industry and we need worldwide regulation. We have to be able to respond as a country to that need. While we have a totally better regulation or deregulation agenda as an industry, none the less, without that international framework, we cannot work. When something like the International Labour Organisation’s Maritime Labour Convention is delayed because it has gone through not the MCA or the Department for Transport but wider deregulatory and regulatory agenda processes, that is unfortunate because it inhibits the UK from being seen as a leader.
Q76 Chair: Are there any examples you can give us?
Mark Brownrigg: That is precisely one where we ratified just before the convention came into force, which means that we have a fairly limited and inhibited role for about 12 months until it comes into force for us in the UK. That was a pity, and the importance of that convention made it a double pity in a way.
The industry and the Departments in question worked well on trying to overcome those deregulatory processes. In that context, to return to the MCA issue, we need to have confidence, and we do have confidence, in the administration. It is just a matter of working together on current issues and working on that to good effect.
In terms of implementation of international regulation, the industry put forward-and the Government have taken on board-some basic principles on how international legislation can be adopted or brought into the UK system in the future. The concept of directly applying that international legislation with guidance on top of it-I think the term is ambulatory references-is a particularly useful way of cutting down that red tape.
Q77 Chair: The Government tell us that they will "continue to resist" what they call "the unnecessary extension of EU competence in the maritime sphere, in particular the use of EU legislation to go beyond provisions adopted by the IMO and impose additional regulatory requirements". Are the Government right in adopting that approach? Can you give us any examples of where you think things have gone wrong, or is this a real issue?
Mark Brownrigg: I think they are right. We have talked a lot about this being a global industry, subject-appropriately-to global regulation. Any interpose at a regional level, whether it is in the EU or anywhere else, is not helpful. We have seen in the past examples of unilateral impositions in, say, the United States, which have not necessarily been helpful.
Can I give examples of that? We have seen industry and Government agreements on ILO issues, which have then been reflected in industry/Government agreements at EU level. That is a good example of how things can work, but that is driven very much by the international agenda. It is where an interpose is put in, which adds a regional dimension which does not help, that is a danger. Part of the sulphur debate, which is quite a complex mix of international and regional, does stem from that interpose.
Q78 Chair: We did look at that issue in the Committee. Does any other panellist want to comment on this issue?
Nigel Palmer: I would add that we have spent a lot of time developing a suite of qualifications for the maritime sector, which enables people to transfer from one sector to another and take the core part of their qualifications with them. Those are the maritime studies qualifications. You are hearing noises and seeing stuff now potentially coming out of the EU in the future over, for example, the training requirements for inland waterways trying to get a uniform European system that would cover both UK and European waterways. That would potentially severely damage the flexibility of people to move around within our industry and change what is a very workable structure that we now have for qualifications on inland waterways in the UK.
Q79 Chair: Did London International Shipping Week help the UK maritime sector?
Mark Brownrigg: You will have a big chorus of yes from all three of us.
Q80 Chair: What should be done to get the benefit from it? What new measures are needed?
Mark Brownrigg: It had benefits at many levels. In Government, it was extremely helpful to have ministerial engagement, not just with one Ministry but with several Ministries. The Department for Transport responded incredibly well in offering Lancaster House, for example, and in the way in which they supported the week. They came proactively with the question as to how they could contribute to the week and to the industry/Government relationship, hence the strategic partnership plans. It was more of a trade promotion than a pure maritime meeting, but, none the less, the fact that the Prime Minister was there demonstrating commitment to the country and that there was cross-departmental engagement demonstrated cross-departmental commitment. All of that was of benefit.
What does that mean in practical terms? If we get one or more large maritime shipping companies deciding that the UK is a good hub for their activities, that will be interesting. Personally, I think it has raised maritime services by a significant margin in people’s awareness and consciousness; I hope that is true. If it has done that and if we can repeat that in the future, then the runes are very good.
Nigel Palmer: Coming back to your opening question about joined-up Government in the maritime sector, if it has raised the understanding of the maritime sector not just as infrastructure but as a business, whether it is people, shipping, companies or ports, which is hugely valuable to this country and can contribute enormously to the wealth of the country, then it was a good thing.
Mark Brownrigg: I would say one last thing. From the shipping, ports and maritime business services’ perspective, the UK and London stood up and shouted. It has not done that for a while. Other competitor countries like Singapore and aspects of China, Hong Kong and Dubai will have noticed that. I think that is a big message to have sent.
Jim Stewart: Additionally, it attracted the world’s most important shipping companies. I had discussions with some of them. They said they were hugely impressed by the Government and industries standing alongside each other. We know that some of those shipowners are thinking about relocating to the Red Ensign going forward, so I think there will be a huge number of pluses from London International Shipping Week. It is something we are looking to try and replicate maybe every two years going forward.
Chair: Thank you very much, gentlemen, for coming and answering our questions.
Examination of Witnesses
Witnesses: Mick Cash, Senior Assistant General Secretary, RMT, Mark Dickinson, General Secretary, Nautilus International, and Don Cockrill, Chairman, UK Maritime Pilots’ Association, gave evidence.
Q81 Chair: Good afternoon and welcome to the Transport Select Committee. Would you give your name and organisation, please?
Mick Cash: I am Mick Cash, senior assistant general secretary of the RMT.
Mark Dickinson: I am Mark Dickinson, general secretary of Nautilus International.
Don Cockrill: I am Don Cockrill, chairman of the UK Maritime Pilots’ Association.
Q82 Chair: Mr Dickinson, in the written evidence we received from you, you spoke about the lack of joined-up thinking between Departments, resulting in sometimes contradictory or damaging approaches being taken. Could you give us any examples of what Nautilus mean by that?
Mark Dickinson: Our evidence was written of course before the Government announced their new maritime strategy. In some respects we need to think about that today in my answer.
Q83 Chair: Maybe you could tell me in your answer what you think of the new maritime strategy.
Mark Dickinson: Okay, thank you; that is a good opportunity-absolutely. The Government have a strategy, so we are pleased about that. Is it perfect? No, it is not. Are we concerned about some aspects of the policy? Yes, we are. Have we voiced those? Of course we have. We understand that it is an organic document and one that will develop going forward. We are looking forward to playing a constructive role in that policy.
The strength of it is that there is this understanding of co-ordinating across Departments. That is something which we have long called for. We have had problems in the past about the tonnage tax. Mark Brownrigg said that he wanted stability and predictability. That is something that we would also endorse. It does cause problems if issues are being raised about the tonnage tax and the unique feature of our tonnage tax-the core training commitment for officer training.
We have had concerns over the national minimum wage and the Equality Act. There are regulations coming out for seafarers where we have had examples of less than co-ordinated thinking across the piece. Any policy or strategy that has at its heart bringing different Departments together so that we all understand what the impact is of any regulatory measure on our industry is going to be welcomed by Nautilus International.
Q84 Chair: Are there any other views about the new strategy or the issue of contradictory policies from different Departments?
Mick Cash: From the RMT’s perspective, I would echo Mark’s views. The document we have seen is certainly a plan, but one of the disappointments we have is that early drafts of it had specific references for the employment of ratings. The final document excluded specific references to employment of ratings. I was listening at the back earlier on. When we talk about employment in this industry we talk about seafarers, but they are officers as well as ratings. Ratings are not given the justification and the importance that we think they should have. The plan, strategy document or whatever you want to call it is certainly lacking for that reason in itself.
Q85 Chair: Mr Cockrill, do you want to comment on the new strategy?
Don Cockrill: Only very briefly on two things. First, as a document or a strategy it needs to remain dynamic. It needs to be an active strategy that is continually reviewed and not something which, having been published, ends up on a shelf somewhere with very little reference in years to come. Secondly, it is to do with the longer-term view of the strategy. There is some mention about the retention of younger seafarers, whether they are ratings that are able to get through into officer training schemes or officers who are trained within the industry. You referred to it with a gentleman earlier. They remain within the industry to ultimately come ashore in various positions of administration, whether it is harbourmasters, pilots, VTS managers or whatever it is. It is a maritime skill base rather than a business skill element that is required.
Nigel Palmer mentioned the fact that we have this migrating hole from the 1980s that is now coming to fruition, if you like, over the next 10 years. I am part of that tranche that was recruited before the 1980s. I am now coming up towards retirement with others of my era and there is nobody behind us at the moment. There is a big hole and we do not want to see that repeated. Whatever we do, we must make sure that that experience is not repeated. It is important to maintain that within the strategy.
Q86 Jim Fitzpatrick: I want to bring in the industrial dimension. You heard the witnesses before in respect of their attitude to what Government are trying to do and have been doing. Lots of it was quite complimentary but some was quite qualified. The Maritime Labour Convention is clearly one area where both sides of industry were pressing Government to ratify that more quickly for the benefit of UK shipping. Do you stand closer to the industry or Government on the general issues of employment and strategy? There must be some differences between you and the shipping industry. Can you elaborate on what qualifications you have of Government policy with the industry?
Mark Dickinson: I will try and field that question first. Obviously, there are differences between us as unions within the industry as opposed to the shipowners and the Government. I would phrase that or describe that as lack of ambition. We could make such a big push on youth employment and valuable and long-running careers. Nigel Palmer had 17 years at sea and a lifetime in the industry. I am a little bit younger than Nigel, but, equally, I have spent my entire life in this industry. It offers such wonderful opportunities. What really frustrates me is the lack of the Government’s-all Governments, all colours-ambition for our industry. We want them to put more support in.
When we had the review of SMarT funding, we have already demonstrated that the value of that investment in young people is returned threefold in the economy. It is a fantastic opportunity. There are worldwide shortages. There are jobs there and there are young people who want to go to sea. I make apologies if I steal your thunder, but they advertised for some ratings vacancies with Caledonian MacBrayne. There were 10 slots and 1,000 applicants. If that does not tell you all you need to know about the opportunities that exist, then nothing will convince you. That is the difference. We believe employers could be bolder and firmer on their opportunities for ratings and officer trainees. The benefit would be to underpin our lead in the international maritime services. It does not matter how many foreign shipowners we encourage to come to this register and relocate their business; if you do not have the seafarers, ratings or officers coming through the industry, the whole thing is built on extremely shallow foundations.
Mick Cash: I would echo that. The theme of lack of ambition is correct. We are severely disappointed that the tonnage tax, for example, as far as we are concerned, has not delivered improvements in employment for ratings. It has done some good in terms of officers and SMarT funding, but we really do need to see a step change in employment opportunities not only for apprentices but for ratings.
You asked in one of the earlier questions what London International Shipping Week was like. One of the things that came out of it for me in particular was the fact that the Government announced they were putting £3 million more back into SMarT funding, having cut it in 2010 by the way; but that is a separate point. It is still welcome. It would seem to me that targeting that money specifically for ratings would be a step change.
Just as an aside, again, it is about this lack of ambition. That is a perfect way of describing it. Last month I was in HMS Sultan in Portsmouth. In my other day job I deal with the rail industry. Since 2005, the rail industry has been recruiting over 200 apprentices a year. I addressed over 230 apprentices at HMS Sultan who are employed by Network Rail and their contractors. Forgive me if I get the figure wrong, but I think they spend about £10 million a year doing that. I could be right or wrong, but that is commitment and ambition. That is in an industry where they know they have problems coming up in terms of recruiting and retaining a skilled work force. That is perfect forward planning.
We see all the glossy brochures in the maritime sector about the amount of money being spent and the people being employed. A lot of them might be here in London; I do not know. Where is it for those young people on the front line at the grass roots in the coastal towns and cities facing huge problems for their future? If this industry had ambition, it would commit to a proper arrangement both in terms of using the funding from tonnage tax for ratings and for apprentices. The question is whether it has the ambition. I doubt it has the commitment if it does not have the ambition.
Q87 Chair: Where will the people come from in the future if there are not enough trained people in the sector?
Mark Dickinson: Maybe I could give you an example. The MCA has 97 full-time main surveyors. It has 97 MS1 posts and 72 in place. There are 97 vacancies. They advertised for an MS1 in Dover and got 16 applications, 14 of which were from outside the EU and two from the UK. The answer is that we either home grow or we import from abroad. That is the only option you have. That is the only way we are going to underpin our maritime skills in this country and maintain our maritime services lead. We either train our own, which I would have thought is a more sensible way forward for a number of reasons, or we are going to have to import them.
Q88 Jim Fitzpatrick: The previous witnesses said that they had great difficulty persuading the Government on the merit of apprentices and the recognition of the qualification. Is that a joint criticism that you share? Have you had meetings with the Skills Agency at BIS when trying to press this? Obviously, if Government do not recognise the qualification or the quality of the training, then you are not going to get the funding to be able even to promote the employment opportunities as they arise.
Mark Dickinson: To be fair, I do not think there was a problem convincing the Government of the opportunity that existed. It was when we got down to the detail. There is a lack of understanding and appreciation of our industry, the peculiarities that exist and the way things have developed over the generations. Making things fit in order to access the funding was the problem. I share the frustration of my colleague, Nigel Palmer, when he explained how that process basically took an extra two years. The detail was the problem. The commitment was there, and I think everybody would acknowledge that there was a commitment there to achieve the objectives. It was just a pity it took so long.
Q89 Chair: The Government promote the Red Ensign Group of registries. Is that detrimental to UK shipping?
Mark Dickinson: I think it is. It is bizarre when I get this new e-magazine on the internet from the ship registry part of the MCA and there are glossy photographs of various people in Japan and Germany enticing German and Japanese shipowners to come and do business in the UK. Whilst I thought the meeting with the Prime Minister during London International Shipping Week was an amazing coup and fantastic for the profile of our industry, it was disappointing from my perspective at least to see that, of the major shipowners that were there, very few, if any, of them were British. I wonder why it is we prop up the system of the Red Ensign Group registries. Many of them have been declared flags of convenience by the International Transport Workers Federation and feature on OECD lists of tax havens. They are being propped up. They would not exist and would not be able to compete in the marketplace without the MCA or the Government propping them up, whatever the reason or policy is behind it. They are principally Crown Dependencies and Colonies.
Q90 Chair: Are there any other views on the Red Ensign Group?
Mick Cash: I would concur with what Mark has said.
Q91 Chair: The Maritime and Coastal Agency has had some pretty severe cuts to its budget. What is the impact of that and what are your concerns?
Don Cockrill: One of the things that we do as pilots is to observe the day-to-day operations of ships on an up-to-date daily basis. One of many things that we do is to observe standards and report substandards. We report operational standards or whether we believe it is to do with poor physical conditions, equipment failures or whatever it might be.
I would not level this as any criticism of the individual people involved in the MCA. They are all trying to do a very hard job under very difficult circumstances. It is certainly apparent from our experiences of either reporting deficiencies or trying to find out what action might have been taken after events that have been investigated and reported by the MAIB, bearing in mind that the MCA is not able to use MAIB evidence in any prosecution and it has to do its own investigations afterwards-that is the legislation-that there seems to be a general reluctance on the part of the MCA, which we believe is through lack of resources and nothing more, to follow up on particular cases of regulatory non-compliance. Some of them are quite serious, we think. The answer to your question is yes, that is the sort of thing we would see has happened.
Q92 Chair: Are there any other concerns about MCA budgets?
Mark Dickinson: There is a shortfall of 22 MS1s, which is your full grade marine surveyor. There are 95 identified posts and 73 are in post. Those shortages impact in a number of ways, and Don has just explained some of them. The MLC will now come into force in the UK in August next year. All of the preparation for the MLC is being covered by overtime. This is extra work beyond the existing work that they have and which has been impacted by the cuts. MLC is extra and the agencies fill in those gaps through overtime. That is not going to be sustainable going forward. They need to find a way to fill those posts.
Q93 Jim Fitzpatrick: Mr Cockrill just mentioned that the marine accident investigation branch’s evidence cannot be used by the MCA in prosecutions. Notwithstanding that conflict under the regulations, has the MAIB’s role and operation been impacted by budgets, or, in your view, is it still operating as efficiently as it needs to be to investigate those events that need to be examined?
Don Cockrill: It has had some very substantial cuts in its budget. Mark might know the figures better than me. That has reduced the number of investigators that they have. We have noticed around the country that certainly the investigations that happen within port areas are quite often now devolved to port authorities, unless they are very serious. If there has been a fatality, for example, then quite clearly they are not going to devolve that, but they will otherwise devolve investigations to port authorities, with an oversight to it. That raises some concerns for obvious reasons because there are potential conflicts of interest.
When one looks into some of the investigation reports, there sometimes seems to be a bit of a reluctance to dig too deep into the underlying causes of some accidents. It is almost as if they go so far in trying to determine the cause of an accident and then reach a point where they stop as if to say, "We don’t want to go beyond that," because perhaps it is digging too deeply into the system itself rather than just the operators that are working within the system. Whether that is because they do not have the resources to spend the time to dig any deeper or for some other reason, I do not know.
Q94 Mr Sanders: What impact have the spending cuts had on the marine accident investigation branch?
Don Cockrill: That really follows on from what I was saying to Mr Fitzpatrick. There seems to be this devolving of certain accident investigations of a less serious nature and the depth, in some cases, of the investigation results and the conclusions to which they come. One also wonders about the recommendations that come out. Quite often the recommendations that come out as a result of their investigations, if one looks at them from a practical knowledgeable perspective, do not necessarily require enough of those to whom they are directed.
Q95 Mr Sanders: In relation to safety at sea, what about the impact of cuts on the reorganisation of the coastguard service, or has that not had any effect at all?
Don Cockrill: I don’t know whether Mark might like to comment on that.
Mark Dickinson: At the same time I would like to address the question you asked about the MAIB. I wrote to the Secretary of State for Transport in July 2012 when the impacts of the 2010 budget cuts on the MAIB were taking effect. In fact, the chief inspector had commented upon them in his annual report. That 18% reduction in the budget from the 2002 level resulted in the number of inspectors declining from 16 to 12. That was at a time when pressure was on the MAIB because of the incidents around our coast. There were pollution incidents, groundings and sinkings. One is reminded of the Swanland in which all the crew died.
Bearing in mind the limitations on civil servants to criticise their paymasters, when you read the 2012 foreword of the chief inspector’s report, he talks about the staff "working under tremendous pressure to deliver valuable, well-structured and intellectually rigorous investigation reports to tight deadlines." Their resilience to future change is much reduced, and staff turnover, sickness or other planned events are now less easy to absorb. This is an organisation that is on a knife edge in terms of its resources, and I hope that the Government will be able to return the MAIB to the pre-cut levels in short order.
It is early days to know whether the impact of the cuts on the MCA coastguard stations around the UK has had any detrimental effect because the true impact won’t be felt. The other cuts that came as part of the package to ETVs around the UK coast and the closing of the MIRG-and Jim, as a former fireman, would feel very-
Q96 Chair: We did a report on these things and we shared your position. Mr Cockrill, you mentioned that there were examples where recommendations have not been strong enough. Can you tell us any more about that?
Don Cockrill: Not specifically for recommendations not being strong enough. It is a difficult question to answer because it is not one I had prepared. It is really a comment in passing. I am quite happy to write to you and give you an answer to that question.
Certainly, where recommendations are made and not necessarily complied with, the MAIB itself supplies an annual audit of that. It is quite noticeable that the MAIB can make recommendations, but there does not seem to be any sort of machinery in place to make the recommendations compliant. I think one can see that that is something to be reviewed within the system, though "failing" might be too strong a word.
Q97 Chair: So it is a follow-through.
Don Cockrill: Yes, a follow-up having made recommendations. As an example of that, there was a recommendation, following the Sea Empress way back in 1996, for the need to have some sort of national qualification for pilots. It is now 2013 and we still do not have it.
Q98 Mr Sanders: The pilots are in a front-line position when servicing vessels to record when something is wrong. Take us through the protocol. There will be various different things that can go wrong, but if you have a suspicion that the vessel is unsafe what process do you go through? On whose desk does it end up and in what format?
Don Cockrill: The reports are made under regulations. We are required in law to report substandard operations, whether it is operations personnel-wise, mechanical or just general ship condition, and also, interestingly, health issues on board as well, such as unsanitary conditions. If there is anything like that, we are required to report it.
As pilots in the port become aware, we are required to report it to the harbourmaster. In practical terms, that is either going to be through reporting to the VTS station-the port radio station-or, depending on the nature of it, it might be better left until one comes off the ship and then to report it once one is ashore. Basically, it goes to the harbourmaster and then they decide whether it goes to the MCA or the port health people, depending on the nature of what is being reported.
Q99 Mr Sanders: Presumably, most harbourmasters are employed by local authorities.
Don Cockrill: The harbourmasters would be employed by their ports. Whether it is a local authority or not would depend on the nature of the port. It might be a private port, a trust port or a local authority port. Yes, the harbourmaster is employed by the port authority in whatever form it is in.
Q100 Chair: Mr Cash, the RMT say that legally requiring seafarer health and safety representatives to undertake a union-approved training course as soon as they are elected would make a significant difference to health and safety. Can you tell us what lies behind that recommendation?
Mick Cash: Yes. We have already heard the concerns about the MCA and the regulatory authorities. Effective health and safety reps provide a good way of preventing accidents and ensuring the welfare of seafarers and passengers. There seems to be a divergence between land-based safety regulations, where as soon as you are trained you can get access to training as soon as possible, and actually to a wider range of training as opposed to what happens on a ship, where effectively you can become a safety rep but you do not seem to have the same rights or entitlements to training and time off to do your duties.
Q101 Chair: Would it be possible for the unions to make that a requirement, or does there have to be a change in the rule to do it?
Mick Cash: I think you will find it is based on the need to change the regulations. We supported an amendment to the Code of Safe Working Practice 2010, which applies to seafarers to allow proper time off and training for seafarers who are health and safety representatives.
Q102 Chair: We spoke earlier about problems in training and not having enough personnel. Would you say the tonnage tax has been successful overall, or not?
Mark Dickinson: This is probably where you will find some differences between the two main unions representing the seafarers.
Q103 Chair: Let us start with Nautilus and then I will ask the RMT.
Mark Dickinson: From the officers’ point of view, on average, for the last three years, there has been something in the region of 900 officer trainees who have entered the industry as a result of the tonnage tax. Obviously there has been an increase in the fleet, but that in itself is not what it is about for me. It is about the seafarers of the future. Am I completely happy? No; I want more. As I said before, I want the nation, the Government, the administration and the shipowners to be more ambitious in their targets. We need twice that number coming through to stop the long-term decline in the number of British officers.
Q104 Chair: Mr Cash, what is your view?
Mick Cash: Obviously it has been beneficial in terms of officers, but certainly in terms of ratings it has done very little indeed. The tonnage tax, if my figures are correct, has given tax breaks of over £750 million to the industry. You would wonder, therefore, whether or not you would see more for that tax break. We were told at the time it was being introduced that SMarT money was targeted specifically at officers because there would be a natural increase in ratings due to the fact you had tonnage tax. We have actually seen a decline. We would prefer to see the model they have in Australia where they link tax benefits for the industry and employers to the employment of Australian seafarers. Failing that, we would want to be in the position where we see more money being targeted as part of the SMarT scheme for the training of seafarers, as I said earlier on.
In addition to that, it is also important to understand that there are drivers out there that stop the employment of seafarers. They can be trained, but then there are practices out there such as those we see on Condor Ferries-funnily enough, out of Poole harbour, I think-where they employ non-European economic area seafarers from the Ukraine on £2.30 an hour. You can have trained seafarers from the UK, but if you then allow the national minimum wage not to apply or the Equality Act to be able to discriminate against non-EEA seafarers-you have to do both things together. You have to provide the training and you have got to resource it, but then you have to ensure that you do not undercut UK seafarers.
Q105 Jason McCartney: Mr Cash, just to be absolutely clear here, are you advocating a "British seafarers for British shipping" policy?
Mick Cash: When you say "seafarers", are you saying-
Jason McCartney: I am asking what policy you are advocating. You are saying what the problem is, but what are you advocating?
Mick Cash: We want to see better employment for UK seafarers, which includes officers and ratings.
Q106 Jason McCartney: How do you propose to do that?
Mick Cash: We identified that earlier on. We have £750 million-worth of tax breaks. We should get more employment back for that, shouldn’t we? What is the purpose of the maritime policy if it is not to ensure better employment, not just in this place, in the City of London, but for UK workers to be employed? If we cannot get a direct link between the tonnage tax and employment, then we would want to see more money provided from the SMartT scheme to train seafarers and stop the use of non-EEA seafarers to undercut UK workers. You would support that, wouldn’t you?
Q107 Jason McCartney: Which nationalities in particular are you seeing in the industry, other than British nationals? I asked this question earlier.
Mick Cash: I gave an example earlier on about the Ukraine. There are Ukrainian workers on Condor Ferries operating from the south coast to the Channel Islands.
Don Cockrill: I would like to answer that briefly. It is not unusual to go on board a British registered ship that will have a Russian master, non-EU officers and probably an Asian-more likely Filipino but not necessarily-crew. It will be sailing under a UK flag. There are a lot of ships like that and that is not unusual.
Q108 Chair: Do you agree that the London International Shipping Week was successful?
Mark Dickinson: It would be difficult to answer that in anything other than a positive way. Anything that exposes our industry to wider audiences has to be a good thing.
Q109 Chair: Should it be repeated?
Mark Dickinson: I think it should be repeated. I would like to think that part of this is also down to us. We have to take, and be offered, a more active role in the whole proceedings.
Q110 Chair: Mr Cockrill, do you have any views on that week and what we might learn from it?
Don Cockrill: There are three parts to the answer. Yes, I thought it served its purpose and without any doubt achieved the goal that was intended. There is no need to repeat what has been said before. If we are going to do it again, I think it needs to have a more national perspective. It is difficult to try and find a suitable title to repeat it again, but my members thought there was not a national feeling to it. It was very much London-centric, for obvious reasons. If it is going to be repeated and to have more success, it needs to have a more national perspective rather than just London. You could take it to Liverpool, Aberdeen or wherever it might be.
The third thing is that it needs to be more public. It was too introspective within the industry. We are an island nation. One of the big problems we suffer with this industry generally is that the average man in the street has no idea what goes on behind the dockyard gate. It is a superb opportunity, if it is repeated, to get it out into the mass media in some way or other. I do not know how that would be done, but there are people who are expert at that and would be able to advise us. We need to get this message about the industry that we have out into the country as a whole.
Mick Cash: I would support the comments that my colleagues have made. I would also like to make sure that it achieves its purpose. Did it deliver one extra job, particularly for UK ratings? I do not know. But if its target is to improve employment going forward, then, fine, it should do that. I have my doubts; it did seem at a distance.
Chair: Thank you very much, gentlemen, for coming and answering our questions.
Examination of Witnesses
Witnesses: Dr Sarah Mander and Dr Paul Gilbert, Tyndall Centre for Climate Change Research, University of Manchester, gave evidence.
Q111 Chair: Good afternoon and welcome to the Transport Select Committee. Could we have your name and organisation, please?
Dr Mander: My name is Sarah Mander. I am from the Tyndall Centre for Climate Change Research at the university of Manchester.
Dr Gilbert: I am Paul Gilbert from the university of Manchester, again at the Tyndall Centre for Climate Change Research.
Q112 Chair: Cars are much more fuel-efficient than they were 20 or 30 years ago, but the same does not seem to have happened in relation to shipping and ships. Do you know why that is?
Dr Gilbert: As you are aware, shipping is very international. It is not covered under regional or national targets compared with the car industry, which is covered under UK and EU targets. It also has a different policy framework, in the sense that at a national level we are very much under the common but differentiated responsibility when we are looking at national targets to address climate change, whereas the shipping and aviation sectors have no more favourable treatment in that sense.
The industry itself also has very slow rates of change. When we look at cars and try and negotiate targets, it is negotiated at a national and EU level with different tiered systems for efficiency and scrappage rates. When we look at the shipping sector, it is very slow and late in the day. We look at negotiating aspects at a global level and trying to reach a global majority.
Looking at benefits, it is very clear from looking at the automotive sector who would benefit from efficiency improvements. When you are looking at the different actors involved within the car industry, it is very much the driver and the owner of the automobile, the manufacturer and some level of distribution. When you are looking at the shipping sector, it is very difficult to pinpoint the benefit and responsibility. There are different ship operators, owners and different people with different goods transporting the goods between different nations. Ships are registered in different nations at the same time with different employers within them. It is very hard to pinpoint the benefits and who holds the responsibility to implement those measures.
We do have standards in place within the sector. There is the energy efficiency design index, which came in in January of this year. That is a 10% efficiency improvement on new builds. That is going to be tightened by 2030 out to 30%. Again, it is not a strong measure. It is a very weak measure, in the sense that it is only covering new builds and it is not looking to address efficiency across both new builds and retrofits, especially when you consider how long ships are going to be in operation for. Something that came in in 2012, for example, before the regulation, will be in operation for perhaps the next 30 to 40 years. It would not have been covered under the energy efficiency design index measures.
Q113 Chair: You have said that the maritime sector is international rather than national, which some of the other sectors that I have referred to are. There is this mix of regulatory bodies, is there not? There is the IMO, the ILO, the EU and the UK authorities. Could those be used to assist this, or is it just too complicated to have an impact?
Dr Gilbert: The regulations working together have both advantages and disadvantages. In one sense, yes, at an UK and EU level we should be working towards a global target with the International Maritime Organisation. At the same time this has been seen as a stumbling block where, because we are waiting for something to happen globally, it often leads to us waiting around and not implementing stuff at an EU or UK level.
The UK Government have had several opportunities to introduce UK shipping into carbon budgets and targets. There have been issues with that and it has been put off by what is happening at an EU level. There is a lack of interaction there. It was put off in the sense that there was trouble with the aviation industry and how the European emissions trading scheme was implementing aviation emissions. That put the UK Government off from implementing their own measures to look at addressing UK shipping carbon budgets and targets.
The UK can address stuff as a nation unilaterally. It can also do this in partnership with the EU. It does not have to wait to understand what its share of maritime emissions is. It can start to look at standards and targets, looking at what happens in UK and EU ports or in UK and EU waters. It can introduce regulations and standards for the efficiency of vessels. We can also look beyond the shipping industry at trying to address more as a system how we address international shipping emissions.
Chair: Let me stop you there for a moment. Other members may want to put questions on some of the points you have made.
Q114 Mr Sanders: How feasible would it be for a nation state to refuse entry into its territorial waters of a vessel that did not meet a certain environmental standard?
Dr Gilbert: There are barriers to introducing unilateral measures. It is the same thing if you look at what is happening with the sulphur regulations. We are having sulphur standards and regulations in north-west European waters where we will have to meet a regulation of 0.1% of sulphur content in the near future. The industry has to look to adjust in that sense. Again, there will be issues surrounding it if it does not meet those targets. It has to change, adapt and look at burning alternative fuels like LNG or low-sulphur diesel. There are transmodal shift barriers, shifting on to lorries or not going into the waters.
Q115 Chair: Dr Mander, do you want to add anything to that?
Dr Mander: To back up what Paul has said, regulations such as the sulphur regulations would appear to work well within particular geographical boundaries where particular countries or parts of the world are keen to drive the same regulation forward. That cannot be said about every part of the world, which would then lead to the issues that Paul was highlighting. You might have transhipments or transmodal shifts as people sail the more polluting ship to a particular hub port and then either switch to a cleaner ship or alternative methods of delivery when you enter the area covered by the regulation.
Q116 Jim Fitzpatrick: My apologies for having to leave shortly. I am interested in following up this point. The EU tried to introduce an emission trading scheme for aviation. They had to cave in because ICAO basically said, "We are not doing it." China refused to buy A380s and the whole thing just collapsed. The IMO did appear to be more progressive in addressing climate change than ICAO was for aviation. The emission control zones-for example, you mentioned the North sea for sulphur-did seem to be an attempt to start addressing the hot spots within the world.
You may not have heard the witnesses earlier on, but they said that for the ferry companies in the North sea it could increase their fuel costs by up to 60%. These regulations were signed off in 2007 for a 2015 introduction, but the industry is basically still saying, "We can’t do it." In your view is it going to happen, or is it just not feasible for the IMO/EU to be able to enforce the sulphur zones in the North sea as an example of a localised regulation to try and improve shipping’s performance in addressing climate change and dirty fuel?
Dr Gilbert: That is a good question. Was it the British Chamber of Shipping that mentioned-
Q117 Jim Fitzpatrick: I think it was Associated British Ports, because Poole harbour, which has the ferry companies, is being told by the companies that use Poole-at Goole, rather-that they are going to hit this wall of costs and they may not be able to continue operating. Is it scaremongering?
Dr Gilbert: It could be scaremongering to some extent, yes. I do not think I can comment either way on that situation. There are two things to state. First, if you are looking at what the EU is trying to do at the moment with carbon emissions, the climate change carbon emissions are treated in a different silo from sulphur emissions. They have a very formatted approach to try and address carbon emissions at the moment. This is in addition to what is happening by the IMO. They are trying to monitor, report and verify emissions from large vessels coming into European waters. That will be from 2018 onwards. At the same time, in conjunction with that, they are trying to develop greenhouse gas targets-it is what the sector needs to reduce its emissions by-and also looking at what sort of market-based measures and levies they could introduce within a trading scheme to make sure that emissions reduce to those targets. They are rolling that out and it is getting support. At the moment they are trying to decide how to go about monitoring emissions.
Q118 Chair: How long is that going to take? I know you have suggested a combination of sulphur and carbon targets or measures, but how long would it take to do something like that?
Dr Gilbert: For the verification? The EU has said it will be 2018 when it will have the monitoring and verification process in place. The monitoring is called MRV: monitoring, reporting and verification. That will be for larger ships calling at EU ports.
The second aspect is sulphur emissions. We understand and agree that there are going to be cost implications and issues of potential job losses in trying to meet these targets, which is why we are trying to argue that sulphur and carbon emissions should be looked at in parallel. A lot of the issues and technologies they are looking at to address sulphur emissions, such as liquefied natural gas and diesel, do not look to mitigate emissions within the sector from a carbon perspective. We are trying to argue the case that this should be looked at in conjunction to prevent any lock-in of technology and also trying to prevent lock-out.
Q119 Chair: You have spoken about loss of jobs if these things are done. Have you made any assessment of that?
Dr Gilbert: No.
Q120 Chair: That is not your remit, but it is something you are aware of.
Dr Gilbert: That is me referencing the British Chamber of Shipping’s AMEC report.
Q121 Chair: What measures could shipowners take to reduce their carbon footprint, and what is it that the Government could do? I am trying to think of practical measures. What could actually be done?
Dr Mander: The biggest driver of the past few years has been the high cost of fuel coupled with the economic downturn. That has resulted in a reduction in ships’ speed, which has had a huge impact on the energy consumption and, as a knock-on effect, the carbon emissions of the sector. The challenge for shipping going forward is that, as countries come out of recession, there is more economic growth. The temptation, if you are a shipowner, is that you are going to want to speed up and deliver goods more quickly to be able to make more money from your ship, because ships are hugely expensive. One potential area to look at for regulation would be whether there is anything you can do with speed to try and make sure that the energy savings and carbon emissions gained since 2008 are not lost going forward as people speed up.
Looking at speed, that has a huge knock-on effect in terms of sulphur and impacts on the wider marine environment. From an environmental perspective there are huge double benefits, as it were.
Q122 Chair: Are there any other things that could be done to decarbonise a ship? What practical measures could be taken and who should be carrying them out?
Dr Mander: At the moment there is still massive overcapacity. There are more ships than are needed. There are very old and inefficient ships. Consolidation of the industry and looking at how you remove the less efficient ships might be something to look at, in addition to looking at other changes to operations as well as speed. There could be pooling of cargo. There needs to be more central control and monitoring to make sure that you avoid weather whereby ships go quickly to arrive at a port, rather than sitting outside and waiting at that port. You need to look across the whole voyage. There is also various low-carbon technology.
Q123 Chair: What about new technologies? In your paper you talk about vessels propelled by electric batteries, nuclear energy or wind power. Are these things realistic?
Dr Gilbert: They are realistic, yes. One of the main ones to look at and to consider as a technology, moving forwards, is wind propulsion. To build on what Sarah said, when ships slow down there is less power demand in the main engine so the opportunity to exploit wind propulsion, in terms of kites, Flettner rotors, which harness the Magnus effect, or sails, becomes more attractive. Wind propulsion is not in competition with other sectors. The one thing the maritime sector should be aware of is that a lot of the technologies that are being put forward at the moment-for example, biofuels-could be in potential competition with other sectors such as the automotive and aviation sectors, which have had a longer period of time to put research and development into those technologies.
Wind is a potential technology to deliver up to a 20% saving. It obviously has its issues and barriers. Biofuels is another technology that is very viable for the sector. Microalgae, as a third-generation biofuel, is very attractive in the sense that it can be grown in coastal waters and then refined to a level that could be burned in a marine diesel engine. Do you want more information on technologies?
Chair: No; it was just to get an idea of what could be done.
Q124 Jason McCartney: I would like a little more information on those new technologies. First, is there any one maritime shipping nation that is at the forefront of this? Secondly, is there a company that is winning business because they are seen as being very green and environmentally friendly? Thirdly, is any organisation or company running merchant shipping using sails or wind propulsion at the moment so that I can look into this more?
Dr Gilbert: We made clear in our evidence that there is not going to be one silver bullet when it comes to looking at technology choices for the sector because of the different market services.
Q125 Jason McCartney: But is anyone doing this, to answer my specific question? We are short of time. Is there any one nation that is leading the way or any one company?
Dr Gilbert: It is not as clear-cut as saying one nation, but there are companies that are looking at technologies. They are not necessarily the shipowners and the operators, but companies are looking at the technologies. B9 Shipping is one of the largest companies looking at developing a fully renewable vessel. They are looking at sails and LNG in the first instance. The sails would complement LNG propulsion. Then they are going to move from LNG to biogas, which is produced via anaerobic digestion of biodegradable waste. They are a company that is trying to look at that and at services to and from the UK, with the Baltics, to supply pelletised biomass into the UK market. It is what they would class as a sustainable service, introducing biofuels into the UK on a renewably powered vessel and also looking at renewable green steel which, at the end of its life, is reused within the ship. They are looking at the material aspect as well.
There are a lot of other technology providers again working at an experimental level and, to some extent, a demonstration level. SkySails is a company that is looking at kites for vessels. I think Enercon-
Q126 Jason McCartney: When you say "looking at kites", what do you mean?
Dr Gilbert: They are a company that are developing kites that attach on to the front of vessels. Obviously, as the wind blows-
Q127 Jason McCartney: Are they trialling them now?
Dr Mander: Yes.
Dr Gilbert: Yes. They are installed on about 10 different vessels. I am not too sure of the owners or the companies involved, but SkySails are developing and installing.
Dr Mander: As a region, many Scandinavian countries invest more in technology development and are looking at the R and D of new technologies and trialling them on their ships. Wallenius or maybe Maersk are container shippers that are close to end markets, as it were, that have good relationships with big multinational companies that are themselves based in Scandinavia, or for whom a green supply chain is an important company driver.
Dr Gilbert: It is important to say that, as the UK Government and as the UK in general, we should be looking to invest in more demonstration of these technologies, to try to bring them to life and put confidence in shipowners and ship operators, who see them as having no short-term competitive advantage. There are concerns with the safety of running these technologies and also the high capital cost from the start. It is about going beyond the modelling work, the experiments and the small scale, and trying to make these a commercial reality.
Q128 Chair: Where are the companies you have mentioned based? Where do they work?
Dr Gilbert: B9 Shipping is based in Northern Ireland.
Dr Mander: SkySails is a German company.
Dr Gilbert: I am not too sure about the companies working on Flettner rotors.
Q129 Martin Vickers: To some extent you have elaborated a little on the point that I was going to make. My main concern was the mention of job losses and how we offset that with jobs in research, development and so on. As someone who represents a constituency with a large port, obviously any job losses will be of concern. Do you think the Government have got the balance right? You mentioned helping out with R and D, but are there one or two policies you would like to see our Government pursue that would alleviate job losses but would also move in the direction you are advocating?
Dr Mander: Low-carbon shipping is quite new. We need policies that are able to support the demonstration, the commercialisation and the de-risking of technologies such that their viability can be proven on a commercial scale. If you take B9 Shipping as an example, they would in the first instance be looking to manufacture their ships in the UK. It is helping de-risk that technology to show a shipowner or a shipper who has a valuable cargo on board that a ship with a new technology will arrive at the time it is expected to arrive, will arrive safely and so on.
Dr Gilbert: Just to clarify, we do not do research specifically related to job losses. There are two things to mention. The first would be about the shipbuilding industry in terms of job losses. You probably saw in the news about the job losses at BAE Systems. We have an opportunity in the UK where we can develop a shipbuilding industry looking at a new type of market in terms of shipbuilding. Instead of building ships that run to the end of life, we could try to embrace the circular economy more. We could lease out vessels and materials and create a sustainable UK shipbuilding industry, which, at the end of its life, could remanufacture, reuse vessels and create a market in that sense. There would be jobs around that issue. The circular economy and how we look at implementing that in all sectors is very crucial at the moment in terms of funding and also research and industry funding.
The second aspect is the work force that can deal with and adapt to a low-carbon ship. The training involved with running something like wind technologies is going to be very different from the training involved with operating a ship that runs on heavy fuel oil. We need training to ensure that we have a work force that can meet the demands of that and other potential technologies, whether it is nuclear, biofuels or otherwise.
Dr Mander: I would say the training even comes down at the moment to training crews so that they can work with the EEDI and the new operational regulations.
Dr Gilbert: Yes-the EEDI and the Ship Energy Efficiency Management Plan, which is more about the operations of the ship.
Q130 Martin Vickers: Do you think this can be done so that it is commercially economic? Would you foresee that it would need some sort of taxpayer money to support it or initiate it?
Dr Gilbert: To be honest, I look at what is happening in terms of industry funding at the moment-i.e. the Technology Strategy Board. We are moving in the right direction from Government funding to support these sorts of projects. There are opportunities there. I would not be able to add beyond that.
Q131 Chair: Are there any other factors or issues you would like to bring to our attention in this area? We have your written evidence and we have listened to the answers you have given us. Is there anything we have missed that you would like to put on the record in relation to dealing with this whole area of carbon emissions in relation to shipping?
Dr Mander: It is just worth re-emphasising the fact that currently shipping and aviation are not within carbon budgets. With the importance of cumulative emissions-the fact that CO2 is long-lived within the atmosphere-any kind of delay in including aviation and shipping within those budgets could then have a huge knock-on impact for other sectors that may have to do more-
Q132 Chair: So you would like this to be in the carbon emission targets.
Dr Mander: Yes.
Q133 Chair: You think that would make a big difference.
Dr Gilbert: It would make a big difference in the sense that it would need to be included in the carbon budget targets. This is putting it alongside other sectors as well. If we add the shipping industry early, it would give other sectors an indication of what level of cuts we would have to make as the whole UK economy to meet an 80% reduction target. If we leave it too late, until 2020 or 2030, to go on to include aviation and shipping, then to meet our 80% reduction targets the likelihood is that we might have to make larger cuts than we would have if we had done it in the short term, because of the cumulative emissions.
Q134 Chair: You have covered a lot of issues. I just want to make sure there is nothing else you want to say.
Dr Gilbert: Yes; when we saw the brief we thought it was a lot of stuff to ask. The main thing is to include it in the carbon budgets and targets.
Chair: Thank you very much for your evidence and for coming here today.