Michael Parker - 2012 Chamber Annual Dinner
Minister, my Lords, Ladies and Gentlemen – Good evening to you all and a warm welcome to the Chamber of Shipping’s Annual Dinner. It is always a great evening and I look forward to catching up with many of you tonight.
A very special welcome to our principal guest Mike Penning, the Shipping Minister at the Department for Transport. Last year, the Minister promised to be actively engaged with our industry and to be a friend to our industry. In my experience he has been very much true to his word. Mike, thank you for joining us tonight.
A warm welcome too to Tom Heffer, Secretary General of the Mission to Seafarers, who has kindly agreed to give the reply on behalf of the guests. Tom’s reputation as an after-dinner speaker precedes him – Tom, again, thank you. Thank you also for the work you and the Mission do in looking after Seafarers around the world.
Ladies and Gentlemen, I am approaching the end of my second term as Chamber President and I’ve been around long enough to recognise an important year! I think that the last year will prove to have been a key one for UK shipping and for the Chamber itself. These continue to be challenging times. The UK shipping industry – like others – has faced enormous pressure from the turmoil resulting from the banking crisis, threats to the Eurozone economies and the slow-down in world trade.
Shipping companies have shown tremendous resilience, in coping with the volatility of the world economy. As a result the UK fleet has remained stable. At such times, the potential impact of policy decisions can become the “tipping factor” for a company’s viability and its desire to be based in the UK. This means that the role of the industry’s representative organisation– the Chamber – becomes absolutely crucial.
During my presidential year, I have focussed on four particular issues.
First, the business climate. This year saw a clear threat to the Tonnage Tax regime which has driven the remarkable revival of the UK fleet over the last decade. Some companies faced great uncertainty over their eligibility for tonnage tax. The Chamber worked closely with Her Majesty’s Revenue & Customs and the Treasury to correct interpretations of the criteria that were causing this doubt. I am pleased to say the constructive dialogue between the Chamber and the Treasury has resulted in a clear commitment to maintain the original rules.
This assurance was given by Justine Greening when she was Treasury minister and demonstrates that the Government understands that Tonnage Tax is the rock on which the recovery of the UK industry has been built. We strongly welcome the Government’s commitment to working “with the shipping industry to ensure that the UK remains an attractive location for maritime investment”.
This outcome is absolutely in the national interest and in line with the Government’s strategy to enable the UK to trade its way back to prosperity. Shipping has been a major source of growth for the UK economy over the last decade. The adoption of the tonnage tax produced a dynamic revival of the UK-based merchant fleet, more than doubling our sector’s contribution to GDP and our maritime recruitment. Shipping is a high-productivity industry –16% higher than the economy-wide average. And growth in employment in the UK shipping industry averaged 10% between 2004 and 2009 compared to an economy-wide average of 0.3%.
My second focus has been the employment and training of UK seafarers. During the first part of the year, our efforts were focused on finding an acceptable way to apply the Equality Act to the employment of international seafarers on UK-flag ships.
More recently the focus has been the level of funding for training UK seafarers.
The primary challenge has been the recent review of the Government’s support for the maritime training scheme (or SMarT). For many years, this has been the foundation stone for the development of sea-going skills in the UK. I am delighted to record our appreciation to our excellent and proactive Shipping Minister, Mike Penning, for your good judgement two weeks ago in announcing that the SMarT scheme would continue throughout this Parliament at the current levels. This is particularly important – not just to the shipping industry itself but to the wider maritime cluster. The independent review report found that the SMarT scheme has been effective to date and brought an unusually high economic return to UK plc.
I am pleased that the Government has recognised that quality officers can only be trained by the combination of an integrated programme of sea time and study in this country’s excellent nautical colleges. Each year we recruit some 900 young people to enter our industry. An industry that actually has job vacancies.
The third issue is piracy. I would particularly like to thank the Royal Navy for its unfailing support to our industry both actively with vessels in the Indian Ocean and the through the major role it plays in the co-ordination of the international effort to protect merchant vessels.
We have been closely engaged in policy discussions on the action shipping companies can responsibly take to avoid the threat of piracy. It is essential that the industry follows best management practice to deter attacks and we have reluctantly embraced the need for armed guards in some circumstances.
We welcome the Prime Minister’s action to call a high-level political conference to find solutions to the wider problems in Somalia. We anticipate particular emphasis on capacitybuilding ashore and offering alternative lifestyles to discourage the ambitions of would-be pirates. Such policies – plus the financial tracking of ill-gotten gains from piracy and establishing effective sanctions – are the only way to guarantee a long-term solution to this brutal issue.
We must all hold firm to the end-game of restoring “normality” and safe passage for our seafarers and ships to this huge area in the Indian Ocean, one of the primary arteries of world trade.
My fourth focus has been the environment, where shipping currently faces two very high-profile issues. The UK Chamber has been particularly active on the crucial issue of climate change. We have consistently encouraged the international shipping community to seek proactive solutions and are urging all parties to engage fully in the debate on measures to reduce carbon emissions, their financial implications and the practicalities of putting them in place.
The ways to quantify and reduce carbon emissions must be developed and agreed on a world-wide basis through the International Maritime Organization. Frustratingly, the debate on the various options has yet to begin with the right degree of research and objective consideration. As we have seen in Durban, and also in the IMO discussions, progress is made more difficult by political issues. Unfortunately, this increases the risk of regional solutions, which are likely to distort competition.
Make no mistake – the shipping industry understands its responsibilities and takes them seriously. This is why we were angered by the failure of the House of Commons Energy and Climate Change Committee, in its report published at the end of January, to understand the differences between aviation and shipping, and the significant reductions in carbon emissions that our industry has achieved in recent years, and the efforts we have all been making to achieve an effective international agreement.
Regional solutions in the EU or elsewhere are not the answer. The IMO must be the way forward.
Sulphur emissions are also presenting difficulties for some sectors. With new IMO requirements scheduled to come into force in 2015. These will affect operations close to coastlines and harm the environment by increasing modal shift to other, less environmentally-friendly transport modes such as road. Without a pragmatic compromise, the danger is that freight and passenger transport connections could be cut back or priced out of the market without a way to mitigate those losses. The Chamber – with others – has been active in trying to find a way through this problem.
With goodwill, the objective of reducing Sulphur emissions without disproportionate economic cost can be achieved but this will require the collective effort of EU states and the IMO to find a way of introducing the new regulations in a measured way.
Finally, this is an extremely exciting time for the Chamber, which is entering a new and vibrant era. We have just come to the end of an internal review of our future objectives, structure and working processes.
We are focussing the Chamber’s work on the things that matter to our members – safeguarding our members’ interests, informing them of developments, policy-making, and representation at all levels nationally and internationally. We have cut out non-core activities to release resources and energies to promote the shipping sector in this country. As most of you will know, we have sold our building in Carthusian Street and will shortly be moving into modern accommodation in the dynamic and bustling area of London Bridge. I look forward to seeing you all there at some point this year.
I would like to close by asking all Chamber members to rise and join me in the traditional toast to our principal guests: ‘Mr Mike Penning, Shipping Minister, and all our guests’.