RMT response to the Maritime Growth Study: Keeping the UK Competitive in a Global Market

RMT organises around 5,000 seafarer ratings employed by over 20 different private and public sector companies, predominantly working in the short sea ferry and offshore supply sectors, as well as significant numbers of merchant navy ratings working for the Royal Fleet Auxiliary.

Along with our sister union Nautilus, RMT also sits on and contributes to the work programme of the Merchant Navy Training Board and the Maritime Apprenticeship Trailblazer Working Group.

Key points

As the questions posed in the Call for Evidence document are too broad and business focused for a succinct trade union response, RMT make the following key points:

  • The appeal of the UK Register to domestic and international shipping must be founded on high standards in safety, training, employment law and maritime administration.
  • Increased public investment in the MCA and seafarer training would strengthen the UK Register and reverse the decline in the employment of UK seafarers, to the benefit of the economy and national security.
  • The benefit to the UK of Red Ensign Group registers is in need of urgent review.
  • The stability of the Tonnage Tax regime should be improved by attracting more UK owned and flagged vessels into it.

The union makes further proposals for reformunder each of the four subsequent policy headings.

Introduction

RMT welcome the Maritime Growth Study as an opportunity to present the case for employing and training more UK seafarers as part of a sustainable strategy to stimulate economic growth in the industry whilst enhancing the depleted maritime skills base.

Shipping is central to the social and economic vitality of the UK, with 95% by volume of traded goods arriving and leaving here by sea. It is also central to the global economy, with 90% of traded goods moved by sea and over 1.5 million seafarers employed. Yet despite, or perhaps because of the industry’s pre-eminent logistical position, seafarers continue to be excluded from the benefits of growth in the maritime sector and are invariably subject to practices such asnationality based pay discrimination and uneven application of safety, employment and immigration law that would be unthinkable, let alone legal in other industries.

We are concerned that the focus of the Maritime Growth Study is too heavily weighted in favour of policies to increase the UK’s share of the international market in maritime services. We would argue that considering or enacting such policies in isolation from national seafaring capacity is both wrong and irresponsible. RMT believe thatthe socio-economic, as well as the security consequences of the UK being unable to raise a sufficient number of domestic based seafarers to operate a diverse merchant fleet would be catastrophic.

It is vital for the UK economy, not to mention the social well being of port towns and cities, that the predicted shortage in domestic and international seafarers is avoided. This can only be achieved through effective recruitment and retention of the next generation of UK ratings and officers.

For these reasons, we contend that the economic success of the UK maritime sector should always be gauged, at least in part by the health of the domestic skills base. We are optimistic that the Maritime Growth Study will not overlook the needs of the national maritime skills base and the UK’s security needs as it looks at ways to increase the UK maritime services sector’s share in the international market, which is predicted to double over the coming 20 years, particularly on routes in the Pacific Ocean.

High standards and competitiveness

RMT strongly believes that the UK’s offer to domestic and international shipping owners must be predicated on higher regulatory and employment standards than those applied to vessels on open registers.

It is clear from promotional literature used by the MCA and comments from UK Register officials on international visits to promote the the Red Ensign that the UK flag is, in effect already competing with Flags of Convenience for the business of international shipowners by predicating their offer on minimum international standards, rather than high quality administration.

For example, the MCA’s UK Ship Register promotional leaflet ‘The UK Ship Register for Quality Owners’ states in the list of advantages that the

UK has minimal nationality restrictions giving companies flexibility in whom they employ.

Furthermore, in the October 2013 edition of the UK Register newsletter a recent trip to Germany to promote the UK flag was described in terms we regard as very worrying:

Many prospective customers were unaware the UK Flag offered services equal in responsiveness to Flags of Convenience, but at a significantly lower cost.

On the same trip, UK Register official Tom Borland also outlined just how keen the Government is to take ships on to the register with little or no regard to the composition of the crew:

“We are a customer focused Flag and are here to support industry and its commercial operation whilst enhancing maritime safety and environmental protection.”

We regret that the government is openly seeking to attract shipping companies to the UK Register on these de-regulated, free market grounds which run counter to the needs of the maritime skills base, as well as the economic and security considerations that an island nation must keep under constant review.

The appeal of the UK maritime sector to domestic and international shipowners and managers is already strong, in terms of the cluster of skills, regulatory, financial and administrative support. More should be done, in our view, to tie the skills base to any broader growth in the UK maritime sector, as this would not only achieve a better deal for seafarers and the taxpayer but would also ensure that national security is not compromised.

We reiterate our view that the future competitiveness of the maritime sector should not be based on deregulation of the sector or the UK register. In order to protect existing core areas of employment for UK merchant seafarers, RMT would like to see the Study support the following recommendations:

  • Better enforcement of crew and flag protections for all vessels engaged in island cabotage.
  • Effective enforcement of the employment and equality legislation on all vessels working between UK ports.
  • Formal information sharing mechanisms between shipowners, the Ministry of Defence and Royal Fleet Auxiliary regarding trends in the number of UK merchant seafarers in the industry.

Maritime and Coastguard Agency

The UK Government through the MCA has a key regulatory role to play that goes beyond safety and minimum international standards. At the outset, we state our firm belief that the Study must not bring the neo-liberal economic model into further conflict with the safety of seafarers, whether they are working on vessels or ships registered in the UK or any other register. There is a genuine threat to seafarer safety from deregulating the UK flag in order to put it in direct competition with Flags of Convenience.

Between 2010-11 and 2013-14, the MCA cut 13.5% or 157 Full Time Equivalent staff and the total number of staff at the regulator has now dropped below 1,000 for the first time for over a decade. By 2015-16, £38m will have been cut from the MCA budget in four years. These cuts come at a time when international conventions are coming into effect in the maritime sector, for which the MCA will have responsibility for enforcing in the UK, in the areas of Maritime Labour, marine environment, sulphur dioxide emissions, training standards, ballast water and electronic navigation equipment.

We remain disappointed, therefore, that the Governmentrejected the Transport Select Committee’s recommendation for “...an independent review of how the Maritime and Coastguard Agency will successfully take on new responsibilities without a proportionate increase in its resources.”[1] The Government’s alternative of an internal review of the MCA’s survey and inspection capability has not resulted in any reportable changes and the problems of low pay, recruitment and retention of MCA survey and inspection staff remainserious problems for the MCA, Government and those working in the industry.

In our view, at the very least, lost funding should be restored to the MCA by the next Government.

In addition, existing training funds, especially for ratings training and rating to officer conversion through the Support for Maritime Training (SMarT) scheme administered by the MCA should be taken up in full by industry. The level of funding for ratings training taken up by industry in 2013-14 was a negligible £6,594, or 0.05% of the total £15m annual SMarT budget (see Annex 1). This is despite the MCA making £100,000 available every year for ratings training and ratings to officer conversion. In the case of rating to officer conversion, only £15,879 or 0.13% of the SMarT budget was used by employers in 2013-14.

RMT would like to see the Study make serious recommendations to industry and Government on increasing the uptake of public funding available for ratings and officer training. The proportion of state funding for officer cadet training should also be a focus for the Study’s proposals on maritime skills.

It would also make sense for the Payment In Lieu of Training (PILOT) funds that have accrued under the Tonnage Tax regime, to be made more easily accessible to companies with MCA approved cadet and ratings training plans. At the very least, the Maritime Educational Foundation should review the arrangements for the access to and use of PILOT funds.

Seafarer safety is also the responsibility of the MCA. RMT has been campaigning for a number of years for the status of seafarer health and safety representatives to be equalised with that of land based colleagues. Rights to TUC accredited training for the role of health and safety rep, from the point of election to that role should be afforded to seafarers. This would strengthen the safety culture on board vessels and reinforce the work of the MCA surveyors and inspectors when the vessel is back in port.

It is worth noting that in January 2015 alone, the MCA detained 13 vessels for Port State Control (PSC) violations[2]. 11 of these vessels were registered under flags that appear of the ‘White List’of the Paris Memorandum of Understandingwhich grades the annual performance of international shipping registers. These included Singaporean, Marshall Island and Chinese registered vessels, registers where the majority of shipowners that left the UK flag in 2014 re-registered their fleets.

The annual list of Port State Control detentions list mainly features FoC ships and fatal incidents such as the MV Swanlandin 2011 should always serve to remind the UK Government of the excellent job the MCA does in enforcing safety for seafarers, customers and passengers in the maritime industry. This should not be jeopardised.

However, the union is concerned at the MCA’s recent consultation[3] over aligning the domestic passenger vessel safety code with the international code for such vessels. As well as dramatically reducing the number of on ship safety inspections undertaken by the MCA of these vessels (from two every year to two every five years), self-assessment and the threat of outsourcing safety assessment work are also proposed. We point the Study to the RMT’s response of 8th January 2015[4] to the consultation but reiterate our opposition to cutting back safety regulation to minimal international standards and any outsourcing of MCA safety inspection work.

We believe that this very recent evidence supports the argument for sustainable growth in the maritime sector which does not pare back safety and other essential maritime regulations to minimum international standards. To do so would be to jeopardise the long term reputation of the UK Register and the maritime cluster for the sake of short term gain.

In order to maintain high standards in maritime regulation and seafarer safety and training, we recommend that the Study consider the following proposals for reform:

  • Reform of international shipping law, through the International Maritime Organisation to strengthen national flag registries.
  • MCA to participate in review of the use of PILOT funds from the Tonnage Tax for training ratings and cadets.
  • Equalisation of seafarer health and safety reps with those of land based colleagues.
  • Introduction of an EU Manning Directive to protect domestic flags and seafarer jobs.

Red Ensign Group

As stated previously, one danger in deregulating the UK flag in order to put it in direct competition with Flags of Convenience is that it increases the risk to seafarer safety. Another negative aspect is that such a move would effectively endorse the practices of Open or Flag of Convenience registers which continue to exercise an unhealthy influence on the global shipping industry, particularly the concept of ‘beneficial link’ in the context of national flag registers. National registers need to be reinforced, in order to provide stable economic growth domestically, as well as the promulgation of seafarers’ rights, health and safety.

RMT is concerned that Category 1 Red Ensign Group (REG) registries, particularly the Isle of Man and Bermuda are in regular competition with the UK flag and vice versa. As a result, we see shipowners and managers swapping between the Red Ensign and REG flags, as occurred in 2014 when several vessels left the UK flag to register with the Isle of Man and several vessels were taken off the Bermudan flag and registered with the UK.

RMT acknowledge that the inclusion of REG flags boosts the UK Register’s position in the international list of registers,but we are concerned whilst this enables REG flags to access the cluster of maritime services in the City of London, the survey and inspection arrangements for REG flags are not fit for purpose and risk brining the UK regulator into disrepute. This regulatory issue will, we believe, be heightened at the present time when the MCA’s is subject to so many budget cuts, pay restraint and job losses amongst key survey and inspection personnel, as we outlined in the previous section.

For example, the MCA’s monitoring arrangements for the Crown Dependencies and Overseas Territories that comprise the REG are uneven in terms of frequency and the outcomes of this work not known to the public which has a significant interest in the regulator performing these monitoring services:

REG Administration / Last visit dates / Next scheduled visit
Category 1 Registers
Bermuda / 2014 / Unknown
British Virgin Islands / 25-27 March 2013 / 2016/17
Cayman Islands / 23-27 May 2011 / 2014/15
Gibraltar / 2013-14 / Unknown
Isle of Man / 19-21 March 2012 / 2015/16
Category 2 Registers
Anguilla / 2013-14 / Unknown
Falkland Islands / 5-7 February 2013 / 2016/17
Guernsey / 23-26 July 2012 / 2015/16
Jersey / 19-21 October 2011 / 2015/16
Montserrat / 1-5 November 2010 / 2014/15
St Helena / 11-13 March 2012 / 2016/17
Turks and Caicos Islands / 1-4 November 2010 / 2014/15[5]

We believe that the Study should look closely at these arrangements which RMT believe are at least worthy of a more regular and thorough monitoring system, not least because UK ratification of international conventions, on Maritime Labour for example, is extended to cover REG administrations subject to certain checks.[6]

  • Independent review of the beneficial link between the Red Ensign Group and the UK Register.

Tonnage Tax

The Tonnage Tax scheme introduced by the Labour Government in 2000-01 after extensive consultation with the shipping industry and maritime unions enables company groups to qualify for a minimal (between 1-2%) Corporation Tax rate. As a result, this sees a large number of foreign flagged vessels qualifying for this generous tax break which is now in excess of £1.5 billion in value since 2000-01.

Although there has been a fall in dead weight tonnage registered under the Red Ensign in the last five years, the UK Register remains in a healthy position and has increased four fold from the late 1990s to 2014.[7] The Tonnage Tax and the Corporation Tax concessions it offers qualifying companies was the decisive factor in the recovery of the UK Register to a regular top 20 position in the chart of international shipping registers.

However, this achievement, which has provided the shipping industry with a tax concession in excess of £1.5 billion since 2000-01, has not arrested the continued decline in UK seafarer numbers. Whilst there has been some fluctuation since 2002, in the decade between 2004 and 2014 there was a near 18% (5,000) fall in the total number of UK seafarers active at sea to today’s figure of 22,910.

This fall occurred even with the Tonnage Tax’s mandatory link to training for UK officer cadets which RMT support. Although this is positive provision in terms of the UK maritime skills base, at the present rate it will not train sufficient numbers of cadets to avoid the forecast deficit in officers at the beginning of the next decade.

The Study should also recognise that whilst global shipping trade is forecast to double in the next 20 years, there is a global shortage of seafarers and the forecast deficit in UK officers and ratings from 2021[8] remains accurate. UK seafarer numbers have fallen dramatically since the Falklands conflict in 1982, when there were approaching 60,000 seafarers in the UK Merchant navy, as well as a diverse fleet of ships. In 2014, the total number of UK merchant seafarers active at sea dwindled to 22,910. This includes only 8,440 ratings – a drop of nearly 30% in the last three years alone.

According to the latest figures from the Maritime Educational Fund[9], only 43.8% or 302 of the 690 vessels qualifying for Tonnage Tax in 2014-15 are UK flagged. As a result, the proportion of UK seafarers working on Tonnage Tax ships is low – only 23% of a workforce nearly 17,000 strong.

Furthermore, in 2013-14 UK ratings held 42% of the 3,600 ratings jobs on UK flagged vessels in the Tonnage Tax scheme, a proportion that has remained roughly the same since 2003-04. In the same year, there were only around 335 UK ratings employed on non-UK flagged vessels in the Tonnage Tax scheme, accounting for 0.03% of the 9,130 ratings jobs on these ships. This raises the question of what beneficial link these vessels have to the UK