British shipping & maritime services - world leaders
In recent decades Britain has continued to lead the world as a maritime services centre, with marine insurance, ship finance, law, classification societies, shipbroking, education, consultancy and others all combining to form the largest maritime services cluster, based in the City of London. This strength has historically been rooted in a strong shipping industry and the skills and experience that provides.
Since 2000, shipping itself – owning and operating ships – in the UK has seen remarkable growth as a result of the Government’s positive policies in favour of investment, training and the British register. The UK-owned fleet has increased by some 150 per cent, and the UK-flag fleet – albeit from a very low base – has more than quadrupled.
This turnaround is of major benefit to the UK economy, with turnover of this key sector more than doubling between 2002 and 2005 to almost £12 billion per year and export earnings rising to £9.4 billion.
Latest figures for the sea transport account show a net surplus of just under £1billion in 2006 (the most recent figures available, shown in chart taken from the Pink Book). This improvement is particularly remarkable since it follows a ten-year period in which the average net deficit for the nation (what it spends on shipping as opposed to what it earns from it) was £500 million per year. As a headline figure, shipping now earns well over £1million every hour of every day for the UK economy.
In employment terms, the British fleet has increased the training of officers for a sustained period of six years by almost 30%. Indeed both last year, and already this, we have seen recruitment rise over 650. The growth in trainee officer recruitment has risen twice as quickly as the number of uk-based ships.
Shipping combines with not only “city” maritime services but the broader interests, including shiprepair and marine equipment manufacturing, lying at the heart of the £40 billion turnover maritime cluster in this country. There is every reason to expect that the fleet’s current expansion will continue into the long term – ensuring that the UK remains Europe’s largest maritime centre, and a global leader.
To be sustained into the future, however, this success needs a stable and competitive environment, not least in fiscal policy. The adoption of tonnage tax by shipping companies is conditional on a ten-year commitment to trading and training in the UK. That requires confidence that the regime will not be modified without good cause and adequate notice – and that decisions in other policy areas do not reduce the attractiveness of basing shipping businesses in the UK and of training British seafarers.
That confidence has been shaken over the last few years by a sequence of changes and reviews. The 2006 reform of the taxation of finance leases and proposed future changes to the capital allowances regime bring uncertainty which prompts questions regarding further potential fleet expansion and investment in the UK.
There are challenges too in other policy areas – for example, the law concerning the employment of foreign seafarers, currently under consultation. Challenges may come also from outside the UK, particularly in the application of state-aids policy to tonnage tax by the European Commission.
It is essential that the Government re-establishes a strong focus on ensuring that its successful shipping policy is actively sustained and that the conditions are right for further growth of shipping operation and employment in the UK.