Following four years of review, the European Commission has announced the operation of the State Aide Guidelines (SAGS) in the maritime sector, included within which is Tonnage Tax schemes, will remain unchanged.

A number of EU Member States, including the Netherlands, Denmark, Greece, Cyprus and the UK, operate Tonnage Tax schemes in order to attract shipowners to their registries, however there is an additional branch within the legislation when applied to the UK, whose legislation contains a mandatory link to provide training for UK seafarers at officer level (whereas the link to provide training to crew of ratings level is only voluntary). The review offered the chance for the training of crew of other levels to become mandatory, as well as the training already in place to be improved, but the decision to leave the system as it is has left many concerned about its impact upon the UK maritime training sector.

General Secretary of UK maritime union RMT, Bob Crow, announced his dissatisfaction with what he called, “this tawdry episode of neo-liberal collusion between the European Commission and the European shipping industry,” further stating: “The EU [has] slammed the door on enforcing a link between ratings training and state aid, and that [is] a massive kick in the teeth for RMT members in the shipping industry.”

Maritime union Nautilus International is also opposed to the decision, with Mark Dickinson, general secretary at Nautilus, declaring: “When you see how much the Tonnage Tax is worth to the shipping companies, we don’t believe it is unreasonable that they should provide training and jobs in return. Whilst the Dutch Tonnage Tax system offers employment and training, the UK system – with its mandatory cadet training link – does not guarantee their ongoing employment and does not over ratings, whose numbers are diminishing rapidly.”

Nautilus has submitted evidence to the House of Commons transport committee inquiry into UK maritime strategy and is appearing before the committee next month to give oral evidence. The union told that numbers of foreign seafarers on UK-flagged vessels serve as further confirmation that the UK’s system is not working.    “From 2012 to 2013, with 895 ships involved in the scheme, there were 4,790 UK seafarers and 15,569 non-UK seafarers,” explained Andrew Linington, head of communications at Nautilus. “The number of UK ratings has reduced by around seventy per cent over the past twenty-five years, and the high average age of the current pool of seafarers contrasting with the relatively low level of new entrants means further decline is inevitable.”

Many are concerned that the EU's decision will have a damaging effect upon the UK maritime sector. Credit: Ed Holt.

The UK Chamber of Shipping, however, has taken a different stance on the decision, applauding the statistics at officer level, rather than bemoaning those for ratings level. Mark Brownrigg, director-general, told “The retention of the EU’s current maritime state aid guidelines should be welcomed for the positive and major impact that they have had in helping promote the major revival of the UK merchant fleet. Tonnage Tax is directly responsible for the creation of 115,000 UK jobs over the past thirteen years, and has seen the shipping industry’s tax contribution rise by £1.6 billion. In the UK in recent years, we have seen both a doubling in the number of trainee officer cadets and improved training and employment prospects for ratings.”

Brownrigg did note, however, that the training of ratings level cadets was integral to the UK’s maritime sector, and added: “Since the adoption of the UK’s tonnage tax, over £3 million has been dedicated to encouraging the training of ratings to become officers. In addition, in August the UK Chamber [wrote] to the Shipping Minister calling for shipping companies in the UK’s Tonnage Tax system to be allowed to train ratings as one option for meeting their training commitment under the regime.”

The UK maritime sector is clearly divided over the EU’s decision and it looks likely that, with lobbying from the unions, the industry will re-evaluate the decision at a later date. For the superyacht industry, however, it is certainly a decision worth keeping an eye on, for with superyachts getting bigger, more and more crew from the merchant fleet are entering this niche sector, and as such our industry’s interest in this decision should be paramount. 

Profile links

UK Chamber of Shipping

Nautilus International

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