Greater commercial freedoms would allow it to lure more ships after Brexit, says report.
A part-privatisation of the UK Ship Register will enable it to compete globally and attract more ships to sail under the British flag, the government has been told.
A report by KPMG, commissioned by the Department for Transport, recommends that the Ship Register become a “govco”, a privately held state-owned company that is subject to government oversight but has more commercial freedoms, including over employment terms.
Britain used to have the biggest merchant fleet in the world, but the number of UK registered vessels has declined sharply since the 1970s, even though London remains the legal and financial hub for the global shipping industry.
The UK fleet has shrunk 18 per cent in the past five years and accounts for only 0.8 per cent of global tonnage. This is despite a 5 per cent increase in the total number of ships worldwide to 56,759 during the same period.
The UK Chamber of Shipping said the commercialisation of the Ship Register has acquired greater urgency in the wake of Britain’s decision to leave the EU.
It argued that a strong domestic shipping sector makes a vital contribution to the economy and is crucial to the survival of hundreds of thousands of jobs.
“There’s a strong link between flying the UK flag and investing in the UK,” a spokesman said. “Ships flagged in the UK are more likely to be owned and managed in the UK, creating jobs and contributing to GDP. There is also a greater likelihood that UK-flagged ships will be crewed by British-based seafarers, maintaining the expertise needed to sustain the country’s maritime industry.”
But the PCS civil servants union said any move to privatise the Ship Register would be a “damaging sale of a really important public service”. The register is currently part of the Maritime and Coastguard Agency.
“The UK Ship Register performs a vital function, underpinning the integrity of the UK flag and maintaining our international reputation as a standard bearer of maritime safety, so we would strongly oppose the profit motive having any kind of role,” it said.
“We fear the KPMG model will lean more towards the likes of Panama, Liberia and the Bahamas, watering down the MCA’s role as a regulator and insurer of safety standards.”
More than 95 per cent of goods that the UK imports and exports are transported by sea. This includes about 40 per cent of our food and about a quarter of our energy.
The sector employs at least 113,000 people and generates at least £11bn a year, according to a Maritime Growth Study published by the government last year.
Should a deal go ahead, the register would become one of a number of government organisations given the new status since 2010 in a move aimed at shrinking the state and instilling private sector discipline.
The Ordnance Survey, the government’s mapmaker, and Highways England, which manages Britain’s motorway network, were changed into an autonomous state-owned companies last year.
But not all attempts to privatise public bodies have succeeded, with attempts to sell off the Land Registry, the government agency that records the ownership of all land in the UK, shelved earlier this year after widespread opposition from unions, industry and the Competition and Markets Authority.
The Department for Transport said the government was still considering the findings of the KPMG report. “We want to see a successful UK maritime industry to put our nation in the best possible position to benefit from the expected doubling in world sea trade by 2030.”
“No decisions have been taken on changes to the UK Ship register and we are continuing work on how best to take forward the recommendations of the Maritime Growth Study.”
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Source: Financial Times
