Written evidence submitted by Lord Mountevens (MAR0018)
Methodology of this submission
I hope I may anticipate that the various industry associations and in particular Maritime UK will have assembled a comprehensive review for the Committee. Given that I am no longer actively involved in industry trade associations, and that there is pressure for my submission to be delivered soonest possible, I propose to list my remarks in terms of, firstly, what are the successes and positive contributions of Maritime 2050 (M2050) to the advancement of the UK's maritime industries, where I have sought to group my remarks where possible to correspond to the Recommendations set out in M2050, and, secondly, to summarise where in my view the strategy is not yet delivering fully or more could be done.
My intention is to be as brief as possible. Remarks are intended to be helpful and should not be interpreted as criticisms.
Finally, I write in a purely personal capacity.
The Inquiry by the Transport Select Committee into Maritime 2050 (M2050) is warmly to be welcomed. Quite apart from the lapse of time since the launch of the Strategy in January 2019, the timing is propitious as a number of developments subsequent to its completion now present some challenges to the assumptions that underpinned the report. These include:
- Brexit, with some disruption following UK exit continuing and Britain’s place in the world still under development;
- The long-running Covid pandemic;
- Greatly increased International security concerns, not least
- The Russian invasion of Ukraine and the myriad resulting implications for international trade, short, medium and longer term;
- Increased awareness of the vulnerabilities of maritime supply chains as revealed by the pandemic and the 'Ever Given' grounding in the Suez Canal;
- Other factors which have challenged the assumption of ever-increasing globalisation and pointed to the alternative benefits of some near-shoring;
- The abandonment of the government's Industrial Strategy, which was cited as relevant on a number of occasions and provided context for M2050.
It should be recalled that M2050 was prepared and completed against a background of intense technical and technological change and challenge, impacting the entire world maritime industry. It sought to address the challenges, to maintain and enhance the UK’s position among the world leaders in maritime, capitalising on the opportunities to drive prosperity and levelling up. All of that has not gone away and if anything has become more intense, more important.
M2050 is a very large and serious attempt to address the challenges as well as the opportunities that exist for the maritime industries of the UK at a time of great international competition in the race for decarbonisation solutions and also coming from the disruptive technologies.
The Department for Transport (DfT) is to be congratulated on the ambition and scope of the report which aims to set out a strategy for the UK's maritime industries in the short, medium and longer term. It is admirably comprehensive in what it seeks to address, with around 180 recommendations across 7 ‘themes’. The strategy document confirms and demonstrates that government in general (not just the DfT) recognises the scale and importance of the UK's maritime industries. It now 'gets' maritime, something it had perhaps not fully done before, along with the need to optimize, as far as possible, engagement and coordination with industry. Given the critical position the sector occupies as a facilitator at the heart of exports and exporting, and with its significance for coastal communities and the government's levelling up agenda, this is a very important set of specialisations.
The industry is very fortunate to enjoy a close working relationship with DfT and M2050 is considered to be a helpful and aspirational document. The document highlights implicitly the requirement for a close relationship between the Department and the industry.
The question is put in the call for evidence ‘Whether and how the ambitions and objectives described in Maritime 2050 support the maritime sector’. To this the answer must be a resounding ’yes’. The strategy’s influence has been profound. Industry, Maritime UK and the individual trade associations are to a significant extent guided by the strategy. Several joint working groups have been set up such as the Maritime Skills Commission, the Careers and Outreach programmes, Diversity in Maritime and the Regional Cluster Development Council. A number of Road Maps have been prepared, including on People, Environment, Trade, Technology, the National Shipbuilding Strategy Refresh etc, and have been/are helpful and influential. In certain cases industry has contributed with Road Maps of its own, for example on Smart Ports and Emissions Reduction for Inland Shipping. There is keen interest from industry in M2050 initiatives such as the Clean Maritime Council, the Clean Maritime Demonstration Programme, and more.
(1) What are the successes and positive contributions of M2050 to the advancement of the UK's maritime industries?
UK Competitive advantage
Cooperation between Government and industry is vital to the competitiveness and success of the UK's maritime industries. The partnership has developed and grown since M2050 and was clearly evidenced by the remarkable and highly successful cooperation shown during the Covid pandemic. The maintenance of deliveries of medicines, food and energy was of the utmost importance and was accomplished most successfully. This is a suitable point at which also to note that at the height of the pandemic government provided targeted financial support to domestic ferry operators on key routes to ensure their continued operation.
In the area of Fiscal competitiveness, developments are awaited. The Chancellor made mention of a reformed Tonnage Tax in the Autumn 2021 Budget, though details are as yet unannounced. Meantime, led by the MCA, a considerable body of work is underway aimed at the provision of capital to finance decarbonisation and the development of suitable technologies for low carbon propulsion, also products to mitigate risk for Owners building new vessels with what will initially be new technologies, as well as the provision of a government supported green bond to enable UK based Owners to invest in the next generation of vessel engines etc. Importantly, there are also efforts to develop export finance provision for ships to be built in the UK.
The developing scale of work by Maritime UK, as well as the individual sector trade associations, all working closely with government, is leading to better knowledge, understanding and strategy across the industry, benefitting the business environment. On a specific point related to business environment, a notable success was the delivery of a shipping IPO on the main market of the London Stock Exchange in May 2021, the first for four years. Over $250 million was raised.
Government and industry are working together closely to enhance and grow the UK's regional maritime clusters. Government supported the development of the cluster initiative at the early stage and, subsequently more substantially. Maritime UK published a Coastal Powerhouse Manifesto.
Support to the clusters can take different forms, including towards technology, innovation and infrastructure, as well as careers, skills and training. There are many factors at play here and government actions aimed specifically at other (i.e. other than maritime) areas of policy can have a secondary and beneficial effect on maritime. An example is the £160 million for port infrastructure to develop offshore wind capacity at two UK ports as announced in the 2021 budget. Elsewhere, £33 million of funding was granted for the Humber Zero Carbon Initiative (a collaboration between the Humber and Teesside). This will have a general beneficial effect on two coastal communities. But decarbonisation is a critical goal for maritime globally. By advancing decarbonisation of the environment on the Humber and on Teeside, the nation’s technological base and expertise is grown, which is likely to be of value to the nation’s maritime industries in their quest to reach carbon zero. At the same time the UK is demonstrating to the world that we are focussed on decarbonisation, which can have a number of positive outcomes, including potentially attracting overseas investors, not least to the new Freeports (see also below).
Another example is afforded by Maritime UK Solent which will bring together the Solent’s maritime strengths and champion the region as a globally significant maritime cluster, built upon the region’s natural assets. The Solent Freeport will capitalise on the area’s existing maritime strengths to unlock investment, potentially creating thousands of new jobs, and helping to attract new businesses in high growth sectors.
Thought leadership was demonstrated when the UK government sought early coordinated international action to resolve the crisis that arose during the pandemic, when crew changing for very large numbers of seafarers became impossible. Further, the UK government were early to press for the designation of seafarers as key workers.
Government support has been clear and impactful in the delivery of London International Shipping Week 2021(LISW), the fourth iteration of this biennial gathering which has become one of the most influential international meetings for maritime, and a showcase for the UK’s maritime offer. The DfT garnered impressive senior Ministerial support across Whitehall, significantly more than for preceding LISW’s, demonstrating the importance attached to, and government support for, maritime and contributing invaluable ‘stardust’ to the event. Inevitably international participation at LISW 2021 last September was impacted by the pandemic, but the event has been growing and going from strength to strength, presenting an opportunity to demonstrate considerable thought leadership and influence by the UK, both government and industry, particularly on the conference day. The government (DfT) also successfully invited the influential Global Maritime Forum to hold their 2021 gathering in London.
M2050 set out ambitious goals for the UK flag. Under the Paris MOU rankings, the UK flag performs very highly against other flags, denoting high standards and diligent oversight by the MCA. As will be seen in Section (2), a combination of Brexit and the pandemic has provided a difficult backdrop for the MCA to grow the flag, as was set out in M2050 objectives. In general however the MCA has been, it can be said, reinvigorating itself. The introduction of the UK Shipping Concierge Service was a very positive step. Launched at LISW 21, the service provides a one stop shop for maritime business, focussed on meeting the needs of ship owners, operators and other sub sectors, providing connectivity to the right experts across government and industry.
Under Technology – Future of Shipping the government undertook to ‘legislate for a domestic framework for autonomous vessels to attract international business and allow testing in UK’s territorial waters’. The UK is strong in the area of autonomous vessels. With the intention of positioning the UK as a leading player in this area, Government (the MCA) and industry has set up the Maritime Advisory Regulation Lab (MARLab), bringing together individuals from industry and academia, with the goal of developing regulation of maritime autonomous vessels.
Under Smart ports government undertook to work with industry to develop a ‘Maritime Innovation Hub’ in a UK port via an open competitive process. Newcastle (with partners) has been appointed as the first Maritime Innovation Hub.
People: Performance under the Maritime workforce section has been very encouraging. The whole, Diversity in maritime workforce and Maritime skills and promotion as well as the Need for continuous education and training piece has been the focus of considerable attention from Maritime UK and government and can be viewed as a success story. Maritime UK and others will have reported.
Environment: Towards zero emission shipping: The UK is a leader in addressing carbon zero and was the first country to produce a clean maritime plan. On the macro stage, notwithstanding the obdurate position adopted by a small number of key countries, government is regarded as having made a considerable success of the Cop meeting, setting a positive backdrop to the nation’s efforts to decarbonise, including in maritime.
Attention has been focussed on clean maritime innovation. The Clean Maritime Demonstration Competition initially qualified for £23 million government funding, which was subsequently increased by an additional £206 million to expand the competition. Elsewhere, Maritime Research and Innovation UK (MarRI-UK) was set up as collaborative venture at Strathclyde University to drive innovation. Cooperation between government and industry developed, with an initial government investment of £4.8 million to research technology development.
As regards the Trade objectives, the government committed to ‘an ever more ambitious free trade agenda with the rest of the world, while ensuring continuity of existing EU third country free trade agreements’. It has progressed rapidly with free trade agreements across the globe. The Department for International Trade (DIT) has meantime recruited additional staff to boost help to maritime and marine exporters.
Under the section titled Competition in a globalised world, the government undertook to ‘engage with the ports and the manufacturing industry to consider the case for free ports in the UK’. Progress here has been rapid, with 8 freeports now nominated by the government, seven of them maritime. Two ‘green freeports’ are awaited in Scotland, with a further freeport to be nominated in Wales. The situation in Northern Ireland is complex due to the special status with Eire, but there are hopes that something will be developed. Overall the pace and scale of progress has been commented on as ‘amazing’. The new freeports are all located in disadvantaged areas and are intended to contribute to growth, employment and opportunity in the regional maritime clusters (see above under UK competitive advantage). They have been likened to ‘supercharged enterprise zones’ and have been described as agents for regeneration.
The importance that is attached to carbon zero in the new areas has a real potential to drive innovation, which can be relevant to the decarbonisation of shipping. Moreover the establishment of major ‘green’ ports has an important global potential to attract international investors at this time where they increasingly wish to identify with green localities and green outcomes.
Shipbuilding and boat building
One of the most recent developments, and of great potential impact, has been the publication of the National Shipbuilding Strategy Refresh. With the initial announcement made during LISW 2021 by the Shipbuilding Tsar, the Secretary of State for Defence, Ben Wallace, this is seen as one of the most important initiatives in maritime by government. Developed in conjunction with industry, it sets out a visionary future for shipbuilding and its associated supply train in the UK. It is intended to deliver a pipeline of more than 150 new naval and civil vessels for the UK government and Devolved Administrations over the next 30 years or so. The vessels will include large warships , Border Force Cutters, Lighthouse vessels and the new National Flagship. A number of important initiatives will support the Strategy Refresh, including over £4 billion of government investment to provide finance, skills building and funding for crucial R&D into greener vessels and infrastructure. Central to the Refresh is the establishment of a National Shipbuilding Office. A new Home Shipbuilding Credit Guarantee Scheme will give the yards access to finance for underwriting domestic contracts. Elsewhere the DfT will invest £206 million in the UK Shipping Office for reducing emissions (UK-SHORE) to fund research into zero emission vessels and infrastructure. The Clean Maritime Demonstration Competition is extended to ‘multi year’. Export credit is also to be made available and a new Maritime Capability Campaign Office (MCCO) within DIT will coordinate export support across government and industry. It is made clear that government looks to industry to partner with government and to deliver fully on its side.
There are inevitably some gaps in this very ambitious scheme with not a great deal said of how shipbuilding for the commercial market is to be developed, but encouragingly the Refresh aims at a 45% increase in shipbuilding, boat building and marine exports by 2030. The defence sector is already doing well with significant international orders for Type 26 and Type 31 frigates
On Security and resilience, this is very much an area where government leads and has the responsibility, indeed the final sections of the strategy recommendations are almost all government related. My belief is that the industry feels essentially confident in the efforts made by the UK government.
On a general note, with regard to the current Russian war on the Ukraine, whilst the outcome is not clear and there are risks of escalation into war with NATO and even nuclear war, the unprovoked and illegal invasion by Russia has had a galvanising effect on the free world, which appears to have decided from hereon to stand up to autocracies and be stronger in the defence of democracy. Whilst as noted there are risks with this, in my view this is a good outcome for the recovery and maintenance of the rules based order which has historically been in the interests of UK maritime and world trade.
In concluding, on a number of occasions the Recommendations in M2050 call for UK leadership and action at, or in conjunction with, the IMO. For the UK to be an active and supportive member of the IMO is critical at a time when other jurisdictions would dearly love to lure the IMO headquarters away from London. To my regret however, I do not feel well qualified to comment on how successful we are being there, but I do take this opportunity to stress how important this is.
It is perhaps worth noting that in general, relations between the Royal Navy and the industry are very positive and have grown closer in recent years with M2050, by highlighting maritime, playing a part in that direction of travel. Industry recognises the importance of the Navy, and indeed its international allies and friends, for the peaceful prosecution of trade, whilst the RN on its side clearly understands the importance of the ‘prosperity agenda’ and is keen to play its part.
(2) Where in my view the strategy is not yet delivering fully, or more could be done.
i) M2050 is an admirable, ambitious and aspirational document as well as a blueprint, incorporating many broad laudable principles. It is however a very substantial set of goals, some of them rather loose. A future iteration could benefit from greater focus and detail on a smaller number of target outcomes. Pretty much everything is incorporated in M2050, to the point of ‘apple pie and motherhood’. It is almost a ‘wish list’ of all that could, indeed should, be desired. Whilst there is an undoubted intention on behalf of industry to deliver its part in achieving government’s ambitions, there could be benefit in a subsequent iteration from greater focus as well as the introduction of some numerical targets.
ii) The workload imposed on government by M2050 is exceptionally heavy. DfT has in my view worked tirelessly, and other government departments have moved to engage with maritime in a way that has been remarkable and impressive. However the impact of Covid has been profound on most departments, not least DfT and Treasury. The pace of delivery has inevitably suffered, both on behalf of government and industry. Hopefully this can now be addressed.
iii) Financial support received has been most welcome and heartening, though it does not match what some of our competitors have received, and probably is insufficient to guarantee, were that possible, the achievement of the desired outcomes. An example might be the search directed to carbon zero propulsion, the holy grail for shipping decarbonisation. That said, and being realistic, against a marked rise in the national debt, the sums are creditable.
Meantime details of the Treasury’s review of Tonnage Tax are awaited. Care is required to ensure that the recent requirement for ferries operating in UK waters to pay the National Minimum Wage is not extended to other Tonnage Flag operators trading in non-UK waters. Whether we like it or not, this would negate the attractions of the UK tonnage tax. Shipping is a world market. A personal plea, if I may: the recent debacle involving P&O Ferries should not be allowed to exert excessive influence on the Committee’s deliberations!
iv) Government departments have very heavy workloads and must meet exacting standards. That said, there is a case for more business understanding and involvement within government – secondments, for example.
v) As noted under section (1) the National Shipbuilding Strategy does not include great detail on the scope to build commercial vessels. However the industry is keen to expand, grasp opportunities and be competitive in this area. Coastal shipping is one of the areas offering opportunity. There is a potential to build a large number of small, low (ideally zero) carbon vessels that could take significant cargo volumes off the roads (where carbon emissions are in any case higher). At the same time this could provide a vital source of enquiry for the yards, whilst also driving the development of low carbon, green vessels where there can be a significant export potential.
Rather more adventurously, is there scope to develop low carbon barges for cargo transportation on the nation’s inland waterways? These could be low carbon motor-engined or battery powered. The barges could be extensively used for transporting, among other things, aggregates, sand and building materials. Due to height restrictions in tunnels, containers may not be suitable candidates.
vi) Industry on its side could also do more and has arguably also been falling short in some areas. Although Covid and home working have hindered industry, businesses and individuals need to be accountable for delivering their side of M2050. There is undoubted scope for greater ambition and more long-term thinking and strategy. Investment and training are classic examples where the bar needs to be set higher. Government rightly stresses the scope for increased partnership and joint endeavour. Industry could profitably research market opportunities, market share, growth trend etc. and then set itself challenging targets, quite possibly working together in partnerships where beneficial.
vii) In common with much of the UK economy, the industry’s export performance could be – and needs to be - better. On the government side, the expanded recruitment by DIT of personnel to assist in growing UK maritime exports has been most welcome. On the macro stage, a general expansion nationally in language teaching, particularly for certain key markets, both at school and university level, would be valuable and helpful. On the micro level, is it possible for government to provide increased funding for trade shows to facilitate more effective marketing and especially encourage/assist small and medium size businesses to export? Meanwhile on industry’s side, there is an urgent requirement for greater resource and determination to succeed in export markets. We have to do better.
viii) For both government and business, additional focus and effort is required to optimise the provision of green finance to maritime, where there are obvious areas that qualify as green. The City, the Treasury and the UK more widely wishes the UK to be a leading player in the provision of green finance. This is an obvious and major area of potential.
ix) Under M2050, the UK Ship Register was to ‘attract companies to the UK flag’. Requirements for banking finance normally require vessels to be registered with an EU flag. With the UK no longer a member of the EU, this poses a significant obstacle. Can anything be done to address this challenge?
x) Government and Maritime UK work very closely together. This has the benefit for government departments of minimising the contact and calls etc – the attraction of a one stop shop. Without in any way wishing to diminish that contact, communication with the individual sector trade associations has additional and complementary value, enhancing perspective, knowledge and understanding of what is a very diverse sector.
xi) In concluding, this is an exceptionally important time for the UK’s maritime industries, indeed a pivotal time. The challenges posed by decarbonisation and the new disruptive technologies present a huge opportunity to reinvigorate our shipping and maritime. Valuable work has been done but we need to pick up the pace. Early mover advantage will be critical and failure to grasp these technological opportunities will allow a gap to open up between the UK and our international competitors which it will be difficult, if not impossible, to bridge.