In letters to UK foreign secretary, Boris Johnson and shipping minister John Hayes, the union said the evidence revealed in the leaked documents showed widespread use of UK territories and dependencies such as Bermuda, Gibraltar, the Cayman Islands and the British Virgin Islands to create mechanisms for companies and individuals to avoid tax liabilities.
General secretary, Mark Dickinson said the press reports of the documents highlighted the union’s long-standing concerns over the connections between these mechanisms – and the countries which host them – and the shipping industry.
“The papers contain extensive references to members of the Red Ensign Group (REG), which offer shipowners considerable incentives, as well as the opportunity to use low-cost labour. Essentially, we believe they also serve as another form of tax haven subsidised by the British taxpayer,” he said.
Dickinson claimed that the UK’s relationship with the REG is inherently damaging for its domestic maritime policy objectives.
“The 2016 Shipping Fleet Statistics showed that the UK Ship Register (UKSR) now accounts for just 26% of the total REG deadweight tonnage, and the most recent UNCTAD Maritime Report showed that more than 80% of UK deadweight tonnage is registered with foreign flags – which clearly undermines the government’s stated aim of doubling tonnage under the UKSR,” he stressed.
Dickinson told the Ministers that there is evidence that some of the REG registers fail to discharge their IMO/ILO convention responsibilities to the same level as the UKSR, and some are classed as flags of convenience (FoCs) by the ITF.
“FoC registries, including those in the REG, make it more difficult for unions, industry stakeholders and the public to hold shipowners to account,” he said. “The publication of the ‘Paradise Papers’ raises further questions about their long-term political sustainability.
“The OECD in particular has been working towards increasing transparency and exchange of information among countries, and these moves will inevitably increase the pressure on the FoC system.
“Nautilus supports the ITF position that there should be a genuine link between the real owner of a vessel and the flag the vessel flies, in accordance with the United Nations Convention on the Law of the Sea (UNCLOS),” he said.
Dickinson also said reform of the REG is long overdue and he called for Ministers to make the findings of the UK Department for Transport’s study of the commercialisation of UKSR publicly available and to ensure there is open debate on its recommendations.
“There is, according to UNCTAD, 41 mill dwt of tonnage beneficially owned in the UK but registered in these exotic locations. It’s time to bring those ships to the UKSR. Otherwise the suspicion will persist, as the Panama and now the ‘Paradise Papers’ show, that the shipping industry is an integral part of a global and dirty business of tax and regulatory avoidance,” he concluded.
Nautilus has also called for UK Budget action to improve the UK’s Support for Maritime Training (SMarT) scheme – pointing to shipowners’ promises to boost jobs if the assistance is increased.
In letters to the UK Chancellor and the Shipping Minister ahead of the Budget, Nautilus pointed to a ‘watertight’ case for implementing the SMarT-Plus package jointly proposed by the Union and the UK Chamber of Shipping.
“For an island nation, relying on the sea for 95% of its trade, shipping is an essential industry,” wrote Dickinson. “Seafarers are also vital for the safe and efficient operation of ships, and their skills and experience are also crucial for the future prosperity of the world-leading maritime services provided by the UK.”
He told the Ministers that the SMarT-Plus package would cost little more than a mile of new motorway, yet would ensure a sustainable supply of British seafarers – something that will be of increasing importance in the post-Brexit environment.
“The current SMarT scheme has a £15 mill budget and has done much to reverse what had been a catastrophic decline in the numbers of UK trainee seafarer during the 1980s and early 90s,” he pointed out. “While annual officer cadet numbers have risen from under 500 to around 800 since then, the intake is still woefully short of the numbers needed to meet future needs, to make up ground from the low training levels of previous decades, and to redress what could be a dramatic reduction in numbers in the years ahead as the average age of the existing seafarer population increases.”
Dickinson said shipowners had made it clear there is no shortage of high quality applicants for the limited number of training positions, which are available each year. However, the reduction in the value of the existing SMarT scheme means that the UK has become one of the most expensive countries in the world in which to train a seafarer.