Replacing The “Queens” FOR AND AGAINST A GOVERNMENT SUBSIDY

Press, Volume XCIX, Issue 29227, 10 June 1960, Page 14

Replacing The “Queens” FOR AND AGAINST A GOVERNMENT SUBSIDY

lßy WILLIAM KENNEDY, of ths “Economist”] (From the “Economist” Intelligence Unit)

London, June 2.—Since the end of the Second World War, the Cunard “Queens” have dominated the North Atlantic passenger trade. Newer ships have entered the service and one, the United States, is several knots faster. But the “Queens" have retained the glamour of being the world’s largest liners. The Cunard Line alone has been able to provide a weekly express service across the Atlantic, Now the “Queens” are drawing to the end of their economic life ’ and the question of replacement has arisen. The Queen Mary is 25 years old. and, in spite of postwar reconditioning, will require replacement during the next few years. The Queen Elizabeth, 20 years old and also reconditioned at the end of the war, can be expected to have an additional five or six years of useful life. In spite of their undoubted attractions for passengers, the “Queens” have not earned a big enough surplus to finance the replacement of their successors. This is mainly because of the rise in shipbuilding costs. The Queen Mary cost £5 million to build in the 1930'5; its intended successor, about 10.000 tons smaller, is estimated to cost £27 million. Another important factor in the finance field, according to the Cunard Line, has been subsidised competition from foreign steamship lines. Conservatives’ Promise To enable it to replace the “Queens” by similar ships, the company asked for Government assistance. The principle of government assistance was accepted by the Conservative Party in its election manifesto and on the return of the present Government the Chandos Committee was appointed to decide the form that government assistance should take.

The Chandos Committee has not had an easy task. It is true that there are many precedents tor government assistance to liner

companies in the North Atlantic trade. As long ago as 1906 the Cunarders Mauretania and Lusitania were built with the aid of a government subsidy. And the construction of the Queen Mary and the Queen Elizabeth was assisted by large government loans.

Foreign governments have gone even further. American, French, and Italian lines have their passenger ships built with the aid of government subsidies and receive operating assistance from their governments. The United States Lines paid only £l2 million for their flagship, the United States, which cost £27 million to build. On the other hand, many other British shipping companies object to subsidisation of the Cunard Line for the constructton of the “Queen” replacement Their first reason is. that It will weaken the position of British representatives on international shipping bodies, who have consistently protested strongly against competition from subsidised fleets. Second, it is argued that, if it assists the replacement of the “Queens,” the Government may be less willing to listen to more general approaches from the shipping industry on such matters as the burden of taxation on lines seeking to replace obsolescent ships. Old Arguments Invalid Again, many of the old arguments for subsidisation are no longer valid. The government of the day justified assistance for the construction of the Mauretania and the Lusitania by reference to their value as armed merchant cruisers. Similarly, the value of the "Queens” as troopships had an important influence on the decision to make government funds available for their building. But in the age of the hydrogen bomb, arguments on the economic grounds, too, stress has been laid on the value of the ■— i i

"Queens” as dollar-eamers It is true that they have earned many thousands of dollars in the post war years. But with the disappear, ance of the dollar gap this is no longer such an important consid. eration as it was a decade ago There remains the prestige value of the ships. No-one who has seen the "Queens” can fail to have been impressed by them The fact that Britain has built them may have helped to obtain many export orders for British industry. On the other hand, it may have had little Influence. It is impossible to measure prestige value. And £lB million, the sum the Chandos Committee has recommended to be provided as loan capital to help replace the Queen Mary, is a lot to pay for so uncertain a return. Doubts Remain The Chandos Committee has decided that an outright subsidy is too heavy a price to pay for the privilege of possessing the world’s largest liners and has suggested a low-interest loan to cover 60 per cent, of the cost instead. This Is certainly much less objectionable and much less costly to the taxpayer than a direct grant of the money. But doubts must still remain. In an age when more passengers are crossing the Atlantic by air than are crossing by sea, are large luxury liners a thing of the past? Is the Government, by assisting their construction, merely delaying a necessary adjustment to a new pattern of sea travel complementary rather than competitive with air travel? If the Government wants to intervene in the shipping field, should it not, instead of encouraging the construction of mammoth ships which will run nearly empty for half the year, encourage British ship, ping companies serving different parts of the world to build passenger ships than can be changed between routed and mm fully for nearly 12 months at the Only time can provide the answer to these ln ths meanwhile, they are likely to he forgotten when the new “QoMM” sail on thir maiden voyagaa. Fte by then it will be the btaaßy and size of the shite white vffl claim our attention rather Mat their cost.