HC Deb 10 December 1964 vol 703 cc1948-56

9.35 p.m.

The Secretary of State for Scotland (Mr. William Ross)

I beg to move, That the Undertaking between the Secretary of State for Scotland and the North of Scoland, Orkney and Shetland Shipping Company Limited, a draft of which was laid before this House on 27th November, be approved. We move from the severity of life in the West Country to the most northerly part of these islands. There will be those who will wish to read how the subject of their communications in the Shetlands is dealt with in the House of Commons, and I wonder how they will react to the debate about a bridge over the Severn which they will have the chance to read in the same copy of HANSARD. We are now considering people to whom communications mean life, who live in a place where communication has always been by sea and where the prospect of having a bridge and the comforts of a bridge, with or without toll, is absolutely nil.

The draft Undertaking deals with the sea service between Lerwick and the North Isles of Shetland, that is the islands of Yell, Unst, Fetlar, Out Skerries and Whalsay. The names trip off the tongue like poetry, but, having had the privilege of being there and knowing the islands with some familiarity during the war, I can assure the House that life is not always quite so poetic up there.

The North of Scotland, Orkney and Shetland Shipping Company operates this service with the motor vessel "Earl of Zetland", and to do so it has received assistance since 1960 from the Scottish Office. The company's main services between Leith and Aberdeen and the Orkney and Shetland Islands are not in any way assisted by Government subsidy.

In 1960, the company intimated that it was not prepared to continue to run its subsidiary service between Lerwick and the North Isles beyond that September unless it received Government assistance towards its losses. We were thus faced with the situation that, unless Government assistance was available, the people of these islands would be completely cut off. The Government of that day, the Conservative Government, used the Highlands and Islands Shipping Services Act, 1960, to bring the necessary help to this service. Incidentally, that Act had only just been passed, and passed shortly after they had said that there was to be no more nationalisation, but it was an Act by which they gave power to the Secretary of State to build ships, to own ships, to charter ships and to run ships. Indeed, I appear tonight in the rôle of one of the ship owners of Scotland.

It was calculated at that time that about £2,000 a year would meet the deficit, hut, since then that has proved to be a gross underestimate. Shore and handling charges, wages and repair costs as well as a proportion of overheads of the other service have made this figure quite unrealistic.

One of the reasons for the loss is the transfer of passenger traffic—it is mainly such traffic and not so much freight traffic—through the use and development of what is known as the Shetland overland service between the Islands and the mainland of Shetland. This service is by converted fishing boats about 25 ft. long. They go between the Islands and then there is bus and other transport. If we could develop this service, it might well be that in the end we should have something much cheaper and perhaps more efficient. But that prospect is years ahead and I am sure that, if we are to maintain these communications, we must give the necessary support to the North of Scotland company.

Section 2(3) of the 1960 Act provides that the Secretary of State, where the amount given in subsidy in any one year exceeds £10,000, must bring a draft Undertaking to the House. It became clear by the latter half of last year that the payment for 1964–65 would exceed this limit. That is why I have brought this Undertaking before the House.

Subject to the incentive Clause—Clause 13 of the Undertaking it provides for the whole deficit of the "Earl of Zetland" service to be met by the Secretary of State. This service does not bring in business to the company's other services which it could not otherwise get, nor does it help to cover its overheads. We have had this confirmed by specialist examination.

The draft Undertaking makes arrangements with the company on similar lines to the other agreements that have been concluded under the 1960 Act with MacBrayne's and the Orkney Islands Shipping Company for the North Isles of Orkney. It will enable the Secretary of State to meet the North of Scotland Company's deficit this year of over £10,000 and, if necessary, to deal with the position in future years. For the most part, the detailed provisions repeat, in effect, what the House has already discussed and approved in relation to the other Undertakings.

Clause 1 provides that the agreement is to run for three years. After three years we will be able to have another look and if there is development of the "overland" service we can, of course, make the necessary changes. Part II of the Undertaking sets out what the company is to do. It must provide such transport services as may be approved by the Secretary of State. Any changes in services are made subject to his consent. This is really controls run rife and an Act of Parliament passed by the Conservatives is responsible.

The Secretary of State may also require changes to be made, as he thinks fit. The company is also to provide information required by him in relation to its services. It must provide suitable vessels and crews; it must connect up with other public transport services and observe the fair wages clause. This is common form and has been in all these agreements.

In return for all this, the Secretary of State undertakes, in Part III, to pay an annual grant sufficient to meet the company's losses. The Undertaking sets out how this will be calculated. Clause 12 deals with details of accounts and insurances and Clause 13 provides an incentive to efficiency.

Clause 13 is rather complicated. It really means that, if there is an additional loss of up to £1,000, the company will meet half and the Secretary of State the other half. If there is an unexpected gain then 50 per cent. goes to the company and 50 per cent. to the Secretary of State. In this way we hope to ensure a certain amount of concern for efficiency. It is a small but very important incentive. If, of course, the company went on making extra losses or extra profits year after year, this would show that there was something wrong with the original estimates and the capital grant may be recalculated.

Clause 14(2) deals with charges. Changes in rates and fares require the consent of the Secretary of State and he is empowered to require changes if he thinks fit to do so. The Secretary of State, however, must have regard to certain considerations in exercising these powers. They are, first, the general level of other transport services; secondly, the financial results of the company and the amount of grant payable and, finally, the effect on the economy of the area to be served. This is very important, because the economy of the area concerned would just collapse without these services. In fact, one of the serious reasons for the increase of the grant is depopulation and the fact that the service has not been used because the people are not there to use it.

Clause 14 provides that if rates and fares are changed, the grant must be reviewed. Alternatively, the grant may be changed instead of putting up rates and fares. All this again repeats provisions which the House has approved in the agreements for MacBrayne's and for the North and South Isles of Orkney.

Part IV contains formal matters dealing with summary determination and the Secretary of State's default powers. We hope that we shall not have to use them.

I hope that I have given a sufficiently clear account of the agreement to enable the House to approve it. The agreement is of great importance to the people of these areas where life cannot be sustained without these services and where these services cannot be sustained without this Undertaking.

9.47 p.m.

Mr. J. Grimond (Orkney and Shetland)

As the Secretary of State has said, these services are essential to the North Isles of Shetland even though Yell and Unst can be reached by a system of ferries and buses. The Isles of Fetlar, the Skerries and Whalsay are almost entirely dependent on the "Earl of Zetland" and in addition all heavy freight has to be carried by sea. I noted with approval what the right hon. Gentleman said at the beginning of his speech about the importance of sea routes and how glad we should be to have some bridges, even if we had to pay tolls on them. We do not even have trunk roads and the sea is our trunk route.

As the right hon. Gentleman said, the undertaking enables the Government to make a comparatively small subsidy to the North of Scotland Shipping Co., small in comparison with the subsidy paid to MacBrayne's in the Western Isles. As he also said, it covers only the inter-island services of Shetland and not the trunk route from Leith and Aberdeen to Lerwick.

We are trying to increase the tourist traffic and the shipping company has shown enterprise in conjunction with the local hotels in providing facilities for tourists. However, the "Earl of Zetland" has a limited life. I know that the right hon. Gentleman will not be able to give me any information about this now, but I want to put it on the record that we ought to be considering a replacement and that when we do we must consider the type of ship and whether it is to have accommodation for tourists or to be largely devoted to cargo. In Orkney we suffered from delaying consideration of ship replacement too long. This cost the taxpayer money in the end and affected the services.

As the right hon. Gentleman knows, there is a great deal of consideration about the development of the overland route and there have already been inquiries into how the services should be conducted. All I will say tonight is that there is a tendency to feel that these matters are not urgent. They are becoming urgent and some decision about the services to the North Isles will have to be made fairly soon.

There is no doubt that the overland route is extremely convenient for passengers and light parcels, but if we were to extend it so that we had a system of vehicle ferries and at the same time the roads were improved, it might well carry heavier freight. Within the foreseeable future, however, the steamer will be needed, especially for the Skerries and Fetlar and probably Whalsay. It is also difficult to see, in the near future anyway, that heavy freight and livestock will be entirely carried by road, especially in the winter.

Further, there is the question of piers. We are still awaiting a decision about the repair and improvement of one or two piers. This is obviously tied up with the sort of service that we are to have, how far we are to rely on the overland service and how far we are to rely on the sea service. Therefore, the replacement of the "Earl of Zetland" and the future form of the services, related to the question of piers and roads, are matters upon which we hope decisions can be reached fairly soon.

Turning to the draft Undertaking, it is in fairly common form. We have had several of these Undertakings, and, to my mind, this one is acceptable for the purposes for which it is designed. The Secretary of State has power under paragraph 5 to request the company to maintain services. I think that I am right in saying that, although the Undertaking refers to the North Isle Services, the right hon. Gentleman could direct the company possibly to maintain at least temporarily some other service and take in some other island if he thought it necessary.

The Secretary of State drew attention to paragraph 13, which I welcome. It is right to give the company an incentive to make some money if it can, or to keep down losses to the minimum.

Paragraph 14, particularly subparagraph (1,d) is very important. Here we come to the question of freight and transport charges. They form a perennial complaint in the whole Highland area. Charges went up once again last summer, and it made people feel that talk of development was rather empty when they were continually faced with rising freight charges. I realise that this is not the occasion for debating the whole question of freight charges in the Highlands, but I would make this point.

The Government are to set up a development authority in the Highlands. We believe that this is one of the first matters to which it will have to attend. When it looks at paragraph 14 (l,d,iii) and the equivalent provisions in other Measures, it will find that one of the matters to which the Secretary of State shall have regard is the effect of transport charges on the economy of the area served by the Company". When it looks at that, I hope that it will realise that it is not only a question of trying to keep the existing population from disappearing too quickly.

The Secretary of State is right. The great trouble with these services is that we are in a vicious circle, to some extent. The population is always falling, and as it falls the charges go up and that takes more people away. If the development authority is to do a development job, it must reverse that spiral. It must not merely prevent charges from rising too quickly, but try to reduce charges as part of the general development policy for the Highlands. Therefore, it is not so much a question of looking at the state of the economy as it exists, but of looking forward a bit. As it is bound to direct its attention to ways of increasing the population and trade, it must consider the transport charges.

I do not want to delay the House over this draft Undertaking which, as I say, my constituents welcome. It has given me the opportunity to draw attention to the decisions which will face us concerning the servicing of this area and to impress on the House and the Secretary of State that transport should be considered not by itself but as part of a development policy.

I should like to close on this note. This is a matter which may affect a small number of people, but it affects them very deeply. They are people who are deeply devoted to their islands and homes. They want to make a living there. Recently, great efforts have been made to rehabilitate the Island of Yell. I hope that the House will be sympathetic to this draft Undertaking and will approve it. It will be the better for directing its collective mind to the problems of people who may be far from London but who are not, for that reason, any worse. Many of them have given long service to their country, and they are glad to think that the House of Commons gives as much attention to them in their islands as it does to the less fortunate people who are jammed up in this great wen of London.

9.55 p.m.

Mr. Ross

The important point raised by the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) was the question of the land route and the future of the "Earl of Zetland". I assure him that one of the questions which I immediately asked when I heard about this was how old the ship was, and I was told that it was over 20 years. There is, therefore, no doubt that it has, as the right hon. Gentleman says, a limited life. It will, of course, be appreciated that the nature of a replacement will depend entirely on the development of the overland route. That depends, first, upon the car ferries, their size and design and what they can carry apart from passengers; for the question of freight and livestock arises equally.

From there, one thinks naturally of the physical needs of the landing places. The right hon. Gentleman rightly spoke of the need for piers. The type of pier will depend upon the type of car ferry. An aspect which the right hon. Gentleman did not mention but which we appreciate is that of cost. A tremendous amount of work will be entailed.

As the right hon. Gentleman knows, the Shetlands are not exactly teeming with civil engineers. We cannot, therefore, think of all this being done within a year or two. I do not need to assure the right hon. Gentleman—he already knows—that the Highland Transport Board is looking into the question. I have had a long talk with the Chairman of the Board. The Board has been examining how this is done in other parts of Europe, particularly in Scandinavia. The county council has been doing a lot of work as well. I have certainly come to the conclusion that it is a very good scheme if we could get it developed. As the right hon. Gentleman has said, however, there will still be islands that require steamer services. We take note of the point.

I am glad that the House has seemingly given the Undertaking a welcome. There is no doubt about its importance. I wish that we could find all the time and money that is necessary for the trunk roads and the rest. I know the roads only too well—in fact, I helped to build some of them. The H.L.I. got lots of jobs to do during the war. I assure the right hon. Gentleman that the Shetlands continue to have the strong support of this House. What we are affording to the Shetlands on this occasion is very little compared with what we vote on other items. The present limit here is about £20,000 annually, but we hope that in addition to holding the position with the Undertaking we can look forward to a much improved and more satisfactory service from the combination of the ferries and the land route, as well as from roads and transport on the roads. One of the difficulties is that that is not always entirely dependable.

Question put and agreed to.

Resolved, That the Undertaking between the Secretary of State for Scotland and the North of Scotland, Orkney and Shetland Shipping Company Limited, a draft of which was laid before this House on 27th November, be approved.