HC Deb 28 November 1972 vol 847 cc379-90

10.12 p.m.

Mr. Roy Hughes (Newport)

I am grateful for this opportunity to raise the vital question of the future of the South Wales ports. We had a debate on 1st July last year on the Bristol Corporation (West Dock) Bill. I and many of my hon. Friends opposed the proposals in the Bill not because of envy or any ill will towards the people of Bristol but because we appreciated the economic realities of the situation. Some of our sternest critics will now have to admit that our forecasts at that time have proved to be fairly accurate. The South Wales ports, of course, are essentially profitable undertakings at the present time but they are considerably underutilised. It is reliably estimated that they are working at only about 50 per cent, of capacity.

Furthermore, we have felt throughout that similar facilities to those sought by Bristol could have been provided in South Wales—and at a fraction of the cost. Of course, we were aware of the whole concept of the Bristol port expansion. Various schemes had been examined by the Labour Government and rejected on economic, commercial and social grounds. We expressed our fears of the likelihood of a trade war in the Severn estuary should the development go ahead. We were promised at the time that there would be no poaching of South Wales trade, and that the whole object of the exercise was to introduce new forms of traffic into the estuary. I have here the statement made on behalf of the promoters in support of the Second Reading of the Bill, in which they quote the Sectary of State for the Environment as saying that the proposals would be unlikely to have any damaging effect on the future prospects of the South Wales Ports. Theory and promises are one thing; in practice, we have experienced a vastly different situation. First, there was the incident relating to Barry dock. Over the years the British Transport Docks Board carefully built up a substantial banana trade with the firm of Geest. There were good industrial relations at the port, and its traffic was generally very competently handled. Then Bristol stepped in and tried to undercut for this trade and secure it all for the port of Bristol. That could well have meant the shutters going up in Barry dock. If it had not been for the business acumen of Mr. Tom Roberts, the Ports Director for South Wales, that could have happened.

Secondly, there was the incident with Newport docks. The basis of the present trade at Newport is the iron ore trade, but this is shortly to be concentrated at the new iron ore terminal at Port Talbot. In its place, the port of Newport was building up the car export trade. Then there was a further bombshell, with the announcement that there was a likelihood of the transfer of the whole of that motor car export trade to the port of Bristol. Apparently, IPC has two ships a month coming into Bristol with loads of paper and pulp, and the idea was to load them with the cars which had previously been handled by Newport for shipping to the Americas.

We appreciate that Bristol had a slight advantage in that Mr. Gordon Lowrie, the manager at Bristol, is a former employee of IPC. But if Newport is to lose that car export trade what will be next? Will it be steel exports? Where will all these happenings end? This piracy must end.

We must bear in mind that the difficult situation created in the Severn estuary is purely the result of an election gimmick by the Conservative Party. It had no relationship to economic facts. The question arises whether the port of Bristol is undercutting. I am not happy about the situation. We know that the Minister for Transport Industries presided over a meeting in Cardiff with the representatives of both sides of the estuary on 5th May last year. A statement was issued afterwards saying that one of the major objects of the meeting was to prevent cut-throat competition. What is now being done about the situation that has developed in the Severn estuary?

We know that the port of Bristol has some advantage, too, in that it is a local authority port.

Mr. Arthur Palmer (Bristol, Central)

And Labour-controlled.

Mr. Hughes

It is financed by the local government method of finance—the pooled rate of interest—which tends to be more preferential than the financial facilities offered to other public bodies.

But the whole question of ports cannot be considered in a vacuum. We must consider the difficult economic situation obtaining in South Wales as a whole. The Government bear a considerable degree of responsibility for that situation. Unemployment in South Wales is now nearly 50,000—almost 5 per cent. of the registered labour force. A few years ago we were saying that if this amount of public money was available—whether £15 million, or £18 million as seems to be the case now—the needs of South Wales were far greater than those of Bristol.

We had an alternative lucrative scheme—a real money-spinner—in South Wales. I refer to the Uskmouth iron ore terminal project, for which this House gave authorisation in 1967. It was not a harebrained scheme that would disrupt the whole trade of the Severn estuary. At present the British Steel Corporation is proposing to take the iron ore trade from Newport. I predict that when all this iron ore has to be transported 60 miles overland from Port Talbot there will be all sorts of technical and environmental difficulties. What is more, it is not fair to the Great Spencer works, which is just about the cornerstone of the economy of Monmouthshire. The corporation seems to be using it to subsidise the overheads at Port Talbot.

The Spencer works currently handles 54,000 tons of iron ore weekly. With current developments there this quantity will rise to 89,600 tons weekly. This works is one of the most modern in Europe, and developments there are likely to continue. One day it will undoubtedly have its own ore terminal, and the sooner the better.

Certainly the trade union representatives at the works have been pressing for this for a considerable time. I have had a series of meetings with Mr. Peter McKim and his colleagues in the trade unions represented at the works. They have been pressing for this scheme to go ahead. If we relate this scheme, authorised by the House 15 years ago, to the present situation at the Ebbw Vale Steelworks, which Lord Melchett announced a fortnight ago would suffer a loss of about 4,500 jobs, it will be seen that the Ebbw Vale Steelworks could have been a much more viable proposition today. This morning a deputation of 23 Welsh Labour Members of Parliament—the biggest delegation of Welsh Labour M.P.s ever—met the Minister for Industry and the Secretary of State for Wales to press upon them the seriousness of the situation.

The Government have failed the Welsh steel industry. They have failed the South Wales ports. Major new development in South Wales is needed in future—a shot in the arm, one might say. Perhaps now we should have something even more imaginative than a new iron ore terminal. We need something that will cater for all forms of trade. A few years ago the Labour Government announced what became known as the MIDA concept—the maritime industrial development area. The flats to the east and west of Newport, with Humberside and Thameside, were recognised as the three outstanding sites in the country. Perhaps we can return to this concept. It may be that discoveries in the Celtic sea will lead to developments of this kind, but the Government need to be shaken out of their apathetic approach to the problems of South Wales. They have certainly failed our area, and failed lamentably.

10.25 p.m.

Mr. Martin McLaren (Bristol, North-West)

There are four hon. Members in the Chamber who represent constituencies on the other side of the Bristol Channel. The interests of both sides of the Channel are complementary, and the best thing for all of us to do is to encourage shipping to come up the Channel, so that if any port gets more business there is likely to be a spin-off effect to the benefit of other ports in the estuary.

For years the hon. Member for Newport (Mr. Roy Hughes) has had a complex about Bristol. He has had a sea-green jealousy in our direction. He was successful in the handing out of development for the six years between 1964 and 1970, but the good times must come to an end and on the change in Government Bristol at last managed to get the improvement for our West Dock scheme. which even now is being built.

Mr. Palmer

The hon. Gentleman must be fair to the Labour Members representing Bristol who have supported the West Dock scheme throughout.

Mr. McLaren

I am the first to agree with that. I was referring to the hon. Member for Newport. Hon. Members on both sides of the House representing Bristol constituencies made common cause. Shipping is an international business, and ports thrive if they offer an efficient, cheap and rapid service.

Mr. Robert Cooke (Bristol, West)

And competitive.

Mr. McLaren

My hon. Friend has taken the words out of my mouth. We live by international competition. If we are not efficient, ships will be encouraged to go to continental ports.

The hon. Member for Newport should cheer up. At least there was a financial grant for his harbour developments. which was more than Bristol got. Bristol had to pay for the whole project itself. The hon. Gentleman has his local trades, such as iron ore, for which the shipping comes to Newport, and we have ours. If his dock is efficient it will thrive. I assure him that in any case he will get some crumbs from Bristol's prosperous table.

10.27 p.m.

Mr. Neil McBride (Swansea, East)

I fully support my hon. Friend the Member for Newport (Mr. Roy Hughes): We both represent seaport constituencies. Recent events have shown a drive by various interests to secure additional trade for the port of Bristol at any cost. The fears of a trade war are as real today as they were at the time of the Second Reading of the Bristol Corporation (West Dock) Bill on 1st July 1971. Swansea, Newport and all British Transport ports live in the shadow of the threat posed by the development approved by the Conservative Government which gave Bristol permission to raise £12 million to finance the project.

Swansea and Newport are apprehensive on two counts. The development will not increase the trade in the Bristol Channel and is harmful to the South Wales ports. Bristol will go for that part of the trade. The £12 million was borrowed at an average interest rate of 9½ per cent. The economic basis of the estimation of the returns was shown to be faulty, and an explanation of this is to be found in my speech on 1st July 1971 at columns 691–4 of the OFFICIAL REPORT. What I said has not been controverted, nor will it be, because it was based on accountancy advice. The hon. Member for Bristol, North-West (Mr. McLaren) heard me on that occasion and he did not controvert what I said.

The capacity of the dock from the point of view of future shipping developments and offloading processes is far too ambitious. I believe that the true reason for this activity is the desperate attempt to secure trade at the expense of the South Wales ports.

Swansea City Council was opposed to this menacing threat to the city's trade and Bristol is helped by an unfair threat in regard to subvention rates—

Mr. McLaren rose—

Mr. McBride

I cannot give way. My hon. Friend the Member for Newport has already been very courteous to the hon. Member for Bristol, North-West.

I know that a sense of apprehension has been felt in Barry, represented by the hon. Member for Barry (Mr. Gower) who, to his credit, voted against the legislation.

I understand the feelings of my hon. Friend the Member for Newport about the car export trade at Bristol. I suggest that the hinterland of the South Wales ports is adequate for this trade—certainly more adequate than Bristol. In view of the future volume of this trade, I believe that this can be supported and enhanced by the South Wales ports, which is not the situation in Bristol.

The folly of the Government's decision was reflected in the error of judgment by the Minister of Transport Industries on 17th November 1970 when he gave permission for the use of money for this purpose. This is shown in the attempts which are now being made. Swansea, Newport and the remainder of the British Transport Docks Board will fight any encroachment on their rightful share of trade in the Bristol Channel. The present situation has within it all the germs of a trade war, and we look to the Minister to dispel any suggestion of unfairness and encroachment on the traditional rights of the South Wales ports.

10.33 p.m.

The Under-Secretary of State for the Environment (Mr. Keith Speed)

I congratulate the hon. Member for Newport (Mr. Roy Hughes), my hon. Friend the Member for Bristol, North-West (Mr. McLaren) and the hon. Member for Swansea, East (Mr. McBride) upon their contributions. I am sure that the hon. Member for Newport will not be surprised if I do not agree with many of his conclusions.

I begin by sounding a warning note about the hazards of speculating on the future of any sector of the ports industry. It is an industry which exists, as part of the transport chain, to serve the needs of commerce and, more specifically, of importers and exporters. Its future must inevitably reflect changes in the pattern and volume of trade and the prospects of any particular group of ports must be bound up with these changes.

I pay tribute to the achievement of the board, the South Wales Ports Director and all his staff, and to the way in which their efforts have been backed up by the dock workers in South Wales. Good industrial relations have been a most important factor in the success which has attended the determination of the South Wales ports to gain and maintain economic and financial viability. These ports can stand on their own feet. The record speaks for itself.

The fact is that the South Wales ports as a whole are, and have been for some time, operating at a profit. They made a net surplus of over £500,000 for the first 43 weeks of this year, after providing for depreciation and interest—and this despite the docks strike in the summer and the coal strike earlier in the year. Newport contributed over £200,000 to this net surplus. That is a remarkable performance, and it throws great credit on the ports authority.

The hon. Member for Newport made much of the loss of potential additional car exports from Newport to Bristol but let us keep the matter in perspective. The whole of Newport's existing car export traffic in 1971 represented 48,000 tons, but Newport's traffic totalled nearly 6 million tons in that year. The hon. Gentleman explained the reasons for the decision to use Bristol for the additional car exports as being the result of a straightforward commercial transaction. As a result of securing IPC wood pulp import traffic from Canada, Bristol was in a favourable position to attract return cargoes—in this case motor cars.

I must tell the hon. Gentleman that this is what competition is all about. This is the essence of normal commercial trading, and one must expect to take the rough with the smooth. If our ports are to operate commercially and efficiently they must work in competition with each other. Certainly the British Transport Docks Board has said this. It has made no complaints about unfair competition, and I am glad to say that it is ready to adopt a slightly more robust attitude than the hon. Gentleman has tonight.

The hon. Gentleman also referred to the loss of the traffic in iron ore imports at Newport consequent upon the decision of the British Steel Corporation to transfer this traffic to Port Talbot. He still seems to be under some misapprehension as to the reasons for this decision, and its consequences. I can only say that the decision was made by the BSC on commercial grounds. I understand that the decision has been explained fully by the corporation in a letter to the hon. Gentleman, pointing out, for example, that the additional costs of transporting iron ore by rail between Port Talbot and Llanwern will be more than offset by the savings from importing in bulk through the new harbour at Port Talbot.

Any new iron ore terminal is a matter, in the first instance, for the British Transport Docks Board, and it will be influenced by the requirements of the BSC. My right hon. Friend the Secretary of State becomes involved only when an application is made under Section 9 of the Harbours Act 1964, which is for capital projects costing over £1 million. At the moment no application is under consideration.

The ports of South Wales as a whole will not lose. I am confident that the management of the British Transport Docks Board is alive to the prospects for and opportunities of diversifying Newport's traffic to compensate for the future loss of the iron ore, and I know that it is actively seeking new trade. The considerable increase in the tonnage passing through Newport—and also in the cash surplus of the port—makes me optimistic that the port authority will be able to gain extra traffic to offset any loss in ore traffic. I know that it will make strenuous efforts to do so. I understand, for example, that as a direct result of its efforts the board has recently secured an entirely new traffic in imports of Malaysian hardwood. The board is confident that its efforts to replace this traffic will be fruitful.

I have mentioned Port Talbot. This is a precious jewel in the crown of the South Wales ports. It earned a surplus of more than £300,000 in the first 43 weeks of this year. Its iron ore traffic, which is already well up on 1971 figures, is expected to double by 1975. The splendid new deep-water harbour offers all sorts of exciting possibilities for the future.

Only Cardiff and Barry are not currently as profitable as they were a year ago, but Cardiff is handling considerably more traffic than in 1971 and now handles fruit traffic all the year round. Only yesterday GKN announced plans for expanding and modernising its rod mill plant at Cardiff, at a cost of about £18 million. Barry has succeeded in retaining the Geest banana trade in the face of keen competition. Imports of pig iron and petroleum are buoyant, and the port has recently gained a new traffic in exports of refined sugar.

Mr. Roy Hughes

The hon. Gentleman is not answering my point about the promises that have been made. The basis of the West Dock scheme was apparently to attract new traffic to the Severn estuary. In fact, it is poaching on the South Wales ports.

Mr. Speed

I have no intention of repeating all the debates on the West Dock scheme. My right hon. Friend the Minister for Transport Industries had discussions last year with representatives of the port of Bristol and of the South Wales ports, as the hon. Gentleman knows. It was agreed that neither side would take part in any cut-throat competition based on rates which were uneconomic. We have heard emotive expressions like "piracy" and "a trade war". This is a matter primarily for the ports. If they feel that my right hon. Friend can help, he will be ready to listen to what they have to say. But vague complaints about movement of trades from one port to another, which is endemic to the industry and a mark of its commercial health, do not help anyone. However, it there are specific complaints, my right hon. Friend is prepared to consider them.

Mr. McBride

A trade war can result from false financial estimates. If not tonight, will the hon. Gentleman at some time let me have estimated returns on capital invested on 17th November 1970, on 1st July 1971, and today, the average rate paid for the money borrowed, and how it affects the Bristol rating system?

Mr. Speed

I have taken note of what the hon. Gentleman says. I will see whether I can help him. Time is running out. I have given way a little too often.

The question we must ask ourselves is how the Government can back the docks board in its successful efforts to assure the future prosperity of the South Wales ports. Loan finance to the tune of £5 million has been earmarked for new investment over the next five years. I need hardly say that my right hon. Friend will be ready to listen sympathetically to any proposals for port projects resulting from entirely new developments in trade and industry which cannot be foreseen at present. The hon. Member for Swansea, East mentioned the Celtic oil developments.

The South Wales ports now have better road connections with their inland markets than they had before. This is in line with the Government's announced determination to give priority to road links from the ports to the motorway network. The second aspect which will have increased importance for the prosperity of the ports is the achievement and maintenance of a higher rate of national economic growth. That will have a direct effect upon the continued prosperity of South Wales ports.

I have every confidence in the future of South Wales ports. The management shares this confidence, and takes a very robust line on the future of the industry. I have only recently taken on responsibility for ports within the Department. Top of my list of priorities for visits will be the ports of South Wales.

10.41 p.m.

Mr. Robert Cooke (Bristol, West)

I am grateful for what my hon. Friend the Under-Secretary has said. My hon. Friend the Member for Bristol, North-West (Mr. McLaren) was pretty decent about the way that the Welsh have been giving us nothing but a long bellyache this evening.

If the Welsh lose trade to the port of Bristol it is due to nothing but fair and fierce competition from my constituents, and because the port of Bristol is very well placed geographically. We also have people in Bristol who are prepared to work extremely hard to make a success of their enterprise. Perhaps a little fierce competition will bring the Welsh up to our standards so that the Welsh can benefit—

The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at eighteen minutes to Eleven o'clock.