HC Deb 09 April 1974 vol 872 cc375-82

2.16 a.m.

The Minister of State, Scottish Office (Mr. Bruce Milian)

I beg to move, That the Undertaking between the Secretary of State for Scotland and the Orkney Islands Shipping Company Limited, a draft of which was laid before this House on 2nd April, be approved. The term "undertaking" is used in the Highlands and Islands Shipping Services Act 1960 for an agreement made by the Secretary of State. A draft undertaking must be approved by this House where the payment of subsidy for a sea transport service is expected to be more than £10,000 a year.

The reason for the draft undertaking with the Orkney Islands Shipping Company Limited, for which the Government seek approval tonight, is that the existing undertaking, which was approved in 1961, needs to be changed to enable the company to operate from 1st April 1974 with Government subsidy in the South Isles of Orkney as well as in the North Isles. It was not possible to have this draft undertaking approved before 1st April because of the General Election. No payments have been made in respect of the services since 1st April. Nevertheless, it is necessary that the undertaking be brought into effect from 1st April so that Government financial support for the services may be available without interruption. The amount of money that will be spent in 1974–75 under the agreement is about £135,000, of which £22,000 is needed for the service to the South Islands. Up to the present the South Isles have been served by vessels operated by the Bremner Company, Stromness, the proprietors of which wish to retire. With the approval and encouragement of the Department, they arranged to sell their business with effect from 1st April to the Orkney Island Shipping Company so that that company might carry on the shipping service in the South Isles—a service that is of vital importance to the community there. The retiring partners in the company are Captains Gray and Hourie, who have carried on this work for 35 years. I should like to take this opportunity of thanking them for the service they have given over that long period and to wish them both a long and happy retirement.

The intention is that the OISC should assume responsibility for the South Isles as well as for the North Isles service. The only change of substance in the draft undertaking before the House is the substitution of the words "Orkney Islands" for "North Isles of Orkney" in order to make this possible. Otherwise, the draft undertaking, with some minor and drafting changes, is the same as the undertaking with OISC now in force approved by this House on 11th December 1961. There are some minor changes in wording in the undertaking. but I do not think I need to explain them at this late hour. I commend the undertaking to the House.

2.19 a.m.

Mr. J. Grimond (Orkney and Shetland)

At this early hour of the morning, I shall say only a few words about the undertaking that is now before the House.

I wish to say how glad I was to hear the Minister of State compliment Captains Hourie and Gray on their long service to the shipping service in the South Isles of Orkney. Shipping and transport of all sorts are absolutely vital to my constituency. To bring that factor home to the House, I should mention that at this very moment there are 40 to 50 people stranded in Shetland who have been there since last Thursday, and probably half that number have ben hoping to go from Orkney to Shetland.

We are faced with another increase in freight charges. I listen in the House to speeches about increases in the prices of bread and milk. Unfortunately, we have had to pay these higher prices for some time in Orkney and Shetland. Therefore, there is no subject of greater importance to my constituency than freight and transport.

The undertaking enables the Orkney Islands Shipping Company to take over the services to the South Isles. These services have been conducted by two vessels—the "Hoy Head" and the "Watchful", which are very near the end of their time. I should like to know how and when they are to be replaced. Not only are these services essential to the existing population of the South Isles, but one of the South Isles—Flotta—is designated as an oil terminal. We want to know what services are to be available in years to come for local inhabitants and tourists, and for the oil industry. In my view these two vessels, though old, have given extremely good service, and the captains who have been running them deserve full praise. Captain Hourie is staying on, although Captain Gray is retiring

I should be glad to have some information—not necessarily now—about the implications of the undertaking in relation to the renewal of the vessels. Clause 15, 4(a) refers to the accounts and says that any expenditure of a capital nature shall be excluded. I take it that is meant to he for accounting purposes, and that the Government will give consideration to the replacement of these vessels.

There is also the question of the freight charges, which are of vital importance, as well as the question of the air services. As the Minister of State will be aware, we now have internal air services around the islands of Orkney and a landing strip on Longhope, and these are connected with the Orkney Islands Shipping Company.

I seek an assurance that the Government intend to maintain both air and sea services not only at the present level but at a level which will help developments in Flotta, Longhope and Hoy, and, we hope, on the island of Graemsay, in accordance with the possibilities of those various islands.

I think I am correct in saying that it was at the behest of the Bremner Company that the takeover has been arranged. I also believe I am right in thinking that there were other possibilities, that other companies had shown interest in these services. The amount of Government support forthcoming depends on the profitability or otherwise of the services and that in turn must be examined in relation to the overall activities of the services. The Government have a right to examine the books and so forth.

While this may be the most satisfactory arrangement at the time, there are signs in Orkney and Shetland that other companies are interested in our services, and we would not like to feel that these companies are being shut out in any way. I do not for a moment suggest that the undertaking does that, but the whole situation is changing with the advent of oil and the increase in the tourist trade.

These are the three points which I particularly want to make. The first relates to the question of the renewal of the vessels, the second to Government aid in keeping down the freight charges and maintaining and improving existing services, and the third to the possibility that in future new services may conceivably be available.

Captain Gray and Captain Hourie have performed great feats in keeping these boats going, and we certainly wish Captain Gray well in his retirement. We trust that Captain Hourie, who I think is continuing for some time with Bremner and Co., will have a further profitable spell of duty in the Flow. I welcome this undertaking in that it keeps services going. I hope that the Government will bear in mind the points I have made.

2.27 a.m.

Mr. Graham Page (Crosby)

It appears from the Order Paper that the Select Committee on Statutory Instruments has not yet considered this undertaking. The Committee considered it this afternoon and is asking the Department for an explanation of the absence of a monetary limit on the advances and loans which are to be made by the Secretary of State. This draft undertaking comes before the House for approval because the Secretary of State wants to advance to OISC more than £10,000 a year.

The Minister has told us that it will run into a figure of about £135,000. The Highlands and Islands Shipping Services Act 1960, under which this undertaking is made, provides, under Section 2(3) that Where the Secretary of State proposes under this section to make to any person in any financial year any advance which, by itself or taken with any other advance made or to be made under this section to that person in that financial year, exceeds in the aggregate the sum of ten thousand pounds he shall do so only in accordance with an undertaking a draft of which (including the terms and conditions upon which the undertaking is proposed to be made) has been laid before Parliament and approved by a resolution of the Commons House thereof. The Act does not require the undertaking to fix a limit, but I would have thought that the whole purpose of bringing the undertaking before us for approval is to allow the House to see a limit on the amount of money which the Secretary of State is to advance, either by way of grant or loan. How can an undertaking sensibly include the terms and conditions upon which the undertaking is proposed to be made, which is what is required by the Section, without stating the limit of the grant?

The grant is limited in the undertaking itself only by the wording of paragraph 11, which says: the Secretary of State undertakes to pay to the Company by way of grant in each year ended Thirty-first March…after the commencement of this Undertaking such amount as may be agreed from year to year between the Secretary of State and the Company to be the annual estimated loss incurred in providing the Approved Services … Loans are dealt with in paragraph 14, whereby the Secretary of State can make such loans as he considers "expedient". Having approved this undertaking in its present form the House has no further control over the amount which the Sec- retary of State will grant or advance. I do not see what the point is of the Secretary of State coming to this House or being obliged by the Statute to do so if he is then given a blank cheque. I would have hoped that some limit would be put in the undertaking, so that the House might know the amount which the right hon. Gentleman has in mind. If he had it written in the undertaking the House would be assured that the expense was not excessive. Surely "terms and conditions" as mentioned in the section I have quoted, must mean the amount and the House should know what the maximum amount is to be.

2.30 a.m.

Mr. Hector Monro (Dumfries)

I welcome the undertaking and endorse the references that have been made to the fine record of the three companies mentioned in it. The companies operate in exceptionally deep waters, yet they keep going an essential service extremely well. The seamanship of the captain and crews mentioned by the right hon. Member for Orkney and Shetland (Mr. Grimond) is of an exceptionally high order.

Transport by air and sea is most important in the Orkneys and Shetlands, and I am glad that the Conservative Government played their part in assisting the companies, whether in the provision of vessels, harbours or other facilities. This was set out in the debate on 16th January on the Scottish shipping services.

We wish the new services well and hope that they develop with the vast increase in commercial and oil drilling activity in the Orkneys and Shetlands. I hope that the Minister of State will give us as much information as he can about the rise in freight charges.

2.31 a.m.

Mr. Millan

I shall give further consideration to the question raised by the right hon. Member for Crosby (Mr. Page), but I shall answer him now by referring to what has happened with similar undertakings given under the provisions of the 1960 Act.

As I said in opening, up to now there has been an undertaking to this company dating from 1961, and there have also been undertakings given under the Highlands and Islands Shipping Services Act to other companies, the most recent of which was an undertaking in respect of MacBrayne's, which was introduced in December 1973. It has never been the practice in any of these undertakings to state the maximum amount of the Secretary of State's commitment.

The purpose of the provision in the Act is to provide that the Secretary of State shall not go beyond £10,000 in a year without an undertaking being given, and that is the aspect of parliamentary control with which we are here concerned. I take the right hon. Gentleman's point that there is some logic in laying down a maximum. The maximum is laid down in terms not of a particular figure but of what the undertaking is meant to cover. The amount that is provided in discharge of the undertaking appears in the Vote on Account.

I shall certainly consider the right hon. Gentleman's point, which has never previously been made on an undertaking since the Act of 1960. That does not mean that it is not valid. I do not think that the right hon. Gentleman is Arguing that there is anything invalid in the undertaking or that it is defective, but I undertake to look at the point with reference to any future undertaking.

The right hon. Member for Orkney and Shetland (Mr. Grimond) raised several matters and I shall comment briefly on one or two of them. First, he drew attention to a circumstance which I accept completely, namely, that transport, whether by sea or air, is of particular importance to his constituency. I think the right hon. Gentleman will accept that this is recognised by the various special provisions, whether by way of the 1960 Act or otherwise, which are of considerable assistance to his constituency. The Government, like their predecessors, are anxious that support should continue to be given to transport services to his constituency in one way or another.

The freight charge position may not be as bad as the right hon. Gentleman suggested. The increases in recent years have been comparatively limited. The last increase, dating from November last, was the first since 1968. It would not be true to say that there have been massive and continual increases in freight rates.

The right hon. Gentleman also raised the question of the replacement of the two boats being used at present. I take the point, but he is aware that in the last year or so there have been discussions with the county council on the question of whether it would be willing to take over responsibility for the services. He knows better than most of us that it is the aim, following the Transport Act 1968, to have local authorities, with Government assistance, take over the responsibility for services which are vital to their own communities and which, basically, they are in a far better position to judge in terms of expansion, and so on, than the central Government are. It is in the context of that kind of discussion that one would consider the replacement of the boats and would be concerned with the question of improving or augmenting the services in future. We intend that these discussions should reach a fruitful conclusion.

The right hon. Gentleman also said that he did not wish it to be felt that this undertaking carried any implications of shutting out competitive services introduced by other companies. From that point of view, the undertaking is neutral. It is of the essence of the matter that it is directed only towards one company. The essence of any such undertaking is that it must be related to one particular company providing particular services which, of course, have to be designated by the Secretary of State.

This undertaking carries no implication of shutting out future services, nor any implication that we would welcome entrants to these services in the sense of being willing to provide subsidy for them. If the matter arose the Government and the county council would be willing to look into it, but I do not think it arises on this undertaking, which is very limited and arises out of the situation that I have explained. By itself it has no direct effect on the services now being provided. We desire that there should be adequate services both by sea and air to the right hon. Gentleman's constituency.

Question put and agreed to.

Resolved, That the Undertaking between the Secretary of State for Scotland and the Orkney Islands Shipping Company Limited, a draft of which was laid before this House on 2nd April, be approved.

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