HC Deb 07 July 1975 vol 895 cc294-304

4.11 a.m.

Mr. Neville Trotter (Tynemouth)

I apologise to the Minister who is unfortunate enough to have to reply at this hour, but I ask him to bear in mind that I was on the fish quay in my constituency at five o'clock yesterday morning when he was no doubt in bed.

My original objective in seeking this debate was to obtain a decision from the Government as to the future of North Shields fish quay. In the last few hours, however, we have had notification of the Government's refusal to go ahead with this important project.

I wish therefore first to express the concern which is felt on Tyneside at this decision; secondly, to seek a more detailed explanation from the Minister; and, thirdly, to urge him to reconsider the matter.

It may be helpful briefly to review the background of the matter. North Shields has been a major fishing port for centuries and has the distinction of having been the birthplace of the first steam trawler. Today it is an ideal location for vessels engaged in North Sea fishing. The increasing move to the North Sea from distant waters has led to trade at the port expanding greatly in recent years. Apart from the fleet of large deep sea vessels operated from the port, there are currently no fewer than 45 boats based at North Shields compared with 30 five years ago and 20 ten years ago, and there are a further five fine new boats now being built.

The harbour has many natural advantages. It is particularly well suited for the main North Sea fishing grounds. The harbour is at the very mouth of the river, there are no locks and no troubles with tides.

On the other hand, the fish quay is old and quite inadequate. The list of agreed defects is long. Furthermore, the harbour is overcrowded and there is inadequate quiet water berthing. There are problems from easterly winds to which the port is exposed. There are no slipways and inadequate repair facilities. The merchanting and processing facilities are out of date and overcrowded, with no room for expansion. The ice factory has a limited production capability.

It has been increasingly clear that major improvements are needed. In 1968 the quay passed from the ownership of the Borough of Tynemouth to the newly formed Port of Tyne Authority. Consulting engineers then reported that the quay was in poor condition. In May 1972 the then Government announced 60 per cent. grants for the six major fishing ports. A working party chaired by a representative of the Port of Tyne Authority and representing all interested parties was formed. The working party reported in September 1972 and put forward two alternatives. The first was a rehabilitation scheme, which was cheaper but in the words of the report "very much second best". The cost was estimated in 1972 as £1 million. The siting was poor by present standards and did not provide for an adequate new port.

The second proposal recommended by the working party was for completion of a new quay. This met the minimum requirements of the industry and provided an excellent dock complex for present and future growth. It had the advantage of new facilities, better berths and land available for share activities.

The conclusion of the working party was that there was no doubt that the future needs of the fishing industry on the Tyne were best served by the proposed new facility.

An application for grant was submitted as long ago as October 1973. Only now, in the last few days, has it been turned down. Brief Ministry letters gave only two short paragraphs of explanation. The first contained the words: …having carefully considered all relevant factors, including the greatly increased cost since first mooted. Have not the Government heard of inflation? Of course the costs have greatly increased. So have all other costs. It is only to be expected that the cost of the project would rise as a result of inflation.

The second paragraph stated that the National Ports Council advised that the project was not viable for the Port of Tyne Authority unless 85 per cent. capital grant was made available. The new local authorities on Tyneside became effective a year ago and wholeheartedly support the scheme. I understand from senior officials of the councils concerned that firstly they are prepared to provide the necessary 25 per cent. extra funds by grant or in interest-free loans; secondly, they are prepared to guarantee any borrowing by the Port of Tyne; and thirdly, they are prepared to indemnify the Port of Tyne against any loss.

Is the Minister aware of this wholehearted and enthusiastic support from the local councils? Does this support not change the financial picture, freeing, as it does, the Port of Tyne Authority from any financial burden? Why have the Government ignored this vital aspect of the proposal which was not even mentioned in the official letter of refusal?

I have spoken in the last few hours, since the Government decision was made public, to the main parties concerned on the Tyne, and all have shared my disappointment and concern. The fishing industry is concerned at the failure to attract new industry if the scheme does not go ahead, and it doubts the ability to retain the existing industry with inadequate facilities for much longer.

There is a danger that Irvines will move their six large trawlers to another port. As the managing director put it to me, this is not a threat but pure economics. A bigger fleet is needed to operate from the port to provide an adequate labour pool and to spread the costs of port operations. The fleet cannot grow with the present inadequate facilities while a new port would enable an expansion in the size of the deep water fleet. The merchants need the new port because large trawlers are essential if supplies are to be maintained, for in bad weather landings by smaller boats are affected and if the trawlers go, the stability of the market will be affected. The processors require the scheme because there are no sites available for development behind the quayside.

The Tyne and Wear council assures me that it wishes the scheme to proceed. It sees the scheme as being advantageous, as it would provide increased employment. It would enhance amenities in the area and would increase business there. There would be a tremendous psychological boost for Tyneside if this scheme could go ahead. Conversely, the opposite would happen if the scheme were cancelled.

May I point out to the Government that 60 per cent. grants have been approved for the other principal fishing ports—Lowestoft £3 million, Grimsby £2 million, Hull nearly £1 million, and Fleetwood over £1 million. Yet only North Shields, of all these ports, is in a special development area. So far as I am aware, none of the other ports is even in a development area, let alone a special development area. If the grant that we seek is higher than the others, it is only the result of inflation because the scheme is being considered after the others. Why should Tyneside, alone of the major ports, have missed the boat? Our need of jobs is greater, as witness the fact that we are a special development area. Up to 1,500 new jobs may be involved if the scheme goes ahead. If it does not, it will be hard to retain the existing jobs.

The offer made by the Government of a 60 per cent. grant on £236,000 to be spent on patching up a botched job on the existing quay can only be described as derisory. The grant will work out at £141,000 compared with the millions which have been approved for the other main ports.

I remind the House that the £236,000 now has to be compared with an estimate of £1 million in 1972 for what was then described as very much a second best scheme. Allowing for inflation which has also affected the cost of a botched-up job, this must be a proposal for only the minimum needed to maintain some semblance of safety. It is completely inadequate to meet any of the fair aspirations of Tyneside.

The leader of the Tyne and Wear council has indicated that his council would wish to pursue the matter further. He is particularly concerned lest the Ministry should use its power under Section 9 of the Harbours Act 1964 to prevent the council looking elsewhere for finance, and I trust that the Minister will undertake that having, as it were, shut his own door on Tyneside, he will not wish to shut other doors on us as well.

In particular, I know that the councils are thinking of the possibility of aid from the Common Market. I wrote to Sir Christopher Soames on this subject a few weeks ago and he replied that in principle FEOGA funds could be made available for a scheme of this nature.

The benefits of the scheme are permanent. We are talking of the long term. The present difficulties in the fishing industry, with which we are all aware, will surely be short term. Presumably the Government are not writing off the British fishing industry for the future.

I ask the Government to agree the scheme in principle, even if in the present state of the economy its implementation must be delayed. I assure the House that we in the North East have confidence in the future and confidence in the need for this scheme. I ask the Minister to share our confidence and to reconsider the decision.

4.20 a.m.

The Minister of State for Agriculture, Fisheries and Food (Mr. E. S. Bishop)

I am grateful to the honourable Member for Tynemouth (Mr. Trotter) for raising the question of the proposed new fish dock and quay at North Shields. I was glad to see for myself the present fish dock during my visit to ports in the North East recently when I was able to discuss the project with the fishermen in North Shields. It will help if I outline briefly the background to the Government's grant scheme for certain ports and the projected scheme at North Shields. I agree with the hon. Gentleman in his assessment of the history.

On 24th May 1972 the then Government announced a special programme of assistance to the five major fishing ports in England and Wales—North Shields, which is owned by the Port of Tyne Authority, together with Hull, Grimsby, Lowestoft and Fleetwood, which are owned by the British Transport Docks Board. In order to modernise old facilities and enable the fishing industries to meet the new conditions following accession to EEC, the Government offered a special 60 per cent. rate of grant, instead of the normal rate of grant of 20 per cent., provided that a scheme was approved within 12 months—by 24th May 1973—and that work started within 18 months—by 24th November 1973. On 25th May 1972 the Port of Tyne Authority was specially informed of this opportunity as it had already been considering a major reconstruction of the fish dock. At North Shields itself a local working party was set up to include representatives of interested parties, the White Fish Authority and the Ministry of Agriculture, Fisheries and Food. The working party concluded that there were two choices—first, improvement of the existing facilities or, secondly, building a new harbour downstream where greater space would allow for expansion. The then local authority—the Borough of Tynemouth—would have been prepared to assist a financially sound scheme, especially as land required for some of the new site was then in its ownership.

In order to ensure that the new harbour project was technically feasible, it was necessary to conduct preliminary investigations related to wave effects and the strength of the rock underlying the foundations. These preliminary works have been grant-aided at a rate of 60 per cent. and, as it took time to carry them out, the time limit for approval of the scheme as a whole was deferred. The results of these preliminary works were available in the early autumn of 1973 and showed that the scheme was technically feasible.

The Port of Tyne Authority did not immediately proceed with the scheme because there were two obstacles. First, the authority did not have the necessary powers to carry out all the works. To remedy this, a private Bill was presented to Parliament in December 1973 and received the Royal Assent in December 1974. Secondly, the authority lacked the necessary finance. Even on the basis of a 60 per cent. grant from my Department, the Port of Tyne Authority foresaw difficulties in making ends meet, and has had to consider what action could be taken to meet the expected shortfall.

The delays inevitably involved an increase in the costs of the scheme due to general inflation. In 1972 the local working party estimated the cost at £2.5 million. In October 1973, after the preliminary works were finished, the Port of Tyne Authority, when applying for grant, estimated the cost of £3 million. But by the end of 1974 the costs were estimated at £4.3 million and, more recently, at £4.75 million.

Even if all the financial obstacles were to be overcome, work could not start before 1976 owing to the need to go out to tender and latest estimates of the cost by the time of completion are just over £7½ million. It will not be out of place if I remind the honourable Member that this cost would exceed the estimated costs of the works in the other four main harbours put together.

In addition to obtaining grant from the Ministry of Agriculture, Fisheries and Food, the Port of Tyne Authority had to seek the consent of my right honourable Friend the Secretary of State for the Environment under Section 9 of the Harbours Act 1964. This consent is needed where the total costs of harbour works are estimated to exceed £1 million. Before granting his consent, my right honourable Friend seeks the advice of the National Ports Council, which reported on the projected dock scheme in January of this year, when the estimated cost was only £4.3 million and judged that the scheme would be viable only if users paid twice the existing dues, currently 3p. in the £; that grant would be available at the rate of 85 per cent; that landings would increase by between 3 per cent. and 10 per cent. per annum; and that the unit values of fish landed would increase by about 3 per cent. per annum.

This report raised immediate difficulties on the provision of capital as the Minister of Agriculture, Fisheries and Food, does not have power to pay grant in excess of 60 per cent. At this point, however, the new local authorities, the Metropolitan Borough of North Tyneside and the County of Tyne and Wear sought an opportunity to consider whether they could provide further assistance from their own funds. A short extension of the period for approval was granted and I understand that they have in mind a proposition which is based on 60 per cent. grant being made available by the Minister. But it is now clear beyond reasonable doubt that the project is unlikely to prove viable and hence approval for the purposes of 60 per cent. grant aid must be withheld.

Throughout the period since the inception of this special scheme, the Port of Tyne Authority has been told consistently that aid at the 60 per cent. rate cannot be taken for granted without respect to the capital cost involved. So far, the only firm commitment has been to assist the essential preliminary works and consultants' fees.

We must now look at the scheme in the light of current circumstances in deciding whether grant at the rate of 60 per cent should be paid. When the grant application was received initially in 1973 there was something to be said in its favour.

Landings had increased by three-quarters on a volume basis over the past 10 years. More ships were using the harbour so that the existing berthing space was over-crowded and there was an increase in demand for shore-based processing facilities.

The case seemed favourable, but many of the assumptions upon which this view was based were made in the conditions of the boom years of 1972 and 1973. Since then, there has been a decline in landing. A comparison for the five months January to May shows a fall from 26,000 tons in 1974 to 21,950 tons in 1975. It is also well known to the hon. Member that, at the same time, market returns have declined since the middle of 1974 due to very low prices on the fish markets of Western Europe and North America. At the same time, operating costs have risen, led by the savage increase in the price of fuel since September 1973.

These considerations alone would provide reason for further reflection on a projected new harbour. But also, as I pointed out earlier, the estimated costs of the works have soared and may reach about £7½ million on completion. Therefore additional charges required from users to make the scheme financially viable would have to be much greater than the doubling postulated by the National Ports Council, and the factors I have mentioned must inevitably cast doubt on their ability to meet these charges.

Mr. Trotter

Has the Minister fully taken into account the undertaking by the Tyne and Wear council to guarantee that there will be no deficiency payment by the Port of Tyne Authority?

Mr. Bishop

I have taken note of this point.

I wish now to turn to other factors. Clearly the only way in which the scheme can be made viable for the Port of Tyne Authority is for the losses to be underwritten. This would be an open-ended commitment. The Minister of Agriculture, Fisheries and Food has no power to take on such a commitment. On the other hand, an open-ended commitment of this kind would be inappropriate for the local authority to take on, given the Government's policy of the containment of public expenditure. We cannot tell what the trend is likely to be in local authority costs.

In the circumstances, I must conclude that it would be wrong to approve this proposal for aid at the 60 per cent. rate of grant. That view takes account of the need for increased capital grant and increased running costs which would bear upon fishermen and all the other users of the port.

Mr. Trotter

Will the Minister explain why only £239,000 is said to be needed for the existing quay when in 1972, before the present high rates of inflation, the figure was put at £1 million?

Mr. Bishop

The difficulties involved are such that the major scheme, we expect, will be running in a few years at £7.5 million. One hopes that the rate of inflation will be contained but there is this big problem of capital. There is the danger of open-ended commitment which would have obvious consequences for anyone wanting to underwrite the losses. There is the effect that this will have upon the rates and upon those who have to use the port. I have visited this port, along with 16 other ports, recently. The industry is in a situation in which it is difficult to see it able to pay the much higher charges for the use of facilities.

On the alternative scheme mentioned by the working party, the benefits which are still available to North Shields are important. Firstly any approved works further to those already approved will rank for grant at the standard rate of 20 per cent. Secondly, the Port of Tyne Authority in 1973 submitted a modest scheme of improvement to existing facilities to my Department. It consists of improvements to the fish quay and improvements to the marketing building and some extension to it. On current costs these improvements will amount to £236,000 and the offer to assist this project at the 60 per cent. grant rate still stands, leaving the Port of Tyne Authority to find only £94,400 provided costs do not increase during the course of construction. Further, this work can be put in hand relatively more quickly than the major scheme.

The hon. Gentleman mentioned a couple of other points to which I propose to refer. One is the effect on employment in processing, and so on. The number of on-shore jobs depends on the volume of fish landed. This, in turn, depends on a number of factors, and among these the fish dock facilities must rank for a comparatively small place. Much more important is the stock available to be fished, but this is part of a wider problem with which I cannot and dare not deal at this late hour.

I do not think it can be argued that the decision not to grant aid for the construction of a new fish dock has anything other than a comparatively small effect on employment in the fishing and allied industries, although one recognises the importance of the fishing industry to the port. Any effects on the construction industry would have been short-term anyway.

The hon. Member mentioned FEOGA. I understand that the Port of Tyne Authority has applied for a grant for a fall-back scheme. I do not know the outcome of this application.

I share the regret of many people that inflation, rising costs, increasing costs to be borne by local authorities and higher charges to be met by those who use the dock are factors that have necessitated this kind of conclusion. However, looking ahead I think that this decision will be seen to be in the best interests of all concerned.

I pay tribute to the hon. Member for giving me the opportunity this morning of putting forward some of the points that we bore in mind in coming to our decision. I hope that with the alternative scheme that I have suggested work can go ahead. My Department will be only too willing to co-operate in providing some of the better facilities that I have detailed in this short but important debate.

Question put and agreed to.

Adjourned accordingly at twenty-three nannies to Five o'clock a.m.