§ Mr. Roger Stott (Westhoughton)
I beg to move amendment No. 3, in page 3, line 9 at end add'This draft order shall show the extent to which the increase in the borrowing arises from the National Bus Company having to service those debts attributable to additional mileage operated during 1975, and to London Country Bus Services Co. Ltd. and the interest charges on commencing capital debt being imposed on individual subsidiary companies or counties'.The Bill makes provision to increase the National Bus Company's external financing limit on aggregate borrowing from £200 million to £250 million with an upper limit of £275 million, subject to the Secretary of State's approval. While we are grateful for small mercies, it should be made clear that the National Bus Company, through the provisions of the Bill, will not receive a penny more from the Government to help it to offset its operating costs or to reduce the interest charges that the company must pay on its essential borrowing both past and present.
The Opposition did not try to amend the clause in Committee. Instead, we decided to probe the Government on key issues during the stand part debate. However, I must inform the House that the Under-Secretary of State's reply was far from satisfactory. Consequently, my right hon. Friend, my hon. Friend and I have decided to table this eminently reasonable amendment to restore some justice to the National Bus Company.
When the National Bus Company was formed in 1969, its financial structure was established on the basis of capital debt, which must be almost unique in contrast with the financial structure of a private company. Private companies are usually launched with a mixture of equity capital, ordinary shares and fixed interest loans, but the capital debt incurred by the National Bus Company in 1969 was regarded as an entirely repayable debt, rather than a sum invested in a business on which dividends would be paid, as would be the case in most private and some public businesses. Because the company structure was conceived in what I consider to be an inequitable way, two serious problems have arisen as a direct consequence.
First, there is no flexibility in the structure to enable less interest to be paid in a poor trading year. Instead, further loans must be obtained to cover losses, thus adding to future problems, or further fare increases and service cuts must be made at short notice, with all the attendant problems of trying to get the changes approved by the appropriate traffic commissioners.
Secondly, not only must the fixed interest be paid. In theory, the commencing capital debt must also be paid. Only in a highly profitable situation could that be possible. In practice, to meet the ongoing demand, further loans had to be obtained at far higher interest rates than those applying in 1969.
As if that were not sufficient financial impediment, the position was further exacerbated by the need to obtain further loans to cover the operating losses incurred by London Country Bus Services Limited, which the National Bus Company inherited from London Transport in 1970. The establishment of LCBS as a separate entity results from the Transport (London) Act 1969 about which we have heard recently.
842 The country division of London Transport had lost £2 million in the two years prior to the transfer. That unprofitability, together with the provisions of the 1969 Act, forced LCBS to start life in an extraordinarily impoverished position. A substantial fleet was inherited by the National Bus Company, with an average age of 18½ years and some vehicles 25 years old. That situation continued until 1973. Buildings were also outdated and had deteriorated considerably due to the lack of earlier investment, and the company started out with no head office and no central repair works.
Financially, the company was formed with £2 share capital and £2, 500 in petty cash, which did not go far to meet the ongoing losses and an inherited deficiency of £750, 000 per year from agreements on matters such as welfare and pensions. To remain operational, the company had no alternative but to borrow heavily. No depreciation reserves were transferred, although in London Transport's books they stood at £5.5 million on vesting day.
Despite the company's impoverished birth, the financial objectives laid down in the 1969 Act were extremely stringent. They wereto secure that the revenues are not less than sufficient to meet the charges properly chargeable to revenue account, taking one year with another,and including, in particular, proper provision for the replacement of assets. All of that resulted in a financial deficit on the 1975 management accounts of £5.2 million with losses being repetitive and increasing. They are still being paid off.
Most unbiased observers would conclude that that was a substantial burden to hang around any company's neck, but the story gets even worse for the National Bus Company. In 1975, it continued to operate a considerable mileage which, on any objective financial grounds, would have been cut because of substantial operational losses. However, it did not cut that mileage because of a specific request from the then Minister of Transport to continue operating it while local authorities made up their minds what level of financial support they would provide.
Ordinarily, such action would merit specific compensation to be paid to the National Bus Company by the Government. However, no such compensation was paid, so the poor old company had to pay interest on the extra debts incurred in carrying out a ministerial instruction. Even today, repayment of that debt continues to form a burden on the travelling passengers who use National Bus services and on the counties that pay transport supplementary grants.
The Select Committee on Nationalised Industries 1977–78, when examining that aspect of National Bus Company's finances, said:For any business, this burden would be considerable, for one with a market which has contracted, and which is in any case expected to receive supporting grants from public funds it is almost unworkable. In practice, NBC has met its 'obligations' in this respect, but only by a willingness to cut services, raise fares and make other economies.A more direct comparison with the company could be drawn by considering London Transport. Its debts were entirely written off in 1969 and its current investment in buses has been entirely met by central Government and GLC grants.
843 The Select Committee on Nationalised Industries 1977–78 report, reflecting on what would have happened had those rules been applied to the National Bus Company, said:Were NBC to have this arrangement, it would be able to operate the levels of service and fares applying in 1977 without the need of any further revenue support from local authorities.The local authority grants amounted to £26 million, interest payments to £12 million and the net cost for bus grants to £15 million. Therefore, it is important that the House should recognise that the company faces a real difficulty in repaying the interest on money it has had to borrow, as I have endeavoured to show.
However, regrettably, there is a belief in some quarters that the interest charged on that borrowing represents a very small amount of the National Bus Company's costs. I fear that that view is taken by the Department of Transport which does not appear to have a destruct button anywhere.
When replying to me in Standing Committee, the Minister said:The facts behind the debate are not as the hon. Member for Westhoughton (Mr. Stott) seems to believe. The burden of interest charges on the commencing capital debt has actually dropped, and represents a very small proportion of the NBC's costs."—[Official Report, Standing Committee D, 17 December, 1981, c. 143.]The Minister's view ignored the narrow margins on turnover to which the group must work.
When the interest burden is related to the action that is being taken to sustain the group's financial position, it becomes a significant factor. The National Bus Company has stated that the action that it took in 1981 was designed to reduce its stage carriage services to achieve a saving of £25 million. The interest payments during that year amounted to £18 million. Nearly three quarters of the action that has been taken by the company has been carried out to enable it to service its commencing capital debt—in other words, to pay a dividend in a bad year. It is no good the Under-Secretary of State trying to dodge that fundamental and incontestable fact.
If the company's position were not bad enough, the Government have added further to its problems. Its problems have been compounded by the provisions in the Transport (Finance) Act 1980. The company is now having to operate in free market competition with private bus operators that do not have such financial impediments placed upon them. No bus operators, whether they be the shire counties, the PTEs or private operators, have to operate with such a financial impediment.
The Minister said in Committee on the Transport (Finance) Bill 1980 that free enterprise is a good thing and that fair competition is proper. If I accept what he says on this issue, which I do not, he must recognise that the company is not operating in a market in which it can compete effectively if it has to pay the interest charges that I have described.
The amendment seeks nothing other than to obtain for the company a measure of natural justice. In its conclusion the Select Committee on Nationalised Industries reported:For all these reasons"—for the reasons that I have been deploying for the past quarter of an hour—your committee consider that a change should be made. They recommend: (a) that the Government should write-off entirely those debts of NBC attributable to additional mileage operated during 1975 and to London Country Bus Services Ltd.; (b) that 844 the interest charges on commencing capital debt should be met directly by the Government by direct grant to NBC, and licit imposed on individual subsidiary companies or counties.That is what the Select Committee recommended in 1977–78. I regret that the previous Labour Government took no notice of those recommendations. I am prepared to defend that Government's marvellous record, but it is legitimate to say that in some areas they had blind spots.
We have a new system of Select Committees operating under this Government and the Select Committee on Transport recommended:the Government should now reconsider their attitude to the earlier recommendations of the Nationalised Industries Committee and should consider a possible restructuring of the finances of the National Bus Company by conversion of the original and subsequent capital debts into Government-held dividend shares in the Company.That is a fairly recent recommendation.
I am asking the House to consider the eminently reasonable arguments that have been advanced by Lord Shepherd as chairman of the National Bus Company. If we seek to maintain the levels of public transport that we now have and if we wish to see levels of public transport maintained in rural areas, the company must stop operating with one of its arms twisted up its back. That could happen if the Government showed a little sense, by accepting a reasonable amendment that is totally non-political. It makes the point succinctly. I hope that we will receive a better response than we did in Committee.
§ Mr. Kenneth Clarke
My starting point is that I agree with the aim expounded by the hon. Member for Westhoughton (Mr. Stott), which is that there should be fair competition between different bus operators. It lay behind our Transport Act 1980 that we were opening up more routes to competition, but we accept that the competition should be fairly based between the various parties, and that there should be no unfair discrimination between the public sector and the private sector operators, favouring either the one or the other. That means that in dealing with any company, one has to look at what its costs are. Any company must seek to service its capital, which means operating costs one way or another.
It underlies the Government's approach to such businesses that the costs of servicing the capital required in the capital creation of the company are as much costs of a business as are the costs of labour and the costs of fuel. That is true of private and public sector business. That has been acknowledged by successive Governments in dealing with the financing of nationalised industries.
The hon. Gentleman is asking that we should write off a substantial part of the capital debt of the National Bus Company to give a new form of subsidy to it from the taxpayer, leaving the taxpayer to bear the costs of the capital structure of the National Bus Company, thereby giving it an unfair advantage vis-à-vis its private sector competitors. That view was not taken by the previous Government, and is not likely to commend itself to the present Government. It cannot be supported on an analysis of the past events that the hon. Gentleman went over. He mentioned 1970, when the London Country Bus Service was formed and 1975 when the then Labour Minister stepped in with instructions about the way in which it was to respond to a short-term financial crisis.
It is true that the capital structure of the National Bus Company is different from that of many of its private sector competitors. Being a nationalised industry, it is entirely financed by fixed interest debt. In bad years there 845 is the disadvantage that it cannot reduce its interest payments, whereas, if it were a private sector company, it would withhold payments of dividend. However, that applies in bad years. In good years a private sector company has to distribute its profits, and in good years the National Bus Company is tied to the same payment of fixed interest on its debt.
If a private sector company considered that, if it got into trading difficulties, it would suspend the payment of dividend and would carry on not paying dividends to those servicing its capital for as long as it was necessary because of its financial constraints. Eventually it would run out of the ability to raise fresh investment to finance its activities and would suffer penalties. To leave the National Bus Company in the position required by the hon. Gentleman—its commencing capital debts would be written off, it would have no interest payments, presumably it would have no equity and no dividends to pay and its capital would be provided free by the taxpayer—would be to give it a novel form of subsidy.
I do not want to go over the history of the two previous matters that persuaded the Select Committee to make its report to the House and which persuaded people to put the argument that the hon. Gentleman has put to the previous Government and this Government. It is pointless to look back to 1970 when the London Country Bus Service was created. It received the assets debt free on transfer in 1970. It had to borrow money to get through the short-term crises, but other companies, including other National Bus Company subsidiaries, had to borrow to build up the capital structure of the business. It would not be fair to treat the London Country Bus Service differently from other NBC subsidiaries or other companies.
I shall not rehearse the arguments about 1975. I would be repeating arguments used by Ministers at the time to explain actions taken by the previous Labour Government. It was never accepted by the previous Government, as is usually argued, that enormous sums of borrowing were forced upon the NBC by the decision to make it run additional services. It is true that the previous Government stepped in and asked the NBC not to cut back services at a time when the new revenue support system was being built up. The argument that all the borrowing incurred in 1975 should therefore be written off by the Government pre-supposes that but for that Government instruction no borrowing of any kind would have been carried out by the NBC in that year or that it would have been able to cut services to the degree necessary to avoid new borrowing within the time that was necessary in 1975 and thereby avoid any of the present debt payments.
I can hardly claim to have been party to what happened. The previous Government made the decision in 1975. The previous Government insisted that it gave no ground for wiping off that part of NBC's capital debt. We are not likely to be able to change that policy now.
The Government appreciate, as I have already remarked in relation to British Rail, that the NBC operates in difficult circumstances. The Government have set a stiff financial target that it is endeavouring to meet. The NBC is under external financing limits but succeeds in keeping within them. It is steadily improving the performance of the business. It is reducing costs, matching services to 846 demand and improving productivity at an impressive rate. It is improving performance within the imposed constraints.
The Government would not wish to add an unfair or impossible interest debt. I have pointed out in Committee that the burden of capital debt does not seem to us overwhelming. It is reducing somewhat. I stated:The burden of interest charges on the commencing capital debt has actually dropped, and represents a very small proportion of NBC's costs.The hon. Member for Westhoughton reacted to my remark but did not deny the truth of it. Both statements are accurate. I told the Standing Committee that the total burden of interest paid by the NBC has dropped markedly over the years. I stated:In constant mid-1981 prices, the total interest paid by the NBC in 1970 was £19–7 million; in 1976, £21.1 million, and in 1980 it dropped to £19.3 million. The interest paid on the commencing capital debtwhich is meant to be the basic subject of the amendmentat mid-1981 prices, dropped from £19.7 million in 1970 to £11.2 million in 1980."—[Official Report, Standing Committee D, 17 December 1981, c. 143–4.]The case that interest charges should be wiped off is an old battle, rejected by the previous Government and rejected still by the present Government. It is a burden that represents only 3 per cent. or so of NBC's total operating cost. It is a burden that is reducing over the years. One area remains where the Government has acknowledged to the NBC that difficulties occur. This is that the distribution of the debt between the different subsidiary companies is not readily justified. The burden of debt between individual National Bus Company subsidiary companies is rather a matter of historical accident than present realties.
Because the Government believed that there might be a problem, Touche Ross was asked by the Government and the NBC to report on the distribution of the debt between the companies and the relationship between the debt and interest charges and the earning capacity of the individual companies, how the present arrangements affect their operations and financial decision-making and the prospects for the companies in the present financial regime.
The report is not yet to hand. There will no doubt be recommendations made that shed some light upon the way the burden of capital debt and interest charges is distributed within the company. I do not believe that anything from Touche Ross is likely to support the contention that the capital debt of the NBC should be written off and borne by the taxpayer. This is equivalent to the burden shared by similar businesses and by their private sector competitors. It is not an onerous burden. I congratulate National Bus on the success it is achieving in difficult trading conditions in modernising its business and improving its commercial performance. I know that some if its managers feel strongly about this. I am afraid they are mistaken. National Bus will have to live with the reality, as every other business does, of servicing its capital while coping with the problems that other business management has to tackle.
§ Mr. Stott
I shall not detain the House much longer. I do not agree with a substantial part of the Minister's reply. It is merely a repeat of his reply to me in Standing Committee. I thought that I would try to approach the matter differently and allow the Minister to consider in detail what I said.
847 The Minister said that it is pointless to look back to 1970. That may be so, but the National Bus Company still has to pay interest on the money that it borrowed in 1970. It had to borrow the money then because it was told to take over an ailing and virtually bankrupt subsidiary company. Therefore, it was something it did reluctantly.
In 1975 the Minister asked the National Bus Company to carry on operating routes that it would ordinarily not have operated on. Therefore I do not think he should say that it is impossible to quantify the cost of keeping those routes going. The National Bus Company has informed me that in its best judgment it costs it £23 million, on which it is continuing to pay interest. We are talking not about any company but about a company that was given specific obligations: one, to take over the London country bus services and the other to keep routes open that it would not otherwise have kept going. If the Government would at least consider those two aspects of the problem and try to do something about them they might be able to get away with the argument that it is not incumbent on them to pay the interest charges on the initial capital debt.
I am thoroughly disappointed with the reply of the Secretary of State. We have tried to make the case as best we can. The National Bus Company has got a good case. I hope that the Select Committee on Transport, on which Members from both sides of the House sit, will continue to make recommendations in the National Bus Company's favour, and that at some stage, when my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) is Secretary of State for Transport, we may reverse the Government's decision.
I am conscious of the time and I would no doubt incur the wrath of the House if I were to push this amendment to a Division. Having said that I am disappointed with the reply of the Secretary of State. I beg to ask leave to withdraw the amendment.Amendment, by leave, withdrawn.Motion made and Question proposed, That the Bill be now read the Third time.—[Mr. Kenneth Clarke.]
§ Mr. Arthur Palmer (Bristol, North-East)
This Bill, on which we have had a long and interesting debate, dealing principally with railways and for a shorter period buses, also contains clause 5, which deals with ports. This is headedPort of London Authority and Mersey Docks and Harbour Company.The intention of that clause, as I understand it, is to advance more Treasury money to the ports of London and Liverpool for employee severance payments.
On Third Reading of the Ports (Financial Assistance) Act last year I spoke about its effect on other ports than London and Liverpool, which it was designed to assist. The Under-Secretary said at one stage that it would have no effect, or only a small effect, on their financial situation. I disputed that, with the port of Bristol particularly in mind. That ancient port is municipally owned. I think that it is the largest surviving municipal trading undertaking in the country, funded on the security of the local government rates. It is losing money, under present conditions, and will go on doing so increasingly rapidly unless there is remedial financial action.
In the past few months a new radical financial plan has been drawn up, with the assistance of outside experts, and it is now before the Department of Transport and the 848 Department of the Environment. A response is hoped for fairly soon. In Bristol we have been waiting for quite a time for the response.
However, I am not dealing with that aspect now. I want to confine myself to the special point of the Bill's indirect effect added to that of last year's Act. The problem is particularly acute in Bristol, but other ports are also affected, I am sure.
There seems to be a widely held belief, which the Government do little to correct, that the cost of the special voluntary severance scheme for registered dock workers in London and Liverpool is met wholly from Government funds. That is not so. I understand that the Government have financed severance compensation up to a maximum only of £5, 500 per man, and that the basic cost of up to £10, 500 per man has been met by the port employers' national voluntary scheme, funded by all the scheme employers, including, of course, Bristol. I am told that 60 per cent. of the scheme payments are applied locally and that 40 per cent. come from the national voluntary fund supported by all the ports.
Because of the numbers involved, varying from port to port, already hard-pressed ports such as Bristol have to put their hands in their pockets to help reduce the labour force in Liverpool and London. These other ports that have had to help the successful working of redundancy in London and Liverpool receive no Government help. That is wrong and unfair. The position was bad enough under the provisions of last year's Act. The offence against justice and equity has now been compounded by the present Bill.
I do not know whether it was said during the debates on last year's Act, but it has been said by the Department of Transport and its officials in conversations with the port of Bristol and the city council that Bristol does not qualify for special national help as it can always draw on the rates. Bristol does not need to be told that it can always draw on the rates. It is doing so. Every local industry and old age pensioner makes a greater or lesser contribution and the subsidy from the rates helps not only the port of Bristol but London and Liverpool indirectly.
Bristol is an economical local authority. It is forced to be economical. Anyone who drives on the roads or walks on the pavements in Bristol will feel and know the economies that have been made.
Because of the subsidy that Bristol gives to the port, it has become, in the Government's eyes, an overspender, so the Secretary of State for the Environment further penalises Bristol by withdrawing a portion of the rate support grant. One Minister tells Bristol to milk the rates and another says that the Government will hit Bristol hard if it does so.
I end by quoting Mr. Stanley Turner, the general manager of the port of Bristol. In a recent letter to me he stated:The treatment of the Port of Bristol, which is experiencing financial difficulties comparable with those of London and Liverpool, compares starkly with that afforded to these two Ports, to the point where one begins to speculate as to whether, in fact, the Government would not be unhappy to see a closure of the Port of Bristol, in spite of the extremely serious economic and social consequences"—I believe that he means locally—together with the loss of what I regard as an important national asset.Potentially the new Royal Portbury dock is certainly one of the finest in Western Europe.
Mr. Turner continues: 849I sincerely trust that such a thought is unjustified.I am not as charitable as he is towards the Government. From time to time the hard thought passes through my mind that they have little interest in the port of Bristol or the ratepayers who are asked to sustain it.
§ 11.3 pm
§ Mr. Nigel Spearing (Newham, South)
I, too, wish briefly to refer to clause 5. It gives further authorisation of £200 million to the ports of London and Liverpool, as my hon. Friend the Member for Bristol, North-East (Mr. Palmer) said. However, I do not share his views about the help that the money will give, certainly to the port of London, in the long run.
The limits in the Ports (Financial Assistance) Act 1981 can be raised, and that lies behind this measure. The object of the Act was to assist the ports of London and Liverpool to become financially viable, largely by reducing manpower. But that is not the only way in which a port can become more financially balanced. At the eighth sitting of the Committee on 28 December I made known why I thought that the Government's analysis was wrong. Far from the money assisting the port of London in the long run, in effect, I said that it could hasten its decline. I shall not repeat that warning tonight. It has been made on a number of occasions in the House.
The second part of that debate related to the Government's accountability. It would be quite proper for us to differ on the analysis that I have just mentioned, But I question whether it is proper for this money to be voted without the Government giving an undertaking that the corporate plan for the Port of London Authority is to be published. In Committee, the Minister made it quite clear that that plan would not be published. Moreover, he did not see fit voluntarily to state that he would lay before Parliament a statement showing the purposes of guarantees and items of expenditure made under the Act, and the conditions, if any, made by the Secretary of State in respect of payment of those sums.
For reasons that are best known to you Mr. Deputy Speaker, my amendment No. 8, which would have produced a debate on this subject, was not selected. I deplore the fact that the Government have not put this in the Bill. A Government who pride themselves on their husbanding of public resources have chosen not to do so. They have chosen not to publish, or even to give an indication, apart from the commercial matters, of the plan that the Port of London Authority will impose on its work force, and which will have implications for the local authorities and many other persons in the port. I deplore that fact. I am sorry that we have not been able to write in that condition. We should have had a much better Bill if that condition had applied to section 5.
I hope that my forebodings about the use of the money will not be correct, but unless and until we have more information about how the money is spent and the way in which the Port of London Authority sees its way towards future financial viability, my doubts will remain. I fear, too, that we shall have a third Bill dealing with the problems, perhaps not only of London but of other ports. This Government are not concerned with considering a proper ports policy for the nation; rather, they take each port individually. We see each port decline in its own area.
§ 11.8 pm
§ Mr. Kenneth Clarke
I shall confine my remarks on Third Reading to clause 5, and I shall reply to the fears that have been raised.
First, I shall deal with London, the port which is directly affected by clause 5. The purpose of the Bill is to assist the port of London, with which the hon. Member for Newham, South (Mr. Spearing) so closely identifies, and in which he shows great concern. The Bill seeks to extend the limits imposed on the 1981 Act to an additional ceiling of £200 million. That will enable us to continue to help the port of London to get back to viability and profitability. We made it clear that unfortunately the problem is still a surplus of manpower, so some of this money will undoubtedly go towards reductions in manpower in the port. However, we shall continue to pay operating losses in the transitional period while changes still have to be made.
Again, we have made it clear that support for continuing losses will not continue beyond the end of 1982. That rather stiff target has to be met by London, and incidentally by Liverpool, because those ports cannot expect continued deficit financing beyond then. Meanwhile, we shall maintain the ports to whatever extent is necessary to keep them going, including some assistance with essential capital investment, which is required by both of them if they are to have a good long-term future.
The hon. Gentleman does not oppose the additional support for his port, but he says that he wants more information to be laid before the House about the way in which it is being disbursed and about the unfolding of the policy. I assure him again, as I did in Committee, that the Government have no desire to withhold essential information from the House pointlessly. We shall continue to answer parliamentary questions and correspondence, and to reveal the rate at which the money is being disbursed and the broad purposes for which it is being disbursed. Our only reticence on the subject of disclosure is that we do not wish to disclose documents which contain commercially confidential matter which could be of assistance to the ports' competitors.
The ports industry is fiercely competitive. Shippers can move their business from point to point and there is much fierce fighting between the ports to get trade. There is excess capacity at present and that is all to the benefit of shippers and to many exporters and importers. However, London and Liverpool will be placed at a severe disadvantage if, because of their relationships with the Government, documents have to be published that contain information that may be of considerable assistance to their competitors. That is the case with the two corporate plans. They were produced earlier this year and contain much commercially confidential information. If they were edited and if the confidential information was removed, the documents would be bowdlerised and useless, and would not give any clear impression of the subject matter.
The policy is not based directly on the corporate plans. We asked for the corporate plans to be produced and also had the advice of accountants. In the light of information received, we used our own judgment to come up with the present policy and the financial provisions that we think are required. Therefore, no great guidance would be given to the Government if the corporate plans were produced.
We are waiting for action plans from the two ports. We shall not be able to publish them, because those plans, 851 which will show how the ports attempt to live within the restraints imposed on them and how they will use the money to meet the target of no further deficits by the end of 1982, will inevitably contain commercially confidential information. We should defeat the object of the Bill if we exposed the ports to unfair competition by making that commercial information available to their competitors.
In the previous debate I was not very forthcoming and I repeated a refusal to move that I had given in Committee. I must repeat the reasons that I gave in Committee for not accepting those arguments for greater disclosures of information. As we cannot disclose such matters, we shall endeavour to be as forthcoming as possible in such other information as we can give the House as the policy unfolds and as we disburse public money.
The hon. Member for Bristol, North-East (Mr. Palmer) fears that the Bill may—like the 1981 Act—contain more difficulties for the port of Bristol. I do not minimise the problems faced by the port of Bristol and the ratepayers of Bristol. Things are very difficult. Portbury has been an extremely unsuccessful investment so far. The port has passed through difficult times and fairly radical readjustments are required in Bristol. I hope that ratepayers, councillors and others involved in the port of Bristol do not think that we are giving London and Liverpool an easy ride. In the past 12 months, London has witnessed the closure of the old Royal docks to cargo handling by the Port of London. We hope that London's future in cargo handling lies at Tilbury.
The profitability plans produced by the port of Mersey involve drastic changes in the shape of the port, with a concentration on the Seaforth grain terminal and on modern facilities at the northern end of the port. Bristol is being driven to bring in consultants—Cooper Lybrand is assisting Bristol—and is contemplating severance for dockers, the disposal of land to reduce the capital debt and so on. Those are difficult steps, but Bristol does not have to labour under those difficulties while believing that the Government are somehow bailing out London and Liverpool in a soft option that involves reconstruction.
§ Mr. Palmer
The point that I sought to make was that under the Bill, which allows for severance payments, Bristol has not only to deal with its difficulties—which are real enough—but indirectly to subsidise Liverpool and London through the voluntary scheme.
§ Mr. Clarke
The National Association of Port Employers has a voluntary severance scheme to which all ports contribute. There is an agreed sum of voluntary severance available to registered dock workers, to which all ports contribute a levy. London, Liverpool and Bristol all contribute. The special severance scheme run by NAPE in the autumn of last year is one from which Bristol, in particular, benefited. I believe that 400 dockers in Bristol 852 took voluntary severance payments. Of course Bristol and its ratepayers contributed to the levy in addition to all the other ports, including London and Liverpool.
To deal with London's and Liverpool's special problems, the Government financed enhanced severance for the enormous surpluses of dockers in those ports. That took a liability off NAPE generally and off the two ports, because they were insolvent and could not deal with the extra severances required. They had no prospects of returning to viability unless some special effort was made to reduce the numbers, which we did.
I do not believe that we have discriminated unfairly against the ports. They all belong to the NAPE voluntary severance scheme. They all impose a pay levy on a basis agreed by the dock workers. They have been assisted by the Government in the past with borrowing arrangements, which are the responsibility of my right hon. Friend the Secretary of State for Employment.
There is no unfair discrimination against Bristol in the Bill. The Government have before them the latest submissions from Bristol, prepared by Cooper Lybrand, which are still being considered by Ministers and especially by my right hon. Friends the Secretary of State for Transport and the Secretary of State for the Environment. We shall respond to those submissions soon. We are not unappreciative of the problems of Bristol. On the other hand, I must enter a few notes of caution. If we were to give special help to Bristol, we should face allegations that other ports also facing difficulties were being discriminated against and that we were bailing out Bristol from trading difficulties. I must also add a note of caution about local authority trading. The port of Bristol was developed by the local authority. When it received Government approval it was expressly agreed that the port was the responsibility of the local authority in all ways. Now many local authorities are talking vaguely about engaging in trading activities of one sort or another. It cannot be a sound basis for such activity that a local authority can incur, on its own account and responsibility, a major capital investment and trading responsibility and, if the matter goes wrong, expect the national taxpayer to step in and relieve it of the liability.
I say that only in general terms. The submission that has come from Bristol is not so crude. Complications and real difficulties are being faced by the ratepayers. However, the hon. Member for Bristol, North-East knows that. Ministers in any Government must face up to general issues of policy. Therefore, we shall consider the proposal sympathetically, but I do not wish to be too encouraging. In the last resort, it is Bristol's responsibility to take the difficult steps that I commend to try to get the port out of its present mess and back on a more sound financial footing.
§ Question put and agreed to.
§ Bill accordingly read the Third time and passed.