§ Order for Second Reading read.8.57 pm
§ Mr. Keith Best (Ynys Môn)
I beg to move. That the Bill be now read a Second time.
This is a modest Bill. I am encouraged to be brief by the hon. Member for Wigan (Mr. Stott) who is sitting on the Opposition Front Bench. I tell the hon. Gentleman that, not only is it a modest Bill but it is a brief Bill. I wish that all legislation that came to the House were as brief. However, its brevity should not in any way diminish the importance of the Bill and I shall detain the House just a little to explain why it is important. I want to say why the promoters of the Bill have sought to move a private Bill rather than a harbour revision order. Some hon. Members may say that a harbour revision order was a better way to proceed. Section 62 of the Harbours Act 1964 gives a harbour authority the freedom to proceed either way. Despite the hopes initially entertained for the system, the harbour revision order is not particularly quick, simple or cheap. Even an unopposed order usually takes as long as a private Bill. An opposed order often takes more than a year even if it does not end in special parliamentary procedure. Some orders have taken much longer than that.
Furthermore, the harbour revision order procedure can confuse the issue by permitting objections to be made that are outside the strict scope of the order that has been promoted. At the time that the board of the Milford Haven conservancy decided to promote legislation there was in process in Whitehall a harbour revision order, promoted by the Warkworth harbour commissioners, which, having started as a simple order, became a lengthy and costly affair because of the ramifications permitted by the objection and public inquiry procedure for harbour revision orders. The order that was subject to that procedure did not come into effect until about two years and four months later. The general manager of the Milford Haven conservancy board advised the use of the private Bill procedure, not least because of what had happened at Warkworth.
§ Mr. Alistair Burt (Bury, North)
My hon. Friend has described graphically the gloom and doom side of the harbour revision order procedure, but does he agree that he is overloading that side of the matter and that it is possible for harbour revision orders to go through all the procedures far more quickly than that? It is not unknown for harbour revision orders to take no more than two months. Does my hon. Friend also agree that it is impossible for the private Bill procedure to take less than eight months?
§ Mr. Best
I am grateful to my hon. Friend. All things being equal, even if a private bill is opposed, this private Bill, having been laid in November 1985, should reach its final stages in July 1986. My hon. Friend asks why a harbour revision order is not appropriate. I understand that he is to oppose this measure. That fact alone will extend the procedure in the way that I described at Warkworth.
The facilities at Milford Haven include five oil terminals that were built by oil companies—Esso, BP, Texaco, Gulf and Amoco—under powers conferred by an Act of Parliament in each case. Commercial facilities also include a ferry terminal that was built by the board at a total cost of £10 million, the facilities of Milford dock, 269 an enclosed dock that is owned by a separate statutory harbour authority, the Milford docks company and some other fairly minor installations. The former royal dockyard at Pembroke dock has been largely sold into private ownership. The board's ferry terminal occupies part of the site but the Ministry of Defence retains a section at the western end of the dockyard. Apart from commercial traffic, the haven is extensively used for recreational purposes. The diversity of the operations in the harbour make it necessary to have on the board interests other than those represented by the oil companies.
Part I, schedule 1, to the Milford Haven Conservancy Act 1983 lays down that a representative of organised labour has to be on the board, a representative chosen after consultation with two district councils and with Dyfed county council. It is right that a broad diversity of views should be represented on a board such as this. The Bill is being promoted precisely for that reason: to ensure that no inhibition will be placed upon service on the board by anybody who might represent diverse views but who would be a significant contributor to the board's operations.
By the mid-1970s Milford Haven had become the largest oil port in Great Britain, handling nearly 60 million tonnes of crude oil and oil products. Since then, because of such factors as OPEC and the exploitation of North sea oil, the haven's oil traffic has been substantially reduced. However, in 1985 it was still in excess of 30 million tonnes of oil and other cargoes. In that year, slightly over 26 million gross tonnage of dues-paid vessels entered the port. Of the five oil terminals originally constructed, that owned by Esso is largely disused because of the closure of the Esso Milford Haven refinery, and the BP terminal has been taken over by Texaco as a result of BP's decision to phase out much of the capacity at its Llandarcy refinery which was supplied with crude oil by pipeline from Milford Haven.
The total capital employed by the board is approximately £20 million. Over the years about £10 million has been invested in a ferry terminal and about £7 million of capital expenditure was devoted to dredging the haven's deep water channel to enable 275,000 tonne tankers to be accepted on virtually every tide. Together with two subsidiary companies, the board's annual turnover is approximately £5.5 million. In recent years, average net surpluses before tax of about £1 million per annum have been achieved.
The objectives of the Milford Haven Port Authority Bill 1986 can be simply stated. The first objective is to change the name of the Milford Haven conservancy board to the Milford Haven port authority. The second objective is to provide the board with the power to pay fees to ordinary members—that is, members of the board other than the chairman, vice-chairman and executive members — as well as travelling and subsistence expenses.
To deal with the first of those objectives, the term "conservancy" in the board's present title has been the cause of much misunderstanding. It has been commonly assumed that the board's functions resemble those of the Nature Conservancy Council. It was for similar reasons that in recent years the former Harwich harbour conservancy board took steps to have the word "conservancy" deleted from its title. Furthermore, the title "Milford Haven Conservancy Board" has been a misnomer 270 since 1975. Before then the board's functions were indeed confined to those of a conservancy authority, as the Harwich harbour board functions still are. In 1975, however, Parliament conferred on the board a considerable extension of functions and powers by the Milford Haven Conservancy Act 1975, all this legislation now consolidated in the Milford Haven Conservancy Act 1983. In general the board's current functions and powers resemble those of other major trust authorities in Great Britain.
§ Sir William Clark (Croydon, South)
Given that we have had the 1983 legislation, why did the Milford Haven Conservancy Board not bring forward the change of name and, indeed, the payment of non-executive members of the board? I understand that only one member of that board is non-executive and is not a salaried official of some oil company or other.
§ Sir William Clark
My hon. Friend will surely agree that in a consolidating Act all the loose ends are tied up. I cannot see the justification for expenditure of some £8,000, £9,000 or £10,000 on a private Bill to change the title of a body or to pay the members of the board something that is already being paid by the private sector. Why is it necessary to increase the number of quangos—I am sure that my hon. Friend would agree with me in this matter—by paying fees to these non-executive people? There is no limit to the fees which they may be paid.
§ Mr. Best
It merely brings the board into line with other port authorities. My hon. Friend has really answered his own intervention. Although consolidating measures are helpful in tying together loose ends, if some loose ends are still flapping, I am sure that he would be the last person to argue that they should remain flapping in the wind for ever. The promotion of this Bill is the opportunity to ensure that those loose ends are tied up firmly and that the Milford Haven board is brought into line with other port authorities.
If I may deal with the point raised by my hon. Friend about the membership of the board, he will know that there are 12 members of the board. The chairman and vice-chairman are paid. There is facility under paragraph 19 of part 1 of schedule 1 to the 1983 Act, to which I referred, for payment of the chairman and vice-chairman. There is a general manager who is also paid. There are two representatives of oil companies, one from Gulf and one from Texaco, who are paid by their companies.
I remind my hon. Friend that there are people on the board who do not receive any remuneration from the oil companies or by virtue of their membership of the board or by virtue of being paid officials of the board. There is, for example, the representative of organised labour who receives not much remuneration, and there are those who are appointed after consultation with the two district councils and the county council. I hope that my hon. Friend will agree with me that there should be no inhibition on a representative of organised labour, often a retired trade union official, as in this case, Mr. Driscoll; or indeed on representatives of local authorities from serving on a port authority and taking a substantial and necessary part 271 in the way in which the port is organised simply because they are not given any remuneration. That would be unjust.
§ Mr. Burt
My hon. Friend will be aware that many local authorities appoint councillors to a wide variety of outside bodies and, as far as I am aware, the question of payment rarely, if ever, arises. Most local authority councillors accept the appointment to bodies with which the authority is connected as part of their duty, not something for which they should seek payment. Why should my hon. Friend seek, through the Bill, to breach that principle? Does he agree that it is dangerous to try to knock holes in the principle?
§ Mr. Best
My hon. Friend misunderstands the purpose of the Bill. Perhaps I have explained it inadequately, but, in fairness to me, I hope that he agrees that he has not given me much chance to explain it so far. The representatives who are appointed by the Secretary of State after consultation with the district councils and the county council are not necessarily councillors. Local authorities can recommend that any individual should serve on the board. Therefore, what my hon. Friend has just said is erroneous. He might be right if it was the invariable practice that everyone appointed as a result of the consultation between the Secretary of State and the local authority was a member of that authority. But that does not follow under the Act. The local authority is not obliged to put forward the name of one of its members, nor is the Secretary of State obliged to appoint a member of the authority.
My hon. Friend is saying that there should be a financial inhibition on people serving on an authority, such as a port authority, because they will receive no remuneration and are being asked to give their time free when the representatives of the oil companies are already being paid decent salaries—one does not begrudge them that—by the oil companies concerned.
In a moment, I shall deal with another anomaly in the stance of the oil companies. It was an oil company that proposed a measure, which was adopted and is now enshrined in the Bill, to enable the fees that might otherwise be payable to a member of the oil company to be paid to the parent oil company, so that the company would benefit in any event.
The Bill is designed simply to facilitate payment. It does not provide an obligation to make payment. It is simply an enabling Bill to allow the port authority to make payments to individuals as it sees fit. Most other port authorities which have a similar power exercise it to give some remuneration — usually a very small sum and nothing which could be regarded as a living wage—to those who serve on them. [Interruption.] If my hon. Friends will allow me, I shall proceed, because it is important to explain all the matters. Perhaps they would do me the honour of waiting to hear what I have to say, and then no doubt when they catch your eye, Mr. Speaker, they can make their own points.
May I deal with the proposed power to pay ordinary board members fees? The Bill includes such a provision because it is thought to be unreasonable that members of the boards who devote time and effort to the conduct of the boards' affairs, and who may have no income derived from business in and around the haven, should not be remunerated apart from having their reasonable expenses 272 met. The proposed power would be discretionary—it would be for the board to resolve whether to exercise it and, if so, at what level to fix ordinary members' fees. Any fee offered could, of course, be waived by the member, and there is also provision for a fee to be paid to a member's sponsoring body if he so desires. As I said a moment ago, that was proposed by an oil company representative on the board.
As will be stated later, the power is well precedented in other ports. The Rochdale report of 1962 will be well known by my hon. Friends the Members for Croydon, South (Sir W. Clark) and for Bury, South (Mr. Sumberg). No doubt it has been their bedside reading for a long time in preparation for this debate. At paragraph 95, that report recommended that non-executive members of port boards should be paid a feeas in the case of other statutory authorities or boards of public companies, the fee to be appropriate to the demands and responsibilities of the appointment.The report also said:The purpose of this provision will be self-evident.
It is in order for me to say something about the Bill's history. The idea of proposing a Bill and its content was put before the board in a paper by its chairman. It was circulated for discussion at the board's meeting in January 1985. There was lengthy discussion during which a variety of views were expressed. At the end, the board resolved to proceed with the Bill and authority was given to apply to parliamentary agents to draft it.
The Texaco representative was absent. The Gulf representative showed a distinct lack of enthusiasm for the proposal to pay fees to ordinary members, but he did not ask for a vote or for any dissenting view to be recorded in the board's minutes, which were duly approved at the following board meeting. The minutes of that board meeting, on 18 January, say this inter alia:The chairman said that while some members might have reservations, the majority were clearly in favour of the board taking power to pay fees to ordinary members.I can provide a copy of the minutes if my hon. Friends would like that. They continue:In further discussion, general agreement was reached that a private Bill should also provide for a change of the board's title to Milford Haven Port Authority.For the board meeting in September 1985, copies of the draft Bill were circulated to board members. They were also sent to the oil company refinery managers who have not served on the board, including a Mr. Havers of Amoco. At that meeting, both oil company representatives were present. One of them proposed that the draft Bill should be amended to provide that a member could ask for a fee to be paid to the body that employed him or otherwise was involved in his appointment to the board, rather than to himself. It is strange that the oil company representatives agreed, maybe tacitly, but certainly did not dissent from the idea that there should be payment of fees. Indeed, one was so non-dissentient that he proposed an amendment to how fees could be paid—to the parent body rather than to the member. It lies somewhat ill in the mouth of oil companies to say now at this late stage that they object to these modest proposals.
§ Mr. Burt
It is not unknown for people to formulate views over a period of time. In this case, the dissent of oil companies was made known early. It is clear from my hon. Friend's description that the oil companies' representatives are in a considerable minority and that their objections carry little weight if the other members of the 273 board are opposed to the oil companies. Their anxiety has led to this debate. My hon. Friend cannot suggest that, because the matter has to go through a certain procedure before coming here, although the oil companies objected but could do nothing because of their slight power on the board, they could do anything other than allow the matter to come here. My hon. Friend cannot suggest that the matter coming here after all this time suggests a heartfelt change in attitude such as to make the oil companies' comment in any way reprehensible.
§ Mr. Best
I can only assume that my hon. Friend has come uncharacteristically unprepared to the House. It is quite clear that he has not seen the minutes or discovered what proceedings took place. If he had read the minutes, he would realise that the oil companies raised no objections from January last year, when the matter was first proposed at a board meeting, until the beginning of this year. Indeed, the oil companies went along with the rest of the board. Both representatives were able to call for a vote or for objections to be entered in the minutes, but not once did they do that.
§ Mr. Best
It is not pointless. If one feels strongly enough about a matter, presumably one would wish to have that objection registered. The objection was not registered. No opposition to the Bill was expressed at the meeting in September when the draft Bill was in front of the board. Indeed, the approved minutes of the meeting record that its content was generally approved.
At the beginning of November the Amoco refinery manager, Mr. Havers, who was not a member of the board, expressed concern to the board's general manager about the Bill, confining his complaint to the payment of fees. The board's general manager suggested to him that he should wait to see how in practice the board might wish to exercise the powers conferred by Parliament, or, if he were not content to do that, to write to the chairman of the board on whose original initiative the Bill was being promoted. He chose not to adopt either suggestion at that time.
However, Mr. Havers served on the advisory committee of Milford Haven, which had met on 29 October when he was present. At that meeting, when the general manager of the board explained in detail why it was proposed that there should be payment of fees, no objection was made by Mr. Havers; certainly none was recorded in the minutes. One can only assume that at that stage he was satisfied with the explanation that had been given by the general manager of the board to the advisory committee.
The first written articulation of dissent was in a letter of 3 February of this year, some days after the Bill's Second Reading had been blocked and after petitions from his own oil company and two other oil companies had been lodged against the Bill. So at no time between January 1985 and January 1986 did either of the two oil company representatives on the board make further representations to the chairman.
The petitions are all framed in identical terms, which does not show much inventiveness if nothing else, even to 274 the extent that in paragraph 3 there is an assertion that each of the three companies is represented on the board. That is not true in the case of Amoco, there being provision in the board's constitution for no more than two oil company representatives at any one time.
As for the proposal to change the name of the board, the petitions offer no argument or appreciation of the reasons which were made clear in the discussions which led to the adoption of the proposed change of name and in which representatives of two of the petitioning oil companies took part. I do not wish to add, therefore, to what I said earlier about the reasons for the insertion of clause 2. The main thrust of the petitions is against the proposal to pay fees and much is made of cost considerations. I hope that both my hon. Friends will understand that by objecting to the Bill now they are doubling the cost of the Bill.
§ Sir William Clark
Surely it is an extraordinary principle to advocate in the House that if two hon. Members think a Bill is wrong they should not push their objection because it might add to the cost. I must point out that I have a connection with Texaco. My hon. Friend the Member for Ynys Môn (Mr. Best) has not explained why the name should be changed from a conservancy to a harbour board. My second point is that it is creating another quango. My hon. Friend shares my views on Conservative philosophy and we are diametrically opposed to quangos.
§ Mr. Best
I am diametrically opposed to a useless quango, but if my hon. Friend says we are dealing here with a quango he is also saying that the Port of London authority, the Medway ports authority, Dover harbour board, Shoreham port authority, Clyde port authority, Forth ports authority, port of Tyne authority, Tees and Hartlepool port authority and Ipswich port authority are also quangos. I do not know if my hon. Friend likes travelling around the country, but if he goes to all of those and accuses them of being quangos, he will not find himself a welcome guest. I am sure he would not say that they are all quangos, because they perform a perfectly proper function in managing their ports. That is the purpose of the board as presently constituted and the port authority as it would be if the Bill reaches the statute book.
§ Sir William Clark
If it is now essential that we should pay these non-executive members of the Milford Haven board, why is it that up until now the board has been successful without making payments?
§ Mr. Best
It is not in line with other port authorities, because the authorities that I have mentioned and that are now on the record all have provision for payment of their members. That is an example of setting something on the record as a matter of precedent to ensure that this port authority, if the Bill goes on to the statute book, would have the same facility as existing port authorities. 275 On the matter of cost, let us say, ex hypothesi, that the payment to an individual member is in the region of £1,000 a year. That is in line with the payments made by other port authorities. That would amount to £8,000 per year, because there are eight members on the board who could be eligible for payment. As my hon. Friend has pointed out, some are already earning salaries. It is reasonable to suppose that two of those would be oil company members and would either not take the fee or would have it directed to their parent companies. In that event the effective annual cost would be reduced to £6,000 at most if all of the other six members decide to accept a fee.
If the board were to conclude that the £6,000 per annum had to be found by making an increase in the conservancy due, the increase required would be approximately 0.6 per cent. on the current level of basic due. That stands at 3.6p per gross registered tonne and is beyond doubt one of the lowest conservancy charges of any major oil port in Great Britain. An increase of 0.6 per cent. would raise the due from 3.6p to 3.62p. That represents an addition of one fiftieth of one penny. I hope that neither of my hon. Friends would wish to argue that that will be a crippling burden on the oil companies. If they do argue that, then I suspect they will not carry the House with them.
§ Sir William Clark
I am sure my hon. Friend is right in that point, but if it said in the Bill that the payment is restricted to £1,000 at today's figures, a lot of the opposition would fall.
§ Mr. Best
My hon. Friend may serve on the Committee dealing with this Bill. I hope he will take the point that the matter he has just raised is one for Committee and not for Second Reading. By virtue of what he has just said and the way he has put it, he has generously conceded that there should be payment but that there should be a limit on payment, in which case look forward to supporting the Bill. I hope that he will be able to serve on the Committee and move an amendment that there should be a ceiling on the amount of payment. I do not know and I cannot speculate, but that might even find favour without going to a Division, particularly if that suggestion were addressed to certain members of the board.
I understand that some port authorities make provision for a maximum payment to local authority members so that they do not receive remuneration in excess of what they might otherwise receive by way of attendance allowance at a local authority meeting. These are matters for the Committee, not Second Reading.
I hope that the House will give the Bill a Second Reading. It is a modest, important and necessary Bill. I hope that, in those circumstances, my hon. Friends will accept what I have said and will support me in the Lobby.
§ Mr. Alistair Burt (Bury, North)
I shall first make clear my interest in this matter. I have no financial interest to declare. I am not paid or retained in any way by any party to this matter. When I first became a Member, I took an interest in energy matters because of the great importance of energy costs to consumers, especially industrial consumers, in my constituency. I have retained that interest, which is uppermost in my mind when talking about the Bill. I make no secret of the fact that my concern about the oil industry and the costs affecting that industry, which has been through a boom period but is now in some 276 difficulty, is known to the oil companies, especially Gulf and Chevron. They have been in contact with me about the Bill, and I would not seek to hide that fact.
My hon. Friend the Member for Ynys Môn (Mr. Best) made a good speech, but I am sorry that it was wasted on such a trifling issue. There is not much doubt that the Bill has little substance. There is no need for it to be before the House. This issue need not have troubled us. The Bill seeks to change the name of the Milford Haven Conservancy Board to the Milford Haven Port Authority and to provide for payments to be made to board members, and that is all. The change of name is of small consequence, but the matter of payment is one of principle. Despite that, I suggest that such a principle is not a suitable subject for this procedure and that it could have been handled in another way, if required. It is not required. In the context of the position at Milford Haven and the oil industry, it would be the wrong thing at the wrong time. The Bill does not deserve a Second Reading.
I shall deal first with context. The port of Milford Haven is located at the south-western tip of Wales, surrounded by a coastline of outstanding beauty. The harbour waterway, which extends 15 miles inland, is ideally suited to sailing boats and similar pleasure craft. There are up to 1,000 sailing boats — ranging from dinghies to large ocean-going yachts—in the haven at any one time. Generally, the oil companies and the yachting fraternity live happily side by side.
Historically, Milford Haven has had strong connections with the Royal Navy and the fishing industry. After the second world war, the naval presence was steadily reduced to the present armaments storage depot and underwater recovery facility. During the same post-war period, the size of the fleet fishing from Milford Haven declined as Irish sea and other local fish stocks were depleted. But the port's location placed it at a disadvantage with regard to the long call fishing grounds around Iceland. However, such disadvantage as the port suffered in relation to fishing proved to be no disadvantage in relation to the oil industry.
The sheltered deep-water harbour and the port's good weather record proved to be attractive to the rapidly expanding oil importing and refining industry of the late 1950s and 1960s. Around 1960, BP constructed an ocean terminal on the south side of the waterway where crude oil, pumped in ever larger tankers, was off-loaded and pumped to the Llandarcy refinery some 70 miles away between Port Talbot and Swansea. Esso and Texaco followed closely and constructed oil refineries on the north and south shores respectively. Shipping activities increased significantly as crude oil was delivered and a high proportion of products were moved by sea to the consumer. Gulf and Amoco followed. Massive investment was put into Milford Haven. Government grants, especially regional development grants, proved to be an incentive.
The immediate availability of a number of separate supplies of the then cheap fuel oil encouraged the Central Electricity Generating Board to construct the largest and the last oil-fired power station—the Pembroke power station—on the south side of the haven. The station is supplied by pipeline from the refineries. By 1976 the port supplied approximately 25 million tonnes — almost 25 per cent. of the United Kingdom's oil refining capacity—and 20 million tonnes of that capacity was located on the shores of the haven. 277 The House knows the problems resulting from the OPEC instigated price increases of 1973 and 1976. They triggered a series of events that have had a profound effect on the oil industry worldwide and, significantly and crucially, on the port of Milford Haven. The large increase in oil-based fuel prices depressed consumption, because of price, the switch to cheaper fuels, energy conservation and improved efficiency of use. By 1980 the European oil industry had almost 40 per cent. overcapacity. That problem affected all the oil companies that use Milford Haven today. The continued operation of the marginal refineries resulted in petroleum product volumes exceeding demand with a consequent reduction in product prices and refinery margins. Oil refining, especially at the less sophisticated and less efficient sites, became unprofitable. In the latter case it became highly unprofitable. As a consequence, the industry shut down the simple refineries and concentrated operations at the more sophisticated and lower cost locations.
In the late 1970s the industry recognised the need to construct more sophisticated plant, which would produce more higher value products at the expense of low value products. The construction programme of those fluid catalytic crackers and, to a lesser extent, hydro-crackers and vis breakers was accelerated. Construction was concentrated at each company's best location. Texaco and Gulf and, separately, Amoco and its new partner, Murco, constructed two FCCs and associated plants at Milford Haven. However, the industry was changing and Milford Haven, through no fault of its own, began to feel chill winds.
In 1983 Esso announced the closure of the Milford Haven refinery, which was followed in 1985 by BP's decision to rationalise its operation at Llandarcy, which resulted in the closure of the oil terminal at Milford Haven. The total refining capacity at Milford Haven had now been reduced to approximately 15 million tonnes per annum. Average throughput in the next year or two will probably be limited to about 12 million to 13 million tonnes. As I said earlier, that is almost half what it was 10 years ago, which is a significant decline.
The recent fall in crude oil prices from about 28 dollars to 16 dollars a barrel has disrupted the industry. To say the least, the future is uncertain. In the long term, low oil prices should benefit industry in general. However, the switch to higher demand will take several years. While that process is continuing the capacity at places like Milford Haven will decline and the port will be in some difficulty. The need to watch costs will become paramount. That uncertainty makes the board's move to pay expenses to board members inexplicable to the oil companies.
Has the relationship between the Milford Haven Conservancy Board and the oil companies always been bad? Has their relationship always ended up being debated in a contested private Bill of small consequence? The relationship between the board and the oil companies has not been all that bad. As the port grew in the 1950s and 1960s, it was obvious that an authority was needed. The conservancy board fitted the needs of the port and the oil companies, and it has worked closely with the major oil companies.
The board's composition has reflected the variety of interests that it serves in the area. My hon. Friend the 278 Member for Ynys Môn has referred to the composition of the board, which is set out in schedule 1 to the Milford Haven Conservancy Act 1983. The oil companies nominate two members and Trinity House nominates one. There is one union representative, one representative of shipping agents and brokers, and two local authority representatives. The harbour master and the general manager serve as of right. There is a chairman, a vice-chairman and a representative of some body concerned with the environment. Therefore, there are 12 members, of which the oil companies have only two.
All but the representative of the environmental body are or could be remunerated in some form, not through the oil companies, but through their everyday work. They accept membership of the board as a duty which they cheerfully perform. My hon. Friend never said that the board was short of members, or that there was great pressure from any existing members for payment.
§ Mr. Best
I am sorry to say that my hon. Friend is factually incorrect. How can he tell the House that members who are appointed by the Secretary of State, after consultation with two district councils and a county council, must necessarily receive remuneration from elsewhere? The present membership is self-employed and is not necessarily receiving remuneration from another body.
I listened with interest to my hon. Friend's paean of praise and his newfound enthusiasm for Wales. I am not sure how he squares it with his statement on 12 February when he intervened in the speech of the hon. Member for Cynon Valley (Mrs. Clwyd). The hon. Lady said that no mention had been made of Wales, and he said:It was not worth mentioning." — [Official Report, 12 February 1986; Vol 91, c. 1020.]Is my hon. Friend trying to filibuster and talk the Bill out? So far, my hon. Friend the Member for Croydon, South (Sir W. Clark) has twice told him to slow down, and has passed him a note.
§ Mr. Burt
If my hon. Friend wants to give me a demonstration of filibustering, he has just done so. He spoke for a considerable time about a small Bill and left many points which need to be cleared up. [Interruption.] I accept that he was generous in allowing interventions, but he will appreciate that there are many points to be considered and that I have made all my remarks relevant.
The only irrelevance during the past few minutes has come from my hon. Friend. He rightly referred to a remark I made in a debate last week. The hon. Member for Cynon Valley (Mrs. Clwyd) had been describing a remarkable character who lived in the last century called Mr. Smith O'Brien, who apparently thought so little of anywhere but Ireland, a constituency of which he represented, that he did not participate in English or Scottish affairs. The hon. Lady, in an aside, said that he made no mention of Wales, and I remarked that Wales was not worth mentioning. Indeed, at the time of Mr. Smith O'Brien, Wales was not worth a mention because he did not give it one. It is to the credit of the hon. Lady and others who have represented Wales since then that it is now impossible to disregard Wales. I have spent many happy holidays in Wales and there is no suggestion that the feelings of Mr. Smith O'Brien are my feelings. I am pleased that my hon. Friend has allowed me to correct that misunderstanding and misapprehension. The hon. Lady, to whom I spoke afterwards, took the whole matter as a joke. She 279 appreciated my apology. The sense of humour of the hon. Lady and of the people of Wales will now be satisfied by my explanation. Whatever Mr. Smith O'Brien may have thought of Wales, I have nothing but the greatest admiration and respect for it. My forebears are Celtic, so I have a close affinity with that great Principality.
I take my hon. Friend's point seriously regarding the members appointed by the Secretary of State in consultation with the local authorities. I fully accept that if they are not remunerated, my earlier words do not stand true, and I withdraw them.
Most of the members of that board receive money from their general occupations and they serve on the board as a matter of duty. I refer to a matter which my hon. Friend the Member for Ynys Môn failed to mention in his speech: that the board members were clamouring for payment and there was a dearth of people waiting to serve on the board, so there was a strong case for change.
We in the Conservative party are supposed to leave matters alone unless a problem should occur. Change for the sake of change is not necessarily the best maxim for the Conservative party. Yet the tenor of the speech made by my hon. Friend the Member for Ynys Môn was that we should have change for the sake of change. He could suggest no benefits that would accrue from the change he proposed.
I believe that the relationship between the board and the oil companies is good. The board performs the usual functions of a port authority. My hon. Friend made the point that he seeks only, in some way, to make the board's power equal to that of other port authorities around the country. However, the Bill does not seek any major powers. The conservancy board at Milford Haven already provides for and maintains safe navigation in the harbour. It controls the construction and operation of marine facilities and identifies and designates safe moorings. It ensures that the harbour is operated in a safe and effective manner. There is nothing of substance in the Bill to affect the serious matters that relate to harbours. There are just two small inconsequential points.
I maintain that that fact alone has prompted the greatest concern amongst the oil companies. There is no suggestion that the Bill seeks major powers. The board already performs the functions that all port authorities perform and, by and large, the board does that well. That is one of the reasons why the oil companies and the board have had such a good relationship for so long.
The board's facilities have expanded to meet the needs of a new authority. Additions have been made to staff and equipment as the port's activity has increased. A purpose built administration building and control centre was completed in 1964. The board has a good record of steadily increasing the channel size, in navigation aids and the design and economy of launches leading to the current replacement of the harbour radar surveillance by a more powerful and highly sophisticated system.
The record of the Milford Haven Conservancy Board on oil pollutiion prevention is highly commendable with its system of committees and working groups manned by oil company and board staff, usually led by the harbour master. The harbour has developed effective operating procedures for the prevention of and cleaning up of such pollution. In general terms, the relationship between the board, particularly its operating staff, and the oil companies is at a very high level. I am sure that the oil 280 companies would wish me to pay tribute to the good work that has been done by the conservancy board and its staff over many years.
The competent professionalism of the board's officers and staff is highly regarded. They, in turn, are aware of the oil companies' environment and the pressures upon them and generally react in an understanding manner.
If everything is working so well, as generally it is, why is there need for change? My hon. Friend the hon. Member for Ynys Môn said that the changes would bring the board into line with others. I would like to know what the benefits would be. I can see the two changes outlined in the Bill, but my hon. Friend has not suggested how the consumers, the people who use the Milford Haven port authority, would benefit from the changes. My hon. Friend has not made the case for benefit, so I believe that the need for the Bill has not been made. There has been no desire for payment from board members. Again, I stress that my hon. Friend did not suggest that the board is short of members. So why is there a need for change?
§ Mr. Burt
I accept the point, but I challenge my hon. Friend to say whether he has any evidence to show that anyone of whom he can think has been inhibited from serving on the board due to lack of remuneration. My hon. Friend remains in his place.
I shall deal with some of the financial aspects which are crucially important to the oil companies. In 1969, a major dredging scheme was undertaken. At that time, the board had no cash reserves, but it had an overdraft. The Treasury said that as a condition of the loan the board should aim to make a profit sufficient to build up over the years a cash reserve of £500,000. The dates are significant. In 1969, the board had no cash reserves. The reserves have been increased over the years and now stand at just below £3 million, compared with an inflation rate target of £2.7 million. The excess will be consumed in paying for the new radar surveillance system in 1986. The cash reserves have been invested successfully over the years. The dividend and the yield form part of the board's income and capital growth helps to protect and increase the cash reserves.
When determining harbour dues, the board balances its effective income from harbour dues, based on the oil companies' estimates of future traffic, from investments and major project income against operating capital expenses. A net margin is targeted, first, to inflation-proof reserves and, secondly, to obtain a return of 10 per cent. on capital employed.
In 1975, the National Ports Council, with the approval of the Labour Government, recommended that port authorities should aim to receive a return on capital employed of not less than 10 per cent. That latter target has plainly rankled in latter years when oil companies have been losing money.
From an early stage, the conservancy board provided transport for harbour pilots to and from vessels in the harbour. The cost of those services is recovered from the pilotage authority. The board has no control over the pilots or the pilotage authority other than through representation on the management committee and good working relationships. 281 In 1970, the board supervised a large dredging project to allow the safe passage of larger ships in and out of the harbour. The £6.4 million expenditure was funded through the conservancy board by a loan and grant under sections 11 and 12 of the Harbours Act 1964. The beneficiary companies, initially Esso, BP and Texaco, are effectively repaying that loan over 25 years. Esso and BP are obliged to maintain repayments until the loan is discharged, on a ship or pay basis.
In 1978, and after much activity by the board, the British, Irish and Steam Packet Company effectively contracted the Milford Haven Conservancy Board to construct a roll-on/roll-off terminal at Pembroke dock for a newly established Pembroke dock to Rosslare passenger service. B and I in turn contracted repayment of that loan, plus a suitable profit element. The outstanding loan is about £9 million. B and I pays port dues on appropriate shipping movements in addition to those charges.
Those large financial transactions appear to have whetted the board's entrepreneurial appetite. It acquired two private companies operating within the port—the Marine and Port Services Company, a small boat repair and construction company to which my hon. Friend has referred, and D. V. Howells, which is also a small boat construction and repair company.
The board provides accountancy services to those two subsidiaries. The purchase and continued operation of those two companies has been a bone of contention between the oil companies and the board from the outset. The acquisition of the subsidiaries was not seen to be consistent with the board's functions. In addition, the board has resisted fallback suggestions made a number of times to integrate the two operations in favour of cost savings.
The board's operating revenue is obtained from port dues, capital project income, pilotage charges and investment income. In excess of 95 per cent. of the port dues will fall on the remaining oil companies—Amoco, Gulf and Texaco—in the future.
Bearing in mind the port authority's financial problems, the decline in traffic and the fact that BP and Esso have gone and the large part played by the oil companies in its finances — 95 per cent. of all port dues — and the consequential need for great confidence between the board and the companies, the Bill's timing is wrong.
At a time when costs need to be reduced to as low as possible—that affects many industries other than the oil industry — and when the board needs to be seen to be doing as much as possible to help, it comes along with this proposal, and the Bill, to increase expense, no matter that it is by a small amount. It is sending out the wrong signals at the wrong time. Bearing in mind the good relationship over the years between the oil companies and the conservancy board, this seems a great shame. I am sure my hon. Friend the Member for Ynys Môn would agree.
§ Mr. Best
I am grateful to my hon. Friend for giving way. He has not maintained, as I mentioned earlier, that ex hypothesis there might be a net increase of £6,000 to discharge payments of dues. Does he accept that if that is right, the extra revenue would involve an increased charge per gallon of .000001p? Is he seriously telling the House that will cripple the oil companies?
§ Mr. Burt
No, of course not. My hon. Friend persists in missing the point of principle in referring to the figures. I do not quarrel with those figures. Can my hon. Friend point to anything in the Bill which fixes the costs at the levels which he has just mentioned? Once again my hon. Friend remains seated. It is a point of principle. There is no guarantee that the costs which he has mentioned will come to pass. In all common sense, the costs will be in that region, but no one knows that and it does not say so in the Bill. It is the point of principle that has concerned the oil companies. In a time of great financial stringency, when the oil companies have to cut back—indeed, some oil companies have had to leave Milford Haven—the oil companies now see a couple of extravagances coming from their boards —the promotion of the Bill and the suggestion of expenses being paid.
If my hon. Friend and those who promote the Bill had put forward the need for the changes and the need for expenses to be paid then there would have been more sympathy. That has not been done. There is a bone of contention over the period of time which has elapsed since this matter first arose between the oil companies and the conservancy board through discussions that took place at board level.
The proposals to change the conservancy board's title and to pay fees to ordinary board members was raised at the January 1985 meeting. I have a copy of the appropriate minutes—despite what my hon. Friend has suggested. The Gulf representative disputed the need to pay fees on the basis that all members were already salaried by interested organisations. It was pointed out that those circumstances may not always apply and that one member was in that category. The resolution was carried. My hon. Friend has asked why more protest was not made. I have already explained that the composition of the board is 12 members, and the oil companies hold two posts. There is no point in fighting again and again for a vote which always goes the same way. My hon. Friend will see that the minutes for the January meeting clearly state:Some members did not feel that payment of a fee to ordinary board members as well as their expenses was altogether appropriate in the circumstances of the Milford Haven Conservancy Board.The objection of the oil companies was clearly stated—their dissent was marked. There was no point in forcing a matter to the vote time and again when the odds were so stacked. The oil companies had no wish to pursue the matter in that manner.
At a later meeting the Gulf representative asked for the inclusion of clauses to allow payment of fees to be made to members' employers in the event that fee payments were made. This is also a matter to which my hon. Friend has made reference. The reason was that the oil company members who serve on the board had no wish to profit themselves through such fees. It was a straightforward matter for them to direct the payment of those fees to their companies.
§ Mr. Burt
No, there was no acceptance of the principle. The oil company representatives in a minority, with no constitutional power to block the motion, were anxious not to be seen to profit by it. They were thus seeking to fund the money back through their companies. In the circumstances, that was an honourable thing to do. The suggestions to the contrary by my hon. Friend are completely rejected. 283 In April 1985 consultants were appointed to review B and I's lack of profitability with a view to rationalising the business. Since that time, the oil companies' representatives on the conservancy board have been seeking to suggest stringent economies, but they have not been forthcoming.
The Bill has proceeded, but the oil companies have made their opposition clear from the start, and suggested that the Bill was unnecessary and of no benefit to them or anybody who used Milford Haven. Alas, the Bill has still come to the House. I am sure that it is with the great regret of all that the matter has come this far, but there is no doubt that the matters that have so concerned the oil companies have been matters of principle and should, if the Bill is to proceed in this way—
§ It being Ten o'clock, the debate stood adjourned. Debate to be resumed on Thursday 20 February.