Trust Ports (Hansard, 1 December 1989)

§ Mr. Stuart Bell (Middlesbrough)
I am grateful for the opportunity to speak on the Adjournment on this important topic of the future of the trust ports. The concept of trust ports is of long standing. Of the 15 major ports, six are trust ports: London, Liverpool, Glasgow, Leith, Newcastle upon Tyne and Middlesbrough.
Trust ports were said to be non-profit-making, in the sense that there would be no dividends but the profits would be ploughed back into the ports for the benefit of the users and, in a sense, for the benefit of the community. Trust ports were usually capitalised by fixed interest borrowings and they were managed by boards, partly elected by port users and partly appointed by Ministers. There was also local authority or particular interest involvement.
I would not wish to leave the House with the impression that I am caught in any time warp in relation to trust ports. Nevertheless, it would be helpful to quote from the report of the Royal Commission on transport in 1930, which declared: We are further of the opinion that the best kind of authority to own docks and harbours is a public trust. Because Britain was an island and, certainly in those days, docks were the only means of taking cargo in and out of the country, it seemed right therefore and in the national interest that as assets they should be held in trust for all the British people.
Another review of the trust ports was that of the Rochdale committee, whose findings were published in 1962. The report suggested a number of ways in which the running of trust ports could be improved and added the following and, in my view, significant recommendation: In order to simplify the procedure for making such revisions and to reduce the expense which promoting private legislation means for port authorities, we suggest that in any legislation arising out of this report, the Minister of Transport should be empowered to approve amendments to port statutes by Order subject to affirmative resolution procedure. This recommmendation will have some significance as I develop my theme on the future of trust ports.
Middlesbrough is a trust port, or rather the Tees and Hartlepools authority covering both Middlesbrough and Hartlepool is a trust authority where the assets are, in every sense of the word, held in trust for the British people, and certainly for the local community.
The Tees and Hartlepools port authority owes its existence to and derives its powers from an Act of 1966, subsequently amended. That Act established the Tees and Hartlepools port authority and made provision for the appointment of members to the board by the Minister— now the Secretary of State for Transport—vested the authority with duties and powers of authority and made other general provisions for the running of the ports.
There is no suggestion that the Tees and Hartlepools port authority has been run in other than an exemplary fashion. I draw particular attention to its policies on equal opportunities and the employment of disabled persons. The authority has been and will continue to be fully committed to the principle of equal opportunity in employment. That has meant that recruitment has been 1009 carried out on the basis of ability and without regard to race, colour, ethnic or national origins, sex, marital status, religion or sexual orientation. The authority gives full and fair consideration to disabled persons who apply for employment. If employees become disabled during their employment, every effort is made to keep them in the same job or to find them an alternative. The authority's training and career development is structured to ensure that disabled persons have the same opportunities as other employees.
Notwithstanding the observations of the Rochdale committee's report—that trust ports are essentially non-profit-making—the Tees and Hartlepools port authority turned out last year profits of £9.246 million, with a historic capital employed of £52.508 million and a return on capital of 17.61 per cent., which is an impressive record by any standards.
The Tees and Hartlepools port authority is one of the leading authorities in the United Kingdom both in tonnage and profitability. It handles about 37 million tonnes a year and the majority of that tonnage is brought in and out by the oil, chemical and steel customers, who have private terminals on the river Tees. The authority also owns and manages two general cargo docks. There is the Tees dock, near the mouth of the Tees, which handles more than 2 million tonnes a year of general cargo, cars, steel and forest products. There is also the Hartlepool dock, which handles more than 1 million tonnes a year of forest products, cars, scrap and bulk cargoes.
With such a success story, one wonders why the Tees and Hartlepools port authority wants to take itself out of the ambit of the trust ports and into the somewhat more risky commercial world of the private company. Having served Tees and Hartlepool for many years under the 1966 Act and having fulfilled the obligations of the Act, why is it that the authority now wishes to alter not only the way in which it does business, but the ownership of the assets?
I shall not refer at length to the private Bill that was published on 27 November, but I want to refer to the assets. According to the last balance sheets, the assets of the Tees and Hartlepools authority stood at £52.508 million. The reason why proposals are now coming forward is the abolition of the dock labour scheme earlier this year. We were told by the Secretary of State for Employment that the abolition of the dock labour scheme would open a new door to the docks and that there would be more investment and more jobs. In practice, the only door that has opened has led to lay-offs and redundancies, and now the proposed privatisation of dock assets running into millions of pounds. The abolition of the dock labour scheme has cleared the way to privatisation which was on the Government's hidden agenda all along. Rather than jobs being created, jobs have been lost. In Hartlepool alone, 70 jobs have been lost and on the Tees, 130 jobs have gone in a few months. In all the docks that were formerly covered by the dock labour scheme, 3,800 jobs have been lost. That may fit in with the Government's scheme of things, but it does not fit in with the promises or forecasts made by Ministers at the Dispatch Box.
The fear on Teesside and at Hartlepool docks is that once privatised, the Tees and Hartlepools authority will not stay in cargo handling for long, but will concentrate on property investments, where the pickings might be said to be easier. Indeed, moves in the direction of property development were begun by the Tees and Hartlepools port authority even before the abolition of the dock labour 1010 scheme when the proposed privatisation was but a gleam in its eye. Property deals took place involving the Tees offshore base where the former Smith's dock shipbuilding site has been transformed significantly, and there is to he a tripartite development venture in Hartlepool marina involving the Teesside development corporation and the Lovell partnership.
As I understand it, the new proposal is designed to provide a legislative framework for selling assets. It will also permit the authority to spread its wings, invest other than on Teesside and buy into other ports if that is its wish. It will be able to invest in Europe while remaining on Teesside. If that was the ambition of the Tees and Hartlepools port authority, why did it not simply apply to the Government to extend its powers in accordance with the recommendations of the Rochdale report, to which I referred in my opening remarks? Why did the Government not come to the House with the appropriate orders to amend the powers of the Tees and Hartlepools port authority so that it could do all those things within its existing framework? If that was not possible within the present legislative framework, why did the Government not agree to bring before the House a short amending Bill to give the port authority such powers?
Again, we are seeing the hidden hand of the Government, not to allow the port authority to spread its wings but, in accordance with the Government's ideology, to insist on the privatisation of its assets, forcing it into the considerable expense of putting a private Bill through the House of Commons. It will be a long and hard route.
When Mr. John Hackney, who was chief executive of the Tees and Hartlepools port authority announced the proposed privatisation of the docks he said that it was the authority's wish to take advantage of the competitive environment in which it operates and of the pan-European transport industry in the run-up to 1992. I hope that I have demonstrated to the satisfaction of the Parliamentary Under-Secretary that the first aim might have been achieved through appropriate orders in the House or Government legislation. Perhaps he will clarify that when he responds.
What is one to make of the authority's second proposal, which is to take advantage of the pan-European transport industry? What on earth is a pan-European transport industry other than a fine phrase from the press agency? Mr. Hackney has said that the authority wishes to defend and build on the success that it has achieved since its creation in 1966. No one doubts that success, least of all myself. He also said that it must have full scope to develop its business, both in the United Kingdom and Europe, in providing port facilities and in other distribution activities. Again, I submit that all that might have been achieved through orders before the House or amending legislation. Mr. Hackney also stated: The authority is determined to ensure that this development will take place without any reduction in its commitment to maintain, develop and expand the ports of Tees and Hartlepool. I accept fully the assurances which Mr. Hackney wishes to give.
Mr. Hackney has also said that the authority is committed to a continuing Teesside base for the business and to ensuring that the area shares to the maximum the benefits that will come from the development of its business on a broader scale. We on Teesside do not want simply a share; we want to develop in our own right. We 1011 want to make Teesside the third largest port and a busy port facing out, as it does, towards Europe. We want a vigorous approach to more business for the river and more facilities so that Tees and Hartlepool can become the Rotterdam of the north.
As it is a trust port, all that is possible within the present legislation. Sharing is not what we are about. A full-scale investment in the ports and a massive search for the kind of in-going and out-going business that Britain needs are what Cleveland needs, not a right to buy into other docks elsewhere or to share in the so-called pan-European transport industry.
The new proposals make no mention of a commitment to Teesside, to jobs, to the port remaining a secure and permanent employer in Cleveland, to maintain and expand the ports of Tees and Hartlepool, to a continuing Teesside base for the business or to ensuring that the area shares to the maximum the benefits that will come from the development of its business on a broader scale. The words of the press handout do not find their way into the cold light of the print of the new proposals.
Was it the Government's decision not to allow Tees and Hartlepool to have their additional powers by appropriate orders through the House? Was it the Government who rejected amending legislation? Did the Government push Tees and Hartlepool on to the privatisation road? Has the Tees and Hartlepools port authority asked the Government to widen its powers under the 1966 Act by the use of orders through the House? Has the THPA asked for public legislation to give it additional powers? If so, what was the Government's response? If the request has not been made and were it now to be made, how would the Government respond?
Have the Government a policy towards trust ports as a whole? Do the Government support the privatisation of trust ports throughout the country? Do they support the privatisation of the trust port of Tees and Hartlepool? Will they use their payroll vote to push through the final legislation on any privatisation should it come to the Floor of the House?
Has the Department calculated the impact of such privatisation on rates for the use of the port of Tees and Hartlepool? Has the Minister taken account of the fact that as an island nation most freight still comes through the ports and that our ports continue to have, if not a full monopoly, certainly a quasi-monopoly of importations and exportations of freight? Does he accept that privatisation of the assets of Tees and Hartlepool ultimately means that a public monopoly will become a private monopoly? Has he calculated the impact of such a private monopoly on employment prospects within the docks?
How can the present trust port assure job prospects when the company is privatised and passed out of its control? What provisions in the 1966 Act will be allowed to find their way into the articles of association of the future privatised company? What safeguards will the Government demand for the perpetuity of the Hartlepool port as well as that on the Tees?
Should privatisation come about, who will ultimately own the THPA? Will it be the employees themselves? Will it be the local pension funds, the local authorities or a mixture of all three? Or will the shares in the final 1012 privatised public company be floated off to the general public with a stock market quotation on the London stock exchange or on the unlisted securities market? If not, why not? Who will ultimately sit on the board—not on the board of a trust which may be created but on the board of the ultimately privatised company which will hold the assets?
What will happen to profits? We have already discussed the concept of trust ports. We have seen that the trust port does not make profits merely in a commercial sense. It makes a proper return on its investments and on its capital. It does not, however, distribute those profits, because they are there to stabilise port and cargo handling charges and to improve the infrastructure and facilities of the port.
If a private company is to operate a port monopoly in Tees and Hartlepool, will dividends be paid in such a way that charges will have to rise, thus making Tees and Hartlepool less attractive to the user and diminishing not only the prospects of the port but the prospects of employment in it?
The Minister will see from this series of questions that the future of the trust ports and a proper policy to be announced today or later on their future—particularly on that of the trust port of Tees and Hartleport—touch on the livelihood of Teeside. They touch on the work force in the ports and on the nature of the towns of Middlesbrough and Hartlepool. Middlesbrough was built around the port when the river was deepened to accommodate iron and coal terminals in the last century. As the port shrinks, so do the town's prospects. The answers to the questions that I have asked today are of the utmost significance to my constituents and to the wider public on Teeside.

§ The Minister for Aviation and Shipping (Mr. Patrick McLoughlin)
I congratulate the hon. Member for Middlesbrough (Mr. Bell) on raising this subject for debate. I believe that it has not been debated widely in the House before, so this provides us with a chance of some novelty. I hope in the short time left to me to be able to answer some of the hon. Gentleman's questions, but I am sure that he will appreciate that I am not in a position today to discuss primary legislation; it would be out of order, to do so.
I certainly note the hon. Gentleman's concern about the proposals put forward in the port authority's Bill. They will be considered in the usual parliamentary way during the coming months.
The hon. Gentleman has said that Tees and Hartlepool is one of the most successful ports, and I agree with the figures that he gave. In 1988 the port made a pre-tax profit of £9.2 million on a turnover of £35.5 million. It makes an important contribution to our exports and exports a large amount of steel and Nissan cars.
Trust ports are a peculiarly British concept, although modified versions of them can be found in some other countries. Like many British institutions, they have developed by virtue of circumstance rather than as a result of any express policy or planned development. The term "trust port"—so I am told—is not legally defined and indeed does not appear anywhere in statute law. It is a convenient shorthand term to describe ports which are not owned and run by a company, a local authority, or a nationalised industry.
1013 It may be helpful to describe the main features of trust ports. They are ad hoc bodies created by Act of Parliament to manage a harbour. They are thus statutory undertakings. The directors—variously known as members of an authority, as harbour commissioners, or sometimes, in Scotland, as harbour trustees—are appointed either by a Minister of the Crown or by a variety of bodies specified in the governing Act, or by a mixture of the two. These appointments are nearly always non-executive. Trust ports have no equity capital. Originally they raised their capital from bonds and stock. For a period between 1964 and 1980 they were able to obtain loans from the Government, but that practice has now ceased and trust ports which need to raise finance today must do so from commercial sources. Since there are no shareholders, any profit goes to reserve or to finance new investment.
I should make it clear that trust ports are independent of the Government. They are not accountable, financially or otherwise, to my right hon. Friend the Secretary of State for Transport or any other Minister. That is the case even where a Minister appoints all or some of the members of a trust port authority.
Trust ports vary enormously in size and scope. At one end of the spectrum are some of our largest ports, such as Dover harbour board, the Port of London Authority, and of course the Tees and Hartlepools port authority. At the other end are a host of tiny harbours catering for recreational boating or local inshore fishermen. In between is a wide range of types and size of port undertaking. Taken together, the trust ports account for between 40 and 50 per cent. of the country's seaborne cargo trade, and a good deal of passenger traffic as well.
The hon. Gentleman asked about the Government's policy in relation to trust ports. As with other types of port, it has been gradually to disengage, and to leave the ports to determine their own destinies. Thus, as I have said, the Government are no longer a source of capital for them. Their investment and pricing are entirely within their own control. They are not subject to any Government controls.
Nevertheless, we regard the trust ports as slightly odd in the changing ports world of the last few years. The success of the old nationalised British Transport Docks Board, since it was privatised in the shape of Associated 1014 British Ports, has been widely recognised. But trust ports are restricted in what they can do. Like any creature of statute, they are limited by the powers which Parliament has bestowed on them. They cannot readily diversify. They are not free to develop their land for purposes other than those connected with the port. Yet in essence they are commercial operations, especially the larger ones like the Tees and Hartlepools port authority, and they are competing in a commercial world, in this country against many ports which have the freedom and flexibility of company ownership. It has therefore seemed to us only sensible to consider the possibility that trust ports might be converted into companies so that we do not tie their hands behind their backs. As a general principle, we think that commercial operations are best carried out wholly in the private sector.
The hon. Gentleman also spoke of his fear of a loss of jobs. I understand that fear, and the associated thought that the port, which I understand is the largest employer on Teesside—

§ Mr. Richard Holt (Langbaurgh)
My hon. Friend the Minister has just said that the Tees and Hartlepools port authority is the largest employer on Teesside. It is not. Cleveland county council is the largest employer, followed by ICI and British Steel.

§ Mr. McLoughlin
I am grateful to my hon. Friend for that information. However, the Tees and Hartlepools port authority is a large employer in the area and its headquarters are based locally. The fear is that it might be taken over by a company based elsewhere in the United Kingdom which might be inclined to treat the Tees port business as a branch economy. I believe that those fears are misplaced. Tees and Hartlepools has been a successful port, as the hon. Gentleman has shown, for several years now, in terms both of traffic and of profitability. It is well placed for further measured expansion. Its prospects are extremely good. It is ably managed. I am sure that the port authority has in mind the future prosperity of the port and the interests of Teesside as a whole. It is not for me to judge a possible Bill. That will be a matter for the House and the House authorities at a later stage.
Question put and agreed to.
Adjourned accordingly at two minutes to Three o'clock.