HC Deb 05 February 1992 vol 203 cc429-36

Motion made and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]

12.45 am
Mr. Stuart Bell (Middlesbrough)

It is appropriate that we should adjourn the House on a short debate on the operation of the Ports Act 1991. Only last week, the Secretary of State for Transport endorsed the privatisation of the first trust port in accordance with the powers granted to him by the Act.

The legislation privatising trust ports is unlike a great deal of other Conservative legislation in past years, in which the Government sought to avoid responsibility. The fingerprints of the Secretary of State for Transport may be found all over the Ports Act. Not only does he oversee the sale of the ports, laying down conditions; he also makes the final decision on criteria set down by this Department.

It has always struck me as curious that, as Secretary of State for Trade and Industry, the right hon. Member for Chingford (Mr. Tebbit)—I have heard a variety of speehes from him—used to have to tootle along to see the Chancellor of the Exchequer for money for Jaguar, while feeling that the decisions involved were commercial decisions on investment, more appropriate to business men. In the case of the Ports Act, the Secretary of State bears on his shoulders a series of duties for which he is held accountable to the House.

We know that the Act came into force because the Treasury saw a variety of pots of gold dotted around the country in our trust ports. Section 13 makes that clear when it talks of levy on initial disposals of securities of successor companies. In short, half the pot of gold in each port would go to the Treasury; the other half would go back into the successor company.

If the Treasury had its eye on the pots of gold, however, so did other predators. When the successor company to Tees and Hartlepool, Teesside Holdings, took over the port, it immediately picked up the £35 million cash asset that was standing in the bank, in the port's name, at the time of the takeover.

Whatever arguments may be advanced about the first privatisation of a trust port—and there are many—the fact is that, of a purchase price of £180 million, with £90 million going to the Treasury and with cash to the tune of £35 million in the Treasury, not to mention a pension fund with some £38 million in the bank, Teesside Holdings has paid no more than £55 million for assets worth £180 million. Opposition Members feel that that constitutes naked capitalism of the worst kind on the part of this Conservative Government—capitalism at its most blatant. It is cynical; it deprives a local community of its port; and it is immoral.

When deciding to endorse the bid of Teesside Holdings, in his written response to a planted parliamentary question, the Secretary of State for Transport said that he had considered representations about Humberside Holdings and other companies associated with the Holloway family. He was required to do so because Humberside Holdings is one of a trio of companies in the consortium that became the successful bidder for the port of Tees and Hartlepool.

The Secretary of State made the following statement about John Holloway, who was intended to be chief executive of Tees and Hartlepool port authority: I have found nothing in the evidence put before me concerning either Mr. John Holloway or Humberside Holdings which would make it proper for me to withhold my consent to the proposed sale to Teesside Holdings Ltd."—[Official Report, 28 January 1992; Vol. 202, c. 501.] Mr. Kevin Fletcher, a solicitor on Teesside, who advised the Tees and Hartlepool board on the sale, advised me that the backgrounds of all the bidders were fully taken into account. Nor can the Secretary of State claim ignorance, for I gave his Department a full file on matters surrounding both the Holloway family and its associate companies.

This is important, because one of the criteria which was laid down by the Secretary of State in accordance with the Ports Act, and to which he alluded in his parliamentary response, was the fitness of the bidders to run the port. The Secretary of State was quite right not to take into account the past criminal records of Douglas and Barry Holloway, nor did I ask that he should. We know from newspaper reports that Douglas Holloway was convicted in November 1980 of bribing officials at the Scunthorpe works of British Steel with two of his directors, including his son Barry. He was fined £11,000 with £10,000 costs, and given a 12-month suspended sentence. Barry Holloway was fined £1,500, received a six-month suspended sentence and was gaoled for seven days for contempt of court. John Holloway was charged and acquitted and, by way of explanation of how he found himself in the dock in the first place, he said that he had just left school at the time.

Both Douglas and Barry Holloway were on the board of Humberside Holdings throughout the bidding process for the port of Tees and Hartlepool. They promptly resigned on 21 December when facts of their criminal records became known to the public. Mr. W. G. Andrews, who is now the non-executive chairman of the new board of Tees and Hartlepool, indicated, when asked, that he thought that the Holloways had paid their debts to society. As it happens, it turns out that society, on both sides of the Atlantic, paid their debts for them.

As the Secretary of State for Transport knew when he made his first decision under the Ports Act, the most significant company in the Holloway group was Interdom. That company went into liquidation on 15 November 1991, during the bidding process, with a summary of liabilities to non-preferential creditors in the amount of £1,740,000, and an estimated total deficiency, as regards members, of £2,240,527. Those directors listed as holding office during the last three years were Douglas Holloway, Barry Holloway and John Holloway, all of whom were involved in the bid for the port of Tees and Hartlepool. As I have already said, John Holloway is now the new chief executive.

A full file on Interdom Ltd. was submitted by Ernst and Young to the Department of Trade and Industry, marked "Private and Confidential" and dated 29 November 1991 —this at the very time that the former non-executive board was debating the credentials of the bidders. The Secretary of State for Transport was aware of this when he satisfied himself that Mr. John Holloway was a fit and proper person to run a port. Thus, while he was making that decision, the Department of Trade and Industry was considering a file submitted by the receivers on the selfsame people. The Secretary of State knew that when he decided that Humberside Holdings, with the same Holloway shareholders, was also composed of fit and proper persons.

Nor could it be said, when it came to receivership, that the Holloways were respecters of particular creditors or persons. Thus, American Express found itself owed £50.15. Arthur Anderson was owed £57,542. Mercury Carphones was also owed money. That is an interesting thought for you, Madam Deputy Speaker: running a port without car phones. One can imagine the Holloways being unable to phone back and forth because, when their company went into receivership, they owed Mercury £827.72. Nevertheless, the Secretary of State concluded that they were fit and proper people to run the port of Tees and Hartlepool.

There is a significant statement appended to the file sent to the Department of Trade and Industry, to the effect that, prior to the receivership date, the company had a credit balance of £1,658,817. That amount had been set off against the bank borrowings of other group companies by the company's bankers, pursuant to their security. The offsetting arrangement has, according to the statement on file at the Department of Trade and Industry, created inter-company balances with other group companies which are also in receivership and the balances arc not therefore recoverable.

"Other companies in receivership"—but the Secretary of State declared in his written response that he had considered the record of the bidding company and satisfied himself, or words to that effect, that it was fit and proper to run the port of Tees and Hartlepool. In fact, the receivership of Interdom and other group companies referred to in the file submitted to the Department of Trade and Industry is only the last in a long line which looks like a trail of broken dreams and promises—rather like the tragic James Dean posters that one sees from time to time.

Lindsey Dock Services Ltd. and John Sutcliffe Consolidated Stevedores Ltd. were associate companies of Humberside Holdings Ltd. The holding of Humberside Holdings Ltd. in Lindsey Dock Services Ltd. amounted to 50 per cent. and, in the case of John Sutcliffe Consolidated Stevedores Ltd. to 33 per cent. John Holloway and Frederick Russel Brown were directors of Lindsey Dock Services Ltd. as well as directors of Humberside Holdings Ltd.

I shall return to Frederick Russel Brown in a moment, because he is a director of the new Tees and Hartlepool port and will work in an executive capacity alongside John Holloway. Both companies of which they were directors went into liquidation, leaving the Government to pick up the bill for redundancy payments to stevedores amounting in the case of Lindsey Dock Services Ltd. to £3,340,001 and in the case of John Sutcliffe Consolidated Stevedores Ltd. to £3,598,314.

Let us look across the Atlantic. Interdom owned a company in the United States called Contract Marine Carriers Inc. with head offices in Richmond, Virginia. Douglas Holloway was listed as one of the officers—in fact, he was listed as chairman and president. The chief accountant was Mr. Frederick Brown who, as I said, is now to run the port of Tees and Hartlepool in accordance with the decision of the Secretary of State in the discharge of his duties under the Ports Act 1991. When Contract Marine Carriers Inc. went into involuntary bankruptcy, Interdom Holdings Ltd. was the principal shareholder.

Just prior to the involuntary bankruptcy, moneys amounting to $172,250 which rightly belonged to the creditors were transferred from the Sovran bank, Richmond, Virginia to the National Westminster bank, 52 Threadneedle street, London, and to the Hungarian International bank, Princess house, 95 Gresham street, London EC2. Those concerned with the transfers were Douglas Holloway and Interdom Ltd., of which Mr. John Holloway was a founding shareholder and director.

When an attorney representing the creditors in the United States—Mr. C. Thomas Green III—sent a letter to the company, a reply was sent by McHale and Co. denying that Interdom Holdings Ltd. was or had ever been a shareholder in Contract Marine Carriers Inc. A search at Companies house revealed that, although Contract Marine Carriers (UK) Ltd. was registered, as was Contract Marine Carriers (Garston) Ltd., there was no reference to Contract Marine Carriers Ltd. in the United States. In the end, Mr. Douglas Holloway accepted responsibility for the company in a letter dated 3 April 1986.

So we see the link between a company in the United States—Contract Marine Carriers Inc.—and Douglas Holloway; through Mr. Holloway to Humberside; through Humberside to Interdom; and from Interdom, through Humberside again, into the consortium, and from that consortium to the new company created under the Ports Act.

We come again to Mr. Fred Brown. Not only was he listed as chief accountant, but—between 20 and 29 January 1986, shortly before Contract Marine Carriers Inc. ceased trading, because of the involuntary bankruptcy— he went to Richmond, Virginia. One of the reasons given for the involuntary bankruptcy of the American company was that the revenue was being collected abroad, and debts were not being paid in the United States. In short, the money owed directly to the company was being funnelled off to the United Kingdom.

There was also serious doubt whether the company was properly registered in the United States in accordance with the Jones Act There were violations not only of United States law but of United Kingdom law, because the company was not registered as one of the companies in the Interdom group.

What do we see when the Secretary of State for Transport has made the first decision? We see that two directors involved in two companies that have gone into receivership are now to run the port of Tees and Hartlepool—at a time when the associate company was not only in liquidation but had been referred to the Department of Trade and Industry.

It is my full intention to call for the disqualification of the directors Fred Brown and John Holloway in accordance with the Company Directors Disqualification Act, 1986, and to submit a full file to the Department of Trade and Industry, calling for it to take action in the public interest. A disqualification order under section 8 of that Act should be made.

The reason for my decision is the inability of the Secretary of State for Transport to look the facts fully in the face and to act upon them in accordance with his duties under the Ports Act. I shall submit the file because, in my view, there is prima facie evidence of a breach of commercial morality, of gross incompetence and of recklessness. There is evidence, too, that the two directors are not fit and proper persons, and are not competent to run the port of Tees and Hartlepool.

Other factors, too, make me determined to take the matter a stage further. Six and a half million pounds of taxpayers' money has never been seen again; it was paid to stevedores so that two companies could go into liquidation and then set up in business again. The law takes a dim view of such a situation—rather more so, apparently, than does the Secretary of State for Transport.

According to the law, the amount of Crown debt is an important factor in determining unfitness. I have already mentioned the £6.5 million of Crown debts owed by the two companies, which the Department of Transport has been unable to recover because of the massive debts that the companies have run up, and their inability to meet any of them.

The number of liquidations that directors have been involved in is a relevant factor, too. It is no coincidence or accident that Fred Brown and John Holloway have been involved in previous liquidations, nor that John Holloway was a founding member of Interdom Ltd., and retired, or resigned, from the firm in May when he saw that the writing was on the wall. However, he is listed in the DTI file as a director for the past three years.

The way in which the companies have been managed in the past is another significant reason why the matter should be referred to the DTI with a view to having those two directors disqualified.

I have already referred to the issue of morality. We see here the confluence of Government immorality and bad legislation.

After 13 years, the Tory Government have no sense of morality and no sense of what is due to the taxpayer. We hear so much about Labour's tax policy, yet £6.5 million of my money, your money, Madam Deputy Speaker, the money of other hon. Members and the money of those who live in our country has simply been given away to firms and individuals who, as I have shown tonight. have lined up a whole series of liquidations in the United States and in this country.

We have seen incredulity on the part of the 15 trust ports of our land, which were lining themselves up for management-employee buy-outs only to shelve their plans. The ports of Tyne and of Ipswich have no further interest in privatisation. After two years, the Government's ports policy is totally incoherent.

Dr. Ashok Kumar (Langbaurgh)

Does my hon. Friend agree that the Secretary of State has delivered a kick in the teeth to the people of Cleveland and Cleveland Members who lobbied him, pointing out his errors at different times?

Mr. Bell

I entirely agree with my hon. Friend. We saw the Secretary of State and he said, "I hear what you say," but he did not act upon what he heard.

We have seen immorality, bad legislation and a privatisation too far and we have seen —to paraphrase "Gone with the Wind"—that the Tories don't give a damn about Teesside.

1.5 am

The Minister for Shipping (Mr. Patrick McLoughlin)

In the short time that is left, I shall attempt to answer some of the points that the hon. Member for Middlesbrough (Mr. Bell) has made. I will not be able to answer them all.

The hon. Gentleman said that the operation of the Ports Act 1991 is in some chaos, and I shall come to that matter a little later.

The hon. Gentleman said that we had not fully considered his representations. I can assure him that my right hon. and learned Friend the Secretary of State considered in great detail all the representations that were made. That is why a considerable time elapsed between his original statement that he was minded to accept and the announcement of the final decision to give the go-ahead. Any complaints that were made to us were taken seriously.

We have heard on numerous occasions that the only reason why the Government wanted the Ports Act on the statute book was that they wanted the money. That allegation has just been made again. Had that been our sole concern, we would have accepted the highest bid. The simple fact was that a recommendation was made to us by the Tees and Hartlepool port authority and the Secretary of State accepted it.

We all know that Labour Members have consistently opposed all the measures that we have taken to free up the docks industry. Tonight they have yet again shown their total objection to any privatisation that gives opportunities to the people who work in the industry concerned. Such privatisations are anathema to the Opposition.

The enactment of the Ports Act was the latest stage in a process of deregulating the port industry. The abolition of the dock labour scheme did much for the THPA, freeing it from the constraints from which it had suffered for many years. The repeal of the dock labour scheme provisions was consistently opposed by the Opposition.

We believe that it is essential to have a competitive industry in which individual ports compete with each other for business in the marketplace. We believe that the right place for the larger trust ports is the private sector. As company ports, they will be able to compete on equal terms with the part of the ports industry that already lies in the private sector and which, by tonnage, already amounts to more than 50 per cent. of the industry. They will no longer be bound by the unnecessary constraints on their activities that their status as trust ports brings.

My right hon. and learned Friend delayed making his final decision on the sale of THPA until he had looked into the various matters that Opposition Members had raised about the sale. On 28 January, he announced that he had not found anything in the points raised that would justify him in not confirming his consent to the recommendation that the THPA board had made to him that the port should be sold to Teesside Holdings Ltd. This statement ended a period of uncertainty for the port which had the potential for doing real damage to the port itself. It was important that that period of uncertainty should be ended and I am sorry that Opposition Members seem to want to reopen the whole subject and to renew that uncertainty—

Dr. Kumar


Mr. McLoughlin

I am sorry, but I do not have the time to give way because I have not been left with enough time to reply. I apologise to the hon. Gentleman.

That is not and cannot be good for the port or the area that is serves. A few moments ago, I noticed my hon. Friend the Member for Dorset, North (Mr. Baker) nodding his head in agreement, because that is exactly what the Opposition intend—to continue that uncertainty. That is disgraceful from any elected representative.

Dr. Kumar


Mr. McLoughlin

I am sorry, but I do not have time to give way.

The record of those earlier debates shows that the hon. Member for Middlesbrough's concern about the Act naturally centre upon the privatisation of the Tees and Hartlepool authority, as he has demonstrated this evening. Now that that privatisation has actually taken place, I am wondering whether this will be his swan song, or whether he will continue to take such a lively interest in the Act.

The hon. Gentleman's views on the Tees and Hartlepool port authority have not always been clear or consistent. During the debates in 1990 in this House on the authority's own Bill for privatising its undertaking, he was happy enough to denigrate the authority for having the temerity to be seeking privatisation at all. He was even more ready to attack the management for even thinking of buying the port. During the earlier stages of the passage of the Ports Act 1991, he was virtually silent on the question of management-employee buy-outs—perhaps he was undergoing some sort of fundamental change of heart and could not reconcile the way in which he had stopped the original private Bill from proceeding in the House.

By the later stages of the Bill, and particularly during this House's consideration of the amendments that were made in another place, the hon. Gentleman had become eloquent in favour of a management-employee buy-out for the Tees and Hartlepool port authority, primarily, as he suggested, to protect the port from outsiders, who might even be foreign. Possibly the most consistent aspect of his approach—if this can be called "consistency"—has been to try to attack and undermine whenever possible the decisions of the authority, obstruct its privatisation at every turn, and to make that privatisation as uncertain, costly and damaging a business as he could.

The motto of the hon. Member's policy might perhaps have been that it was necessary to destroy the authority in order to save it from privatisation. That would be an approach typical of a party that values entrenched positions and the status quo so much that, in the unlikely event of the Opposition winning the next election, they would probably reintroduce the dock labour scheme and reimpose on the ports industry the shackles from which it has just been released. By contrast, the Government have done a lot for our ports industry. My right hon. and learned Friend's announcement on 28 January will enable the THPA to embark on a period of development and expansion under its new owners.

Looking ahead to other trust port privatisations which are currently in progress, we continue to see the use of a range of objectives of sale as criteria against which the final bids are to be evaluated as being the best way of enabling each trust port authority to assess the competing bids that it receives, and to take into account, alongside the price offered, its concern about the future of its port.

As I have said, the Opposition frequently accused the Government during the debates on the Ports Act of recognising no other criterion for port sales except the price paid. That was untrue. We said at the time that we were prepared to consider other objectives apart from the price if those were of importance to individual ports, and that is what has happened in this case. It is an approach to privatisation that gives each individual port authority considerable flexibility and control over its own privatisation, a situation which I would have thought was welcome to both sides of the House, given the views that were expressed during debates on the Act. The port authority is the vendor in the sale of each port, and it must be for each bidder to convince the authority's board that his bid meets the objectives of the sale as completely as possible and more fully than any of his competitors' bids.

I reject most emphatically the attacks on the ports privatisation programme that the hon. Gentleman has made both in the media and in this House.

I turn now to the progress that has already been made, since the Bill became law last July. One trust port—Tees and Hartlepool—has now completed its privatisation, and no fewer than four others—Medway, Clyde, Forth and Tilbury—have begun the process. I remind hon. Members that they comprise five out of the country's eight largest trust ports. Those developments clearly show that our assessment of the need for Government legislation to enable the trust ports to enter the private sector was right. The privatisation programme resulting from the Ports Act remains firmly on target.

By contrast, we know that, under a Labour Government, the trust ports would have no such opportunity. Not only that, but they would still be saddled with the enormous dead weight of the dock labour scheme, constantly draining away their resources and their competitiveness to no purpose. That is why this Government's long-term strategy for the ports industry is the better road for that industry to take, and why the trust ports privatisation programme, under the successful operation of the Ports Act, is an essential part of that strategy.

Having thoroughly scrutinised all the bids, the Tees and Hartlepool port authority board decided to recommend to my right hon. and learned Friend—

The motion having been made after Ten o'clock and the debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at fifteen minutes past One o'clock.