Trust Ports

HC Deb 09 March 1992 vol 205 cc647-55 3.32 pm

The Secretary of State for Transport (Mr. Malcolm Rifkind)

With permission, Mr. Speaker, I should like to make a statement about the progress that has been made on the privatisation of the trust ports since the Ports Act 1991 received Royal Assent in July of last year. The main objective of the Government in promoting the legislation was to enable the major trust ports to bring themselves into the private sector.

On 28 January I announced that I had given my consent to the sale of the Tees and Hartlepool port authority's undertaking to Teesside Holdings Ltd and that sale has been completed. The Forth ports authority intends to seek the privatisation of its undertaking on 12 March by floating it on the stock exchange. The boards of the Clyde port authority and of the Medway ports authority have now put to me their recommendations concerning the sales of their ports; the board of the Port of London authority has put to me its recommendation concerning the sale of the port of Tilbury.

Different objectives were agreed for the sales of the three ports, but in all three cases they included encouraging the disposal to managers and employees of the whole or a substantial part of the equity share capital; seeking the best open market price subject to the other objectives; and continuing the port operations of the undertakings.

I am satisfied that, in all three cases, the boards conducted the sales in a fair and proper manner. In particular, I am satisfied that each of them carefully assessed the bids for their ports against the agreed objectives of sale.

The Clyde port authority board concluded that the bid made by Clydeport Holdings Ltd, a management and employee buy-out team, satisfied most appropriately and fully the objectives of sale. It was also the largest bid in monetary terms. Under the terms of the bid at least 60 per cent. of the equity share capital of the company will be held by managers and employees. The Clyde port authority board has accordingly recommended to me that its successor company should be sold to Clydeport Holdings Ltd.

The Medway ports authority received only one final bid for its undertaking. This was from Medports Mebo Ltd, also a management and employee buy-out team. The board considered that the bid fully met the agreed objectives of sale. Under the terms of the bid, 51 per cent. of the equity share capital will be held by managers and employees of the company and an employee share ownership trust. The Medway ports authority board has recommended that its successor company should be sold to Medports Mebo Ltd.

The Port of London authority board concluded that the bid by International Transport Ltd, also a management and employee buy-out team, best met the agreed objectives. It was also the largest bid in monetary terms. Up to 50.1 per cent. of the equity share capital and 7.5 per cent. of preference capital will be available to managers and employees of the company. The board of the Port of London authority has recommended that the port of Tilbury should be sold to International Transport Ltd.

I have considered carefully the recommendations of the three port authority boards. I am satisfied that in all three cases the recommended bids meet the agreed objectives of sale. I have noted the provisions made in each case for managers and employees of the company to hold a substantial part of the equity share capital of the companies. I also consider the bids to be satisfactory in monetary terms.

I am therefore writing to the chairman of each of the three port authority boards giving my consent to the sale of their ports to the three bidders whom they have recommended, subject to the completion of satisfactory contracts of sale. I am delighted that today's announcement means that three more major British ports are now moving into the private sector and that a fourth intends to do so shortly.

I commend this statement to the House.

Mr. John Prescott (Kingston upon Hull, East)

I am pleased that, at least on this occasion, the House has been treated to a statement rather than a repeat of the rather shabby deal that was associated with the sale of the Tees and Hartlepool port.

The Secretary of State should reconsider the remarks that he made when I left the Chamber. He is aware that when a statement is made on such complex matters it is necessary to read and consider it before one can be expected to make a response. It is the convention in the House for statements to be given to the Opposition by approximately 2 o'clock so that they can consider the details. If that is done, it avoids any discourtesy to the House that is caused by having to go out of the Chamber to read the statement in order to make a proper assessment of it. In view of that, I hope that the right hon. and learned Gentleman will withdraw his earlier remarks.

In view of the complex matters involved, we have been given insufficient time to make a proper judgment of the Government's assessment—[Interruption.] That is the reality. It is difficult to make a proper assessment of the matters involved.

Does the Secretary of State accept that great concern attended the sale of the Tees and Hartlepool port when the preference for the management-worker deal was ignored and the highest bid was refused? The integrity of that deal and the community interest were severely compromised.

Does the Secretary of State accept that the motivation behind and timing of his announcement has much to do with the coming election and tomorrow's Budget? No doubt the receipts from the sales will be used to finance the Government's taxation programmes. Does he accept that his announcement has nothing to do with transport policy or the national interest? In view of that, the Opposition reserve the right to review, where possible, these privatisation deals to ensure that the national interest and employees' interests have been properly taken into account. The Tees and Hartlepool sale failed to do that.

What is the estimated price to be paid for the deals that the right hon. and learned Gentleman has announced, and how much will be secured by the Treasury? When he considered the preference criteria for the management buy-out, were they in any way different from those in the Tees and Hartlepool deal? What protection has been secured for the employees, particularly with regard to their pension rights, from those who have purchased, or propose to purchase, the trust ports?

The Port of London police force, which is publicly accountable, will become a privatised force. What assurances have been given about the use of that privatised force, which has considerable powers and responsibilities in connection with drugs, illegal immigration and contraband? What arrangements have been made with regard to the navigation powers for the Thames, particularly in the Port of London area, and how will they be financed under the scheme?

Mr. Rifkind

The House will have noted the hon. Gentleman's opening comments about his absence, and it will make its own judgment on that matter.

Mr. Prescott

Cheap little man.

Mr. Rifkind

The hon. Gentleman should realise that the House would expect him, and all other hon. Members responsible for transport matters, to be present during transport questions.

The hon. Gentleman says that it is difficult to make a judgment about the content of my statement, but he has not found if difficult until now. He has opposed the privatisation of ports. Irrespective of whether they were acquired by management and employees, he and the Labour party opposed the legislation. Why does he now find it difficult to make a judgment? Perhaps it is a late sign of repentance.

The hon. Gentleman made a comparison with the Tees and Hartlepool privatisation, but on that occasion the bid by the managment-employee company was not the highest. It was not the bid recommended by the port authority. Other factors led to the recommendation that was made to the Secretary of State.

The hon. Gentleman asked about the timing of my statement. It has been made today because in the past few days we have received the recommendations from the port authorities. My task was simply to decide whether they complied fully with the objectives laid down in the Act, and I am satisfied that they do.

The hon. Gentleman asked about the price that has been agreed. For the Medway, it is £29.7 million, for the Clyde £26 million, and for Tilbury £32 million.

The hon. Gentleman also asked about the position of the police in the Port of London authority. He will be aware that there are ample precedents in other ports already in the private sector for police serving those new port authority companies, and all the proper interests of the police have been taken fully into account.

Mr. Prescott

What about pensions?

Mr. Rifkind

Of course pensions have been covered. That is to be expected, given that management-employee bids succeeded in each case.

The most alarming aspect of the hon. Gentleman's remarks was that he said that if a Labour Government were to be elected they would review the privatisations. I am not sure what was the implicit threat in that remark. In the three companies to which I referred, the employees succeeded in taking over their company. Is the hon. Gentleman saying that a Labour Government would seek to reverse the decision that I have announced today? [Interruption.] The hon. Gentleman is nodding. Is he saying that a Labour Government would try to deny to employees in Tilbury, the Medway and the Clyde the opportunity to own the companies in which they work? I am sure that local opinion in each of those three communities will be appalled by the insensitivity of his response.

Mr. Roger Moate (Faversham)

I warmly congratulate my right hon. and learned Friend the Secretary of State and the Under-Secretary of State, my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin), on their tremendous personal efforts to bring about these great advances in the port industry. Is my right hon. and learned Friend aware that the port of Sheerness, in my constituency, which constitutes the bulk of the port of Medway, has transformed itself in the past 25 years from an ex-naval dockyard into one of the most profitable, enterprising and largest ports in the United Kingdom? The privatisation will allow the 650 employees to have an even greater stake in their futures and will attract new investment to our area.

Is he also aware that every advance in the ports industry has been opposed by the Labour party, and this privatisation has also been opposed by the Liberal Democrats? The suggestion by the hon. Member for Kingston upon Hull, East (Mr. Prescott) that an incoming Labour Government would review the proposals is utterly irresponsible. It introduces uncertainty into the matter, whereas we had hoped that total certainty would be established by today's statement.

Mr. Rifkind

I thank my hon. Friend for his warm welcome, and I associate myself particularly with his tribute to my hon. Friend the Member for Derbyshire, West (Mr. McLoughlin), who played an enormous part, when piloting the Bill and at subsequent stages, in ensuring the successful progress of this policy.

My hon. Friend was also right to draw attention to the important benefits for his constituents and for those in the local community resulting from today's announcement.

Mr. Tony Worthington (Clydebank and Milngavie)

Is it now possible to see details of the bids? I believe that in the case of the Clyde port authority an assurance was given that the value of the management-employee buy-out meant that 60 per cent. was controlled by management and employees. Would it be possible to discover who was represented by the other 40 per cent.? What undertakings have been given to safeguard such ports? What would happen if Clyde port authority decided to move to Greenock and to ignore the rest of the Clyde, as it has done in the past? What undertakings would then apply to ensure that the Clyde was dredged? Will the company give such assurances?

Mr. Rifkind

The hon. Gentleman is correct to say that 60 per cent. of the shareholding belongs to management and employees. It is for the company to say who the remaining shareholders may be. Clyde port authority has expressed itself fully satisfied that all the responsibilities that it has undertaken in the past will be carried out by the successor company. The objectives of each sale—they are slightly different in each case, depending on circumstances—have to be taken into account. Both I and the port authority are satisfied that the requirements will be fully met.

Mr. Tim Janman (Thurrock)

I congratulate my right hon. and learned Friend on today's excellent statement about the port of Tilbury. There will be great rejoicing in Tilbury this afternoon and tonight. He will be aware that the hundreds of men and women who work at the port and who have successfully turned it around since the abolition of the dock labour scheme go along fully with his decision; and it was absolutely the right one, given all the hard work and dedication that they have put into the port in the past two years.

Is my right hon. and learned Friend aware that, before the hon. Member for Kingston upon Hull, East (Mr. Prescott) decided that this announcement would be reviewed if Labour won the election, at the end of last year, Labour's parliamentary candidate for Thurrock said that he wished there had been a November election and that Labour had won it so that the privatisation would have been stopped?

Mr. Rifkind

I am aware of that. The local Labour party in Tilbury appears to contain the only people in the area who are trying to frustrate the natural aspirations of the employees of Tilbury to own their own company. I suspect that the hon. Member for Kingston upon Hull, East will find that his aspirations cannot be realised—first, because he will not be elected, and, secondly, because legal procedures and the strength of local community feeling in each of these ports would unite to prevent any of his suggestions from coming into effect.

Mr. Ronnie Fearn (Southport)

I welcome the statement, but will the Secretary of State explain what he means by a substantial part of the equity share capital"? In the case of Tees and Hartlepool, it meant only 5 per cent., which appeared to be a shambles. Are the figures in these cases substantial—and are they correct?

Mr. Rifkind

I have explained what a substantial share means: it was 60 per cent. in the case of Clyde, 51 per cent. in the case of Medway and 50.1 per cent. in the case of Tilbury. The hon. Gentleman will recall that, under the Act, management and employee shareholding was one of the objectives, not an obligation. Such shareholding would of course strengthen any bid put before the Secretary of State or before the authority. Sad to say, although the Tees and Hartlepool employees' bid met that requirement, it did not meet all the other objectives so that port authority felt unable to make that recommendation. I concurred in that judgment.

Mr. Robert Adley (Christchurch)

Does not the attitude of the hon. Member for Kingston upon Hull, East (Mr. Prescott) clearly show that on this as on so many other issues the Labour party is torn between the interests of its trade union masters and those of the work force whom it purports to represent? Has my right hon. and learned Friend seen the recently published report of the Mersey Docks and Harbour Company, which produced the first profit for 29 years and restored traffic levels to what they were in the mid-1950s, and which attributed that almost entirely to the ending of the dock labour scheme—which the Government pursued through the House in the teeth of opposition from the Labour party? Is it not clear that our ports, as with so much else in this country, depend on the continuation of good, sound Conservative government to drag us into the future and to prevent us from being dragged into the past by the Labour party?

Mr. Rifkind

Yes. There has been a splendid renaissance of the ports since the repeal of the dock labour scheme. The Labour party's response is typical because it always provides pig-headed opposition to any sensible reform, always in the face of the Government and the employers, and usually in the face of the employees as well.

Mr. Ian McCartney (Makerfield)

The Secretary of State rather flippantly set aside the issue of pensions on the basis that there was a management-employee buy-out. The report on pensions published this morning seems to show that that is insufficient to protect pensioners. Will current pension arrangements be safeguarded and will the scheme continue, or will there be a new scheme under the new management? That is vital, because previous privatisations in the transport industry have led to losses of pensions, as in the case of British Rail Engineering Ltd., where the company was sold to Parkfield which eventually went bankrupt and the members lost their pensions after paying into the British Rail scheme for 25 to 30 years. Will the Secretary of State give a clear understanding on the issue of pensions and on the protection that is required for pensioners who are currently receiving benefits from the scheme and for future pensioners?

Mr. Rifkind

Both the legislation and the various schemes that have been proposed have had to take into account the proper and legitimate interests of pensioners. The hon. Gentleman can assume that the port authority would have been looking especially at that matter in the light of its responsibilities. The Government, as the body required to give final approval, would also wish to take that matter into account.

Mr. Michael Alison (Selby)

Does my right hon. and learned Friend realise that, although his statement will be enthusiastically welcomed in practically every quarter, it is just possible that in certain circumstances it could be less welcome to the British coal industry, of which the Leicestershire coalfield and Selby, in particular, are important parts? I also represent the views of my hon. Friend the Member for Sherwood (Mr. Stewart). Will my right hon. and learned Friend kindly tell those who are likely to be newly responsible for the ports featured in his statement that there is already much unused capacity at British ports for coal imports, and that they would be ill advised to seek to provide further capacity?

Mr. Rifkind

It is for each port, irrespective of ownership, to come to a judgment on whether there is likely to be a demand for its services which requires increased capacity. Clearly, it will be for individual ports to decide on that matter, and that would have been true irrespective of my statement. Obviously, matters of energy policy are not for me. My responsibility is to ensure that there is a framework in which the ports can prosper, and it is the ports' obligation to judge the demand for their services and to seek to provide capacity to meet it.

Dr. John Reid (Motherwell, North)

Would the Secretary of State rethink his initial response to my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott)? When he demands that a decision should be made irrespective of whether the information is available or whether reflection has taken place, he is asking for a decision based on prejudice. Does he not think that, after 13 years of prejudiced and dogma-ridden decisions, the country would find it refreshing for a politician to say, "I want to see the facts before I make a decision"? On the facts of the Clyde port authority, the Minister said that there would be 60 per cent. control by the management and work force. What percentage of that is nonmanagement control?

Mr. Rifkind

I think that I am entitled to be a little sceptical about the hon. Gentleman's remarks and those of his hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). The idea that the Opposition regularly ask for time to reflect on Government announcements before giving their response so that the response can be fully informed, and not based on misunderstanding or be in danger of misrepresentation, is an endearing suggestion, but not one that the House has regularly identified. If it is to be the policy of the Opposition in the next Parliament to reflect on all Government announcements before responding, I heartily welcome their conversion.

Dame Peggy Fenner (Medway)

I agree with my hon. Friend the Member for Faversham (Mr. Moate) in whose constituency is the largest part of the Medway port authority. I have the honour to serve the Medway constituency and my constituents will today be saying, "Thank you for a management-staff buy-out." We have always had good industrial relations in the Medway. Does my right hon. and learned Friend think that this sort of buy-out, which really involves staff, quite contrary to the prejudice about which the hon. Member for Motherwell, North (Dr. Reid) spoke, can only enhance the good industrial relations that we have always had in that port?

Mr. Rifkind

I agree with my hon. Friend. A healthy bid from a management-employee organisation helps to create motivation, and that is always to be welcomed. It is sad that that kind of initiative does not always succeed, but wherever it does, and if it meets the overall requirements, it is proper for it to be welcomed in all quarters.

Mr. Harry Barnes (Derbyshire, North-East)

Is it Government policy eventually to privatise all trusts?

Mr. Rifkind

The hon. Gentleman should consult the Ports Act 1991, which makes it clear that the Secretary of State has the power to require privatisation of the 13 largest ports, but only after two years have elapsed since the passage of the legislation. That time will not elapse until July next year. As it happens, once Forth completes its procedure, five of the 13 ports will already have used the voluntary procedure, and that includes four out of the five largest ports.

Mr. Jacques Arnold (Gravesham)

My right hon. and learned Friend will be aware that I have constituents employed in both the port of Tilbury and the Medway port. They will welcome today's decision and see it not only as underwriting the future and putting it in their hands but as giving them the opportunity to take a personal stake in the ports.

Mr. Rifkind

My hon. Friend is rightly entitled to feel doubly delighted by the announcement.

Mr. Dennis Skinner (Bolsover)

Will the Secretary of State clarify the answer that he gave the right hon. Member for Selby (Mr. Alison) about the importation of coal? Was he saying that, although nearly 20 million tonnes of coal were imported last year and more is likely to be imported this year, he will allow these ports to import as much coal as they like, even though, when it comes to producing food, British Governments, of whatever colour, have always taken the view that it makes sense not to import food but to produce as much as we can and subsidise it here? What he is saying is that as much coal can come into these ports as anybody wants without the Government interfering. Come on, let us hear exactly what the Secretary of State has to say.

Mr. Rifkind

The hon. Gentleman knows perfectly well that I was making no comment on energy policy, which is a matter for others to comment on, if appropriate. I should have thought that it was entirely obvious what I was saying. The ports' responsibility is to respond to any legitimate request that they receive from any potential customer to handle products either for import or for export. Individual ports do not determine energy policy.

Mr. Andrew Rowe (Mid-Kent)

At my first constituency surgery in 1983, two dockers from the Medway port came to see me and asked whether we could get rid of the dock labour scheme. We have come a long way since then, and the improvement in the ports in Kent has been staggering. Today's announcement carries them a stage further. Will my right hon. and learned Friend remember that, as the volume of traffic increases, the opportunity for a considerable amount of freight to move from road to rail will increase? Given that a new railway line is under consideration, will he make sure that the possibility of taking freight from road to rail is closely borne in mind?

Mr. Rifkind

We are keen to see a move from road to rail and also to sea transport. There may be opportunities for the ports to benefit from the improved freight facility grants that I announced some months ago. Interest in the grants is mostly centred on the opportunity for the railways, but there is also an opportunity for the ports if environmental benefits would result from freight that would normally be carried by road being carried by sea.

Mr. Derek Enright (Hemsworth)

Now that we know that the Secretary of State does not care about energy policy, and will pursue his policy no matter what, will he give the House an assurance that he will consult the Department of the Environment? During the passage of the Mersey Docks and Harbour Bill, it was made clear that no consideration had been given to the dreadful and deleterious effects on the local environment of the way in which its provisions would operate. For the future, therefore, will the Secretary of State lay down guidelines on the control of orimulsion and coal, when they are being stored, to prevent happening what has happened in the past in Liverpool?

Mr. Rifkind

The hon. Gentleman knows perfectly well that it is for my right hon. Friend the Secretary of State for Energy to comment on the energy implications of the policy. The environmental matters that arise from these decisions, and especially conservancy responsibilities, have been important factors, particularly in terms of the Medway where the port authority was more than satisfied with the determination of the new owners fully to carry out their responsibilities.

Mr. Geoffrey Dickens (Littleborough and Saddleworth)

Will my right hon. and learned Friend confirm that, if it had not been for the abolition of the dock labour scheme, his statement could not have been made? My constituents, who are a long way from the sea, would have been pleased to hear my right hon. and learned Friend make his statement. They would have heard that yet again the Government are giving workers their rights, as they gave council tenants and parents their rights. Is it not significant that the hon. Member for Kingston upon Hull, East (Mr. Prescott), the shadow Secretary of State, did not even mention the coal industry, showing how incompetent he is?

Mr. Rifkind

As always, my hon. Friend is entirely correct in his observations. Without the ending of the dock labour scheme it is conceivable that neither management nor employees would have been remotely interested in controlling the ports in which they work. There is an entirely new spirit in the ports. Those of us who have visited small ports since the ending of the dock labour scheme have been told constantly by management and by the representatives of trade unions that the spirit has changed entirely. There is an enormous amount of co-operation in ensuring that the ports can best meet the needs of local communities. The Opposition know that. There has not been the slightest suggestion from them that they would bring back the scheme. We know very well why that should be their view.

Mr. Quentin Davies (Stamford and Spalding)

My constituency, like that of my hon. Friend the Member for Littleborough and Saddleworth (Mr. Dickens), is landlocked. However, my constituents are second to none in recognising that an efficient, innovative and dynamically managed set of ports is essential for economic growth. Does my right hon. and learned Friend agree that, during the had old days of nationalisation and trade union monopoly, the registered ports were a costly and moribund incubus on the economy? They were incapable of competing either with private sector ports or, importantly, with Le Havre, Antwerp, Rotterdam, Hamburg and other ports on the continent.

Does my right hon. and learned Friend agree that his announcement is excellent news? It constitutes a splendid new step in the revival of our ports. Does he agree with me also that nothing is more revealing in terms of the damage that Labour's industrial policy would do than the scarcely veiled threat of renationalisation that we heard from the Opposition Front Bench this afternoon?

Mr. Rifkind

I agree with my hon. Friend, as do the managements and employees at the ports. The hon. Member for Kingston upon Hull, East (Mr. Prescott) is the last of the neanderthals.