§ Mr. Norman Baker (Lewes)
I am grateful for the opportunity to hold the debate, although I wish that it were not necessary. As the Minister will know, I last initiated an Adjournment debate on Government support for Newhaven in June, when I drew attention to the importance of the port not only for Newhaven itself but for a much wider region. I am sure that she accepts that a wider region is affected by the fortunes of Newhaven port.
Introducing my debate on 3 June, I said:This is a critical time for Newhaven. The port is at a crossroads … It has the potential a major success story of the next century, but it might also slip away, leaving a shell of derelict buildings, rusting metal and high unemployment …The Government, local councils and, crucially, the private sector must all deliver if we are to succeed".—[Official Report, 3 June 1998; Vol. 313, c. 324.]
I am sorry to tell the House that the five months since then have not been kind to Newhaven. The crossroads sign has begun to swing round, away from prosperity and towards the rusting metal and empty shell. In response to my previous debate, the Minister gave me genuinely sympathetic words, and set out the help that has been provided by both the present and the previous Government.
I acknowledge the help that has been given, and place on record again my thanks for the positive approach and flexibility of the Government office for the south-east. However, let there be no misunderstanding. Today I have to say clearly that that level of help is no longer enough. The situation has deteriorated, and I ask the Government to move up a gear, as the French Government did yesterday.
The seriousness of the position is reflected by the fact that in the Strangers Gallery today we have a large contingent from Dieppe, including the Deputy and mayor, Christian Cuvilliez, with representatives from the unions and from the Dieppe chamber of commerce. Hon. Members may have seen the coaches outside the House bearing the slogan "Save the Line".
I am pleased that so many distinguished guests are here today to listen to the debate and to hear the Minister's response. I hope that she will send them away in an optimistic frame of mind, and I am grateful that she has said that she will be able to have a brief few words with the members of the delegation immediately after the debate. I know that her timetable is very tight, and the fact that she has found us a small space is much appreciated both by our friends from Dieppe and by me.
I am also grateful for the support of other local Members of Parliament, especially the hon. Member for Brighton, Pavilion (Mr. Lepper), who is in the Chamber now, and who has initiated an unprecedented statement of support for the ferry from interests on both sides of the channel. All the local Members, from all parties, have contacted me and been supportive. The hon. Members for Pavilion, for Brighton, Kemptown (Dr. Turner), for Hove (Mr. Caplin) and for Hastings and Rye (Mr. Foster), and the right hon. Member for Wealden (Sir G. Johnson Smith), have all signed my early-day motion 1694 on the subject. I notice that the hon. Member for Eastbourne (Mr. Waterson) is also present today, and I encourage him to add his signature.
838 Let me outline the present position. It has become clear that the port owner, Sea Containers, is not prepared to build a new outer harbour, despite having signed up, literally, to the town's regeneration programme as established through the Newhaven economic partnership, which clearly included that project.
The alternative suggestion was for a deepening of the existing harbour—an idea that came from Sea Containers itself. Yet the company now says that it is not prepared to do that, either, despite the fact that the Government office for the south-east was helpful and flexible about altering the plans for the approved port access road, to be funded through capital challenge, and the county council committed yet more public money to redesign the road.
The county council had done all the work, and was ready to go. Planning permission had been obtained, all the land ownership problems had been sorted out, and extensive landscaping schemes designed. The county then waited almost a year for Sea Containers to deliver its side of the bargain; it waited in vain.
Now that window of opportunity for funding the road has been lost. Also lost, almost certainly, is the well-respected and key local employer, James Fisher, which has been unable to reach a satisfactory deal with Sea Containers, and, I understand, is now negotiating a surrender of its lease. More jobs are being lost.
Most serious is the potential loss of the ferry route that has operated between Newhaven and Dieppe for 173 years. Ho Chi Minh once worked on the route, Lord Salisbury travelled on it to reach his home in France, and Lord Lucan allegedly used it to escape from the country. I hope that the ferry does not disappear, as he did.
Last week, P and O Stena announced the withdrawal of the Elite, the fast craft used on the route. We are now down to one ancient trundling boat, the Cambria, which sails twice a day and is often late. Indeed, it was late this morning. Its timetable is hardly designed to attract extra traffic. The boat used by our French friends this morning left Dieppe at 3.45 am.
The ferry company is in talks with the unions to discuss a range of options, one of which is to close the line altogether. That would be catastrophic for both Newhaven and Dieppe, and for nearby areas in Normandy and East Sussex, including Brighton and Hove, and Eastbourne.
§ Mr. David Lepper (Brighton, Pavilion)
Does the hon. Gentleman agree that some of us gave our reluctant support to the limited merger between P and O and Stena last year only on the understanding that that would secure substantial new investment in that vital ferry service, and that those of us who did so feel betrayed to some extent by the company?
§ Mr. Baker
The hon. Gentleman is right. He has hit the nail on the head. People have a right to feel betrayed. They expected a better service from P and O Stena as a result of the merger, and they have not got it. If that service goes, 440 jobs are directly at stake—indeed, some have already gone with the disappearance of the Elite—and the knock-on effect on the wider region would be substantial.
Closure of the line cannot be allowed to happen. All the local authorities and Members of Parliament, in both Newhaven and Dieppe and in their local areas, stand shoulder to shoulder to fight any such proposal. 839 The French Government yesterday added their support, and I hope that our Government will mirror their attitude today.
I met my opposite number, Mr. Cuvilliez, who is here today, in Dieppe on Monday to discuss the situation. Yesterday he raised the matter in the French Assembly, and I have now provided the Minister's office with a copy of that exchange in advance of today's debate. She will have seen that the French Government have accepted that the matter isune question grave et sérieuse".
The French Government also suggest that any closure or even diminution of the line might be contrary to the conditions fixed in Brussels at the time of the merger between P and O and Stena. I have already discussed that idea with the Minister for Small Firms, Trade and Industry, and her office subsequently advised me that the Government do not believe that the merger conditions have been breached. In the light of the French Government's response, however, may I ask the Minister to look afresh at the question, and be kind enough to drop a line to other Members and to myself?
§ Dr. Desmond Turner (Brighton, Kemptown)
I represent a constituency next to the Newhaven area, and Brighton and Hove have a strong interest in the future of the port, which falls within our travel-to-work area. I echo the comments of my hon. Friend the Member for Brighton, Pavilion (Mr. Lepper); he and both I met the management of Stena Line, and were given the same undertakings, which the company has now breached.
I am sure that the hon. Member for Lewes (Mr. Baker) will agree that many commercial complications are involved, and companies are acting with no regard for the impact of their actions on the communities that the port serves. If the line has lost passengers, which it has, precipitately, that is scarcely surprising. The company cannot justifiably use the opening of the channel tunnel to explain the loss, because, as I think the hon. Gentleman will agree, the line has been so appallingly managed that, if the company had set out to deter passengers, it could not have done a better job.
I therefore assure the hon. Gentleman of our support in asking Ministers to do everything that they can to introduce some rationality into the situation so that we can have a future. I am sure that he agrees with me—
§ Mr. Deputy Speaker (Mr. Michael J. Martin)
Order. I have given the hon. Gentleman some leeway, but he must understand that he is making an intervention, not a speech.
§ Mr. Baker
I do agree with the hon. Gentleman, Mr. Deputy Speaker. I agree with his analysis of the Stena problem, and I am grateful for the cross-party support on the issue. In fact, that was to be my next point.
The level of commitment that Stena showed to the line has waned somewhat since the merger with P and O. The company says that it is experiencing large losses on the line, but there is a strong belief, especially in France, that it is deliberately redirecting freight away from the line and on to its Dover-Calais route. The chambre de commerce believes that £3 million of the alleged £8 million losses is attributable to that alone. P and O Stena has three cross-channel lines. Many people believe that it wants to 840 save money by operating only two, and has decided that Newhaven-Dieppe is the one to go. We need a clear statement from P and O Stena of its position.
There has also been a complete lack of marketing for the line recently, but despite that, despite problems with the boats, despite poor timekeeping and despite the timetable, about 700,000 passengers were carried last year. They used the line in spite of P and O Stena, rather than because of it, because the line would be successful and make a profit if only investment was made in infrastructure, marketing and achieving reliability.
The problems that Newhaven has at present are largely due to the behaviour of Sea Containers and, to a lesser extent, the ferry company. All aspects of the public sector, in this country and in France, have delivered their parts of the bargain and have consistently shown commitment to, and faith in, Newhaven and the ferry link. I must conclude that we would not be in this situation if the port and the ferry were in public hands. That may sound old Labour, or old Liberal, but it is difficult not to draw that conclusion.
Sea Containers is interested only in Sea Containers. Its strategy over the past 10 years has been minimum expenditure—just enough to deal with maintenance of statutory obligations—while bleeding as much money as it can out of the port. It will not invest in the port, nor can it find a buyer. That is, at least in part, due to the fact that it has grossly over-valued the port at £18 million, and has, I understand, borrowed against it. If Sea Containers sold the port for its real value, the over-valuing would be revealed, so it sits tight and bleeds it dry instead.
Sea Containers' latest tactic is to seek planning permission for land it owns in the strategic gap between Newhaven and Seaford. It wants to increase the value of its land to bring it up to the £18 million figure that it has arbitrarily set, should it receive such permission. In such circumstances, it might invest in the port.
Let me be clear: this is an attempt to blackmail the council into giving planning permission that it would otherwise not countenance. Having said that, the council would of course be prepared to consider any proposals, but they would have to be backed up with legal and enforceable guarantees. Sea Containers must come absolutely clean on its detailed plans for Newhaven, and then stick to what it has said. That has not been the case so far. If those plans are made clear, it will then be for people in Newhaven and Seaford to take a view, and make it known to their elected representatives at all levels.
Sea Containers has told me that it is prepared for one year to run a fast ferry on the route during the summer months, if P and O Stena withdraws. That is welcome as far as it goes, but it is not in any way enough. It appears that Sea Containers wants to cream off the profitable summer trade with a craft that requires little on-investment in the port—more bleeding of the port. I say to Sea Containers, "If you bleed the port too much, you will destroy your own asset. The longer you fail to invest, the more businesses will pull out, and the real value of the port will fall further from the arbitrary £18 million figure."
I should like the Government to intervene before breakfast, before lunch and before dinner, and I have six requests for the Minister. First, will she examine the legal position, to which I referred earlier, in respect of the European Commission? Secondly, will the Government 841 put pressure on P and O Stena to make its intentions abundantly clear, and to maintain the route at a proper level of boats and investment? Thirdly, will they put pressure on Sea Containers to make its plans clear, and to introduce plans, which it has promised for so long, to invest in Newhaven port?
Fourthly, will the Government consider areas where they could apply for European Union funding for port infrastructure improvements, and support the plans for rail investment through the trans-European rail network, because Newhaven to London is a trans-European rail line? Fifthly, will they consider reallocating the money in capital challenge for the port access road to other port improvements, which could be discussed with the county council and the district council?
Lastly, will the Minister, or one of her colleagues, visit Newhaven to meet people and discuss matters on the ground? I want those six questions answered, but my constituents want one question answered: what will the Government do to keep the ferry going and to save Newhaven? We need a clear and decisive answer today.
§ The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Ms Glenda Jackson)
The hon. Member for Lewes (Mr. Baker) ended his speech with six requests, but there were seven, I think. On the legal position, I will most certainly look into it. On pressure that the Government can bring to bear on the two commercial organisations to which he referred—P and O Stena and Sea Containers—he will be aware that the Government's powers in those areas are limited. I intend to touch on European funding and possible changes to capital challenge later.
On the kind invitation to visit Newhaven, as I have told my hon. Friend the Member for Brighton, Kemptown (Dr. Turner)—I say it now to the hon. Member for Lewes, my hon. Friends the Members for Brighton, Pavilion (Mr. Lepper) and for Hove (Mr. Caplin), and the right hon. Member for Wealden (Sir G. Johnson Smith), who sits on the Conservative Benches—I am happy to meet everyone at the earliest opportunity which is convenient to us all.
The hon. Member for Lewes said that he wished that he did not have to touch on the issues mentioned in the debate. All hon. Members with particular concerns about the port of Newhaven and its surrounding area will share that feeling. Although I am not aware that P and 0 Stena has made any formal public announcement about the future of the Newhaven-Dieppe ferry route, I am aware, as we all are, of the press reports. My right hon. Friend the Minister of Transport raised that issue with Lord Sterling, the chairman of P and O, because of the high level of public concern. My right hon. Friend was told that the company had not yet reached a final decision.
The hon. Member for Lewes detailed the important role that Newhaven plays in linking the south-east region and markets in continental Europe. Newhaven-Dieppe is the shortest and most direct of the ferry routes, and, like neighbouring Shoreham, is a key port for marine aggregates for the construction industry. The port handles 1.3 million tonnes of cargo, including fruit, vegetables, fish and forest products; passengers, to the tune of 841,000; and about 160,000 vehicles. Its importance to the area is clear.
842 A number of measures have already been put in place to help the regeneration of Newhaven port and Newhaven town, and I thank the hon. Member for Lewes for the warm thanks that he expressed to the Government office for the south-east.
In December 1996, under the pilot capital challenge scheme, East Sussex county council was awarded credit approval of £6.8 million towards the £7.8 million cost of a port access road, to which the hon. Member for Lewes referred. That road was considered to be the key to unlocking Newhaven. However, following discussions between East Sussex county council and its local partners, it has been decided not to proceed with the port access road scheme as originally proposed. I understand that the county council may consider alternative proposals designed to meet the objectives of its capital challenge bid. We will, of course, consider those proposals carefully, but the county council allocation needs to have been used by March 2000.
The wider regeneration of Newhaven includes £6.5 million of the Government's single regeneration budget challenge funding. That remains available for a range of regeneration projects developed to address strategic objectives in the comprehensive economic regeneration of Newhaven, without regard to the capital challenge project.
East Sussex county council also secured a bid through Interreg, the European funding programme, for a £1 million grant contribution towards the port access road. The Government office for the south-east will continue to discuss with our French partners ways of ensuring that the proposed Interreg support for the regeneration of Newhaven may proceed, possibly in some other form.
In addition, Lewes district council has applied to the Ministry of Agriculture, Fisheries and Food for grant to aid the fisheries aspects of the modernisation of Newhaven port. Grant for a feasibility study has already been made under the PESCA scheme, and Lewes district council has been given approval in principle to grant-aid its proposed west quay scheme at 50 per cent. of £1.35 million.
The Interreg proposals have already demonstrated the potential value of co-operation between British and French partners on the future of Newhaven. I welcome the contact that the hon. Member for Lewes has made with Dieppe, and the work that he has put in to ensure that not only are our French colleagues present here today but that I will have the opportunity to meet them, albeit briefly.
I can well understand the disappointment of the hon. Member for Lewes and, indeed, other hon. Members about the possible loss or curtailment of ferry services from the port. However, it would be premature for me to comment on that matter when decisions have not yet been taken by the ferry operator.
The hon. Gentleman touched on new port development for Newhaven. That could be a matter for the port operator, although the new port access road, which is being publicly funded, could serve such a facility if it meets the original aims of the capital challenge bid. However, any development would require approval from my Department. We have seen no plans and there has been no formal application for such an approval, so I cannot comment on the proposal; nor would I want to say how it might be affected by possible changes to ferry services.
843 All hon. Members who have joined in this debate or made representations to me have touched on the P and O Stena merger. Indeed, my hon. Friend the Member for Pavilion spoke briefly on that subject this morning. As we know, the European Commission has not yet announced its formal decision on the merger. However, the Monopolies and Mergers Commission's findings do not bear out the contention that the joint venture is to blame for the decline of the Newhaven-Dieppe route.
The report recorded Stena's projections of substantial losses for Dover-Calais and Newhaven-Dieppe if the merger did not proceed. The MMC considered that, in respect of freight, the Newhaven-Dieppe service was more likely to remain competitive within the joint venture than outside it. In respect of passenger services, it considered that the joint venture would improve the potential for the continuation of the existing choice of routes.
In view of the uncertainties, prohibiting the merger would not have been warranted. My right hon. Friend the then President of the Board of Trade took account of the fact that the adverse effects identified by the MMC were expected to arise only after June 1999, when duty-free sales are due to end. She also took into account the MMC's view that there were benefits from the joint venture, which would be lost if the merger were prohibited, and that adjustments of cross-channel capacity are necessary as a result of the opening of the channel tunnel.
The MMC's findings suggest that that would not have been an answer to the decline of the Newhaven-Dieppe route. The Secretary of State's powers in respect of mergers under the Fair Trading Act 1973 are limited to remedying the adverse effects specified by the MMC, not other matters, and therefore cannot be used to require continuation of the Newhaven-Dieppe service.
I well understand that all hon. Members are interested in good accessibility to the port of Newhaven. They are keen to know whether the Government have the power to delay closure until matters have been looked into. There is no power in national shipping legislation that enables the Secretary of State to delay the decision of a private company, taken for commercial reasons, to withdraw from the provision of a ferry service in circumstances such as these. However, I have little doubt that, in the light of the meeting that my right hon. Friend the Minister of State has held with the chairman of P and O, and also of this debate, which will be read with close attention, the concerns that are being expressed in the House by representatives of the people who live in and around Newhaven and the port will be closely considered.
Perhaps hon. Members are thinking of circumstances in which a ferry service is provided as an essential lifeline to a remote community, which has no other realistic means of access and where economic life is entirely and exclusively dependent on that service. Those are circumstances that are covered only by legislation specific to Scotland, and limited geographically to the highlands and islands. The Newhaven-Dieppe route, although important to the area, is not the sole means of access or of economic support.
There have been suggestions that the Government might subsidise the service to assure its survival. However, it is not Government policy to subsidise a service that does not fulfil a vital economic lifeline 844 role—there would have to be no alternative route or method of transport. Clearly, there are other sea routes across the channel, and other means of travel to the continent. We would need to consider very carefully whether a subsidy would be compatible with European Community rules, or whether, on the other hand, it would be a distortion of competition in the market. Clearly, the overriding concern this morning is what is perceived to be the removal of a ferry service, but, as I said, Newhaven is a sizeable port as regards handling cargoes and freight.
Railtrack is investigating the scope to develop several major routes for freight, and, with a group of local authorities, is studying congestion on the south coast rail route from Weymouth to Dover, with the aim of improving services to encourage more use of the route. We are watching that study with close interest. The new freight companies have adopted positive attitudes and ambitious targets, which would quadruple the proportion of freight tonne kilometres by rail in the next 10 years. Rail freight volume has already shown a 5 per cent. growth in tonne kilometres in 1996–97, which is the first such increase in many years.
More needs to be done. We have made it abundantly clear that we are committed to the creation of a strategic rail authority, so that the sort of issues that have been raised here this morning—how we can be best served by our railway infrastructure, where more investment is needed—can be more strategically directed. Indeed, a shadow strategic rail authority will be in operation by next spring, based on the British Railways Board and the Office of Passenger Rail Franchising working closely together under new leadership.
Strategic planning will be an early priority for the shadow SRA, to fill the void caused by privatisation. That work will develop into the strategic plan of the SRA proper. Therefore, it will deal with key long-term issues such as demand, capacity, service levels and investment.
Of course, rail is not the only means of taking people and freight into and out of our ports and it would be grossly improper of me to suggest that. Certainly, our roads play a major part in such movements. The inherited roads programme included a scheme to improve the A27 between Southerham and Beddingham, and representations both for and against were received during the public consultation. A scheme to improve the A26 was withdrawn from the roads programme in December 1995. The A27 Southerham-Beddingham scheme has been withdrawn from the trunk road programme. Problems along that stretch of the A27 will now be tackled in the Southampton-Folkestone study.
We had to examine the environmental impact of all schemes. The Southerham-Beddingham scheme is in a particularly sensitive area environmentally, affecting a site of special scientific interest and the Sussex downs area of outstanding natural beauty, part of which is also designated as an environmentally sensitive area. There was uncertainty about whether the scheme as proposed would have proved the most sustainable solution. For Newhaven and its port, as indeed for the United Kingdom as a whole, the Government believe that we must have sustainable development, and that environmental considerations must always be given the value and importance that they warrant.
The Government are determined to encourage greater use of the railways for passengers and freight. We want improvements in existing rail services and in other 845 transport infrastructures, not least the inland waterways and short-sea shipping. As the topic of debate is in essence a port, I must point out that we will be publishing a daughter document on ports and another on shipping, after the publication of the integrated transport White Paper.
The Government have made it abundantly clear that our overriding goal is to ensure that we can move more freight not only by rail but by using other modes of transport. On rail, we are examining what further action we can take in the context of our integrated transport policy White Paper. We have already taken major steps by overhauling the freight grants scheme. Shortly after coming to office, we doubled the grant available for moving freight from the roads, and we have increased it by a further £10 million for 1998–99. An initiative to publicise that system has resulted in the take-up of all last year's £30 million. Moreover, £32 million of this year's grant money is already accounted for.
I am sure that the hon. Member for Lewes and my hon. Friend the Member for Pavilion—