§ 3.21 p.m.
§ THE MINISTER OF STATE, FOREIGN AND COMMONWEALTH OFFICE (LORD SHEPHERD)
My Lords, I beg to move that this Bill be now read a second time. This Bill gives effect to the proposals set out in the White Paper published in January, 1969, entitled The Reorganisation of the Ports, which was debated by your Lordships on April 30 of last year. As your Lordships will know, these proposals are the outcome of several years' study of a complex and important industry and of a wide range of consultation. There was the 1962 Report of the Committee of Inquiry into the Major Ports of Great Britain, prepared under the chairmanship of the noble Viscount, Lord Rochdale; then the report of a Labour Party Study Group under the chairmanship of Mr. Mikardo, then the "working document" put forward as a basis for discussion by the Ministry of Transport in 1967 and, finally, the White Paper.
Your Lordships may also be aware that this Bill comes to this House after important changes have been made during its passage in another place. This, I think, is the result of the very full discussion given to all parts of the Bill during its Committee stage. A total of 94 hours was spent on the Bill in Committee. It is true that, in order to keep to their timetable, the Government were reluctantly forced to impose a guillotine upon the final stages of the Committee. But no Amendment, clause or Schedule went un-discussed as a result of that. In fact, my researches show that there was ample time between the various discussions and the falling of the Government knife——
§ LORD DRUMALBYN
My Lords, will the noble Lord allow one correction? No Amendments which were selected by Mr. Speaker.
§ LORD SHEPHERD
Well, that is the normal procedure in another place, as the noble Lord, Lord Drumalbyn, knows better than I, since he sat in that House and I did not.
My Lords, during the Bill's passage there have been genuine attempts from both sides to improve it, and I think that the Government have shown themselves very willing to accept such improvements. 308 I shall be referring to some of them later on. The main policy behind the Bill still follows that set out in the White Paper, but I think the Bill as introduced to this House is a notable improvement upon the form of the Bill as originally published.
The Bill has provoked a certain amount of controversy. That is, I suppose, inevitable with a Bill that makes such far-reaching changes in the structure of an industry. But I would stress that the Bill is no doctrinaire nationalisation measure; it is a sensible attempt to put to rights the archaic framework within which our ports operate. Everyone, I think, recognises the need for change. It has been argued that changes have been the keynote of the very real improvements which have taken place within the industry over the last five or six years. But these improvements, though real enough and a tribute to the hard work which has been undertaken by many devoted people within the industry, have not been radical enough to provide the country with the ports system which its shipping and its inland transport services need in the 20th century. A new type of dynamic organisation is wanted, and that is what this Bill is designed to provide. Given the drive and enthusiasm of those within the industry, I am convinced that this restructuring will bring about a substantial improvement.
The key to the restructuring is the setting up of a National Ports Authority. The N.P.A. will be in a position to make a reality of central planning and coordination. The lack of such central planning was recognised as a fundamental defect in our ports organisation as long ago as 1962, when the Rochdale Committee reported. It has been suggested that instead of the form of reorganisation proposed in this Bill all that we need to do is to strengthen the powers of the National Ports Council. The noble Viscount, Lord Rochdale, suggested that during your Lordships' debate on the White Paper. The Council has undoubtedly done a valuable job within its powers, and I place on record the Government's great appreciation of the vigorous way it has tackled its duties. But the Council is only an advisory body, and it is now generally acknowledged that the Rochdale Committee was right in concluding that a Council with purely 309 advisory functions would not be sufficiently effective or influential.
In my view, those who advocate a strengthening of the National Ports Council have not really made their position clear. They would presumably attempt to change it from an advisory body by giving it some positive powers of direction and control. Yet it appears that they would also want the existing port authorities to be completely independent autonomous bodies. Surely any arrangement of that sort would be fundamentally unsound. It would confer powers upon a body at the centre which would not have to accept financial and managerial responsibility for the effect of its decisions. Thus port managements would be put in the impossible position of being required to do things which they might regard as totally wrong, and having (to adopt a phrase used by the noble Lord, Lord Drumalbyn in the previous debate) to "carry the can" for the consequences. Any alternatives to the proposals contained in the Bill must face and answer this problem. As yet, we have not seen one which does so effectively; whether we shall this afternoon only events will prove.
But the Government are determined to preserve what is best in the present structure; namely, the scope for local enterprise. So the ports will be run, not by the N.P.A. itself but by port boards: each port board will be responsible, under the N.P.A., for running the harbour or harbours placed under its charge, and the Bill requires the N.P.A., to delegate to each port board the powers and functions which are necessary to achieve this. There will thus be clear lines of management responsibility within the industry, and each port board will have substantial independence within the central planning framework laid down by the N.PA. Thus, local initiative and patriotism will be brought into play. Whilst working to national policies the port boards will have the incentive to achieve results which will bring local benefits.
Although the "public trust" type of port authority, with a board composed of representatives of outside interests, will cease for the major ports, we recognise that it is necessary—and right—that users of the ports should be able to make their views and interests known. For 310 this reason a system of advisory committees is proposed, at both local and national level, to advise the port boards and the National Ports Authority. These committees will be able to consider any matters relating to the N.P.A.'s functions.
Appointments to these committees will be made after consultation with a wide range of interests, including shipowners, importers and exporters, the fishing industry, local authorities and trade unions. The committees will be able to consider and discuss charging and pricing questions with the boards, but will not be empowered to make recommendations to the Minister on these matters. The Minister will, under Clause 17 of the Bill, become the appellate authority in relation to objections about ship, passenger and goods dues.
Under the organisational structure proposed in the Bill, the Authority themselves will assume responsibility for establishing sound economic and financial policies and management objectives for their sector of the ports industry, for making the best use of resources of management and investment, for pricing policies, and for promotion of training and research. The establishment of strong and soundly-based financial policies will be high on the N.P.A.'s list of priorities. On Tuesday, the noble Lord. Lord Drumalbyn, asked my noble friend Lord Winterbottom how much of the £120 million capital expenditure devoted over the last five years to development schemes at harbours handling more than 5 million tons of goods (excluding British Transport Docks Board harbours) was, in the opinion of the Government, a misdirection of resources. In so far as harbour developments required the approval of the Minister of Transport under Section 9 of the Harbours Act 1964, there is no question of this investment being misdirected.
Here I should like to make two important points, however. First, the Government and the National Ports Council have only negative powers in connection with the vetting of harbour investment, and then only for schemes costing over £500,000. Neither the Government nor the National Ports Council have powers to require a harbour authority to carry out necessary development schemes. Certainly the Council have no executive responsibilities 311 in these matters. Nor have they any executive responsibility for the whole wide range of other expenditure incurred by harbour authorities.
Second, if the noble Lord, Lord Drumalbyn, were to read again the relevant paragraphs of the White Paper, I think it would be clear to him that the reference to "misdirection of resources" in paragraph 6 was not simply concerned with expenditure on investment. Far from it. Paragraph 5 specifically refers to such problems as the need for rationalisation of facilities, efficient organisation of the work of loading and unloading ships, the efficient use of modern facilities, and efficient management. We are concerned with management resources, manpower resources, technical and scientific resources, as well as financial resources. For example, a reduction in the number of employers within the major ports will do much to help here by tackling the problem of the fragmentation of interests and responsibilities.
As the House knows, many of our ports, including some of the largest, have financial problems, and the changes facing the industry—heavy investment, new operating methods, labour agreements—have substantial financial implications. I must therefore make it clear that we are not taking over a prosperous industry. The industry is capable of making an enormous contribution to our economy—but not until it has been rationalised and developed in a co-ordinated way. The financial provisions of the Bill itself are inevitably complex. The financial powers and duties of the National Ports Authority follow closely those of the other nationalised transport undertakings adapted to the particular needs of the ports.
Doubts have been expressed that a single overall financial responsibility for the N.P.A. may lead to inefficiency in individual ports and to forms of cross-subsidisation which would be harmful to the industry. My right honourable friend the Minister in another place agreed that this must be avoided, and confirmed that the policy of the Government is to encourage competition on service and on price between individual ports in the public sector. With this in mind pricing policies should be related to the cost of the 312 services provided. The Minister also repeated the assurance given to the Milford Haven Conservancy Board—who were concerned that the charges at Milford Haven might be increased to subsidise ports elsewhere—that cross-subsidy of that kind was not contemplated.
The N.P.A. will be expected, as soon as they can, to organise the affairs of their port boards so that cross-subsidy will be unnecessary. Financial targets will be set for the N.P.A. under the usual arrangements for nationalised industries, and the Authority will in turn set financial targets for individual port boards. In addition to the normal power of the Minister to give directions on the form of accounts to be used by the N.P.A., Clause 14 imposes a specific requirement upon the N.P.A. to show the separate financial results of each port board in the statement of accounts to be included in its annual report. This was always intended, but the statutory requirement was introduced to meet a point raised in another place. It will show the success of each port board in achieving its financial and management objectives, and help to refute charges which have been made about concealed cross-subsidisation. This is something which the Minister has repeatedly rejected, and I am glad to re-emphasise that it is not the intention that losses at one port will be made good at the expense of another. The N.P.A.'s annual accounts will provide a more than adequate picture of the financial performance of the system as a whole.
I now turn to compensation for the ports to be taken over initially. For a very large proportion of the ports to be placed under the charge of the N.P.A., compensation is not at issue. The undertakings of port trusts and of local authorities are already in public ownership, and there is a well-precedented method of transferring such undertakings to national ownership. The British Transport Docks Board is already nationally owned. The National Ports Authority will take over the liabilities of these undertakings to meet interest and repayment of capital on debts relating to the transferred assets. There will also be provision, in the case of local authorities, for a "severance" payment if expense is incurred in the allocation of administrative cost to the remaining 313 activities of the authority. Compensation, in the proper sense of the word, arises only in the case of company ports. In the 1969 White Paper we gave details of the position of the main company port—very possibly the only one to be affected—the Manchester Ship Canal Company.
Here again, there are precedents in other similar Statutes, and we have followed those. The basis of compensation will be the market value of the securities over a selected period. That will be either the three years from January 1, 1966, to December 31, 1968, or the six months from July 1, 1968, to December 31, 1968, whichever gives the higher valuation. In the event of failure by the parties concerned to agree on any question, the matter will go to arbitration. The Government believe that the quotations in these alternative periods provide a reasonable basis in relation to all kinds of securities. The basis was described very fully in the White Paper, and I do not think I need go into detail about it to-day. But obviously, the speculation which would have resulted from leaving the situation open since the time of publishing the White Paper until the time of vesting of the assets would have been totally unacceptable.
It is impossible to quote a precise figure for compensation. Assuming, however, that Manchester is the only company undertaking in question, and Bristol the only local authority, the basis of valuation referred to in the White Paper and incorporated in the Bill would give a sum for compensation and severance on initial vesting which we do not think would be greater than £25 million. Under the proposals in the Bill the ports to be placed initially under the charge of the N.P.A. will consist of those handling over £5 million tons of cargo in a period of one year, in addition to those already under the charge of the British Transport Docks Board. The N.P.A. will, under Clause 29, have power to submit to the Minister schemes for making them the harbour authority for harbours not transferred at the original vesting date. Some fear has been expressed that this power may inhibit the future improvement and development of non-nationalised harbours, like some sword of Damocles hanging over their heads. So I must stress that there is no 314 automatic provision for taking over a harbour if and when it reaches the 5 million tons mark.
Any proposed take over under this provision must be designed to further the efficient and economical operation or development of the system of harbours in Great Britain; this means the whole system of harbours, not simply N.P.A. ones. Any scheme put forward by the N.P.A. will be open to objections which must be heard by a public inquiry, and will ultimately be subject to Special Parliamentary Procedure. Thus, in effect, Clause 29 simply provides a more convenient and more direct method of achieving what the N.P.A. would otherwise have to achieve by means of a private Bill.
In the provision of port services, a new structure is equally necessary. For too long the industry has suffered because there have been too many employer interests. Steps have been taken since decasualisation to improve the position, but much more needs to be done. I believe that the only real answer is that for which provision is made in the Bill—for the N.P.A. to become the principal provider of port services. Only in this way can we sensibly deal with the problems. The present multiplicity of operators and employers breeds a division of responsibilities which affects working arrangements and employment conditions. If these divisions are removed we can simplify organisation, reduce possibilities of friction and get better industrial relations, better working methods and greater efficiency. So the Government propose that the N.P.A., acting through the port boards, should become the principal operators of port services and facilities within their ports, and, by virtue of this, the principal employers of port labour. It would not make sense, however, to require them to operate all port facilities; for example, oil jetties, or certain other private wharves which are integrated into another transport or industrial activity.
§ Clause 33 places a duty upon the N.P.A., in the first year following the vesting date, to apply to the Minister for vesting orders for all port businesses at their harbours, with certain exceptions relating to port businesses of manufacturers and producers. A port business for this purpose is, broadly, one carrying on activities of loading or unloading cargo, 315 or warehousing, sorting, weighing, movement, lighterage or handling of goods which are to be, or have been, loaded or unloaded as cargo, or cargo checking and identifying operations, or managing a cargo wharf.
§ There is provision in Clauses 35 and 38 for objections to be made by persons carrying on port businesses on various grounds. These will provide an opportunity for the particular conditions and circumstances under which individual port businesses are operated to be considered before a decision is made about a vesting order; for example through-transport operations, or merchants' private wharves.
§ These proposals balance the need for the N.P.A. to proceed speedily with their proposals against the need to allow particular cases to be brought forward for consideration of objections. But the clear underlying aim of Part II of the Bill is that the N.P.A., acting through port boards, should become the principal operators of port facilities and should be the principal employers of the port transport workers at their harbours.
§ At this point, I should like to draw attention to two major improvements made in this Part of the Bill during its passage through another place. The first is the inclusion of Clause 36, which will enable the N.P.A., in certain circumstances and subject to conditions, to fetter their discretion to apply for a vesting order in respect of a port business being carried on or proposed to be carried on at one of their harbours. This should go a long way to satisfy the apprehensions of those who represent the operators of private businesses in the ports, and who have argued the need for a greater degree of security of tenure. The second is the change which has been made in Clause 35 to extend the exemption provisions for port businesses, where they are wholly or mainly used as an integral part of the manufacturing or production processes of the person or consortium carrying on the business.
§ These extensions give the Minister wider powers to exempt consortia in appropriate cases (for example, the proposed consortium of newspaper manufacturers and producers which will control the Purfleet Deep Wharf and Storage 316 Company), and ensure that fishing and dredging for minerals, which are part of an integrated production process, are regarded as excepted businesses. These points were raised by the Opposition in another place and their inclusion reflects the Government's willingness to accept Amendments which will lead to genuine improvements. I offer that to noble Lords opposite. We will consider any useful proposals which they make.
§ I turn to the proposals in the Bill for improving labour relations in the docks. Good industrial relations, in an area where the past record has been particularly troublesome, are of crucial importance. In the public eye, docks disputes have seemed almost part of the natural scene. We hope now to move away from this sort of climate. Over the last few years there have been a great number of improvements—especially with decasualisation. Work on Devlin Stage 2 negotions continues. There have been encouraging recent developments in the Port of London which may open the way to the speedy conclusion of necessarily protracted negotiations. This will mark a considerable step forward towards modernisation of port labour relations.
§ The Bill, in itself, will materially assist in improving industrial relations. The proposal that the N.P.A. should become the principal employer, taken with the proposals in Clause 42 to which I will refer in a moment, should lead to a better understanding between management and workers. Clause 42 is designed to speed up progress in the improvement of employer/employee relations. It provides, for the first time, that one of the aims of setting up machinery for negotiation and consultation is to be the furtherance of the participation of persons employed by the National Ports Authority in the processes leading to the taking of management decisions. We believe that in the ports industry, in particular, it is essential to involve the workers, through their trade unions, to the fullest extent possible in all the matter on which their work and daily lives depend.
§ But the Bill can only provide a framework. It will be for the N.P.A. and the unions to work out the agreed machinery for giving effect to this clause, and clearly it is right that the two sides should do this rather than that Parliament should 317 attempt to lay down detailed machinery in the Bill itself. An essential prerequisite to successful participation or consultation is surely agreement by this process of the machinery to be established. The N.P.A. and the unions will be able to take account of the circumstances existing in each port, and build up the machinery in step with the progress made with the reorganisation, and to meet the particular circumstances encountered and the problems that have to be dealt with. The N.P.A. will, however, be required to report on the progress or lack of progress in arriving at agreements for setting up machinery, and the Minister may call for such reports from time to time. In this way we shall be able to keep in touch with progress, and will be able to see where difficulties and problems are occurring and consider what action to remove them is possible.
§ During the passage of this Bill in another place changes were made which extend these proposals still further. The consultation under Clause 42 is to be extended to cover measures to be taken, including the provision of facilities, to assist communication between workers and their recognised representatives—an area in which labour difficulties have all too frequently been aggravated. There is also now provision in Schedule 1 for one or more workers in the industry to be appointed to each port board. This move towards greater involvement of workers in management is one which will be followed with the greatest interest by all those who are concerned in this vitally important field. Because of its history and tradition, the ports industry is a peculiarly appropriate one in which such a significant step can be taken. The Bill thus provides the framework for vastly improved industrial relations in the ports industry, and for workers to make a genuine contribution to the running of the industry. We can do no more than lay down a framework, but we believe that all those working in the industry are ready and willing to make it work.
§ My Lords, I have spoken at length about the organisation proposed by this Bill. I understand that not all aspects of it command universal approval, but there is nearly universal agreement that radical change is needed in the existing system. I believe also that there is widespread support, inside the industry and 318 outside, for the framework we propose, and in particular for strong central control and direction. A lot has been done in recent years in the modernisation of our port facilities and working methods, following the Rochdale and Devlin Reports, but we have a long way still to go, and a further major step forward is required and should now be taken.
§ This Bill is designed to put the ports industry into the right shape to face the 1970s. I believe that it provides for a sensible and effective reorganisation, and I believe that it now commands wide support throughout the country. Certainly I have not seen any convincing alternative suggested. An efficient ports system is vital to the wellbeing of this country, which depends so much on the exchange of goods with our overseas neighbours. The Bill will, I firmly believe, do much to modernise the structure of the industry, which itself is an integral part of our transport system. With an efficient ports industry, our shipping industry, too, can better serve the needs of this nation, and the two together can help us to face the challenge of the coming years with confidence. My Lords, I beg to move that this Bill be now read a second time.
§ Moved, That the Bill be now read 2a.—(Lord Shepherd.)