§ 11.20 a.m.
§ Lord WYNNE-JONES
My Lords, I beg to move that this Bill be now read a third time. Your Lordships will recollect that we had an extended Second Reading debate on the 22nd June. I admitted at the time that I knew very little about docks. I must still admit that I know very little, but I do know a little more than I did then. I have been able to do a small amount to remedy my ignorance in the matter. After that debate I received a letter from Mr. Wickenden of European Ferries, telling me that I had not been very well informed in the debate and that he was reading Hansard to be able to write to me again to correct all my errors. I am still awaiting that letter from Mr. Wickenden. Perhaps he found I was not so ill-informed, or perhaps he decided that my ignorance was so abysmal that there was no point in attempting to inform me.
However, I have tried after that to find out all that I could. I made two or three attempts to get to Felixstowe and finally, through the good offices of a friend, I was able to get in touch with Mr. Gordon Parker and his son John Parker, and received a very friendly invitation from Mr. Gordon Parker to go and visit Felixstowe. I spent the inside of a day there and was shown all round the docks. It had to be from a car because it was pouring with rain all day; but I was able to see a great deal of the docks. I was able to see at first hand what a splendid job Mr. Gordon Parker did there. I think it must be clear to everyone that Mr. Gordon Parker and his organisation have turned what was undoubtedly a little scrape in the mud into a healthy thriving port—and that is a great achievement. He has done this since taking it over 25 years ago.
I asked him why he had done it—because he is a man, and he will not mind my divulging this fact, of 86; and when he tool it over he was 61 years old—and he told me that he did it because he wanted to have some zest and fun in life. That has been his attitude and I cannot help 1665 but admire the man. He is a person of great courage—and I mention that because over a period of a few years he has had several major operations, two of them at the hands of the surgeon who dealt efficiently with me. Really he is quite remarkable. I can say that from what I could find out about him; and I have met him since on two occasions. I am well satisfied that he is a person who has built up an extremely good concern. There is no dispute about that. If it were a matter of whether Mr. Gordon Parker's organisation should be nationalised or not, I, frankly, would stand before your Lordships and say that I did not think it ought to be nationalised because I think that Mr. Gordon Parker knows how to run the thing.
However, my Lords, that is not the issue before us today; because what happened was that about 18 months ago the Felixstowe Dock and Railway Company, founded, I think, about 130 years ago, found themselves in considerable difficulty over finance. This was not because they had run the docks badly—they had run it well—but primarily because they had built up rapidly an excellent organisation. They had used all sorts of methods (which I saw for myself) for improvising. They had purchased old buildings and re-erected them on the site—a very sensible thing for a small firm with little capital to do. They had bought at considerable cost big transport cranes for the container traffic that they wanted to build up. They had bought also the various loader trucks which remove the containers from one place to another, and Mr. Gordon Parker told me himself that when he purchased those container transporters he paid £45,000 for one and that to replace it today would cost £150,000. In other words, they were faced with the problem that over the 25 years obsolescence was creeping in and they had to raise money in order to get replacements. There was no question about that. In consequence, a contract was reached between the British Transport Docks Board and the Felixstowe Dock and Railway Company—a contract reached between (so far as one can judge) a willing vendor and a willing, perhaps eager, buyer. This is how the whole thing has arisen.
The matter was discussed in this House at considerable length and it was referred 1666 to a Select Committee. The Select Committee was specifically asked to look into the question of whether this would be in the national interest or not. This they have done and have reported. In view of this, I think that we move on to the point of giving this Bill now a Third Reading, It is argued with regard to this Bill that in the first place the British Transport Docks Board is not perhaps the best organisation to take it over. But this is not really what we are talking about. We are discussing whether a contract reached is a good one or not. There may conceivably be some other organisation in this country or the world mote capable of doing it; but it is not our business to go round searching to find out whether there is such an organisation. We are simply faced with the question of the contract.
My Lords, in the evidence given before Select Committee of this House, if one looks at this in detail, one finds that there was a certain accountant who deals with matters of public companies, utilities and so on, a Mr. S. W. Hill. Mr. Hill was specifically asked whether the position of the British Transport Docks Board was strong enough to be able to deal with this commitment. If one looks at the evidence he gave one finds that he was asked, referring to the British Transport Docks Board:What do you say of its organisation? A. It is highly decentralised. Herein, I think, lies an important factor in its success.What about competition? A. There is competition within the organisation, as you heard from Mr. Stuart"—he is the general manager of the British Transport Docks Board—and each port operates commercially and competitively.How would you describe the Board's present financial position? A. It is extremely strong.Is that a condition which obtains generally in the ports industry in the United Kingdom? A. No, it is not. In many respects the financial position of ports in this country gives rise for concern. This does not apply to the British Transport Docks Board.I shall ask you later about the comparative financial position of the Felixstowe Dock and Railway Company, but in general terms how does the present financial position of the Board compare with that of the company? A. It is vastly superior.You have made those general comments. I think that you wish to support them by putting forward tables and other statements in detail? A. I should like to, yes.1667 Then later he was referring to the relative strength of the British Transport Docks Board and European Ferries, because after the original contract, European Ferries made a bid to the shareholders to take over the whole of the shares and give in exchange shares in European Ferries. It has been contended that European Ferries are a better organisation for running the docks. Mr. Hill was asked:If we were to compare the position of the Board in those respects with that of European Ferries, have you any view you would care to express on that? A. They are two very different propositions. Here we have the Docks Board with its favourable financial position, able to take over Felixstowe. Necessarily, European Ferries must be rather more risky from the point of view of the future of Felixstowe, at least in my opinion. I think it is more vulnerable to change. It is having to spend a great deal of capital and raise a great deal of loans which are increasing at a very large rate—they are largely bank loans—£46 million or more now and probably another £50 million in the course of this year. There is always the risk in the case of an investment company of it having a bad year, of it meeting a situation in which it is called upon to pay millions of pounds of loans in what might unfortunately be very difficult times. I am not saying this will happen. It is a risk. It does seem that comparing the alternatives of the transfer to the Board which offers a permanent satisfactory solution to the Felixstowe problem, it is the sounder alternative action, than that it should pass into the hands of European Ferries. This does not imply any criticism of European Ferries, of their management or development. It is the reality of the situation.These are statements made by someone who is an accountant in a position to have looked a the whole situation. I find it difficult, with my slight knowledge, to fly in the face of such evidence as that.
If one moves on from the question of whether the British Transport Docks Board has the strength to manage the finances, if it has the organisation which can devolve responsibility on to individual ports, then one comes to the legal position. A lot of play was made in the other place about the legal position, and there was some talk of hybridity as well getting involved in it. The matter was decided by teh courts because European Ferries challenged the contract that had been reached between the Felixstowe Dock and Railway Company and the British Transport Docks Board. They did their best to get it overturned.
The first hearing was before the noble and learned Lord, the Lord Chief Justice, 1668 Lord Widgery, on 19th July last. He pointed out that there were four particular grounds on which this action was being taken by European Ferries. First of all, that there was no valid contract; secondly, that making the contract was ultra vires so far as British Transport Docks Board was concerned. Thirdly, it was claimed that the contract violated the ruling of the European Community about not setting up a monopoly in transport. The fourth one was a more general point. The Lord Chief Justice giving judgment, in referring to the first point said:It is quite obvious to my mind that there was an obligation which could be enforced and that in itself, I think, is enough to show that this agreement was an agreement effective and binding from the outset and not a mere future promise which has no value unless and until the intended Act is passed. I feel bound, therefore, to reject Mr. French's first submission on behalf of the plaintiffs.He went through them all and rejected each one. If I may refer to the last one, this is important because it emphasises the whole moral character of a situation when an agreement has been reached between the parties. Here we have the statement of the noble and learned Lord in which he said:I do not find it necessary and certainly not desirable that I should, sitting in this court, endeavour to expound the basic principles of equity which are not normally expounded in this court, and I feel confident that as a matter of law if the sole reason why this notice was given was because it appeared to be a convenient way of putting an end to the contract, and if it was, as I said before, a device to be used to put an end to the agreement and for no other purpose, and if as a result the clause was not unacceptable to the Board in the ordinary sense, then in that case I am satisfied as a matter of law that the notice is irregularly given and is ineffective. And as a matter of fact, having had the opportunity of seeing the witnesses concerned, I find as a fact that that was the only motive which caused the notice to be served, namely, to use the provision of clause 7 as a device for getting out of the agreement. Since as a matter of fact I find that it was not possible to say that this clause was unacceptable that seems to me to put an end to the last of the four points upon which the Plaintiffs' case was to be sustained.There could be little more emphatic than that.
There was an appeal. It came before the Master of the Rolls, Lord Denning, Lord Justice Scarman and Lord Justice Geoffrey Lane and there they entirely reinforced what the Lord Chief Justice has said: in particular, if I may quote 1669 the Master of the Rolls:The Lord Chief Justice said 'I find as a fact that that was the only motive which caused the notice to be served, namely, to use the provision of Clause 7 as the device for getting out of the agreement.'In other words, Clause 6(2) really was acceptable to them, but they made out it was not acceptable so as to get out of the agreement. That seems to me a finding of fact of the Lord Chief Justice. I must say it seems to me there is evidence on which he could so find. On that finding the notice by the Felixstowe Dock Company purporting to withdraw was invalid and cannot detract from the binding force of the agreement.My Lords, we are in a very peculiar position, because every time the position has been investigated, when it has gone to a court of law, when it has been looked at by eminent authorities, it seems perfectly clear that the original contract was binding. My Lords, of course it is perfectly true that we have freedom of action. We are not bound by courts of law. We can come to any decision we like.
§ Lord WYNNE-JONES
I would absolutely agree, my Lords; but let it be clear that what we do is no longer based either upon law or upon equity, either upon reason or upon good judgment. It then becomes a purely political decision; and it means that if we in this House take action not to approve this Bill we are taking a purely political decision. We are not taking a decision on legal grounds. We are not taking a decision on any grounds of fact or substance. We are doing it purely politically.
I have been a Member of your Lordships' House long enough to realise that, of course, we have politics in this House; but it has been our boast, it has been our pride, that when it comes down to moral matters, when it conies down to issues of this type, we do not allow the decision to be reached on partisan political grounds. My Lords, I beg to move.
§ Moved, that the Bill be now read 3ª—(Lord Wynne-Jones.)
§ 11.43 a.m.
§ The CHAIRMAN of COMMITTEES (The Earl of Listowel)
My Lords, I am sure your Lordships will sympathise with my predicament when I say that I find myself in a difficult position this 1670 morning, because I am speaking in two different capacities: as Chairman of Committees and as chairman of the particular Select Committee that considered this Bill. My duty to your Lordships as Chairman of Committees is to advise the House and to inform the House about matters of procedure. If this duty is not to conflict with my duty as chairman of the Select Committee, I must confine my remarks about the work of the Committee to the procedure that it followed, so I shall leave it to other noble Lords who are members of the Committee—the noble Lord, Lord Champion, the noble Lord, Lord McCarthy, the noble Lord, Lord Reigate, and the noble Earl, Lord Grey—to argue the merits and demerits of our report, the Special Report which we have submitted to the House, and to discuss the reasons which led the Committee to recommend that the Bill should be allowed to proceed.
As the House will be aware, there were four Petitions deposited against the Bill. In addition to the Petitions, the Committee had to consider the Instruction, which was moved by the noble Earl, Lord Gowrie, on 22nd June, about the effect of the passage of the Bill on the competitive position of the port of Felixstowe, so the Promoters had to prove to the Committee not only that there was a genuine need for the Bill, which was something that every Promoter of a Private Bill has to do, but also that there would not be an undesirable reduction in the competitive position of the port of Felixstowe as a result of the passage of the Bill into law. It was this double task that obliged the Committee to sit for 16 days, an abnormal length of time, as noble Lords who have served on Select Committees will be well aware, for a Select Committee on an opposed Private Bill.
During that time the Committee heard leading Counsel for the Promoters, the British Transport Docks Board, and for the four Petitioners, all of whom were represented by the same Queen's Counsel. During the course of the hearing the Committee heard the evidence of 15 witnesses. Witnesses for the Promoters included the Chairman of the Docks Board, the general manager of the Board, employees of the Board at Southampton, Swansea and Hull and a financial expert 1671 on the finances and organisation of the Docks Board. For the Petitioners the Committee heard the evidence of the chairman of European Ferries, Mr. Wickenden, a partner of the firm retained by Trinity College, Cambridge to manage their lands in the Felixstowe area, the Bursar of Trinity College, Cambridge, a senior shop steward of the Felixstowe Dock and Railway Company and the chairman of the Felixstowe Port Users' Association.
What I have just described was, of course, the normal procedure of Select Committees in dealing with opposed Private Bills; but this Committee also adopted one quite unusual procedure, and I think I should explain what it was and the reasons that actuated the Committee in doing so. Only in very rare cases are the Minutes of Proceedings of Select Committees on Private Bills printed. On this occasion, however, the Committee decided to take that unusual step, and they did so for two reasons; first, because, as the Committee was, unfortunately, not unanimous, it was essential that the views of the minority as well as those of the majority should be available to the House; secondly, because the future of the port of Felixstowe is a matter of considerable interest to your Lordships and also to members of the public. The Committee therefore thought it right that the differences of opinion among members of the Committee should be printed and published and that the House should have an opportunity of reading the Minutes of Proceedings, and the alternative paragraphs which a minority of the Committee had proposed to insert into the text of the Special Report. I hope that the House will agree that the Committee was justified in taking these exceptional steps to make your Lordships fully aware of the division of opinion in the Committee.
§ The Earl of LISTOWEL
I have spoken at rather greater length than usual about the procedure of the Committee because I should like—and this has been my endeavour—to satisfy your Lordships that the case for and against the Bill was thoroughly examined by the Committee and that your Lordships' Instruction to the Committee was considered with the utmost care.
§ 11.48 a.m.
§ Lord REIGATE
My Lords, I am unlike the noble Lord, Lord Wynne-Jones; the name "Felixstowe" bulks very largely in my memory at the moment, but I have never visited it and I am afraid I feel a slight aversion when I even see the name in print, after 16 or more tedious but interesting days spent in Committee. I should like to pay warm tribute to the Lord Chairman for his presiding over us, and to my colleagues. Although there was an ideological rift, which makes itself apparent at this stage, we were very happy in our discussions and in our meetings together.
May I also say that there has been so much had blood about this issue—and I blame no one in any quarter for it—that I was delighted that the tone of the speeches so far has not added to that, and I do not intend to add to it either. It continued even during the sittings of the Committee, unfortunately, and one witness was rather unnecessarily and maliciously asked whether he was after some else's job. Mr. Wickenden was described as "not a man for all seasons", which was not intended as a compliment. My only reaction to that is that, unlike Sir Thomas More, I do not think Mr. Wickenden is likely to lose his head; nor, as I told him, is he likely to be canonised. I also thought that all the major witnesses—and I stress the word "major"—were quite admirable. Of those principally concerned, I should like to say that I think that Mr. Wickenden is an energetic, vigorous type, and exactly the kind of man who is needed in British industry. If there were more Mr. Wickendens to match Mr. Gordon Parker, to whom the noble Lord paid a quite correct tribute, we should be better off than we are today.
Of the Docks Board, I would say that they seemed to me to be a model State enterprise, well-run and efficient so far as I could judge. I do not, however, entirely share the optimistic views about their financial future. I accept that they have the development money available, as have European Ferries, for developing Felixstowe, but they have this curious duty to repay, I think, £76 million to the Government in due course, starting in 1978. That burden on them is historic and interest is at the rate of, I believe, 3 per cent., though some in another place suggested that the patriotic duty of the 1673 Docks Board, if they are so affluent, might he to repay that to a Government which is rather shorter of cash than they apparently are.
In the main—and the noble Lord, Lord Wynne-Jones, brought this out—the argument so far has centred around the agreement between the old Felixstowe Board and the Docks Board, and the alleged breach thereof. I think that we must also look at the background to the agreement. On Second Reading, the noble Lord, Lord Wynne-Jones, said that this was an ordinary commercial agreement. If I may say so, that is about the one thing it is not. If all ordinary commercial agreements involved proceedings in both Houses, there would not be any business done at all. Of course, it is of an entirely separate character, because it is subject to an Act of Parliament, under the 1962 Act. Why? The 1962 Act was intended to control "empire building" by nationalised undertakings and that is exactly why this procedure has had to he adopted.
The right to sanction extensions was reserved to Parliament, not the Minister, for very good and right reasons. Hence the gap between the signing of the agreement and the Act, and it was during that interim that European Ferries intervened and put in their bid. The Minister in another place agreed that they were entirely entitled to bid, and the shareholders to sell their shares. It was a wholly legitimate proceeding in accordance with the City Code. The fact is that the Docks Board had got Felixstowe at a low price and, I may say, I do not think that European Ferries, with the advice of their merchant bankers, have got a bad bargain either.
As to the alleged breach of the agreement, which is a Schedule to the Bill, I hope your Lordships will read it carefully. It contains many clauses, under one of which the Docks Board brought the case to which the noble Lord referred. That was for the rescission of the agreement on the grounds that there had been an amendment to the Bill in another place. It was a technical point and the High Court found against them, but it was no more than that. There are other clauses in the Bill and I hope that all of your Lordships, if you can hear the thought, will read it very carefully. There are 1674 many clauses; for example, Clause 1, whereby Felixstowe have to inform the Docks Board of various actions, changes of personnel, pensions and so forth. I will not go into all the details. There is no allegation of any breach of any of these, so far as I know.
The only smear of bad faith relates to Clause 3 where, if I may summarise, Felixstowe agree to support the promotion of the Act by evidence or otherwise if requested to do so. Members will recall that in reply to the noble Lord, Lord Champion, Mr. Wickenden, rather to my surprise, said that lie had not been asked to do so. I must frankly say to your Lordships that I do not think that a Petition against the Bill is exactly support. But in the words of the Amendment which I moved, supported by the noble Earl, Lord Grey, it is for the Board, if they have suffered injury at the hands of Felixstowe, to seek redress in the courts exactly as Mr. Wickenden did at an earlier stage. I am not anxious to foster litigiousness, but it seems to me that this would have been a suitable occasion. They could have sought an injunction to restrain Felixstowe between the time when the Petition was deposited and the time when the Select Committee agreed that Felixstowe had a locus standi before the Committee, and if the Bill failed the Docks Board could sue for damages. It will be an interesting case if it takes place.
Furthermore—which was not apparent from the speech of the noble Lord, Lord Wynne-Jones, or indeed from the Majority Report, if I may so call it, of the Select Committee—Felixstowe Docks Board was not the only Petitioner. There were Trinity College, the port users and European Ferries as the principal shareholders. Whatever happened, any interest or shareholder, small or large, would have been entitled to be heard by that Committee if they had an alleged grievance. Even if Felixstowe had not been authorised to appear, exactly the same issues would have been raised; exactly the same arguments would have been heard. But, of course, it was only Felixstowe which went to court to have the agreement rescinded. The other Petitioners who are not party to the agreement—nor is Parliament—are now asking Parliament to reject the Bill. It is the Bill, not the agreement, which provides 1675 the vesting of the Felixstowe Dock in the Board, and surely it is the right of any citizen to petition against an Act of Parliament. Surely that is elementary. As I said, you have these three parties whose arguments would have been heard, so please let us hear no more about what was only the role of Felixstowe in this matter.
The noble Lord, Lord Wynne-Jones, referred to the financial position of Felixstowe and, indeed, much of the argument for the Promoters hinged on the financial position of Felixstowe during the latter part of 1975. The noble Lord referred to the evidence which was given by a financial expert witness. I find myself in difficulty here. I do not question his expertise, but I must say that I do not think he appeared before us entirely free from bias, and my own researches into the figures, some of which I shall have to use, give a rather different picture. But the rest of the evidence, and the bulk of the evidence, was, quite frankly, gossip. We were treated to things like the managing director having said to the convener of shop stewards that the company was going bust and similar trivia.
The extraordinary feature of the whole case is that no witness was called from the old Felixstowe Board in support of the Promoters' case. Not one. All 10 directors approved the agreement and recommended it to their shareholders. Not one was called by the Promoters to justify the agreement or the allegations about finance. Talk about Hamlet without the prince! The entire Danish Royal Family was missing. Of the 10 directors, three, including Mr. Parker's son, whom the noble Lord, Lord Wynne-Jones, met, are still on the Felixstowe Board and are therefore presumably satisfied with the existing situation. Some of the directors were not even aware of the negotiations until a day or two before the announcement. Mr. Gordon Parker at the time was a sick man. He appears to have recovered his health and vigour at the moment. But Mr. Stevenson, the managing director, and Mr. Thorogood, the acting chairman at the time, who were the prime negotiators and who must have known what was happening at the time, were not called and I was given no valid reason whatsoever by counsel for that fact. I view it as very significant indeed.
1676 The responsibility of a board is collective. We all recognise that in practice some are more responsible than others and I am amazed at and critical of the alacrity with which the board accepted this agreement without the most cursory attempts to explore any possible alternatives. Four months later European Ferries turned up—rather late it is true, very remiss of them. But I do not think it is quite fair to blame someone for not having a bright idea earlier than they had the bright idea.
Increasingly I find that the financial situation of Felixstowe did not justify this panic decision and there is nothing to show a bad financial situation in the documents recommending the Docks Board's offer to the shareholders nor is there frankly in the old Felixstowe Board's almost reluctant comment on European Ferries' offer. There was a drop in turnover at a certain period. There was a loss in January and February this year, but there was nothing to justify a panic decision. The only difficulty is in future development capital and I am satisfied that European Ferries is just as able to provide that as is the British Transport Docks Board.
Going back to the position at the time, the interim profits and cash flow for the last half of last year—July 1975 to January 1976—show slightly increased profits compared with the equivalent half year a year before. There has been a substantial increase in profits since European Ferries took over. Mr. Wickenden told me modestly that he thought this was only a coincidence, and I am inclined to agree with him. The year ending July 1976 showed, in turnover, a slight increase over the preceding year—very different indeed to the picture painted by the Promoters.
My Lords, the emotive word "gazumping", which is a choice pejorative, has been used. It is quite wrong. The essence of a share takeover is that shareholders are free to accept a better offer until a very late stage, as I understand it. The City Code requires this and it forbids the shutting out of other bidders. European Ferries' bid was made by merchant bankers fully in accordance with the City Code. When the European Ferries' bid was made it seems to me that there were three courses open to the 1677 Docks Board: to approach the old Board and, first, either to match European Ferries' offer or give a better one; secondly, to withdraw—with dignity if I may say so; or thirdly, to insist on the agreement with all the difficulties that have arisen since.
Well, they insisted on their agreement. I recall a phrase about a pound of flesh. If they had approached the old Board they would surely have released them from the agreement in the interests of the shareholders whose interests they are there to protect. But no, the Docks Board stuck to their agreement, which is why your Lordships and the Select Committee have had to waste so much time on this matter.
Why do the Docks Board want Felixstowe? We were given a number of reasons. I will not repeat the word "empire-building" because it was not used. The reasons were given in a miscellany of mixed metaphors. We were told they "started with an assorted collection of which it has had to make the best"; it was "a scratch collection"; we were told that the Board should have a "fair crack of the whip"; and we were told that "Felixstowe would provide a useful addition to the geographical balance and the balance of scale of the Board's undertaking". I cannot see that these arc valid reasons in the public interest for extinguishing the independence of this undertaking which was described by a former managing director of the Docks Board as the "yardstick for measuring their achievements". My Lords, usefulness, rounding up, balancing up—I do not think Felixstowe should be sacrificed for purposes of cosmetic surgery.
I turn to another point. On Second Reading and in Committee there was a great deal concerning the opinion of the work force. Mr. Wickenden was foolish, if I may say so, in these days of industrial democracy. He wanted to know what his employees wanted. It was a tactical mistake to hold a ballot without the union's permission and co-operation— which he would not have got, but such is the world we live in. Note that the local branch of the union was neutral. The union's national policy favours public ownership, so the local branch was in defiance of national policy and we should give them credit for that. But the truth 1678 of the matter was that the local branch told the head office that the work force would not wear support of the Docks Board, hence this compromise, which deceives no one.
The results of that ballot are not without interest. The chairman of the Docks Board, in a letter to the Daily Telegraph on the 4th August, said that only 35 per cent. of those balloted voted for European Ferries despite the intensive campaign waged against the Docks Board. There was also an intensive campaign and pressure for neutrality by the union. In the circumstances, it was not a bad poll and 34 per cent. is six times the number which voted for the Docks Board.
I want to turn now to the much more important issue of competition and the Instruction to the Committee. It is an extremely complicated subject and a shudder passes over me if I ever hear the words "roll-on" and "roll-off". The Transport Docks Board has won traffic and so has Felixstowe—both probably at the expense of other publicly-owned undertakings. The Docks Board asserts, and I accept its sincerity, that it encourages competition between its various undertakings. Yet that depends how you define competition. Internal competition between limbs of the same organisation has strings attached, and the competition here is subject to what is known as the Board's overall financial policies, which means that you must not hurt your colleagues. But that is not real, unhampered competition. It is emulation, rivalry, but not competition in a commercial sense.
Mr. Stuart, the managing director of the Docks Board, and an admirable witness said:We encourage our ports as we will encourage Felixstowe to compete with other Docks Board ports on these very factors of service and efficiency.But note that there is no mention of price. There was much reference in the Committee to what became known as the Stuart-Stevenson correspondence when Felixstowe was encouraged to raise its prices. Felixstowe at that time was not a Board port but was thought to be "in the bag".
Mr. Gordon Parker, in an extremely effective letter in The Times on either 1679 Monday or Tuesday which I am sure that all of your Lordships have read, said:It was made clear to my general manager that charges should be raised".Mr. Gordon Parker is very incensed in this letter at the reflection in one of the paragraphs of the Select Committee's Report upon his commercial acumen, and I think that he is quite right. The Select Committee was told by the Docks Board that this was to meet the financial difficulties in which the Docks Board was alleged to find itself. As I mentioned earlier, I do not think that there was any foundation for such a panic decision. It is true that there was a temporary malaise. To quote again Mr. Gordon Parker:Felixstowe suffered from the recent depression, but as a result of my Board's policies in the past Felixstowe is now enjoying a measure of prosperity not previously attained".Listen, my Lords, to this from Mr. Stuart's evidence. There was:… not sufficient business to bring in cash flow. It was evident that not sufficient revenue was coming in in order to keep the company afloat. There is no doubt at all that some charges at Felixstowe have been too low. This is why the company got itself into financial difficulty.Then Mr. Stuart said:Mr. Stevenson, as general manager, required and welcomed assistance from the Board as to how he could find the desperately needed extra revenue. This port was in a very grave financial situation".Noble Lords should note those words "required and welcomed". In fact, turnover, gross profit, net profit before tax, net profit after tax and cash flow were all up for the 24 weeks July to December as compared with the year before.
What was the real reason for the Board wishing to seek to persuade Felixstowe to raise its charges? In some quarters, apparently, the price was thought to be too high. As I have said, Mr. Gordon Parker is incensed at the statements made in the Committee reflecting upon his acumen. In particular he is incensed at paragraph 8. The real reason was an entirely different one. It was a political reason, as has now been shown by a letter which has been released by Mr. Gordon Parker of the 12th December 1975 addressed by Sir Humphrey Browne to Mr. Parker. The letter is marked "Private and Confidential".
1680 As I was going to use the letter I thought it right to warn Sir Humphrey, and I received two letters and two telegrams from him; but I must break it to Sir Humphrey that the telegrams were a waste of money because the letter arrived first. He said:Thank you for your letter. My own view is that private and confidential letters ought not to be used publicly, least of all without both sides of the correspondence".The answer to that is that for, to me, obvious reasons from their point of view, this letter was not put before the Select Committee. But it was known about; there was a Docks Board minute in January referring to the letter. When Mr. Wickenden's case was before the High Court the letter was produced on a subpoena, but for reasons that I do not understand the letter was not used by counsel and it was not available to the Select Committee. I regret that; then the other side to Sir Humphrey Browne's letter could have been put. The letter was requested by the Agent for the Petitioners but was refused.
I believe that the public interest is far above the considerations in this case of privacy and confidentiality, and I want to quote from the letter. I shall try to exclude names because I think that would be unfair. It says that so-and-so:is acutely worried because the Left is saying that the price is far too high".Then follow some figures which I cannot tally with the ones in my possession. Then the letter says:The money"—this is urging them to raise prices—is, of course, extremely important in any case, but it is also vitally necessary to indicate that the result for the year will be of the order I have mentioned. This raises the question whether, in the Interim Statement, it might be possible for the Company to forecast an end of year result at least not less than 1974/75. If that could be said (truthfully) I think we might have a reasonable chance of getting the Bill through. To justify such a statement we undoubtedly need a substantial increase in charges as soon as possible.I omit the next paragraph but it is available if any noble Lord opposite wishes to have the letter. On the second page the letter says:We have let Mr. Stevenson"—Mr. Stevenson is the general manager—know this, but I am afraid he seems less responsive to increasing charges than I would have hoped, and 1st January is getting very near now".1681 That is the Mr. Stevenson whom we were told was anxious and eager to raise his charges. The letter continues:You may think that it is impertinent of me to be interfering in this way but the results have been very disappointing and I do not see any hope of getting the Bill through unless we can justify the price: and this means indicating, meaningfully, a result certainly no worse than last year".The letter ends with another interesting paragraph:Incidentally, we have learnt through the drain-pipe that Felixstowe are quoting very low prices currently, for instance, for theXY trade£26 per box as against £43.50 by Southampton and £56 by London. I do hope that you will feel able to intervene in this situation".All this was at a time when the Government were requesting price restraint.
§ Lord WYNNE-JONES
My Lords, I thank the noble Lord for giving way to me. I wonder whether he would be prepared to quote from Mr. Gordon Parker's reply to Sir Humphrey Browne because what Mr. Gordon Parker said was:…but there is no doubt that our charges are too low in the light of inflation
§ Lord REIGATE
No, my Lords, I cannot quote from Mr. Gordon Parker's letter for the very simple reason that, like Sir Humphrey's letter, it was not before the Committee. This only shows how much I regret that we were not given all the information. The noble Lord has accentuated my very point.
§ Lord REIGATE
My Lords, I cannot quote a letter which I have not got. I was going on to point out that all this was at a time when the Government were requesting price restraint. It is quite true that Felixstowe did raise their prices and that that contributed to their present prosperity, but they did not raise them—incidentally, a last flicker of independence—by anything like the amount which was suggested. The point is that that letter would not have been written to an independent concern.
No one would dare to write that letter to a firm outside their own organisation. 1682 It is proof positive of Mr. Gordon Parker's remark in his published letter in The Times which presumably the noble Lord also has, that is,Local management would of necessity be administered from headquarters".No wonder he ends his letter with these words:Felixstowe's competitiveness in my opinion would be adversely affected".I entirely agree. If the Select Committee had had all the evidence before them, including the letter to which the noble Lord, Lord Wynne-Jones, refers, I think they would have come to the same conclusion.
My Lords, I want to conclude with one word on the issue of nationalisation, or public ownership, as I am sure I shall be asked to call it—a much more mellifluous phrase. Felixstowe is half of the commercially-owned ports of the country, and 6 per cent. of total capacity. Almost the first of the flood of documents received was from the Department of the Environment and read as follows:…that this merger would accord with the Government's general plans for the re-organisation of the ports industry, one objective of which is to bring commercially-owned ports into public ownership".So it is nationalisation, and this Private Bill is not even nationalisation by the back door; it is burglarious entry by the skylight.
If the Government want to nationalise ports, let them bring in a Government Bill, and not use a Private Bill to implement their policy which, anyhow appears to be in a state of confusion. I think the noble and learned Lord, Lord Stow Hill, when speaking on Second Reading, said:We all believe in a mixed economy".The noble Lord the Leader of the House said on 29th September:I believe in a mixed economyWe all believe in a mixed economy— or do we? But it is never the mixture as before. Inch by inch the public sector encroaches; mile by mile at the moment, and today is a chance to call a halt.
§ Lord SHINWELL
My Lords, when the noble Lord, Lord Reigate, says that we all believe in a mixed economy, does not that also apply to nationalisation? Does not nationalisation play its part 1683 in a mixed economy? Or is not the case the noble Lord is putting one that is clearly and definitely against nationalisation?
§ Lord REIGATE
No, my Lords; it must be quite obvious by now that many people on this side of the House accept that there is room for a measure of nationalisation. My point is that the boundary between the two is always moving against the private sector, and that is that.
§ 12.23 p.m.
My Lords, first of all, I noted an article in The Times today gave a statement by Lord Grey of Nauntons. In fact, it was my statement, and I trust that the noble Lord will forgive the error. As I have been sitting as a member of the Select Committee on this Bill, there are a few points I should like to make. The main opposition to the passing of this Bill is on the grounds of reduction in competition, increased port charges and a threat of nationalisation. The British Transport Docks Board claim that competition will not be adversely affected because they state it is their established principle of management to allow and encourage the individual ports to compete. In an article in The Times of 6th October 1975, Sir Humphrey Browne, chairman of the British Transport Docks Board, referring to Felixstowe, was reported to have said:If we get Felixstowe, it will raise our share of the industry from 25 per cent. to 30 per cent., so it will reduce competition by 5 per cent., but it will still be a basically competitive situation".My Lords, I find it strange to believe that competition is being encouraged, on the one hand, and effectively reduced on the other. Over the years, the prosperity of Felixstowe has been based on a single-minded desire to compete successfully and to promote its ideas along its own lines. In my view, I do not think that with 19 ports, some in competition with Felixstowe, the British Transport Docks Board will be able to apply the same vigour and attention to Felixstowe as can European Ferries, who admittedly own two small successful ports which do not compete with Felixstowe.
Competition is based on service and satisfactory port charges. There are about 1684 95 members of the Port Users' Association who, as a body, have petitioned against the Bill. They are deeply concerned over the possibility of very much higher charges and damage to the good relations which have existed over the years. The port charges at Felixstowe, have been, and are, competitively lower than its nearest comparable rival, Southampton—in fact, considerably so. A letter from Mr. Stuart, general manager of the British Transport Docks Board, to the Felixstowe company last December, suggested that a container quote by Felixstowe of £26 per foot, which had been accepted, was £16 less than that from Southampton.
§ Baroness PHILLIPS
My Lords, I am grateful to the noble Earl, Lord Grey, for giving way. In all fairness to him, he is almost inaudible from that part of the Chamber. Would he be good enough to move nearer to a microphone?
My Lords, I apologise. I will go back a little. A letter from Mr. Stuart, the general manager of the Docks Board to Felixstowe last December suggested that a container quote by Felixstowe of £26 per foot, which had been accepted, was £16 less than Southampton, could well have been raised by £10, and still would have secured the traffic. Mr. Stuart goes on to suggest that a harder line must be necessary in future. The present owners of Felixstowe have, indeed, put up their charges for that operation by the princely sum of £2, increasing it to £28, while Southampton now charges £44.
In other cases of charges where the operation is similar to that of Southampton, charges at Felixstowe are considerably lower and are showing a profit. If the policy of the Docks Board is apparently to charge what I would call what the market will bear, I suggest it is a harmful and dangerous one. It is difficult to understand the claim of the British Transport Docks Board that they believe in competition within their own family of ports, when head office obviously suggests to them what charges they are to make. It is no wonder, then, that the Port Users' Association of Felixstowe are gravely worried when they make a comparison with what is happening in other ports.
To give an illustration of port charges and service, a major broker for one of the 1685 largest Canadian steamship owners who arranges the shipping of cars and machinery, prefers to use Felixstowe rather than Southampton, even though access to Southampton is more favourable. The reasons for his choice are mainly the charges and the facilities for looking after and protecting the vehicles before shipping. The parking facilities at Felixstowe are much better, in that they are tarmacked, and security precautions are rigidly enforced, whereas at Southampton, the cars are just parked on open rough ground. At Newport, there were instances of people driving the cars after working periods. There are recent instances of loading operations using more men and taking longer at Southampton, thereby increasing the cost.
An important factor is the turn-round position. The longer a ship is in port the more charges are incurred; for a shipping company, speed is vital. The record of Felixstowe in this sphere is excellent. The labour relations at Felixstowe also have an excellent record. The number of men has increased, which is a healthy sign in any industry, especially in today's world of recession. The workforce are of the opinion that their association with the management is second to none. They are able to approach management at any time. The attitude of the port workers to the take-over by the British Transport Dock Board is best illustrated by a secret ballot, which has already been mentioned, organised by the Electoral Reform Society. This received a lot of publicity in the Press. There were moves by the Transport and General Workers' Union not to have it published, but the results were published, and they showed that 86 per cent. voted in favour of European Ferries, and only 14 per cent. were in favour of the British Transport Docks Board. In various other ballots taken it was shown that the port users and their employees voted overwhelmingly in favour of European Ferries.
Trinity College, Cambridge, who also oppose the Bill, claim that their properties, rights and interests will be injuriously affected by its passing. They own approximately 3,500 acres at Trinity. Part of this estate is adjacent to the Port of Felixstowe and has been leased to the port for industrial development, such as roads, warehousing, offices, hotel and lorry parking facilities. The revenue 1686 from the use of this land amounts to one-sixth of their endowment income. Over the past few years Trinity have invested about £1 million in purchasing and developing that land. If Felixstowe is adversely affected by competition and trade is diverted to other ports, although there have been assurances of sorts by the British Transport Docks Board in that respect, their income and interest will be affected. With the threat of State ownership hanging over their head the question of compulsory purchase of the land may also arise.
In my view, there is no argument in favour of the British Transport Docks Board on the grounds of capital resources. The Board faces a capital repayment over the next 10 years of £77 million, and claim that this can be managed without holding up new investments. These estimates are based on assuming a greater traffic growth over the next few years. Their growth rate over the last few years does not compare favourably with that of Felixstowe. From 1971 to 1974 the Docks Board's total tonnage fell by 4 per cent. Where is the growth in that? The total tonnage rate at Felixstowe has risen by 77 per cent. I call that growth. Why should Felixstowe join a group of ports whose growth rate is extremely slow when it is perfectly able to forge ahead successfully under its own steam?
The funds available at the disposal of European Ferries are readily available when the need will arise to invest in plant and machinery. They have fixed assets of well over £70 million and a cash reserve at the end of last year of nearly £8 million. This reserve had increased by July of this year to approximately £12 million.
My Lords, this is a Bill that will do harm to an industry that requires no help, does not need public finance to assist its growth and to keep it alive, and is a credit to the British economy. This Bill is a compulsory nationalisation Act. These are not my words, my Lords, but I believe them to be true. These are the words of Sir Humphrey Browne. If the Docks Board acquires Felixstowe, the result will be that they will control about 70 per cent. of the short sea unit load traffic between Britain and ports like Rotterdam and Antwerp, compared with 40 per cent. at present. This situation would result in a reduction in competition, and because 1687 of the near monopoly in that area would lead to an increase in charges. I urge your Lordships strongly to reject this Bill.
§ 12.33 p.m.
§ Lord MCCARTHY
My Lords, it falls to me to make the case for the majority of the Select Committee, and I am sure that I can speak for all members of the Committee when I say that when we were appointed we took as our first text (one might say) the debate on the Second Reading of the Bill in this House, and there I am afraid we managed to find that we had been given somewhat conflicting advice. Some speakers in that debate told us that it was a simple moral issue and that the crucial thing one really ought to take into account was how far there was or was not some breach of an agreement. It was, as it were, a moral issue of the sanctity of agreements that we ought to have uppermost in our minds.
On the other hand, other noble Lords in that debate told us that this was really a matter of political principles. It was said that this was a question of back-door nationalisation: that nationalisation, if it came at all, should come in through the front door, and the issue which we had to decide in the select Committee was really a political issue of that kind. But it was also said by some noble Lords in the debate that the critical question, certainly from the point of view of the survival of the port, was in a sense a democratic issue. It was a question of what were the wishes of the users and in particular what were the wishes of the workers involved. Faced with those somewhat conflicting principles, I think the work of the Committee would have been impossible had it not been for the very useful, and I found extremely helpful, Instruction which arose from the Motion by the noble Earl, Lord Gowrie, which asked us to think in terms of the wider public interest, really in relation to the preservation of the comptetitive position of Felixstowe.
I have tried to test my approach to the Bill in terms of the Instruction, and I think that is the basic criterion which we should use today in evaluating the adequacy or inadequacy of the majority report—the Instruction which tells us to take particu 1688 larly into account the preservation of the competitive position of the Port of Felixstowe. No doubt because they had read the Instruction, those who opposed the Bill in front of the Select Committee made a number of arguments designed to indicate that the transfer of the port to the British Transport Docks Board would result in an undermining of its competitive position, and so far as I could see, looking through the Minutes the other day, I am sorry to say that they put forward no less than five separate arguments.
I should like, as briefly as I can, to go through those five separate arguments today. First, they argued that the transfer of the port to the British Transport Docks Board would result in its obtaining a predominant share of an important, definable market and they sought to spell out what that market was. Certainly, they argued that the British Transport Docks Board would use the ownership of Felixstowe to restrict their power to compete, and in particular to compete with other Docks Board ports. They argued that they would impose a less competitive system of charges and that they would be less inclined to invest and develop because they would not be single-minded in the way that the old Felixstowe Dock Company was. Finally, they argued that this transfer would lead to bad relations with the users, who objected to the transfer; bad relations to some extent with Trinity College, the landlords, but above all, of course, bad relations with the workers who they said were really opposed to the transfer of this port to the British Transport Docks Board.
I think we tried—I know I certainly tried—to address our minds to these charges as they came forward in the Select Committee, and for that reason, if I may say so in reply to the noble Lord, Lord Reigate, if there was an ideological rift between the members of the Committee—and there are bound to be ideological differences in any Committee drawn from different sides of the House—I hope that all the members of the Committee were able to put those ideological differences aside for the period of the discussion, and I am glad to see that for the most part so far this morning we have been able to do so.
Having disagreed to some extent with the noble Lord, Lord Reigate, I should like to say that I agree with him in two 1689 respects in what he said. It was very curious—at least to a newcomer—to observe the people who failed to come before the Committee. Indeed, the notion that people had failed to come from the old port company was first put forward by the counsel for the Docks Board. He spoke about the dogs that failed to bark in the night, and of course in a way he was right. The curious thing is that neither side sought to bring before us people from the old Felixstowe Port. Mr. Wickenden did not seek to bring before us people from the old Felixstowe Port who were still on the Board; neither did the Brititish Transport Docks Board seek to bring before us people who had been removed from the old Docks Board. It was curious, but it was a fact: it was a fact on both sides and for that reason I suggest we cannot make much of it in this House today.
Secondly, I agree with the noble Lord, Lord Reigate, that we were given no very satisfactory reason as to why the British Transport Docks Board wanted Felixstowe. In that respect I would suggest to the House that we were given no better reason why Mr. Wickenden and European Ferries wanted Felixstowe. We have to conclude that people want assets, especially assets which they think they can develop and which they think will be profitable. I think we need take this question no further.
The other point I wish to make on what the noble Lord, Lord Reigate, said refers to the case of the Department of the Environment. It is perfectly true that in their letter and more particularly in the speech that was made and the evidence that was given by a representative of the Department of the Environment to the Select Committee, the fact was mentioned that one reason why the Government wanted us to pass this Bill was because it was conformable with basic Government policy. I suggest to your Lordships that they did this as their third heading. Their first reason was that the agreement was freely negoitated. Their second reason was that they regarded it as necessary and desirable for the future prosperity of the port. And then they said, as the supplementary third reason, that it was comformable with Government policy.
I do not put too much stress upon that—I think it is worth correcting the record 1690 —because it seems to me that once again the Committee had all kinds of strange reasons put before it, all kinds of reasons which in terms of the Instruction were not strictly germane. In 16 days of hearings, or whatever it was, it would be very difficult not to have irrelevant arguments put before it. The job of the Commttee is to stick to the specific charges which relate to the issue of competition, and frankly from my point of view what the Department of the Environment may say, with all due respect to my noble friend, is neither here nor there.
What we had to look at were these particular questions. I should like to come first to the question of the predominant share of the market. Let us be clear what was the charge against the British Transport Docks Board in respect of this. It was not—it never was—that transferring Felixstowe to the British Transport Docks Board list of ports would give them a predominant share of the whole of the United Kingdom market. Indeed, in terms of tonnage, the difference is trifling, 22 per cent. to 23 per cent. In terms of value, the difference is not significant: from 25 per cent. to 30 per cent. So it was not the whole of the docks trade that this transfer was supposed to change. Indeed, it could not be because of the relatively small size of Felixstowe. It did not really affect, as the evidence went on, what one might call conventional trade, because on the whole Felixstowe was not very big in this field. It did not really affect lift-on/lift-off, and it did not affect deep sea trade.
The predominant share of which so much was made was that part of short sea load roll-on/roll-off trade that uses the East Coast ports. Indeed, if you look closer at what was being said, it was not, even in that area of trade, the whole of the East Coast. As the arguments went on it began to be clear to me that this was best summarised in the words of Mr. Sparrow, that what the Petitioners were saying was that short sea load roll-on/roll-off trade in the East Anglian bulge, which was the term he invented—that part of the port industry which stretches from Kings Lynn to Harwich, which does not include, for example, up into Tyne Tees and does not include as far down as London—was the area.
The Earl of GOWRIE
My Lords, if I may intervene, I am most grateful to the 1691 noble Lord. I have been following his argument with great closeness. Would he not agree, on this point, that our recent deliberations on the Dock Labour Bill have shown us that the area that he is mentioning, the estuarial East Anglian bulge, because of roll-on/roll-off, because of the European Community, is by far the biggest growth area of all dock land activities?
§ Lord MCCARTHY
My Lords, I would not deny that that is an expanding area. What I am saying is that if we are talking about predominant market share, lather than growth, and if we are trying to say that a particular definable area of trade is being significantly changed in terms of the market share, the form of competition in the market, then this is a very queer and peculiar section of the market. Indeed, the more one looked at this, the more it appeared to me that ports were being excluded by European Ferries which really were being ruled out on very strange grounds. A change in the nature of competition was coming about, in order, for example, to rule out competition in London.
What was really argued was not whether the Port of London wished to compete with Felixstowe; not whether, in a sense, the Port of London regarded itself as in the same market as Felixstowe, because it quite clearly did, but whether, given the cost structures at Felixstowe, given the turnround at Felixstowe, given the general efficiency of Felixstowe, Felixstowe thought that London had a prayer. This was the way in which, quite genuinely and quite honestly I think, the market was narrowed down to produce the figure of 70 per cent. As I say, I regard that as an understandable but unwarrantable use of the notion of predominant share.
I think it accords very much with the remarks of the Lord Chief Justice, who said in a similar argument when the case was put before him, that the difficulty about these arguments is that you have to narrow it down to an increasingly artificial market in order to get the share up, but if you pull the market up to make it more reasonable the share drops away. This was the problem that European Ferries were faced with, and all I can say is that it did not convince me. I also would argue that in any case the undesir 1692 ability of 50 or 60 or 70 per cent. largely depends on the second question to which I would like to turn now, the extent to which there was competition inside the Board's ports.
§ Lord DRUMALBYN
My Lords, before the noble Lord leaves that point, would he not acknowledge that so far as reference to the Monopolies Commission is concerned, the market can be defined in any way at all for the purpose of deciding whether there is a predominant share in it, and it can inquire into it accordingly?
§ Lord MCCARTHY
My Lords, I quite agree, but, of course, we must not take the view that mere reference to the Monopolies Commission is a confession of guilt. The point about the Monopolies Commission is that when allegations of predominant market shares are made, the Monopolies Commission is expected to investigate. I would respectfully submit that that is what the Select Committee tried to do, and that is what I am trying to say today. I think it was an artificially created market, and in any case the question—I am sure the Monopolies Commission would have looked into this, and if it had not it would not have done its job—turns on the nature of competition within the British Transport Docks Board. That is what I want to turn to.
Again, the significant issue is what was alleged by European Ferries about the effect of competition and the degree of competition inside the British Transport Docks Board. The remarkable thing to me is that so little was alleged. For example, it was not alleged that the British Transport Docks Board has a very clear, published, list of prices which everybody knows operates and which restricts in terms of competition the finish price. Nobody charged the British Transport Docks Board with having a public price list. More significantly, nobody charged the British Transport Docks Board with having their equivalent of Glass's Manual, an undercover arrangement which fixes so-called minimum prices which are actually maximum prices. Nobody alleged at any stage that that is what the British Transport Docks Board did, and nobody produced a Glass's Manual. Nobody said that the British Transport Docks Board cross-subsidises 1693 one port, an inefficient port, for example, in order to protect it. Nobody even said that the managers in British Transport Docks Board systematically operate a kind of unofficial clearing house on tenders of the kind that is so universal in the construction industry.
The only specific allegations—and I will come to the last minute letters in a moment—were the famous Stuart-Stevenson correspondence. On examination, that is not a correspondence, it is a letter; because there is really only one letter that matters, a single letter from Mr. Stuart to Mr. Stevenson in which basically what Mr. Stuart is trying to do is to persuade Mr. Stevenson—and we can see from the correspondence we have had today that that was extremely necessary—that in fact the Felixstowe Board could raise prices without driving away business. The only way that that could be proved was quoting past examples—not future examples—of where it could have raised prices and retained business.
Of course you could say—and some speakers on the other side of the House have said—that it was monstrous to suggest to the Felixstowe Board that it could raise its prices: that to put the idea into its head was a monstrous thing to do. It has nothing to do with restricting competition between the Board's ports; it has to do with whether or not, in the opinion of the Docks Board and its general manager, the prices charged at that time by the Felixstowe Company fully cover the need for reinvestment, amortisation, expansion, and the critical problem of cash flow. To some extent this is the issue of judgment which we have to decide.
What the British Transport Docks were saying to us again and again in their evidence, and Mr. Hill made this point in these terms, was that this was an efficient operation at Felixstowe which was not a profitable business— "not a commercial success" was the phrase he used—because, like many small, efficient operating companies, it could not bring itself to raise prices to the point where it could maintain efficiency and investment and cash flow in the medium and long run. This is basically the decision which the majority had to decide.
I came to the conclusion, looking at this difference between the sides, that 1694 the critical problem of the old Felixstowe Company was under-pricing; that it had very few other problems; that in most other ways it was indeed an excellent company. It was under-pricing which had produced its cash-flow problem; it was under-pricing which had produced its excessive overdraft; it was under-pricing which had produced the need on the part of the port managers and the part of the old Board to go to the British Transport Docks Board in the first place.
Very strange things were said about the old Board. This is one of the reasons why I would very much have liked to see some members of the old Board there, because on Mondays, Wednesdays and Fridays, as it were, we were told that they were the epitomy of innovative efficiency. On Tuesdays, Thursdays and Saturdays we were told that, unfortunately, they all went mad in the end and approached the British Transport Docks Board. The moment that they approached the British Transport Docks Board it appears they lost courage, we were told, they failed to exhibit leadership, they failed to add two and two together and they made 36.
Now this is a matter of judgment. I find that situation difficult to accept. I say in my opinion that it is difficult because nobody on either side saw fit to put these gentlemen before us. I say that in my judgment they were probably excellent operators and not very good commercial men, because, like with so many small companies, they failed in the end to charge effective prices because they were terrified of driving away business, being in the grip of their own growth philosophy.
This, I am sure that noble Lords who know more about business than I do will know, is a very familiar syndrome, particularly for small companies a short period after they move into an upswing. Therefore, what they did in approaching the British Transport Docks Board was not mad. They did not suddenly take leave of their senses; they took what seemed to them to be the reasonable decision at the time. The fact was, and the House must grasp this, there was no way at that time of the Felixstowe Company going forward on its own. It had to find an ally. The issue we have to decide is not the old Board and its success and record, but whether the best ally is the 1695 British Transport Docks Board or European Ferries.
So I come to the next issue, and I hope that I shall not be so long on this one. What of the charges? What of the suggestion that the British Transport Docks Board does that dreadful thing, charging what the market will bear; in other words, making up for the need to cut margins to get business by raising margins elsewhere, especially when the business is locked in? Which of us can say that we do not know of companies who have done this frightful thing? The first point to make about British Transport Docks Board is that they volunteered the information. But when asked about their pricing policy they told us quite frankly, "Yes, we sometimes had the margin charge what the market would bear". They admitted it.
The second thing to say about it is that so far as I know this is the universal practice in markets which do not consist of semi-monopoly or differentiated products. It is very widespread, for example, in road transport, air freight, railways. It is very widespread in the port industry itself. The third point to make, and I make this with some care, is that there is evidence in the fine print of the Committee that Felixstowe did it too. For example, we were told that day-to-day decisions on charges at Felixstowe were, in the past, left to relatively low levels of management, who did what they could and charged as they thought fit. The basic situation in which charging what the market would bear naturally emerges.
We were told that since European Ferries had taken over Felixstowe, they had decided to increase charges. Listening to some noble Lords today, you would have thought that only the British Transport Docks Board was interested in increasing charges. Mr. Wickenden quite understandably and rightly knows that charges must be increased. But when those charges were increased, they were to produce 20 per cent. across the board. Now 20 per cent. across the board would be most easily found in a company which does not charge what the market will bear, which has standardised costs and standardised profit margins. Yet what do we find? We find that in Felixstowe, under European Ferries, actually charges 1696 went up from 0 per cent. in some cases to 25 per cent. We find that in one particular case where European Ferries admit that the profit margin is unusually low, they actually raised the margin by only 10 per cent. I suggest that it is not reasonable to suppose that there is not somewhere else where the profit margin is unusually high where they are charging significantly more than 10 per cent., and indeed if they are not doing something like that they will go bankrupt in the end. The plain fact is that some flexibility in profit margins is probably essential in the kind of business in which Felixstowe is engaged.
§ 1 p.m.
The Earl of GOWRIE
My Lords, I thank the noble Lord for giving way. The noble Lord is arguing very clearly. I just want to take up one point with him. I think no one disputes the rights of the British Transport Docks Board, or of any other Corporation, to charge what the market would bear. What we on this side of the House should like to know is why, if the old Board were under-charging so heavily, has the new Board, under the ownership of European Ferries, put up the charges so relatively little?
§ Lord MCCARTHY
My Lords, it is a question of what is meant by "relatively little". I do not like to say to noble Lords that I am coming to that point, but I think I really am coming to it. If I can throw myself forward, the point is that there is a real difference of opinion as to what are realistic charges at Felixstowe, and that is the point I want to deal with in a moment. The next point is very simple and can be dealt with very briefly. It is the point about the long-term investment and expansion of Felixstowe, and about the single interest argument. Here we looked at financial resources, the experience of dock management, commitment to investment, and overall efficiency. I think here I can come to the point which the noble Earl, Lord Gowrie, raised.
On financial resources, I came to the conclusion that there was not much in it. I am glad to see Lord Reigate nod. In some ways the Board was stronger—less dependent on loan capital, bigger cash reserves—on the other hand, it had this burden of debt. In terms of financial resources, nothing in it either way. In 1697 terms of experience of dock management, I do not think there can be any doubt that the Board has the edge. It is accepted to be the most efficient of all nationalised concerns. It is accepted in its own terms to be an efficient organisation, which knows its business and which has taken a series of remarkably efficient decisions in dealing with what was undoubtedly a scratch collection of ports.
Now we come to the willingness to invest and this relates back to the point about charges. Again I ask noble Lords to look at the fine print, to look at what Sir Humphrey Browne said on day five of the hearings and contrast it with what Mr. Wickenden said on day seven. The fact is that the view of Eurpoean Ferries of Felixstowe is that it does not really need much investment, much re-equipment, much new machinery unless and until it begins to expand. I do not want to be unfair to Mr. Wickenden; this is the basic position. Therefore because of that it does not need any significant increase in prices at the present time.
The view of the Docks Board, as I understand it—and I go back to what I understood Sir Humphrey Browne to say on day five—is that this is not so. As the noble Lord, Lord Wynne-Jones, said, if you go around Felixstowe—and I stress that I have not been around Felixstowe; he has—you will find that large parts of the equipment, of the infrastructure of the port are in urgent need of re-equipment. Felixstowe is in urgent need of re-equipment, says the Biritish Transport Docks Board. Felixstowe really only needs a considerable infusion of money if and when it begins to expand, says European Ferries. This is partly a matter of judgment, it is partly a matter of style. It is also I say to your Lordships—and this is the last point I want to make before coming on to the question of the users and the workers—a very reasonable difference as between users and owners. It is reasonable for European Ferries and for the other users to say, "Why do we need to have all this equipment introduced which will only result in an immediate rise in prices"?
This is the classic conflict between users and operators. It is reasonable for the British Transport Docks Board, who are fundamentally operators of dock equipment and machinery and who 1698 have a very long-term interest in the industry to say, "No, at present prices we can get this equipment for so much. If we leave this for five years, 10 years, 15 years, some of the users may not be using the port, but we shall still be there. We have to put aside necessary money for the re-equipment of existing machinery on the basis of the existing through-put. If that means that we have to raise prices, if that means that we would raise prices more than Mr. Wickenden has clone already, that must be faced". That is the issue of judgment.
So now I come to the users and the workers. About the users, I think I have said most of what I want to say. They legitimately are worried about the inadequate assurances given to them by the British Transport Docks Board. Here I think that the Committee was unanimous. I think I take it that the Committee in the end agreed unanimously on the form of assurances which we insisted should go into the Bill, if the Bill went forward, I think that quite wrongly the British Transport Docks Board, until a very late stage, would not entertain assurances which were enforceable between the users and themselves. I think that they were wrong in this; I think they came to appreciate it. I think it was because of mistaken ideas about their own statutory obligations. But I think it largely explains the attitudes of many of the users.
I come therefore to the workers. Here we have misrepresentation piled on top of misapprehension. What are the facts? In February there was a mass meeting at which the shop stewards—not the full-time officials—put to the meeting of the workers the issue of neutrality. It has been presented in this debate that the Transport and General Workers' Union wanted neutrality as it were in order to be awkward, or in order to try to prevent the workers of Felixstowe from giving their voice. We are told what a strange thing to do in an age of industrial democracy. But this was explained in front of the Committee. Why did the Transport and General Workers' Union recommend a policy of neutrality?—because as their own chief shop steward said in front of the Committee, they knew that they would have, as a union, and as workers to work with whoever won this battle.
1699 Therefore the sensible thing to do, the reasonable thing for the workers to do, was not to take sides in a row. I think that the noble Lord, Lord Reigate, wishes to interrupt—
§ Lord REIGATE
My Lords, I entirely appreciate the attitude that the noble Lord is putting forward, but surely this would be an argument for a secret ballot rather than a mass meeting?
§ Lord McCARTHY
I think it would he an argument for a secret ballot; I would not be against a secret ballot. But as I want to go on to say to the noble Lord, Lord Reigate, if you are to have a secret ballot it should not be on the terms of the secret ballot put forward by Mr. Wickenden. The point was that from the moment when the British Transport and General Workers' Union took up this policy, instead of saying, as might have been—I will take the noble Lord's point; a perfectly reasonable thing to say—"Let us do this on the basis of a secret ballot and see if that is what the members really want", I think it is fair to say that European Ferriers sought to get behind that decision. They began with an extremely tendentious petition which everybody had to sign, and which was subsequently withdrawn. They went on to make statements about the intentions of the British Transport Docks Board and contrasted them with the intentions of European Ferries.
Finally, they had a ballot. My criticism of the ballot is not that it was probably impolitic at the time—this is a question of judgment, I agree with the noble Lord, Lord Reigate—but that the ballot took the wrong form; such a wrong form did it take that I suggest that its result is of very little use to this House. I say that because the form of the ballot was an attempt to force the workers at European Ferries to abandon their neutral position and to choose between Mr. Wickenden and the British Transport Docks Board, because that was the only way you could answer. The form said: "Do you want this docks port to be run by European Ferries, in effect, or do you want it to be run by the British Transport Docks Board?"
The only way in which workers who did not want to take sides could in fact 1700 register their desire not to take sides was to abstain. The fact is as has been said quite reasonably by the Docks Board since, that the majority of workers remained loyal to the original policy of the union and abstained. Therefore I suggest that we can make very little of this ballot in this issue. I am virtually finished. I apologise to the House for speaking for so long, but having had so many days of this matter it is very difficult to summarise it.
In conclusion, I should say that the view of the majority is that there is no evidence that the British Transport Docks Board would suppress competition or inflate charging policy and prices. There is no sign that they would be unable to get on with the users, or with Trinity College or with the labour force. There is every indication that they have adequate resources, more experience that they demonstrated before the Committee, a greater willingness to invest in the success of Felixstowe, and in the relevant issue of the area of trade where Felixstowe excels the Docks Board can show that they have a rate of expansion which on the last figures available is slightly larger than the rate of expansion in European Ferries.
If so, it seems to me that we cannot allow the Bill to be vetoed because the users say that they do not want it. We cannot allow this Bill to be decided on the simple, crude issue of whether we are against nationalisation or whether we think it should come in by the front door or the back door. We must decide it on the basis of the Instruction, and the Instruction has been discharged. For all those reasons I ask the House to vote with the majority today.
§ 1.9 p.m.
§ Lord CULLEN of ASHBOURNE
My Lords, the key note and perhaps the only note of my speech will be one of the utmost brevity. I shall roll on and roll off very quickly to the mutual satisfaction of us all. I have no personal experience of the docks industry, though I have for many years been aware of the outstanding success of Felixstowe, and I have followed with interest and alarm the circumstances of the bid by BTDB and the counter-bid by European Ferries. As one who sees no evidence that nationalisation acts as a 1701 spur to vigour and success, but much evidence that it results in overmanning and inefficiency, I am in total opposition to the Bill. Since there are many noble Lords much better qualified than I to put the industrial and political arguments, I shall confine myself to a few observations from the standpoint of the shareholders—and I mean the shareholders of Felixstowe, of course.
One of the requirements of the City take-over code is that shareholders in a company which is the subject of a takeover bid are not only free to sell their shares in the open market but are also free to withdraw acceptance of an offer until it is declared unconditional. Accordingly, the shareholders of Felixstowe were fully entitled to withdraw their acceptance of the Docks Board hid and accept the higher offer from European Ferries. This is, of course, an unusual situation, in that the Docks Board, without the power to acquire Felixstowe which the Bill would give to it, was prevented from making its bid unconditional, since it was a necessary condition that the Bill be passed, which I hope it will not be. This was undoubtedly disadvantageous to the Docks Board, and gave to the Felixstowe shareholders exceptional flexibility; but I repeat that they were fully entitled to change their minds.
Now the Docks Board stated its aim to abide by the requirements of the City code, but it seems to me that it has failed to do so, first, by refusing to negotiate unless it was alone in the field. Such shut-out tactics are clearly unfair to shareholders and are totally contrary to modern take-over practice. Secondly, and equally unfair, was the threat to withdraw if Felixstowe negotiated with European Ferries. I suggest to your Lordships that it is extremely important that institututions such as the Docks Board closely emulate Caesar's wife and avoid any possibility of creating "another City scandal", which, as is often the case, is no fault of the City when its rules are by-passed or its code of conduct not followed. I would add that if practices of this kind are accepted it might encourage the National Enterprise Board to act in a similar manner, and that is a real mind-boggler.
I submit, my Lords, that it is essential that the City code should be fully sup 1702 ported, but the effect of the Bill would be just the opposite; namely, to undermine it. It is abundantly clear that the vast majority of the Felixstowe shareholders—97 per cent. of them—prefer to have their company as a subsidiary of European Ferries rather than of the Docks Board. In these circumstances, normal practice would have been for the Docks Board to have withdrawn its offer. In conclusion, I trust that your Lordships will not wish to interfere with normal commercial practice, and will oppose this Bill.
§ Viscount SIMON
My Lords, before the noble Lord sits down, may I ask him one question, because it puzzles me. The original shareholders of the Felixstowe company accepted the counter-offer, and they are no longer concerned with the issue at all. Even if we pass this Bill, they already have the increased offer which the noble Lord was saying they are entitled to have.
§ Lord CULLEN of ASHBOURNE
My Lords, I think I am right in saying that if we pass this Bill they will not get the extra 15p that they would have got on their shares, which is quite a noticeable difference.
§ Viscount SIMON
I take the noble Lord's point, and I shall deal with it when I come to my speech because we cannot go into it now.
§ 1.15 p.m.
§ Lord STOW HILL
My Lords, I ventured to intervene in the debate which your Lordships had in June on the Second Reading of this Bill. In speaking in that debate, it seemed to me that the question really could be formulated, and should he formulated, in the following terms: Would the public interest be better served if this most important dock were carried on by the Docks Board or were carried on by European Ferries? Bringing my judgment to bear as best I could, it seemed to me that when one considered all the circumstances—the experience likely to he available to the Docks Board in comparison with the experience likely to he available to European Ferries, and the general circumstances of the case—it was nearly certain (I cannot say absolutely certain, but nearly certain) that the public interest would be best served if this very 1703 important dock were taken over by the Board, which, after all, has run very successfully 19 of the important docks in this country, which seems to indicate that the Board must possess that knowledge, experience, expertise and understanding which is requisite to run those 19 docks. Therefore, the advice which I modestly ventured to offer your Lordships on Second Reading was that the public interest would be better served if the Docks Board operated the Felixstowe dock.
The question is: What has happened since? Has what has happened since produced anything which would seem to conflict with the view which I ventured to put forward; or, on the contrary, has what has happened since seemed to support the choice which I ventured to propose to your Lordships on Second Reading? What is the question with which your Lordships' House is really concerned? The question is whether this agreement of 20th November 1975, duly negotiated and entered into and supported at the time by 86 per cent. of the holders of units in the Felixstowe company, should be carried into operation or should be rejected at some stage in its passage to the Statute Book. It seems to me that what has happened since, if I may respectfully say so—and I speak rather as an enthralled listener, and certainly by no means as an expert—confirms the view which I respectfully offered to your Lordships on Second Reading.
My Lords, what has happened since? We were told when we were considering the Bill on Second Reading that an application had been made for an interim injunction to the High Court to prevent further proceedings towards the implementation of this agreement. To start with, those proceedings have now taken place and have been fully disposed of by a thorough judgment of investigation by the noble and learned Lord, the Lord Chief Justice of England; and the view which he expressed in, if I may be allowed to say so, a most careful, thorough and comprehensive judgment has been supported by the three learned Lords Justices, headed by the noble and learned Lord, Lord Denning, in the Court of Appeal.
The noble and learned Lord, Lord Denning, delivered a full judgment; Lord 1704 Justice Scarman also delivered a full judgment; and Mr. Justice James indicated that he was in full agreement. Therefore, my Lords, may I look at the outset to the legal aspects of this? It is the decision of the courts that there is no possible legal ground whatsoever for holding up the passage of this agreement to the Statute Book. Every ground that was put forward was fully gone into. I am rather proud to say that the solicitors acting for the Felixstowe Company were my own family solicitors, and the leading counsel who appeared for the company, Mr. Christopher French, is the head of my former Chambers at the moment. The matter was thoroughly argued and the Lord Chief Justice thanked counsel for their assistance.
§ Lord DRUMALBYN
Would the noble and learned Lord forgive me? He talked about the agreement being carried into law. It is not the agreement that we arc talking about. It is the Bill which provides for the vesting and for the payment out and lays the duties upon the Board for the future. It is not the agreement that we are talking about at all here.
§ Lord STOW HILL
My Lords, I am sorry to say that I do not find myself able to agree with that observation. The whole purpose of the Bill, its raison d'être, is to produce the result that the agreement of 25th November 1975 between the Docks Board and the Felixstowe company should become an operative agreement. That, as I understand it, is the whole purpose of this Private Bill; we are discussing, in effect, that and nothing else.
§ Lord DRUMALBYN
My Lords, the agreement is operating now. It was this that the courts, as I understand it, considered. It is operating now because the courts decided that it should go on operating and should not be rescinded. The question of the Bill is quite a different matter.
§ Lord STOW HILL
My Lords, the claim, if I read the pleadings correctly—and I read them with care—was that there should be an interim injunction to prevent further implementation of the agreement. I agree with the noble Lord to that extent, but only to that extent; so that what we are considering is whether 1705 this agreement in future shall be operative so as to result in the assets of the Felixstowe company (or European Ferries) being transferred to the Docks Board with the result that the Docks Board operate Felixstowe Docks. That is the position in the statement of claim which I have read and which I have in front of me. I am sorry that I am not able to go away from that position which I hope that I have stated correctly—if not, I profoundly apologise to the noble Lord and to the House. I still think I have stated it correctly.
My Lords, that is the first major change; that is to say, that the noble and learned Lord the Lord Chief Justice and the Court of Appeal have decided that the legal grounds alleged are invalid, all of them. The allegation that the other place introduced a material change which entitled notice to be served rescinding the agreement is formally rejected. The argument that it was ultra vires is formally rejected. The argument under Article 86 of the Rome Treaty that the Docks Board would be abusing a predominant position—all rejected. After careful examination, one after the other—all rejected.
Then what is the other most significant and important happening—in my view at any rate—which should influence Members of this House in deciding what the right issue should be? When I say "Members of this House" I speak in particular of Members such as myself. I describe myself as an enthralled listener. I was not a Member of the Select Committee. Noble Lords who were Members have spoken; and their speeches, if I may say so, were of the greatest possible value and help to me. The noble Lord, Lord Champion, has not yet spoken, but I understand he will do so later. I found that the speech of the noble Lord, Lord Reigate, was of the greatest possible help to me.
I will give the reason. The Special Report of the Select Committee answers precisely the questions which I asked myself and as to which I had to give a speculative conjectural reply when speaking on Second Reading. Those questions were: would competition be materially inhibited if the agreement were operative? The agreement, your Lordships will remember, contains specific undertakings by the Board not to allow that to take 1706 place by diverting traffic and, in effect, to operate Felixstowe as a separate enterprise and as a separate dock. The Select Committee's finding is that competition would not be reduced, from the point of view of the Felixstowe undertaking, in comparison with other ports, through the diversion of traffic.
Then the question that I asked myself on Second Reading was: Is it likely that the Board would bring to the operation of this port a greater and more profound experience than would European Ferries? That question is answered precisely in the Report: Yes, the Docks Board would have at its disposal through its undertakings a wider and better experience in these matters. It went on to say that the workers' relationships had been good at Felixstowe and that, in other words, there was little to be alarmed at on that basis. My noble friend Lord McCarthy has already addressed your Lordships on that and I shall say no more about it. Therefore I found that I had the questions which I had put to myself precisely answered on page 13—and I hope I am correct in quoting the context of page 13—and part of page 14 of the Select Committee's Report. I find the complete answers which, if I may respectfully say so, seem to me to confirm the rightness of the opinion which I ventured to put to your Lordships on Second Reading.
That greatly influences my mind, if I may say so, and, if I may, I go back to my reference to the noble Lord, Lord Reigate, and indicate why it was I found his speech so extremely helpful to me. It is this. Your Lordships know that this Select Committee Report was produced only after bearing in mind, as the Committee did, the special Instruction and only after many days had elapsed during which evidence on a very extensive scale was heard. I asked myself when I noted that there had been a good deal of disagreement in the proceedings of the Special Committee: Could it be said—and I hope with the greatest respect—that the findings of the Select Committee had been reached without that perhaps full and thorough testing of the evidence which was given before it and of the full argument and full analysis which would be requisite to coming to findings of the sort that they pronounced?
When I listened to the noble Lord, Lord Reigate, I had the answer to that 1707 question. He was utterly unsparing in his criticism. He went right through, as I listened to him, I so thought, all the points of attack—and use the word "attack" in the most respectful sense—that he thought were relevant: as to the evidence, as to the conclusions drawn from it and as to the proceedings generally. He could not have been more thorough. As I listened, I thought to myself that if that is the worst that can be said about this evidence, what am I to do as an uninstructed listener when I have before me the final conclusions by majority contained in this Select Committee Report?
These conclusions were arrived at after a thorough testing, in particular by the noble Lord, Lord Reigate, whom we all hold in the highest respect in this House. If he could not find anything worse to say than that, then nobody will be likely to do so. I do not mean to imply—and I hope he does not think for a moment that I do—that he spoke in any sense as a result of prejudice. Of course, he did not. He spoke in discharging as he regarded it, his absolute duty. He did his duty and the whole House is indebted to him for doing precisely that.
But it leaves me in this position. What should I do? I have before me the findings of the Select Committee. Those findings include findings which seem to me to justify 100 per cent. the conclusions which I ventured to offer your Lordships on Second Reading. If I had uncertainty before, and felt that I was on a somewhat conjectural basis, that uncertainty has—I would not say 100 per cent. disappeared —very nearly gone because I had the support of the findings of the Select Committee containing those very respected noble Lords. I know that it was not in the least on a matter of form; it was a matter of acute and prolonged contest and conflict of view in the course of that Committee after a thorough investigation of all the material put before them.
I find myself in those circumstances able—I hope justifiably—to submit to your Lordships that what I earlier argued on Second Reading was entirely justified. There is the simple question: would the public interest be better served if these important docks were run in the circumstances which I have outlined by the Board or by, in effect, European Ferries? I answer that question with much less 1708 hesitation than I did when I spoke on Second Reading by saying that it would certainly be more in the public interest that the Board should run it than that European Ferries should run it.
§ 1.32 p.m.
§ Lord BUTLER of SAFFRON WALDEN
My Lords, I shall not weary you with a long speech. Several of the arguments I shall bring forward have already been touched upon by the noble Lord, Lord Reigate. In view of the substantial connection between Trinity College and Felixstowe Dock, I think it desirable to comment briefly on this matter and to agree with my noble friend sitting on these Benches to oppose the Bill.
During the past 10 years, Trinity have built extensive warehousing and dock facilities. They have been built on Trinity land adjoining Felixstowe Dock. These have contributed greatly to the Dock's rapid and outstanding progress. They are precisely the kind of investment in national efficiency, creating new jobs, which the Government and country so urgently need. In this way we are helping not only the national interest, but the local interest in Felixstowe—which is now prospering—and our own interest by creating more funds for education and research which were conspicuously successful. Current rents and the future potential of Felixstowe will help not only us but also our university as a whole, owing to the income redistribution scheme which has been reintroduced in our university. Therefore noble Lords can see that I am deeply serious in saying that this is a matter of considerable importance to us.
We do not think these installations will be compulsorily acquired by the Bill, and I shall say a word about the assurances. We do not think that it would be impossible to live with the Docks Board. We have told them so. We strongly believe that the current value and future potential will not be as great if this Bill goes through, as it would otherwise. That is a perfectly simple point to which I am entitled to make in a free House and in a free society.
The answer is simple: Felixstowe's outstanding success is physical growth and human relations arises from the single mindedness and individuality of 1709 those who controlled its affairs for the past 20 years. This private Bill would merge Felixstowe with 19 other British ports whose achievements in many respects fall short of those of Felixstowe. Single-mindedness and individuality at Felixstowe would drastically decline if this takeover went through. That is why we are against the Bill. I want to make it clear, as I did on Second Reading, that I am not taking a political stance on behalf of my frinds. If a private enterprise company were to be so bold and so far-reaching—as happens so often in the City now—already owning 19 ports and wanting to take over Felixstowe, we should oppose them just the same.
We are doing this for political reasons. It is no good the noble Lord, Lord Wynne-Jones, in his, as usual, charming speech, trying to make out that some of us are trying to oppose the Bill purely politically. We are not. We are opposing it for good reasons of our own. Nor are we alone in opposition to the Bill. The noble Lord, Lord McCarthy, referred to the port users. The port users represent huge creations all over the world, including America. The port users are unanimously against the Bill because they are perfectly happy under the present arrangements. That is what it comes to. They are overwhelmingly against the Bill and we feel that it is vital for us to support their interest.
Now we come to the report of the Select Committee and this crucial question of the agreement. I listened with very great interest to the noble Lord, Lord Goodman, on the Second Reading and to the noble Lord, Lord Wynne-Jones, and the noble and learned Lord, Lord Stow Hill, on the question of the agreements. I should like to take an original line on this which I hope will vivify and interest the House. We are not partitioning against the agreement at all. I accept absolutely what the noble Lord, Lord Wynne-Jones, said about the making of the agreement and its nature. We are not against the agreement at all.
I cannot understand why the noble Lords, Lord Goodman, Lord Wynne-Jones, and the noble and learned Lord, Lord Stow Hill, should object to a private person with private corporeal interests objecting to a Bill which has resulted from an agreement between two parties who 1710 want to hand over the Bill to a national board. This would deprive the whole of our life of privacy or power to express our will. Suppose two colleges in Cambridge came together to nationalise each other and had an agreement which the law courts afterwards defended, imagine a greengrocer nearby objecting to this because it upset his garden. Would it be illegitimate or immoral for the greengrocer to oppose the Bill which was ultimately introduced?
I go further: I do not object to the findings of the High Court; I do not object to the findings of the Lord Chief Justice; I do not object to the findings of my great friend the Master of the Rolls, who helped me a short time ago in making an educational judgment which gave me great pleasure. Quite apart from all these things, all I ask for is liberty to oppose a Bill which has been introduced after an agreement has been made by two separate parties and which has a result which I do not like. Please let us accept that agrument about the agreement, and please let us remove from my speech at any rate any atmoshpere of immorality in expressing a few private views of my own, which are not heinous to the public interest.
The Select Committee considered a a great deal of evidence which I took the trouble to look at, The noble Lord who is to speak next—who is an honourary fellow of my college—has been through the whole of the evidence and I will leave that for him to deal with. But Section 6(2) of the Report says,that the Board will adopt charging policies at Felixstowe that are at least as competitive as those existing European Ferries.It seems to me that this statement, after all that we have heard today is totally untrue. Perhaps the Petitioners against the Bill do not bring out the case as strongly as they should or perhaps the solitary member of this side of the House—namely, the noble Lord, Lord Reigate—and the solitary Liberal, who were all that were allowed on the Committee, had not time to do so.
In passing, I might tell your Lordships that I was for six and a halt' years, longer than any other person living, Leader of the other place and am somewhat of a dab on procedure, and I simply cannot understand why it was permitted by your 1711 Lordships that a Committee should be constituted with an obvious majority of three to two from that side of the House, including the noble Earl the Lord Chairman, against one only from this side of the House, when the Party represented on that side of the House gained only 32 per cent. of the votes at the last Election and this does not represent a fair division between the two sides. I would say to the noble Earl that nobody questions his independence. He has great reputation as Chairman of Committees and many people are sorry that he is giving it up. Since he has been in office I have never had reason to raise a question on procedure. But, really, when we come to find what the Committee decided we must reflect that it was weighted against the point of view which some of us represent and we regret that, however careful and however noble, if I may say so, the speech of the Chairman of Committees was at explaining that he had issued not only the detail but also the evidence which is available. For that we thank him.
When we come to the statement that the dock charges at Felixstowe are at least as competitive as those under European Ferries, at the risk of repetition I would say that even today—I can quote prices at Felixstowe—their charge, for example, for a large box is only £28 against the £36 which the BTBD would certainly have charged last December if they had had their way. In other words, box charges at Felixstowe would be nearly 30 per cent. higher under BTBD than they are under European Ferries. How can the—
§ Lord McCARTHY
May I say to the noble Lord that he is confusing competition in terms of time? What we were saying in the majority is that they would be at least as competitive as European Ferries over the medium and long run, because they would allow for proper provision to be made for investment. Of course, in the short run there might be lower prices at the moment in Felixstowe than in the Dock Board ports, but in terms of medium and long run competition there would be no significant difference.
§ Lord BUTLER of SAFFRON WALDEN
I simply do not agree with that. Statements have been made by the noble Lord, Lord Wynne-Jones, and, 1712 again I say, in a charming tone of voice so that one is almost bewitched by the way he does it, that the finances of the Board are very much stronger than the finances of European Ferries; but, knowing the debt of the Board, and when that has got to be repaid, I do not think there is very much difference, as one noble Lord has already said. I think European Ferries are in just as strong a position at the moment to carry on this port as if it were taken over by the Board. I believe, therefore, that these charges are very important. When I looked through the list of charges for motor cars, vegetables and everything else I was astonished to see the difference that would arise if the port was taken over by the Board.
The only other points I have to make concern the wider issues. The noble Earl the Chairman of Committees, said towards the end of the Second Reading debate that the wider issues were mostly for your Lordships' House and not for the Committee. I do not think this is a good moment to change, in the face of Britain's economic and other financial difficulties. Secondly, I think the higher charges which the BTDB would introduce would remove a very competitive brake on charges in the ports industry as a whole, and that is a most important point. Thirdly, if the Board have spare cash to buy the shares, then I should have thought that that spare cash was better employed in developing one of their many ports than in spending the money under this Bill on buying the shares. Fourthly, I think that Felixstowe is a superb yardstick—there has been a letter about this from Mr. Stuart—against which to measure the success of the Board. Here I would add a word to what one noble Lord said, that the Board obviously have a very efficient record and to have a yardstick against which to measure their record would, I would have thought, be healthy and not unhealthy.
I would add one more general point. I do not think the Bill would encourage progress towards national and rational ports reorganisation. When we look over the Channel at Rotterdam we see a ports reorganisation scheme, one of the most powerful port networks in the world. I should have thought that if the Bill does not go through we might aim at a ports network of Ipswich, Harwich and Felixstowe which might rival Rotterdam and its 1713 network and be much more valuable than if the Bill does go through.
For all those reasons, I think it would be wiser—and I fully value the atmosphere of this debate, which has been a friendly and reasonably conducted one—not to pass this Bill. There is terrific world esteem for Felixstowe, so much so that Felixstowe has been obliged to establish a formal port consultancy service. I have its booklet here. The customers have come from Canada, Nigeria, Saudi Arabia, the Sultanate of Oman, Ghana, Greece—and even Aberdeen, which may in the not too distant future, if the next Session is not crowded with legislation, become an independent port on its own. So you see Felixstowe has a great world name.
If this debate were to continue, and the Docks Board could prove that they could produce as good a consultancy system as that, we might be able to think again; but I do not think that they can produce such credentials as Felixstowe has established. I am not tangled up in all the legal material, with which in most cases I do not disagree, but I am putting forward the simple speech of somebody who, quite quietly and firmly, does not agree with this Bill, for the reasons that I have given.
§ 1.47 p.m.
§ Lord CROSS of CHELSEA
My Lords, for a Law Lord, even a retired Law Lord, to speak on a Bill which has such political undertones or overtones as this one perhaps calls for some explanation. As the Master, my noble friend Lord Butler has said, I was a Fellow and I am now an Honorary Fellow of Trinity College, Cambridge, which has a tremendous financial interest in the future prosperity of the port of Felixstowe. I would emphasise that its interest is not simply to maintain the existing flow of traffic there but greatly to increase it, because we have prepared 300 acres of our land for port use there, and at present only 150 acres of it have been developed by the erection of warehouses and so on, and obviously the other 150 acres will be developed in course of time only if the port continues to flourish as it has done in the past, and to expand.
I welcomed the decision of your Lordships' House to give the Bill a Second Reading and send it to a Select Committee, and when the report came 1714 out I arranged for all the transcripts of the proceedings before the Committee, 16 volumes, to be sent to me at home. That is not quite as bad as it sounds because six of the volumes comprised the speeches of counsel, and my experience as a judge led me at once to omit them. I would distinguish between the speeches of counsel and the questions which counsel ask the witnesses, which of course is quite a different point. On the evidence itself, I thought it right not to read one word of the evidence given by Mr. Wickenden, the chairman of European Ferries, because I thought that it might well be—I do not know whether it was or not—that he could not take a purely impartial view of the situation. So I do not know what he said.
I read carefully, I think word for word, all the evidence given by Mr. Stuart, the general manager of the Board, and all the evidence given by Sir Humphrey Browne, the chairman of the Board; and if I may intervene at this moment, I share the surprise which the noble Lord, Lord Reigate, expressed why Mr. Thorogood, who is no longer a director of the Felixstowe company and who was the man who, alleging financial difficulty for the Felixstowe company, negotiated the agreement with Sir Humphrey, was not called by the Promoters.
It baffles me completely to understand that. However, he was not. Then I read, on the other side, the evidence of Mr. Jinks, the chairman of the Port Users' Association; of Mr. Woodhead, who is a prominent shipbroker and has, I should think, an unrivalled acquaintance with the traffic through Felixstowe and through the ports managed by the Docks Board; and, finally, of Dr. Bradfield, the senior bursar of Trinity College. Having weighed that evidence to the best of my ability, I formed without any hesitation the opinion that your Lordships should refuse to give a Third Reading to this Bill.
In view of what was said by the noble Lord, Lord Wynne-Jones, in opening, I must emphasise that I am in no way at all politically notivated. I am not a political animal. If it is not out of order or impertinent for me to say so, I have an impartial dislike of all three Parties; 1715 nor am I in any way opposed to the running of ports, or any other undertakings, by public authorities; nor am in any way opposed to the British Transport Docks Board. So far as I can judge, it is a very well-run undertaking, though I should judge that it is quite big enough as it is. Our objection, as my noble friend Lord Butler has said, is simply that the Board own the Humber ports and Southampton, which are the principal competitors with Felixstowe, and largely at whose expense Mr. Parker succeeded in building up the port of Felixstowe. As my noble friend Lord Butler said, we should have just the same objection if European Ferries owned Southampton and the Humber ports and were then coming along to try to get hold of Felixstowe. My objection has nothing to do with politics, and nothing at all to do with State ownership.
Before I come to the competition point, in view of the misconceptions which I believe are present about this matter, I would say something about what has been called the moral issue. It is said in the Select Committee's Report that the agreement vests the property in the Docks Board. That is wholly untrue. The agreement does nothing of the sort. It is also said that this House is being asked to overturn the agreement. That is absolutely factually untrue. The courts were asked to overturn the agreement and refused to do so, but your Lordships are not. The agreement simply provided that the Docks Board should promote this Bill, and that the Felixstowe Dock Company would support the passage of the Bill and would manage the company's property in a certain way, pending the passage of the Bill. But whether the vesting should take place rests entirely with your Lordships, and with the other House.
Of course, I can understand that if nothing untoward occurred the Board might reasonably expect the Bill to go through "on the nod", so to say, but something very untoward did occur. When the proposals were known, there was violent opposition from the port users, not quite such violent opposition from Trinity College, and then, in due course, European Ferries came along and did what they were perfectly entitled to do; they made an offer for and acquired 1716 the shares. I can quite understand that the Docks Board are very annoyed at that, and I can sympathise with their annoyance, but how they have any moral claim to ask your Lordships to pass this Bill, if you do not think that it is in the long-term interests of the port of Felixstowe, simply passes my comprehension.
If I may come to the subject of competition, the simple question that I ask myself is this. If the Board own Felixstowe are they going to be actuated by the same single-minded desire to further the growth of Felixstowe, even at the expense, if necessary, of the traffic through the Board's other ports, which actuated Mr. Parker when he was running the company? I should have thought that the answer to that was quite plainly No, and I would illustrate that by some references to the evidence given by Mr. Woodhead, the ship broker.
Among other activities, he is concerned in shipping contracts, in shipping British Leyland cars from Coventry to Canada—to the St. Lawrence and the Great Lakes. There are only, in effect, three ports which have the capacity to deal with the quantity of cars involved; they are Newport, Southampton and Felixstowe. Quite plainly, Felixstowe is not a natural place through which to export from Coventry to Canada. You have to drive the cars right across England and then take them down the East coast and through the Straits of Dover. But, in spite of all that additional transport cost, the people who are buying the cars are, beyond measure, anxiously clamouring to get into Felixstowe and only as a last resort, and, very unwillingly, going to Southampton or Newport. The reason for that, apparently, is that the charges at Felixstowe are substantially less, but much more, I should say from the evidence, is it that the turn-round time at Felixstowe is much less than it is at Southampton and Newport.
Indeed, Mr. Woodhead, at Volume 9, page 19, gave some quite horrific evidence of the conduct of the labour force in the port of Newport which, if true—and it was not challenged—makes me understand the attitude. Then Mr. Woodhead asked, and I agree with him: "How is it conceivable that the Docks Board, if they acquire Felixstowe, are not going to try to alter that situation and get the British 1717 Leyland cars through Southampton and Newport, either by raising the charges or by refraining from providing money to develop Felixstowe still further so that it can take still more cars?" He went on: "But of course they will".
I know the answer to that is that there are these wonderful assurances. But I think one can put too much emphasis on them. It is true that there is an assurance that the Board will not divert traffic from the port of Felixstowe to their other ports. That is somewhat vague language but I see that it might, taken alone, be said to hamper them in not pressing on with the car business through Felixstowe as opposed to Southampton and Hull, and I notice that some of those who were friend lily disposed to the Board were rather worried about these undertakings. The noble Lord, Lord Champion, asked Sir Humphrey Browne at Volume 5, page 38: "But how can you justify giving undertakings of that sort? Is it not grossly unfair to Southampton and Newport and Hull?" And the representative of the Department of the Environment, writing to Mr. Stuart, said at volume 2, page 59—I am paraphrasing—" For God's sake! be careful about giving these undertakings, because they will hamper your proper running of the business."
But I think that the Docks Board and their counsel know their way about the world all right, because it is all qualified. It is all subject to the Board's overall financial policies and objectives. Speaking as a lawyer, I can say that an assurance so qualified is not worth the paper it is written on. No one could enforce it. If the workers at Felixstowe say "We hope to get a fresh dock or fresh facilities for these cars", or "Why are the charges here so high? That is a breach of this undertaking", the Board will say "The overall financial policy and objectives of the Board make it necessary for that to ensue." So that the College—and I think we should listen—are not impressed by the undertakings, though we would rather have them than nothing.
Why, I ask finally, should this House pass a Bill that no one at all at Felixstowe wants? Sir Humphrey Browne was asked by counsel for the Petitioners "Do you know of anybody, other than the Board, who wants this Bill passed?"
1718 Sir Humphrey was apparently completely nonplussed and could think of nobody. If he had had his wits about him, he could have said: the Department of the Environment and the Labour majority in the House of Commons, but that did not occur to him. However, it is quite clear that nobody at Felixstowe wants this Bill. The port users, who are the lifeblood of the port, do not want it; Trinity, which have invested what, for them, is a vast sum of money in the development of the port, do not want it; and it is apparent to me—I thought it was fairly clear on Second Reading, but it is now absolutely clear—that the men do not want it. On the secret ballot hardly anybody could be got to vote for the Docks Board.
It is not unusual, surely, for the official view of an organisation to differ from the private view of the members. May I take an analogy. On the Second Reading the Tory Party in your Lordships' House decided that the Party line should be to give the Bill a Second Reading and, if I may say so with respect, it was a sensible view. But if one had had a secret vote of the Tory Peers it is very likely that the majority of them would have said, No. Similarly, at Felixstowe the Party line is to be neutral, but that does not represent the views of the men. No one who had the chance of talking as I did to the senior shop steward could have any doubt of that. The reason for the difference here between the Party line of the Tory Peers and the individual feelings of the Tory Peers is the fear of the House of Commons. The reason at Felixstowe for the difference between the party line of the union and the private view of the workers is the fear of Mr. Jack Jones. That is perfectly clear.
I still think we live in a mixed economy. Why on earth should not this successful port be allowed to continue as a spur to the activities of the Docks Board? In a letter—it has been referred to, but I will quote the words—which he wrote to Mr. Parker on the 16th December 1975, Sir Humphrey Browne says:Throughout my 15 years in the ports industry in the United Kingdom I have regarded Felixstowe as a standard against which to measure the British Transport Docks Board performance and achievements.Why in God's name—if that is Parliamentary language—should it not continue to be a yardstick and a spur to better 1719 efforts on the part of the Docks Board? Of course, it will be a thorn in the flesh for Mr. Jack Jones. But is it against the public interests that there should be any thorns in his flesh? Perhaps this particular thorn might compel him to use his great influnce to do something to remedy the scandalous state of affairs at the Newport Docks. For those reasons, which I hope I have not expressed at too great length, I ask your Lordships to reject this Bill.
§ 2.2 p.m.
§ Lord BARNBY
My Lords, I am not inspired to emphasise or repeat any of the many figures or technicalities which have been advanced in the discussion on the Bill. We have had, from my noble friend Lord Reigate, a most comprehensive survey to bring us up to date, delivered with great lucidity. Of course, we had with great fluency from the noble Lord, Lord McCarthy, and the noble Lord, Lord Cross of Chelsea, other angles of the matter with which I cannot begin to compete. But my motive in speaking is basically because the Bill is one of nationalisation. I should not like to miss an opportunity, therefore, to add my voice in opposition to this Bill. Naturally, I took the trouble to re-read the Second Reading debate and I was impressed particularly by the elegant and persuasive way in which the noble Lord, Lord Wynne-Jones (who has just left the Chamber), put his case. I was equally convinced by the strong and convincing line put out by my noble friend Lord Gowrie. Since that Second Reading there has not been a great deal of development to change the situation except in so far as concerns the correspondence between Sir Humphrey Browne and Gordon Parker.
I should have thought that that correspondence would not have given much satisfaction to the Socialist side who are not in the habit of supporting increases in prices anywhere. However, that was a substantial angle introduced since the Second Reading debate. I am particularly interested in this subject because, from the early days of the development of containerization—and that port was one of the first ports to bring it in—I have been fascinated about how that inevitably would bring about a great change in all 1720 ports throughout the country and indeed throughout the world. To deal with a general subject, however, I have often wondered about the fact that the circumstances which the advance of science, experience and research brought about should have resulted in such comprehensive legislation for dockers—evidently a result of political pressure. After all, dockers number only 30,000 approximately while a big industry like the textile industry which has probably lost a couple of hundred thousand people would receive little sympathy in Parliament.
It is that early development from a small port which attracted me so much to the evolution of the port. The House has often been indulgent of the introduction of a personal or human note to a debate, so may I say that I was reminded of a visit made a good many years ago to the Port of Felixstowe. After I had had lunch with Gordon Parker, he then said: "It is a curious thing, you know, my father who was a large Eastern Counties farmer told me when I was a very young man to go to Bradford to sell the products of our not insignificant wool clip. I went there in trepidation as a young man and my first port of call to any firm of potential buyers was to (Barnby's) my family firm". He apparently met my father and had a happy negotiation. When he got home, his father said to him: "Well you made a very good sale." I instance that only because it is evidence that Gordon Parker, from his early days, by his enthusiasm and his drive built up a private enterprise port that is an example of great imagination, application and determination. My Lords, I am strongly opposed to the principle of nationalisation which is the basic motive of this Bill, and on those grounds and with those convictions I shall vote against this Bill, as I hope will the majority of the House.
§ 2.8 p.m.
§ Lord HAYTER
My Lords, I look at these things from a simple businessman's point of view, if indeed there is such a thing as a simple businessman. I look at these affairs also from the point of view of chairman of a little "Neddy" called International Freight Movement and I am aware, from our colleagues and from our staff, of the high regard which 1721 we hold for the British Transport Docks Board. I look at these things as I speak from the Cross-Benches and I fear that one of the most regrettable things that has happened in relation to this Bill is the influence of politics which has come into it. I disliked intensely the suggestion that the Select Committee was fixed—whether that was an political grounds or not. There has been this air of animosity on both sides in this case which I think was quite unnecessary.
I do not want to expatiate on the good qualities of the British Transport Docks Board or indeed on the original Felixstowe Dock and Railways Company, but the Docks Board have increased their share of their seaborne freight from 20 per cent. to 25 per cent. in the last six years. Their surplus has risen from £7½ million to £12 million. They are self-financing. They have got cash. Curiously enough, in relation to my own personal friend who spoke just now, the noble Lord, Lord Barnby, it was he who asked a question last year in requesting the noble Lord, Lord Jacques, to give the announced profits or losses for nationalised industries for their last reporting years. In reply to that question, he received an answer which demonstrated that out of the 15 industries which were quoted, only four showed profits and that one of them was the British Transport Docks Board. I will not expatiate on the work that they have done in the variety of harbours around the country that they have looked after: Hull, Fleetwood, Grimsby, Lowestoft. In anybody's terms, from a business angle that is an excellent record.
Reference has been made to the industrial relations problem. Industrial relations have been bedevilled by some very curious manoeuvres, but I feel certain that the record of the British Transport Docks Board in relation to their other docks will be true in this case as well. From a business man's point of view, I cannot help pointing out that they have 11,500 employees and a headquarters staff of only 200, which includes both their computer and their research staff.
Speaking from this fairly detached point of view, it is a matter of very great regret to me that in this debate today we have not had the advantage of hearing the noble Lord, Lord Goodman, who spoke so eloquently at Second Reading. Despite 1722 what anybody else says, I feel that there is the question of—I was going to use the word "morality" which has been bandied around but perhaps "business integrity" is better and the unacceptable face of capitalism which seems to me to be emerging from some of the issues that we have been considering today. For example, I was interested to observe that all the newspapers, which had received a handout from the European Ferries side, quoted Sir Humphrey Browne's letter and that some, but not all of them, omitted, obviously quite purposely, the word "truthfully" which made the whole sense of his letter. I dislike intensely the fact that in today's Daily Telegraph the best part of a quarter of a page, written by their shipping correspondent, is devoted to this issue. What a coincidence that their shipping correspondent thought to bring it out today. What a coincidence that he also has fallen into the trap into which the noble Lord, Lord Reigate, fell of reading one part of the correspondence but not the other.
As reference has been made to Sir Humphrey Browne's letter, and as the noble Lord, Lord Reigate, quite properly, in my view, omitted the political references in Sir Humphrey's letter, I shall do the same when reading the reply from Mr. Gordon Parker. However, to get the record straight, Mr. Gordon Parker said:Dear Humphrey, Yours to hand this morning. I shall be in Felixstowe on Monday and will see what can be done".He was there referring to the question of raising prices. He continued:Your comments are pertinent".Then there is a political reference which I will not read. Mr. Gordon Parker continued:This half of the year is usually a poor one and we look up in January to June, but there is no doubt our charges are too low in the light of inflation".In other words, Sir Humphrey had made his point.
If I may return to the question of business integrity, I find that it is difficult to explain, not to my business friends but to other friends when discussing the matter, how I should have thought the average businessman would regard these matters. There is a quotation from the notes which some of your Lordships have:Apart from the need for the Bill to extend the British Transport Dock Board's powers and duties, 1723 the deal was concluded by the vote at the Extraordinary Meeting".That is to say, from a business point of view the matter was solved.At no time during the period when the BTDB's offer was before the Company's stockholders was any counter offer put forward.In business parlance, that would be the only time when anybody could make an opposing bid.Seven weeks elapsed between the announcement of the BTDB offer and the EGM when shareholders voted in favour of it, during which European Ferries made no move. Indeed several months passed before they came in".To my mind, that is too clever by half.
When it came to the legal side, where they were trying to resist what they should have accepted as an accomplished fact, they went to the courts and twice they were turned down. Who could contradict the comments of the Lord Chief Justice? He saw, I am sure, the way the other side were conducting their case. If, by any chance, this Bill does not go through, I sometimes wonder what will be the attitude of the unions and other associations which will be dealing. with the then Felixstowe Dock and Railway Company owned by European Ferries. I wonder what credence they will give to any agreement to which they want to put their names.
There is a conflict of interest here between a shipowners company which is experienced in ferry operations rather than as the operator of a port. I was slightly involved with the noble Lord, Lord Butler of Saffron Walden, at Second Reading when we discussed the argument of whether size was good in itself. Since the British Transport Docks Board have made such a success out of the ports they have managed, particularly Southampton, I should have thought that there was every indication that they would make a success of Felixstowe, bringing success not only to the Board but also to the employees at Felixstowe.
Speaking again as a simple businessman, one of the dilemmas in which we find ourselves is that we have turned over this issue to a Select Committee. I wonder why we did that? Surely it was because the issues were complicated. A great deal of evidence was taken to which much thought had to be given, and we expected 1724 to get from that Committee a report. And we have received their report. How odd, therefore, it is to get different versions from the various members of that Committee—not that I object to that, except that it vitiates the whole concept of the Committee.
I believe that it is useless for us to follow the noble Lord, Lord Cullen of Ashbourne, who waded through the whole of the Committee's report. Why bother to do that? If one sets up a Committee, I believe that, unless there is an extremely good reason for not doing so, one must accept their view. In those circumstances, I shall be supporting the Government in the Division Lobbies.
§ 2.18 p.m.
§ Viscount SIMON
My Lords, I am very happy to follow immediately after the noble Lord, Lord Hayter, because with his last remarks I could not agree more. As I have sat through this debate I have become more and more convinced that your Lordships' House is not the place in which one can discuss effectively issues of this kind. In a moment I shall come to the political issues which I am afraid underlie a great deal of the discussion, but the essence of the Select Committee was to examine the proposals of the British Transport Docks Board in relation to the port of Felixstowe from the point of view of the national interest.
It seems to me that in the normal course—and I was rather surprised that the noble Earl the Lord Chairman of Committees did not emphasise this a little more—we accept the recommendations of Select Committees. If we did not do so, I wonder how many noble Lords would agree to serve on Select Committees if all their decisions were to be mulled over again in the House? One recognises that in this case the Committee decided by a majority, and perhaps that makes a difference, but it is the Committee who hear the evidence and who can question and cross-question people. How are we, sitting in this House at Third Reading, to assess the position? I am sorry that the noble and learned Lord, Lord Cross of Chelsea, is not here, because I believe that noble and learned Lords who sit as judges would agree that in a court of appeal the judge would never seek to controvert anything except a point of 1725 law because he has not heard the witnesses and has been unable to form his own judgment as to the value of the evidence.
It seems to me that the Select Committee have quite properly sized up the evidence. There was a difference of opinion but by a majority they came down in favour of the Bill going forward. I feel that there should be a very strong reason put forward before your Lordships reject that recommendation. However it is quite clear that we have been asked this afternoon to speak about the merits or demerits of the Bill, and so I must turn to that subject.
First, I want to make it clear that I am speaking from this position because I differ from a number of my noble friends on this issue. A number of them, and a number of noble Lords sitting on my left, undoubtedly take the view—and they have expressed it quite frankly—that any private enterprise is better than any public enterprise. Therefore they object to public enterprise on principle. I would say to my noble friends who are here that I regard that as a doctrinaire attitude; it is the very attitude which we and noble Lords on the Conservative Benches rightly criticise the Government for adopting on other occasions. I believe that we should look at these questions strictly on their merits. When I was speaking on the shipbuilding and aircraft nationalisation Bill I think I mentioned that I tried to look at these things objectively, although we believe—and I believe—that the public sector is getting too large. But, when it comes to an adjustment of this kind, I think those issues hardly arise.
For example, the noble Lord, Lord Reigate, said that the boundary always seemed to be moving in the direction of more nationalisation. I expect he is not aware that since the British Transport Docks Board was established two quite sizeable ports have been transferred from the British Transport Docks Board into the other sector. One was Grangemouth, a very important port on the Forth where the B.P. oil refinery is situated, which is now part of the Port of Forth Authority, and the other was Hartlepool, which is now part of the Tees Authority. So, my Lords, it has not always been going in one direction.
§ Lord REIGATE
My Lords, if the noble Viscount will allow me to intervene, 1726 I should like to say that I was not of course speaking of the British Transport Docks Board; I was speaking nationally.
§ Viscount SIMON
My Lords, I recognised that the noble Lord was speaking nationally. I just thought that I would put the record straight so far as the British Transport Docks Board was concerned.
§ Lord DRUMALBYN
My Lords, can the noble Viscount tell us the year in which those two ports were detached from the British Transport Docks Board?
§ Viscount SIMON
I am sorry, my Lords, but I cannot do that because I do not carry the information in my head. I agree with the noble Lord, Lord Reigate—and here I think I differ from the noble and learned Lord, Lord Stow Hill—that the agreement about which there has been so much discussion is rather irrelevant. As he rightly said, it was an agreement by the Felixstowe Docks and Railway Company to support the British Transport Docks Board in promoting the Bill. As the noble Lord, Lord Reigate said, of course anybody is entitled to petition against the Bill, except, I venture to think (and here I think the action was questionable) the Felixstowe Docks and Railways Company because they had entered into an agreement not to do so, or rather to help the promotion of the Bill.
I think the noble Lord, Lord Cullen of Ashbourne, would have a view to express on this; I believe that noble Lords on those Benches would not wish it to be said that if a company comes along and takes over a company it can immediately appoint a new board and tear up the agreements that the original board had made. I think it is highly questionable whether that company should have petitioned against the Bill. However, that is by the way. The question is, what are we to do? Many noble Lords have spoken with great admiration—which I share—of the tremendous efforts of Mr. Gordon Parker and his colleagues in building up the port of Felixstowe. It has been a splendid achievement, but Mr. Gordon Parker has said that he cannot carry it on, so what we really have to decide is whether it shall be carried on by the British Transport Docks Board or by European Ferries.
If we look back over the last 10 or 15 years it is rather interesting to find that 1727 there has been a lot of criticism by both Conservative and Labour Governments and by the National Ports Council, the independent body that looks over the general policy of the ports, that some of the public trust ports were unduly under the thumb of some of the shipowners. I did not always agree with that criticism because I thought it was sometimes overstated, but there was a certain measure of truth in it and I think the disaster which befell the Mersey Docks and Harbour Board—which noble Lords w ill remember—was almost certainly due to the fact that the shipowners had too much influence in the running of the port. Here we have the suggestion that one shipping company should be responsible for running this national port. I know that European Ferries already run the port of Larne in Northern Ireland, but that is a small port dealing with roll-on and roll-off traffic, a great deal of which comes from European Ferries themselves. I feel that there is a real objection in principle to a port of this importance—and we hope of growing importance—being run entirely by one firm of shipowners.
Several noble Lords, including the noble Lord, Lord Butler of Saffron Walden, have told us that the port users are unanimously in favour of this Bill. I read in a leading article in The Times today—I would not call it a statement but an expression of opinion—that naturally shipping lines would clearly prefer European Ferries to run the port. I wonder what is the evidence for that? I should have thought it was much more likely that shipping companies which were contemplating running a service from Felixstowe would be dissuaded from doing so if they knew that a competitive shipping company owned the port. I should not have thought there was any evidence for the fact that shipowners were of that view.
In fact, I have been told that, although the port users' committee, which is an unincorporated body, have expressed the view and indeed launched a petition, the petition was not joined by any of the shipping companies which were using the port. It seems to me that the difficulty here is whether European Ferries have the management expertise to run this port as effectively as the British Transport Docks Board.
1728 I should now say a few words about the subject of charges. Here I think the noble Lord, Lord McCarthy, put his finger completely on the situation. There are many businesses in this country which during the years of inflation have had the greatest difficulty in fully appreciating the need to set aside sufficient funds to cope with the replacement of their plant and machinery, and noble Lords will know the discussions that have been going on in the accountancy profession about this. A business that was growing as rapidly as Felixstowe, I am quite sure, was charging less than it should have charged and was not making this provision. It was when the company came up against that situation that they felt it necessary to go to the British Transport Docks Board and try to make some arrangement with them.
I think that explains entirely why the charges have been increased and will require to be increased further. It is the question of providing for the replacement of plant and machinery. When the noble Lord, Lord Reigate, remarked that the company was not in such a had way because its turnover and profits were increasing I would only say that in days of inflation if your turnover and profits are not increasing you are going backwards.
§ Lord GRIDLEY
My Lords, has the noble Viscount any evidence for the statements he is making about the accounts at Felixstowe and for justifying the fact that a statement which the company was satisfied with—and was able to meet all its needs—was, in his opinion incorrect?
§ Viscount SIMON
My Lords, I am not sure I fully understand the question put to me by the noble Lord. If I appeared to be making a statement as though I were an auditor, I was merely expressing what I thought was almost the position, because it is the position of so many other companies. Doubt was expressed as to why Mr. Gordon Parker thought it necessary to approach the British Transport Docks Board for help. As has already been said, he did not give evidence to the Select Committee, so we cannot be sure, but I suggest it is not at all unlikely that that is the situation.
I wish to say a few words about competition. I was a little surprised by what the noble Lord, Lord Cross of 1729 Chelsea, said about competition. The main competition with Felixstowe has been that of the Port of London Authority, the Medway, and Dover. The competition between Felixstowe and Southampton or the Humber is relatively unimportant because they are so far away. I must say I do not feel that if the Docks Board acquired the Port of Felixstowe they would divert the traffic in motorcars secured by Felixstowe to Southampton; I cannot see any point whatsoever in their doing that.
The noble Lord, Lord Barnby, asked what had happened since the Second Reading. Here, I would follow the noble Lord, Lord Hayter, in saying, with great respect to the noble Lord, that what has happened since Second Reading is that the Select Committee have sat and have examined the whole problem. The Select Committee have reported to us that the Bill should go forward. On these grounds, I hope the House will give the Bill a Third Reading.
§ 2.32 p.m.
§ Lord DRUMALBYN
My Lords, the House will have listened with great interest to the noble Viscount, Lord Simon, who has been the chairman of one of our larger ports, if not our largest port, and his views on which of the two parties is the better to run the port of Felixstowe. Before I come to that, however, may I deal with one or two points regarding the relationship between the agreement and the Bill.
My Lords, the question we have to ask is: Would the public interest be better served if the Bill is passed? The noble Lord, Lord McCarthy, is not in his place at the moment, but as he said, this is a matter of judgment, and, I submit, a matter of judgment for each of us. I do not agree with the noble Lord, Lord Hayter, that we should necessarily agree with a three to two majority in the Select Committee on a matter of this kind, much as they have contributed to the understanding of the issue.
As to the agreement, I have studied this very carefully and it seems to me it has three purposes: first, to ensure continuance of port activities in the practical course of business by the company until the fate of the Bill was decided. That is now being done, and has been done since the agreement was signed. Secondly, 1730 to join in promoting the Bill, a point which my noble friend Lord Reigate dealt with in a brilliant speech. As he said, that is a matter for the parties. Thirdly, to record the assurances given by the Docks Board. That is a matter for the future. The Bill provides for vesting and payment to ordinary stockholders. It is not true that we are faced simply with an agreement or contract. We are faced with a Bill, and we have to decide whether or not the Bill is in the public interest.
I should like to say just a word about what transpired in the time running up to the offer made by European Ferries. I would suggest to your Lordships that the parties to the agreement knew, or ought to have known, the following things: first, that though no other prospective purchaser was in view, it was possible at any time for a higher bid to be made. Secondly, that the Stock Exchange rules did not favour, as my noble friend Lord Cullen of Ashbourne said, the kind of shutting-out bid the Board attempted to insist on. Thirdly, that stockholders who accepted the Board's bid were perfectly at liberty to withdraw their acceptance at any time until the bid became unconditional. That cannot happen in the circumstances of the case unless and until the Bill is passed by both Houses. Fourthly, that while under the agreement the company undertook obligations up to the passing or rejection of the Bill, and the Docks Board undertook to promote the Bill, the assurances given by the Board could not apply unless the Bill were passed. They could apply only after it was passed. In short, the important thing to realise is that the agreement, while enforceable, no doubt was in part short-term and in part conditional. Once the Bill is passed, as I see it, Clauses 1 and 3 will be spent; so that we are really talking for the future about the remainder of the agreement.
In March, European Ferries came on the scene, a company which had a major interest in the good running of the port. It had a perfect right to make a bid. Individual shareholders were entitled to accept that bid. I share the belief expressed, that at that point the Docks Board should have withdrawn, as any other contender who is outbidden has to do. But they did not do that. They say they believe in competition. If the 1731 Docks Board believe in competition, then either they should have increased the bid, or withdrawn. Clearly, European Ferries would not have made their bid at all unless they intended to oppose the Bill. Therefore, I cannot see that there is any force in the argument that they did wrong in opposing the Bill. If there is anything wrong then, as has already been said, it is a matter for the courts.
§ Viscount SIMON
My Lords, I did not mean to suggest, and I do not think I did, that European Ferries should not have objected to the Bill. I suggested that the Felixstowe Dock and Railway Company should not have objected to the Bill.
§ Lord DRUMALBYN
My Lords, I accept that, with the proviso that, of course, European Ferries hold a 97 per cent. interest now in the Felixstowe Docks Board. Whether your Lordships think the Board was right or wrong to proceed, your Lordships have to face the situation as it now is. There are two contenders. One then has immediately to insist on asking: What is the point of subjecting such Bills to Parliamentary control? The answer must be: to determine where the public interest lies. The "public interest" may be a vague concept, but it obviously includes at all times the interests of the community immediately affected, the interests of national trade, and the welfare and wellbeing of the nation. Where there are two contenders clearly it also includes, as the noble Viscount, Lord Simon, said, consideration of which of them is likely to contribute more to their interests. Of course, these are matters of judgment. I humbly suggest that each of your Lordships has to make up his own mind, and vote accordingly. I am bound to say that the members of the Select Committee had to do the same and, as I have said, the outcome was as closely balanced as it could have been.
What is the main public interest at present? Surely it is to curb inflation, to improve the balance of payments and to reduce unemployment. Which of the two contenders is likely to produce the more efficient services at a lower cost? I do not think it is seriously challenged that the rates at Felixstowe are lower than those 1732 at the 19 BTDB ports. I recognise that the rates vary because of the different types of traffic handled, but if you compare like with like I do not think you will find that Felixstowe rates are as high as the BTDB rates. Secondly, I think it is accepted that European Ferries, whose traffic accounts for 25 per cent. of the total traffic of the port of Felixstowe, have an interest in keeping rates low, but not so low that the port will cease to be useful to them. I do not believe anybody dare dispute that the Board has already tried to get the company to raise its rates substantially, and is, therefore, likely to raise the rates to a level more in line with those prevailing at its other ports. I doubt whether anyone will dispute that in the five years to the end of 1975, taking 1971 as the base year, Felixstowe increased its total import and export tonnages by over 75 per cent. while the British Transport Docks Board, after rising slightly up to 1973, declined in total tonnage in 1974 and 1975 and finished up below the level of 1971. We hear that they have gone up again now.
§ Lord WYNNE-JONES
My Lords, I am grateful to the noble Lord for allowing me to intervene. I assume that he is aware that Felixstowe virtually does not deal with general cargo. It has no oil import; it has no main imports of that type at all. If one compares the container traffic, the unit traffic, with the traffic in the BTDB ports, one finds that the rate of increase has been higher in the BTDB ports.
§ Lord DRUMALBYN
Yes, my Lords, I was just coming to that very point, and I have already mentioned comparing like with like. In terms of growth and efficiency it cannot be denied that in the 1970s the company has a better record, and one is entitled to ask why. Well, as the noble Viscount, Lord Simon, mentioned, the company has some experience in running the ports, and all experience is relevant in these matters. It has established a very successful service between Larne and Cairn Ryan. The main reason, I suggest, is because it has accommodated itself better to change—this exactly meets the point the noble Lord, Lord Wynne-Jones, has just mentioned: changes in method, changes in the pattern of trade following on our joining the EEC. The next reason is the spirit of all con 1733 cerned with the working of the port. The Select Committee talks of the excellent and reliable record in dealing with the workers and trade unions. To give only one example, may I ask whether the relations with workers in Hull have been excellent? But, however good the record may be, and I would not disparage it for a moment, can it compare with the unique record at Felixstowe?
§ Viscount SIMON
My Lords, does the noble Lord really mean "unique" in its proper sense? My own feeling is that there have been very good labour relations in Felixstowe and in many other small ports in the country. The real difficulty with labour relations in the ports has been in the large ports, not in the small ports, which have uniformly excellent relations.
§ Lord DRUMALBYN
My Lords, I do not think Felixstowe is a small port in that sense. But I accept the correction of the noble Viscount; I used the word perhaps loosely. Because of the single-mindedness of the company, backed by the users of the ports, it has provided ancillary services, such as to Trinity College and the local authorities. This is another of the reasons why this port has proved so successful.
I do not want to detain the House more than I feel is absolutely necessary. I want to finish on these lines. I was going to deal with the assurances, but I think they have been very ably dealt with indeed by the noble and learned Lord, Lord Cross, and I need not add anything to what he has said. The noble Lord, Lord Wynne-Jones, said that the agreement—which, as I have said, is to some extent conditional—might be regarded as an endangered species. He said that on Second Reading. Is not private enterprise the real endangered species? If, as he said, the private companies account for about 12 per cent. of the tonnage in the country, what happens if 6 per cent. is now removed by the Bill, and what is going to happen to the rest? Are the wishes of the dock users, both here and abroad, and of others concerned with the welfare of the port, which has had such a beneficial effect on the wellbeing of Felixstowe and the surrounding area, to be overridden? Assurances or no assurances, they support rejection of the Bill.
1734 I have noticed that to some extent the arguments have been comparing British Transport Docks Board as a kind of secure refuge with the slightly less certain future of a body which does not have recourse to the Treasury as the ultimate source of finance. One could put it like this: It is perhaps stability versus initiative. But this is a time when initiative is needed and when initiative has proved to be successful. You should reinforce success and you should back it up. I believe that the rates are likely to be raised. That means higher prices for our exports and therefore loss of competitiveness; higher prices for our imports and therefore higher prices for consumers in this country.
It is worth noting that if the Bill is passed—the point touched on by the noble Lord, Lord McCarthy—the Board will control about 70 per cent. of the short sea unit load traffic between this country and continental ports such as Rotterdam and Antwerp, instead of 40 per cent. as at present. I believe this is an undesirable extension in what is a growing sphere. I have sought to show that if there is a moral issue the arguments do not all lie on the one side. It is not the simple issue that some speakers have sought to make it. European Ferries have shown not only great enterprise but great courage. They are aware of the threat of nationalisation with the usual terms of low compensation. They have preferred to invest in Britain. I support their action.
§ 2.49 p.m.
§ Lord CHAMPION
My Lords, after the bread and butter speeches that we have been listening to for many weeks now, the play between the Parties on the Bills before the House, it has been a pleasure to me to have some of the caviare and champagne of the speeches of the noble Lord, Lord Butler, the noble Lord, Lord Cross, and other speeches that have been made in this debate. They lifted it, it seemed to me, to some extent above the play of Party that we have had during the past few weeks. My Lords, I was a member of this Committee, and I must say that in the whole of the sittings of the Committee I cannot remember a single witness suggesting that the old Felixstowe Docks Company were not in a serious financial plight at the time when the then 1735 chairman of that company made an approach to the chairman of BTD Board. Some witnesses for the Petitioner before the Select Committee asserted that the chairman and the Board had panicked, and that, had they held on, the company could have weathered the financial storm which beset them at that period. That statement we had to assess in the light of what we heard about the quality and general standard of the chairman of the Felixstowe Docks Board. To me it seemed completely unlikely that men of the calibre of Mr. Gordon Parker, Mr. Thorogood, Sir Eric Milbourn were likely to panic.
I am sure that we have to take it that the Felixstowe Docks Board decision to enter into negotiations with BTD Board was the result of the sober appreciation of the position as set out in their letter to the shareholders dated 30th October 1975 when they said:Your Board has to look at its responsibilities to the area around the Felixstowe Dock (which is dependent upon the successful trading and continued development of the Port of Felixstowe) as well as having due regard to the interests of customers, employees, creditors and shareholders.And after a reference to the prospect of an extension of the Dock Labour Scheme to Felixstowe the letter recommended the BTDB offer to the shareholders.
At a subsequent extraordinary meeting of the shareholders the decision was taken by an overwhelming majority to accept the offer, and subsequently there came an approach by European Ferries and the Felixstowe Docks Board issued a Press announcement in which they said that they had met the representatives of European Ferries but would not be able to recommend to their stockholders the conditional terms proposed. They ended by saying:The Directors of Felixstowe Dock remain of the opinion that the continued support for the British Transport Docks Board's proposals and therefore for the passage of the Bill currently before Parliament will best serve the collective interest of all concerned.The noble Lord, Lord Reigate, in a speech of great ability and force, has made much of the point that no director of the old company had been called to give evidence to the Committee. The noble and learned Lord, Lord Cross, said the same thing. I wondered why they should have been called at all having regard to the 1736 fact that we had the written words to the old shareholders, the written words of the old company before us in the form of the letters which were, of course, read out to that Committee.
The noble Lord, Lord Reigate, referred to the fact that European Ferries were wholly entitled to make a bid for the shares. With that I am in complete agreement. They of course did have a right to make a bid for the shares; the bid which they made. But the House will recall the agreement entered into by the Felixstowe Docks Company as set out in subparagraph 3 of paragraph 2 of Schedule 1 to the Bill, which states:The Company will aid and assist the Board in the promotion of the intended Act and in furtherance of this object will supply the Board free of charge such information, particulars and evidence in the possession of the Company as the Board may reasonably require.(3) The Company will also support the promotion of the intended Act by evidence or otherwise if requested by the Board to do so.In a question to Mr. Wickenden, whose company, European Ferries, has secured a majority holding of the stock of the Felixstowe Dock Company and who have petitioned against the Bill, I asked:As something of an innocent abroad in the matter of business operations, is it regarded as acceptable to take over a company and immediately repudiate solemn undertakings given by that Company?I must say that his hedging replies to that and subsequent questions on the same issue I found absolutely shocking. The questions and answers are to be found in the Minutes of Evidence on day 2, pages 50 and 51. It would take too long to quote them completely here, but I recommend them to anyone interested in ethics in the conduct of business in this country. I must further add on the matter of ethics that an attempt to secure some legal justification for the European Ferries action caused the Lord Chief Justice to term what was being used as a "device". It seemed to me that the device was rejected by the Lord Chief Justice in no uncertain terms.
We have heard today, and of course we heard on Committee, quite a lot about the opinion of the workforce at Felixstowe. We heard about the ballots that had been held, the circumstances in which they were conducted, and had doubts cast, understandably, on the actual wording of the questions put to the 1737 employees. Questions can be framed to produce a given result, and I must say that it seemed that some of the questions were framed in that sort of way. I must admit that all on this part of our evidence boiled down eventually to the firm statement by the trade union which caters for the employees that the union preserved a position of neutrality. Your Committee were told a great deal about the excellence of the labour relations that had existed between the workforce and the Felixstowe Company over the period of the development of the port. No doubts were cast by any witness on the impressive nature of the labour relations at Felixstowe, and I am sure that all the Members of the Committee, as I was, were impressed and would regard the situation that existed there as a model to be recommended to other ports and industries.
I formed the opinion that the excellence of the relations existing at the port were due to the good sense of Mr. Gordon Parker and his directors, the arrangements for consultation, and in no small measure to the general feeling in the area as a whole. To probe a little on that aspect I asked Mr. Jinks, chairman of the Port Users' Association, this question:I understand you to say that there is an excellent history of industrial relations at Felixstowe which is unparalelled in other UK ports. The question I want to ask is this: is this not due in large measure to the general industrial atmosphere existing in East Anglia as a contrast to areas where there is a greater tradition of militancy among the trade unionists?A. It may be due in part to that situation. However, I think it perfectly fair to say that Felixstowe is a very self-contained part of quite a large agricultural area of East Anglia. The total area is free of industry. There is relatively little industry in the area and, as I say, the majority is agricultural. Therefore, I think what you have said is perfectly correct, that Felixstowe on its own has been pretty well self-contained. Again a certain proportion of the workforce have come in from outside areas but they have contributed and I think it has been a good thing.What Mr. Jinks said confirmed the opinion I had formed many years ago about that part of East Anglia when I was at the centre of a great national trade union. Most of the areas in which the British Transport Docks Board operates are not, as Mr. Jinks put it, "a very self-contained part of quite a large agricultural area". The general area there is free of the kind of troubles that beset more highly industrialised areas.
1738 It was inevitable that comparison would be drawn between the Felixstowe port's industrial relations and those of the ports of the BTDB. The Promoters of the Bill called employee witnesses from King's Lynn, Southampton, Swansea and Hull, all of whom testified to the excellence of the approach of the BTDB to the problems of satisfactory labour relations. But I found even more convincing the clearly unbiased conclusion of the Select Committee on Nationalised Industries of June 1972, when they reported, in the section on relations with the staff:The uneven nature of its labour relations has probably more to do with the trading situation in individual ports than with the efficiency of its consultation with its employees.The evidence submitted to the TUC was that labour relations are somewhat better in the ports of the Board than in the ports of this industry generally. I personally formed the opinion that, given a continuation of the general climate of opinion in the area as described by Mr. Jinks and the application of the good sense of the BTDB's management staff, there is nothing to suggest a change for the worse in the attitude of the workforce if this Bill is passed.
My Lords, the negotiations leading up to the offer by the BTDB and its acceptance by the Felixstowe Docks Board must inevitably have centred around the general position and around the tactics to be employed to secure the best result for the two major parties concerned. Such negotiations are not, as a rule, conducted in the market place, any more than trade union negotiations are so conducted, and letters are exchanged on a private and confidential basis. One of the letters found its way into the hands of Mr. Heseltine, and from him into the columns of the Sunday Times. The morality of the use of such private and confidential material I must leave to the House to consider.
About the financial position of the Felixstowe company, there is no doubt that the Board of that company were acutely worried about the current performance of the port and were seeking the BTDB's assistance on the matter of charges. Your Committee heard much evidence about he situation existing at that time, about the price of the stock and the port's financial plight, because it was clear that prices were falling behind 1739 costs. I understand that as a result of the help and advice given by the Board the position was restored by the suggestions which were put into operation and have been maintained since by European Ferries.
Just how bad the financial plight of the Docks Company had become is shown by the question to Mr. Wickenden of European Ferries before the Lord Chief Justice and Mr. Wickenden's answer.
The question was:So far as Felixstowe is concerned, I think you accepted in the Parliamentary proceedings that there was very definitely a ground for a view that Felixstowe's charges had become too low in a period of inflation?The answer was:Yes, I qualified that quite severely—not because of inflation, they had become too low in an independent capacity because they were not building themselves up a sufficient reserve fund, which would be prudent for an independent company. I did say that once that company became part of a larger organisation, whether it be BTDB or European Ferries, then that undercharging element was removed.He was then asked:You mean it could be carried by the other activities of the larger group?The answer was:Yes. The only reason that Felixstowe was undercharging was that if a trade recession came along it simply had not got the resources to stand up to it on its own. As soon as it became part of a larger organisation which could afford to take a longer view, that worry was removed.Then there was the question:if the larger organisation was prepared to subsidise Felixstowe's low charges out of profits from elsewhere—Reply:No, it was not a question so much of profits as of cash flow …The answers by Mr. Wickenden make the position quite clear, even in the eyes of the opponents of the BTDB. Mr. Wickenden's assessment of the position was underlined by Mr. Hill, a financial witness, who testified that the Felixstowe Docks had had this great development. "It has been a success", he said. But he went on:However underlying that it has not been a commercial success, and in the sense that it has got itself into a position in which it cannot go forward, it is really a crisis problem.The Committee had the Instruction of the House and, as the special report of the Select Committee indicates, a great 1740 deal of the time of the Committee and of counsel and therefore the witnesses was devoted to the possible effect on competition in the docks industry by a transfer of the Felixstowe Docks to the British Transport Docks Board. The conclusion of the majority of the Committee is shown in paragraph 7 of our report. It is to the effect that the acquisition of the Felixstowe Docks by the BTD Board could only make a significant impact on the Board's share of the market in respect of some aspects of the East Coast trade; and even in this area the Board would not be in a position to dictate terms to the rest of the market.
That was, I think, to overstate the possible, especially if proper stress is not laid on the words, "could only", for we heard nothing which would seem to indicate that the Board would use its position to direct traffic away from Felixstowe, but rather, it seems to me, it would by a considerable capital development seek by fair competition to attract traffic from, for example, the expanding Tilbury Docks. Also, it would use internal competition, which on all hands it seems to be agreed the Board fosters between its own ports. It will, of course, foster competition on a fair basis.
I cannot imagine men with the commercial acumen of Sir Humphrey Browne seeking to divert traffic away from a highly successful port which it is pledged to use considerable capital resources to develop; and that is part of the reason why the takeover is so important in the case of this dock—because the old company did not have the necessary resources to do precisely that.
My Lords, the Rochdale Report, at paragraph 51, says:The argument for diversion tends to ignore the fact that trade was attracted to a port in the first place and remains there for good economic reasons. Diversion may, while affording some relief for the port, create economic difficulties for trade".I cannot imagine that this Board, which is now seeking by the promotion of this Bill to obtain the ownership of this port, would do anything so stupid.
The attitude of the Board, as expressed by Sir Humphrey Browne and Mr. Stuart, the general manager of the Board, could be summed up in the words used by Mr. Stuart on Day 2 at Question 7, when he answered a question by counsel for the Petitioners. The question was: 1741It is suggested in various ways, at various times, by various people, that competition will be reduced; that the competitive position of Felixstowe will be decreased …The answer was:… the Board's policy is to allow competition between their ports, quite apart from looking at the outside world, competition between the Docks Board's ports. Our philosophy here is that if we did not do that we would lose all the kind of local initiative and local enthusiasm, and we would also lose business overall, because if you put a straitjacket on enterprise and you lose enthusiasm, ultimately the whole business declines. Our policy is that the competition should be partly on service, quality of service, the way in which you can do a particular job, the sort of facilities you can provide, and partly on price. On price our only limitation is this: we do not see that there is any sense in one of the Docks Board's ports competing with another by reducing its charges to a potential or actual customer to a level at which the proper costs of providing the service are not covered".The next question was:You are saying that you do not allow your ports to make a loss simply to catch business?",and the answer was:That is right".I understood the noble Lord, Lord Reigate, to say that there was no reference to price in the Board's witnesses' evidence, but the position is quite clear that in answer to that question they made a reference to price, as they did in a number of other answers to questions that were put to them.
Mr. Stuart gave a concrete example of how competition between their own ports works. He said that a user of the Southampton port,showed an interest in moving to Cardiff because the cost to him would be lower. However, he could not move to Cardiff unless the Docks Board provided facilities at Cardiff to him to store his fruit. So there not only was a question of simple movement from one side to another: the Board had to make a decision to invest capital in Cardiff to allow the customer to move. This indeed is what we did, even though the traffic was lost to Southampton. We did it because of this philosophy I mentioned earlier: that if a customer chooses to go from one port to another and we can service him at that other port, then he should have that choice.On internal competition, the Report of the 1972 Select Committee on the Nationalised Industries concluded:The Board's overall record in competition with ports elsewhere is an index of its managerial and technical skills. Your Committee see no reason to doubt its general efficiency and the basic correctness of its operational policies.High praise indeed from a Committee not normally known for tenderness towards 1742 the nationalised industries and which does not pull its punches when it finds something to which the attention of Parliament and the public should be drawn! Perhaps I should add that the Committee had evidence to the effect that the addition of Felixstowe Docks to the Board's ports would by no means create a monopoly position or, in the words of the E.E.C., a dominant position in the United Kingdom; for its share of the tonnage would be 23 per cent. and 30 per cent. in value of the ports industry as a whole.
My Lords, to conclude, I think it is a great pity that this Bill comes up for its Third Reading in this House in a particularly charged period politically when there has been a great deal of discussion against nationalisation and nationalisation proposals. It has partly resulted from the pressure of the overspill and the fact that we are all operating under time pressures which are not to the benefit of sober discussion and debate. I regret very much that the whole House could not have heard the whole of the case as presented to the Select Committee that I and my colleagues sat on for 32 separate Sittings—and, of course, we had meetings apart from that. I regard it as part of the job of a Select Committee on Private Bills hearing evidence, not merely to listen to the words of the witnesses but also, as used to be my practice in court, to try to assess their ability and grasp of the subject, their standing and, perhaps, above all, their character.
As a result of that, plus the evidence which is there for all to read, I emerged from these 32 or so separate Sittings of the Committee feeling that Felixstowe, the town, the whole area, in joining with BDTB will join an organisation whose record over the years has been such that the efficiency and managerial skills of the Board and its officers were never questioned before your Lordships' Committee. They are outstanding in this particular field. The evidence given to the Committee was on all counts overwhelmingly in favour of the Bill now receiving a Third Reading.
§ 3.17 p.m.
§ Lord BOLTON
My Lords, this is the second time in some three or four months that this House has discussed this subject. In both debates we have heard a number 1743 of eloquent, distinguished and often very highly important speakers on this complex subject. I am not going to waste your Lordships' time by going through all the facts and figures that I have in front of me. That would take two and a half hours, if you were lucky! I shall merely pay great tribute to some of the speakers who have said what I should have wished to say, albeit not so well as they said it. First, my noble friend Lord Reigate put very clearly and factually what I should have liked to put. Then there was the distinguished speech by the noble and learned Lord, Lord Cross of Chelsea, which I thought was quite exceptional, and that of the noble Lord, Lord Wynne-Jones, at the start, who with his usual clarity put his views on this Bill. I should like to take one particular exception to the view of the noble Lord, Lord Wynne-Jones, and, indeed of the noble Viscount, Lord Simon, who both assumed, incorrectly, that those of us who are going to vote against this Bill will do so necessarily for doctrinaire reasons. So far as I am concerned, I am not a political animal and I do not vote in that way.
I have disagreed with a number of speakers, notably the noble Lord, Lord Champion, on prices in particular. It is very clear, and it must have been clear throughout this debate and the last one, that the prices charged by Felixstowe are consistently much lower than those of the British Transport Docks Board. What is more, I also disagreed with him (as I did with other speakers) in the contention that they were not sensible prices. They are sensible prices if you look at the state of Felixstowe Docks' finances. It is a booming, healthy firm. The pricing policy has been successful partly because prices are low. Those low prices must be of complete benefit to the housewives of Britain, regarding imports, and of great benefit to our balance of trade if the prices are low on outgoing goods from the port of Felixstowe. It must have a significant effect on our balance of payments.
I should like to comment on the remarks by the noble Lord, Lord Cross of Chelsea, about the assurances. It is obvious that if the assurances are as effective as they look as if they should be, then Felixstowe will be given a ridiculous position of advantage over the other 19 ports which 1744 they would join. If they are not as effective as that, then those assurances are not worth the paper they are written on. Regarding labour relations, again I respectfully disagree with the noble Lord, Lord Champion, and the noble Viscount, Lord Simon. A smaller enterprise finds it easier to have good labour relationships than a big one. There are many notable exceptions to that in this country. I do not think that we should detract from European Ferries' handling of their labour or the great relations that they have with their labour force by ascribing it merely to coincidental influences.
I place world esteem particularly high on my reasons for opposing this Bill. Felixstowe enjoys—I hope the noble Viscount, Lord Simon, will not disagree with me—a unique position in respect of its efficiency, courtesy and competition. A vast number of teams have been sent from other countries to observe how to make a port work and how to develop it successfully. That says for itself what would take a million words to write in a book.
The affection of the local people is not to be disregarded. Felixstowe enjoys a special place in the affections and esteem of that part of the world. If it were to change to the British Transport Docks Board, part of the personality which has established that affection would be lost. I come back to where I started, which was to say that I disagree with any suggestion that we who are going to oppose this Bill are doing it for political or doctrinaire reasons. The only people who are being doctrinaire in any way are those who are promoting the Bill.
§ 3.23 p.m.
§ Lord GRIDLEY
My Lords, I shall be brief in what I have to say. I am sure that most noble Lords are anxious to vote on this issue. In rising to speak on this Bill and the Report of the Select Committee, I should like to convey our thanks to the Committee for their report and for the labours they have put into it. We should acknowledge that as a debt of gratitude from this House. It is customary to state in your Lordships' House whether one has any interests which might influence one's judgment. I have no interests which are influencing my judgment in this matter. I hold no shares in European Ferries or in the Felixstowe Docks Board. 1745 In your Lordships' House, one often speaks from conscience. I shall do that. I do not intend, as was rather imputed would be the case by the noble Viscount, Lord Simon, to speak because we on this side of the House are on principle against nationalisation. That is not what motivates me to speak in this debate. Conscience sometimes transcends Party line. I am sure that this Bill should not attain a Third Reading. I hope that the House, when the time comes to vote, will reject it.
The noble Lord, Lord Champion, made what I considered was an attack on Keith Wickenden, the chairman of European Ferries, rather impugning his integrity when he appeared before the Select Committee. In that respect I suppose I should declare an interest, in that I know the chairman of European Ferries, Keith Wickenden, and that he is a personal friend of mine and a fellow director of a company, Centralised Audio Systems, of which I am chairman. I have the highest opinion of Keith Wickenden in respect of his integrity, honesty and ability, and while I have been briefed this evening about the issues with which we are faced in this debate, Keith Wickenden himself has made no attempt, no contact with me, to influence my judgment, so the views I shall express will be views which I have come to express myself, and myself only.
I have the greatest respect for the Select Committee of your Lordships' House and for its procedures and while, with respect, I reject some of the Select Committee's findings in the report and some of the reasons given for their judgments, I am wondering whether they were not placed in an impossible position in this matter? They were asked by your Lordships' House to report on whether there would be a reduction in the competitive position of Felixstowe if the Bill were passed. I note that the Committee were of the opinion that there would be no reduction in the competitive position if this Bill were passed; but is not the question of the competitive position a matter of charges, a matter of profits and even a matter of public policy, that is to say, when one is considering public policy, nationalisation? On the question of public policy, the Chairman of Committees, on the Second Reading of the British Transport Docks (Felixstowe) Bill, on 22nd June 1976, said this: 1746A Select Committee of the House … is a quasi judicial body".He went on: A Select Committeeis therefore unable to consider matters of public policy".—[Official Report, cols. 241 and 242.]So I think that in this matter the Select Committee obviously found themselves in some difficulty.
I now come to paragraph 7 of the Committee's report, in which the Select Committee reported to your Lordships:The Committee were not convinced by the petitioners' assertion that the mere transfer of Felixstowe docks to the Board would place that body in a quasi-monopolistic position".And the Committee then went on:More importantly, the Committee accepted that the Board promotes and favours competition"—that is, the British Transport Docks Board promotes competition.
One wonders whether the Committee would have come to that conclusion if certain allegations which have been made by other noble Lords, and which have come to our knowledge and into our possession today, and would have given such a decision had they known of the existence of this letter. I refer to certain correspondence reported in the Press, in the Daily Telegraph and in last Sunday's Sunday Times; the reference to a letter in December 1975 purporting to have come from the British Transport Docks Board, an interested party in this case, urging Felixstowe to raise their handling charges, then at £26 or lower than in any other port, to £36, thereby putting that figure well above Hull at £29 and only just below Southampton at £42. This is not the promotion of competition by the British Transport Docks Board and I assume that had the Select Committee seen this letter they would not have accepted that the Board were promoting competition, as they were satisfied that they would do by what they had written in their report.
There has been some suggestion that because the Felixstowe Docks Board were in some financial difficulty at the time their charges should therefore have been raised. I understand from inquiries that I have made, that it is not true that the Felixstowe Dock Company were in any financial difficulty; and, in fact, an interim statement for the six months to December 1975 reveals that they were showing a profit and that there was an increased cash flow.
1747 I do not know precisely into which category one places the chairmen of our national boards in this country. They hold an honourable position, they are appointed by the Government, I assume that they are responsible to a Minister and that Minister is responsible to Parliament. For many years I was a civil servant, and if ever in the course of my duties I had brought undue pressure to bear on another party in which I had an interest, I would have been sacked. If I had heard nothing else today but this letter of December 1975 from the British Transport Docks Board—improperly written and improperly withheld from the Select Committee—that alone, in itself, would have been sufficient for me to reject the Bill. I hope that the House will do so.
§ Lord GEORGE-BROWN
My Lords, may I just be allowed to make it quite plain that this is not, as it might otherwise be presented, a Conservative Party versus Labour Party confrontation. With great respect, it is not—
§ Lord SHINWELL
But I understand that it is customary to put one's name on the list if one intends to speak during the proceedings. I would have taken advantage of it, and, of course, I have not done so. Why is anybody allowed to take advantage of that custom and not put his name on the list?
§ Baroness LLEWELYN-DAVIES of HASTOE
My Lords, I think it is as well if I explain what the customs of our House are. The noble Lord, Lord Shinwell, is quite right. We have a list. If a noble Lord wishes to speak, by custom we accept that he can do so, in this case after the speaker from the Opposition Front Bench has spoken. As it is extremely late and we have another Bill 1748 to go through, I would beg all noble Lords to act with their customary restraint and let us try to finish this business and get through the next very important Bill.
§ Baroness LLEWELYN-DAVIES of HASTOE
My Lords, I have just explained to the House and to the noble Lord that it is customary only to speak at the end, if one's name is not on the list.
§ 3.34 p.m.
The Earl of GOWRIE
My Lords, we are a self-policing body, but we seem to have got into a traffic jam. I am sure that after my brief remarks noble Lords will be able to make their points. In view of what has been said in this well thought out and closely argued debate, I think it would be naive of me to ignore the virtual certainty that we are proceeding to a Division on this issue.
So while I still hope to persuade a few, at any rate, of your Lordships who may be uncertain about the question, I intend to speak briefly because my instinct is that the majority of the House has already made up its mind and would like the matter resolved. Something in the air, not unconnected perhaps with an extraordinarily impressive turnout for a Friday, and for a humble Private Bill at that, fortifies this instinct. I suspect noble Lords on all sides feel that no ordinary Private Bill is before us, whereby some outside interest or individual propels that interest through Parliament, but that really larger national issues are also at stake here and that the way in which we vote tonight will help define our attitudes and anxieties about them.
Underlying all our discussions of this exciting saga of the Felixstowe Dock are two main arguments. The first is the argument of a particular issue of commercial morality. Was there a binding 1749 agreement between the original Felixstowe Dock and Railway Company and the British Transport Docks Board whereby the Board would take over the company, the present Bill being simply the Parliamentary imprimatur, or seal of approval, on this freely-negotiated commercial agreement? This argument was made much of at Second Reading in his inimitable and fluent way by the noble Lord, Lord Goodman.
Let me say right away that we on this side do not for one moment contest that the agreement was binding. What we insist—and I shall return to this later—is that the agreement was to seek Parliamentary approval for the takeover and that the takeover would be conditional upon it. The speech of my noble friend Lord Butler of Saffron Walden on this issue made me despair. Will one ever be able to get one's Parliamentary performance even within spitting distance of his? It was one of the best speeches on this point and it completely demolished the case against.
The second argument is the argument of a general issue of public and political interest. Should a privately-owned dock company in principle be taken over by an organisation ultimately responsible to the Secretary of State?—the present Bill being the vehicle by means of which such an effective policy of nationalisation proceeds through Parliament.
As I have said, the Felixstowe saga is an exciting one and its ending will shortly be revealed to us. But it has also been long, complex and contentious. I do not for one moment deny that there are other matters for argument and for decision involved, and we have heard many of them this afternoon; but I hope that your Lordships will agree that I have unravelled the principal strands fairly and I should like to confine this final examination on the part of this side of the House to them.
My Lords, I believe that a principal asset of this country is not only the business that we do but the way we do business. This is indeed a moral issue and long may it remain so. Anyone who has been in a position to compare commercial practice in the City of London, and our public and private attempts continually to refine it, with that of foreign financial centres will 1750 know what a priceless asset we have. Even in the awful economic circumstances in which we now find ourselves, our invisible exports, largely the products of the City of London, are saving us from ruin. So we must all be satisfied that the private company involved in this case, the board of the Felixstowe Dock Company, now virtually wholly owned by European Ferries, took over the shares of the old Dock Company, themselves the subject of a bid by the Dock Board, entirely in accordance with the letter and spirit of the universally honoured City Code on takeovers and mergers.
We on this side of the House, as notable speeches from my noble friends Lord Cullen of Ashbourne, Lord Drumalbyn and others have demonstrated, are satisfied that they did so. We feel that this is not really in dispute; that the propriety of European Ferries action was undisputed in the Select Committee in this House; it was undisputed by the noble Lord, Lord Champion, this afternoon; it was undisputed in another place in the words of the Government Minister when he said at Second Reading on the Floor of the House that,European Ferries was perfectly entitled to make the counter-bid that it has made.My Lords, it has also been argued, and today most notably argued by the noble Viscount, Lord Simon, that even allowing for this perfect propriety, European Ferries having become the virtual owners of the dock company were morally bound to promote the Bill now before us, because the original freely negotiated commercial agreement between the old Dock Company Board and the BTDB depended for its realisation on the passage of a Private Bill through another place and through your Lordships' House. With very great respect to the noble Lords I have mentioned and to the special report of our Select Committee, I contend that they have got hold of the wrong end of the stick.
As my noble friend Lord Drumalbyn said, we in Parliament who oppose the Bill are not asking Parliament to break the original agreement. The original agreement was to go to Parliament to seek approval for the takeover deal. This deal—or, indeed, any extension of powers by a body subject to statutory limitations—was conditional on Parliamentary approval under the terms of the 1962 Act. This is 1751 what really answers the aspersions on business integrity which were made today by the noble Lord, Lord Hayter.
Proponents of the Bill have consistently argued that it was only the delay imposed on the Docks Board by their obligation to promote a Private Bill that enabled European Ferries to make their bid at all. My Lords, might it not be precisely this eventuality that my right honourable and noble friends had in mind when, in their wisdom, they promoted their 1962 Bill? This Bill became an Act which noble Lords opposite and their honourable and right honourable friends never repealed and it is still, thank goodness! the law of the land.
Before I turn to the argument of general principle, let me make just one more point on the so-called moral issue. The worst that could be said of European Ferries, in my contention, is that they, as a separate company, did not sedulously subscribe to every word which had already been agreed to by the Felixstowe company which they now newly owned. I contend that in their capacity as a separate and independent company and, indeed, in their capacity as a major port user they were under no moral, let alone technical or legal obligation to do so. They were entitled to appeal to the High Court to stop the Bill's proceedings in Parliament, although I think they were very foolish to do so and I told Mr. Wickenden so at the time.
As we know, the appeal failed and I make not the slightest criticism of the High Court's decision. However, that decision, dealing as it did with a technical matter to do with whether a Commons Amendment justified there being a material alteration to the original agreement, has nothing whatsoever to do with whether the BTDB takeover should be approved by Parliament. I would say with all respect to the noble Lord, Lord Wynne-Jones, and to the noble Lord, Lord Stow Hill, and the noble Lord, Lord Hayter, who all made much of the Lord Chief Justice's decision, that it is quite wrong for them to imply that the decision does have to do with the takeover.
I do not think that I need to remind the House that the most effective lobbying and opposition to this Bill have been undertaken, again with perfect propriety, 1752 by interests altogether separate from those of European Ferries: the other port users, a clear majority of the port's workforce and the hardly dubious institution of Trinity College, Cambridge. On the subject of the workforce ballot, may I say to the noble Lord, Lord McCarthy, and to the noble Lord, Lord Champion, that I feel that they wriggled. They wriggled beautifully but they wriggled none the less.
I come now to the argument of general principle. I suggest that this is the hub of the affair and that this is the area of our proper concern as Members of a sovereign Parliament. We are being asked to consider whether or not the Docks Board should have the powers it must by Statute request in order to complete its takeover proposals. Indeed, we are to consider whether giving it these powers is in our national interest. When we consider this we do so, I contend, as a House, and must do so on the Floor of the House.
Noble Lords like the noble Lord, Lord McCarthy, have made much of the fact that a Select Committee of your Lordships allowed the Bill to proceed; that is, my Lords, to proceed to consideration on Third Reading. I will pass over the fact that the Select Committee was divided on the issue, as the speeches of my noble friend Lord Reigate and the speech from the Liberal Benches of the noble Earl, Lord Grey, have testified. However, I am bound to say that I can remember no precedents for a Select Committee on a Private Bill, with all the expertise and testimony available to it, dividing along political lines.
I will not make much, either, of the—to my mind, at any rate—unfortunate matter of the letter written by the chairman of the Docks Board to the then chairman of Felixstowe, Mr. Gordon Parker, in December 1975. My noble friends Lord Reigate and Lord Gridley referred to this letter. However, I do feel bound to say that the letter appears to us to confirm our anxieties about the degree to which take-over of Felixstowe by the Board will diminish competitive pricing. It has recently been made clear that our anxieties are shared by the previous chairman and founder, Mr. Parker himself. But my main point is that the fact that a Select Committee allowed the Bill to proceed to 1753 Third Reading in no way affects the duty of the House as a whole to determine whether this private company should be taken into public ownership. That, rather than matters in dispute between, as it were, Sir Humphrey Browne in the red corner and Mr. Keith Wickenden in the blue corner, is what concerns us.
As the noble Earl the Chairman of Committees has told us, any such Select Committee, by its quasi-judicial nature, is unable to consider matters of public policy or morality outside the Petitions. In the case of my Instruction through the Select Committee, the Committee may consider competitiveness within the port of Felixstowe itself; but it cannot take into consideration the wider question of competition within all docks in Great Britain. I listened with great care to the speech made this afternoon by the noble Earl the Chairman of Committees, but I cannot see that he has altered the opinion which he gave us so clearly at Second Reading.
Here the issue of public policy becomes clear. It is whether the most successful of the tiny handful of ports outside the public sector should be brought within it. Whatever the noble Baroness may have said at Second Reading, and whatever she may say this afternoon, if that is not nationalisation I do not know what is. If this bad Private Bill is not part and parcel of the bad Public Bills we have been debating for most of the nights and most of recent days, I do not know what is. At least the Dock Work Regulation Bill, with which I am myself involved, and the Aircraft and Shipbuilding Industries Bill have the courage of their own malevolent convictions. The present Bill, backed to the hilt by the present Government, is nationalisation by the back door.
We know that nationalisation of the ports is declared Government policy, whatever muddle the Government's Parliamentary timetable for this year and next has got into; we on this side have read the two 1974 Labour Party Election Manifestos. We know that in August 1974 the first Department of the Environment consultation letter indicated that legislation would be prepared as soon as possible. We know that a document appeared in April of last year saying that all commercial undertakings not already run by public bodies would be transferred into public ownership. Therefore the 1754 process of implementation, in the long term at any rate, is already under way. What we are saying is that this process must be a public process; using that method of public general legislation which applies fair and equal treatment to a general class and which does not travel the underground route of the compulsory acquisition of a single, individual company by Private Bill.
My Lords, what precedent have we for effective nationalisation by Private Bill? If the Government believe in the nationalisation of ports, as they say they do, let them come forward with a Public Bill of implementation for the few private ports that still remain to us. The Government will not do so because they know how unpopular even the remaining stages of this process will be: unpopular not only with our own people but with the international creditors on whose mercy we have come to depend. I close by saying that in my opinion the economic life of the nation owes much to the confidence—
The Earl of GOWRIE
My Lords, I am just coming to an end and I should be grateful if I could conclude my speech because it is getting late. The economic life of our nation owes much to the confidence it enjoys within its own bounds and the confidence it instils outside. There is nothing wrong, I believe, with Great Britain that a dose of success cannot cure. As all are agreed on both sides, the original Felixstowe company was one of the great entrepreneurial and regional successes of the post-War years. It became the model for good industrial relations, quick turn-round, competitive pricing and sheer, glorious bustle not only to this country, but to the industrialised world outside. This challenge has now been taken up by its principal port user, the guarantor of its previous success, in the form of the equally vigorous and fast-growing European Ferries. No wonder that the creator of the Felixstowe miracle, Mr. Gordon Parker, has come to give European Ferries his blessing, as we saw in a letter to The Times on Tuesday.
I have taken special care not to belittle the achievements, nor to underrate the management, nor to ignore the difficulties 1755 of the British Transport Docks Board. The Board has a job to do and does it as well as its framework permits. But it has 19 ports to its fist. Let this twentieth go it alone! I contend that no one in our debate this afternoon has answered the question: why cannot the Docks Board do without Felixstowe? If the Government decree that the Board must own it, let them have the guts to do so in the open forum of the Public Bill procedure. The present Bill is an aberration, and I submit that the House should reject it.
§ The Earl of LAUDERDALE
My Lords, this is the moment to declare an interest. I have been advised by the Officials of the House that I must declare an interest before casting my vote. I am chairman of a company with Parliamentary powers to develop between 200 and 300 acres of mudflats opposite Felixstowe and behind Harwich. So I have an interest to declare. I would in any case have opposed the Bill, but your Lordships will understand that my vote is cast quite openly.
§ Lord GEORGE-BROWN
My Lords, before she replies, would the Minister allow me to say what I have to say rather than doing it after, because I think this has to be said. This is not a Conservative Party versus Labour Party confrontation. Our own people, not just the users of the port (for they are important), but the people who belong to our trade unions are against this Bill. This is a ridiculous situation, where the Labour Government is seeking to force through a Bill which is not just opposed by the old-fashioned owners; it is opposed by the users. It is opposed by the employees; it is opposed by everybody. That is all I want to say. I just want to make it clear that in this respect—and not for the first time—this particular Labour Government is actually acting against the views of everybody who knows what Felixstowe requires.
§ 3.53 p.m.
§ The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk)
My Lords, I think I have the feeling of the House that your Lordships will not want me to spend too long on winding up, although I have a very good 1756 speech which I shall not be delivering. Of course, I appreciate that our legislative role is a different one from that of the courts. I accept that. We have to consider primarily whether the Bill is in the public interest rather than continuing to inquire into the validity of the Agreement. But what can be more in the public interest than that commercial agreements should be upheld when the courts have proved them valid and when there are no other grounds for setting them aside?
My Lords, I have listened, with one exception, to every speech made this afternoon. The opponents of the Bill have raised one obstacle after another. They have raised every conceivable objection to it, and even some inconceivable objections to it have been brought out. Patiently and laboriously, the Docks Board set themselves to answer the objections and to overcome the obstacles. They satisfied the High Court and the Court of Appeal. My noble and learned friend Lord Stow Hill admirably dealt with that, so I will not go into it in detail. They have satisfied the other House of Parliament, and the majority of the Select Committee. After a 16-day marathon, the Select Committee obviously got the ins and outs of the case at their fingertips, far more than the rest of us can possibly do. I say this with the greatest respect to the noble and learned Lord, Lord Cross of Chelsea. It is true that their report was not unanimous, but a majority found for the Bill, and it seems to me that if we set up a Select Committee in this House We should think very carefully what we are doing before we vote against it.
May I briefly quote from what the noble Lord, Lord Lucas of Chilworth, said in 1973, on a Private Bill which was another British Transport Bill as it happens:There is little purpose in your Lordships sending a Bill to a Select Committee and not having trust in that Committee to do the business. If Select Committees are going to do this work on behalf of the House, I think it would be in the best interest of the House to accept their recommendations unless there are very momentous and pressing reasons why it should not.This was the line taken by the noble Viscount, Lord Simon.
Now we come to the Third Reading in this House, and, regardless of all that has gone before, some noble Lords are inviting your Lordships to go back to the 1757 beginning and throw out the whole Bill. Incidentally, in the count that I have done so far, including myself, there have been eight who have spoken in favour of the Bill and 10 against; I think the noble Lord, Lord Butler, is really halfway, because he said he would prefer European Ferries but Trinity College could live with the Docks Board, so I do not count him as wholly against.
If the Select Committee had come to the decision on the basis of nationalization—which frankly seems to be the impression, unfortunately, of many of the speakers against the Bill—it is true that the majority decision could have been questioned. They did not. They obeyed the Instructions scrupulously and they were satisfied that this was in the public interest. What is the case they have against public ownership in this case? And it is no good the noble Lord, Lord George-Brown, coming out again with his phoney figures about the workers. We settled that last time. The Transport and General Workers' Union put out a Press notice dissociating themselves from what the noble Lord has said. So I do not think we need bother about that.
§ Baroness BIRK
My Lords, I am not giving way. Do they really think that public ownership will inevitably lead to inefficiency and financial losses? We know that the Docks Board are remarkably successful port operators who will be ideally placed to build on Felixstowe's success in the future. Do they think that under the Docks Board Felixstowe will charge high prices and be uncompetitive? We know that the Select Committee have vindicated the Board's position on this very point, and my noble friends, Lord McCarthy and Lord Champion, dealt with this so competently and 1758 exhaustively that there is no need for me to delay your Lordships on that.
Do they think that the Docks Board could not enter into a valid agreement with the Felixstowe Company? We know the courts have upheld the agreement between the Docks Board and Felixstowe as being fully valid and binding. Is it not really the case that your Lordships are being invited to ignore the facts that the Select Committee have carefully established? You are being asked to ignore the judgment of the courts.
§ Baroness BIRK
Yes, you are, my Lords. You are being asked to ignore the record of achievement of the Docks Board and to throw out the Bill at this late stage for what is frankly no more than a doctrinaire objection. The noble Earl, Lord Gowrie, let that cat out of the bag very carefully when he came right down to the core of it and said once again that this is nationalisation by the back door. The noble Lord, Lord Reigate, said we all believe in a mixed economy. What sort of mixed economy are they talking about? Of course, the Government have the objective of bringing into future public ownership the commercially owned ports. Nevertheless, surely this should not prejudice this House into seeking to prevent a successful public enterprise from extending its boundaries by agreement with a willing seller. Those who dislike these prospects should reflect very carefully on whether their action in a case of this kind is not counterproductive. It is just as doctrinaire to be passionately against public ownership in all circumstances as to be passionately for it in all circumstances. Both extreme views do not only not benefit our country but they do immense damage to it.
If this prejudice is used to prevent a successful private enterprise from extending its boundaries in this way, what on earth do you want? The noble Earl is saying, "Why don't you come in and nationalise the lot?" Here we are behaving in a completely businesslike way and not forgetting the morality which comes into this. Quite frankly, despite all that has been said, if in the private sector of industry this kind of thing occurred there would be an absolute outcry. I hope therefore, that the House will, 1759 because it seems to me that there is fairly balanced division of opinion, turn aside from what are very much side issues and give the Bill a Third Reading today, which is in line with the procedure in your Lordships' House and really what the
§ Select Committee Report and the behaviour of the Docks Board merit.
§ On Question, Whether the Bill shall be now read 3ª?
§ Their Lordships divided: Contents, 71; Not-Contents, 147.1761
|Aylestone, L.||Gordon-Walker, L.||Pannell, L.|
|Bacon, B.||Gregson, L.||Parry, L.|
|Beswick, L.||Harris of Greenwich, L.||Peart, L. (L. Privy Seal.)|
|Birk, B.||Hayter, L.||Phillips, B.|
|Bowden, L.||Henderson, L.||Pitt of Hampstead, L.|
|Brimelow, L.||Houghton of Sowerby, L.||Ponsonby of Shulbrede, L.|
|Brockway, L.||Jacobson, L.||Ritchie-Calder, L.|
|Bruce of Donington, L.||Jacques, L.||Sainsbury, L.|
|Buckinghamshire, E.||Janner, L.||Shackleton, L.|
|Caradon, L.||Jessel, L.||Shinwell, L.|
|Castle, L.||Kaldor, L.||Simon, V.|
|Champion, L.||Kirkhill, L.||Snow, L.|
|Chorley, L.||Lee of Asheridge, B.||Stedman, B.|
|Collison, L.||Listowel, E.||Stewart of Alvechurch, B.|
|Cooper of Stockton Heath, L.||Llewelyn-Davies of Hastoe, B. [Teller.]||Stow Hill, L.|
|Cudlipp, L.||Strabolgi, L. [Teller.]|
|Darling of Hillsborough, L.||Lloyd of Hampstead, L.||Wallace of Coslany, L.|
|Davies of Leek, L.||Longford, E.||Wells-Pestell, L.|
|Delacourt-Smith of Alteryn, B.||Lovell-Davis, L.||Wigg, L.|
|Diamond, L.||McCarthy, L.||Willis, L.|
|Douglass of Cleveland, L.||McCluskey, L.||Winterbottom, L.|
|Elwyn-Jones, L. (L. Chancellor.)||Melchett, L.||Wootton of Abinger, B.|
|Fisher of Camden, L.||Murray of Gravesend, L.||Wynne-Jones, L.|
|Gardiner, L.||Oram, L.|
|Aberdeen and Temair, M.||Clwyd, L.||Gowrie, E.|
|Abinger, L.||Cornwallis, L.||Greenhill of Harrow, L.|
|Airedale, L.||Cottesloe, L.||Greenway, L.|
|Amory, V.||Craigavon, V.||Grey, E.|
|Ampthill, L.||Craigmyle, L.||Gridley, L.|
|Amulree, L.||Cranbrook, E.||Grimston of Westbury, L.|
|Arran, E.||Cross of Chelsea, L.||Hailsham of Saint Marylebone, L.|
|Ashdown, L.||Cullen of Ashbourne, L.||Halsbury, E.|
|Auckland, L.||Daventry, V.||Hanworth, V.|
|Balfour of Inchrye, L.||de Clifford, L.||Harcourt, V.|
|Banks, L.||De Freyne, L.||Harmar-Nicholls, L.|
|Barnby, L.||De La Warr, E.||Hertford, M.|
|Barrington, V.||Denham, L.||Hinton of Bankside, L.|
|Beaumont of Whitley, L.||Derwent, L.||Hives, L.|
|Belstead, L.||Drumalbyn, L. [Teller.]||Home of the Hirsel, L.|
|Bessborough, E.||Dudley, E.||Hornsby-Smith, B.|
|Bethell, L.||Duncan-Sandys, L.||Howe, E.|
|Birdwood, L.||Ebbisham, L.||Ilchester, E.|
|Bolton, L.||Eccles, V.||Jellicoe, E.|
|Boothby, L.||Elibank, L.||Kemsley, V.|
|Brentford, V.||Ellenborough, L.||Kinnaird, L.|
|Brocket, L.||Elles, B.||Kinnoull, E.|
|Brougham and Vaux, L.||Elton, L.||Lauderdale, E.|
|Burnham, L.||Emmet of Amberley, B.||Leathers, V.|
|Butler of Saffron Walden, L.||Erroll of Hale, L.||Lindsey and Abingdon, E.|
|Byers, L.||Fairhaven, L.||Long, V.|
|Caccia, L.||Faithfull, B.||Lyell, L.|
|Camoys, L.||Fraser of Kilmorack, L.||Macleod of Borve, B.|
|Camrose, V.||Gainford, L.||Massereene and Ferrard, V.|
|Carr of Hadley, L.||George-Brown, L.||Merrivale, L.|
|Carrington, L.||Gisborough, L.||Mersey, V.|
|Chelwood, L.||Gladwyn, L.||Milne, L.|
|Clitheroe, L.||Glasgow, E.||Monck, V.|
|Monson, L.||Reigate, L. [Teller.]||Stanley of Alderley, L.|
|Mottistone, L.||Renwick, L.||Strathcona and Mount Royal, L.|
|Mowbray and Stourton, L.||Robbins, L.||Strathspey, L.|
|Munster, E.||Robertson of Oakridge, L.||Sudeley, L.|
|Netherthorpe, L.||Ruthven of Freeland, Ly.||Terrington, L.|
|Newall, L.||Sackville, L.||Teviot, L.|
|Norfolk, D.||St. Helens, L.||Thurlow, L.|
|Northchurch, B.||Sandford, L.||Trefgarne, L.|
|Nugent of Guildford, L.||Sandys, L.||Vickers, B.|
|O'Hagan, L.||Selkirk, E.||Vivian, L.|
|Onslow, E.||Sempill, Ly.||Ward of North Tyneside, B.|
|Pender, L.||Sharples, B.||Ward of Witley, V.|
|Ranfurly, E.||Skelmersdale, L.||Wardington, L.|
|Reading, M.||Slim, V.||Wise, L.|
|Reay, L.||Spens, L.||Wolverton, L.|
|Redesdale, L.||Stamp, L.||Young, B.|
§ Resolved in the negative, and Motion for Third Reading disagreed to accordingly.
§ 4.31 p.m.
§ The LORD CHANCELLOR (Lord Elwyn-Jones)
My Lords, before the House disperses, may I express my apologies to my noble friend Lord Wynn-Jones? Owing to an oversight I failed to give him an opportunity to address the House at the end of the debate, although his name appeared on the list of speakers. I apologise to him personally and profusely.