Ports (Financial Assistance) Bill (Hansard, 21 May 1981)

§ Lord Bellwin
My Lords, I beg to move that this Bill be now read a second time. This Bill is a measure to provide statutory authority for continued financial assistance to the Port of London Authority and the Mersey Docks and Harbour Company. It has been made necessary by a rapid and unexpected loss of traffic over the last year or so.
To some extent the recession has affected nearly all British ports, but London and Liverpool have suffered particularly serious difficulties since each lost between 35 per cent. and 40 per cent. of their general cargo traffic last year. This loss of traffic follows a period during which the whole ports industry has been radically affected by the introduction of new cargo handling methods—primarily the move to containers—and by changes in the pattern of trade. Both of those developments have been felt particularly severely in London and Liverpool which remain our two biggest traditional general cargo ports.
The central problem facing these two ports at the beginning of this year was a substantial surplus of labour. Even though both PLA and MDHC have, over the last two years, made substantial progress in reducing their workforces, the fall in demand for their labour has overtaken them, so that at the beginning of this year each authority employed almost 1,500 surplus workers, including roughly 1,000 registered dock workers each.
There is no doubt that an essential first step, if the ports are to return to profitability, must be to relieve the authorities of the burden of paying for these large numbers of people for whom there is no work and no prospect of any in the foreseeable future. There was, however, no chance of a rapid rundown in their workforce being achieved without special assistance. As far as the registered dock worker force was concerned, applications for severance under the port industry's National Voluntary Severance Scheme were not coming forward in anything like the required numbers, and the PLA and MDHC had no reserves or other sources of help from which to finance improved severance payments for the registered dock workers. I shall refer to them as "RWDS" each time otherwise I shall be reading out the full description. The Government, therefore, decided in view of this, and of the strategic importance of the two ports, that financial assistance from central funds was needed.
The timing of the Bill has been determined by the certainty that, without the assistance it provides, both the PLA and the MDHC would have had to cease trading in early April. The existing provision for Government assistance would then have been 1017 exhausted—that is the £70 million limit on help to the PLA set in last year's Port of London (Financial Assistance) Act and the £3 million overdraft guarantee to MDHC announced by the Government last December. As the Secretary of State for Transport emphasised when the Bill was discussed in another place, the crisis was an urgent one, requiring an urgent response.
One of the principal purposes of the Bill is to provide funds to pay for the special supplementary severance scheme for registered dock workers in the two ports, which the Secretary of State for Transport announced on 17th February. This scheme was intended as a direct way of tackling the surplus manpower problem. It provided for the payment of supplementary amounts of up to £5,500 to registered dock workers applying for severance during March and April. When added to the normal payments of up to £10,500 available under the industry's own National Voluntary Severance Scheme these supplements gave a maximum payment of £16,000, for a man with 20 or more years' service.
The size of the special supplements, as the period of availability, were decided in consultation with the chairmen of the two port authorities. I am happy to be able to tell the House that, now that the period of availability of the supplements has ended, the final results show that the scheme has been almost completely successful in achieving its objectives. The targets in each port were 1,000 applications in the Port of London and 1,250 in the Port of Liverpool; the figures achieved were 1,057 and 1,313 respectively, thus comfortably meeting the target in each case. This success reflects credit on those who have been responsible for getting the message across in the ports, and on all those who have recognised the importance of grasping this opportunity to take the first step towards recovery of the ports' fortunes. I understand that already about 1,400 registered dock workers have left the two ports, and more will follow shortly.
I do not believe that there has been serious dissent from the view that the difficulties in London and Liverpool required urgent Government action. But concern has, understandably, been expressed about its implications for other ports; and we have been asked by both sides of the industry to make supplementary payments available in all ports. This is to misunderstand the nature of the assistance we are giving. The supplements are a special local arrangement designed to meet an immediate crisis in two ports of national importance. The Government remain firmly opposed to any suggestion of general or open-ended subsidies to ports, and the objective of the help now being given is to ensure that PLA and MDHC can return, as quickly as possible, to a position where they no longer need such assistance.
The Government do, of course, recognise that other ports are facing difficulties as a result of the recession, and also that a number of them have substantial problems of surplus labour. But nowhere else is the scale of the problem as serious as in London or Liverpool, and nowhere else was it the case that, without Government help in achieving immediate manpower reductions, the port had no prospect of survival. The scheme in London and Liverpool has, as was to be expected, led to fewer applications for severance elsewhere as dock workers have waited to 1018 see whether it would be extended. The Secretary of State for Transport has repeatedly made it clear that the special supplements are outside the National Voluntary Severance Scheme and perhaps I should take the opportunity of emphasising that the Government have no intention of introducing similar supplements in any other port nor, indeed, of reviving them in London and Liverpool. I hope that now that the supplementary scheme is behind us, severances elsewhere will begin to pick up again and there is already some evidence that this is happening.
Although the supplementary severance scheme forms perhaps the most dramatic element in the assistance to the two authorities, the Bill also provides for a number of other purposes. Although this Bill provides a limit on assistance to the ports of £160 million, this represents only £87 million of new money; the £160 million figure includes £70 million aid under last year's Port of London (Financial Assistance) Act, and the £3 million guarantee to MDHC. Of this, about half is expected to pay for severances, not only of registered dock workers but also for about 600 voluntary redundancies among other employees of each of the two port authorities. The remainder is to cover necessary capital investment, a number of contingencies, and to enable the ports to continue in operation while manpower reductions and other changes are taking place.
The Bill itself deliberately does not include detailed breakdowns as between different needs or as between the two ports, as it is the Government's intention to keep a very tight control on the amounts actually disbursed to the two authorities, and to maintain a close watch on the purposes for which they are used. Initial cash ceilings have been set for each port, and regular monitoring meetings between the port authorities, our accounting advisers and departmental officials have been instituted. So far £12.6 million has been paid out to MDHC and £8.6 million to the PLA. However, there is certainly no question of the PLA and MDHC being entitled to expect that they will receive even a substantial part of the remainder of the money provided in this Bill without providing us with evidence that, in addition to manpower reductions, the necessary improvements in working practices and methods of operation are also well in hand.
Now that the results of the special severance scheme are known, we are reviewing the case for continuing financial support into the autumn. If further help is given, the next step will be to examine the PLA and MDHC's corporate plans which will be ready in the late summer. These should provide the basis for detailed consideration of the steps needed for a return to long-term profitability, and will be assisted in this work by the two firms of accountants appointed to advise us at the beginning of the year—Price Waterhouse in London and Peat Marwick in Mersey.
I should say something about the provisions of the Bill. Clause 1(1) provides for assistance to be given, first, for measures taken by PLA and MDHC to reduce the numbers of persons employed in their ports, or adjacent ports; and, secondly, for the carrying on of their undertakings while these measures are being taken. These are similar powers to those provided in the Port of London (Financial Assistance) Act 1980, but with extensions to bring in Liverpool and registered dock workers employed in the private sector.
1019 Clause 1(2) enables assistance to be given in the form of grant, loan or guarantee, and provides for the attachment of conditions, including conditions requiring repayment. Clause 1(3), 1(4) and 1(5) cover the new limit of £160 million and the previous payments that count against it, and Clause 1(7) repeals the Port of London (Financial Assistance) Act 1980.
Clause 2 of the Bill raises the limit on borrowing by the National Dock Labour Board. This is necessary, first, to enable the board to meet the payments being made under the National Voluntary Severance Scheme, to those registered dock workers who have now accepted severance in London and Liverpool; and, secondly, to enable them to finance continuing severances in other ports. The new limit of £50 million, which can be raised to £90 million by order, is expected to meet the NDLB's requirements for the foreseeable future.
Finally, in commending this Bill to the House, may I emphasise again that the future of these two great ports lies, to a very large extent, with the PLA and the MDHC themselves, and with those at all levels who work for them. Encouraging steps have been taken, particularly with the success of the special severance scheme, but radical changes still need to be made before the authorities can once again stand on their own feet. This Bill provides the means to carry them through, at least to a position from where a clear path to profitability can be seen; it remains for the ports themselves to show that they can continue to justify our assistance. My Lords, I beg to move.

§ Lord Underhill
My Lords, I am certain that noble Lords will be grateful to the Minister for the clarity with which he has explained this Bill in the manner in which we have come to expect from him. Although this is a money Bill, I should like to raise a number of points. First, the noble Lord has stressed the urgency of the situation, which we, on this side of your Lordships' House, clearly recognise. He has explained that it is due to the problem of overmanning and also to loss of trade. As he said, far too few workers have opted for severance pay, and this must be allied to the problem of these men finding alternative employment in those particular areas. It would be foolish to disregard that fact.
Therefore, one can understand why the Government thought it desirable to offer this additional inducement, and it is encouraging to know that so many of the workforce have accepted the additional severance pay. The noble Lord said that this had been worked out in consultation with the chairman of the two ports authorities. It would be interesting to know whether there had been prior consultation with the general bodies of ports employers throughout the country. It would also be useful to know whether there had been any prior consultation with the trade unions concerned for the whole of the ports industry, because it has a considerable effect.
As the Minister has said, there are other ports which also have this problem of overmanning. As I think your Lordships know, when companies go out of existence—stevedore companies and so on—all the 1020 workers have the option either of accepting redundancy or of being transferred to particular ports authorities. Other docks have had this problem and have also had the problem caused by the trade recession. We know that there are workers in some other ports who have refused redundancy, partly because of the difficulty of obtaining alternative employment in those areas, particularly if they are young enough, for once they have left the industry and their redundancy payment has been used up, they then want work; the redundancy payment will not give them the standard of living to which they are used for very long. They also ask, "What is special about Liverpool and London"? The workers in these other ports argue, "Why is there an artificial distinction? Why should not we also have the advantage of this increased generous severance pay which has been given to the PLA and to the Merseyside docks"? I understand that some requests have already been made by bodies of workers in those particular ports. Although one understands the problems of the PLA and the Mersey docks, it is difficult to justify why this has to be done in London and Merseyside but not in other ports which suffer the same problems and where the workers suffer the same problems.
It may be—and I accept this—that London and Merseyside have larger numbers of workers involved, but proportionately to the workforce in some of the other ports, the problem is as bad. All this, together with what the Minister has said, indicates the problem facing the ports industry. The Minister has explained this, so I shall not go into it again. However, does this Bill do anything about it? It may be argued that this is a money Bill to deal with the urgent situation, but surely there must be the need for a body which is in a position to review the whole of the docks industry and to give advice to the Minister. No matter how eminent may be the two firms of accountants, surely this is an issue which goes far beyond the question of pounds, shillings and pence in the PLA and Merseyside. Surely it is the whole problem of the British ports industry. Although it is not particularly covered by this Bill, the problems are raised because of the reasons for the necessity for this Bill.
What do the Government propose to do in the Transport Bill that will be before your Lordships' House when we return after the Recess? The National Ports Council, which in a very limited way, is able to give advice after reviewing the situation in the industry, is to be abolished, so we shall not have that body to give advice to the Minister on the ports industry. The harbours part of Sealink is also being separated from the shipping part, and there are proposals to change the Transport Docks Board into Associated British Ports; but, in itself, it does not involve a great change and review for the docks industry.
As the noble Lord, Lord Bellwin, has said, other port authorities are facing financial difficulties. I believe the figures are that only one-third of the total capacity of British harbours and docks is at present able to be used by the amount of trade going through them. Therefore we have two-thirds surplus capacity. There is clearly a need for a national docks policy for the docks as a whole, and the matter cannot be dealt with by piecemeal investigation into just the PLA and Merseyside. When your Lordships come to the 1021 Transport Bill, we on this side of the House will be putting on pressure for such an authority to review the whole of the industry and to advise the Minister.
While we recognise the necessity for this Bill, it is not a solution for the industry; it is not even a solution for those two docks alone, because one cannot deal with those two docks in isolation from the rest of the industry. While it is not my place this morning to reverse the arguments that will be put forward when we come to the Transport Bill, these are very important considerations with which your Lordships' House will concern itself.

§ Lord Bellwin
My Lords, to cover the point about consultation to which the noble Lord, Lord Underhill, referred, and although I am not absolutely clear on the point, I understand that consultation did take place with other ports. I do not know the answer to the noble Lord's point about consultation with the trade unions and I will have to write to him about that.
Perhaps not surprisingly—particularly in view of what the noble Lord, Lord Underhill, said—the Government have received a number of representations seeking to demonstrate that other ports have as pressing a case for financial assistance as do the ports of London or Liverpool. I am afraid that is not really so. With the exception of Bristol, which is something of a special case, no other port is approaching the state of bankruptcy which both the PLA and MDHC reached during the first week of April. Even in those cases where losses have been made recently—and I recognise that 1980 was a bad year for a number of ports—financial reserves are still available and surplus labour problems, although significant in some cases, are nowhere near the scale that applies in London and Liverpool. There would be no justification, either on grounds of immediate financial need or in terms of some fabulous national ports authority, for the assistance which this Bill provides being extended to other ports. Of course I am sure that we shall be discussing the broader aspect before too long.
This is a limited Bill, designed to meet an immediate crisis in two specific ports. As the Government have made clear, it provides assistance for specific purposes and there is no question of a permanent or open-ended subsidy to these ports, or indeed to any other ports. The objective is to return both the PLA and the MDHC as quickly as possible to a situation in which they no longer need to rely upon Government support, and this Bill is designed to achieve that end. My Lords, I commend it to the House.