HL Deb 26 June 1991 vol 530 cc580-630

3.23 p.m.

The Minister of State, Department of Transport (Lord Brabazon of Tara)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Lord Brabazon of Tara.)

On Question, Motion agreed to.

House in Committee accordingly.


Clause 1 [Formation of companies for purposes of transfer of certain statutory port undertakings]:

Lord Underhill moved Amendment No. 1:

Page 1, line 14, after ("body") insert ("listed in Schedule (List of Trust Ports)").

The noble Lord said: In moving this amendment it may be convenient for me to speak also to Amendment No. 70, which is the new schedule mentioned in Amendment No. 1. The definition and description of port undertakings is a matter of much importance to this Bill which is concerned with such provisions. Clause 1(1) refers to: Any relevant port authority". Subsection (3) states: 'relevant port authority' means any body which is a harbour authority, other than one within subsection (4)". The Committee will no doubt agree that that subsection hardly answers the question about the definition of a trust port.

At Second Reading my noble friend Lord Clinton-Davis said that we were entitled to know what is a trust port and how many there are. He said: Surely those trust ports which are likely to be affected should be mentioned in a schedule to the Bill. The trouble is that the Government either did not know or deliberately declined to give either those statistics or definitions".—[Official Report, 10/5/91; col. 1294.] I supplemented those remarks (col. 1318) by asking: what are trust ports? No explanation is given in the Bill … there is nothing in the Bill to indicate which ports are covered". I also remarked that I had a list indicating four categories of trust ports covering 116 ports and said that no doubt the Minister had a similar list. That was confirmed by the Minister, who said that he could produce such a list and that there was nothing whatever secret about it. Indeed, he said that it was public knowledge. He stated: I believe that the definition of a 'trust port' is in Clause 1. However, if it is not, that clause contains all the other definitions".—[Official Report, 10/5/91; col. 1327.] The noble Lord can check exactly what was said.

Emphasis was put on the need for a definition. That point was raised quite strongly in the Committee stage in another place. It was suggested that a definition by exclusion enabled the Government to avoid giving a clear answer as to what was meant by a trust port. In the Commons Committee the Minister on that occasion was hardly helpful in dealing with the matter.

The Notes on Clauses, for which we are very grateful to the Minister, do not help. At Second Reading (col. 1287) the noble Lord, Lord Brabazon, stated: Clause 1 defines a trust port by excluding other categories of harbour authority".

Reference to the House of Commons Library's reference sheet gives a very useful account of trust ports. It explains the differences between public trust ports, municipal ports and company ports. That document quotes a statement by the Minister for Shipping to the effect that the term "trust port" is not a legally defined term. Moreover, he said: It is a convenient shorthand term to describe ports which are not owned and run by a company, a local authority or a nationalised industry".

The Minister has relied on that definition. We do not consider that that is good enough. The reference sheet has an appendix which lists 113 public trust ports under four categories. It states that those listed are taken from the total of some 300 ports, of which 100 only are commercial. We have to rely on that list in the Commons' reference sheet.

I repeat that there is nothing in the Bill to define precisely a trust port. Nothing in the Bill indicates which ports are covered in Part I of the Bill. Amendment. No. 1, with the schedule contained in Amendment No. 70, will help us achieve that definition. I beg to move.

Lord Brabazon of Tara

As the noble Lord explained, the effect of these two amendments would he that Part I of the Bill would apply to the ports listed in the proposed new schedule—except for the Port of London Authority as that appears in Clause 1(4) of the Bill—and to no others. The list of ports which the noble Lord would like to place in this proposed schedule seems to me to bear a strong resemblance to a list of trust ports produced by the Department of Transport. But the department does not attempt to maintain an accurate list of such ports. There is no reason why it should do so. The list tabled may therefore be out of date. Some ports listed may now be defunct. There may be others which are not included; other trust ports may be created in the future to which the Bill ought to apply.

I see nothing wrong in the way in which the Bill defines the ports to which Part I of the Bill is to apply. I think that it does so better than would the noble Lord's proposed amendments. I must therefore ask the noble Lord to withdraw the amendment.

Lord Underhill

I am naturally disappointed with the Minister's reply. It does not explain why the only definition of a trust port is by excluding all ports which are not trust ports. That is hardly a definition.

The Minister for Shipping made clear that there is no definition of a trust port; yet Part I deals with trust ports. Surely powers can be included in the Bill to amend, as required, the list which the department keeps. We are prepared to accept that. We ought to have a clear definition in the Bill. Will another Bill be presented to Parliament which does not define what is covered by this Bill but which states that it covers all other ports except those which are excluded? That is what the noble Lord stated.

I can do no more than read carefully what he said. He has not answered my questions. I shall consider what to do at the next stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

3.30 p.m.

Lord Greenway moved Amendment No. 2:

After Clause 1, insert the following new clause:

("Powers of relevant port authorities to amalgamate etc. with other authorities

.—(1) Any relevant port authority shall have power, in addition and without prejudice to the powers conferred on a harbour authority by section 37 of the Docks and Harbours Act 1966 to amalgamate its business and undertaking with any other relevant port authority or authorities; or to acquire the business and undertaking of any other relevant port authority or authorities under subsections (2) and (3) of this section.

(2) Any relevant port authority shall have power, for any of the purposes of subsection (1) of this section, to subscribe for or acquire any securities of a body corporate which is wholly or mainly engaged, or which it is proposed should become wholly or mainly engaged, in carrying out harbour operations or in the acquiring and carrying on of the business and undertaking of one or more harbour undertakings. Such body corporate is hereinafter in this section referred to as "a holding company".

(3) Any relevant port authority shall have power for any of the purposes aforesaid to transfer to a holding company, in exchange for shares in that holding company or for cash or any combination of cash or shares—

  1. (a) all property, rights and liabilities of the authority; and
  2. (b) all functions conferred or imposed on the authority by any statutory provision of local application;
but may not transfer any part less than the whole of the foregoing.

(4) A holding company to which a transfer is made under this section by a relevant port authority shall thenceforth have all the powers, rights, duties, functions and liabilities of that authority and shall (subject to section 2(7) below) be treated for all the purposes of this Part as if it were a relevant port authority.

(5) Part I of Schedule 1 to this Act shall apply upon the transfer of property, rights, liabilities and functions under subsection (3) of this section as it applies on a transfer under section 2.

(6) If any relevant port authority exercises the powers conferred on it as a harbour authority under section 37(1) of the Docks and Harbours Act 1966 to acquire the business or undertaking of another relevant port authority, then subsections (4) and (5) of this section shall apply in relation to that acquisition (mutatis mutandis) as they do to a transfer under subsection (3) as if the acquiring relevant port authority were a holding company.

(7) Any cash paid to a relevant port authority under subsection (3) above shall be applied first in meeting the residual liabilities of that authority including corporation tax on income and chargeable gains arising from the transfer and any balance shall be paid as soon as practicable to the holding company.

(8) Section 7 shall apply to a relevant port authority which has transferred all its property rights and liabilities to a holding company in exchange wholly for cash as it does to an authority which has fulfilled all its functions under sections 3 and 4(3).

(9) Any relevant port authority which makes any transfer under sub-section (3) in exchange for shares shall be under a duty to join with the other shareholders of the holding company in procuring that no dividends are paid on the shares which it acquires and that the holding company fulfils all its duties and functions. The shareholders collectively shall be treated with those shareholders as a relevant port authority for the purposes of this Part.").

The noble Lord said: I shall speak also to Amendments Nos. 3 and 5.

It is true to say that of the ports affected by the Bill some are enthusiastic about the possibilities of privatisation and some have set their faces resolutely against it. Most are what I might describe as ambivalent, seeking to test the likely effect of the Bill against the criterion of what will be in the best interests of the port as the trustees of that port currently see it. In those circumstances it is regarded as a pity by some of the ports that the Government appear to have had little regard to the needs of a very diverse group, particularly as regards their post-privatisation futures.

It is true that under the various schemes that each port has to draft for submission to and approval by the Secretary of State, there is room for manoeuvre. However, such manoeuvre as there is must lie within the framework provided by the Bill. It is a framework which presents any privatising port with Hobson's Choice in relation to its future structure and which lays down no criteria for the future objectives of privatised ports.

My amendments seek to remedy those two failings without in any way attacking the principle on which the Bill has been constructed. If the amendments become part of the Bill it is certain that several of those ports which are dubious about how the Bill will benefit them will be much encouraged about their futures. That in turn will diminish the resistance still being expressed in many quarters with regard to the reserve compulsory powers.

As the Bill currently stands, each trust port contemplating privatisation, whether or not voluntary, must establish one successor company to which it shall transfer its rights and obligations and assets and liabilities in return for shares which it must eventually sell. However, many of the ports affected by the Bill, in particular the smaller ones, are worried that individually they lack adequate means, especially immediately following privatisation, to defend themselves from predatory attacks by those with objectives other than port operations. Such potential purchasers might be property developers or shipping companies hoping to exert monopoly control over a port.

One means of increasing the defensive capabilities of these ports—Amendment No. 2 seeks to achieve this—would be to permit them to exploit the benefits of co-operation and integration before privatisation. Under the Bill each port, once privatised, would be free to amalgamate with any other private sector port, although not with a non-privatised one. However, a newly privatised port is likely to have many other urgent matters to attend to during this critical and dangerous time, in addition to investigating and negotiating a merger with another port.

There is a precedent. I believe that Associated British Ports came into being from the privatisation of the nationalised British Transport Docks Board, itself a grouping of various ports of various sizes located in pockets around the coast. Harbour authorities already enjoy certain powers under the Docks and Harbours Act 1966 to, acquire by agreement any business or undertaking which consists wholly or mainly with carrying out of harbour operations".

However, these amendments enlarge those operations by giving a port authority the power to merge its business either with that of another port or with the new company owned by one or more ports. Accordingly, subsection (1) of the new clause sets out the general power to be conferred by the clause in addition to those conferred by Section 37 of the 1966 Act. It is not known whether or not any port or ports likely to be affected by the Bill are determined to take advantage of the amendment if it is passed. However, several ports—I include among them Dover, which is one of our largest trust ports—have indeed discussed the possibilities of doing so.

The amendment provides a moderate and, I believe, useful increase in the flexibility of the Bill which does not in any way attack the fundamentals. After all, in my opinion there is not a great deal in the Bill as it stands to demonstrate the Government's interest in these ports in the long term, which is most unusual in privatisations. I believe that rather more flexibility is not too much to ask. I shall not go through the other subsections of the clause in detail. They follow on from what I seek to achieve.

Amendments Nos. 3 and 5 are designed to permit any port authority planning or considering privatisation to propose to the Secretary of State what it believes to be a more appropriate organisational structure from that which the Bill requires or which Amendment No. 2 permits. However, all the Secretary of State's rights of approval under Clause 9 of the Bill would apply to this extension so that anything he believed to be inappropriate, or indeed downright wrong, could be disallowed.

I believe that these two amendments build into the Bill further flexibility without in any way circumscribing the Secretary of State's powers to approve port schemes or to require ports to produce a scheme if they appear disinclined. I appreciate that the drafting of my amendments may leave something to be desired. However, I look forward to hearing what the Minister says. I beg to move.

Lord Murton of Lindisfarne

As I indicated in my speech at Second Reading, although I am firmly against the powers of compulsion contained in Clause 10 I am not averse to the principle of privatisation on a voluntary basis for those trust ports which see their future to be down that road.

I doubt whether the expenses incurred in privatising under the scheme of transfer proposed in the Bill would be very different from schemes pursued under the old Private Bill procedure. But at least this Bill removes the uncertainty of the outcome. The scheme proposed in the Bill provides a much less complicated structure than that proposed in the Private Bill promoted by the Tees and Hartlepool Port Authority. That Bill was rejected by a Select Committee of your Lordships' House and, given all the circumstances and the reasons expressed by the committee, I am quite sure that that was the right decision.

Having said that, I believe that insufficient thought has been given to providing a mechanism which covers all the individual schemes for those ports desiring to take the road to privatisation. I realise that it has proved difficult to tailor a scheme suitable for all. The reason is not hard to find. Trust ports are spread diversely in geographical terms. Some play a much more significant part than others in the regional economy. Their customers differ, as do their operations. Of most importance is their variation in financial structure. Some have wide powers to function commercially and are almost indistinguishable from private companies. However, others are much more curtailed.

This part of the Bill is satisfactory so far as it goes but it does not give me confidence that it has been drafted with the needs in mind of such a diverse set of ports. In this part of the Bill we are concentrating on the 15 trust ports with a turnover of more than £5 million. Since the port of Dundee has probably come up to the starting gate the figure is now perhaps sixteen. I am a little confused as a result of comments made in respect of Amendment No. 1 but I believe that there are 32 major trust ports. Admittedly some are still small but others have considerable potential.

It could be made easier for some of those ports to amalgamate should they wish to do so at some time in the future and before taking the final step into privatisation. There is at present nothing in the Bill to facilitate this more flexible approach nor is any clue to the department's thinking on the matter contained in the guidance notes on the procedure for the sale of ports. I took that document out of the Library and read it carefully but found that it does not deal with any of the problems which are currently worrying us.

There is a requirement in the Bill fully to accommodate privatisation schemes individually tailored to meet the needs of the various ports concerned. Although the Government have gone some way towards meeting that requirement I believe that more detailed consideration is required of alternatives to the creation of a single successor company. For example, the transfer of the harbour undertaking to a specialised subsidiary within a group structure, the sale of the port in two or more parts, and the sale of two or more ports as a group are options about which Government intentions are unclear and which should be explored more fully. Similarly, it should also be possible to pursue the concept of a local flotation whereby shares even in a relatively small port will be offered primarily to local investors.

That being the case the noble Lord, Lord Greenway, has moved this amendment to which I have added my name. The mechanism is made more flexible by allowing various choices of corporate structure for the successor company and enabling port authorities to amalgamate if they so wish before privatisation. It should be borne in mind that in combination the trust ports deal with 186 million tonnes annually and comprise no less than 39 per cent. of the port industry. That is a significant part of the whole. If the Bill is to be a success it is important that ports contemplating privatisation should be able to consider the benefits of co-operation and integration. That would give them confidence in having the increased capability to defend themselves from predatory attacks from any quarter by persons or companies with objectives other than port operation. The most dangerous form of predator is the property developer whose activities could well lead to a small port operation being closed down in favour of some other form of land use. I suggest that in the North such land would probably be used as sites for factories or warehouses and in the South it will have a more Sybaritic use, for so-called luxury homes more vulgarly described as yuppie dwellings. I support the amendment.

Lord Shackleton

I too support the amendment. The noble Lord, Lord Greenway, is a younger Brother of Trinity House and the noble Lord, Lord Murton, is well known in the other place and to those of us who live in the Poole area. Any amendment that protects the commissioners of Poole Harbour, which is a most wonderful part of the world, will have my support. I hope that the Government will consider the proposals carefully. I also hope that the amendments achieve their intended purpose and I await a further explanation. In general, I support the amendments.

Lord Skelmersdale

Assuming that the department approves the scheme setting forward the ideals contained in the amendment, Clause 9(1) appears to allow them. However, it is important that my noble friend takes this opportunity to spell out exactly what the department will allow and its current thinking on these issues, as suggested by my noble friend Lord Murton.

3.45 p.m.

Lord Brabazon of Tara

I am grateful to the noble Lord, Lord Greenway, for his explanation of the amendments which he has tabled. I have to say, however, that there are serious doubts that the amendments would work in the way intended.

I shall deal first with Amendment No. 2. The heart of this amendment is the transfer by one or more trust ports, or relevant port authorities as they are designated in the Bill, of their undertakings to what is termed as a holding company in exchange for shares in the holding company, or cash, or a combination of cash and shares. There is nothing in the amendment to suggest that the transfer at this stage is to be the subject of a scheme of transfer under Clause 2 of the Bill, which would then be subject to the procedure set out in Clause 9 of the Bill to which my noble friend Lord Skelmersdale referred. But I do not imagine that the noble Lord's intention is to avoid the procedure set out there and I take it that the point of providing in subsection (4) of the amendment that the holding company is to be treated for this part of the Bill as if it were a relevant port authority is so that the holding company can transfer the undertakings of the various ports which have already been transferred to it to a successor company by means of a Clause 2 scheme of transfer, which would then be subject to the Clause 9 procedure.

However, I suggest that that leaves a great deal of confusion as to how the various duties and powers which relevant port authorities acquire under the Bill are to be discharged. Under Clause 3, for example, who gives directions to the successor company about the issuing of securities? Is it the various trust ports concerned or the holding company (since it is to be treated as a relevant port authority), or all of them? Similar questions arise throughout this part of the Bill, but I do not believe that I need elaborate further on them.

A point which is perhaps more of detail relates to the provision in subsection (4) of the amendment that the holding company should have the powers, duties and so on of the trust ports which have transferred their undertakings to it. But the local legislation under which trust ports have been established varies considerably from one port to another and their powers and duties vary accordingly. The holding company could therefore end up with sets of powers and duties which could be not only a hotch-potch but inconsistent and mutually contradictory.

A more important consideration is that there can be no certainty that once the holding company has been formed it will be sold into the private sector. The trust ports concerned, having bought into the holding company, might decide that the market is not right for a sale, or that the ports might not attract good enough bids. Alternatively, the trust ports might disagree between themselves as to whether the bids put forward were good enough. But if a sale does not occur we are left with two or more ports which have amalgamated without having to use the harbour revision order or harbour reorganisation scheme procedures which would usually be required. These procedures provide for objections to a proposed amalgamation, the possibility of a public inquiry and of special parliamentary procedure.

I do not believe that we should allow a Bill which is about the privatisation of trust ports to become a means of amalgamating trust ports which would avoid the statutory procedures already laid down for such operations. It is true that the Bill does not provide for trust ports to be sold as groups, but it would be a difficult and complex matter to make specific provision for that in the Bill. In any case, I believe that with some ingenuity and careful attention to timing it will be possible even under the Bill as drafted for two or more trust ports to arrange matters so that they can be bought by a single purchaser.

I turn now to Amendments Nos. 3 and 5 proposed by the noble Lord. As I understand it, these are intended to make it possible for a trust port to transfer its undertaking to more than one successor company and thus to sell parts of its undertaking separately. I have first to say that to achieve that objective we believe that far more extensive changes would be needed to the Bill. The tax provisions in the Bill would need to be reviewed and substantial changes would be needed to retain the tax position achieved under the Bill at present. Indeed, that would apply also if we adopted the noble Lord's proposed Amendment No. 2.

The provisions about the distribution of the proceeds of sale and about the schemes of transfer would also need a thorough overhaul; in particular the distribution of a trust port's assets, liabilities and statutory functions between the various companies would need to be considered. So I have to tell the noble Lord that I do not believe that these amendments achieve their objectives. Neither do I believe that the Bill needs to provide for ports to be sold in separate parts. It is difficult to see the circumstances in which this would lead to a better price being obtained for a port. The risk is that a less attractive part of a port's business might not sell at all.

The noble Lord, Lord Greenway, and my noble friend Lord Murton of Lindisfarne said that the Bill was perhaps inflexible. I do not believe that that is true. It is not inflexible as regards the future structure of the ports. There has to be a single successor company, but the purchaser can bring the company within a more complicated structure and can introduce a holding company and/or subsidiaries. For all those reasons, I must ask the noble Lord to consider what I have said in regard to these amendments. In the circumstances, I hope that he will feel able to withdraw the amendment.

Lord Clinton-Davis

The Minister, perhaps with some justification, has been critical of the detail of the amendments. In introducing the matter the noble Lord, Lord Greenway, observed that it is extremely difficult to draft such complicated provisions, as is the lot for all noble Lords other than, of course, the government Minister. Indeed, I believe that very few of us are parliamentary draftsmen and very few of us have the money to enable us to consult parliamentary draftsmen in order to suggest amendments for consideration in this Chamber. Nevertheless, it was a pretty good try even though I have one or two minor criticisms. What the Minister did not do was to concentrate on the principles which were adumbrated by the noble Lords, Lord Greenway and Lord Murton of Lindisfarne. They eloquently expressed those principles. But not for one moment did the Minister have anything to say about them. The first principle I identify is the fact that the Bill does not properly address the diverse interests of the numerous ports throughout the country. The Minister also chose not to say anything about that aspect. Of course, he is entitled to make his speech in his own way. However, I should have thought that that was a point worthy of response.

As I understand it, the basic worry lies in the alarm which has been expressed about the possibility of predatory activity which could disadvantage the interests of those ports which concern noble Lords, or at least some of them. I should have thought that that was something which the Minister should have seized the opportunity to deny, repudiate, confirm, or whatever. But, again, he chose to say nothing about it. That is a point of great substance. I know from correspondence that I have received and from discussions which I have had that this is a matter which, rightly or wrongly, disturbs people. Therefore, the o is on the Minister to try to allay those suspicions and concerns.

The noble Lord, Lord Murton of Lindisfarne, illustrated that concern by saying that in his judgment the property developer is the most dangerous type of predator in terms of taking action which might be injurious to the interests of the proper functioning of a port. I know what he means by that; he means effectively—and we shall come to consider that aspect in later amendments—that a property developer might choose to undertake courses of action which have nothing to do with the effective functioning of a port. I believe that that is a reasonable interpretation of what the noble Lord said. Indeed, I see that he is nodding his head affirmatively. That is a matter which the Minister must address.

I am sure that the Minister is right to say that the drafting of the amendment does not really achieve the objectives sought by noble Lords. That may be so. However, we want to know whether the Minister accepts the principles underlying what was said by the noble Lords in their introductory speeches, or whether he denies that. If he denies that, he must give chapter and verse to determine, for the benefit of the Committee, whether the Government are right in so repudiating the matter.

I share the anxieties which have been expressed. I do not know whether this series of amendments achieves the intended purposes; it is all far too complicated for me. However, at the end of the day, that is not what the Committee is really concerned about at this stage of the Bill. The Committee is concerned to hear what noble Lords have to say in addressing really vital concerns about which the Minister must be aware from the representations which have been made to him. We shall, therefore, listen with interest to what he has to say in further response to the debate.

The Earl of Selkirk

I very much support the remarks made by the noble Lord, Lord Clinton-Davis, and those made by the noble Lord, Lord Shackleton. There is grave anxiety in certain places as to what shape and form this Bill will take. Noble Lords may have explained the matter to those who understand it, but they have not explained it to many other people who do not understand it.

Let us take Poole as an example. It is an extraordinary port. Indeed, it has been used as a port since the time of the Romans and has developed steadily since that time. It has all manner of interests, among them oil and a vast amount of private sailing. That is nothing to do with the broad commercial interests of ports as such. I should have thought that those concerned are really disturbed about the proposal. They want to know exactly what form the Bill will take. For example, why should that form be largely settled by a large department in London instead of letting the people on the spot decide what it is they really want to do?

I believe that what is to follow has been laid down very rigidly. Moreover, I am not sure whether what is proposed will give all ports the same facility. I am not saying that it will not suit some of them—indeed, perhaps it will—but, so far as I can gather from my understanding of the Bill, it does not suit Poole. It is a different sort of port with many interests. Those concerned may be wrong in their interpretation of the Bill, and I must confess that it is not an easy Bill to interpret. However, I should like the noble Lords to consider the fact that there are special circumstances relating to Poole and therefore it will be difficult to impose one rule. I hope that that will be carefully considered.

Lord Ezra

As the debate on the amendment has developed it seems to me that the underlying purpose is of great importance; indeed, it strikes at the root of the Bill. The concern on the part of many of the trust ports which are capable of having Clause 10 applied to them is that they feel that their destiny might lie elsewhere. Therefore, it is desirable that there should be greater flexibility in the Bill. After all, local communities are involved. The port of Poole has been mentioned, but there are many others.

I should have thought that it would be helpful if the Minister could at least indicate that he has some sympathy for the underlying purpose of the amendments, even if the wording is defective in some respects. There are serious fears, with strong local support, about how this Bill may develop in respect of ports which have developed and served their localities and which are now to be put, as regards their future, in what appears to be something of a strait-jacket.

Lord Brabazon of Tara

I recognise the concerns expressed by my noble friend Lord Selkirk and the noble Lord, Lord Ezra, in regard to the port of Poole. Obviously we shall have the opportunity to debate that issue later when we deal with Clause 10, which relates to the element of compulsion. If I may say so, the noble Lord, Lord Clinton-Davis, was a little unfair in saying that I gave no details when outlining the Government's objection to this amendment other than to criticise the drafting—or words to that effect. I believe that when noble Lords read Hansard they will find that I did in fact go considerably further than that. I see that the noble Lord wishes to intervene. I am happy for him to do so.

Lord Clinton-Davis

My criticism was that in his reply the Minister did not seize the opportunity to respond to the underlying principles adumbrated in the speeches of the two noble Lords who proposed the amendment. That was the purpose of my observations.

Lord Brabazon of Tara

I am afraid that we shall have to disagree about that fact.

The issue of predatory interests was raised, especially by my noble friend Lord Murton of Lindisfarne. I understand the anxieties. However, I believe that they are somewhat exaggerated. The Bill includes provision for clawback and that will discourage the type of difficulty which worries my noble friend. Moreover—I believe that this has been made clear and is well understood—the Government expect to agree the objectives of the sale with the ports which may, of course, include objectives relating to the continuity of the port, and so on. I have already said that we believe that sales of more than one port can be arranged under the Bill at present. That is the point which the noble Lord, Lord Greenway, is making in the amendment. We shall have further opportunities to discuss the specific concerns of ports such as Poole. But I believe I have dealt with the amendment.

4 p.m.

Lord Greenway

I am grateful to noble Lords from all quarters of the Chamber who have taken part in this short debate, and for their support for the principle behind the amendment. I am bound to say that I am a little disappointed by the Minister's answer, which will make it more difficult for some ports which still have considerable worries about how to proceed with their privatisations.

I hope that I did not give the impression to the Minister that I thought the Bill was inflexible. Indeed at Second Reading I commended him on its flexibility. I was merely attempting to seek a greater element of flexibility to help some of the ports. It was not my intention to undermine in any way the Bill as it stands.

I noted what the Minister said with regard to the problems of tax provisions in Amendments Nos. 3 and 5. It is a complex issue. I shall read in detail what he said and reserve the right to come back at a later stage if need be. Before I withdraw the amendment I believe that the noble Lord, Lord Clinton-Davis, wishes to intervene.

Lord Clinton-Davis

Perhaps I could return to two remarks made by the Minister. First, in referring to the question of predatory interests, he said that he thought this was "somewhat exaggerated". He did not dismiss it. "Somewhat" means that they were perhaps underlined more forcefully or emphatically than the Minister would accept. By saying "somewhat exaggerated" does he mean that there is no cause for anxiety whatever? That is quite different. That is what the Committee wishes to know. Does the Minister recognise that there is something in the anxieties expressed?

Secondly, he said that he "believed" the sale of more than one port could be arranged under the Bill. That evidences some degree of uncertainty. Perhaps he could indicate in the Bill where that may be possible. He must be precise. Before the noble Lord withdraws the amendment, which I gather is his intention, perhaps the Minister could answer that point.

Lord Murton of Lindisfarne

Before my noble friend replies perhaps I could make one comment in regard to what the noble Lord, Lord Clinton-Davis, said. We are somewhat inhibited inasmuch as we cannot mention ports by name because we may cause a certain amount of confusion and embarrassment. However, I am familiar with another port because of my territorial background—not military but otherwise—where the predator could be a strong threat. I worry a great deal about that. I cannot mention the port but I know that the people concerned in that authority are extremely alarmed. I hope that the Minister—I do not say he does not take the matter seriously—will mark it up as being an important factor in the consequences of compulsion.

Lord Brabazon of Tara

My noble friend Lord Murton says that we are not to name ports. We seem already to be naming them.

Lord Murton of Lindisfarne

I do not mind mentioning my own port. I am a bit chary of mentioning ports in other parts of the country.

Lord Brabazon of Tara

Be that as it may, at the risk of repeating myself I shall respond to the noble Lord, Lord Clinton-Davis, who asked me to clarify two points. With regard to the possibility of ports merging I said that I believed that, with some ingenuity and careful attention to timing, under the Bill as drafted it would be possible for two or more ports to arrange matters so that they could be bought by a single purchaser. I believe that covers that point.

With regard to the threat of predators buying the ports for property speculation, to which my noble friend Lord Murton referred, I merely drew attention to the claw-back provisions in the Bill which will do a lot to discourage people from that type of activity.

Lord Greenway

I believe we have given this particular hare a good enough run. As I said earlier, reserving the right to come back to this specific question at a later stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 3 not moved.]

Earl Howe moved Amendment No. 4:

Page 2, line 23, leave out ("statutory provision of local application") and insert ("local statutory provision;").

The noble Earl said: On behalf of my noble friend Lord Brabazon of Tara, in moving Amendment No. 4 I shall speak also to Amendments Nos. 74, 82, 83 and 98. These amendments are largely technical. They arise from the existing provision in Schedule 1 for transfer schemes to provide for, repealing or amending any statutory provision of local application".

By appearing to limit the provisions which could be repealed or amended to ones which were only applicable locally—that is, within a limited territorial area—it is possible that this expression might be taken to exclude, for example, a port authority's borrowing powers, leaving the new successor company encumbered with the old authority's more limited borrowing powers. It is precisely such statutory limits on trust port activity which this Bill is intended to remove. Any such unintended effect is now avoided by the substitution of the expression "local statutory provision" and its accompanying definition. I beg to move.

On Question, amendment agreed to.

[Amendment No. 5 not moved.]

Clause 2, as amended, agreed to.

Lord Clinton-Davis moved Amendment No. 6:

After Clause 2, insert the following new clause:

("National Ports Council

.—(1) Before exercising their powers under this Act the Secretary of State or the appropriate Minister shall consult a National Ports Council.

(2) The National Ports Council shall consist of representatives of Government, port authorities or, where appropriate, their successor companies, local authorities covering the areas in which the ports are located, and workers in ports, and of individuals with relevant experience and expertise in the industry, according to a scheme of appointment to he approved by the Secretary of State.").

The noble Lord said: Amendment No. 6 relates to a national ports council. The burden of our case, as I have said on many previous occasions, is that in approaching transport policy we believe that it is fundamentally misconceived always to compartmentalise the different modes of transport and thus to approach the legislation in that way. As a result, because the Government do not accept that, their approach to transport policy is essentially piecemeal. There is no recognition that for a transport system to operate we must ensure that, where necessary, the different modes in the transport sector operate in a coherent and integrated fashion. Left to their own devices, with competition allegedly being the prime factor, the impact on the nation's economy can sometimes be harmful and negative. Sometimes the competition that affects different modes of transport does riot take into account the different methods of paying for infrastructure and so forth, so it is not fair competition.

I do not suggest for a moment that competition is undesirable. It must be viewed as part of the whole. In some respects in the development of transport policy it is important to dwell on the complementarity between the different modes of transport as well as on competition. If competition is to be effective and fair, then it must be, to use that horrendous phrase, based on a level playing field. That does not exist at the present time in regard to road and rail.

One can take a simple example. In London we have been dealing in other contexts with the Road Traffic Bill. There was some discussion in regard to lone driver/conductors on buses. Operating that system in the outdated manner deployed by London Transport means that, although it may be less expensive for London Transport to operate in that way, the cost of traffic congestion, the inevitable hold-ups and the prejudice to the environment that is caused is borne by others It is not reflected anywhere in the balance sheets. These are costs which the public have to take up. I have given the Committee a single example of what I mean. That kind of situation can be multiplied through the various sectors over and over again.

Our intention is to ensure that the ports, docks and waterways become part of the integrated transport policy. That is not something which can be achieved overnight. It will take time. It may take five, 10 or more years. I do not believe that what we are putting forward here represents a particularly radical proposal because the system of a national ports council or something comparable operates in virtually every other member state. The Government chose to do away with something comparable some years ago.

We believe that a national ports council should be able to offer advice to the Government on ports policy. It would be an important instrument in achieving the objective to which I have referred. Among other things, we contemplate the body advising on the development of a national policy for ports. It would be able to bring independent and objective advice to the Government. It would be able to advise on the adequacy and application of investment in the ports, which represent a critical part of the nation's infrastructure. It would be able to insist on a port-operating licensing scheme.

All these functions are required because market forces cannot be the sole arbiter of how a transport system works. The Government implicitly concede that because they permit wholly different criteria to determine the operations of the different transport modes. A national ports council would have a great advantage when long-term policies have to be developed. I wish to stress that point. Sometimes policies can be unpopular and public cynicism—perhaps "prejudice" would be a better word—emerges very soon. That causes governments difficulty in moulding policy. Complicated matters such as ports policies, cars in London and waste are difficult to deal with. All governments find such matters difficult. They give rise to enormous prejudice on the part of the public. Such problems consistently lead either to delays or to the abandonment of proper schemes.

The value of having an independent, objective organisation containing representatives of government, ports authorities, local authorities, successor companies (if this Bill is to go through), employees in ports and individuals having knowledge and expertise, can be of value in the demarcation of lines of policy that should be undertaken over a period of time. The Secretary of State will be able to consult the council in undertaking his obligations under the Bill. Such a council would attempt to reconcile differences which will probably emerge under the legislation between the ports authorities and the Government. I refer to the kind of difficulties anticipated in the previous debate. I do not believe that anyone can say that government would be wholly objective and independent. They would be an interested party.

The Government have a clear vested interest in procuring the best price in relation to the privatisation of ports. Disputes between the users of the ports and the ports authorities concerning charges could be another area which gives rise to concern and where the advice of a national ports council would be of value.

It is a pity that some years ago the Government abolished the old national ports council. Our intention is not to restore that council in every shape and form. One thing, however, is clear. It is wrong for the Minister, when he has a vested interested in these areas, to make very critical decisions because he cannot be seen to be adopting a proper judicial approach to the matters with which he will have to deal.

There are many other areas of potential dispute beyond those to which I have referred. One may be the question of fair representation on a port authority. At present the procedure for nominating board members is often outdated to say the least. In the longer term it is a matter on which the national ports council could offer significant advice. It could offer advice in reconciling disputes between the different authorities as regards any difficulties that might arise concerning infrastructure problems. Because the national ports council would be the repository of confidential information, it could help to ensure maximum efficiency in ports policy as between the users and the ports authorities.

Other countries employ a policy similar to that which I have outlined. It works. I do not believe that our system will work properly without an advisory national ports council. I beg to move.

4.15 p.m.

The Viscount of Oxfuird

The noble Lord, Lord Clinton-Davis, has moved an amendment which perhaps reflects the fact that we are going backwards. The Bill is about the privatisation of ports. I ask my noble friend the Minister: is there a necessity for such a scheme at ports like Felixstowe and Southampton which have been privatised? Is there any proof of need for such consultation? Perhaps my noble friend will advise the Committee when he replies.

Lord Brabazon of Tara

The short answer to my noble friend Lord Oxfuird is, no. However, I must give the amendment moved by the noble Lord, Lord Clinton-Davis, more attention than that. It is a fascinating amendment because it takes us back quite a few years to the grand old days of the national ports council and a ports policy as such. I do not know what such a policy would entail under a Labour Government. We would have to see what that was. It would no doubt also bring us back to the National Dock Labour Scheme if there were a chance for that to happen.

Perhaps I may outline the Government's policy so far as the ports industry is concerned. It is to promote the development of a viable, competitive and commercially orientated industry. Some ports in the private sector have long been exposed to the opportunities and disciplines of the market place. The Government's aim is progressively to expose the remainder of the ports industry to those opportunities and disciplines and—if I dare use the phrase to the noble Lord, Lord Clinton-Davis—to put the ports on a level playing field with the other ports already successfully in the private sector; that is, the majority of the ports in the country, measured by the tonnage moved.

The Government took a first step in pursuit of their policies in the privatisation of the former British Transport Docks Board, which is now Associated British Ports, and of the Sealink harbours in the early 1980s. They added substantially to the size of the private ports sector. A major further step which the Government took to place the ports industry on a genuinely more competitive basis was the abolition of the dock labour scheme in 1989. That established a more level playing field between the former scheme ports and those which had had the immense advantage of being outside the scheme.

This Bill represents an important further step forward in exposing the ports industry more fully to the opportunities and disciplines of the marketplace. We believe that at least the major trust ports should be released from the constraints which their status places upon their activities and that they should be allowed to compete on a level basis with those ports which are already in the private sector and which already constitute more than half of the ports industry.

Although the noble Lord, Lord Clinton-Davis, spoke at the beginning of his speech about a national transport policy, about roads and rail and even about one-man operated buses, it is not clear what influence a ports council, such as is outlined in the amendment, or a quango, with its membership drawn only from the ports industry, would have on an overall transport policy. According to this amendment, its only function would be to advise on the trust ports which might be privatised under the Bill. It leaves out entirely the activities of the other ports to which I have already referred and which are already in the private sector.

We simply do not have the noble Lord's vision of a centrally planned investment in ports. We do not decide where these should and should not be. We believe that the ports and ports management should be able to decide their own commercial policies and investments. For all these reasons I can see little merit in the noble Lord's amendment.

Lord Geddes

At the Second Reading of the Bill I declared an interest, albeit an indirect one, in that I am a director of a company which owns a number of small ports. However, in speaking to this amendment my interest must be declared as a direct one in that, as I understand it, the amendment goes much wider than the ports to which this Bill is pertinent. I very much support my noble friend Lord Oxfuird.

As a director of that particular company, I would be horrified if the direction of those few ports which we control were subject to the overall control of a Big Brother in the form of a national ports council. We believe we operate on a perfectly level playing field; it is called competition. We co-operate with our fellow ports; the majority of these ports are on the River Trent. There are a number of small ports on the River Trent. We are friendly rivals. To use an analogy, it is rather like the hotel industry: if one's hotel was full, one would try to pass on guests to another hotel which had a certain amount of capacity up its sleeve. The same applies to ports. That works extremely efficiently. I should be appalled if we had Big Brother looking over us in the shape of a national ports council. I would be against that.

Lord Clinton-Davis

If I may say so, I am not sure whether the noble Lord was listening to the debate and to what I had to say. He has certainly misinterpreted me absolutely and utterly in what he has just said. There is no suggestion that the national advisory council would be directing or controlling anybody; it would be an advisory body. It would be there to assist the Minister in carrying out a ports policy. That was the purpose of it.

There is a huge difference of principle between the Government and ourselves in relation to the Bill. That was dealt with at Second Reading. However, I do not think it is right for the noble Lord, Lord Geddes, to distort what I have said, albeit accidentally. Certainly he may be horrified by the thought of control of direction. That is not what I was talking about.

The noble Lord, Lord Brabazon, dismissed the idea of a national ports council by saying that it was going back 1.o the past. As I have just explained in response to the noble Lord, Lord Geddes, that is not what the national ports council that I have in mind is all about. The Minister does not like the idea. He believes that market forces should be the sole arbiter of these issues, with a bit of guidance from him as envisaged by the Bill. We on these Benches take the view that that is not right. That is why I thought it appropriate to put down this amendment but I shall not press it to a Division now. I shall listen to what the Minister has to say. However, we may well come back to this at a later stage. I seem to have upset the noble Lord, Lord Boyd-Carpenter, in some way.

Lord Boyd-Carpenter

Far from upsetting me, I was delighted to see the gleam of sanity appearing in the noble Lord's speech when he indicated that he was not going to divide the Committee on this silly amendment.

Lord Clinton-Davis

Like the noble Lord, Lord Boyd-Carpenter, I have lucid intervals from time to time. Mine perhaps are a little more frequent. However, I did not intend to divide the Committee on this matter when I got up. I wanted to hear what the Minister had to say. As I have indicated, it is quite possible that we shall come back to this at a later stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 [Initial issue of securities of the successor company]:

Earl Howe moved Amendment No. 7:

Page 3, line 7, leave out ("In consideration or) and insert ("Following").

The noble Earl said: I move this amendment on behalf of my noble friend Lord Brabazon of Tara. I shall speak also to Amendments Nos. 73, 95, 96 and 97. The leading amendments in this group are Amendments Nos. 7 and 95, which relate to the tax payable on the sale by a relevant port authority of securities of its successor company.

clause 3(1) begins with the words "In consideration or and when those words were inserted during proceedings on the Bill in another place, it was explained that the words would ensure that, for capital gains tax purposes, the securities are regarded as being issued in consideration of the transfer of the business. The wording would, it was explained, provide greater certainty, enabling the port authorities and prospective purchasers of shares to assess what share of any bid would accrue to the Exchequer as tax and how much would be left in the residual amount accruing to the authority and, thereafter, to the successor company.

Even so, the use in Clause 3(1) of the words "In consideration of" does not by itself indicate their relevance for tax purposes, and it was also less appropriate for company law purposes than the use of the word "Following" (which, in the proceedings in another place, the words "In consideration or had replaced). The word "following", rather than the words "In consideration or, was consistent with the terminology used in a succession of privatisation statutes; and, when taken with the provisions of Clause 3(4) (b), it avoids any apparent inconsistency with existing provisions of company law (in particular Section 103 of the Companies Act 1985, and Article 27 of the second EC directive on company law; to which that section gives effect).

As noble Lords will appreciate, the points to which I have referred are of some technicality, and the purpose of Amendments Nos. 7 and 95 is to clarify them. Amendment No. 7 does so by restoring to Clause 3(1) the word "Following" instead of "In consideration or; and Amendment No. 95 inserts into Clause 35 (which is the general tax clause) a new subsection which expresses the point that it is for capital gains tax purposes (or, in the more technical words of the amendment "for the purposes of corporation tax on chargeable gains") that securities issued by the company to the authority are to be treated as if issued or allotted in consideration of the transfer of the authority's business.

Amendments Nos. 96 and 97 restore to Clause 35 the substance of certain provisions which were originally contained in the general tax clause (at that time Clause 29), but which were omitted from the Bill when the words "In consideration of" were inserted into Clause 3(1) in another place. The provisions in question, which followed similar provision in previous privatisation statutes, were intended to prevent unduly adverse consequences that might arise from certain technical provisions of tax law; in particular, a subsequent repayment of share capital might have been treated in its entirety as a taxable distribution because the shares had not been paid up by the receipt of "new consideration". It is considered appropriate that, even though not paid up by such consideration, the share capital, if repaid, should not be treated as a taxable distribution to the extent that the repayment equals the nominal value of the shares; and similar considerations apply in respect of any debentures issued by the company. Amendments Nos. 96 and 97 provide accordingly.

Amendment No. 73 is consequential on the omission from Clause 3(1) of the words "in consideration or, provided for by Amendment No. 7. Amendment No. 73 refers to heading (c) of paragraph 9(1) of Schedule 1. Heading (c) makes technical provision in relation to the ascertaining of the amount, if any, of a share premium arising on an issue of shares in pursuance of Clause 3. A share premium can, however, arise only where shares are issued for a consideration, either in cash or otherwise. If Amendment No. 7 is given effect, the issue of shares will therefore not arise; and heading (c) of paragraph 9(1) will be redundant. Amendment No. 73 accordingly provides for the omission of heading (c).

I conclude by saying that these amendments make no change in port authorities' liability to corporation tax on chargeable gains as compared with the position in the Bill as introduced in this Chamber. I beg to move.

The Deputy Chairman of Committees (Lord Nugent of Guildford)

Amendment proposed, page 3, line 7, leave out the words "in consideration or and insert the word "following".

4.30 p.m.

Lord Clinton-Davis

That is just about the only thing I can understand. I am grateful to the noble Lord, Lord Nugent of Guildford, for reading that again. I must be going through one of those intervals when I am not lucid. I am sure that the Minister explained the amendment to the satisfaction of the Committee but I did not understand more than one or two words of his explanation. The noble Earl said that there was a possible inconsistency in the law and in relation to a European Community directive. Can he develop that point? He did not give further particulars. He merely said that the amendments sought to correct an inconsistency. I shall have to consider carefully in my bath what he said about those other matters.

Earl Howe

The easiest way to answer the noble Lord is to say in summary that the core amendments are Amendments Nos. 7 and 95. The effect of those is to express more clearly and directly than at present the objective intended when Clause 3(1) was amended in Committee in another place, and at the same time to render Clause 3 more consistent with certain elements of existing company law. That is the easiest way of explaining it. If further clarification is required, I should be glad to know.

Lord Clinton-Davis

I am obliged to the Minister but it will test his ingenuity to offer clarification on this point. We may have to take it all as read, but we shall see.

On Question, amendment agreed to.

Clause 3, as amended, agreed to.

Clause 4 [Disposal by the authority of their holding in the successor company]:

Lord Clinton-Davis moved Amendment No. 8:

Page 3, line 26, leave out ("shall") and insert ("may").

The noble Lord said: It may be for the convenience of the Committee if at the same time we consider Amendment No. 9. These are probing amendments. I think I am right in saying that the word "may" has been interpreted by the courts as importing an obligation. I may be wrong but I think that there was a judgment by the noble and learned Lord, Lord Scarman, to that effect. If the Minister cannot deal with that point today, perhaps he will deal with it in correspondence later on.

I come to the second amendment. I wonder whether it would not be more sensible to give a port authority a right to be able to hold on to part, albeit a minority part, of its holding in contemplating the procedure which the Government have in mind. It might be a useful instrument in ensuring that, perhaps only for a temporary period, the experience of a harbour authority in a wide variety of ways could be used positively. It might also be a useful way of monitoring progress, or the lack of progress, in port development and of ensuring that speculative development is restrained or even stopped if it is thought to be deleterious to the interests of the port and/or the local community, a point raised earlier by the noble Lord, Lord Murton of Lindisfarne. This procedure might be used as a way of curbing undesirable actions which could also prejudice the environment. I put forward the amendment only in order to probe the Government's thinking on this matter. I beg to move.

Lord Brabazon of Tara

The noble Lord introduced his amendment and then said that he was not sure about the difference between the words "shall" and "may". I shall certainly write to the noble Lord with the implications of those two words, but it is really for the noble Lord himself to explain what he means in his own amendment. It is his amendment, not mine.

The effect of the amendments would be to allow the trust port authority to sell only a part of its holding in the successor company and to retain the remainder. This joint ownership of the successor company by the trust port, which would continue in existence, and by a new owner seems an odd arrangement and one which falls short of the privatisation of the port. Members of the Committee will hardly be surprised to hear that it is not a solution which we would welcome. It may be that the intention of the amendment is to enable a trust port to retain its conservancy duties while selling off the remainder of the port. In the case of the Port of London Authority, we have recognised that only the main remaining commercial operation at Tilbury should be sold and that the PLA should remain as a conservancy and regulatory body for the River Thames. We believe that the case of the PLA is wholly exceptional, as I explained at Second Reading, because of the sheer scale of the area for which it is responsible, the unique nature of its responsibilities and the role of the river in the life of the capital city. But in other cases we believe that trust ports should be sold off as a single entity, cargo handling businesses and conservancy functions together. We do not believe that the commercial operation should be sold, leaving a rump trust port as a regulatory and conservancy body. That would be doing only half of the privatisation job.

As I said in regard to previous amendments, more than half the ports industry is already in the private sector—cargo handling, conservancy, regulatory functions and all—and we see no reason why the trust ports which are to be privatised should not operate on the same basis. I hope that I have explained our attitude to the noble Lord's amendment.

Viscount Caldecote

Would not the retention by the port trust of a minority holding in the successor company be quite a good way of ensuring that the general interests in a port of fishermen, environmentalists, yachtsmen and the like were looked after? That aspect will be absent if the port is wholly privatised without those interests being represented.

Lard Ezra

I am surprised that the noble Lord, Lord Brabazon, is not more flexible on this issue. There could he cases other than the Port of London Authority. The port of Poole has been mentioned. It is responsible for a large territory and has a good many conservancy responsibilities. Would it not be desirable at least to retain some flexibility in this matter when the possible privatisation of these ports is being considered?

Lord Murton of Lindisfarne

The noble Lord, Lord Ezra, referred to the port of Poole. There are 10,000 acres of water in the port area. The harbour authority is entirely responsible under all the regulations for its maintenance. There could be a serious problem if the port were to fall into other hands. It is questionable whether any other form of company could ever cope with the responsibilities that the harbour authority now has.

Lord Brabazon of Tara

As my noble friend Lord Caldecote said, the amendment seeks to allow a partial privatisation of a port in terms of the shareholding as opposed to a separation of the conservancy functions from the other functions of the port. Clause 2 of the Bill makes it clear that the rights, duties and liabilities of the ports all go to the successor company. Those responsibilities go to the successor company. In this Bill all that we are dealing with is the change of ownership of a port. We are not talking about a change of its responsibility so far as conservancy and the other matters to which my noble friend referred are concerned.

Lord Clinton-Davis

I find that a disappointing answer. I am grateful to those Members of the Committee who have intervened on this matter, but I should like first to deal with the first amendment that I introduced. My attention was drawn to the point that I raised after I had put down the amendment, and I thought it was perfectly reasonable. After all, I introduced this as a probing amendment to find out whether I was right or wrong in my supposition about the law. I had not had the opportunity to research it. The Minister, as he has rather better facilities, has undertaken to do that, and I look forward to hearing from him. I do not feel that this is an abuse of the procedure or that it is wrong in any way. Indeed, it is frequently done in another place, and I sense that it is done here too.

In terms of the main amendment that I moved, which was also a probing amendment, the short debate we have had has been useful because it has isolated the Minister to a degree, as he has chosen to adopt an inflexible position—as the noble Lord, Lord Ezra, put it—about a concern which has been expressed on his side of the Committee as well as by the noble Lord, Lord Ezra, and myself.

It is not just a question of legal responsibilities and duties being transferred from the trust port to a successor company. We have already touched on the anxieties—which were not really properly dealt with by the Minister in an earlier debate—about the way in which the successor company will go about undertaking those responsibilities and duties. Some of us are deeply concerned about that.

For ideological reasons the Minister is saying "we want to go through this privatisation process, and nothing short of that will do". With respect, I think that that is absurd. It is perfectly possible in the short or medium term to be able to take advantage of the experience of those who have been running the ports in a way that his privatisation process will not fully permit. This is what I thought it was appropriate to try to do. The Minister has chosen to reject that.

The noble Viscount, Lord Caldecote, referred very properly to concerns on the part of fishermen if the privatisation measures were to go through. He may or may not be right about that, but he expressed a concern that certainly exists, and nothing the Minister has said in the course of this short debate will allay such concerns.

The noble Lord, Lord Murton, referred to the 10,000 acres of water in Poole which have to be overseen. There are similar extensive areas that have to be covered in other ports as well. The Minister had little or nothing to say about that.

I shall of course give consideration to what the Minister has said, but in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 9 not moved.]

4.45 p.m.

Lord Underhill moved Amendment No. 10:

Page 3, line 39, at end insert:("except for the proceeds of the sale of the successor company which shall be transferred to the local authority, or local authorities, covering the port authority area to use in trust for the local community.").

The noble Lord said: Clause 4 relates to disposal by local authorities of their holding in the successor company, and in particular the amendment refers to subsection (3), which reads: The authority shall provide for the disposal of all securities or rights comprised in that holding in such manner, at such time or times and on such terms as they think fit". The purpose of the amendment is to add the words which appear on the Marshalled List.

I think it is generally recognised that local authorities played a very large part in the establishment of many of the trust ports, and in the continued relationship and responsibility of the trust ports to the local community. The amendment seeks to ensure that those responsibilities to the community shall be continued from the proceeds of sale being held in trust for the community: that the proceeds should be passed to the local authority or authorities concerned—that is, those covering the areas of the particular port authorities.

This has nothing to do with the question of compulsion. It will apply to all the trust ports when they set up the successor company, and its seems to be a very sensible and helpful amendment, ensuring that the future of trust ports will be linked closely to the work of the local community. I beg to move.

Lord Brabazon of Tara

I have listened to the noble Lord's argument, but first I have to say that it overlooks certain important factors.

Many of the trust ports, especially the larger ones which are more likely than smaller ports to want to take advantage of the provisions in the Bill, are at least as much national assets as local assets. Secondly, the relationship between individual ports and their neighbouring local authorities varies significantly from one port to another, as do so many other aspects of the trust ports.

The local authorities have not invested in these ports. Indeed, it could well be argued that the ports have made important contributions in terms of employment and economic activity to their local communities by providing jobs and export opportunities, rather than the other way round. Local authorities have no claim to the ownership either of the ports themselves or to their assets. In some cases, far from being anxious to benefit from the increased freedom that privatisation may bring to their local port, they are actually in open opposition to its plans for early privatisation.

For all those reasons, I do not believe that local authorities would be the obvious or natural beneficiaries of the proceeds of privatisation, as this amendment suggests.

The noble Lord said that some local authorities played a large part in setting up many of the trust ports. I do not see the evidence for that. Therefore, I have to say that I see little merit in the amendment, and I hope that the noble Lord will agree to withdraw it.

Lord Murton of Lindisfarne

Before the noble Lord replies, perhaps I may refer to what my noble friend the Minister said about local authorities. I do not want to beat the Poole drum too much, but I should like to mention the preamble to the Poole Act of 1756. I shall not read the whole Act because there are 23 pages of it, but for "time out of mind" the port had been controlled by the mayor and burgesses, and in 1756 the responsibilities were transferred to the commissioners. So I think my noble friend must agree that historically the ports did not belong to the state, and that the nearest approach to them belonging to anybody was to the local authority and the community which the local authority represented. That goes very far back into history, but it is an interesting historical fact.

Lord Geddes

I wonder whether the noble Lord, Lord Underhill, could explain one matter to the House. I must confess that after hearing what he said and reading the amendment I am somewhat confused, but perhaps I am alone in that. Let us assume that the sale of a trust port is to be 100, or whatever the unit may be, and—to use an expression that I have heard recently—that 50 is left on the front seat of a car, so the net comes back to 50. To what do the words, the proceeds of the sale of the successor company in the amendment refer? I am not at all clear as to whether they refer to the 100 or the 50.

Lord Underhill

I shall deal first with the final point made by the noble Lord, Lord Geddes. We are discussing the principle of the matter and we want to know the Government's view about it. Later, if we need to define what the proportion should be, we can do so. The Minister asked what evidence there was of the part played by local authorities. I ask the Minister what evidence the department has to show that local authorities have hindered the work and progress of the trust ports, which is what his remarks seemed to indicate.

As the noble Lord, Lord Murton, said, in many of the trust ports, including the one about which he is intimately informed, the initiative was taken by local authority officials. It would be bad if a statement came from this place that many local authorities are not interested in what happens to their trust ports. They may not be in favour of privatisation. There are many things in politics with which I disagree, but I do what I can to correct any mistakes.

We are not arguing about the principles of privatisation. The ports will have to set up successor companies. We are asking how the community can best be helped by the proceeds of the sale. It might be that they should receive a proportion of the proceeds. Surely one of the objectives of the trust ports is to help local communities. Improving relationships with the community is one of the trust ports' existing objectives. The amendment tries to ensure that that relationship will not be broken once the Act comes into effect. I am sorry that the Minister has not seen fit to agree with what I and other Members of the Committee have said. We shall have to reflect seriously on this matter. The trust ports' present purposes must not be forgotten. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Greenway moved Amendment No. 11:

Page 3, line 39, at end insert: ("Provided that in any sale by tender of such securities the authority shall require any person submitting a tender to include with his tender detailed proposals as to how those persons who acquire control of the successor company would intend to procure the implementation of section 7(3) for a period of 5 years following completion of the disposal and in accepting any tender the authority shall require and secure compliance with such proposals as it thinks fit.").

The noble Lord said: It may be for the convenience of the Committee if I speak also to Amendments Nos. 18 and 22. I return, on a slightly different tack, to the trust ports' anxieties about the successor companies. For reasons best known to themselves, the Government have so far been unwilling or unable to list the criteria by which they will decide what is a desirable or undesirable port privatisation scheme or who will constitute a suitable or unsuitable owner of a privatised port. That is regarded as unsatisfactory by a number of trust ports. Accordingly, the amendments propose explicit objectives for the successor companies in relation to port operational matters for a period of five years following completion of the sale. They require the selling port authority to satisfy itself that a tenderer will comply with those objectives for the same period, and they require the port authority, when originally proposing the scheme to the Secretary of State, to prepare a corporate plan for the port to show how its port operational objectives might be achieved in the years immediately following privatisation.

Although the successor company or companies will bear all the responsibilities and duties of the present trusts, it has been usual with other privatisations for the privatised successor company to have spelt out more explicitly what its underlying obligations are to be. Given that many of the trust ports fear predation by those who would not welcome such clearer definition of a port's objectives, and given the underlying local wish, and possibly the Committee's wish, that ports continue to have those obligations while it is economic so to do, the amendments seek to tighten things up.

I do not propose to comment on the amendments to my amendments tabled by the noble Lord, Lord Murton, until after he has spoken, except to say that I deliberately did not include the words relating to the environment that he wishes to introduce. With some fairly weighty amendments relating to the environment to come, now may not be the time to embark upon a long and heated argument on that subject. I look forward to hearing what the Minister has to say. I beg to move.

Lord Murton of Lindisfarne

I reinforce what the noble Lord. Lord Greenway, has said about the amendments. It is important that a successor company which intends to bid for a port should show its bona fides not just as to its financial backing but as to its intentions in relation to the port itself so that the Minister can judge whether it is suitable. For that reason, I support what has been said.

Lord Underhill

In general, I support the amendments. Amendment No. 11 refers to the obligations contained in Clause 7(3). However we have to turn to Amendment No. 18 to see what the noble Lord proposes. As far as we can see, it follows what he said on Second Reading. I then referred to a useful briefing that we had received from the British Ports Federation. It explained the background to the trust ports and pointed out that their purpose is to provide a service for the import and export of goods; to pre vide navigation conservancy; and to make the best use of their assets.

Trust ports were not established to create private profits. Any surplus accumulated has to be reinvested for port development or to reduce charges. Those responsibilities are set out in the separate Acts of Parliament which set up the trust ports.

On Second Reading it was emphasised that a trust port was held in trust for the local community. That refers back to what I said on Amendment No. 10, because that was one of the primary purposes of the trust ports. It was emphasised that the responsibility was to maintain, improve, and administer a harbour. Those are the points that are clearly set out in the amendment. The amendment also provides that the purposes for which the trust ports were set up should continue. The noble Lord, Lord Greenway, made it clear on Second Reading—I believe that he will agree with this—that he agrees with the Government's privatisation proposal. We are not arguing about that. Nevertheless. he wants the obligations of the ports to continue as they are now under their separate Acts of Parliament. We do not oppose the proposals made in the amendments tabled by the noble Lord, Lord Murton. Harbour operations should not cease without the consent of the appropriate Minister. That is an important point. Harbour operations should continue until the Minister decides otherwise, as a result, we would hope, of the advice that he receives.

We support the amendments tabled by the noble Lord, Lord Murton, because we should take environmental considerations into account. Amendment No. 22 relates to the procedure involved with regard to schemes proposed by the relevant port authority. The subsection deals with the submission to the Minister of a scheme prepared by the authority for the purposes of the proposed transfer. Amendment No. 22 sets out the criteria about which the Minister would have to be satisfied before he approves a scheme. The Minister must tell us what those criteria will be. There may be some defects in the amendments, but we support their general tenor.

Lord Geddes

It may be a surprise to the noble Lord, Lord Underhill, but I very much go along with the line of his argument. I strongly support the principle behind the amendment. It seems to me that the wording which the noble Lord, Lord Greenway, has put down, particularly in Amendment No. 18, is well drafted. It ends with the phrase: without the consent of the appropriate Minister". The fundamental point, it seems to me, is that this amendment or something similar, if agreed to, would act as an effective brake upon the unprincipled predator who would come in solely, for example, for property exploitation or property development purposes. As I read the amendment, it would not prevent such a successor company developing property, but it would oblige the company to continue the operations of the port unless it received the consent of the Minister to do otherwise. I support the amendment.

5 p.m.

Viscount Caldecote

I support what my noble friend has just said. It is important to ensure that the arrangements that have been in place with the trust ports, where proper attention has been given to all the people who use the ports, should be protected in future. I hope that the Minister will be able to be flexible and give us an assurance that, if these amendments are not quite right, others will be brought forward at Report stage to meet the point.

Lord Brabazon of Tara

I have listened carefully to the debate on the amendment. It seeks to impose a remarkable array of conditions and restrictions, some of which are almost impossible to fulfil, on port privatisations which would be carried out under the Bill. To take one example, Amendment No. 18 would place the new owners of a port under a statutory duty to have regard to the welfare of everyone employed in the locality of the port, whether or not they were actually employees of the port itself and irrespective of whether their employment had any bearing on the port at all. In short, the obligation would be quite irrespective of local circumstances, which vary significantly from one port to another.

This kind of condition, far from providing any safeguard for the operation of the ports' statutory duties—and remember, these will all be transferred under the Bill in any case—would place the new owners of the ports under obligations which they would find onerous and which would not apply to other ports, whether in the public or the private sector. The main benefits of privatisation to trust ports are to escape the restrictions and limitations which are placed upon them as trust ports. The amendments would add to the limitations placed upon them after privatisation.

I believe it would be a mistake to legislate for the successor company to produce a corporate plan. I refer to the guidance notes still in draft form which the Department of Transport has produced. It would be for the port authority to agree with the Secretary of State on a port by port basis the authority's objectives in selling a port. These objectives will form the criteria against which bids for a port will be assessed. They may, for example, include objectives for the future operation of the port. I hope that that will reassure my noble friends Lord Geddes and Lord Caldecote. Even the major trust ports differ so much in circumstances that we believe that it is much better to proceed on a port by port basis in this way rather than by legislating for the successor company to draw up a corporate plan before the port is sold into the private sector. This would place too much of an inhibition on the subsequent purchaser.

The amendment also suggests that the port authority should cease to carry on harbour operations only with the consent of Ministers. This is an unnecessary provision. A harbour authority—and the successor companies will all be harbour authorities—may cease to carry out its statutory functions and cease operating as a harbour only after seeking the approval of Parliament by means of a Private Bill. I hope that that is a full safeguard against what is feared.

My noble friend Lord Murton drew attention in his amendments to the fact that the statutory functions which will be transferred to the successor companies will include environmental obligations. It is perfectly true that all the obligations of a trust port, whether of an environmental nature or otherwise, will be transferred to the successor company. My noble friend explained why he would like to see the word "all" inserted in Amendment No. 18. However, I am not persuaded that the amendments of the noble Lord, Lord Greenway, would form a useful addition to the Bill, with or without my noble friends' amendments. I hope that, with the assurances I have been able to give, the noble Lord will feel able to withdraw his amendment.

Viscount Caldecote

With the leave of the Committee, perhaps I may ask my noble friend two questions on what he has just said. The comments he made are fair as regards the wording of the amendment of the noble Lord, Lord Greenway: the welfare of the persons employed in the locality". That is somewhat stretching the purpose of the amendment and I take his point. However, the point I believe the noble Lord, Lord Greenway, is getting at and that I have picked up from Amendment No. 18 is the obligation of the successor company to produce a plan. I shall come to that in a minute. The company must produce a plan that requires it to continue to operate the port as a port. However, if it wishes not to do so, it must obtain the specific consent of the appropriate Minister. At grave risk of repeating myself, I believe that that is an important safeguard against the unprincipled predator coming in with an artificially high price and killing the traditional use of that area of land or water as a port.

My noble friend made the point that each port is different. With great respect to him, I could not agree more. I have been involved in the industry for 30 years and each port is different. However, that is the whole point of producing a business plan. Quite rightly, each port will produce a different business plan. As regards what my noble friend said on the draft guidelines, which will arise on another amendment, the difference is that the guidelines, as I understand them, impose no obligation nor are they backed by any obligatory powers. On the other hand, this amendment makes an obligation, albeit for a period of five years, that the operations of the port as a port should continue.

I ask my noble friend to look again at the principal point of the noble Lord, Lord Greenway, which, as I understand it, is that the port should continue to operate as a port.

Lord Murton of Lindisfarne

Before my noble friend replies, I am fully prepared to accept the plea from the noble Lord, Lord Greenway, not to make Amendment No. 18 more difficult by moving my amendment. However, it is important. When one reads the guidelines, there is nothing in the selling memorandum which makes any mention of rights or obligations, including conservation or planning restrictions. I know that it is impossible to put everything into guidelines, but with respect, these are somewhat vague on the subject.

Lord Brabazon of Tara

Perhaps I may respond to that point and those of my noble friend Lord Geddes. The rights and obligations of the port are continued in the Bill. They do not have to be written into the guidelines; they are included in Clause 2.

My noble friend Lord Geddes said that the guidance notes carried no legal obligation, and of course they do not. The point of having them is that any port authority wishing to take advantage of privatisation measures in the Bill must agree with the Secretary of State on a port by port basis the authority's objectives in selling the port. The guidance notes give the port authority ideas about what the Secretary of State will seek. Those will be the legal obligations: it is the first stage in the operation, if I may put it that way.

I mentioned the other hurdles which exist when, as my noble friend suggested, a port might wish to give up being a port altogether, cease to carry out its statutory functions and cease to operate as a harbour. That is not affected by the Bill. In order to do that, the port would have to put a Private Bill through Parliament and go through all the other hurdles which the proposal would comprise. I believe that that answers the points raised.

Lord Underhill

Before the noble Lord, Lord Greenway, decides what to do with his amendment, I have another point to put to the Minister. Does the Minister generally approve—although he may criticise some aspects—the principles behind the amendment of the. Lord, Lord Greenway? Is there a general line which the Minister feels is the right line to follow? If we can be informed of such a line, that might help us on Report.

Lord Brabazon of Tara

I believe I almost answered that point when I said that the guidance notes issued by the department lay down the criteria which the Secretary of State will require to see fulfilled before approving a privatisation. Those guidance notes cover some of the concerns which the amendment outlines.

Lord Greenway

I am grateful to all Members of the Committee who have taken part in this debate. I recognise that my amendments have certain technical failings, and I was not in the least surprised to hear that. Nevertheless, I am again somewhat disappointed at the Minister's reply. This matter boils down to the draft guidelines. The trust ports have stated on several occasions that they are not happy with the guidelines. They would like far more specific guidelines, if that is possible. The Minister said that the guidelines are still in draft form and that something more concrete may emerge at a later stage. I do not know whether the Minister can give us any idea of when more concrete provisions may appear. All of us who are discussing this Bill would be helped by the provision of concrete guidelines. Many of the trust ports are operating completely in the dark. One of the reasons I tabled the amendment was to try to obtain a slightly more concrete set of criteria on the face of the Bill. I accept the argument that my amendments are lacking; nevertheless, we have had a useful debate on this matter and we may well return to it at a later stage. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clause 5 [Control by appropriate Minister over exercise of authority's functions under sections 3 and 4]:

Lord Clinton-Davis moved Amendment No. 12:

Page 4, line 6, after second ("time") insert ("after consultation with the authority concerned").

The noble Lord said: I apologise for my tardiness in getting to my feet. I was distracted by my Chief Whip who is very distracting. This is a critically important part of the Bill which affects ministerial control over the exercise of a port authority's functions under Clauses 3 and 4. It is my submission that directions which the Minister can provide should involve prior consultation. It is as simple as that. It will not be sufficient for the Minister to use the time-honoured phrase that he often uses and say that the Government will carry out prior consultation. In my view, that provision should be stated on the face of the Bill. After all, when we debated the New Roads and Street Works Bill recently we discovered that the Government had overlooked consultation in a material and critical way. I do not think the Government have been as rigorous in this regard as they have so strongly asserted. I consider that the obligation to consult does not appear in the Bill. It should be written clearly on the face of the Bill. I beg to move.

5.15 p.m.

Lord Brabazon of Tara

I have noted the arguments of the noble Lord, Lord Clinton-Davis, in support of this amendment. I do not believe, however, that the statutory requirement for a full process of consultation to take place before the Secretary of State directed a port authority on the issue or disposal of the securities of its successor company is necessary. In certain circumstances it would be counter-productive. Clause 5(1) already makes clear that the Minister's consent is required before the authority exercises these powers: this presupposes a framework of consultation and agreement between the Minister and the authority and in the normal course of events this will inform any directions that the Minister may need to give. If, however, it is necessary to give a direction urgently—for instance, because there appears to be a risk that the port authority's disposal of the securities might infringe some legal requirement, or if some question of financial propriety were involved—it would clearly be unsatisfactory that such a direction could only be given once full consultation had taken place. I hope, therefore, that the noble Lord will be satisfied with the position I have outlined on that amendment.

Amendment No. 33 relates to the situation where the Secretary of State feels obliged to direct an authority to form a company for the purpose of transferring its undertaking, or to submit a transfer scheme to him. This amendment adds little to what is contained in the subsection it seeks to replace. Under the Bill the Secretary of State is under a duty to consult the port authority before issuing a direction. He will then be obliged to take into account any arguments which the port puts forward. The provision already in the Bill ensures that there will be genuine consultation. Anything less would prejudice the validity of any direction which the Secretary of State might subsequently make. I see no reason therefore to write into the Bill a requirement for written representation. Indeed, a port might well prefer to put its case to Ministers at a meeting because that seems a better way of getting its points across. I hope the noble Lord will be satisfied that his concerns are already covered in the Bill and that he will feel able to withdraw the amendments.

The Earl of Selkirk

What are the time limits within which the consultation is to take place? My noble friend said that the Secretary of State has to consult the local authority concerned. Must that be done within two or three years, or can it be done at any time? I am asking whether there is any pressure as regards the time limits for consultation. The Secretary of State has an obligation to consult. Must that take place within two years, or can it be done at any time that suits the Secretary of State?

Lord Brabazon of Tara

I am not sure to what provision my noble friend is referring. There is a requirement for the port authority to consult with those who are locally concerned. I believe the time limit for that is given in a later part of the Bill as 42 days. Perhaps my noble friend is worried about other aspects of the consultation.

The Earl of Selkirk

I was inquiring about a provision that my noble friend referred to when he said there was an obligation to consult. I wanted to know about the conditions relating to that obligation.

Lord Brabazon of Tara

There are various different obligations within the Bill as regards consultation. I think my noble friend will find they are amply covered.

Lord Clinton-Davis

I listened carefully to what the Minister said. He referred to important matters on which I shall need to reflect further. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Clinton-Davis moved Amendment No. 13:

Page 4, line 12, leave out ("particular") and insert ("primary").

The noble Lord said: The purpose of this amendment is to question the word "particular". I should prefer the word "primary". If "primary" were inserted in the Bill I believe it would further elevate the issue of a management or employee buy-out. Under pressure in another place the Government conceded that point. They had not inserted it in the Bill originally, but under pressure from both sides of another place they conceded the point. I wish to see that point given additional emphasis. I believe that if the word "primary" were inserted in the Bill the Government would always be obliged to consider the practicality of a management or employee buy-out as the favoured possibility before they began to consider other possibilities that might emerge.

It does not follow that the Government would have to say that a management-employee buy-out was the best option. They would not have to confer their favour on it ultimately, but it should be recognised before other possibilities emerge. Otherwise the whole question of a management or employee buy-out is brought into question.

I should like the Minister to affirm that he will give that point the priority which the amendment seeks. I hope that he will respond positively. I beg to move.

Lord Boyd-Carpenter

I should have thought the word "particular" strong enough to express adequately the needs of the situation.

Lord Geddes

I, too, see no necessity for the amendment. It is a matter of semantics. However, the point relating to management buy-outs is very important. As the noble Lord, Lord Greenway, said in relation to Amendment No. 11, strong representations have been made on the subject. I have received a number of representations from those involved in the existing trust ports. To use their expression, the draft guidelines have put many of them off. They are regarded as either rather legalistic or straight out of the merchant bankers' standard draft. They do not fully address the specific problems involved in the trust ports. I ask my noble friend to look again at the guidelines—it is a great relief that they are still only in draft form—and to discover why the existing draft is regarded by some as off putting.

Two obvious points arise. First, how much help will the Government give to management buy-outs? Secondly, and more specifically, what price preference will be given? I do not expect my noble friend to answer specifically, either now or at a later date. Perhaps he would be ill advised so to do.

There are inconsistencies in the draft guidelines. I shall not bore the Committee with full quotations, but paragraph 5 states that the objectives, will need to include the obtaining of the best open market price for the port, taking account as necessary of any other objectives that might seem appropriate to the particular sale". Four pages further on, paragraph 15 states: Those proposals will need to take into account the extent to which the bids meet the objectives of the sale"— so far, there is consistency— and will not therefore necessarily recommend that the highest bid should be accepted. In particular a trust port may wish to recommend that a limited price preference should be applied to a bid from a management and employee buy-out team". On the following page—and this is my last quotation—the draft guidelines state that the Secretary of State, will accordingly be prepared to consider a limited price preference for management and employee buy-outs in individual cases and will have regard to the particular circumstances of each case". It has been put to me—and I have a great deal of sympathy with the point—that there is at the very least conflict between those three quotations. The present managements of trust ports and the British Ports Federation are confused about exactly what the Government have in mind and to what degree they will or will not encourage management buy-outs. If my noble friend can help in that respect it will allay a great deal of anxiety.

Lord Selsdon

I have a great deal of sympathy with my noble friend Lord Geddes. I had not intended to intervene; however, there is a very important point at issue. I believe that it is the Government's intention and wish to encourage and support the concept of management and employee buy-outs. If that is the case, they should look carefully at the draft guidelines in their present form. They will recognise that to some extent the guidelines create a conflict of interest within the managements as they struggle to honour their own obligations to government and the trust ports and their own ambitions for the future. I hope that my noble friend will look at the guidelines carefully. In addition, perhaps he can give an assurance that it is the Government's intention to give priority to management buy-outs.

Lord Brabazon of Tara

So far as concerns the amendment, we shall make the desirability of a management and employee purchase of a port the Minister's prime concern in supervising the arrangements for its disposal. However, subsection (3) of the clause already establishes a very favourable position for management and employee buy-out teams, and I believe that it is widely accepted that the present provision is the right one. As my noble friend Lord Boyd-Carpenter said, the word "particular" is strong enough and it is certainly no worse than the word "primary".

I should like to draw the attention of my noble friends Lord Selsdon and Lord Geddes to subsection (3) as a clear indication of the Government's wish to encourage management and employee buy-outs.

My noble friend Lord Geddes referred to the draft guidelines, the latest draft of which was published on 21st June. As my noble friend said, they are a draft and we look forward to receiving comments on them. I shall take into the account the remarks that my noble friend made as a contribution to those comments. I shall certainly take them into account.

My noble friend asked me—although he then said that he did riot want me to answer—how much help and what price preference we would give to management and employee buy-outs. My noble friend was right to say, and I am sure that Members of the Committee will agree, that it would not be wise for me to answer the question in detail. Circumstances may differ in individual cases. I believe that the question is best left unanswered at this stage.

The trust ports are national as well as local assets and arrangements for selling them cannot be manipulated simply to ensure that the sale is made to a particular bidder whatever the price. The Government hope very much that management and employee buy-out bids will be successful and we are prepared to accept a limited price preference for such buy-outs in individual cases. On the other hand, it would be wrong for the Government to allow the ports to be sold off cheaply whoever the purchaser is.

Lord Clinton-Davis

I fear that I have to explain again why I put down the amendment. It was to give complete priority to the concept of a management or employee buy-out and to ensure that that should be considered before any other option. That is why the word "primary" is used. That meaning cannot be attributed to the word "particular". Therefore, it is not a pedantic expression as the noble Lord, Lord Geddes, observed. I am sorry that I have to keep taking issue with the noble Lord, Lord Geddes, who is a very agreeable golfing partner.

Lord Geddes

To the best of my knowledge, and Hansard will prove me wrong or right, I said "semantic" and not "pedantic".

Lord Clinton-Davis

It is the same thing. The noble Lord may not agree with what I say, but I hope that he will appreciate that it is not a semantic difference. A degree of exclusivity would be offered to the management or employee buy-out. The Minister did not address that point, and presumably by not addressing it he repudiated the possibility. The Minister appears to be sceptical, but he should not consider any other options until he has considered and agreed or dismissed the prospect of an employee or management buy-out. That is the purpose. Perhaps I have the wrong word. I do not want to appear to be semantic about the matter; I am very anti-semantic.

The other point that worries me in that respect is that it apparently never occurred to the Government to think in terms of a management or employee buy-out when the Bill was drafted. They were converted by pressure from their own side and from the Opposition, and I am glad that they were so converted. Nonetheless, it never occurred to them to introduce the provision in the first place. That is why I am a little sceptical about their approach to these matters. To some degree the Minister is right. Clause 5(3) specifically refers to, encouraging the disposal to managers or other persons employed … of the whole or a substantial part of its equity share capital". Incidentally, it is interesting to note that, when he refers to "the whole or a substantial part of" the equity share capital, he distinguishes that from the debate that we had previously when he said that the whole of the share capital had to be transferred. That was in another context.

5.30 p.m.

Lord Brabazon of Tara

That is simple to explain. It is possible that a management or employee buy-out was not able to afford the whole of the share capital and that an institution or other shareholders would take another part of it.

Lord Clinton-Davis

That does not exclude the possibility in other respects either, but we shall return to that point. I should have thought that beyond the question of whether a management or employee buy-out could take the whole of the equity on board there are other considerations relating to our earlier debate which would make it desirable not to get rid of the entire equity share capital in the company. However, we have passed over that matter and it is certainly not appropriate to debate it now.

The provision must be strengthened and this is a way of strengthening it. Before I withdraw the amendment, I invite the Minister to say whether he will give that degree of exclusivity to the prospect of a management or employee buy-out in the way that I have outlined.

Lord Brabazon of Tara

I do not think that I can add anything further. It is all very well the noble Lord suggesting that we were dragged screaming into bringing the subsection into the Bill, but we have always been in favour of management and employee buy-outs. We have simply been persuaded by the arguments that the provision should be put on the face of the Bill. If the noble Lord carried his argument through logically he would not wish to see the Bill amended at all by the Government. I should have thought that that was not what most noble Lords wish to see.

Lord Clinton-Davis

The logic of that argument completely eludes me. There is plenty of scope for revision of the Bill quite apart from on this issue. If the Government were so manifestly concerned about management or employee buy-outs they showed it in an extraordinary way by not including the provision in the Bill. We may have to return to this matter, but in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Underhill moved Amendment No. 14:

Page 4, line 12, after ("to") insert: ("(a) the role of the port in contributing towards the achievement of his national ports policy and broader transport policies, in particular by providing access for people and goods in the least environmentally damaging way; (b) the contribution of the port to the economy of the region in which it is situated; (c) the views of—

  1. (i) the managers and other persons employed by the authority; and
  2. (ii) the local authorities serving the area in which the port is situated, and

The noble Lord said: In moving this amendment I wish to speak also to Amendment No. 24.

Clause 5, to which the amendment relates, deals with the control by the appropriate Minister over the exercise of the authority's functions under subsections (3) and (4). Clause 5(2) provides that the Minister may from time to time give certain directions. Clause 5(3), with which the amendment is concerned, makes clear that in exercising those powers the Minister shall have regard to a limited but important factor; namely, the desirability of encouraging the disposal to managers or other persons employed by the successor company of the whole or a substantial part of its equity share capital".

Amendment No. 14 stipulates certain matters to which the Minister should have regard. Paragraphs (a) and (b) set out what we believe is the role that the successor company should play. Paragraph (a) emphasises the role of the port in contributing to national ports policy and transport policies. It is interesting to note that on two occasions this afternoon the Minister said that some trust ports were valuable national assets. If they are valuable national assets surely they must play some part in the national transport policies, as paragraph (a) suggests. The provision also aims to continue one of the responsibilities that the trust ports have at present.

Paragraph (b) continues the objective of a trust port to act in the interests of the community in which it is situated. It must have some regard to the economy of the region in which it is situated. If it is to have some regard to encouraging the disposal to managers or other persons it seems obvious that such persons should have the possibility of giving their views. Paragraph (c) provides that the managers and other persons employed by the authority should be entitled to give their views and that regard should be paid to their views. We do not necessarily say that they should be adopted, but regard should nevertheless be paid to those views. The local authorities in the area should also be entitled to give their views.

Amendment No. 24, relating to Clause 9, deals with the scheme submitted by the relevant authorities. That clause refers to documents which must be issued. It should be noted that some of the points that we suggest should be in the document are similar to those in Amendment No. 14. My noble friend Lord Clinton-Davis may wish to say something further on the question of a business plan for the next five years. I beg to move.

Lord Clinton-Davis

Before the debate proceeds any further—my point is relevant to the amendment—I must say that I have been to the Printed Paper Office to secure a copy of the draft guidelines to which a number of noble Lords referred in dealing with an earlier amendment. I am told by the Printed Paper Office that, having been in touch with the Department of Transport, it has no knowledge of the draft guidelines. It has not been able to procure any copies.

That puts noble Lords, other than those who appear to be in a position of priority here by being able to obtain the document, in a peculiarly disadvantageous position. That is wrong. We on this side of the Committee—I understand that the same is true of the noble Lord, Lord Ezra—have no knowledge of what is in that mysterious document, yet it was apparently printed on 21st or 22nd of the month. The Minister referred to it and other noble Lords referred to it. I wonder how best we can proceed with the Bill without cognizance of the document. Before we proceed any further it is for the Minister to explain the extraordinary situation that has developed.

The document has obviously been of help to some noble Lords in enabling them to determine the Minister's approach when dealing with issues which are germane to a number of amendments before the Committee today. I am puzzled about the situation. Perhaps the Minister will advise the Committee as to how the situation has arisen, where the document is now, how it can be procured and whether it will be in the Printed Paper Office in the near future.

Lord Murton of Lindisfarne

Before my noble friend replies, perhaps I may say that I discovered a document dated 16th May in the Library. I gather that it was placed there as a result of my noble friend's promise at Second Reading. However, I must also say that I failed totally, as did the noble Lord, Lord Clinton-Davis, to find anything dated 21st June.

Lord Brabazon of Tara

Before dealing with the amendment, perhaps I may answer the valid point made by the noble Lord, Lord Clinton-Davis. My noble friend Lord Murton is quite correct in saying that the original draft guidance note was placed in the Library of the House. That document has since been updated. The most recent draft, to which Members of the Committee have referred, was issued on 21st June to the ports themselves for further comment. I suspect that my noble friends who referred to that draft guidance—it is an update of the copy already in the Library of the House—will probably have received copies from someone in the ports industry who will have seen them. I shall make sure that the most recent version, which I remind the Committee is still in draft form, is placed in the Library.

Lord Clinton-Davis

This is quite a serious state of affairs. The document reveals the thinking of the Minister in terms of the discretion and other powers that he may exercise under the material clauses of the Bill. This Bill is now in its Committee stage and the Chamber is faced with the position that some Members are apparently aware of the contents of the document while others are not.

We must consider the matter carefully. It is relevant to many of the amendments that we are soon to consider. I find it difficult to understand how we can proceed with this part of the Bill without having sight of the document. Obviously it is critically important as a guide to how the Government are likely to react. After all, the Minister himself referred to the document on a number of occasions.

We are under considerable prejudice as a result of not having the document and therefore not having an insight into what the Minister may be thinking. It is true that we are speaking of an updated document, but I have no idea in what respects it has been updated.

Lord Boyd-Carpenter

Before my noble friend answers the noble Lord, I should point out—perhaps it was a slip of the tongue—that he said that he would arrange for the document to be placed in the Library. Surely copies should be made available to the Printed Paper Office if it concerns a subject of debate in your Lordships' House. Frankly, one or two copies in the Library are not sufficient.

Lord Brabazon of Tara

The original draft guidance note was placed in the Library and has been there for quite a considerable length of time. All that is new is that the most recent version—I emphasise again that it is still only in draft—has not been placed there. I take my noble friend's point and shall ensure that as well as being placed in the Library it is put in the Printed Paper Office. I am afraid that I can go no further than that at the moment.

5.45 p.m.

Lord Clinton-Davis

This is a very important matter. The Minister may say that he cannot go any further. I wonder whether the Committee can go any further in its consideration of these amendments. I was not aware—perhaps I was not sufficiently diligent but evidently the noble Lord was also not aware—of the earlier document which was put in the Library but which has not been made available in the Printed Paper Office.

We have the Notes on Clauses, for which we are grateful to the Minister, but those are quite separate. The document is very important in terms of the points relating to the memorandum and articles of association that we shall be considering and the variety of other points that must be discussed. Yet we are denied that important document. I wonder whether we should not continue our consideration of the Bill until that document is made available. It is a very serious matter. I hope that the Minister will address himself to it.

I feel that the Committee should adjourn its consideration at least of this part of the Bill in so far as the document is germane to it until the document is available. It is an important document and the Committee should be given the opportunity to study it.

Lord Brabazon of Tara

I shall certainly send a copy to the noble Lord as soon as I possibly can. My noble friend Lord Murton confirmed that I said at Second Reading that I would place a copy of the draft guidance in the Library, and so I did. Had the noble Lord wished for additional copies, I could easily have supplied them. I received no such request. In this instance we are speaking of the most recent version of the draft guidelines which have been sent out to the ports as part of the consultation process.

Lord Clinton-Davis

With respect, the ports have been given a priority over Parliament, which is simply not good enough. How can the Committee consider the possible views of the Minister in relation to these critical matters unless it has had an opportunity to consider the document? It is no good saying that it will be available tonight. The fact of the matter is that the document needs to be carefully considered. Advice may have to be taken upon it. I do not know whether that is conceivable in a matter of even a few hours.

I do not want to take the Minister unduly to task but it is a matter which reflects on the priorities that have been applied. The ports have been given this information. Parliament ought to have had it contemporaneously. We are at the Committee stage of an important Bill. I ask the Minister again whether in these circumstances he will consider adjourning the Committee stage of the Bill so that there is an opportunity to see the document. A number of Members of the Committee are deeply concerned about the Bill. They may hold differing points of view, but that does not matter in this regard. The Committee is entitled to have this document before it when considering the wide variety of amendments that have yet to be considered. Indeed, it should have been available in relation to the previous amendment.

Baroness Young

I have considerable sympathy with the point made by the noble Lord, Lord Clinton-Davis. I also have considerable sympathy with my noble friend the Minister. I once found myself in a somewhat similar position and know only too well how difficult are such circumstances.

As a matter of practicalities, given that the first document has been placed in the Library—I assume that the noble Lord, Lord Clinton-Davis, has seen it as he is following the discussion so closely—and the second document is one that amends it, I wonder whether it would be possible to obtain a copy. Clearly, copies are available. I have noticed my noble friends referring to them. Even a photocopy would be something for those who want and need to have sight of the contents immediately. It is a difficulty that could be overcome, and I hope that such an arrangement can be made.

Lord Tordoff

I have not been party to all the discussions but it seems that we are close to a situation in which it would be wise to adjourn the Committee for a brief period so that the usual channels can discuss the matter. Certain arrangements might be made during that period, which could avoid pressure being applied for a fuller adjournment.

Lord Brabazon of Tara

The best I can do may be to ask the Committee to adjourn for a short period during which I shall provide the latest updated version of the draft guidance to the Printed Paper Office. I hope that we can find sufficient copies; otherwise they may have to be photocopies. I hope that that will not be objectionable to the noble Lord. I wonder whether anyone would care to give me a clue as to how long it is felt that this process should take. I am listening hard.

Lord Clinton-Davis

I should say about two years. Seriously, I am grateful for the suggestion made by the Minister. In practical terms, the difficulty will lie in digesting two documents and comparing them. I am therefore a little loath to suggest a specific time. The Minister knows the documents and the differences between them. Procuring a sufficiency of them for the Committee is another matter. I do not know how long the adjournment should last. Maybe we should leave it to the usual channels to discuss the matter. Obviously I shall help in whatever way I can.

Lord Tordoff

Perhaps I may suggest that an adjournment of half an hour would be reasonable. If we find that there is need for further adjournment that can always be moved. During that period we can have discussions through the usual channels. Perhaps the Minister will be good enough to do what he can to provide the Committee with copies.

Lord Graham of Edmonton

From these Benches, we certainly accept 30 minutes as a reasonable period.

Lord Brabazon of Tara

I hope that I can provide copies of the guidance notes within a much shorter period than 30 minutes. I therefore beg to move that the Committee be adjourned until twenty minutes past six.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 5.51 to 6.20 p.m.]

Lord Clinton-Davis

I wish first to thank the Minister and his colleagues for having made available a copy of the draft guidance notes. The problem is that the document is complex and, as it has only recently been handed to me, I have not had an opportunity to read and digest it. It is material to a number of amendments which, frankly, might otherwise have been drafted differently. Despite that we must plough on. The Minister must not rebuke us by saying that the proposals contained in the amendments are covered by the draft guidance notes, and I am sure that he will not do so.

I hope that we can learn one or two lessons from the incident. First, the Minister is right that at an earlier stage he said that he proposed to place a copy of the original draft in the Library. Apparently he did so but I do not believe that the practice is sufficient. The noble Lord, Lord Boyd-Carpenter, said that such a document should be placed in the Printed Paper Office. This is an important matter. I know that I should read the Minister's speeches with great care and I promise to do so in the future. However, on this occasion I missed his comment and therefore did not see the original document. That is my fault in a way, but it is a problem that should be overcome.

Secondly, it is important that the circulation of such documents be timed to coincide reasonably with debates which are to take place. We cannot do justice to the Bill this evening and, through the usual channels, have now resolved to complete the Committee stage this evening. I thank the Government Chief Whip for recognising the difficulties that I face next week. The best course is to carry on and to utilise the dinner break in considering the guidance notes further and deciding whether they have relevance to these proceedings.

Lord Geddes

I apologise to the Committee for being absent from the Chamber approximately 40 minutes ago when the matter was discussed. I wish to make clear to Members of the Committee that the draft guidelines that I received dated 21st June were not sent to me by the department. I am sure that my noble friend will confirm that a certain number of copies of the guidelines were distributed to the ports concerned; in my case to the British Ports Federation. It was from that source that I obtained the guidelines and not from the department.

Lord Brabazon of Tara

I am grateful for what was said by the noble Lord, Lord Clinton-Davis. I apologise to Members of the Committee for omitting to place the latest version of the draft guidelines in the Printed Paper Office. The original draft was placed in the Library. If there had been an overwhelming demand for that draft from Members of the Committee I should have ensured that all who wished to have a copy received one. Perhaps I was at fault in omitting to place the document in the Printed Paper Office. My noble friend Lord Geddes is right in saying that the department did not circulate the guidelines to any Members of the Committee. Copies were sent to the British Ports Federation from where my noble friend received a copy.

I take the point made by the noble Lord, Lord Clinton-Davis, about needing time to look through the guidelines. I hope that Members of the Committee will find them useful. The guidelines vary from the earlier version mainly because they contain more detailed guidance about how the Secretary of State will expect the roles to be arranged. The objectives of the sale of ports vary little from the original draft.

Perhaps I may remind Members of the Committee that we are discussing Amendments Nos. 14 and 24. I shall reply first to the noble Lord, Lord Underhill. Amendment No. 14 threatens seriously to hinder and delay the process of transfer and disposal by placing blanket statutory obligations on the Minister irrespective of the actual circumstances of the individual port sale involved.

The Government are fully aware of the need to ensure that port sales take place on a careful and realistic basis. But at the same time, the circumstances of individual ports differ so greatly that it would be neither careful nor realistic to saddle every sale in advance with criteria of the sort mentioned in the amendment.

Each port will, on an individual basis, agree objectives governing its own sale with the department before the formal process begins. The objectives will need to include the obtaining of the best price for the port, but they may also include plans for the port's future and other matters depending on individual circumstances. This will ensure that there is a suitable framework for each privatisation.

The amendment also seeks to impose an obligation on I he Minister to take into account the views of managers, employees and local authorities. Inasmuch as these views are likely, naturally, to favour a sale of the port to the management and employees themselves, the Minister is already required to have regard to the desirability of this under subsection (3) of the clause.

As regards other views, under Clause 9(3) the port authority is already obliged to take such steps as are reasonably practical to serve a copy of a notice of a transfer scheme on every one of its employees. All managers, employees, local authorities and any other interested parties will be able to make representations to the Minister at the same time as the transfer scheme is submitted; they are representations which he is obliged to consider. I have no doubt that those making representations will take that opportunity to express their views on the proposed sale.

It must be remembered that a transfer scheme will merely effect a port authority's transfer of its whole undertaking to a successor company which at that stage will still be its wholly-owned subsidiary. In practice, therefore, the scheme will be doing little more than re-establishing the former authority in a form in which it can enter the private sector. It is the business plans of those bidding for a port which will be important and they will become important at the point when the company is offered for sale. Also, much of the amendment proposed by the noble Lord would take us into the realm of the Government planning where ports should be, what business they should undertake and how they should undertake it. I know that that is dear to noble Lords opposite but we on this side of the Committee believe that the ports industry is a competitive business which should operate in the marketplace with as few restrictions on it as possible. These amendments reflect the difference in philosophy between us and therefore I cannot agree with them.

Lord Clinton-Davis

I am faced with a peculiarly difficult task this evening. I must listen to the Minister, try to read the document that has been distributed and attempt to understand whether it applies equally to the port of Tilbury as to the trust ports. That is not clear and perhaps in parenthesis the Minister could indicate whether it is the case.

I wish to allude further to Amendment No. 24. With respect, I do not think that the Minister has done justice to that amendment. I have not yet been able to marry up the draft advice that the Minister has given with what we propose. However, that is not our fault and no doubt the Minister will indicate whether there is a disparity.

Perhaps I may first draw attention to the fact that there is no indication in the Bill, so far as I can see, of the precise nature of the company documents which would have to be provided. It says what they should include and particularises those aspects. Therefore, I am simply seeking to probe the Minister in that respect.

I am not seeking in any sense to make this amendment all-embracing. It is possible that there are other issues which also need to be caught. But I now turn to the individual points which are raised in the amendment. Paragraph (a) refers to, a business plan for the company covering the next five years". Clearly a business plan is a prerequisite, but the period of time is a matter which can be commented upon. I do not know whether the period of five years is too long, but we should at least have something of the kind. Surely it is a matter of concern about which the Minister needs to be satisfied in relation to the proposed transfer.

Paragraph (b) refers to a "policy statement" to indicate, how the company's plans will contribute towards achieving the objectives of the Government's national ports policy". The Minister said that he is not much interested in that—although, perhaps, he did not say that in so many words: he implied it. It appears that he is concerned to deal with such matters in a piecemeal way. It is our contention that this is a matter of great concern. Indeed, it will be of great concern to us within the short period ahead when we shall take office. Moreover, it reverts back to the points that I made during an earlier debate. But I shall not weary the Committee by repeating them.

However, environmental policies are also important here. So far as I can see, there is no reference to them in the document—although I have only reached paragraph 14 and perhaps I am in for a shock, because it is possible that the Minister will have referred to environmental policies somewhere, though I suspect not. It seems to me that this is a critical element, having regard, notably, to the remarks made by the noble Lords, Lord Murton of Lindisfarne and Lord Greenway during earlier debates. I do not see how in this current day and age one can exclude that consideration. However, it is excluded from the Bill, and, so far as I can see, it is excluded from the draft guidelines. That is not acceptable.

Paragraph (c) of the amendment provides, as a primary objective for the company, the encouragement of the movement of goods and people [by]"— the word here should be "by" although the word "to" is used in the amendment— the least environmentally damaging means, and in particular provisional facilities designated to facilitate

  1. (i) coastal shipping; and
  2. (ii) the carriage of freight and passengers by rail.")".
So far as concerns the issue of coastal shipping, I believe that that is a matter of concern to the General Council of British Shipping, yet there is no reference to it whatever. In response, the Minister merely says that he and I do not agree or that he and my noble friend do not agree and that is that; that is the end of the story. However, it is not the end of the story. We are entitled to a fuller explanation from the Minister about the company documents and why, in particular—if I may emphasise one particular topic—there is absolutely no reference to environmental protection in the documents which he is calling on the company to provide.

6.30 p.m.

Lord Boyd-Carpenter

I am sorry that the noble Lord, Lord Clinton-Davis, is tiring himself out with the reflection that he may shortly be in office. I fear that he is indulging in wild speculation and causing unnecessary fatigue to himself. I am sure that he will be happy to reflect that he is likely to be relieved of any such worries.

I have one general point to make on both amendments. It is one which has not yet been made. When drafting a statute, if you spell out a large number of matters which must be taken into account—as both amendments do—then you raise, from the point of view of interpreting that statute, at least a presumption that other matters need not be taken into account. In other words, if you spell out a large number of matters, then matters not included will be assumed, and likely to be taken—if necessary by a court—to be matters with which you need not concern yourself.

Therefore, in drafting a statute, it is very often self-defeating to spell out many matters which you think are important. With due respect to the noble Lord, Lord Clinton-Davis, I must point out that none of us in drafting an amendment of this sort could possibly include every conceivable possibility. I believe that he is making a mistake from his own point of view by trying to put all these detailed points into the Bill. I say that because the effect is likely to be that other matters which may turn out to be just as important will more likely be thought to be excluded. I shall be much happier if the Bill stays in its present form.

Lord Geddes

Perhaps I may intervene briefly in respect of Amendment No. 24. I can only give the Committee an example of my own experience. It is effectively singularly unlikely, if not impossible, that any port could conceivably make a five-year plan. Ports do not work in that way. They work either on a day-by-day or a week-by-week basis. One does not know when ships will come into port nor what sort of cargo they may be carrying.

However, there may be one exception. I can give an example without mentioning the name of the port. On one occasion the port in question was asked to consider the implementation of a plan to put a complete covered warehouse alongside the jetty. That was a major investment. The company said, "Yes, we will contemplate this. It will cost £x million. Therefore, we should like an undertaking from you of y tonnes per annum at a price of £z per tonne in order to justify the initial investment". That was a major exception to the rule. The normal operations of a port simply do not work on a long-term basis; ports rely on short-term business coming in on an ad hoc basis.

Lord Greenway

I must take issue with the noble Lord, Lord Geddes, on that point. I was most grateful for his support during the earlier debates. However, I cannot let this pass. One of the ports about which I know a great deal, although it is not in this country, is already planning up to the year 2020. I cannot, therefore, believe that all ports are looking ahead only in respect of one or two years.

Lord Geddes

I believe that the noble Lord may have misinterpreted what I said. Of course, any port will look ahead to see what sort of projections it thinks will arise. I was talking about the actual commitment of cargo coming into and going out of a port. Other than the two exceptions of contracts of affreightment and a regular liner service—although, as the noble Lord, Lord Greenway, knows, liner service can be taken away—a port lives effectively from hand to mouth. It can plan to its heart's content, but it does not plan on any security.

Lord Brabazon of Tara

Perhaps I may say a few words in reply to the noble Lord, Lord Clinton-Davis. We have just heard an interesting debate between my noble friend Lord Geddes and the noble Lord, Lord Greenway. I know that both of them are very experienced in the matter of ports. Indeed, my noble friend has personal experience through actually being in the business and I know that the noble Lord, Lord Greenway, takes a close interest in ports, although he is not actually involved in the running of them.

So far as concerns the business plan of the successor company, we are talking about the situation before the port is bought. We should be more interested in the business plan of those who bid for the port, the intention of the bidders and how they relate to the objectives underlying the sale of the port. All those will be taken into account when considering bids for a port.

We should perhaps remind ourselves of the purpose of the Bill. It is the transfer of ownership of the trust ports from being trust ports to being in the private sector. We are not asking them, as the noble Lord, Lord Clinton-Davis, proposes in his amendment, to embrace any great ideas of encouraging a national ports policy—that was dealt with in a previous amendment—or regional, local, transport, planning or environmental policies. Environmental policies are not noted because the obligations of the port in regard to the environment do not change with the change of ownership.

With regard to the possibility of encouraging coastal shipping and the carriage of freight and passengers by rail, admirable as those objectives may be they would be quite a burden to place on a port merely because ownership is being transferred from a trust port to a private port. It is a burden that is not placed on any of the other ports. I remind noble Lords that over half the ports in this country are already in the private sector.

Lord Underhill

It is almost an hour since I moved the amendment. I have not forgotten what I said; I have a pretty good idea what it was. But I am certain that the Minister has not understood what we require. He said that we were not concerned with wide policies for the ports. Surely we should be. If the Bill is proposing to transfer the ownership of trust ports— nobody knows who owns them—to private organisations, we should know why we are disposing of them. That is the purpose of Amendments Nos. 14 and 24.

The noble Lord, Lord Geddes, referred to details and I bow to his knowledge of shipping. But all Amendment No. 24 asks for is, provisional facilities designed to facilitate (i) coastal shipping; and (ii) the carriage of freight and passengers by rail". We are not asking for details as to the times when vessels will come in and go out. We want to be sure that facilities will be provided. That is the point contained in Amendment No. 24.

All we can do is to read carefully what the Minister has said and consider how to act at Report stage. I repeat what I said at the outset. The purpose of the Bill is to ensure that new owners of trust ports—which, as the Minister has said on more than one occasion, are national assets—carry out certain functions. Therefore we must lay down some of those functions. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 p.m.

Lord Clinton-Davis moved Amendment No. 15:

Page 4, line 14, at end insert ("and pursuant thereto the Minister shall be satisfied that such managers or such other persons shall individually have received or had the opportunity of receiving independent and objective professional advice concerning the desirability of such disposal to them and that the expenses incurred in providing such advice shall have been discharged by the authority").

The noble Lord said: In moving Amendment No. 15, I shall speak also to Amendments Nos. 16 and 89. The purpose of these amendments is to facilitate the possibility of management or employee buy-outs.

I visited the port of Tilbury recently—I do not know whether the Minister has done so—and it was a fascinating opportunity to speak to management and employees separately, and to glean some indication from them of their respective attitudes. One of the most profound anxieties expressed to me was that the sale of Tilbury may be to a foreign company or to a company whose prime concern is with pursuits other than the development of the port. Employees were worried about their jobs and livelihoods in either contingency.

I sensed that people were not wildly enthusiastic about a buy-out for its own sake but were enthusiastic for that concept in preference to the other possibilities that appeared to be central to their thinking. It was to avoid those possibilities that in principle they welcomed the idea of the two options to which I refer. I susrect that the same anxieties would be prevalent in other trust ports. That is a point already raised by the noble Lord, Lord Murton.

Management or employee buy-outs can be a risky business. They undoubtedly require each potential participant to be properly advised by people who are capable of offering advice that is objective and independent, for example, of the interests of management. It is not inconceivable that in such buy-cut schemes there could be conflicts of interest between employees and management and between different groups of employees.

Each individual has different interests. There is a need to ensure that those interests are taken properly into account before that individual participates in a wider scheme. For example, one must take into account the individual's personal commitments. That is a private and confidential issue. It is not something that people want to discuss in a group. Mortgage and other personal commitments are relevant considerations in determining whether the individual should participate in such a scheme. Those commitments need to be carefully assessed with professional guidance so that the investor can be properly advised as to whether there is a risk of becoming over-extended. Enthusiasm for the principle is certainly worthy. But that enthusiasm can become distorted when viewed against the realities of the individual's existing commitments.

I turn to the question of costs. The cost of professional advice in this field may be very high. It may be beyond the means of the average employee. It is advice which some port authorities may be prepared to offer but that will not necessarily be independent advice. It may be thought that the interests of the port authority are inconsistent with those of the person receiving the advice. People should feel that the advice they are receiving is independent and objective.

People involved in buy-out schemes are not like the shareholders involved in a privatisation exercise. Those people frequently dispose of their shares at an early opportunity; they take a quick buck. I do not know what is the average proportion in privatisations, but a substantial number of people go into such ventures for that reason. We are speaking here of people who have devoted a lifetime of work to the service of the port: it is their precious savings that may be at risk.

Nobody should exaggerate the importance of management/employee buy-outs; they are not always appropriate. They may involve only a small part of the equity—perhaps as little as 10 per cent.—because they may not be able to match the investment requirements. The Minister appeared to make that inference when we were debating another issue a short time ago. For those reasons potential participants must know the full facts; they must know the truth about these matters.

It is perfectly reasonable that, if people are to be in a position to seriously consider all the possibilities, they should have independent and objective advice; that it should be paid for, because such payments are beyond the scope of individuals; and that it should be aimed at individuals as well as at a collection of people. All that should happen regardless of the outcome. It may be that bona fide people will come forward with a proposition but the proposition does not commend itself to the Minister. They will have been put to expense and should be indemnified. I beg to move.

Lord Brabazon of Tara

I have not had the opportunity to visit the port of Tilbury as recently as the noble Lord, Lord Clinton-Davis. I have visited it in the past: I wish to reassure him on that point. As the noble Lord explained, the amendment is about giving advice individually to managers and employees wishing to bid for a port. If they wish to do so they will undoubtedly take financial advice which will enable them to decide whether or not it is realistic for them to mount such a bid and, if so, at what level that bid should be. The port authority will be able to reimburse them for the cost of that advice. That is already in the Bill.

As the noble Lord explained, these amendments seem to require individual counselling for all those concerned as to whether their purchase of the port will be good for them. That is a matter for them to decide, but should they need further advice they will no doubt seek it. I do not believe that that is a suitable provision to add to the Bill. Therefore, I hope that the noble Lord will not press the amendment.

Lord Clinton-Davis

I do not consider that to be a satisfactory response. If the Government are proposing to maximise the possibility of employee buy-outs, then the Government must be prepared to go along the lines proposed by the amendment. It is all very well to put the employees in a position similar to that of anyone else coming forward with a bid; but they are not in the same position. The Minister conceded that: they have to be given certain precedence. That is one of the sure ways of providing that they receive expensive advice. I believe that the Bill provides for indemnity in whole or in part. That is another matter we shall refer to. I shall seek to eliminate the words "in part". We shall find out in due course whether the Minister responds to that. He assures me that he will, but I am not sure whether we shall hear from him or whether he will concede.

Lord Brabazon of Tara


Lord Clinton-Davis

This is a test of the Government's credibility. The Minister has not begun to answer the point. In the circumstances I believe that the news he has given the Committee tonight will come as a shock to people at Tilbury and elsewhere who are placing great reliance on the possibility of a scheme of this kind being made available to them. I fear that they will be put off. I fear also that the costs will frequently be too great for a scheme even to be contemplated. There are many uncertainties as to whether those involved will be reimbursed. The employees need help at a very early stage, much more so than other bidders who will not be short of money or of the ability to get advice.

I suggest that what the Minister has said tonight runs completely counter to the suggestion that the Government want to maximise the possibilities of a management or employee buy-out. It is bad news. I do not know whether the Minister wishes to reply. He indicates not. I shall want to come back to the issue at Report stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 agreed to.

Clause 6 [Supplementary provisions as to the authority's functions]:

[Amendment No. 16 not moved.]

Clause 6 agreed to.

Clause 7 [Dissolution of the authority]:

Lord Underhill moved Amendment No. 17:

Page 4, line 43, after first ("authority") insert ("relevant local authorities, users of the port, trade unions representing the employees of the authority and conservation bodies including local conservation bodies").

The noble Lord said: In moving this amendment on behalf of my noble friend Lord Clinton-Davis, I wish, with the leave of the Committee, to speak also to Amendments Nos. 26, 41, 43, 44 and 81. To save the time of the Committee, instead of going into each of the subsections where we want these particular words included, I propose to make a general statement. Wherever there is to be consultation with the authority, we wish consultation with the other bodies also to be included except in the case of Amendment No. 26 to which I shall refer later.

The Minister said at Second Reading: This is too important a matter to leave entirely to those who have been appointed, for the time being, to the boards of these ports".—[Official Report, 10/5/91; col. 1324.] That is excellent justification for having the consultation process widened. It will be noted that we wish to include consultation with the relevant local authorities, bearing in mind, as I have said two or three times today—the Minister has not always agreed—that in most cases the local authorities were deeply involved in setting up trust ports and in the work that they are carrying through. We believe also that the users of the ports should be consulted on particular matters as should trade unions representing the employees of the authority. We also wish to include local conservation bodies.

I note from a report in February that the Nature Conservancy Council held a conference about the effect on the environment of developments in Britain's ports and estuaries. The council regards that as a very important matter. We believe that it should be consulted along with any local conservation bodies in the area.

I now come to the one exception, which is Amendment No. 26. Clause 9(3) states: Where an authority have submitted such a scheme to the appropriate Minister, the authority shall—

  1. (a) publish by Gazette and local advertisement the required notice relating to the scheme; and
  2. (b) take such steps as are reasonably practicable to serve a copy of that notice on—
(i) every employee of the authority". We believe that while it is good that every employee of the authority should receive a notice, that is not sufficient. Amendment No. 26 provides that a copy of the notice should be sent to, any trade union representing employees of the authority". I have spoken in a form of shorthand, but I am sure that Members of the Committee will understand what we seek. I await the Minister's response with great interest. I beg to move.

Lord Ezra

I support the amendment. The dissolution of a port authority is a very important decision to take. Other bodies should be consulted about it apart from the authority itself. No doubt the Minister will have satisfied himself of all the matters mentioned in Clause 7. Nonetheless, it is advantageous from the Government's point of view that all bodies concerned in the operation of the ports—in many cases over many decades and maybe even centuries—should have been consulted before the act of dissolution takes place.

Lord Murton of Lindisfarne

I support what the noble Lord, Lord Clinton-Davis, said. The harbour authorities generally have representatives on their bodies of all the various users and trade union representatives, and in particular the local authorities, who often nominate members. As far as I am aware, the conservation bodies have no representation at all. In a major upheaval such as the privatisation of a port, full consultation should be held locally.

7 p.m.

Lord Brabazon of Tara

I believe that Amendment No. 17 is unnecessary. By the time the question of dissolving the authority arises it will be a port authority in name only. All its property, duties and liabilities, except such as are required by the provisions of the Bill, will have passed some time before to its successor company. The act of dissolution itself, as Clause 7(2) indicates, affects the final transfer of these residual rights, liabilities and so on, but does nothing else. Clearly, the only parties that need to be involved in this formal winding up of the privatisation process are the Ministers and the residual authority itself. There would simply be no locus for any of the parties mentioned in the noble Lord's amendment.

The later amendments are also unnecessary. I refer to Amendment No. 26. The authority is already obliged to take such steps as are reasonably practical to serve a copy of the notice of the scheme on every one of its employees—a process which certainly is more direct and democratic than going through the local trade union. Any employee, or for that matter any trade union, who wishes to do so will be able to make representations to the Minister within 42 days of the scheme being submitted, which of course the Minister is obliged to consider.

The later amendments all relate to the probably rare situation where the Secretary of State is obliged to propose and then to make his own scheme of privatisation. It must be remembered that by the time that happens the Secretary of State will already have fully consulted the port about the prospects of privatisation. The Bill already obliges him to consult the port before preparing his own scheme. He then has to advertise the proposed scheme locally and nationally under the existing provisions of Clause 12. In addition, the authority has to take all practicable steps to serve a notice of the scheme on all employees and on certain other individuals. There will then be a 42-day period in which any interested party can make representations to the Secretary of State, which he is obliged to consider. Further consultation with the authority has to be undertaken, still under the existing provisions of the Bill, before the Secretary of State can modify the proposed scheme.

I hope I have persuaded your Lordships that there are already sufficient provisions in the Bill for consultation and the consideration of representations. I see no need to add to them as proposed in the amendments.

Lord Underhill

I am grateful to the noble Lord, Lord Ezra, for his support for the first amendment in this group. I presume he also supports a number of the other amendments. I am also grateful to the noble Lord, Lord Murton, who recognised the importance of conservation bodies. I listened with great interest to his speech on Second Reading on behalf of the port of Poole and I can understand why he appreciates the need for conservation bodies to be consulted.

Having listened to the Minister's reply I wish now that I had taken every one of my amendments one by one, explained exactly where they were situated, and argued the case; but I tried to be helpful to the Committee by not doing so. However, I shall study carefully the Minister's reply. He said sufficient consultation is provided for in the Bill. We on these Benches think otherwise or we would not have tabled these amendments. The Minister may smile at that, but I can assure him that we have looked very carefully at the Bill and its various provisions and decided where there is need for wider consultation. In an important matter of this kind we are dealing with the possible transfer—certainly with the formation of successor companies—of practically all the trust ports, the background of which very few people know but which came into existence via several Acts of Parliament. We must ensure that there is the widest degree of representation for consultation. That is the point of all these amendments. I repeat, we shall study carefully what the Minister said.

Perhaps I may deal with one specific point he mentioned. The Minister is satisfied that there is no need for our Amendment No. 26, believing that if every employee has a copy of the notice there is no need to send a copy to the trade unions. I should have thought it elementary common sense that if one wants to obtain support and people to understand exactly what one is after it is not sufficient to send a copy to each employee, but also to the trade unions who may have employees in the respective port authority areas. That is the point of Amendment No. 26. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe

I beg to move that the House do now resume. In moving this Motion I suggest that the Committee does not resume until five minutes past eight.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.