§ 7.5 p.m.
§ The Parliamentary Under-Secretary of State, Northern Ireland Office (Baroness Denton of Wakefield) rose to move, That the draft order laid before the House on 19th January be approved.
§ The noble Baroness said: My Lords, the purpose of the draft Ports (Northern Ireland) Order 1994 is to enable a relevant port authority, if it so desires, to form a successor company, registered under the Companies (Northern Ireland) Order 1986, and to transfer to that company all of the port undertakings. It would introduce provisions broadly in line with those already in force in Great Britain by the enactment of the Ports Act 1991, which was designed to provide a more efficient means than currently existed for ports to privatise themselves. It is right that Northern Ireland should have the same freedom as Great Britain.
§ At the same time I would like to speak to the draft Ports (Northern Ireland Consequential Provisions) Order 1994 which deals with taxation.
§ Noble Lords will be aware that to advance the strategy of progressively opening up the ports industry to market forces, the Government concluded that it was in the public interest for most of the major trust ports in Great Britain to enter the private sector although it was accepted that immediate privatisation might not necessarily be right for all of them.
§ The main thrust of the Government's policy was to enable these ports to develop their potential by giving them access to share capital as well as loan capital. It was intended that this would make them more attractive as partners to companies that might wish to go forward in joint ventures. It would also enable them to stimulate the development of land surplus to their requirements and make it easier for them to diversify their activities, thereby ensuring their viability for the future.
§ It may be helpful if I say something by way of background about the position of the Northern Ireland trust ports although the order is not confined to these alone. There are only four; namely, Belfast, Coleraine, Londonderry and Warrenpoint. In addition, Carlingford, which is essentially a navigational authority, is also included in this category. These ports are independent statutory bodies, each established under its own local legislation. They are not owned by anyone, nor are they accountable to anyone. Their status makes them neither properly public nor properly private, answerable neither to shareholders nor to the Government. Nor is there an overall pattern to the scope of, or the restriction on, their powers and duties, which differ from port to port.
§ The order before your Lordships is essentially a technical measure to extend the Government's policy on the privatisation of trust ports to Northern Ireland. It is an enabling measure which recognises that since many different circumstances affect individual ports, it would not be appropriate or sensible to have a blanket policy which automatically applied to all ports.
§ The order would empower any relevant Northern Ireland port authority, as defined in the order, to submit a privatisation scheme to the Northern Ireland 300 Department of the Environment for approval. The port authority would be required to pay to government a 50 per cent. levy on the sale proceeds, with a further levy payable by the new owners on gains arising from any disposals of land within 10 years of privatisation.
§ The order would recognise the desirability of employee participation in the privatisation process by empowering a relevant port authority to reimburse the costs incurred by a management-employee buy-out team in mounting a bid for a port's undertaking.
§ While it is essential enabling legislation, the order would also empower the department to give a direction requiring a harbour authority to bring forward a transfer scheme. This reserve power has been made subject to a number of constraints. It cannot be used until a period of two years has elapsed from the enactment of the order, and only then after consultation with the port authority concerned. Moreover, it will apply only to those ports with an annual turnover of £5 million. This amount will be index-linked and in a Northern Ireland context. This effectively excludes all ports except Belfast.
§ Finally, if after two years the department consults a port about the application of its powers of compulsion but decides not to apply them, it will not be able to reconsider the application to that port for a further period of five years. I hope that these important safeguards in the order will reassure your Lordships that the Government have the clear intention of applying reserve powers only in a careful and responsible manner.
§ I would, in closing, stress again that this is not an order to privatise Belfast port. It is an enabling order, following the Ports Act 1991. It may be useful for the House to know that in Great Britain, where the powers of compulsion have been available for over a year, they have not been used. I hope tonight we may discuss the orders in front of us, and not hypothetical scenarios. I beg to move.
§ Moved, That the draft order laid before the House on 19th January be approved.—(Baroness Denton of Wakefield.)
§ Lord Fitt
My Lords, there is one very short question that must be asked at the beginning of this debate. That question is: why? Why have the Government embarked on this exercise to privatise Belfast harbour? I listened very intently to what the noble Baroness said. This is not an order to privatise; it is only an enabling order to allow the Government after two years to compel the harbour authorities in Belfast to privatise. So this is a matter of semantics. It is a play on words. If the Government were not intent on, at some time or other in the future, pushing the Belfast harbour authorities into the position of privatising themselves by the compulsory acquisition of harbour property, why would they go ahead with this provision?
It may be said—I believe it was said on another occasion by the Minister—that the purpose of this measure is to bring legislation in Northern Ireland into line with that in Great Britain. In this House and in another place it has been said repeatedly that Northern Ireland—and in this case Belfast—is totally unlike any 301 other part of the UK. The port of Belfast is not like any other port in the United Kingdom. The port of Belfast is situated on the island of Ireland. It is not in competition with other UK ports. But it is very, very much in competition with ports in the Republic of Ireland.
If we read carefully the words on what is liable to happen if and when privatisation takes place, then the port of Belfast, and Northern Ireland, will be at a serious disadvantage. It has been clearly stated—and I leave it to the noble Baroness to clarify the position tonight— that a trust port such as Dublin will be eligible for a 75 per cent. European Union grant, while a private company, if it were to go on to own the port of Belfast, would be liable for only a 50 per cent. grant.
The British and German governments have been until now—it may change within the next year or two—the main contributors to European funds. Here we have a British Government, one of the main contributors to the EC and continuing to be so into the foreseeable future, denying the people of Belfast and Northern Ireland the extra 25 per cent., or indeed 35 per cent., grant from European funds. One must ask: is this Tory philosophy? Is it Tory philosophy gone haywire? Is it pure ideology and Tory dogma —a case of, "We have done it in Great Britain so it must be good for Northern Ireland?"
Many times in this House I have had to say that Northern Ireland is not like Kent. It is not like any other part of the UK. And it has been proved repeatedly that it is certainly not like Finchley. The situation in Northern Ireland is totally different. What applies to ports in other parts of the United Kingdom certainly may not be applicable to the port of Belfast.
I speak with some experience on this issue. For many years I was a Member of Parliament in the Northern Ireland Assembly. I was also a Member of Parliament in the UK for the Belfast West constituency. At one time my constituency covered the whole of the Belfast harbour area. I remember the times when there were hundreds and hundreds of dockers. Now there are 85. I remember when the dock labour scheme was in operation. Now it is no longer in existence. And perhaps advances have taken place on the running of Belfast harbour.
The reason given for privatisation throughout the 1980s by the then Conservative Government was that it brings about more efficiency; that it does away with overmanning; that in the situation that existed then it was to the advantage of the taxpayer to transfer from a failing industry or a failing enterprise to one which the Government, with private enterprise, could remedy. That is not so in Belfast.
Since 1785 the port of Belfast has been a trust port. It is rather questionable whether the Government can legally undertake what they are trying to do with this legislation. It has been said—the noble Baroness herself said so this evening—that trust ports are not owned by anyone. But the facts of life in Northern Ireland are that the trust port of Belfast does not receive one single penny from the Government. Over a number of years the authorities have run that port and its accessories in so successful a way that they pay very heavy capital gains tax to the Government. They do not ask for 302 anything in return. All they ask for, and get—which is their entitlement—are grants from the European funds, which have nothing to do with the Government unless the Government make application to the funds. So why —I keep asking the question—have the Government done this?
At the moment there are nine harbour commissioners in control of Belfast harbour. They are appointed by the Government. Whatever may be said of the present situation, the Belfast harbour commissioners over many decades—indeed it runs to over a century—have carried out their functions with efficiency, and indeed honour to the city of Belfast. By all the agencies of direct rule since the abolition of Stormont, the Government have now taken over the position whereby they appoint the commissioners. I must ask—one would be foolish not to ask—seeing that the Government are in the position of appointing the commissioners, will there not be a gun pointed at their head? Is it not likely that the Government will appoint "yes" men. They will make the appointments in October this year. Within two years, if the present Government are in existence, and certainly in the run-up to the two-year period when the Government will begin thinking about compulsion, they will want to have as many people as possible among the harbour commissioners who support their ideas on privatisation. That is a very, very unfair way to treat the harbour commissioners in the port of Belfast, and indeed in Northern Ireland.
When we talk about Belfast, we are not talking about one little area of the harbour commissioners, or about one little port in Belfast. We are talking about the whole Northern Ireland economy. Belfast is crucial to the whole six-county economy in Northern Ireland. If the port of Belfast fails, it will affect not only the people of Belfast; it will affect the people of Fermanagh and Tyrone and the outlying districts of the Province. So again I ask: why are the Government laying down this edict that within two years the harbour commissioners must come up with their own privatisation scheme?
With a great deal of regret I say to the noble Baroness that not for the first time I am deeply offended by the way in which Northern Ireland business has been conducted in this House. If the port of Belfast were situated in any other part of the United Kingdom—on the land mass of Great Britain—there would not be such a sparse attendance in the Chamber as there is this evening. We should not be threatened by an Order in Council which is of such major and crucial importance to the future of Belfast. We should not be threatened that it would go through on a negative resolution. It would not be an order if it affected any other part of the United Kingdom; it would be a Bill. There would be a debate: first and second readings and a Committee stage to go through. The Bill would probably come to this House. I believe that the people of Northern Ireland have a right to feel seriously aggrieved by the way in which the order has been promulgated.
I listened to the debate in another place. The new Minister who introduced the Bill did not do himself any favours. I am not sure how he conducts himself in the other place as such, but so far as concerns Northern Ireland he did not do himself any favours. Let me put 303 to the noble Baroness what was put to him in that debate. The Government say that they asked for submissions from those who would be interested in the development of the harbour and future developments. They said that they received 50 representations—in fact, I understand that the number was 54. So there are that number of organisations in Belfast who are connected with the port and who are very fearful of future developments. They made submissions to the Minister who, in quite an airy-fairy way, said: "I read them all but it didn't really matter."
The people of Belfast and Northern Ireland must not be treated in such a high-handed fashion. I ask the noble Baroness whether she can give some detail tonight of who were those 50 or so people who made representations. Were they connected with Belfast harbour? Were they or had they been involved in the running of the harbour over many years? Did they have misgivings about what was liable to happen in the future? Let me ask the noble Baroness a straight question: did any of those 54 representations say, "Yes, yes, we are standing up and applauding the Government for taking this initiative." I have serious doubts whether any one of those representations were in fact in support of the Government.
The question has not been fully answered. Perhaps the Minister will say that they do not need to answer these questions because nothing will happen for two years. But that is not the way the people of Northern Ireland see the matter. They see this order as the first step down the very short road to privatisation.
What will happen to the harbour police, a body which has been in control of the security of harbour property over many years? They have carried out their functions very visibly and very well. They are an armed force in Belfast. The reason that they are armed is to prove that they are not like the police in Finchley. You do not need armed police in Finchley; you do need them in Northern Ireland. If that armed police force is to be privatised, will a Group 4 organisation be set up in Northern Ireland? Is there to be a privately armed police force to look after harbour property in Northern Ireland? That is quite unlikely. Given the record of this Government, I believe that it would be very foolhardy to put a Group 4 organisation in control of Belfast harbour. Again I say that Northern Ireland is totally unlike any other part of the United Kingdom,and that is certainly true of the port of Belfast.
The Minister says that trust ports are not accountable. There are a great number of quangos in the United Kingdom at the moment. They are unaccountable, in the view of many people. Far too many quangos, with their lack of accountability, have been created by this Government. So why is there the implication that because the trust port of Belfast has been unaccountable it has been doing something wrong? Has any charge ever been made against the harbour commissioners and those who are in control of the port facilities of Belfast? Has any charge been made that they have been doing something to the detriment of the city of Belfast and thereby to the detriment of Northern Ireland? If such a 304 charge can be made, it may mean that other people feel some justification in examining the Government's proposals.
I know the area very well. On the east side of Belfast harbour there is a lot of land, particularly in the Belfast shipyards and around Belfast city airport, which could be exploited by private enterprise if it were ever to get its hands on it. All too sadly we have seen fly-by-night private companies coming into Northern Ireland, obtaining government grants, making a profit and then leaving. We have only to think of DeLorean, or Birmingham Sound in Deny, or Zeenozipp in Newry. Private companies do not and will not come into the city of Belfast or Northern Ireland with the intention of helping people in that area. Private companies come with the idea of making a profit for themselves. I would have serious reservations about letting a private company come into Northern Ireland to bring about open exploitation of the land on the eastern side of Belfast Lough.
I can only repeat my question: why have the Government embarked on this change? The port is being efficiently run. It is paying tax to the Government. There have been no great scandals. People have not been caught with their hands in the till. No money has been filched from the harbour authorities. It is not as though thèy have not enough to do. This Government have a lot of things to do and could have been doing something much more important than embarking on this enterprise.
I tell the noble Baroness that this proposal has succeeded in bringing together the most diverse elements in Northern Ireland. Belfast city council, the trade union movement, politicians of all descriptions, people who have been involved with the harbour, the harbour commissioners themselves and the executives who run the business end of the harbour have all voiced opposition to this proposal by the Government.
As we have so sadly seen over many years, Northern Ireland has many problems. I urge the Government to think again before going ahead with the order. It will cause serious trouble and a serious breakdown in relations between the people of Belfast and Northern Ireland and the people of the United Kingdom.
§ 7.30 p.m.
§ Lord Cooke of Islandreagh
My Lords, I find myself at one with the noble Lord, Lord Fitt, in what he said most ably. He made the case without any matter of doubt. But this is so important to all of us in Northern Ireland that several parts of the argument must be gone over again.
This is not a hypothetical order. It is written in general terms but it can only apply to the port of Belfast. The port of Belfast has a specific place in the Province. Fifty-four different organisations submitted papers in response to the consultation process. The views expressed by those interested parties were disregarded. Why on earth do the Government wish to proceed with the order if in due course they do not intend to see that the harbour is privatised? One can only assume that it is the Government's intention to privatise the port in due course and that is what is causing such widespread and general alarm.
305 We ask: what is the case for privatising Belfast port? Will it bring substantial benefit to the port, to the users and to the economy of Northern Ireland? If not, is the Treasury simply interested in the cash that privatisation will bring? Everyone engaged in trade or industry in Northern Ireland knows that we work at a disadvantage to those on this side of the water. The costs of raw materials are higher to us in Northern Ireland and it costs more to export our goods. That is something the bosses, the managers and every other person knows. It is vital that our transport costs are kept to a minimum. That is what the Belfast Harbour Commissioners have been trying to do for 200 years.
As the noble Lord, Lord Fitt, said, formal management started in 1785. Under the Harbour, Docks and Piers Clauses Act of 1847 the commissioners were elected by the business rate payers of the city and their powers and duties are clearly set out. I can think of nothing more democratic than having them elected by the business users of the city. Many families whose companies traded or manufactured in the Belfast area have been connected with the port. My own great-grandfather was one, as Lord Mayor of Belfast in 1866. My uncle was a commissioner and I served as a commissioner in the late 1960s and 1970s.
Throughout the history of the Belfast port the majority of commissioners have been prominent business people who have headed up private businesses in and around Belfast. It has been their objective to ensure that the port is efficient with low charges and facilities to match the needs of industry in the area. The relevant Act requires the commissioners to deal fairly with all users—an important point—whereas it is not unknown for a privately-owned port to favour its owners. If Belfast port is privatised and the owner appears to be inefficient or to neglect the interests of one type of user, little can be done. If the present commissioners should appear to so act, they will be replaced.
Naturally, the management style of the Belfast Harbour Commissioners has changed over the years, but probably never more quickly than in (he past 10 years when the commissioners have felt it necessary to reduce costs wherever possible and to ensure that the port is competitive. To measure the efficiency of a large general port like Belfast is difficult and must include consideration of the stevedoring arrangements. Stevedoring in UK ports has been inefficient in the past and Belfast port, although better than others, had inefficiencies as well. However, after lengthy negotiations including input from the harbour commissioners, stevedoring was reorganised. The old stevedoring organisations were disbanded in 1993 and we now have three competitive companies employing port operatives. Restrictive practices have gone. And they really have gone. I visited the port last week and was told that a port operative can be driving a train one moment but if he is not needed there he will be sticking notices on containers or some other menial job. In 1985, 277 men were employed in stevedoring duties. In 1994, 84 port operatives are employed leading to a very substantial reduction in the cost of loading and unloading cargoes. Those numbers represent a reduction 306 of 70 per cent. In 1984 the total employed by Belfast harbour commissioners was 324; in 1994 the total is 158 including the police service—less than half the number 10 years ago. That means 158 employees are responsible for management, administration and attention to the wide variety of equipment for which they are responsible over many hundreds of acres. Support services have been contracted out to private companies wherever practicable. In 1993 84 dock workers and 158 harbour employees handled 11 million tonnes of cargo. It would be interesting to know how those figures compare with other large UK ports.
That rapid change has not been easy. The commissioners are supported by their dedicated management team and the change has been carried out in consultation with the trade unions and other relevant parties. Tribute must be paid to all concerned that the; changes have taken place without disruption or withdrawal of labour. That is because everybody concerned understands that if transport costs can be: reduced the chances of jobs elsewhere in Northern Ireland are improved.
I want to turn for a moment to the capital investment which has taken place, because that is important. In the late 1960s it was realised that the old port, with its restrictive space and long sheds, could not be made convenient, suitable or economic for Ro-Ro and lift-on lift-off traffic. The only way to rearrange things to make it economic was to reclaim several hundred acres of land to form new quays and hard standing to the north of the present port in what was then open water. Each year the profits from harbour operations after tax are put into the new facilities. Last year the new berths were commissioned—25 years after the decision to reclaim the land. The process is on-going and over £100 million has been invested in the past 10 years.
Trust ports generally are eligible for support by the European Regional Development Fund to a maximum of 75 per cent. but private companies are limited to a maximum of 50 per cent. I understand that that is fact and nothing could be done about it if Belfast port were to be privatised. There is also the possibility that if Belfast port should be privatised some of the EC funding already given would be clawed back, thus either reducing the proceeds to the Treasury or crippling the port.
Belfast is the only port in Northern Ireland with 34 feet of water and able to handle all cargoes including bulk cargoes, petroleum products, coal, grain, chemicals and general cargo. It is not in competition with ports in Great Britain; it is in competition with the deep-water ports of Dublin and Cork, primarily Dublin. At present 55 per cent. of the total sea-borne tonnage handled in Northern Ireland passes through the port of Belfast and a substantial proportion of the sea-borne trade generated in the greater Dublin area passes through the port of Belfast because it is the cheaper way to move the traffic.
Dublin port has had serious labour problems in recent years which resulted in the almost complete closure of Dublin some two years ago, but Dublin is moving forward again under new arrangements and is determined to become efficient and recover trade presently handled by Belfast. Dublin will make full use 307 of the 75 per cent. funding of fixed assets to which it is eligible and could get 85 per cent. under new Cohesion Fund arrangements.
Port charges which shippers have to pay reflect the fact that fixed costs represent at least 75 per cent. of the total charge, the small balance being variable costs. Dublin is eligible for grants of up to 75 per cent. and probably 80 per cent. A privatised Belfast port would only be eligible for 50 per cent., meaning that the nett cost of fixed assets in Belfast would be double that for Dublin. A privatised Belfast even with zero variable costs would be unable to compete with Dublin on port charges. In other words, if the port were privatised and the management and everything to do with it and the financing were zero, Belfast would still be at a disadvantage compared with Dublin. To us in Northern Ireland that is a very serious matter.
It is interesting that the Government in the Republic of Ireland have taken note of the efficient operations of Belfast port and decided that their ports should be restructured with trust or semi-trust status in order to make them eligible for maximum European funding support. They are changing the structures in order to make them eligible. The conclusion must be that Belfast port, if privatised, could not in time compete with Dublin port which would receive almost double the assistance with new facilities. Belfast charges would have to rise and Dublin charges would reduce. The cost to the industry would be more because the costs of Belfast would have risen.
There is also the property side, which the noble Lord, Lord Fitt, mentioned. Belfast harbour commissioners own more than 2,000 acres, which is leased to large companies such as Harland and Wolff, Shorts, Bombardier and many other companies large and small. Twelve thousand people are employed on the estate. New acreage is being reclaimed and presently 350 acres are available for development. The harbour commissioners intend this land to be let as far as possible for port-related activities and planning is carried out in conjunction with the Industrial Development Board in order to make the best use of a very scarce resource.
It is bound to be tempting for a new private owner to sell off land for maximum cash generation and without regard to the long-term development in the interests of industry generally. Careful long-term development of this land in consultation with the city and government is a pre-requisite. Could a private owner be relied on to do that? If there is no obvious advantage to port users in privatising the port, why take the risk on the property development side of putting in private hands what is presently being responsibly developed as an asset to the Province?
The order includes provisions for the way in which the proceeds of a sale would be dealt with, which strike us in Northern Ireland as a little unusual. The Government have said that no one owns the port. Surely that is a little dismissive. What 200 years ago was marshland in the estuary of the River Lagan has been progressively developed for the benefit of port users and the economy—first of all for the ratepayers in Belfast 308 but in recent years for the Province as a whole. The harbour belongs to the Province. In our view in Northern Ireland, the Treasury has no right to it.
Belfast port has never received any government assistance for capital assets. It pays corporation tax and all other taxes as would a private company. However, the Treasury is nothing if not cunning and has devised a way of pulling in the proceeds of the sale without suggesting ownership. The order requires the port authority to pay the Government a 50 per cent. levy on the proceeds of the sale. The other 50 per cent. would remain with the authority and therefore the purchasers will get it back again. As the purchasers will get 50 per cent. back into their own pockets, this means that they can afford to bid twice what they think the port is worth, which means in effect that the Treasury will get 100 per cent. of the value after costs. I refrain from commenting on the morality of such an arrangement as no reason has yet been advanced by government to show the benefit of privatisation to the port of Belfast or the community. Is the sole reason that the Government are craving to get their hands on £50 million or £75 million?
Last year various interests were consulted by government as is required before putting forward the order. Fifty-four replies were received and I have copies of three of the replies submitted. CBI Northern Ireland opposed privatisation as being harmful. The Northern Ireland Chamber of Commerce and Industry set out in great detail the reasons why the Government's proposal for privatisation should be dropped. The submission of the port of Belfast trade union side is well set out and was well argued by the able people leading the trade unions in Northern Ireland. I can do no better than quote from the conclusion of the trade union submission:TUS believes that no good case exists for the privatisation of the Port of Belfast. The position of Northern Ireland Trust Ports, in particular Belfast, is substantially different from ports in Great Britain, especially with the competition from ports in the Republic of Ireland and that privatisation would therefore do untold damage to the whole of the Northern Ireland economy. It is extremely reprehensible of Government to enforce privatisation and benefit from the sale of Trust Ports when Government neither owns the ports nor supports them.The Government, by its actions, will attempt to force through the legislation against the will of the workforce and the united voice of all the main political parties in Northern Ireland. TUS therefore calls on the Government to respect the democratic wishes of all involved and to abandon this unwelcome and unnecessary legislation".I have quoted that because I do not think it could be better spelt out and because it indicates the unanimity on the matter in Northern Ireland.
Apart from generalisations which the Government have made about the reasons for privatisation—the exposure to market forces, increased efficiency and so on—no specific reason has been given to justify privatisation. If the Government think that the working of Belfast port can be improved they should tell the people of Northern Ireland and they should certainly communicate their views to the harbour commissioners.
It should be clear to your Lordships that the passing of this order will inevitably lead to a period of considerable uncertainty over the next two years, which will not be good for the port and its continuing development. To offset that as far as possible, I ask the 309 noble Baroness the Minister if she will give an undertaking that the Government will not permit or cause the port of Belfast to be privatised unless substantial benefits will derive therefrom for the port and for the economy of Northern Ireland. If there are considered to be substantial benefits, will the Government undertake to consult the Belfast harbour commissioners and other interested parties?
Finally, I must mention a most unsatisfactory aspect of the order. For technical reasons it is subject to negative resolution whereas the Ports Act 1991 was subject to affirmative resolution. For such an important matter as this, which affects the whole economy of Northern Ireland, to be implemented without debate is in my view quite outrageous. Can the Minister give an undertaking that in the event of the Government wishing to privatise Belfast port because of substantial advantages they will ensure that it is debated in this House and in another place? I hope I have made it clear that this order is not welcome.
§ 7.48 p.m.
§ Lord Blease
My Lords, the stated purpose of the two orders is primarily to provide an enabling measure designed to offer a more efficient mechanism than currently exists for the ports to privatise themselves. My noble friends Lord Fitt and Lord Cooke rightly asked why. My few remarks will be directed towards trying to extract an explanation.
Whatever the industrial, economic and social reasons or the political or ideological purposes in Britain, there is certainly no such compelling manifestation of the need for the legislation in Northern Ireland. That point has been emphasised by my noble friends Lord Fitt and Lord Cooke. Indeed, there is widespread and pronounced opposition in Northern Ireland, particularly in Belfast, to any such change as provided for by these two draft orders.
I shall begin with a point on which I should also like to conclude. I shall argue a few points to justify why I am putting them forward. Suitable democratic parliamentary provision should be made to ensure that the proposed legislation meets the needs of employment and prosperity in the Province. If in two years' and two months' time—I believe that that is the correct period of time within a month or two, depending on when the order is adopted by this House and the Privy Council— the Government propose to use compulsory powers to privatise, whatever undertaking may be given, the Belfast Harbour commissioners should be presented with an affirmative order following debate in both Houses of the Parliament of the United Kingdom. There is time for progress before that decision is made.
The two draft orders are complex and difficult, and that pertains to orders in general concerning Northern Ireland. The two draft orders are particularly difficult. They are tabled under the Northern Ireland Constitution Act 1973, the Northern Ireland Act 1974 and the Ports Act 1991. The two orders raise many vital issues not only as regards the suitability of the parliamentary procedure but also about the industrial, economic, social 310 and employment prosperity of the Belfast port and of Northern Ireland. Those factors have been presented in argument by previous speakers.
I invite the Minister to consider the following points and I also ask for clarification of Article 1. What date will the Department of the Environment, acting on behalf of the Government, be in a position to approach the Belfast Harbour Commission, if it does not come forward in the meantime with a scheme for privatisation? Am I correct in putting a date on that of two years plus two months after this order has received approval by the Privy Council?
Article 4(2) (a) and (b) refers toall property, rights and liabilities … all functions conferred or imposed on the [authority]In the intervening period, it will have to have pledged to put forward a scheme to meet all those situations if there is privatisation. That will involve a considerable amount of consultation with a number of bodies. It will involve not only the harbour commissioners, who would have to consider the scheme that is presented; there would also have to be consultation with the Belfast City Council, which is an associated body, the port users and those who rent property on the estate. Various employees would have to be consulted. Therefore, in the intervening two years before the Government impose any particular legislation or guidelines for a scheme, the harbour commissioners will be involved in consultations with the Department of the Environment, the Northern Ireland Office and the Government in order to clarify the various issues.
A welter—if that is the proper term to use—of issues are involved which have not been argued either in another place or in this House tonight. They are left unstated. There are tremendous gaps in the general understanding of those who are interested in the harbour itself and what it means to the city of Belfast and to Northern Ireland. Other noble Lords have mentioned a few of these concerns. There are the police, the dredgers, those involved in pilotage schemes, co-ordination with other bodies and who rent facilities. There are the controls imposed on the harbour by statutory rules and orders over the years and the question of how they are to be adjusted. Therefore, not only is property involved and financing and assets; but other functions have impinged on the harbour since it was originally established.
Perhaps I may also refer to the very close connection with the new Laganside development which is a tremendous project. It is making a tremendous improvement in Northern Ireland. There is an inter-relationship there. I have here information concerning the Clarendon Dock. The headquarters of the Laganside Corporation is on the dockside. I have a picture of the two chief executives side by side. That indicates clearly what is said in the Laganside Annual Report; namely, that there is a close and ongoing inter-relationship. It is not publicly known what particular deals have been made and what the relationships mean.
We look forward, with the Belfast Harbour Commission, to converting the interest into a living reality. That means that there is an ongoing situation 311 which must certainly be examined by the general public. It cannot be confined merely to the Belfast harbour commissioners.
The Minister has rightly said that five ports (I believe that there were 12 originally) have been privatised since the 1991 order came into existence. I wish to quote as briefly as I can from a 20-page document. It is entitled Committee of Public Accounts Thirty-first Report [Session 1993–94] Department of Transport: The First Sales of Trust Ports). I shall not go into a lot of detail, but a number of very relevant points emerge which require answer. The report states:In 1992 five port authorities, Tees and Hartlepool, Clyde, Forth, Medway and the Port of London, used powers under the Ports Act 1991 (the Ports Act) voluntarily to sell their ports".That was a voluntary arrangement. We have not yet reached a compulsory arrangement. We have not yet had any experience of a compulsory arrangement. The Government hope that if there is privatisation, it should be undertaken by the Belfast harbour commissioners.
The Committee of Public Accounts goes on to say that the sales have proceeded under certain guidelines. The report states:We accept that these were only guides based on the judgement of advisers, but we are concerned that prices fell below the lower benchmarks in two cases and that the upper benchmark was achieved in only one of the five sales".The report continues:We are particularly concerned that, having been sold for £29.7 million, little more than three quarters of the lower benchmark, Medway was re-sold some 18 months later for £103 million. In this onward sale the management of the company and their backers made profits which considerably exceeded the taxpayer's receipt of some £13 million on privatisation".Here we have a voluntary privatisation going ahead and there is a rake-off of about £80 million. The report further states:We note the bases on which Chatham Docks were valued and that if, contrary to the Department's expectations at the time of the sale, the land proves to be suitable for development and is developed, the clawback provisions will apply".As I understand it that is because of an underestimate of what the sale would realise.
Paragraph 27 of the conclusions of the report states:We are particularly concerned that, having been sold for £29.7 million, little more than three quarters of the lower benchmark, Medway was re-sold some 18 months later for £103 million".The report is repeating itself.
In this onward sale the management of the company and their backers made profits which considerably exceeded the taxpayer's receipt of some £13 million on privatisation. We note the Department's view that the key factor was the reduction of the workforce following privatisation, while turnover was maintained. In all these circumstances we are surprised at the Department's view that they had not done badly for the taxpayer in this sale".The report goes on to deal with the handling of employees' interests and states:Given the Department's objective that a substantial part of the equity share capital should be sold to managers or other employees of the port concerned, we asked why employee participation in these sales ranged from five per cent. at Tees and Hartlepool to at least 60 per cent. in the case of Clyde.The Department told us that the objectives was concerned with encouraging management buy-outs".312 That is a very good case to make.
The report continues:The Clyde, Medway and Tilbury sales were of this type, and therefore by definition more than 50 per cent. of the equity could be expected to go to employees. Tees and Hartlepool by contrast went to an outside bidder who conceded five per cent. of the equity to the employees. In the Department's view this was to ensure that the employees not only had salaries from their employment but also a stake in the port. The Forth Ports sale was a flotation in which slightly different considerations applied; employees acquired 11.2 per cent. of the equity".I give your Lordships only a smattering of the argument to make the point.
The report continues:We asked the Department whether it was correct that those people who had lost their jobs had also been required to sell back their shares, on which they had made only a small profit, and whether it was this that had enhanced the company's profitability before the second sale. The Department told us that the reduction in the workforce would have made a significant difference to profitability.In relation to the surrender value of £2.50 per share against their worth of £35 and the advice which the individuals concerned, who had lost their jobs, had received on this, the Department told us that this was a matter for those individuals".Employees' shares had been undervalued and although those employees had expected to be in profit, in fact, they are worse off than if they had taken redundancy.
If my memory is correct, the Minister has been at the Northern Ireland Office for about nine months. It is known that she is held in high regard because of her constructive approach to the issues that are put before her. She has met, and been a willing listener to, those with genuine arguments and representations to make. Therefore, I am sure that the noble Baroness will take on board what has been said this evening. I believe that it has been said in the best interests of the Government's future relationship with, and the prosperity of, the people of Northern Ireland.
§ 8.3 p.m.
§ Lord Sefton of Garston
My Lords, I apologise for the fact that my name does not appear on the list of those noble Lords wishing to speak. I could not find the list, but I have now discovered it.
Liverpool, in which I have an interest, and Northern Ireland are closely linked in more ways than one. The port of Liverpool was once a trust port. It is now a PLC. I expressed my anxiety at the time, but that is how the port finished up.
I have a fundamental objection to any infrastructure that has been created by the community (either through the local authority or in other ways) being passed into private hands. That fundamental objection is not only ideological; it stems from the fact that such a proposal cannot possibly meet the requirements of a modern community. I shall give your Lordships an example in only two minutes because I have promised noble Lords that I shall take only two minutes. Liverpool has become a profitable port. The fact that the number of employees has dropped from about 30,000 to 2,000 has nothing to do with it. The port has money. The local paper on Merseyside hailed as a great tribute the fact that the port of Liverpool can now talk about acquiring Medway Ports.
313 However, there is another side to this that needs careful consideration. If it is found, given the general drift to the South-East, to Brussels, Luxembourg and Paris, that it would be more economical from the point of view of a private company to develop the port of Medway rather than the port of Liverpool, I am quite certain that the interests of the private company would be met. And Liverpool will be sacrificed in the name of profit.
I conclude on a serious note. Many questions have been asked about this, but the fundamental question is: at this stage of the developments in Northern Ireland and when some people consider that there is a possibility of peace, why should the Government deliberately upset, and contradict the wishes of, the majority of the population in Northern Ireland? There is no doubt that the vast majority of the people in Northern Ireland see this proposal as anti-them. That is the situation, so I ask the Minister to think carefully.
It is bad enough looking around the House because one then realises that although we axe discussing this very important measure, the Government Benches are empty. Indeed, it is bad enough that the rest of the Benches are empty, but because of this order and because of the way in which the Government have handled it the message will go out from this House that the Government do not really care about Northern Ireland.
The port of Belfast was created by the community of Belfast and Northern Ireland in the same way as the port of Liverpool was created by the people of Liverpool. Therefore, I plead with the Government: hands off. Until they have more sense, it would be better for the Government to spend more time seeking to solve the problems of Northern Ireland rather than introducing measures of this kind. The problems still need to be solved. The Minister may well look askance at my suggestion; but the problems there still need to be solved. One of the ways of not solving those problems is to send out a message to the people of Northern Ireland that the Government do not care about them and that they intend to carry out their ideological wish.
§ 8.7 p.m.
§ Lord Holme of Cheltenham
My Lords, I am glad that we have had the chance to hear that powerful intervention from the noble Lord, Lord Sefton of Garston. I begin by thanking the Minister for her usual persuasive and clear presentation. I am bound to say that she must feel a bit lonely this evening as we hear the sheer amount of information and feeling in the speeches of the three noble Lords who have spoken from their great experience and knowledge of Northern Ireland. I am quite certain that those noble Lords reflect the feeling of everybody in Northern Ireland on this issue; not just the Confederation of British Industry; not just the unions; not just the people who work in the port; and not just the present commissioners. Those noble Lords reflected the feeling of everybody in Northern Ireland about their port. The Minister might want to address that in her reply.
314 Rather than making out any general case for or against privatisation, I should like to address particular arguments of a practical nature against this privatisation. As the Minister pointed out, the order makes provisions for the ports to privatise themselves if they have an annual turnover of more than £5 million. In practice, that means that only the port of Belfast is affected. Belfast port is a very successful business. It has a very impressive growth rate. I think that the noble Baroness will agree that it has increased its turnover by more than 40 per cent. in the past five years. There have been notable increases in productivity which the noble Lord, Lord Cooke, outlined. The port accounts for no less than 55 per cent. of Northern Ireland's trade.
The most worrying thing about the order is that it will hang like the Sword of Damocles over the port because the order contains reserve powers whereby, if the harbour commissioners fail to apply for privatisation, the Government will have the power of coercion, at their own discretion, to compel the privatisation of the port of Belfast. I heard the Minister say that this is just enabling legislation; but what is the point of introducing it unless it is the Government's intention to proceed with that privatisation? Why would they want all that hassle? Why would they want all that difficulty? Why would they want to fly in the teeth of local opinion unless it was their intention to proceed onwards to privatisation?
I am glad that the Minister's moral support has now returned. I remember the Government recently being extremely forceful about refusing to sign up for a single European currency until we saw a definitive proposal. How could anyone possibly sign up for a single European currency in principle unless they saw definitive proposals? Is not that an exact analogy with what we are being asked to do tonight? We are being asked to sign up for possible future privatisation, and the Government have not yet even promised that there will be a debate if they decide to come forward with an order on privatisation. All they have said is that they will consider carefully a debate at that point.
I came here this evening knowing that I was opposed to the privatisation and knowing that there was a great deal of opposition to it in Northern Ireland. I am sure that the Minister will be affected by the fact that not one Member on her side of the House has seen fit—there are some noble Lords with great experience of Northern Ireland—to come here and support the order. I believe that that is no coincidence. I merely ask her to consider that it will make it difficult for those of us who have reservations about the order to be acquiescent in it unless the Government can give a categorical assurance that it will come back to Parliament. I cannot see why she would not want that. The people of Northern Ireland would be greatly reassured if the proposal—when the Government have a definitive proposal —came back to Parliament. I hope that the Minister will address herself specifically to that point and try to avoid, if she can, vague and evasive phrases. It is something that the House would like to hear from her this evening.
Perhaps I may make one other important point of which I have given the Minister notice. It is the point raised by the noble Lord, Lord Fitt, about the eligibility of funding from the European development fund. It will 315 be reduced from 75 per cent. to 50 per cent when the ports transfer to the private sector. There must be some commercial reason, hidden from the average person, that would make a government deliberately turn their back on a subsidy of that order. We are talking about large sums of money. The estimate is of course that the port currently receives about £12 million in aid. What will that be reduced by? Will it be £2 million to £3 million? Will not that create an automatic competitive advantage for Dublin? Dublin does not just receive the 75 per cent. level of support. Because it obtains money from the cohesion fund, it receives 85 per cent. support.
If the Government's privatisation proposals go ahead the port of Belfast will receive 50 per cent. support while Dublin will receive 85 per cent. support. That is an enormous commercial differential. What will make it possible for the port to be successful? In that respect, I have a question for the Minister. Could there be clawback by the European Commission of funds that have hitherto been given to the port by way of subsidy? As the Minister will be aware, Mr. Bruce Millan, the European Commissioner for regional funding, says that it is possible that there could be clawback. That could be incredibly serious. I should like to know categorically from the Minister whether she admits that there is a possibility of clawback. She may say that it is unlikely. But is there a possibility that money could be clawed back? That would make it even more foolhardy to proceed with the potential privatisation.
I have two final points. They are points which should be of great concern to the House. There is the issue of accountability, which has been raised by other noble Lords. The noble Lord, Lord Cooke, related an extremely interesting history. We recognise that the Belfast harbour commissioners are publicly accountable at present. They draw upon various elements of the community in Northern Ireland. Will there be any provisions to ensure that if the port is privatised the new owners will have a similar breadth of background and that they are similarly rooted in the community? Or will they, as with so many other similar ventures, turn out to be narrowly commercial or just friends of the Government? Will they have the same obligations to dredge the harbour; to guarantee the pension rights of the employees and former employees; to health and safety provisions; and to the local community as a whole?
Then there is the question asked by a previous speaker, about which the Minister knows I was concerned in the instance of the privatisation of the airport. I refer to the question of a private police force. We are going to privatise the security force. Is it sensible in Northern Ireland, with all its great problems, to create these private security forces carrying arms all over the place? Group 4? What is the future of Northern Ireland? Does it not depend crucially in these delicate times on the total integration of security rather than a patchwork of private security forces?
I am afraid that what I have had to say has not been very encouraging for the Minister. My last question may be even less encouraging. However, I do not for the life 316 of me understand how the Government can sell something they do not own. I should be grateful if the Minister will tell us how that feat is possible.
§ 8.15 p.m.
§ Lord Prys-Davies
My Lords, I too thank the Minister for guiding us through this important order. For reasons which have been well rehearsed by all speakers, and admirably summed up by the noble Lord, Lord Holme, we cannot welcome the order. It is clear that the order is aimed at the port of Belfast. That point has been made by every speaker. Its essential purpose is to make it possible for the department to enforce privatisation of the port if its commissioners fail to apply for a privatisation scheme within two years after the enactment of the order, subject only to negative resolution. I must say that I was surprised when the Minister referred to the negative resolution as being a safeguard. We are opposed to compulsion, and we are opposed to the negative resolution procedure.
The order applies the Ports Act 1991 to Belfast. However, in 1991 the Government based their legislation on two separate grounds. The first was that it was the Government's policy to open up the ports industry to market forces. The Minister relied upon that ground this evening, but it is only one ground. The second ground was the claim in 1991 that a number of the larger ports had made clear their enthusiasm for privatisation and that two of them had gone so far as to introduce Private Bills. The Minister has been unable to rely upon that ground in support of the order today.
We have heard some powerful speeches this evening. I would rate them among the most powerful I have heard on any Northern Ireland order in the House. There is no desire in Belfast or Northern Ireland for the privatisation of the port. There is no popular support for the order. The port commissioners, unlike two of the English ports in 1991, have never toyed with the idea of promoting a Private Bill, and they are opposed to the order. So is the Belfast city council; so are the trade unions; so are all the political parties in Northern Ireland; and, if it matters to this Government, so are the elected Members of Northern Ireland in another House.
Accordingly, the second limb of the case for the Ports Act 1991 cannot be made out in 1994 to support the order. I should have thought that when more than a year ago it became crystal clear to the department that there was powerful opposition to this order and that there was no consent for it the idea of privatisation would have been buried there and then.
Like the noble Lord, Lord Holme, I was glad that the noble Lord, Lord Cooke, gave us the history of the port of Belfast, which for more than 200 years has been built up on the delta of the Lagan. He described his family connections with the port and spoke of it with great affection. Indeed, the people of Northern Ireland speak of the port with great affection. It has no shareholders. The profit goes to reserves or to finance new capital investment, about which we have heard tonight, or to reduce charges.
Moreover, the port commissioners are and have always been representative of the many organisations which have a direct interest in the efficient and smooth 317 working of the port. Not withstanding what Ministers say, in a lay sense the board is accountable to those organisations. It does not matter what lawyers say; in a lay • sense the commissioners of the board are accountable to the people who use the port. That point was well made by my noble friends Lord Fitt and Lord Blease and by the noble Lord, Lord Cooke.
Of course, the commissioners cannot be faulted in any way. We have had not one word from the Minister blaming the commissioners for this or that. The commissioners have ensured that the port is modern and efficient. They have managed the assets honourably and effectively. In the result, the port has a fine record of service to the people of Belfast and Northern Ireland. It has earned for itself a unique place in the estimation of the people of Northern Ireland. Therefore, it is not surprising that there is no enthusiasm for the order and that there is opposition to it. If the Government had any regard for the principle of subsidiarity they would pay careful attention to what is being said in Northern Ireland. The Minister has not referred to that tonight.
The order is directed at Belfast harbour. However, as has been made clear, it could adversely affect the whole economy of Northern Ireland, not merely Belfast and its immediate neighbourhood. That is why it is such an important order for Northern Ireland, and that is why it should not be the subject of an Order in Council.
From this side of the House, that is our first issue of principle with the Government. With the greatest respect to the Minister—we hold her in high regard—I have not heard from her or from any of her Northern Ireland ministerial colleagues a single argument, apart from doctrine, to justify the order. Indeed, I found the speeches of the Minister's colleagues and their letters— we have been corresponding with Ministers— extraordinarily unconvincing on the subject.
We have heard tonight that the view of those who responded to the order is that the privatisation will create problems where there are none. Moreover, during the next two years there will be uncertainty about the port's future where there ought not to be uncertainty. We believe that there is a grave risk that the privatisation of the port of Belfast could be a backward step.
I summarise the points that have been made by all speakers tonight in saying that there are at least three main grounds for our anxiety. The first is that a privatised port would not be eligible for European Union funding at the current rate of 75 per cent. That could lead to increased charges by port users and eventually affect the whole industry of Northern Ireland. In addition, there is the question of the clawback, mentioned by the noble Lord, Lord Holme.
Secondly, the privatised port, receiving substantially lower grants from Brussels, might not be able to continue to compete successfully against the deep water ports of the Republic, in particular Dublin. Thirdly, the substantial and valuable portfolio of properties in and around the port, which may be surplus to the requirements of the board and which are in the ownership of the commissioners, will be sold off. Current lessees of small business premises in and around the port may find it difficult if not impossible to renew 318 their leases on acceptable and affordable terms. In the past, the Minister has had special responsibility for small businesses. I draw to her attention the anxieties and fears of small businessmen in and around the harbour. The long-term interest of the lessees in and around the harbour should not be sacrificed to short-term advantage.
I turn to the second ground of opposition to the order. It is that the department is empowered to privatise the port after the expiration of two years by a subordinate order, subject only to negative resolution procedure. The subordinate order will not therefore be debated in Parliament. There will be no opportunity to question the Minister about the criteria that have been applied or to challenge the grounds upon which the decision has been taken. In other words, when we come to the subordinate order, privatisation will be a fait accompli. Is that fair to the people of Northern Ireland? Is it fair to proceed by way of legislation which is a fait accompli? The point has been made that a port in Great Britain may be enforced to privatise under the 1991 Act only under an affirmative resolution. We must ask the Government to justify the change of procedure for Northern Ireland. We must press the Minister for a satisfactory explanation.
I have always understood from the Northern Ireland Office, and not from my understanding of the law, that the Government will resort to the negative resolution procedure under the 1974 Act only where the proposed Northern Ireland legislation corresponds to primary legislation for Great Britain. All right, the Government can satisfy that condition, but I understand that they must also satisfy another condition; namely, that it is desirable for Northern Ireland legislation to be made speedily. That is the advice I have received in the past from the Northern Ireland Office: I feel justified in quoting from a letter which the Minister's immediate predecessor sent to me on 20th May 1993. He stated:The negative resolution procedure for Northern Ireland Orders in Council is only used where Northern Ireland requires legislation corresponding to the purposes of a Great Britain Bill (or part thereof) and it is desirable for the legislation to be made speedily".That was said in May last year. But such reasoning cannot possibly apply in respect of this order. First, Northern Ireland does not require the legislation. Of course, there is no urgency attending the matter. The history of the order to date demonstrates that its provisions are not required to be speedily applied. That being so, the Government should not be relying on the negative resolution procedure.
Perhaps I may rehearse the facts. The draft order was published in February of last year. That is 18 months after the passing of the 1991 Act. It was subsequently held back for 15 months and it was not until last month that the Government decided to issue the order. Of course I do not complain, but the delay is evidence that there is no need for the order to be speedily applied. Therefore, it should receive the affirmative resolution of each House.
In those circumstances and if the Northern Ireland Office advice which I received in May of last year is correct, it seems to me that the use of the negative procedure in this case is an abuse of that procedure. I 319 believe that the noble Lord, Lord Holme, is being generous to the Government when he asks for an undertaking that if the Government decide to privatise the harbour board, it will be the subject of a debate in both Houses of Parliament. We must press the Minister for an assurance that such a debate will be forthcoming, unless the Northern Ireland Office has changed its mind and has decided that it is no longer necessary for the order to be introduced speedily. We are sorely tempted to vote against the order but I hope that the Minister will be able to give us those assurances.
There are at least two questions on which we on these Benches require information from the Government, additional to the questions that have been asked by other noble Lords. First, in the event of the enforced privatisation, will the European Union be entitled to recover the grants or any part of them paid to the commissioners? That was a point made by the noble Lord, Lord Holme. If it is entitled to a clawback, who will be responsible for the repayment? Will it be the successor company or companies or the Northern Ireland Office and, therefore, a charge on the whole budget of Northern Ireland? Perhaps the Minister will respond to that question.
I should very much like to know what will happen to the capital reserves of the Belfast harbour pension fund and, indeed, the existing and future rights of the beneficiaries under the fund.
The Minister said that there will be consultation before the Government decide to exercise the power to privatise the ports. I hope that the Government have a genuinely open mind on the merits of the enforced privatisation of the port of Belfast. I say that because if they have a genuine open mind, we are satisfied that the port can demonstrate to any objective observer that it should not be forced in the direction of privatisation.
I have taken up more than my fair share of time but this order is important for Northern Ireland. We regret that it has been introduced by the use of the Order in Council procedure and not by primary legislation. Many questions have been asked. We have listened to powerful and sobering speeches. I hope that the Minister will be able to give the assurances for which we have asked.
§ 8.35 p.m.
§ Baroness Denton of Wakefield
My Lords, I really must congratulate noble Lords. From their great knowledge and experience of Northern Ireland, noble Lords have listed the majority of matters which would have to be taken into account if privatisation were considered. I assure your Lordships that all those matters will be considered fully. That is the point at which they should be discussed and taken forward. I doubt whether your Lordships missed one of those points.
I hope that the House will accept that we must agree to differ on the philosophy in relation to privatisation. I had the advantage of working for a company pre-privatisation and I watched it blossom in the private sector. Any Rover owner can see for himself the benefit of that. British Airways stands on its own two feet as a 320 success in the market place while France still tries to find ways in which to increase the subsidy to keep Air France flying. Our views on privatisation are based on firm evidence of success.
Having said that, I return to the statement which I made in my opening speech: this is not a privatisation order. It allows the matter to be considered in the future.
The noble Lord, Lord Fitt, knows Northern Ireland and its history better than I will ever do. But even from my limited recent experience, I know that Northern Ireland is not Kent or Finchley. Indeed, I know that in many areas it is better than Kent or Finchley. But it has a right to the options available to similar structures in Great Britain.
This evening your Lordships were asking to close the door on the commission if it wished to bring forward an opportunity to privatise. I agree wholeheartedly with the noble Lord, Lord Fitt, that Belfast port is crucial to the economy of Northern Ireland, but it may be that there were occasions when it needed access to share capital or partners. I should say to the noble Lord, Lord Fitt, that we cannot put a fence round Northern Ireland and say that people cannot come in. With regard to helping companies coming into the Province, I hope that Bombardier is an example of bringing support to the people of Belfast.
I believe that you have to make profits to pay wages. The noble Lord, Lord Cooke, pointed out that you have to make profits to reinvest. While I understand the depth of the feelings of the noble Lord, Lord Fitt, and other noble Lords who have spoken on this matter, I regret that the noble Lord, Lord Fitt, should question the commitment to the Province of any Northern Ireland Minister. We are all there from choice and we ask to stay.
This is an order which opens doors. Privatisation is an option to be considered subsequently. I believe that it is of interest to those of us here this evening that it was announced today that the airport at Aldegrove is to go to the management-employee group. That is a great opportunity for the people involved. The noble Lord, Lord Cooke, and others were right to praise the achievements of the port. The noble Lord, Lord Prys-Davies, said that I had not criticised it; I have no reason to do so. As I said, it may wish to move in a different direction.
But I worry about the statement that there has been no government support for the port. I wonder where noble Lords think that the EU funds come from, other than from other member states. The noble Lord, Lord Holme, referred to a Sword of Damocles and I gained the impression that the noble Lord, Lord Blease, felt that it would descend two months and two years after the order's adoption by the Privy Council. He has the dates absolutely right. That is not the case, as I stressed in my opening speech. Were it a Sword of Damocles, it has been available in Great Britain for over a year. It is the opening of doors. Laganside is of course a child of the Department of the Environment, and a very successful birth that has been.
The noble Lord, Lord Fitt, said that we should look at Northern Ireland separately and the noble Lord, Lord Blease, quoted Great Britain's experience in the area. I 321 believe that one of the advantages that we have is that we can learn from the experience in Great Britain should it be necessary to do so.
I should tell the noble Lord, Lord Sefton, who intervened in the debate, that of course there are great links between Liverpool and Belfast. However, if Liverpool were not competitive in productivity, it would not be an issue of southern ports; it would be an issue of ports such as Rotterdam and other ports on the continent of Europe to which we would lose business. That is not what we want to do. I was also unhappy to hear the noble Lord say that we should give more time to considering the efforts towards peace. I do not really believe that anyone can doubt this Government's commitment to finding a peaceful solution in Northern Ireland.
I shall try to answer the points raised by noble Lords because, as the noble Lord, Lord Fitt, said, it is important that Northern Ireland should be given full consideration. The consultation period to which the noble Lord referred ended in April 1993 and 54 submissions were received—17 made no substantive comment, but others expressed reservations about the privatisation of Belfast port, some of which have been quoted. I must stress that such matters will be considered should privatisation come onto the agenda.
The question was also raised about the harbour police force. Again, that is a group of people doing a good job. That group would not change; indeed, the same people would be involved. They would continue to be overseen and trained, with refresher training, by the RUC. However, the RUC would have the opportunity to take over if there were problems. Because of the major security issues in the port, the RUC is closely involved. The economic importance of the harbour estate requires the presence of armed police.
I should like to reassure the noble Lord, Lord Holme, and other speakers that, in the event of Belfast port moving to the private sector—and I must say that, at present, that falls into the hypothetical category—the new owners would be required to assume all statutory obligations then applying to the Belfast harbour commissioners. I hope that I have reassured noble Lords on that point.
The issue which gave concern to most speakers was the question of the ERDF grants. I can confirm that, should any trust port move to the private sector, the maximum grant rate available to it would be 50 per cent. as opposed to the maximum of 75 per cent. in the public sector. No allocations from the ERDF have yet been made for the period commencing 1994, so figures could not be calculated. However, perhaps I may suggest that a business built on efficient provision of customers' needs will always be stronger than one reliant on decisions from Brussels which, to make an understatement, can be variable. I should also point out to the House that, yes, there is the possibility of a clawback, but no repayment or clawback, as it is usually known, of grant has yet been sought by the EC as a result of a privatisation of a trust port. Obviously, it is not possible to anticipate whether that position might 322 alter in the future, but I should stress that any clawback would be levied from the Government's shares of the receipt of privatisation.
Dublin and other ports in the Republic are indeed eligible for higher grant rates than Belfast would be after privatisation. That would be a major concern to be taken into account when discussing privatisation. However, I would give enormous credit to Belfast. As the noble Lord, Lord Holme, pointed out, it has an extra edge at present and yet port charges at Dublin are some three-times those at Belfast. Trade through Belfast is now 30 per cent. to 40 per cent. higher than Dublin and the gap is increasing. We must recognise that it is people and management that make a difference as well as money. I also understand—and this may be of interest to noble Lords—that Dublin port is unlikely to receive assistance from the cohesion fund which offers up to 85 per cent. for projects which do not provide income. It is likely to be restricted to the 75 per cent. available under the ERDF.
The noble Lord, Lord Prys-Davies, asked how small firms would be protected against increased charges. As the noble Lord rightly said, I have a deep affection for the small firms; indeed, I believe that they are the future of any economy. However, the Harbours Act (Northern Ireland) 1970 safeguards against excessive charges. That legislation will remain unaltered. There is nothing in the order to change it. Moreover, the scope for appeals will remain intact.
Some doubt was expressed about the morality of the issues that we are debating; for example, the morality of privatising the port. In effect, the trust ports have no legal owners. The lack of any identifiable owner means that there is no vendor to receive the proceeds of the sale if such a port is privatised. Therefore, in the absence of a levy, any purchaser would receive back the entire proceeds of the sale along with the port itself. It really would be difficult to justify a windfall gain of such a scale going to the buyer, especially as we would aim for a level playing field between newly privatised trust ports and ports such as Larne which are already in the private sector.
When reflecting public interests, the Government should be able to participate in the benefits that flow from such privatisation. The levy provision meets that public interest requirement in a fair and acceptable way. I should like to reassure the noble Lord, Lord Fitt, who was nervous about asset stripping that the Ports Act provides—and it will continue to apply in Northern Ireland—that any disposal of land within 10 years of privatisation would be subject to clawback.
There was great concern about the question of the legislative process for the order. The order that we are considering tonight is subject to the affirmative resolution procedure. As the noble Lord, Lord Prys-Davies, pointed out, it has been brought forward as an affirmative resolution. However, the order provides for subordinate orders to be made at Westminster by the negative resolution procedure. I believe that that is where confusion arose in the minds of some noble Lords. I should point out that there is no precedent for subjecting a subordinate order of this type made by a Northern Ireland department to the affirmative rather 323 than the negative resolution procedure at Westminster. To do so would mean that, if a locally elected assembly was reinstated, then such powers would remain with Westminster. I believe that I can say without hesitation that that would not be the wish of noble Lords opposite.
§ Lord Holme of Cheltenham
My Lords, two or three minutes ago the Minister charged those of us on this side of the House with putting forward hypothetical considerations. Is not the instance she has just given of a reversion to the powers of a Northern Ireland Assembly, which I believe many of us devoutly hope for, exactly the type of hypothesis that she herself was describing? What we are concerned with here is whether Parliament itself will get the opportunity to debate the matter. I hope that the noble Baroness will come to that issue, because that it is the one that concerns us and I am sure will determine our attitude to this order.
§ Baroness Denton of Wakefield
My Lords, I quote what many of my noble colleagues have said. I was about to come to that. What I said was not hypothetical. The law is such that if a subordinate negative order is changed, the powers will stay at Westminster. But even a subordinate negative order can be prayed against in both Houses. Should such a prayer receive sufficient support in the Houses—your Lordships will understand that this is a matter for the House authorities —it is extremely likely that there will be a debate on the provisions. I have noticed that Northern Ireland Members do not fail to ensure that Northern Ireland matters get as full a discussion as possible. That is a view I support very much. Any agreements regarding pension funds that exist immediately prior to any privatisation will continue to have effect. If there is any other point that I have not considered, I shall carefully read the written report and make sure that answers are given to noble Lords.
In closing, I thank noble Lords who gave me notice of the questions that they wished to raise. I stress to your Lordships that I do not ask the House to sign up to privatisation, but simply to ensure that Northern Ireland has available to it the same open doors as are available in Great Britain. I feel that is important, and I commend the order to the House.
§ On Question, Motion agreed to.