House of Commons Hansard Debates for 28 Jan 1991

Mr. Heseltine : We did not discuss specifically any particular chemical at any meeting I have had today. We determined to draw together all the best information and all the offers that we had received, to evaluate them in so far as we have the capacity to do so, and then to inform the Gulf states of where we can help. I will ensure that the chemical to which the hon. Gentleman refers is put forward for special consideration to ensure that we have not overlooked anything.

Mr. Simon Burns (Chelmsford) : In the light of the despicable ecological devastation caused in the Gulf over the past few days, will my right hon. Friend accept that his comments earlier today about the possibility of a ceasefire to allow time for clearing up were particularly welcome? Will he now confirm, fairly and squarely, that a ceasefire would not save one bird, one fish or any lives, or ensure that the Gulf spillage could be cleared up? Quite simply, it would play into the hands of Saddam Hussein, and achieve nothing else.

Mr. Heseltine : I could not have put it more effectively. It seems clear to me that a man with Saddam Hussein's record, if given any respite, will claim credit for it ; and the respite will do nothing to undermine his ability to start all over again the moment that hostilities begin.

Mr. Tony Banks (Newham, North-West) : However the tragedy occurred, it amounts to a crime against the planet. It is worth reminding the Secretary of State and the House that, when the Opposition were telling the right hon. Gentleman what a maniac Saddam Hussein was, the British and American Governments were cuddling up in bed with the monster. That is what this is really all about.

Will the Secretary of State pledge that all the necessary resources will be made available to the volunteers from animal welfare groups who are prepared to go into the Gulf, even while it is a war zone, to try to rescue some of the animals that are now victims of the collective insanity of man?

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Mr. Heseltine : When talking about crimes, the hon. Gentleman should concentrate more of his effort on talking about the criminal who perpetrated the crimes.

It would be entirely wrong for us to suggest to the military commanders the introduction of a civilian presence of the environmental nature suggested by the hon. Gentleman. This matter must be judged by the military commanders, in the light of the circumstances. The presence of such people would immediately mean that the military would have to look after them, protect them and spend a great deal of their time ensuring that there was no enhanced risk to them ; that would not be justified in the circumstances.

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Points of Order

4.16 pm

Mr. Max Madden (Bradford, West) : On a point of order, Mr. Speaker. Is it not extraordinary that the Secretary of State for Defence should have announced yesterday, on the radio, fundamental and important changes in the war aims of the British Government in the Gulf? He made it clear that, even if Iraq withdrew from Kuwait, allied forces would launch a ground and air attack on Iraq if it was perceived to maintain a military threat. That is clearly a major change in Britain's war aims ; yet the House of Commons is being given no opportunity to question the Secretary of State--or, indeed, the Prime Minister--about such an important matter.

I therefore ask you, Mr. Speaker, to reconsider the application that I made to you earlier for an emergency debate on the war aims of the British Government in the Gulf, arising from the exchanges that have taken place today on a very narrow but nevertheless very important subject. I urge you, Mr. Speaker, to allow such a debate to take place, if the Government are not--

Mr. Speaker : Order. That is plainly cheating. As the hon. Gentleman knows very well, I explained to him when he came to see me--as he has raised the matter, let me say that he did come to see me about it--why it would not be possible for me to do as he asked, as it would be an abuse of our procedures.

Mr. Simon Hughes (Southwark and Bermondsey) : On a point of order, Mr. Speaker. About three months ago, I raised with you--you dealt with it sympathetically--the question of where the division lay between the responsibilities of the Department of the Environment and those of the Foreign and Commonwealth Office, in relation to international environmental matters.

Given that there will clearly be opportunities in the House for requests to question Ministers and to table questions, I wonder whether the Secretary of State for the Environment could consult his colleagues in the FCO and the Ministry of Defence. Perhaps a note could be issued explaining which Department should most appropriately deal with matters that fall within such a confused area of responsibility.

Mr. Speaker : I am sure that the hon. Gentleman's remarks will have been heard by the Secretary of State for the Environment, and by those on the Front Bench who are responsible for such matters.

STATUTORY INSTRUMENTS, &c.

Mr. Speaker : With the leave of the House, I will put together the three motions relating to statutory instruments.

Mr. Tam Dalyell (Linlithgow) : On a point of order, Mr. Speaker.

Mr. Speaker : Order. I am on my feet.

I will put the three motions together.

Ordered,

That the draft Unfair Dismissal (Increase of Compensation Limit) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.

That the draft Unfair Dismissal (Increase of Limits of Basic and Special Awards) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.

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That the draft Employment Protection (Variation of Limits) Order 1991 be referred to a Standing Committee on Statutory Instruments, &c.-- [Mr. David Davis.]

Mr. Dalyell : On a point of order, Mr. Speaker. What could be more urgent and definite than the war aims in which we are now involved? If it is said- -I understand that it is said--that confusion is being created, that is a judgment that may or may not be made ; but if ever an application under Standing Order No. 20 should be--

Mr. Speaker : Order. The hon. Gentleman is on this subject every day. It is a continuing matter. I have to take into account all relevant matters and decide whether something has happened that is so urgent that the business before the House should be disrupted for this day or for tomorrow. I have made that judgment.

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Orders of the Day

Ports Bill

Order for Second Reading read.

4.19 pm

The Secretary of State for Transport (Mr. Malcolm Rifkind) : I beg to move, That the Bill be now read a Second time.

As an island nation, Britain has a particular interest in the welfare of its ports and harbours. Much of the economic activity of the nation depends on these ports being able to deal with the tremendous demands that are made upon them. Even though the Channel tunnel will become available during the next 10 years, 85 to 90 per cent. of our trade either into or out of the United Kingdom will still be dealt with by our ports and harbours. It is important, therefore, to ensure that our ports and harbours are able to adapt to the changing needs of our economy and to cope efficiently and competitively with the many problems and challenges that they will face.

Until recently, our ports and harbours were unable to do that. They had been subjected over the years to antiquated, old-fashioned and anomalous legislation that defined their status. Restrictive practices and other difficulties also limited their modes of operation. During the 1980s, therefore, an important Government objective was gradually to change all that so that ports and harbours could face the future with confidence and with a structure that had been adapted to meet the modern needs of the society in which we live.

In 1983 Parliament approved the privatisation of Associated British Ports. Despite Opposition predictions, that has been a great success. A thriving employee share ownership scheme operates in the ports that were privatised. A large majority of the employees, including the dockers, are shareholders in the companies for which they work. They have seen the benefits that privatisation has brought to those ports.

Dr. Norman A. Godman (Greenock and Port Glasgow) : Where does the Clyde Port Authority Bill, which appears to be securely anchored in the other place, stand in relation to clause 1? Will the sponsors of that Bill be advised by Ministers and their officials to throw it on the scrap heap because of the provisions of clause 1?

Mr. Rifkind : No such advice will be given to the sponsors of that Bill or to the sponsors of the Tees and Hartlepool Port Authority Bill which is going through this House. Those private Bills were sponsored by the port authorities in question. It is entirely for them to decide whether they wish either to continue with their Bills or to wait and then use the provisions of this Bill.

Mr. Harry Ewing (Falkirk, East) : The Secretary of State referred to the success of the 1983 legislation. Will he define what success there has been in the Scottish ports? Throughout the 1970s, 75 per cent. of all goods that were manufactured in Scotland were exported through Scottish ports. However, those exports are down to 25 per cent. At Grangemouth in my constituency, the number of dock workers has declined dramatically. They are struggling to

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find enough work to fill the day. Where is the success of the 1983 legislation to which the Secretary of State has just referred?

Mr. Rifkind : The combination of the 1983 legislation and the ending of the dock labour scheme gave a tremendous boost to the prospects of the port industry throughout the United Kingdom. The fact that the Forth and Clyde port authorities--the two largest in Scotland--are among those most anxious to be privatised shows the opportunities that they believe are available.

One of the major benefits of the privatisation of Associated British Ports is that, unlike its predecessor, it has been able to use and develop its land for non-port purposes and to diversify its activities where that made sense. The result is a spate of schemes for the regeneration of old docks for recreation, housing and other facilities, thereby benefiting not only the local community but the company. It is right that those benefits should be recognised. Subsequent to that privatisation was the ending of the dock labour scheme. The hon. Member for Kingston upon Hull, East (Mr. Prescott) prophesied doom and disaster if that measure was taken forward. He said :

"We believe that the Bill will be damaging to the ports industry and will bring a return to casual working."--[ Official Report , 17 April 1989 ; Vol. 151, c. 105.]

Mr. John Prescott (Kingston upon Hull, East) : I am glad that the Secretary of State mentioned that, because most reports show that it has been happening. Fifty per cent. of labour is now working for casual rates in many ports, exactly as I predicted. The Secretary of State seems to be as badly informed as were previous Secretaries of State.

Mr. Rifkind : I was waiting for the hon. Gentleman to promise that the next Labour Government would reinstate the dock labour scheme, such have been its benefits to the national economy.

The hon. Gentleman knows that the main consequences of the change have been entirely beneficial. We have seen, for example, an end to overmanning. The 50 per cent. net reduction in the number of dock workers in ex-scheme ports shows the gross inefficiency of those ports under the previous arrangements. Productivity in some ports has increased by 50 to 100 per cent. since the ending of demarcation disputes and the introduction of new flexibility. There is now competition among ports, which provides a faster turnround, and lower rates and benefits the whole economy. I should have thought that the hon. Gentleman would particularly welcome the revival of trade in historic ports such as Hull, which has reopened its container terminal and will reopen the Alexandra dock subsequent to these reforms.

The trust ports, of which there are more than 100 in various parts of Great Britain, have a curious and anomalous status. Some hon. Members might find it useful if I say that trust ports are independent statutory bodies established under local legislation. They are not owned by anybody except the state, nor are they accountable to anybody. Their status is a strange limbo which makes them neither properly public nor properly private, answerable neither to the shareholders nor to the Government.

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Mr. Frank Doran (Aberdeen, South) : I am intrigued by the Secretary of State saying that trust status is anomalous. Why are the Government so keen to press our hospital service into trust status if it has such an anomalous legal position?

Mr. Rifkind : The hon. Gentleman makes an interesting comparison, but he should appreciate that trust status for a port is an anomaly that results from a historical accident ; it is not intended to give greater control to those who operate the ports in order to ensure their proper operation.

Mr. Michael Carttiss (Great Yarmouth) : My right hon. and learned Friend said that trust ports are answerable to no one, but does he accept that a number of them, notably the one in my constituency, Great Yarmouth, which has its origins way back in the 17th century, are very much answerable to someone--the community that they serve? Although I do not disagree with the general theme that my right hon. and learned Friend will expound, I want him to offer more praise to trust ports for their accountability to the communities that they serve.

Mr. Rifkind : I have no doubt that trust ports have done their best, within the constraints of the legislation and of the structures under which they are required to operate. I am not sure that I can agree with my hon. Friend that trusts are answerable to the local community. They are not elected by the local community or indeed, by anybody else. In some cases the Secretary of State for Transport appoints the chairman and all the board members ; in others he appoints a minority of the members. In many cases, the appointments are entirely in the hands of others.

In no case of which I am aware is a trust board entirely answerable to the local community. Whether in the public sector or in the private sector, boards will, I hope, be sensitive to the interests of the local community. However, I do not think that that sensitivity can be described in the terms used by my hon. Friend a moment ago. Indeed, in the case of some appointments I am required to consult other parties. All this is laid down in the local legislation for each trust port. There are over 100 such ports and, although many of them are very small, they form a major component of the ports industry. They include many of the largest ports in the country-- London, Medway, Forth, Dover and Tees and Hartlepool.

Mr. Michael Stern (Bristol, North-West) : My right hon. and learned Friend has described the anomalous nature of the trust ports. It would appear that in many cases they have not been fully answerable to the community, as they are supposed to be. Does my right hon. and learned Friend agree that this is entirely applicable also to municipal ports such as Bristol, part of which I represent? Is not it regrettable that, for legal reasons--and for legal reasons only--municipal ports cannot be given the same benefits as trust ports are about to be given?

Mr. Rifkind : I accept that some municipal ports are in a situation similar to that of the ports covered by this Bill. However, as they can already achieve privatisation through harbour revision orders, legislation such as this is not necessary for their transfer to the private sector.

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Mr. Barry Field (Isle of Wight) : Does my right hon. and learned Friend agree that, where municipal ports exceed the turnover figures set out in the Bill, there is no provision for a Secretary of State to give directions?

Mr. Rifkind : That is certainly the case. Obviously municipal ports are controlled by the municipality, but there is an option for their transfer to the private sector. That is why it was not thought appropriate to deal with them in this Bill, which is concerned with all ports that have trust status.

Mr. David Martin (Portsmouth, South) : Portsmouth is a municipal port. One difficulty is that local authorities do not have the money to develop ports as they should be developed if they are not to be sold. Brittany Ferries and others would like to invest millions in local authority ports, but they could not acquire shares unless there were some sort of half-and-half arrangement on the way to privatisation which would enable them to reap the benefits of private money doing precisely what municipal ports at present cannot do. In such cases there should be more flexibility.

Mr. Rifkind : I am sure that many local authorities will allow their ports to be transferred to the private sector, thereby securing many of the significant benefits that will be available to the trust ports. This would enable them fully to develop their potential and to respond to the commercial environment in which, as large businesses in their own right, they must operate. It would give them access to share capital as well as loan capital. It would make them more attractive, as partners, to companies that might wish to go forward in joint venture. It would enable them to stimulate the development of land surplus to their requirements which, under current legislation, they are sometimes unable to do. It would make it easier for them to diversify their activities, thereby ensuring their viability in years to come. It would make them more accountable. I emphasise that at the present those ports are not accountable to anyone. If they were companies in the private sector, they would have to be conscious of the need for accountability. Finally, transfer to the private sector would introduce the prospect of substantial employee share ownership. That is not just a theoretical option ; as we have seen in the case of Associated British Ports, it is one of the major benefits of the privatisation scheme.

Mr. Robert Hughes (Aberdeen, North) : Will the right hon. and learned Gentleman confirm that the trust ports have access, under conditions, to grants for capital works through the Secretary of State for Scotland or through the appropriate English Minister? The Bill seems to be silent on this point, but does not it follow logically that, if the trust ports become private companies, they will no longer have access to Government loans? What benefit is that to the ports?

Mr. Rifkind : That is a theoretical question. Apart from the Port of London authority--for which there is different provision in the Bill--there have been virtually no examples of grants or financial assistance from Government to any trust port in recent years. The hon. Gentleman should bear that in mind.

I am conscious of the fact that one of the main criticisms from certain quarters relates not to the Bill as a whole but to that part of the Bill which permits the

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Secretary of State in certain circumstances to require a trust port to bring forward a privatisation scheme, and I shall address my remarks to that.

I emphasise that previous privatisations, almost without exception, have not been enabling measures but have been compulsory measures. The Government and Parliament have said that such and such an industry will be privatised in a particular way and privatisation has not been expressly subject to the consent of an individual company or industry. The Bill is an exception, in that it is primarily an enabling measure. It does not say that all the trust ports will be privatised, as happened in previous privatisation measures. The Bill already recognises that many different circumstances affect individual ports and therefore that it would not be appropriate or wise to have a single policy which automatically and without further consideration applied to all the ports in Great Britain.

I do not dismiss out of hand the concern that has been expressed in certain quarters, nor do I say that it is unreasonable, unjustified or unnecessary. The Government have recognised that concern in their response and in drafting the Bill. The Bill enables the trust ports to come forward with proposals for privatisation.

In our view, and we hope in Parliament's view, it will be considered in the public interest that the trust ports, especially the larger ones, will enter the private sector and thereby be able to benefit fully from the opportunities that that will provide.

Mr. Stuart Bell (Middlesbrough) : I am grateful to the Secretary of State for spending some time on this issue. As I understand it, clause 9 enables the Secretary of State, after an initial period of two years, to give a direction requiring the authority to bring forward a scheme for the purposes of a transfer. Will the right hon. and learned Gentleman explain that clause?

Mr. Rifkind : I am drawing attention to that point. Generally speaking, and unlike previous privatisation Bills, the Bill is an enabling measure. A fallback power enables the Secretary of State to require a particular trust port to be privatised, but even that power is not unqualified--it is hedged around with all sorts of requirements and preconditions. First, the use of that power cannot be contemplated until two years after the passage of the legislation. Secondly, it can be contemplated only in respect of those trust ports with a turnover of more than £5 million a year. That figure will not be unchanging, but will be indexed to ensure that the real purpose behind that restriction continues for a number of years.

These conditions mean that, although there are about 100 ports round our coastline, only 14 will be subject to even the possibility of being required to be privatised against their wishes. The vast majority of ports do not see that as a potential risk because of their small turnover.

Mr. David Harris (St. Ives) : Will my right hon. and learned Friend publish the list of 14 ports? He may already have done so by way of written answer, but I should be grateful for that information. Let me ask a question about fishing ports? How will the level of turnover--the £5 million requirement--be assessed? I take it that the £5 million relates to the turnover of the port trust itself rather than to total fish sales, which might come under the umbrella of the harbour commissioners. Am I right in thinking that the £5 million

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relates to the revenue that the trust receives from the sales rather than to the sales themselves? In respect of fishing ports, that is most important.

Mr. Rifkind : I confirm that the £5 million refers to the turnover of the trust port itself.

My hon. Friend asked which trust ports will be affected by the potential power of compulsory privatisation. They are the ports with the largest turnover--London, Dover, Tees and Hartlepool, Medway, Forth, Tyne, Ipswich, Clyde, Harwich, Aberdeen, Milford Haven, Poole, Lerwick and Blyth. Those are the only ports affected at present, although turnover will be subject to indexation, and other ports may come into the category if their turnover increases in years to come.

Mr. John Ward (Poole) : My right hon. and learned Friend has been so generous in giving way that I, too, am tempted to intervene. He will be aware that the Poole harbour commissioners control an area of about 10,000 acres. We are anxious that, under any new legislation, the present environmental standards and regulations protecting the area against exploitation--at present, the whole harbour is designated a site of special scientific interest--should apply. Will my right hon. and learned Friend confirm that that will be so whatever he may recommend by way of privatisation for all or part of the harbour?

Mr. Rifkind : I am well aware of my hon. Friend's interest in Poole harbour and its future. I can give him the assurance that he seeks. Any requirements in respect of conservancy matters and environmental issues that affect the existing trust ports will equally affect any successor private sector port. The ports will be subject to exactly the same legislation and will have exactly the same obligations. Moreover, we have the precedent of Associated British Ports, whose conversion from public sector to private sector status has led to no diminutions either in obligations or in standards of behaviour on environmental protection.

I was explaining to the House the preconditions for compulsory privatisation : two years must have elapsed and the port must have a turnover of at least £5 million. There is an additional factor. If, after the two years, the Secretary of State for Transport wishes to require a port to bring forward a privatisation scheme, that scheme will be subject to consultation with the port authority and with other interested parties. My successor or I would wish to listen carefully to any considerations that might be put before us, and to arguments as to why privatisation might be inappropriate given local circumstances. Therefore, it would not automatically follow that other ports falling within the category would be privatised. That would depend on the response of the port and of other local interests.

Mr. Tim Janman (Thurrock) : Let me raise two points from the opposite direction. First, can my right hon. and learned Friend assure the House that, in Committee, he will consider reducing the £5 million cut -off to £1 million, thus bringing in a further eight ports? Will he also consider reducing the two-year period to one year, as that seems much more realistic?

Secondly, Belfast is one of the largest trust ports in the United Kingdom, with a turnover of £10 million. Once

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again, Northern Ireland has been excluded from important legislation and an important trust port has been missed out. Even if it means introducing a separate Bill, will my right hon. and learned Friend consider the possibility of giving Belfast the same opportunities as the trust ports included in the Bill?

Mr. Rifkind : On the latter point, I would want to take into account the views of my right hon. Friend the Secretary of State for Northern Ireland. On the first point, we shall naturally listen with great interest to the arguments made in Committee and we shall consider amendments, including amendments tabled by my hon. Friend in an attempt to make the opportunities even more widely available, which is clearly what he wishes.

Mr. Robert Hughes : Will the Secretary of State say more about the criteria for invoking the compulsory privatisation clause? As the right hon. and learned Gentleman will know, the matter has been discussed widely over a considerable period. What would the right hon. and learned Gentleman say to the majority of the commissioners of the port of Aberdeen who were appointed by him in his previous incarnation as Secretary of State for Scotland, who represent commercial and industrial interests in the city of Aberdeen and who have solemnly declared that they are opposed to privatisation because they see no need for it? Why does the Secretary of State want to go against his own business friends?

Mr. Rifkind : No decision about Aberdeen could be taken until at least two years after the enactment of the Bill. We would then wish to consider the circumstances at the time and to hear not only the port authority's conclusion but the reasons for it. We should want to consider whether they were valid reasons that needed to be taken into account or whether they reflected a misunderstanding of the likely implications of privatisation. It is premature for the hon. Gentleman to assume that Aberdeen will be a candidate for compulsory privatisation and to expect to know what the relevant consideration may be at some time in the future.

Let me deal with the proposals concerning the Port of London authority.

Mr. James Wallace (Orkney and Shetland) : I am sure that the right hon. and learned Gentleman, who was Secretary of State for Scotland in his previous incarnation, is well aware that Lerwick harbour trust had succeeded both in diversifying its port business and in developing its surplus land. Clearly, such achievements are possible under the auspices of the trust port as presently constituted. Will the right hon. and learned Gentleman confirm that the Government would not stand in the way of trust ports seeking to increase their powers and to develop in that way merely because they had not opted for privatisation?

Mr. Rifkind : The hon. Gentleman will appreciate that one of the problems that the trust ports face is the great difficulty involved in extending their powers. They are constituted under trusts which lay down their powers and responsibilities. A number of ports have been prohibited or inhibited from developing what would otherwise be the normal commercial activities of a company seeking to make the best use of the assets available to it in respect of surplus land. For Lerwick and for other ports, the

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privatisation option provides the most attractive way of releasing opportunities and does not entail any dangers of that kind. The Bill deals with the Port of London authority separately and in a manner different from the other trust ports. The Bill provides for the privatisation of a trust port in its entirety, except in the case of the PLA. The PLA is empowered under the Bill to sell off its commercial docks at Tilbury, but it will retain its conservancy and other statutory functions as regards the River Thames as a whole. In concluding that this is the right course to take for the PLA, we have had in mind three factors peculiar to London. The first is the sheer size of the area for which the present PLA is responsible : 150 km of river from Teddington lock to well seaward of the Medway estuary and Clacton-on-Sea. The second is the very wide range of regulatory functions that the PLA undertakes compared with other port authorities, including in particular the regulation of public passenger traffic on the Thames. The third is the place and role of the river in the capital city--for example, in its use for state occasions and by royalty.

I know that the PLA welcomes the proposals. The House will wish to know that the proceeds from the sale of Tilbury will go towards repaying to the Government the PLA's outstanding debt and repayable grant.

The Bill also includes provisions about navigational aids in harbour authorities' areas. These will correct an anomaly whereby some harbour authorities are financially responsible for all navigational aids in their areas and others are not. Where the harbour authorities are not responsible for those aids, the general lighthouse authorities--Trinity House in England and Wales, the Northern Lighthouse Board in Scotland and the Commissioners of Irish Lights in Northern Ireland--are. The Bill makes it possible for those responsibilities to be transferred from the general lighthouse authorities to the local ports.

Let me outline the specific provisions of the Bill. Part I deals with the privatisation of trust ports in general. Clause 1 defines a trust port by excluding other categories of harbour authority. It also excludes the Port of London authority from the provisions of part I. It empowers trust ports to set up a successor company to which the property, rights, liabilities and functions of the trust port may be transferred.

Clause 2 provides for the property, rights, liabilities and functions of the trust port to be transferred to the successor company on the coming into force of a transfer scheme to be made under this part of the Bill. Part I of schedule 1 contains supplementary provisions which relate to all transfers under this clause.

Clauses 3 and 4 oblige a successor company, once the trust port's undertaking has been transferred to it, to issue securities of the company to the trust port as and when the trust port directs it to do so. The trust port is obliged to dispose of the whole of its holdings in the successor company at the time and on the terms that it thinks fit.

Clause 5 lays down that a trust port may not exercise any of its powers under clause 3 or clause 4 without the consent of the appropriate Minister. The clause also empowers the Minister to give the trust port authority directions about the exercise of those powers. In most cases in this context, the appropriate Minister will be the Secretary of State for Transport. But for fishery harbours in England he will be the Minister of Agriculture, Fisheries

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and Food, and for similar harbours in Scotland and Wales, the Secretaries of State for Scotland and for Wales, respectively. Clause 5 enables Ministers to approve the price at which a port is sold and also to whom it is sold. The Government will therefore be able to ensure that a fair price is paid for each port and that will be a main consideration of Government in considering ports' proposals for sales. In the Government's view, competitive bidding will be the best means of ensuring that a fair price is paid for each port. However, we also recognise the aspirations of many in the trust ports to carry out management and employee buy-outs. Such buy-outs give the work force the opportunity of participating directly in the benefits of privatisation and of acquiring a stake in their own business. We wish to encourage such management and employee buy-outs and are considering how to give effect to some degree of preference for them. Clause 6 contains supplementary provisions to the preceding clauses. Clause 7 provides for the Minister to dissolve the authority once its functions have been discharged. Any remaining property, rights and liabilities of the trust port authority will then be transferred to the successor company. Those will include the proceeds of the sale of securities in the company, after payment of the Government levy and capital gains tax.

Clause 8 lays down the procedure to be followed by trust ports in making schemes for the transfer of their undertakings to successor companies. The trust port will need to submit a scheme to the Minister. The trust port will be required to advertise the fact that a scheme has been made and to notify its employees and those persons who have a locus in the appointment of members of the trust port authority ; and it will be required to make copies of a scheme available for inspection. Representations regarding the scheme may then be made to the Minister within a period of 42 days from the date of advertisement. The Minister then considers whether to confirm the scheme, with or without modifications, and such confirmation will be given by means of an order.

Clause 9 gives the Secretary of State the reserve power to direct a trust port to make a transfer scheme. I have already said why that is a flexible proposal which takes into account the particular concerns that have been expressed by hon. Members and also by ports. Clause 10 sets out the annual turnover requirement to which I have already referred. Clause 11 empowers the Secretary of State to make a transfer scheme of his own where he considers that a scheme which a port authority has been directed to make is unsatisfactory. Clause 12 provides for a 50 per cent. levy to be charged on the proceeds of sale of the trust port's successor company. Hon. Members who followed the progress last year of the two private Bills promoted by the Clyde and the Tees and Hartlepool port authorities will be familiar with the concept and with the case for it. A similar 50 per cent. levy is chargeable on disposals under those two private Bills through the provisions in sections 115 to 120 of the Finance Act 1990. The trust ports have no legal owner except the state. In the absence of a levy, therefore, the purchaser of the port would receive back the entire proceeds of the sale along with the port itself. It would be difficult, to put it mildly, to justify a windfall gain of such a scale going to the

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buyer, especially as we should aim for a level playing field between newly privatised trust ports and ports already in the private sector.

Mr. Kenneth Hind (Lancashire, West) : I wholly support what my right hon. and learned Friend is trying to achieve, but as a supporter of the abolition of the dock labour scheme, I see what he is doing as a further logical step to free our ports. Will he give us an indication of how he will give the remaining 95 trust ports the opportunity to become privatised which I believe is the appropriate place for those ports in the marketplace?

Mr. Rifkind : Every one of those ports will have the opportunity to be privatised under the provisions in the Bill. The only distinction between those ports and the larger ones is that the Secretary of State could not compel them to bring forward privatisation schemes unless they had a turnover of more than £5 million a year. However, all the ports that so wish may come forward for privatisation under the Bill, and we should be happy to encourage them to do that.

Mr. Spencer Batiste (Elmet) : Will my right hon. and learned Friend clarify the tax and levy position? From what he has described, it seems that there will first be a 50 per cent. levy and then a capital gains tax assessment on the proceeds remaining. The balance of that money will go back to the authority and will ultimately be passed back to the purchaser. Is there not a more simple way of netting all that so the original bid can reflect the real sums involved instead of there being a complex scheme which leaves a certain amount for the Government, in the knowledge that the rest will return at the end of the day to the people making the bid?

Mr. Rifkind : I should be happy to hear any suggestions from my hon. Friend for an even simpler way of dealing with these inevitably complex matters. It is important that there be a clear distinction between the levy and capital gains tax. They are based on different concepts and they are obligations for different reasons. I am not sure that there is a simpler way, but if my hon. Friend has any proposals, we should be very happy to consider them sympathetically.

Mr. Bell : I am grateful to the Secretary of State for explaining why in clauses 12 and 15 we are talking about a 50 per cent. levy. On 15 March 1990 the Minister for Shipping and Public Transport said, in relation to the Tees and Hartlepool Port Authority Bill, that the reason for taking 50 per cent. was that

"there is a general rule that, when assets acquired or approved by a non- Exchequer Body with the aid of Government grants are disposed of, an appropriate proportion of the proceeds should go to the Exchequer."--[ Official Report, 15 March 1990 ; Vol. 169, c. 749.] In the case of Tees and Hartlepool, the reason was that grants had been given 20 years ago. The Secretary of State referred to a level playing field, but he is now changing the goal posts.

Mr. Rifkind : The fact that grants have been paid is an important factor. However, even if no grants had been paid, it would be wrong for the entire value of the ports to revert to the purchaser who might have had no previous involvement in those ports.

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