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4.24 pm
Mr. Andrew Smith (Oxford, East): The Secretary of State's speech and the imposition of the order mark a sad day in the history of British ports. For the first time, the Government are forcing through the privatisation--indeed, the expropriation--of a trust port against the will of the port and in the face of the views of 98 per cent. of those who commented in the consultation process, including many businesses.
We are witnessing Tory privatisation for the sake of it. That was clear from the fact that the Secretary of State spent half his speech talking about privatisation before he got round to mentioning the port of Tyne.
Unlike the Conservatives, Labour is not obsessed with public or private ownership, but is concerned with what can work best for the users of the port, for those who work there and for those in the surrounding area who rely on the prosperity that the port creates. We believe that ports can flourish in the public or private sector.
It is abundantly obvious that the port of Tyne is succeeding in developing its business, in investing and in sustaining the confidence of its customers. It should not be forced to undergo the uncertainty and cost of privatisation simply to satisfy Conservative dogma.
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The Port of Tyne Authority is already meeting the objectives that the Government say that they want privatisation to achieve. The Secretary of State said that he wanted the port to be innovative and self-sufficient. It has been innovative and self-sufficient--it has the widest possible powers of any port to enter into joint ventures to develop its business; it has significantly increased its attractiveness to companies; and it has already successfully taken steps to secure the regeneration of virtually all its developable surplus land, as the Secretary of State has said. Its financial position is such that it has had no need to obtain share capital, nor has it had any difficulty in borrowing from the financial markets. Last year, the port paid off the last remaining part of its debt. This year, it announced an £8 million investment plan as part of its programme to tackle the decline in its traditional trade of coal. All that was managed without recourse to borrowing.
I can understand a Government who have doubled--no less--the national debt in the past six years being jealous of that achievement, but that gives no grounds for this vindictive and damaging order. The port's operating record also does not justify the privatisation: it operates to more overseas ports than any other in the United Kingdom; last year, it was used by more than 360,000 passengers and almost 60,000 cars; and the number of passengers is expected to increase by 50 per cent. next year. It has diversified its trade and won new business. It was chosen by Nissan as its car terminal despite competition from the privatised Tees and Hartlepool Authority. The port of Tyne won because of the competitive pricing structure made possible by its financial position and Nissan's confidence in the long-term stability of the authority's management.
New agreements have been concluded, including one with Warrant Distribution Ltd., involving the construction of a further 16,000 sq m of transit shed accommodation. Exploiting market opportunities in the container business, the authority developed a new berth and storage compound in 1991. Those facilities are now used by Mitsui OSK Lines to provide just-in-time services to Nissan and other key manufacturers in the region. The port now handles 22,000 containers a year--traffic that has been developed in just four years.
The port has developed diversification, made more investment, generated more business and made higher profits. That is a record that should be rewarded, not penalised. Yet the port is being penalised and has already been damaged by the threat of forced privatisation. The port believes that that uncertainty led to DFDS terminating its freight service from the Tyne. Hundreds of thousands of pounds have already been consumed on external consultants, accountants and lawyers in the privatisation process. The port fears that privatisation would be likely to see a rise in port charges, cuts in capital expenditure and uncertainty and upheaval that would prejudice the authority's efforts to find new trade to replace the declining coal traffic.
The authority takes the example of the privatised Tees and Hartlepool port, which has seen a post-privatisation cut in capital investment of almost 60 per cent. since 1992. No wonder that the authority board members--the majority of whom were appointed by the Secretary of State for Transport--recognise the
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It cannot be wrong, given the port's record, for the authority to choose to continue to have the opportunity to build on its investment and not be driven instead by possibly short-term shareholder pressure, especially given the uncertainties that it faces in its traditional coal business. After all, the Government agreed with that view when they withdrew their plan to privatise the port of Dover after local and national representations. It seems as if the only crime that the users and employees of the port of Tyne have committed is not to be situated in a Conservative marginal seat such as Dover.
Of course, on that plan, the Secretary of State for Transport stated that uncertainties about the impact of the channel tunnel on that port's prospects meant that it would not be appropriate to privatise it until the position became clearer. If that was the Government's case on Dover, there is a comparable one on the Tyne. The decline in coal traffic has had a significant impact on the immediate financial prospects of the port and has created a volatility that will make it similarly difficult to value the undertaking for sale purposes. That is a sound argument and, as the port has pointed out, it is unreasonable for the Secretary of State to attempt to proceed at this stage with compulsory privatisation proposals.
It is particularly unreasonable for the Secretary of State to proceed without incorporating any of the provisions that the authority drew up in its scheme under the Ports Act 1991, to which the right hon. Gentleman referred. Those provisions would have protected port users from excessive increases in dues in the first five years of privatisation. They would have required any new owner to maintain the port to at least the same high standards as before privatisation and would have prevented port profits from being siphoned off for non-port purposes. They would have safeguarded terms and conditions for employees and protected pension rights. They would also have given port users, local authorities and other interested bodies a voice in the privatised port through the consultative committee, with a golden share to ensure that no action could be taken that was in any way detrimental to the port.
In rejecting, as the Secretary of State has, not just some but all of those protections for employees, users and the region, he is giving a signal that he would be happy to see increases in dues, falling standards, and terms and conditions, pensions and the interests of the region undermined. All those important factors are as nothing compared with his obdurate determination to impose privatisation on his dogmatic terms. Where is the freedom of choice that he and his party used to like to boast a belief in?
The proposed privatisation is the first time that any Secretary of State for Transport has imposed the transfer.
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Sir George Young:
That is the second time that the hon. Gentleman has called the order the first. It is not. Proposals for Ipswich were taken in Committee earlier this year, with much less objection from the Opposition. This is the second one.
Mr. Smith:
The Government submitted a scheme--I see that the Secretary of State is nodding. It is a true sign of a tired and incompetent Government that they are resorting to extreme measures and forcing through their dogma in that way. Indeed, so incompetent were they that they could not even get their own procedures right for advertising the scheme that they put forward, and they had to go round the course again.
If the Secretary of State and the Government will not accept the arguments that I have set out, or the views of the port and its employees, the local authorities or the people of the region, perhaps he will listen to what private business has said about the privatisation.
The chief executive of Mitsui OSK Lines said:
RJB Mining is the company that the Government entrusted with the running of the national coal industry, yet its representatives said:
"My colleagues in Japan and Europe all feel strongly that the process and effect of Privatisation of the Port of Tyne will, at the very least"--
[Interruption.] The Secretary of State ought at least to listen to what the European chief executive of Mitsui has to say on behalf of his company. He says that privatisation will
"at the very least, result in instability and uncertainty, which will damage confidence in the region, to the detriment of present and future inward investment. We therefore request that you make every effort to retain the present status quo as a Trust Port."
That plea is directed at a Government who are always boasting of their concern for inward investment. Here is an important inward investor saying that privatisation will damage its business, yet the Government do not respond.
"The implications and potential risks of privatisation are something of an unknown quantity, whereas I am confident that the maintenance of the status quo would enable us to build on our existing understanding to secure continued business through the port. Our preference, therefore, would be to see no change to the current arrangements".
I could list many more examples of representations made on the port, pleading for it to retain its current status. Opinion among port users, employees, local authorities and others in the region is overwhelmingly against compulsory privatisation of the port. Of 330 representations made to the Secretary of State about his scheme, only four were in favour. And who did those four come from? Prospective bidders--and three of those were so confident of the persuasive power of their views that they declined to have them published.
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