Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  100. Will the existing ports which handle containers and the other demands for services be able to handle the increase or will it spread out to some other ports which are not providing that kind of service at the present time?
  (Mr Gray) I believe that at the existing major container ports in the UK, which are Southampton, Tilbury, Felixstowe and Thamesport, to name but four, there is sufficient opportunity to be able to handle the future demand going forward for the next ten to 15 years at least. As the previous witnesses indicated, there are already four schemes which have either been tabled or are about to be tabled which will be able to take care of this growth in the future.

  101. What about passenger services? Is there any surplus capacity?
  (Mr Sloggett) My answer on the issue of the ferry ports answers that as well.


  102. It is a bit unfair because I know it is not your side of the country, but Irish Ferries are going ahead at a good old rate and expanding their traffic. Would you feel able to make any comment about some of the Welsh ports and the possibility of the ferry traffic there? That is rather vital to the areas concerned.
  (Mr Sloggett) I cannot really speak as an expert on the Irish Sea trade but all of us who have had problems as a result of the loss of duty free over the last couple of years—and Dover's traffic has fallen—

  103. Do you have figures which show that up?
  (Mr Sloggett) Certainly. Dover's passengers have fallen from about 20.5 million to about 17 million as between 1998 and 2000. The Channel Tunnel has had similar problems. On the Irish Sea there are problems of concentration of traffic and that is an issue everywhere. Nothing succeeds like success in a sense and it is very difficult to spread what growth there is over all the ports which would like to participate in it.

Mr O'Brien

  104. Is there evidence to say that the abolition of duty free has caused the passenger numbers to reduce?
  (Mr Sloggett) It is very clear, certainly on the short sea routes to the continent, that the ferry operators relied very heavily on the profits they made from duty free. Duty free might have been duty free but it certainly was not profit free. When duty free went ferry fares rose very substantially. It is not the fact that people are staying away because they cannot buy duty free any more; in fact they can buy duty paid goods at the same prices that duty free was priced before. It is simply that to do so now, they have to pay very much higher fares to cross the Channel.

  105. Can you give us any indication as to the percentage increase in the fares over this period of the last few years?
  (Mr Sloggett) I would have to have notice of that question.

  106. Can you let us have a note to that effect?
  (Mr Sloggett) Surely.
  (Mr Whitehead) The duty free issue also affects the Irish routes as well and their profitability. They have to adapt to these changes.


  107. Is it then that the Irish have had more help with their infrastructure because of the European institutions?
  (Mr Whitehead) In the Republic, because of a cohesion fund. Yes, they do get assistance and that is an issue for us.

  108. Has that made a lot of difference?
  (Mr Whitehead) It is difficult to estimate it so far but potentially we have heard of plans for major developments in Ireland which may possibly mean then that the GB is bypassed and that would affect ferry volumes quite significantly. That would be an example of cohesion fund really changing traffic patterns potentially.

Mr O'Brien

  109. Is there any indication as to what can be put in place to increase the ferry traffic? Are any plans available? Are any initiatives being brought forward?
  (Mr Sloggett) I would not want you to be under the impression that ferry traffic is not growing. It has been signalled as one of the two areas of growth in the port sector. Certainly across the short sea ferry routes we are forecasting that perhaps after we have got over the duty free problem our traffic might double within the next ten years or so. It is not that the traffic needs stimulating; there is plenty of traffic there both passenger and freight. At the moment the market is adjusting not only to the introduction of the Channel Tunnel but also this issue of duty free, which is really if anything as severe as the Channel Tunnel.


  110. What is the difference in the growth say between your trade and the container trade? If you do not have the figures, do you have an approximate percentage?
  (Mr Sloggett) They are broadly the same. We are looking at our freight to grow at six or seven per cent a year. The container people would say that theirs will grow perhaps slightly less fast, but of the same order, five or six per cent.

  111. When you say that the passenger ferries are growing at a slightly slower rate, you are talking about purely the passenger traffic.
  (Mr Sloggett) I am talking about the overall ferry traffic. Ferries depend very much on the mix of cargo, being able to carry passengers during the day and during the summer, with freight filling the space during the night and in the winter. We view the ferry market as indivisible as between passengers and freight.

Mr O'Brien

  112. Are any new ferries being introduced into service?
  (Mr Sloggett) Ferries are being constructed for the North Sea routes out of the Humber and Sea France is planning to introduce one ferry at Dover this year. We hope for new building decisions from the major operators like P&O before long, but they have a merger investigation from the EU to go through before they will come to any decision.


  113. What criteria do you use to invite ports to become members of the UK Major Ports Group?
  (Mr Dempster) We do not have any criteria for membership.

  114. How do you define a major port then?
  (Mr Dempster) Our members are largely the larger ports in the country and for the most part they also represent the privately owned ports. The distinction is not absolute. The British Ports Association in the main represent the trust ports sector and on the whole the smaller ports. We do collaborate quite closely. Our position is not always identical, the differences, if there are differences, are more likely to be of emphasis than of major issues.

  115. You do not have an obvious definition of what is a large port. You just know one when you see one, like an elephant?
  (Mr Dempster) We know who our members are and we do not poach from anyone else.

  116. That is always helpful. I think the Labour Party would envy you that. In what way do you think the attitude of the United Kingdom Government towards the ports industry differs from those of other governments in continental Europe?
  (Mr Whitehead) There is a fundamental difference of funding of port activity. In the UK we have commercially and operationally independent ports, which is a long established system. There is no doubt that on the continent ports are regarded as part of public transport infrastructure and as a result they are funded out of public finances. Therein lie many of our problems of distortion to competition and really a difference in philosophy of approach as to what ports should be required to do as well.

Miss McIntosh

  117. May I declare my interest in Eurotunnel and also that I was the Member of the European Parliament for Harwich for ten years? May I put on the record that when you talk about routes which were lost because of the loss of duty free, I think I am correct in understanding that Harwich lost one of the routes to Sweden with either DFDS or Stena because of the loss of duty free and that that vessel now calls via Norway from Newcastle purely to be able to pick up duty free; Norway not being a member of the European Union means you can purchase your duty free there. Just to place that on the record, is that correct?
  (Mr Gray) Yes, that is my understanding.

  118. Following on from Mr Whitehead's last answer to the Chairman, do you think that this philosophical and fiscal practical difference between the ownership of ports has led to a different policy approach in the way we run our ports in this country and the way we do not give state aids and also the way the continental reports receive probably a higher rate of state aid including help from the local councils?
  (Mr Whitehead) Yes, you have expressed it very well. There are big divisions and we tend to get very taken up with the financing aspects. Clearly that is a major issue. It does tend to give a signal to the European Commission in terms of legislation that if ports are part of local government, part of the municipality, then they have a greater range of duties and they can take part in perhaps more bureaucratic procedures than we would want to have them perform in the UK. The distortion is on various levels and seeps through in these different ways.

  119. How confident are you on the two mechanisms? One you have mentioned is the European Directive on Ports and the other is that I understand the Commissioner has actually changed the definition of ports through the Trans-European Network. That has implications at two levels: one is the definition of a port and how Harwich could possibly get money for the last eight miles of road to access Harwich, but also definitions generally as to whether it will qualify as the Trans-European Network.
  (Mr Whitehead) In terms of TENs funding, this is extremely modest for ports. My understanding is that there is an unwritten agreement that funding under TENs would be for feasibility studies only and not for actual port projects and that is a situation we are happy with. TENs in itself is not a major player in all this.

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