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

Memorandum by The Mersey Docks and Harbour Company (P 03)



  1.1  The Mersey Docks and Harbour Company owns the Ports of Liverpool and Sheerness, and also the commercial port area at Chatham Docks. Liverpool is one of the largest and most diverse ports in the UK and, at approximately 30 million tonnes a year, is handling as much volume as at any time in history. The group is highly innovative in its port management, as evidenced by the growth of its business over the last 10 years. For example the Port of Liverpool was the first port to introduce a Freeport scheme, which now extends to over 800 acres of the dock estate. The growth of the Freeport has led to a major warehousing redevelopment in and around the port, culminating the LIFT (Liverpool Intermodal Freeport Terminal) development of 860,000 square feet of warehousing near the port, all of which space is fully let to distribution companies who want to be located very close to the nexus of a vast array of different freight routes that is the Port of Liverpool. When taking such associated employment into account, studies have indicated that the Port generates over 50,000 jobs in the Merseyside area.

  1.2  The Port of Sheerness is the UK's largest port for handling bulk Fresh Produce, and since 1995 has invested £60 million in cool stores and other infrastructure to improve the quality and efficiency of handling fresh produce. The port is also the major importation point for VW and Peugeot cars, and with Chatham is one of the largest forest products ports in the UK.

  1.3  MDHC also operates terminals within the ports of Dublin, Belfast and Cardiff, and has interests in a number of different transport businesses, including container shipping services and haulage.

  1.4  MDHC has a market capitalisation of over £450 million, and its profits have grown from £10 million in 1990 to over £51 million in 1999.


  2.1  It is assumed that the Transport sub-committee is fully briefed with statistical data. Therefore this memorandum will focus on giving a qualitative description of the role ports play in the regional and national economy.

  2.2  This memorandum highlights two particular areas of concern for the MDHC as an active port owner/operator these being:

    —  The unwieldy nature of the planning process. The number of steps involved and the scope for different bodies and individuals to cause delay and block major infrastructure proposals is now such as to make it all but impossible to achieve such schemes within an acceptable commercial time frame. The primary objective must be to devise a faster process for major infrastructure projects (as distinct from easier), and to ensure that, whatever planning process is devised, the full and proper weighting is given to the regional and national economic benefits.

    —  The creation and maintenance of a level playing field. It is nonsensical to take such a rigorous "no-grant" approach in the UK whilst European ports continue to be substantially and very rapidly renewed with public money. Merseyside is an Objective 1 area and is therefore due to receive over £800 million of ERDF funding. The Single Planning Document for the Objective 1 programme makes specific and clear reference to the need to invest in the region's gateways including the Port of Liverpool. Nonetheless the DETR has blocked all recent applications for berth development in Liverpool, whilst Holyhead, Mostyn, Stranraer and Cairnryan have benefited from over £5 million of grant funding in support of berth development since 1995. The DETR's no-distortion policy has in fact only served to distort the market in favour of European ports and has inhibited the North West region's growth prospects. The policy is even less likely to be adhered to fairly within the UK following the creation of the Welsh Assembly and the Scottish Parliament, which bodies are succeeding in directing public money at port investment in defiance of the DETR's policy.

  2.2  The memorandum raises a number of other concerns in relation to port policy:

    —  The need to support Liverpool's and Sefton's Atlantic Gateway SSDA initiative with appropriate investment to improve the transport infrastructure accessing the Port of Liverpool and related strategic development sites.

    —  The need to support the Thames Gateway project, in particular by progressing the new Swale crossing as rapidly as possible.

    —  The need for there to be a recognition that road will remain the major means for inland distribution of product, and that the current rail bias should be reversed.


  3.1  Ports are an integral element of the country's transport infrastructure, and accordingly will touch on every single aspect of commercial life in the UK. In that sense the country cannot do without ports, and must have a policy that allows its ports to develop and grow as the economy develops and grows. It may therefore not be good enough to suggest that ports must rise (on their own) to the challenge of environmental constraints (paragraph 2.4.12 of the consultation document); Government policy must not set ports adrift in this way, but should clearly state that ultimately the national interest demands that the UK has sufficient modern port capacity to meet its needs.

  3.2  The impact of ports on the economy can be seen in the way distribution and manufacturing businesses cluster around major ports. It is when product is first discharged from a ship that the receiver has the first opportunity to inspect the goods he is taking delivery of. The receiver will also want to carry out any value added activity without moving the product any more times than is absolutely necessary. Such facilities need to be away from the quay as otherwise the port will be unable to discharge the next vessel, causing the berth to become under-utilised. In the case of Liverpool, distribution businesses wish to be closer to the port because, as a deep sea port, Liverpool acts as a hub not only for product moving inland to the industrial heartland but also for product being re-distributed to Ireland via short sea networks.

  3.3  The location of distribution and manufacturing businesses close to the port has the effect of drawing additional volume through the port. This can be seen in the success of the LIFT zone and Sefton City Challenge scheme and, as a separate example, in the clustering of produce businesses and car distribution businesses in the hinterland of Sheerness in Kent.

  3.4  The development of value added activity in the hinterland is mainly driven by the deep sea capacity of a port. In the case of produce through Sheerness, shippers constantly examine the feasibility of making a single call with their deep sea ships at Rotterdam or Antwerp, carrying out all the value added work in the vicinity of those European ports, and transhipping finished product via ferry direct to the supermarket's RDCs. This would clearly cause a substantial loss of jobs in Kent and be damaging to the UK economy. The danger of this happening is exacerbated by the determination with which the European regions and governments have supported and developed their ports, disregarding any concept of a level playing field, and certainly taking advantage of the UK's self imposed funding straitjacket. Liverpool has experienced the same effect in terms of loss of cruise calls to Dublin and, more historically, the loss of major bulk sugar liquids trades including associated processing jobs first down to the Thames and now more recently from there to Rotterdam and Antwerp.

  3.5  The agglomeration of industry around Rotterdam and Antwerp is driven by the presence and scale of those two deep water ports. The consequential industries are in turn dependent on the short sea and inland distribution routes in order to distribute product efficiently to their markets. Overall the full effect is achieved through critical mass, which entails focussing on fewer larger ports. The UK's major deep water ports are capable of having a similar effect, but not if port development is all but impossible because of an unsuitable planning system, an excessive weighting put on environmental issues, and the refusal on the part of the government to bear any of the exceptional costs imposed to mitigate environmental effects (as clearly stated in paragraph 2.4.44), dressed up as a policy of inviting ports to rise to the challenge (paragraph 2.4.12).


4.1  Planning

  4.1.1  The overriding problem currently facing major ports is the unmanageable planning system. There are two aspects to this problem, the first being whether or not the system should make it easier to get planning consents, the second being whether or not the system should be faster.

  4.1.2  In terms of the ease of obtaining a consent the main concern is in relation to certain bodies that have a separate statutory power to block a proposal indefinitely by reference to a single issue only.

  4.1.3  In terms of the speed of obtaining a consent, a new more streamlined process must be devised, which enables all of the different issues of planning, harbour revision, rights of way, heritage, environment etc. to be dealt with in a single decision process instead of multiple sequential processes. When such a process is underway, separate powers held by certain bodies should be suspended. It makes little sense and is a recipe for indecision to expect a local planning authority to deal with a project whose economic benefits are mainly regional whilst the main dis-benefits are purely local. The consequence of the planning regime is that decisions which commercially need to be taken within six months to a year in fact take several years. The Twelve Quays project included in the consultation documents as a case study will have taken over 10 years from conception to implementation.

4.2  Regional economic growth

  4.2.1  The opportunity facing major ports is to be a driver for regional industrial and economic growth. Good examples are the recent formations of the Atlantic Gateway strategic spatial development area in Liverpool and Sefton and the Thames Gateway project in the South East. Each of these will identify strategic sites for development as distribution and manufacturing sites, and associated transport infrastructure improvements. Funding must be set aside within the government's 10 year Transport Plan to implement recommended improvements arising out of the two Gateway projects.

4.3  Rail

  4.3.1  Rail remains a limited opportunity because it will always impose an expensive double handling requirement and, other than in exceptional cases, a truck haul at the inland end of the train journey to get the products to the end destination. Road is always likely to be the most cost effective and flexible means of transporting product to and from ports, and therefore investment in road should have a higher priority than investment in rail.

  4.3.2  To have chance of being economic, rail requires very large two way volume on a dedicated medium distance route. There may be an opportunity to create new very large scale inland industrial parks as satellite development zones to given ports. This could be an economic way to achieve the objective of moving product off the berth to a well located inland site using rail. Consequential benefits would be to use existing berths facilities more intensively—reducing future pressure on the coastal environment due to a reduced need for new berth space—and the creation of an employment zone of sufficient size to enable effective commuting by public transport as opposed to private car.

  4.3.3  Making road transport more expensive (through fuel duty or road pricing) is an inappropriate way to improve the competitive position of rail unless and until the rest of Europe adopts the same approach, as opposed to Europe's existing approach of substantial and permanent state subsidy of rail.

4.4  Level playing field

  4.4.1  The lack of a level playing field even within the UK is a further difficulty which needs to be addressed. This issue is well demonstrated by the consultation document itself, which endorses Welsh Development Agency funding for studies to identify new markets for Welsh ports, and the explicit intention of the Welsh Assembly to use Objective 1 funding and EC regional budget funding to develop Welsh Ports (paragraphs 2.1.17 to 2.2.19). The DETR's policy is currently proving ineffective in preventing the Welsh Assembly from supporting investment in Mostyn, which will undoubtedly divert traffic from Liverpool (as would any more public money invested in Holyhead). In view of the evident tacit support for ERDF investment in Welsh ports, and the fact that consideration of such applications is devolved in Scotland and Northern Ireland, and government's policy of maintaining a level playing field within the UK has little credibility.

  4.4.2  The policy has further only served to damage the UK's economy and the UK's ports, in the face of continued and unrestrained national and local government investment in port infrastructure in Europe. The attempt evident in the government's proposed policy to make the ports solely responsible both for commercial development and for non-commercial exceptional costs arising due to the stringent environment protection regime (eg the costs of mitigating any exceptional environmental impacts) will have the effect of stultifying UK port development, and increase the likelihood that UK ports serve only as feeder terminals, with the main deep sea activity moving increasingly to Rotterdam and Antwerp.

4.5  Safety and the environment

  4.5.1  There are no particular issues we would raise in relation to safety and regulation. MDHC is a leader in terms of UK port safety, having just been awarded the Ron Payne Trophy by the Port Safety Organisation for the Safety Passport scheme introduced by the Port of Liverpool in 1999.

  4.5.2  The key issue to be addressed in relation to the environment is the new powers now being exercised by certain bodies such as the Environment Agency and English Heritage without having to pay any regard to economic and other factors. Recent examples would include English Heritage's blocking of the Twelve Quays development and the intention of the Environment Agency to define a new SSSI to include an area actually inside the existing legal port boundaries, which land has since its formation been held as expansion land for the Seaforth Container Terminal.


  5.1  UK Port Policy should require the development of a new fast track planning regime for major port infrastructure development. Such a regime should ensure that projects of regional significance are primarily considered at regional level, and that the different approvals required to implement a scheme can be dealt with in one single forum. When such a process is underway, the separate powers of a diverse range of individual organisations to block proceedings should be suspended.

  5.2  UK Port Policy must serve to maintain a level playing field within the UK, including Wales and Scotland, and to create a level playing field with European ports. The current chosen method of achieving these objectives has to date been a singular failure.

  5.3  UK Port Policy should clearly state that ultimately the UK national interest demands that the country maintains sufficient modern deep sea port capacity, associated transport links and commercial development land to meet its needs. Such a policy should contemplate government assistance to deal with non-commercial costs such as addressing the environmental impacts of a major port development.

  5.4  UK Port Policy should recognise that concentration of port activity into a limited number of major port sites with existing deep sea berth capacity will be more conducive to general economic growth than the dissipation of shipping activity into smaller ports in locations that are more remote from industrial centres.

  5.5  UK Port Policy should support the allocation of funding within the government's ten year transport plan to access improvements likely to be proposed in connection within the Atlantic Gateway and Thames Gateway projects.

  5.6  UK Port Policy should recognise that investment in road connections is a higher priority and is more likely to generate economic growth and prosperity than investment in rail.

  5.7  UK Port Policy should recognise the need to maintain concentrated well connected large scale development sites close to the UK's major deep sea ports.

The Mersey Docks and Harbour Company

5 January 2001

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