Memorandum by M R Tedder (P 40)
Thank you for the letter of 5 April, which has
been of great help to me. As you suggested I would now like to
summarise what actually led me into writing to you. Before doing
that I feel it would be helpful to start with a brief history
of the events that occurred within the Port of Dover that have
brought us to where we are today.
In the late eighties with the Channel Tunnel
opening looming the Dover Harbour Board (DHB) decided on a program
of diversification to offset predicted losses on cars/passengers
as well as freight. The instrument of this was to be the development
of Deep Sea Cargo, the handling of fresh fruit and vegetables,
activities that were run by my employer. The first of the facilities
at the newly created South Jetty Cargo Terminal (SJCT) were opended
in late 1989. This in my opinion created a partnership between
my employer and the DHB that worked so well that we increased
throughput by 150 per cent within five years with the certain
prospect of even more growth to come. We now come to a point that
I am certain has provided the catalyst for the majority of the
problems the port is now facing. The DHB made a decision to stop
all meaningful investment in cargo operations and divert all resources
into a second cruise terminal. Overnight the DHB had effectively
dissolved the partnership that had proved such a success, with
my employer, making virtually all investments it had made in plant,
staff and years of marketing useless. The question this raises
to me is what would have happened to the DHB if they had acted
in such a way in the real outside commercial world? The end result
was inevitable, customers and shipping lines that had been loyal
to the Port and had worked with us and DHB to develop facilities
and cargoes suddenly received clear signals they were no longer
wanted. The prime example of this is when a customer ship owner
of many years standing is told his vessel cannot discharge on
the dedicated cargo berth he had helped to develop because it
was required for a cruise ship.
The first Cruise Terminal was both a success
and good investment for the port. The same cannot however be said
of the second, which within the port directly completed with cargo
for investment, and with related work has now swallowed some £25-30
million of precious port development resources. One cannot deny
the second cruise berth was needed but where the decision is shown
to be flawed is the fact that it was designed as a cruise only
berth. What we now have is a port offering annually 730 cruise
berth slots and is attracting only around 110 cruise vessels per
year. One question to be asked is that now the ports cruise business
would appear to be going into decline, even at this early stage
in its existence, how many times in a year will both cruise berths
be required to work in tandem. Other free days they would of course
be available for cargo vessels. In addition when you consider
that both cruise berths will be empty from October to April, the
very time when cargo activities are at their height, you can no
doubt understand the annoyance and frustration that this berth
was not developed as a dual cruise/cargo facility. The port would
have had the best of all worlds, including year round revenue.
At this point it should also be noted the amounts other ports
looking to get into the cruise market have spent on facilities.
Harwich and Copenhagen for instance have recently spent around
It is now a matter of record that Cruise business
in the Port of Dover is in decline. We now appear to be in a situation
where the DHB has opted to reject developing a proven traffic-Cargo-that
the port had successfully developed and replace it with cruise.
The problem is that history would seem to be proving both decisions
were wrong. To compound this even further it could be questioned
as to whether recent decisions and actions by DHB towards cargo
operations have been made in a way that could be considered to
limit its capacity to operate efficiently and thus survive. One
could also argue and see how such a scenario would be advantageous
to the DHB given what has happened.
It is this sequence of events that has led to
my firm conviction that mistakes had been made. These effect the
future viability of the Port. I therefore set out on what has
proved to be both an interesting and disturbing journey to discover
who can hold Trust Ports in general as well as their Trustees
and Managers accountable for their actions. Armed with the knowledge
that the recent White Paper "Trust Ports a Guide to Good
Governance" had the issue of accountability at its heart
I thought there would be little trouble in at least having the
issues I raised dealt with in an open and honest manner. How wrong
could I be? It would appear that despite this much-heralded Government
Document true accountability in the Trust Power sector is nothing
more than an elaborate illusion.
On 7 May 1999 I wrote to the then Minister-Glenda
Jackson-raising the above issues and others such as the Actual
Constitution of the DHB and its general operating ethics towards
cargo operations. This letter was neither acknowledged or answered.
On August 26 I contacted, by letter John Presscot
who by then had taken over responsibilities for Trust Ports. Here
I related to the £3 million overspend on the new Cruise Terminalthis
has risen to £5 millionagainst the dramatic fall in
cruise business while also making various observations caused
by the ever increasing number of lorries using the port and subsequently
local roads. The letter was referred by Mr Prescott's office to
the DETR who replied on 3 September stating that the "Government
had no locus to investigate and no powers to intervene" and
putting such responsibilities in the hands of the Ports auditors.
I replied on 4 October asking the DETR to investigate
the way DHB had handled cargo development even suggesting a site
meeting. It was at this point I wrote to our local newspaper who
printed my letter in their 21 October issue. Here I was
highly critical of the DHB and damage it was about to inflict
in respect of job losses in the port and its effect on the local
community. I related this to the amount of money put into the
Cruise sector that could not be recouped even in the foreseeable
future. Recently announced redundancies, with more to follow next
year have proved how right this observation was. I received a
reply from the DETR dated 22 October. This letter in general
confirmed that the DETR had no locus in regulating any commercial
decision made by the DHB but could not take these issues forward
as I requested confidentiality for myself as I still worked within
the dock area. The fact this caused a problem surprised me. How
many such incidents have been investigated with those requesting
such action being given anonymity?
I wrote back to the DETR on 10 November and
among other matters asked who could actually investigate DHB decisions
and hold them accountable for any that were proven to be wrong.
They replied on 26 November stating that as these issues were
now in the press they would take up my areas of concern with DHB.
With no follow up correspondence from the DETR
on 20 February 2000 I again wrote directly to John Prescott. Here
I dealt again with port operational and developmental matters
and the overall issue of Trust Port accountability. I even reasoned
that an Ombudsman would be better placed to monitor Trust Ports
than a Government Department. The DETR replied on 27 March. Its
content provided little that was new and offered no way of testing
whether recent Port related development decisions were flawed
in the long term.
16 April found me writing again to John Prescott,
as before the letter was passed to the DETR. They replied on 18
May stating it was not within their remit to investigate actual
commercial decisions taken by the DHB and the Government had "no
locus to intervene and no power to intervene". It would be
up to the ports auditors to comment on such matters.
I replied on 22 May asking how a Trust Port,
that is set up by statute, could not be investigated by the Government
of the day and ultimately questioned, as a result if the DETR
had any useful role to play in this area?
The DETR wrote back to me on 1 June. They did
not challenge any of my observations or comments but advised they
had sent all relevant documents to the DHB for them to deal with.
So began a series of correspondence with the
DHB. We exchanged opinions and ideas as to the ports future developments.
There is much to be considered in these letters but two items
stood out above all the others. Firstly the DHB conceded that
it could be 15-20 years before the second cruise terminal might
recover its costs. This I understand is well outside the accepted
time limits that Trust Ports should adhere to when projects are
considered against expected return. I have always wondered what
original write off time was presented to the Ports Trustees to
gain their approval for the second terminal. The second item is
a little unusual to say the least. In his last letter to me the
Chairman made the point of mentioning that I had previously worked
for the DHB. This is true but it was in a minor position for six
months in the late sixties. As I said at the time should I be
worried or flattered that the DHB appeared to have checked my
past so carefully, or, was I getting a little too close to the
truth for some individuals. Enlightening as these exchanges were
it still moved me no closer to establishing who Trust Ports were
actually and ultimately accountable to.
It was at this point I wrote to the Public Accounts
Committee (PAC) as I had assumed that Trust Ports finances would
be regarded as Public Funds given their very existence was dependant
on an Act of Parliament. In my letter of 29 November to the PAC
over five pages I dealt with, reviewed and asked questions relevant
to the issues I had previously raised. I offered statistical information
comparing how cargo could have developed in relation to cruise.
I also asked again for guidance as to whom Trust Ports were actually
accountable to. Their reply of 15 February gave various technical
information and advised that accountability for Trust Ports was
entrusted by Parliament to in this case the DHB itself, or the
We appeared to have arrived at the point where
accountability would rest either in the hands of the very party,
DHB, whose judgement should be tested. This option of course would
make them both judge and jury for any complaint against them,
can this be right or logical? The alternative is to write to the
Minister responsible who we established will probably hand the
matter to the DETR who, by their own admission have no power,
to intervene or investigate in any real or meaningful way.
With this apparent anomaly of accountability
before me on 5 March I wrote to the Speakers Office setting out
the problems I had encountered asking for help and guidance on
this matter. After what I can best describe as brief but to the
point exchange of correspondence the second letter I received
of 27 March referred me to both you and the Sub Committee that
was looking into "Opportunities and Development prospects
at Major Ports". This resulted in my letter to you of 3 April
and your reply of 5 April.
I would like now to list various questions and
issues related to this subject that I feel should be either answered
1. Is their any real accountability in the
Trust Port sector?
2. Has the White Paper on Trust Ports actually
improved accountability or become an instrument to maintain the
3. Would an independent Ombudsman for Trust
Ports not offer a better chance of accountability?
4. Should Trust Ports resources be regarded
as "Public Money". If not, why not?
5. Even at this early stage should the second
cruise terminal be regarded as an expensive failure?
6. How can DHB state it may take 15 to 20
years to recover its cruise terminal investment when Trust Port
investment guidelines seem to indicate a time scale of around
7. What was the debt recovery time given
to the Trustees when approval was sought for the second terminal?
8. In the light of the substantially reduced
numbers of vessels using this new facility can the investment
in the second stand alone cruise terminal be regarded as nothing
less than speculative?
9. The ultimate given aim was to attract
some 200 to 250 cruise vessels a year. Was this figure ever achievable
or used by the Port Managers to sell the second terminal to the
10. Were all the port stakeholders properly
and fully consulted over the second terminal? Is it possible that
if this had happened those stakeholders who have to live and operate
in the "real" shipping and financial world would have
been able to provide arguments that could have blocked the Ports
Managers ambitions and desire for this second cruise only terminal?
11. How does the amount spent on the second
cruise terminal stand up against recent investments in other ports
trying to attract the very same business?
12. Would the DHB, even in hindsight, concede
that the port would have achieved "Better Value" if
the development had been on a dual cruise and cargo basis?
13. Has the DHB been negligent in the way
it has lost the potential of developing cargo activities in Dover?
14. Is it possible from the way cargo has
been treated it could be perceived that the DHB had been slowly
trying to make it almost impossible for it to operate on a financially
sound basis which in turn could result in its closure? This of
course would have conveniently covered up any potential errors
in judgement they had made in relation to these activities.
15. Did the DHB enter into a development
partnership with cargo interests. The DHB have a statutory duty
to the Trust, do they not also have both a moral and financial
obligation to a party they had encouraged to invest in a project
and then leave them facing heavy losses, or even complete closure,
just because they chose to just walk away?
16. Would not one of the DHB original options
of transferring cargo to the Western Docks and swapping cruise
to the Eastern Docks, where cargo is located, been a better financial
and operational decision?
17. Has the decision by DHB to put all its
financial eggs into the failing cruise basket been the main element
in its present financial predicament?
18. Did the Chairman have copies of my correspondence
circulated to both the other Trustee members of the Board as well
as its Auditors? If this did not happen, given their contents,
maybe he should explain why?
19. Should the Trust Ports top managers have
effectively what is a job for life? Would contracts that were
reviewed every five years be more appropriate? In outside industries
this would be about the length of time executives who operate
at high level will stay at a company before they need a new challenge
for their skills.
20. Is it not possible that if the Board
of Trustees itself contained a majority of individuals with both
shipping and port management experience a more meaningful debate
over the potential and long term viability of the second cruise
berth may have taken place?
I trust you will find this an accurate summary
of events while bearing in mind that all of what is contained
in this memorandum is supported by the documents sent to you with
my original letter.
Let us remember, when I started this journey
I was concerned for the future of myself and work colleagues employed
both within my own company and directly by DHB as well as the
future development prospects of the port itself. Since my first
letter of May, 99 jobs have been lost in all areas of port life
with prospect of more to come from DHB next year.
What I seem to have found is a world where accountability
as advertised is nothing but an elaborate illusion and questions
that are asked are often never directly answered or just ignored
It is my hope that you will find this is of
interest to your Sub Committee in its present deliberations though
my feeling is that when these issues are fully considered it may
be felt that they should be the subject of a totally separate
M R Tedder
17 April 2001