Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 320 - 339)




  320. Such as? Can you give us half a dozen of the most important?
  (Mr Jamieson) Some of the changes now avoid the necessity to break down the vertical integration of services, to unbundle those services. We felt that could be extremely disruptive to some of our ports running very successfully. We have now excluded some of the dedicated terminals that just deal with oil or one particular good coming in and some of the highly seasonal ports as well that operate mainly in the summer period perhaps with holiday or tourist traffic. We now have longer periods for the contracts. Originally, it was 25 years; we have got that up to 36 years. There is an explicit acknowledgement now of private ownership for new ports. There will be no tendering of the services for up to 40 years. We felt, had that not been the case, that would not have attracted the private investment that people would have made. Very importantly, there is the exclusion of casual labour and self-handling. We have made sure that those who are handling things on the ships are keeping to the standards of that port and not a lesser, more unsafe standard. We have, as this was only decided before the Council on 17 June, drawn together a short paper for you showing how the situation was originally in February 2001 and where the text is now in June 2002. If it helps the Committee, we can provide copies for you.

  321. Yes please, Minister. How many changes do you expect in this existing draft again? We seem to be at about the sixth or seventh. What draft are we on now?
  (Mr Reeves) I have probably lost count but I reckon we have had a dozen drafts, if we go right back to the first one from the Commission in February last year. We then had the Parliament's position, which made a number of suggestions at the European Parliament. We then had an amended proposal from the Commission in February this year, which took some of those changes on board, but we have been meeting in the Transport Council Working Group under the Spanish presidency since the beginning of February on virtually a weekly basis at times. The presidency has been producing revised drafts not after every meeting but after every couple of meetings. It has really been a very hectic pace and that is one of the reasons why everyone has found it very difficult to keep up with it. We have given your Committee a copy of the latest version, 25 June, and we have also circulated that to the Ports Associations.

  322. How far is that one from what you really want?
  (Mr Reeves) It will be formally a Council common position after the jurist linguists have had a go at it. It will go to the Parliament as the Council's common position in the autumn. I cannot say that we have achieved absolutely 100% what we want.

Andrew Bennett

  323. What extra do you want?
  (Mr Reeves) We are pretty near. As the Minister said, we have 36 years plus an additional optional 10 years for the duration of the contracts where there is significant investment under the transitional provisions. In essence, this means that most of our ports, we think, are going to be very minimally affected, unless of course they choose to have additional service providers come in, but they do have a very major element of discretion now resting with the ports. We think most of them are going to find that they are not going to be adversely affected and, in many cases, arrangements could in theory continue unchanged towards the year 2040. We are talking about very long periods. There is still an element of market opening which we think will be useful in particularly some of the continental ports, dare I say it, but we think we have gone a very long way towards achieving what we wanted. I believe the European Ports Sea Ports Organisation, the British Ports Association and others have acknowledged that.

Mrs Ellman

  324. Have you made an assessment of the impact of state subsidies and support on European ports to the competitive disadvantage of British ports?
  (Mr Jamieson) This is an interesting area. It is the degree to which there is competition between ports in this country and ports in other countries. We think there may be state aid in other countries and it is a matter that we are keeping a close eye on, but it is a matter of debate as to what effect that has on ports in this country.

  325. Would you consider making a complaint to the Competition Commissioner?
  (Mr Jamieson) If we felt that money had been made available through state aid to ports in other countries and that state aid was affecting the competition between our ports and ports in other countries, we would certainly not hesitate to do so.

Andrew Bennett

  326. That happens on a daily basis, does it not, because very few of them charge for access to the port?
  (Mr Jamieson) Nevertheless, we still have to ask the question whether or not that creates a lack of competitiveness between our ports and theirs.


  327. We have a letter here from the Right Hon John Spellar, MP, dated 7 June, to Jimmy Hood, the Chairman of the House of Commons European Scrutiny Committee about the Transport Council of 17 June, market access. Am I giving you enough to identify it?
  (Mr Jamieson) Yes.

  328. The pages do not seem to be numbered but at the bottom of page three—we are guessing—the last bullet point says, "Recognition of a port's development policy is a valid reason for limiting access and regulating the range of commercial activities in a port." What does that mean?
  (Mr Reeves) This is a reference to Article 6 in the Directive, pages 19 and 20 of the latest text. You will see that it says that Member States shall ensure the competent authority—which will in general in our case be the Ports Authority—may require providers of port services to obtain prior authorisation under the conditions set out in the following paragraphs. Paragraph two says that the criteria for granting the authorisation may only relate to the following items. They include things like the professional qualifications of the provider. What it is basically therefore allowing is for the competent authority to take that into account when deciding whether to grant an authorisation—in other words, to allow a service provider to come in. We think the aim there is to allow for consideration to be given to whether the proposed service is compatible with existing services in the port and whether it is indeed compatible with the future development objectives of the port.

  329. Supposing the Commission suggested that somebody should have access to the new, extended facilities at Barcelona and for one reason or another regional government were not overwhelmed with this idea.
  (Mr Reeves) They might be able to rely on that to say what was being proposed was not consistent with the way they wanted to develop the port.

  330. They could maintain the same kind of control and, dare I say it, exclusivity that they have at the present time.
  (Mr Reeves) That is always a potential.

  331. Something which we could not do.
  (Mr Reeves) You would have to look at the circumstances and there would have to be a judgment.

  332. I think that means yes.
  (Mr Reeves) You can quite imagine that somebody who was running a deep sea container port would not be particularly enamoured with somebody who wanted to come in and offer a service handling bulk coal. This is a hypothetical example. It would not be consistent with the way they wanted to develop the port and I think it is that sort of situation which this is aimed at.

  Chairman: We shall hope you are correct.

Mrs Ellman

  333. Why are there so few reliable statistics about the economic impact of activities undertaken at ports?
  (Mr Burr) The predecessor committee raised this question and we have discussed it with the ports industry since they expressed concern about it. We know that in some localities they have recognised the need for a better understanding of what I might call the economic footprint of the port and the benefits. For example, on the Humber, the regional development agency for Yorkshire—Yorkshire Forward has recognised the need firstly to identify the present added value that the port does contribute to the economy and to provide a base on which they can develop a strategy for adding to that value. It annoys them that lorries drive out of Hull to factories elsewhere that could be driving those things into the Hull area and creating jobs locally. The government accepts that that is something on which more work needs to be done. Regional development agencies are the best people to do it. We are working centrally and we have open discussions with the ports industry to especially look at those who have already done studies of this kind. The Port of London Authority, for example, have done studies of that kind, to understand how many jobs are related to the activities on the river. We are trying to get a bit of a head start on the methodology by talking to people who have done it, with the object of providing some guidance to the regional development agencies and promoting exactly that kind of inquiry.

  334. What kind of priority has the government given to doing this?
  (Mr Burr) It is one of the actions in the ports policy paper that we have to take forward. We are a bit dependent on the partnership with the ports industry because we will get off to a better start if we work with people who have done this work already. We need to agree some priority with them as well. My personal view is that it is a pity we have not already managed to start that work, but the statisticians and people involved have also had to implement the Maritime Statistics Directive and other imperatives of that kind.


  335. We are not actually doing things that are useful; we are doing something else?
  (Mr Burr) We do not always have choices.

Miss McIntosh

  336. You replied in a parliamentary question in March that the government does now recognise that operators in the short sea trade are at a disadvantage compared with those in the deep sea sector. You are therefore considering a short sea shipping employment grant. Why has it taken the government so long to realise there is this disparity?
  (Mr Jamieson) We have responded in good time to this. We took representations from all concerned and we are making grants available at the present time. I do not think there has been any particular delay.

  337. I remember questioning your predecessor on this very issue. What impact do you think a short sea shipping grant would have on UK ports?
  (Mr Jamieson) I think it has potential in certain circumstances to considerably help some of the ports. The grant is specifically aimed at taking goods off the road and putting them onto water. We obviously look at them very carefully and they have to be judged on that criterion. We look to see how many lorry loads and tonnes of goods we can take off some of the major trunk roads and motorways in particular and put them onto shipping. We are also doing that, as you probably know, with a different grant regime for inland waterways.

  338. In many sectors—airports, housing and minerals—the government does make predictions about demand. Against that background in the government's White Paper, Modern Ports: A UK Policy, states that the government cannot make predictions for port demand.
  (Mr Jamieson) Because of the nature of ports and the way that they are structured in this country—there are many of them of different sizes—it is very difficult for the government. The ownership of the ports makes it very difficult for us to make that assessment in the same way as we can in other areas. It does depend on a number of other things. Because 97% of all the imports and exports in this country go by sea in and out of the country, it is very much reflected not just in consumer demand such as for air services but in the fortunes of the economy.
  (Mr Burr) The policy paper did also acknowledge that we needed to understand the industry better.


  339. If we do not have any accurate figures and we did not know what they were going to pay for any infrastructure, I think you can easily say that we need to understand the industry better.
  (Mr Burr) The policy paper perforce took stock of where we were. It was a long time since there had been a comprehensive look at ports and we did not claim that the policy paper had all the answers. It was a bit of a snapshot and we had to work with what we had. We were honest about the lack of information. One of the things since then that we did was to develop a paper on development prospects and demand for container capacity, because that seemed to be a critical priority. That is where the development pressure seems to be most acute. There is quite a sharp debate about how that capacity should be provided, how much capacity should be provided, and we were going to have to make some very big decisions and ministers would in the coming years. We felt that was an area where we needed to push forward just these kinds of concerns. We put this paper out. What we found during the research for that paper was that there was a reasonable consensus about the likely rate of growth and—

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