Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 340 - 359)



  Q340  Joan Walley: If I may, I would just like to pursue that a little bit further. I cannot help being reminded of a time many years ago when I was a shadow shipping minister and people would say to me, "Well, coming from Stoke-on-Trent, what is the connection with shipping?"

  Dr Leggate: I do, in fact. Yes, "What do you know about shipping?"

  Q341  Joan Walley: Of course, my answer was that in the nineteenth century we had an industry, which was the pottery industry, which we took out from Stoke-on-Trent to the four corners of the world via, of course, the Trent Mersey, and obviously we still have Port Vale Football Club flying the flag, if you like, for ports there. Can I just say that I think one of the issues about the role of the inland waterways and about shipping, despite the fact that we are an island nation, really there is not the public perception, I do not think, about the role and the contribution and in a way I think the creation of your organisation following the 2002 report, and so on, is perhaps one step forward, but do you think there is enough perception about your organisation and your role? Is not part of it to move up the political agenda, to be able to get the train operating companies to be talking across modal streams, ports, waterways?

  Dr Leggate: Yes.

  Q342  Joan Walley: But part of it has got to be an understanding in the public's perception of ports and the whole way that connects with the integrated transport strategy?

  Dr Leggate: Yes, absolutely. I totally agree with that and as an organisation this is what we are trying to do now.

  Q343  Joan Walley: How are you doing that?

  Dr Leggate: We are trying to communicate on numerous levels, partly with policy-makers across all the departments.

  Q344  Joan Walley: How is that coming across to the public's perception of the contribution you can make.

  Dr Leggate: At the moment, it is not very much. It is something which we need to push quite hard because freight is not very attractive really in terms of public perception, but I think things which are and things we are trying to push quite hard are the environmental benefits, and I think the public are becoming increasingly aware of those. When we look at water freight transport we are then looking at greener issues and people are becoming more aware of those, and that is something we are pushing quite hard. We are also trying to push on a corporate level with companies now becoming more involved with corporate and social responsibility agendas, for example Tesco announcing the £100 million on environmental issues. We have actually written to Tesco to suggest that part of that could be looking at green supply chains. An area which needs to be developed is the area of waste management and lots of companies could actually use water as part of their waste management systems.

  Mr Lapthorn: If I could go back to the public's perception, I have spent far too long, 30 years or so, trying to persuade MPs and others with more influence than I that probably the best way to influence the public is for those MPs and so on to simply admit that we are an island and that their shipping ministers are ministers for road, rail, air and sea. There are very few (and there has been quite a lot of them) who have admitted publicly to being minister for sea. Yes, we are an island nation, but people will look out here and say, "Oh, isn't that nice?" as commercial vessels go up and down, but the only time the headline is made is when something goes wrong. That is the best way, in my mind, not to dish out subsidies and all these sorts of things—I shall get shot for that!—but for the politicians and decision-makers to accept that here is a real sustainable alternative to sitting on the M25 coughing and spluttering behind a lorry.

  Q345  Colin Challen: The Government has decided to amalgamate the grants for rail with water into a single pot, which is a smaller pot than the previous two pots. What do you think the Department's thinking was on that and what will be the impact of it, do you think?

  Dr Leggate: I think they are thinking about money, but it will have an impact and we are quite concerned because, as I said earlier, until road pricing comes in, on a number of levels it is very hard for water freight operators to compete with road, so it is quite disappointing.

  Q346  Colin Challen: What kind of figures are we talking about in terms of water previously, in terms of grants?

  Dr Leggate: In terms of the grants, not very many millions—

  Mr Lapthorn: £9 million.

  Dr Leggate:—nine, £10 million.

  Mr Lapthorn: Generally speaking, certainly recently it has taken up to such an extent that there was borrowing from the following year to make the numbers fit in the previous year.

  Q347  Colin Challen: Do you feel with the single pot approach that the rail lobby will squeeze you out even more?

  Dr Leggate: Yes.

  Mr Lapthorn: Yes, because the greater impact rests with rail and we as an industry, as a general remark, live and die by our own sword. Rail, I feel, does not. That is my personal view.

  Q348  Dr Turner: Your memo calls for the Government to introduce a system of road pricing on the basis that road haulage does not pay its full external cost to society. What form of road pricing would you like to see introduced, and what do you think the Department feels about this?

  Dr Leggate: I think the Department is a bit cross that we have raised it, actually. I have had discussions with the Department about it and they acknowledge that road pricing in some form is inevitable and we know people are working on that within the Department. Obviously the technicalities are to be worked out and I would not like to say what form it should take, except to say that it should involve road users actually paying more towards the true cost of that road use so that other modes can compete.

  Q349  Dr Turner: Do you have any practical suggestions, so much a tonne, or on the size of the vehicle, or on the vehicle excise duty?

  Dr Leggate: Pence per mile.

  Mr Lapthorn: We are not going to sit here and say we can get rid of every lorry, because clearly there is not much water between here and Liverpool in a straight line, but what we want to do is to reduce the traffic on that straight line by using the waterway, which is free, at least as far as the main bulk of it is concerned. In my view, it comes down to pence per mile or kilometre, that sort of concept.

  Dr Leggate: It is going to be very complicated, is it not, and obviously you need to take into account regional congestion and that kind of thing, but actually the Department in terms of pricing and how much heavy goods vehicles do not contribute to calculations which the Department has actually produced, that the heavy goods vehicle fails to cover its costs to the tune of about 51 pence per mile, of which 2.5 is on climate change and 6 on other pollutants. They have done those calculations.

  Q350  Dr Turner: If you were to be successful in getting a significant amount of freight off the roads, how would you deal with it in terms of shipping capacity? You would have to make some investment to get it to rail and water.

  Mr Lapthorn: If it is done immediately, the problems are not too great. What we see is an accelerating rate of closure and change of use for waterside facilities, this river being a prime example. In our organisation, myself in particular, we deal with the smaller end. We are not talking of the odd 100,000 tonne bulkers, I will not put a limit on it, but let us say 10,000 downwards, and certainly inland 1,000 downwards. The facilities are there, but they are on their way out very quickly. In the Medway we have lost five wharves in the last four or five years because of the quest for regeneration, for housing, et cetera, and the consequence is you end up with a concentration on the larger ports and the natural process then seems to be, "Okay, from the larger port we'll stick it on the road and rail and off we go," and forget the largish number of small ships there are around to service the many small ports and facilities between those hubs. In very short order not only are the facilities going to disappear but the small ships as well, and in pure economic terms based upon the current market—and when I say that, that is probably 20 years—the sums just do not add up. So the size of ship has gone up, making the very small places less accessible and less viable, and the returns on the 1,000, 2,000 tonner that will go to most of these places just do not exist because the rates do not pay the bill.

  Q351  Dr Turner: It is a shame. I would like to see the sailing barge come back.

  Mr Lapthorn: Been there and done it!

  Dr Leggate: Having said that, though, in terms of coastal shipping the infrastructure is there. There is nothing to prevent the coastal routes and there are 300 commercial ports in the UK, so coastal routes could be used and there is not really any sort of capacity restrictions on that at all. In terms of the European short sea fleet, you have got something like over 2,000 vessels of 10,000 deadweight tonnes or less. So you have got quite a considerable capacity there for coastal shipping.

  Q352  Dr Turner: What sort of scale of investment do you think would be needed to make it sustainable for the future?

  Mr Lapthorn: It is almost a "name your figure", but my belief, as a ship owner, is that you have to have a number of ships which enable your customer to feel confident that he can always get his ship, he can always get his continuity of supply. Your starting figure is two to three million pounds per new vessel, but once there it is there for 20 or 30 years and the level of regeneration at the moment is almost insignificant; it is just not happening at the smaller end.

  Q353  Dr Turner: What do you think could make it happen?

  Mr Lapthorn: Increased income, for want of a better expression. We have what I would describe as a pure market, little or no subsidy, little or no assistance, certainly nothing direct, and we are competing directly with road and rail and certainly road and probably rail are not paying their full cost. We are paying our full cost and it is not enough.

  Q354  Dr Turner: If they did, it would then make you commercially attractive?

  Mr Lapthorn: Oh, yes.

  Q355  Joan Walley: I just want to explore some of these in a little bit more detail, if I may. I really wanted to start off by asking you, you mention in the submission which you gave to the Committee that you have called on the Department for Transport to take on board some of the credit risk of water freight operators to enable them to make investments. I just wondered what specifically you had asked for and what specific response you had had back?

  Dr Leggate: We have not had any response. It is something which we have very recently done and the difficulty in getting the finance is something which for smaller operators prevents them from actually investing in new vessels.

  Q356  Joan Walley: You say you have had no response, but what have you had no response to?

  Dr Leggate: It is part of a policy document we have just brought out called "The Case for Water" and the Department has made it clear that it is going to officially respond to this document and that is a part of that document.

  Q357  Joan Walley: In that request for specific support which you have asked for, does it include things like loan guarantees, which presumably are available across other business sectors? Are you looking at what is already available to help? Are there schemes like that which you are looking at as well?

  Mr Lapthorn: The old section 10, 1972 Industry Act gave us loan guarantees for new ships. That expired some years ago and given that the rate of interest was 7.5% fixed, as market rates went down below that, so the uptake of that was reduced anyway, but certainly the experience of that sort of departmental guarantee was really quite onerous and one ended up with something of the order of 200% cover required. So there was not a great incentive to go rushing out to say, "Yes, I'll have some of that," and move on.

  Q358  Joan Walley: Earlier on, Mr Challen referred to the removal of a combination of the rail and the water freight grants into a single pot. While it existed separately for your industry, did that help and contribute on the scale you hoped it would?

  Dr Leggate: It contributed, but I do not think anywhere near the scale that we hoped it would.

  Mr Lapthorn: It is largely inland. There are one or two notable examples like Leeds with aggregates, 100,000 tonnes or so a year taken off the road and delivered directly into the centre of Leeds by water. But coastal efforts are few and far between.

  Q359  Joan Walley: Again, in the memo you have given to us you say that the development of UK ports is frustrated by planning processes which are too slow, over-complicated and costly with the effect that therefore you are at a disadvantage compared with other European competitors. Does that apply, for example, to Felixstowe? I seem to remember Felixstowe being built without any thought at the time of the infrastructure that would lead into it. That aside, how are you now contributing to the port policy which the Government has, I understand, set up? Is that what your document which you have just referred to is about, or are you having separate discussions with the Department about its review of ports policy?

  Dr Leggate: No, we have fed into the ports policy debate and obviously we are now waiting for the review on ports policy.

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