Examination of Witnesses (Questions 340
WEDNESDAY 26 APRIL 2006
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
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
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
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
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 thingsI 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
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
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
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 marketand when I say that,
that is probably 20 yearsthe 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
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
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
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.