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Westminster Hall

Tuesday 2 June 2009

[Mr. Bill Olner in the Chair]

Light Dues

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Tami.)

9.30 am

Mr. Andrew Turner (Isle of Wight) (Con): It is a great pleasure to be here, and to be able to bring to the attention of the House the urgent need for reform of light dues—a tax on merchant vessels calling at British and Irish ports. Light dues are intended to cover the cost of providing lighthouses and navigational warnings around the coasts of England, Wales, Scotland, Ireland, one or two minor territories in the Red sea and, of course, Gibraltar.

The maintenance, upkeep and modernisation of navigational aids around our coastline falls to one of three bodies—Trinity House for England, Wales, the Channel Islands and Gibraltar, the Northern Lighthouse Board for Scotland and the Isle of Man, and the Commissioners of Irish Lights for Northern Ireland and the Republic. Light dues are paid into the general lighthouse fund, and money is drawn from the fund to pay for the running costs of the general lighthouse authorities. The GLAs provide working capital and pay annual unfunded pensions for retired staff. Shipowners feel particularly aggrieved that they have for so long continued to bear the burden of such costs.

What hon. Members may not know is how long the controversy over the tax has been raging. At least three Select Committee hearings recommended the abandonment of lighthouse dues tax in the 1850s without success. The Official Report enabled me to do a little more research. I came across the Second Reading debate of the Merchant Shipping (Mercantile Marine Fund) Bill, which took place in 1898. As the title suggests, the legislation set up the mercantile marine fund, which was the forerunner of the general lighthouse fund.

The mercantile marine fund was often exhausted of funds and had to borrow to overcome a downturn in trade and industry—a condition that may have some resonance with today’s economic situation. Some of the comments made 111 years ago by our predecessors in this place are worth an airing. One argument for the retention of light dues has always been, “If it ain’t broke, don’t fix it.” On 17 March 1898, Mr. T. Gibson Bowles, who represented Lynn Regis, said, in response to such a sentiment, that it was

He also said that he hoped the Bill would be

That takes the controversy back to the 1820s. He went on:

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Many of the comments made during that debate 111 years ago could quite easily have been made yesterday. I suggest that for 111 years, successive Governments have failed to reform the system. They are secure in the knowledge that the commercial maritime industry is simply worn down by so many unsuccessful years of calling for change.

To return to the present day and the real purpose of my debate this morning, I should like the Minister to respond on two main issues. First, the current system is inequitable. The charges paid by ships calling at British ports subsidise the costs of those in Ireland, which is quite bizarre. Secondly, another bugbear of the current system is the failure of successive Governments to tackle structural imbalances in the administration of the general lighthouse authorities. In simple terms, we have reached an identical situation to that of 1800. Then the general lighthouse fund borrowed £200,000. A figure in excess of the alleged £21 million deficit is now claimed by the Government to restore the general lighthouse fund to health.

Mr. Mark Field (Cities of London and Westminster) (Con): My hon. Friend has gone back in history and made an interesting analysis of the issue. There are a lot of old-fashioned taxes that may cause concern to many of us. Will he shed some light on what element light dues are of overall port costs? He has given the impression that it is a huge element, but my understanding is that it is a relatively small, albeit historically irritating, element of the overall port costs.

Mr. Turner: It is a relatively small element, but it is important in its effect.

Bob Spink (Castle Point) (Ind): Although it may be a small element for merchant vessels, which deal in very big commercial transactions, it is a significant element for the fishing fleet. Why should vessels of the UK-registered fishing fleet that are just over 10 metres pay when they make no use of the GLA navigation aids and when other EU-registered vessels do not have to pay? It puts our fleet at yet more commercial disadvantage against the European fishers.

Mr. Turner: As the hon. Gentleman said, the UK fishing fleet has to pay those dues. I should like to draw the matter to the attention of the Department for Transport because it is dealing with it. It has allowed panic to set in. The investments held by the general lighthouse fund, which is still in a substantial surplus, fell by some £18 million. That was due to the parlous state of the economy. Meanwhile, the burden of the subsidy accrued to the Irish Government for maintenance of lights around the Irish coastline increased. The cause was the appreciation of the euro against the pound sterling, and it placed a further burden on the fund, currently totalling a staggering £16 million.

Astonishingly, the Department for Transport also accepted in its forecast a 4 per cent. annual compound increase in the costs of the general lighthouse authorities over the next five years. Things got even worse. On 23 February, the Government began a consultation
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exercise on changes to light dues. Among the proposals were a hike of 6 per cent. net registered tonnes on light dues rates for merchant vessels calling at UK ports from 1 July, a rise in the tonnage cap from 35,000 to 50,000 tonnes and an increased cap on taxable voyages from seven to nine a year. As a result, the maximum charge per call became £20,500.

On the face of it, such adjustments do not seem dramatic. But the impact of the changes will increase the burden of charges on some sectors of the shipping industry by a whopping 115 per cent. Something close to my heart is the impact that such proposals could have on, say, the port of Southampton. I use ports such as Southampton and Cowes each week to get to and from my constituency. The Government assume that deep-sea vessels will continue to call at UK ports, including the busy port of Southampton, regardless of cost. I suggest that that is risky. Shipping companies have already said that they are examining how to reduce their direct calls, and some are considering adjustments in their sailing schedules, so we cannot and must not assume that shipping companies will carry on as usual.

Peter Bottomley (Worthing, West) (Con): My hon. Friend is making some valuable points, some of which the Department for Transport could make to the Irish Government. On that last point, there is a general economic pressure, of which dues are not a part, to reduce direct calls. However, just in case he is thinking of linking the question of direct calls to the cost of light dues, does he have an economic analysis of how much calls increased as light dues, in effect, halved in real terms over the past two years?

Mr. Turner: I do not have those figures, but we are always as a consequence pressing for dues to decrease rather than increase.

No one will be surprised to learn that the situation has caused unparalleled outrage among the international and UK shipping communities. News of the additional burden has reached Bombay, Tokyo, Shanghai, New York and all world cities that control major shipping lines. What incalculable damage to our reputation as a leading maritime nation has been inflicted by the proposed tax increase?

The Parliamentary Under-Secretary of State for Transport (Jim Fitzpatrick): Will the hon. Gentleman concede that the damage to our international reputation would be incalculably worse were there to be a disaster as a result of not observing the maintenance that is required to ensure that the lighthouse services are maintained at the highest possible level?

Mr. Turner: That need not happen if the conduct of the process is more reasonable. The Minister is pressing in the wrong direction.

Jim Fitzpatrick: As the hon. Member for Worthing, West (Peter Bottomley) indicated, the costs of lighthouse services have gone down by some 40 per cent. in the past 10 years and have been cut four times. The service is not increasing its costs irresponsibly; rather, it has been
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acting with the best possible managerial efficiency. Notwithstanding that, there is a 5.6 per cent. cut this year.

Mr. Turner: I understand that.

Mr. Julian Brazier (Canterbury) (Con): The statistics mentioned are of course true, but we must remember that other transport bodies have been expected to reduce their costs. The lights business has been transformed over a generation. Only 10 years ago, substantial numbers of lighthouse keepers were employed, so one would expect there to have been a very large cut in the cost base since that time—[Interruption.]

Mr. Bill Olner (in the Chair): Order. Let the hon. Gentleman speak.

Mr. Turner: I am very grateful to you, Mr. Olner.

This is the point: the shipping industry put its faith in the Government to honour the commitments that were made in 2004. They promised to abolish the Irish lights subsidy and to take steps to eliminate the duplication of services provided by the three lighthouse authorities, but they have blatantly failed to honour those commitments. Eliminating the Irish subsidy alone would virtually solve the anticipated deficit in the general lighthouse fund, and requiring the general lighthouse authorities to implement a 5 per cent. cut in operating costs would eliminate the deficit altogether.

I fully support the efforts of the noble Lord Berkeley, who has introduced a Bill in the other place that would require the Government to remove the Irish subsidy and rationalise the three general lighthouse authorities.

Peter Bottomley: Just because I am a great believer in plain English, does rationalisation mean amalgamation? If it does, many people will think that the first thing that the new organisation would have to do is set up three different control centres.

Mr. Turner: That could be a consequence. Whether the authorities are rationalised, improved or abolished, the point is getting the costs down. I hope the Government will take the proposal seriously and that they will support such a measure. It could be introduced early in the next Session. The Minister will tell us that he is in negotiations with his counterpart in the Irish Republic, but before any such proposal can be made, will he make the notes of the meetings and frequent updates on the situation available in the Library?

Dr. Brian Iddon (Bolton, South-East) (Lab): The hon. Gentleman has been negative rather than positive in that he has not given his views on how the problem ought to be fixed. Does he agree that Britain and the Irish Republic are transparent about our port costs? Has he compared our light dues with those of other continental ports or ports around the world?

Mr. Turner: I approve of what is happening on transparency—we are at least doing things openly—but I do not answer for what is happening in continental countries, whether or not it should be happening.

Will the Minister set out a firm timetable for eliminating the Irish subsidy? He should suspend the proposed increases that are due to come into effect on 1 July pending the preparation of a new budget to reduce the administrative costs of the three general lighthouse
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authorities. The Independent Light Dues Forum, which represents major international shipping lines, other trade association bodies and individual shipping companies of all sizes have all urged such action. It is imperative that the Government act to remove the burden of this proposed tax increase on ships calling at British ports.

In 1898, Sir Thomas Sutherland, the then Member for Greenock, said:

I am more of an optimist—I do not believe that that is the case. Let this be the Minister’s legacy: he could be the Minister who, after nearly two centuries of controversy, finally did right by the shipping companies and introduced a reform of light dues that is fair and equitable to our maritime industry.

9.47 am

Mrs. Louise Ellman (Liverpool, Riverside) (Lab/Co-op): The hon. Member for Isle of Wight (Mr. Turner) has done well to secure this debate and to highlight the problem of maintaining marine and navigation safety equitably. Before anybody jumps to any conclusions about how this matter might be resolved, it is extremely important first to point out the great success of the general lighthouse authorities in creating very high standards of marine and navigation safety, and in looking after 20,000 miles of coastline. They have done so using regional knowledge, and it is vital for hon. Members who are considering changes in the arrangements to recognise the importance of organisations that have such local knowledge on which they can act.

As was correctly pointed out, there has been no increase in light dues since around 1993. However, I also recognise that we are in unprecedented global economic difficulties, which is affecting shipping as much as other industries, including in the UK. Therefore, any imposition of significant increases may well impose difficulties on the shipping sector, which is already under pressure. We are particularly concerned about maintaining shipping in the UK and the viability of our ports. No hon. Member would want to do anything to jeopardise that given the economic difficulties that we face.

That is the situation. The system of GLAs works effectively and the dues have not been increased for a significant time. Nevertheless, we are in a position of great economic difficulty in which we do not want to jeopardise shipping in the UK by encouraging shipping companies to invest elsewhere, leading to reduced investment here.

Peter Bottomley: I am glad that neither the hon. Lady nor my hon. Friend suggested that yachtsmen should have to start contributing to light dues. One of the great things about this country is that they can use the facilities without paying. I declare that I am a member of the Royal Yachting Association.

Mrs. Ellman: I note the hon. Gentleman’s important points.

Last year, the Select Committee on Transport considered the draft Marine Navigation Bill as part of its pre-legislative scrutiny. It contained a provision that might provide part of the solution to the problem by permitting GLAs
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to engage in more commercial activities and to use their expertise to raise more income. The provision contained the necessary safeguards and the Committee supported the proposal. It is a matter of regret that the Bill has not passed into legislation and that that and other important clauses have not been enacted. I hope that the Minister will say what progress is to be made on that. Enabling GLAs to produce additional income by using their expertise is one way in which the issue could be addressed.

It is important that GLAs continue to take cost-saving measures. They have made great progress on that over recent years. The Department must continue to fund projects that look at more efficient ways of conducting such activities and lowering the costs. For example, the eLoran project is developing a land-based, high-powered, precise terrestrial radio navigation system. It is important that that project and others are pursued because they can reduce costs without jeopardising safety.

I endorse the comments of the hon. Member for Isle of Wight on the subsidies given to the Irish Republic. I note that discussions on resolving that matter are ongoing, but more urgency is required.

In conclusion, I support the excellent work of the existing GLAs in maintaining safety. I recognise the major problems faced by shipping at the moment and do not think that we should do anything that would jeopardise the viability and success of that important sector. The funding of marine and navigational safety is a critical and ongoing issue. I urge the Government to consider other ways of enabling more income to be produced so that increased costs do not fall on users of the service in a way that could jeopardise the sector.

9.53 am

Mr. Alistair Carmichael (Orkney and Shetland) (LD): I am grateful to the hon. Member for Isle of Wight (Mr. Turner) for securing the debate and congratulate him on it. Not since I secured a debate some years ago on the future of the Stromness lighthouse depot in my constituency has the oxygen of public scrutiny come to fall on the work of the general lighthouse authorities. Such scrutiny is necessary. I will not stand here and argue against reform because, as he said, it is long overdue.

Mr. Mark Field: I do not suggest that our system is perfect. It has clearly agitated people in the industry for well over a century, as my hon. Friend said. Does the hon. Gentleman recognise that some clear institutional and operational efficiencies are part and parcel of the system? Almost any reform is likely to be costly and there will be losers as well as gainers. Those who represent constituencies such as his will appreciate more than I do that we have a highly complex coastline and crowded shipping lanes, which require specific regional experience. The system we have allows for that. A new system could put it in jeopardy.

Mr. Carmichael: The hon. Gentleman has anticipated a great deal of what I will say. I am minded to sound a note of caution in the clarion call for reform. My concern is that we could end up with a system that does not have at its heart the safety of seafarers and shipping, and the environmental integrity of the seas around this country. That is what the issue comes down to.

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