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Lord Elder: I should like to speak to the other two amendments in the group standing in my name and that of my noble friend Lady Goudie. Amendment No. 426A covers the same general ground as Amendment No. 373, referred to by the noble Baroness, Lady Thomas, and my noble friend Lord Berkeley.

There will be enormous environmental benefits if we succeed in taking freight off the roads. The freight facility grant currently does that by encouraging a switch to rail or to inland waterways. The amendments would extend that to coastal and short-sea shipping. As I understand it, they would cover services around the UK and between the UK and Europe. Support for short-sea shipping is a declared objective of the European Commission.

The amendments cover reserved matters; so they would cover trade between Scotland and the rest of the UK but not wholly within Scotland, which would be a matter for the Scottish Executive.

Congestion on roads is already leading to a reassessment of the benefits of water travel, and that reassessment is to be encouraged. The amendment seeks to do exactly that; and it is to be hoped that it will encourage more operators to make the switch.

For the sake of simplicity, the amendments combine all water-related grants into one, putting coastal short-sea shipping and inland waterways together. Under the amendments, both capital and non-capital grants could be made, which would provide a good deal of flexibility. As grants are paid only when an actual shift is made from roads, I believe that the proposal would prove both efficient and effective.

Amendment No. 427A repeals the relevant part of the Railways Act 1993. I believe that together the amendments would succeed in assisting some shift from roads to other, more environmentally friendly forms of transport and are therefore to be encouraged. I very much hope that the Minister will be able to respond positively to them.

Baroness Goudie: I support my noble friend Lord Elder and the other speakers. I declare an interest as an

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adviser on shipping to Clydeport. If the amendment were accepted, we should be able to see much more traffic shifted off the roads. It would ensure that short-sea shipping was able to take container goods from Glasgow to Southampton, and then on to the main ships, from Grangemouth to Felixstowe, on to the main mother ships and out to Europe and other parts of the world. That would make a great improvement to the environment. Therefore, I hope that we shall receive government support for these proposals.

Lord Brabazon of Tara: I am interested in these two amendments. Amendment No. 373 would appear to cover the Isle of Wight--I declare an interest as a resident. However, the amendment standing in the names of the noble Lord, Lord Elder, and the noble Baroness, Lady Goudie, would appear not to cover the Isle of Wight, or indeed any other island, because the wording in subsection (1) is, "rather than by road". Obviously, there is no road alternative for the Isle of Wight, or indeed the Scottish islands. The only way to get there is by ship--as the noble Lord, Lord Berkeley, is well aware and as he rather foolishly said the other day.

I have one or two questions for the Minister on the amendments. If the amendment tabled by the noble Lord, Lord Elder, is acceptable to the Government, there is a question of what the Treasury calls dead-weight; that is to say, you do not want to subsidise a service that is already happening. How would the Government deal with that situation?

In principle, we support the movement of more freight by sea, whether on inland waterways or up and down the coast. But that is already happening to some extent with certain commodities such as fuel, oil and heavy bulk aggregates. So we need to be certain that the Treasury will not end up subsidising services that are already under way.

Lord Berkeley: I am grateful to the noble Lord for giving way. Is he aware that the rail freight grant covers that situation? The two conditions before a grant can be obtained are: first, that there must be environmental benefits, up to so much for motorway miles; and, secondly, that the traffic is not presently operating and could not do so without a subsidy. Does the noble Lord agree that similar wording would cover this matter?

Lord Brabazon of Tara: That is precisely my point; it is why I question the reference in the amendment. The traffic should not already be a viable proposition, operated commercially, as is the case with rail freight.

I would say to the noble Baroness, Lady Thomas, that the Isle of Wight has doctors and hospitals at present. Many of the residents there are well satisfied with the services that they receive.

The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston): The Government made a commitment in their integrated transport White Paper and in their shipping daughter document to extend the

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application of the freight facilities grant regime to coastal and short-sea shipping. The freight facilities grant scheme is an environmental grant designed to encourage the transfer of freight from road to more environmentally friendly modes of transport. The current grant scheme covers railways and inland waterways but not shipping. Amendment No. 373 provides for a general grant to be made available for inshore shipping services and maritime assets.

The amendment is restricted to inshore shipping services and, therefore, does not include short-sea shipping services such as those operating between the UK and Europe. Nor does it focus clearly on a key issue for the Government of encouraging the transfer of freight from road to water. I am sorry to disappoint the noble Baroness but we cannot support the proposed amendment.

However, the Government are able to support Amendments Nos. 426A and 427A. The intention of the new clause in Amendment No. 426A is to extend the current freight facilities grant scheme to coastal and international shipping. Services operating to the rest of Europe, as well as around the UK, would be eligible for grant. It will constitute a general "water transport" grant scheme by also including inland waterways which are currently provided for in Section 140 of the Railways Act 1993.

The clause also requires that freight traffic must be transferred from road to water, thus ensuring an environmental benefit as a condition for the payment of grant. I hope that that explains why the Treasury would have its concern focused on the environmental benefit and would not judge the matter simply in regard to any dead-weight implications.

The clause will also allow the payment of grant for capital and non-capital costs and provide flexibility to enable the grant to be paid to shipping companies, ports, consignors, consignees and navigation authorities. The powers of the Secretary of State will include only reserved matters. Therefore, the National Assembly for Wales will continue to have power to administer inland waterway grants in Wales, and Scottish Ministers will have power to administer inland waterway grants and grants for eligible shipping services that operate wholly within Scotland. I am pleased to say that Scottish Ministers support this amendment. The Secretary of State will also have power to grant-aid eligible services from and to Northern Ireland. I am sorry to disappoint the noble Lord, Lord Brabazon of Tara. The wording does not cover passage to the Isle of Wight. I hope that the noble Baroness, Lady Thomas of Walliswood, agrees that Amendments Nos. 426A and 427A go a long way to meet her objectives and that she will withdraw her amendment.

Lord Berkeley: Before my noble friend sits down perhaps I may raise one matter. First, my noble friend said that the grant could apply to shipping to mainland Europe but not the Isle of Wight. Does it apply only if there is an alternative road route? The position appears to be slightly odd. What about the Isle of Man which also does not have a road alternative? Secondly,

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on what is the grant calculated? I suppose that if one received a grant for a journey from Grangemouth, to which my noble friend Lady Goudie referred earlier, to Rotterdam the alternative route would be through the Channel Tunnel, which would have a cost, and by road for the rest of the way. Is that the environmental road alternative?

Lord Brabazon of Tara: I do not understand how the grant can possibly apply to shipping across the North Sea and to the Scottish islands, as the Minister implied, but not to the Isle of Wight and, presumably, the Isles of Scilly. If that is so, there will be a serious English rebellion. The amendment reads "rather than by road". There is no road alternative to the Isle of Wight, the Isles of Scilly or the Isle of Man; nor is there a road alternative across the North Sea or the English Channel. Either it applies to places where there is a road alternative or it does not. The answer to that question must be fairly straightforward.

Lord Macdonald of Tradeston: The point that I sought to make was that freight for the Isle of Wight would travel by road to ports either side of a short ferry journey to the island, so the effect would be the same. However, I confess that I do not speak from great certainty. I shall confirm the detail and write to the noble Lord, Lord Brabazon.

Lord Brabazon of Tara: I am grateful to the Minister. There is a considerable argument in the Isle of Wight about the cost of the ferry. If it is to be subsidised by the Government that is a major policy move. I do not know whether the noble Lord is aware of that. We should like to know the answer to that question, especially as we approach Cowes Week.

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