Merchant Shipping (Light Dues) (Amendment) Regulations 2009 (SI 2009/1371), etc - Merits of Statutory Instruments Committee Contents


Letter from Lord Berkeley

I write to ask your Committee to urgently examine the merits of statutory instrument No. 1371 and request the special attention of the House for further debate. The issue of light dues has been a matter of interest and concern to me for some time, particularly the continuing funding by the UK Government (through light dues paid by ships entering UK harbours) for the maintenance of lights in the waters of the Irish Republic. I strongly support the shipping industry view that this dramatic increase in light dues, whilst of historical interest, is deeply flawed and is an issue on which the Government has consistently failed to tackle the underlining problems to deliver a lasting solution.

On the 23 February 2009 the Department of Transport (DfT) went out to consultation on the following amendments to the light dues regulations by increasing rates for merchant vessels calling at ports in the UK and Ireland, by:

  • elevating the current rate of £0.35p per nrt (net registered ton) to £0.41 p per nrt
  • lifting the cap on the maximum chargeable tonnage from 35,000 to 50,000nrt
  • escalating the maximum annual number of chargeable voyages from the current seven to nine.

This set of substantial rises - between 17 to 115 per cent - was met with unanimous, industry-wide condemnation. Some of the extensive national, regional and trade media coverage is enclosed in Annex 1 [not printed].

Light dues are a tax on shipping entering UK ports, which are used to fund lighthouses, beacons and other navigational aids in UK and Republic of Ireland waters administered by the three General Lighthouse Authorities (GLA). These taxes are not applied in most other EU member states. Where they are applied, the costs are significantly lower than those currently charged by the GLA.

The proposal to increase light dues was the highest in two decades and, given the current economic downturn, I believe that this is simply unacceptable. Shipping companies are continuously analysing all aspects of their operations to reduce costs in an ever competitive international market. With this backdrop, there is a very real threat vessels will start omitting UK ports in favour of more cost effective continental alternatives. Diversion of UK calling vessels would be extremely damaging to the British economy - impacting on the ports, wider transportation sectors and peripheral support industries - and the environment in both the short and long-term.

The increases were proposed in order to re-distribute the £20M forecast deficit on the General Lighthouse Fund (GLF) - a fund from which pensions contributions and the GLAs are funded. This deficit is largely due to the poor performance of investments and the revaluation of the euro, but this masks three key problems, which DfT refuses to tackle.

1.  The bulk of the GLF shortfall would be removed at once if the Republic of Ireland was asked to meet the full costs of provision of the aids to navigation in Irish waters - some £16M. In January 2004, DfT made a pledge in a response to a House of Commons Transport Select Committee enquiry to cease the outdated subsidy. This was reinforced on 26 March 2009 when the then Parliamentary Under Secretary of State Jim Fitzpatrick MP acknowledged his Department's failure to deliver and made it both his personal and a departmental obligation to find a solution.

2.  The second point which was completely lacking from the consultation was an analysis of the GLAs' cost-base and structures. I believe that there is genuine scope for rationalising the GLAs' support structures to eradicate heavy duplication, for example, in HR and fleet management. The GLAs need to reflect today's testing commercial reality and exercise the sort of fiscal discipline that shipping companies are applying - typically cutting costs by between 10-25 per cent. The GLAs' gross shore-based over-manning to support six small ships is unsustainable and DtT has failed to tackle this issue - with no clear proposals and timeline for urgent rationalisation to release the obvious and substantial financial savings locked in the three organisations.

3.  The third point covers the GLAs' budgetary assumptions which appear to bear no relation to commercial reality. Across Government, all agencies (including those involved with safety such as the Highways Agency) are being asked to make five per cent year-on-year budgetary cuts. The GLAs' budgetary assumptions, four per cent uplift year-on-year, is out of line, unsustainable and against cross-governmental policy. It is also unnecessary as I have demonstrated above.

In spite of overwhelming condemnation, on 8 June 2009 DfT published SI No 1371, to come into force on 1 July 2009, which made the following amendments to the consultation paper:

  • after 30 June 2009 and before 1 April 2010, to increase dues from £0.35 to £0.39p per ton subject to a maximum charge of £13,650 per voyage
  • on and after 1st April 2010, a further increase to £0.43p per ton subject to a maximum charge of £17,200 per voyage
  • escalating the maximum annual number of chargeable voyages from the current seven to nine.

DfT has completely ignored industry concerns and, disappointingly, the amendments ratchet up light dues on all ships by 11 per cent and by 43 per cent on ferry and short-sea operators. The situation is further exacerbated by a second increase, which goes further than the original proposals, in 2010/11. Some of the shipping industry and wider supply chain reaction is catalogued in Annex 1 [not printed].

It is clear that light dues create a competitive disadvantage and, combined with the proactive efforts of north European ports offering incentives for business, this increase in the tax only heightens the need for decisive action in line with the Government's efforts in other sectors like the car industry. The amount of disproportionate damage caused by these proposed increases is striking, both to Britain's maritime reputation and to the confidence in the country's employment and fiscal environment.

I sincerely hope your Committee will see the merits and the need for further debate on this issue.

June 2009

Information from the Department for Transport


The provision of aids to navigation around the British Isles is funded by light dues levied on shipping using ports in the United Kingdom and Ireland, but the Irish Government also makes a direct contribution in recognition of the shortfall in revenues collected at Irish ports compared with UK ports. The current agreement is that the contribution from Irish sources (i.e. light dues collected at Irish ports plus a contribution from the Irish Government) is 50% of the assessed costs of providing the lighthouse service in the Republic. Negotiations with the Irish Government to improve the basis for funding Irish Lights have been taking place and an evidence report in 2008 by the Department for Transport's In-House Consultancy has been accepted by both Governments as a basis for further work.

Jim Fitzpatrick recently drew attention to progress in the negotiations during a Westminster Hall adjournment debate on 2 June 2009. He said,

"I recently met the Irish Minster of Transport in Dublin to discuss the matter. I am pleased to say that we agreed a better formula for apportioning Irish costs on a north-south basis.

"We also agreed on the need for an overall assessment of the provision of the integrated aids-to-navigation service to all regions of the UK and Ireland. An evaluation is to be undertaken to consider all aspects of delivery, including continuing increases in efficiency, potential structural improvements and the overall financing arrangements. We now have the basis for making real progress. We will make every effort to reach an agreement that is more soundly based than the old one and one that ensures a fair apportionment of funding. The Irish negotiations also raised the question of whether the present GLA structure was the best.

"We have an agreement with the Irish Government, and we need to negotiate a way forward from that. We cannot simply say to the Irish that we no longer accept the arrangements. The discussions in Dublin nearly two weeks ago resulted in a commitment to a ratio of 85:15 in payments [in respect of the apportionment between the Republic of Ireland and Northern Ireland] for this year; and we have a commitment to consider the 50:50 payments [split between Irish sources and the General Lighthouse Fund] in the longer term.

"As I said, the Irish negotiations also raised the question of whether the present GLA structure is the best solution. There are good historical reasons for the position that we now find ourselves in, and we must protect the undoubted advantages that stem from the expertise and geographical knowledge to be found in each of the GLAs, a point made by a number of colleagues. However, I believe that we need to take a fundamental look at how the lighthouse service is provided, and that view is shared by the Irish Minister. Without Irish co-operation, implementing change will be more difficult. I do not intend to destroy the good service that we have, but we need to consider, in the 21st century, how it can be improved in order to achieve efficiencies that will deliver a better service."

Work is now in progress to carry out the assessment and evaluation of the lighthouse service as agreed by the Ministers.

June 2009

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