Mr D P Galway and Capt A K W Gardiner
(Larne Harbour Ltd)
Good morning, Gentlemen. You are very welcome. This session will last one
hour. I ask you to confine your opening remarks to approximately 10 minutes,
after which Committee members will put questions to you.
Would you both like to speak, or will one of you act as spokesperson?
I will probably do most of the talking, unless there is something on which
Capt Gardiner can help me.
Thank you, Mr Galway. Would you like to start.
Thank you for the opportunity to appear before the Committee. Larne is one
of Ireland's major ro-ro Ports. Belfast is one of our major competitors and
Dublin is probably another. The port of Larne is a private port, and we are
a statutory company, operating under an Act of Parliament; we also belong to
the P & O group. Since sending our outline submission to you, I have been
briefed, last Monday, by Belfast Harbour Commissioners on their proposals.
As yet there is very little definitive meat on those proposals, so it is difficult
to comment on them.
Details of the review of Northern Ireland's trust ports which was carried
out last year have not yet been published, and it would be difficult to comment
on what "enhanced trust port status" means because we do not know
what enhancements there will be. Before making any definitive comments, we
would need to have that information.
In principle, we have no objection to privatisation. It is the detail that
we are concerned about. We query the value - about £70 million - that
has been rumoured in the press. That seems to us to be a gross undervaluation,
but without sight of the definitive information, it is difficult to quantify.
We also have a question for the Chancellor of the Exchequer and the Secretary
of State: if the value is significantly in excess of that which has been rumoured,
where will the funds go? Will they be used to benefit Northern Ireland?
We are concerned, as I suspect is Belfast, that the proceeds from its privatisation
are going towards road schemes. Dublin is one of our major competitors, and
the delay in improving roads in Northern Ireland hampers our competitiveness
and the competitiveness of industry in Northern Ireland. Our catchment areas
are gradually spreading north, but the Chancellor's recent increase in diesel
duty - it is 40% cheaper to buy fuel south of the border - is also hindering
The lack of progress on roads schemes seems to be tied to the Belfast privatisation,
but there are ways of getting money without having to go down the privatisation
There seems to be only one proposal on the table - that of the Belfast Harbour
Commissioners. We do not have enough information to be able to consider whether
or not it is worth putting any alternative proposals forward. We also understand
that any alternative proposal would have to have the consent of the Harbour
Commissioners. Any viable proposal that we might make would have to clear that
hurdle before the Chancellor or the powers that be could consider it.
The Belfast Harbour Commissioners and those who run the other trust ports
do not need to produce accounts in the same detail as private companies, and
so it is difficult to get to see the wood for the trees. Likewise, the trustees
of trust ports do not have the same responsibilities or risks as those of private
companies, and any changes made to Belfast's status should equalise the situation.
Our main concern is the distortion of competition. Since the mid-'70s, all
the ports in Northern Ireland have benefited from the European Regional Development
Fund, and Larne has received £11 million since 1973. But the maximum assistance
provided to us for any scheme was 50%, while Belfast was getting 75%, and we
were not allowed to apply for any assistance for lift-on/lift-off, bulk or
general cargo facilities. Belfast's grants were many times ours - its Commissioners
can provide you with the necessary detail.
The Department of the Environment, whose transportation programme 1989-93
emphasised Larne's position as Northern Ireland's principal ferry and passenger
port, stated that Belfast would not receive grant for facilities which would
take traffic directly from us and that we would not get grant for lift-on/lift-off
facilities. These terms do not seem to have been applied, and Belfast and Larne
are major competitors in these areas.
If Belfast were privatised we would be concerned that grants in excess of
those which have been available to a private port could seriously distort competition.
Capital expenditure is a major element of a port's costs. The playing field
is already uneven. But if a port that is to be privatised is going to get grants
of 70% or thereabouts, as opposed to the 50% or less that a private port gets,
the playing field should be levelled by some form of claw-back.
We request that there be an independent study of the potential impact of
the privatisation of Belfast on Larne and other ports. Indeed, we understand
that the Department of the Environment has commissioned such a study. It is
difficult to see how the impact of privatisation could be neutral.
That concludes our submission. The distortion of competition is our main
concern. At present, there are insufficient facts available on the Harbour
Commissioners's proposals to enable us to give a definitive comment.
Thank you, Mr Galway.
You spoke about the effect of privatisation on ports. Belfast Harbour Commissioners
have told us that Belfast would not pose any threat to ports such as Larne,
Londonderry and Warrenpoint because you depend upon a geographical area. That
is the chief factor in your favour. The Commissioners quoted the percentage
by which trade in other ports would fall if there were no charge for using
Belfast. I cannot remember the figure that they gave, but it was small. Perhaps
you could comment on the nature of your trade. Is it as geographical as the
commissioners say, or is there a strong element of competition? You stated
in your submission that trust status places no significant restrictions on
ports. If the organisational structure of a port is not important, what is
the important factor in determining whether it is successful?
Your first comment was about trade. I met Gordon Irwin, the Chief Executive
of Belfast Harbour Commissioners, on Monday, and he made a similar comment.
Business through Londonderry is largely bulk and general cargo, so its trade
would be affected by a very small amount.
Our catchment area is the whole of Ireland. Unfortunately, because of the
improving infrastructure in the South and particularly the difference in fuel
prices, that catchment area is spreading further north. Our catchment area
is the same as that of Belfast, and we are major competitors for the same type
of business. There is a potential impact, but at the moment we have insufficient
information to assess it properly.
To be successful, a port must be dynamic, efficient and able to do a deal
quickly. Customers will not hang around. We must make the best use of our assets.
One of the reasons for our success is that Larne is a small, tightly run port
with well motivated staff.
Trust ports do not have the same responsibilities as private ports. There
is no provision for trust ports to become insolvent for they are backed by
the Government. I carry personal risk, just as a company director has responsibilities
if his company goes insolvent. The Companies Act does not apply to trust ports,
whose trustees are entitled to be indemnified out of the assets. There is also
no statutory duty for a trust port to publish the same detail in its accounts.
We publish our accounts through the Companies Registry, and the detail that
we give is much more than that published by a trust port.
You are saying that there are advantages in trust port status and that day-to-day
business has no restrictions.
I have not noticed anything to make me think that Belfast is not a very aggressive
You are clearly concerned about distortion of competition in the event of
privatisation. The Stena Line has moved from Larne to Belfast. Surely that
shows that there is already competition. Would competition become unfair if
privatisation went ahead?
Secondly, I do not think that any of us believes that there will be full
privatisation of Belfast port. Various options would be considered. Can you
suggest any options for the Committee to consider in relation to the future
of Belfast port?
You mentioned competition. Stena moved from Larne in 1995. I am not aware
of the details of the deal that was done to attract the company; that is a
commercial matter between it and Belfast, and we were not privy to it. Certainly
people are voting with their wheels and their feet, and Larne is doing reasonably
well in a very tight market.
As to the alternatives to full privatisation, the information which Belfast
harbour has given us is not sufficient to allow us to assess the different
options. One would have to be privy to more information to be able to form
an opinion on the matter. For example, it might be possible to dispose of some
land and keep it in Northern Ireland under the control of Laganside.
Alternatively, the Northern Ireland Local Government Officers' Superannuation
Fund could be used to buy or invest in land so that the benefits would be retained
in Northern Ireland and, for example, used to accelerate the roads programme.
There are many options. A cat can be skinned in many ways, but you need sufficient
facts to be able to formulate a programme.
If shares were floated, would P & O show an interest, bearing
in mind its ownership of Larne?
I cannot speak for P & O, but at the moment it seems to be a fairly closed
deal. Our concern is that there appears to be only one option on the table
- the PPP (public and private partnership) scheme, of which we have no details
at the moment. I would like to see the thing much more open.
Do the Belfast Harbour Commissioners control a much larger proportion of
land than that controlled by Larne harbour?
Our total land ownership at Larne is 120 acres, 70 acres of which
are for port-associated or property development. The Belfast area is much larger.
However, much of it is covered by long-term leases belonging to Short Brothers
and Harland & Wolff. A good property developer could find ways to release
much of that land for development.
You said that when you met the Belfast Commissioners you did not think that
you got enough information. Is that correct?
I had a meeting with Gordon Irwin, the chief executive of the Belfast
Harbour Commissioners on Monday, and I got the information that was made available
to other consultees. But again there is no detail in the proposals.
Was the submission made to this Committee the same as that made to you?
I got a package. I can see your colleague's blue folder with copies of the
Finally, are you saying that as we go further down the road, you would like
to return to the Committee and make another submission, if the full information
that you require were available?
With the indulgence of other members, Mr Wilson would like to ask a
No. I want to say that the reason the information is not available is that
the scheme does not have to be lodged with the Department until 23 March,
and I think that the Harbour Commissioners are keeping it under wraps.
That is why I asked if Mr Galway wanted to come back when full information
was available. Perhaps it is too early for that.
Mr Galway, I want to clarify your position. It seems to me that your
chief concern is competition. With Belfast Harbour's current status, there
is competition between you and Larne. We are not trying to eliminate competition.
There is nothing wrong with competition per se, but you seem to feel that if
the port were privatised you would be facing some sort of unfair competition.
That must be your argument, otherwise you will simply be arguing against competition
per se, and I assume that nobody wants to do that.
Your submission does not make the matter clear. I would like you to explain
clearly and carefully what you feel the unfair competition would be. The only
point that I picked up was your reference to EU grant funding, to the differences
between what the Harbour Commission gets under current status and what you
get. That differential exists and will affect competition whether or not the
port is privatised. The argument about unfair competition in the event of the
ports being privatised is not a valid one. That is the first thing.
The second thing is that no future grants will be available. Our grant aid
is finished, though that is more a prediction than a statement of fact. The
fact is that you have not made an argument on the basis of an appeal about
the differential grants for there being any form of unfair competition in the
event of the ports being privatised. It seems to me you have no argument whatsoever
for unfair competition, though I may have missed the point.
We have absolutely no objection to competition as long as it is fair - none
You did not make a reference to clawback.
I did, but a major cost element in ports is the port infrastructure. It costs
between £8 million and £9 million to build a roll-on/roll-off quay, which
is only a little less than the total we have had in grant from Europe over
the last 26 years. Belfast may have received only 50% average grant towards
roll-on/roll-off facilities, but it has had up to 75% for other facilities.
The average grant level, I note from its handout, is 50%. I query that figure.
I have seen figures that are considerably higher. That means that the average
cost to it over any period is significantly less than the cost of our assets.
If Belfast were to attain private status its ongoing cost base would be so
much lower that it would distort competition. Competition is distorted at the
moment, but it should not continue to be distorted if there is a change in
Mr Galway, as someone who is from Larne and who has a fair idea of the
situation there, I believe that congratulations must be offered to the port
of Larne not only for managing to play up-hill but for playing up-hill into
the wind and still remaining competitive.
You mentioned unfair competition. In addition to that, there have been many
improvements to the infrastructure of the port of Belfast, enabling many new
routes to be opened, and because of the increased grant that allows this, that
must give Belfast some improvement in the flow of passengers and traffic. Do
you have any comments on that? How will the new routes to Heysham, for instance,
Some of those routes will affect Larne, but at the moment we do not see them
as having a major impact. We do not see the proposed Troon or Heysham routes
having a major impact. At the moment, unfortunately, tourism is in the doldrums.
People are still waiting.
Last year total tourist traffic on the various routes from Belfast and Larne
was down 3% on the previous year. Larne did very well in a very tight market
last year and continues to do reasonably well. Because of the short sea route
and the flexibility and efficiency of our service, we are certainly attracting
an increasing number of freight customers, and we hope that a boom or increase
in tourism would see us playing a major role in that.
New routes can be attractive, but it is altogether another matter whether
or not they are sufficiently attractive for a customer to want to spend three
and a half hours sitting on a ship crossing the Irish sea in daylight.
Mr Galway, the port of Larne is owned by P & O, and I assume that
P & O shipping is your biggest customer. Can you or do you make a profit,
and what is the harbour's turnover?
The port of Larne is owned by the P & O group. Our major customers are
within that group, but they are treated in the same way as any other customer.
I am satisfied that customers who were with us in the past but who now operate
from Belfast would agree that they were never treated less favourably than
customers from within the P & O group. In fact, at times
the port has bent over backwards to ensure that this does not happen.
Our turnover is just over £5 million per year.
Do you make a profit on that?
Yes. If we did not make a profit I would not have a job. A profit enables
us to develop the port, and last year we made a profit of about £2 million.
You said that you have a land bank of 120 acres. Is it all employed
for port operations?
We have a total land bank of about 120 acres, of which around 70 acres
has been reclaimed by us over the past 30 years. We are currently developing
How much of the 120 acres is devoted to port operations - ships in/ships
out and cargoes on/cargoes off?
Around 40 acres are used directly for the working of ships and the marshalling
of traffic. However, some of the other land, which we call our Redlands Estate,
is used for haulage depots and other port-associated activities.
Roughly how much land is used for haulage depots and other activities?
Around another 15 acres.
So the port can conduct its operations - ships in/ships-out, depots, et cetera
- on roughly 60 acres of land?
We can, although we have plans to reclaim more land because we are tight
for space and require another few acres.
Are you in the business of land or property development?
We are not in the business of property development. At present we lease the
land. We are flexible and can either lease land to others for development or
build distribution centres for our own use. We have not built facilities other
than those for directly handling ships or for terminals, offices or business
centres and the like. None are non-port-related.
Am I correct in saying that you have leased some land for property development
which is not directly related to the port?
It is all associated with the port. The only development which could be described
as non-port-related is that used for fast-food restaurants. But, again, they
are there to service the port.
Are you saying that you can make a profit without becoming property developers?
You know the sort of figures produced by Belfast harbour. If I were to say
that Belfast harbour could not survive unless it got a land bank and went into
property development, how would you react?
I believe that that statement could not be substantiated.
I thank Mr Galway for that very useful insight into the port operations.
I want to go back to the point of competition because clearly the European
grants of 50% and 75% are a matter for discussion.
If the port were totally privatised would that mean that there would be fair
competition? If it were to go into semi-state or trust status, if it were not
fully privatised and the competition were not fair, what protection would you
need to ensure a level playing field?
Secondly, if there were full privatisation, would there really be room for
two or three ports on this side of Northern Ireland in a free and open
It is difficult to quantify what form of protection we would need if the
port were not privatised or if it were a port with enhanced trust status. We
do not yet have all the facts to enable us to answer that question, for we
do not know the details of the privatisation or what enhanced port status means.
Certainly we would wish to have equal access to any funds that were going,
and we all anticipate that there will be little prospect of additional European
funding for ports. Access to ports is a key factor, and if access to the port
of Larne is not improved dramatically, that in itself will destroy competition.
Yes. A port is only as good as its weakest link, and that is the one major
concern that we have.
We are being leap-frogged daily by the vast amount of money that is being
spent in the Republic of Ireland, with 85% cohesion funding for its roads,
and the catchment area for Larne, and I suspect for Belfast as well, is going
further and further north. And, I repeat that the fuel tax is further destroying
Ms Morrice, what was the second part of your question?
In a free and open market is there really room for two, if not three, ports
on this side of Northern Ireland?
There is. We compete fairly effectively even with the possible distortion
of some elements of the grant structure. The customers can demonstrate that
Larne is preferred for a large proportion of freight and passenger business.
In so far as roll-on/roll-off business is concerned - and that is our main
activity - Belfast and Dublin are our main competitors, and Warrenpoint though
to a lesser extent. Londonderry does not compete in any measure for the same
type of business.
Road haulage costs and delivery times play a significant part in the different
products. There are horses for courses.
Mr Neeson, would you like to ask your supplementary question about the
Mr Galway, I agree entirely with you that access to the port is vital
not only this side of the North Channel but on the other side as well. During
your introduction you made the point that there are ways and means of raising
money for the infrastructure without the privatisation of Belfast harbour.
What are these ways and means?
The press has mentioned the very considerable land bank in Belfast, and the
Harbour Commissioners have said in their proposals that there are 85 acres
available for non-port-related development. Property is very valuable in Belfast
- unfortunately much more valuable than in Larne. For instance, look at per-acre
rents: in Larne we might get £3,000 per acre per annum - perhaps more in some
instances, but generally only in sizeable areas - while Belfast gets substantially
more than that. So, on land values alone, it would not take the disposal of
very much land in Belfast for a reasonable sum of money to be made.
Mr Galway, I wish to clarify a point. I absolutely agree with you that
a port needs good access - if it does not have good access, it is in serious
difficulty - and that there are considerable fuel tax distortions between Larne
and Dublin. That is beyond question, but it has nothing to do with the impact
on Larne port of any status that the Belfast harbour may have.
The main issue is the impact the various outcomes for the port of Belfast
will have on your competitiveness. I agree that those are very important considerations
in relation to the overall competitiveness of any Northern Ireland port, but
they have nothing to do with the specific issue of what impact a particular
status for the port of Belfast may have on competition as far as the port of
Larne is concerned.
We do not currently have all the facts to be able to answer that question.
I will be able to answer it only when the full facts are on the table, so I
am guessing. There may or may not be an impact. We just do not know. I accept
your point that road and fuel tax may be extraneous to this argument.
We are concerned that the port of Larne will be destroyed if funding is not
raised through privatisation or some other means from the sale of the port
of Belfast. The Chancellor seems to be holding an axe over our heads by saying
that accesses to Larne will not be built if the port of Belfast is not privatised.
We must release funds by some mechanism. I repeat that we have no objection
to the principle of privatisation, as long as it is fair and open and realises
a fair value.
Thank you very much. Three members have indicated that they wanted to ask
supplementary questions about the issue of road access to the port of Larne.
However, I feel that this subject has been more or less exhausted.
My question is not on that issue.
Mr McGimpsey has indicated that he is not going to ask about the question
of roads. However, the question is supplementary to issues that have been raised.
With your indulgence, Mr Galway, I will allow Assemblyman McGimpsey
to ask a quick supplementary question. I am anxious to move on to other members
who have been indicating for quite some time that they want to ask questions.
Mr Galway, you told me that the port of Larne had a turnover of £5 million
and produced a profit of £2 million. Is a profit of 40% the norm for ports,
or are you super-efficient?
We like to think that we are efficient, but we could always be more efficient.
You have to keep improving. Once you stop, there is only one way to go and
that is down. Some ports probably make more than that but quite a number would
Is 40% a reasonable target?
You would not want to achieve much less than 30% because of the cost of continuing
development. Assets do not last as long as they used to. Quays which were built
in the 1800s would last for 100 years or more. Nowadays, quays quickly
become obsolete because of changes in shipping, and we have had to write off
assets within 25 to 40 years.
Your turnover is £5 million, and you are making a profit of £2 million.
If your turnover were £50 million you would expect to be making a profit
of about £20 million. Would that be a fair assumption?
I would love to think so. It depends on the cost of assets and what is needed
to satisfactorily service the business.
Would it be dangerous for the financial health of the port if your turnover
were £50 million and you were turning in a profit of £5 million?
It would not be seen to be an adequate return in present commercial climates.
What is the percentage level of depreciation per annum?
Depreciation varies according to the type of asset. The quays would perhaps
be written off at 2% to 2·5%. In fact, the quays now have to be changed during
their lifetime, so anything less than 2·5% is probably too low.
Other infrastructure will be written off between four and 16 years. Some
become obsolete in a shorter period. Some land has been written off; some has
not. It can be as low as 1%. We follow a depreciation policy that is probably
not out of synchronisation with many other ports.
What is the average percentage of depreciation?
It is probably 3% to 4%.
Is that on the full assets?
It is something in that order. I would like the opportunity to check that
one, but I would guess that it is 3% to 4%.
What you are saying is without prejudice.
I want to focus on the competition between Larne and Belfast. I understand
that we are not comparing like with like, although that may be the case in
terms of roll-on/roll-off and lift-on lift-off. Belfast has other facilities
which the Port of Larne will not touch.
Assembly Members are very aware of the low tourism figures you mentioned.
Our understanding is that most of the tourists who come to Northern Ireland
enter through the airports or seaports in the Republic of Ireland. We need
to do something about that. We need to try to encourage people to come through
the ports in the Province. We are conscious of that and of the problem of how
we increase the sort of competition needed to get them here and to get them
to stay here rather than just visiting on day trips or overnights.
You have talked continually about privatisation in terms of the competition.
I would like you to focus on the possibility of Belfast Harbour becoming a
semi-state body. In terms of the competition, what effects would that have?
In response to Jane Morrice you said that you were not aware of what
status the state body would give. However, you have already said that the port
of Dublin is one of your major competitors, and that is a semi-state body.
There may be differences in terms of corporation tax and in the amount of
money that could be made, but Belfast is probably more efficient that Dublin
in the sense that it was rationalised some years ago. It cut its workforce
from about 320 to 112. Our understanding is that Dublin will shortly
follow suit and that this will considerably increase its profits.
I would like you to concentrate on the competition between Larne and Belfast.
There are things that Belfast does that Larne would not touch. Perhaps you
could tell us in which areas Belfast and Larne are competing.
You are correct in saying that Larne's speciality is the roll-on/roll-off
business which we first entered in 1938-39. In 1948 we were also the first
in the world in the business of lift-on lift-off. Larne's population is 32,000
to 33,000. It is relatively small compared with that of Belfast. Belfast has
a much bigger population catchment area. Bulk and general cargoes which tend
to come to large cities - oil, grain, coal, steel - are probably more suited
to Belfast. We did handle some of that traffic but were advised by the Department
of the Environment before the 1989-93 round that, unlike Belfast, we would
not get funding from the European Regional Development Fund for any of those
Even if we had been interested in that sort of business we could not have
developed it at a cost which would have enabled us to compete with other ports.
However, it still would have meant that our main development would be the roll-on/roll-off
business. I am not saying that we would have developed other types of business,
but that put it entirely out of the equation.
In the case of semi-state bodies, we do not yet know what enhanced trust
port status would mean in terms of borrowing powers, investment or what additional
work could be done. Until such information is made public it is difficult to
say exactly what, if any, changes there would be. In Great Britain they have
published their review of trust ports. They have not done so in Northern Ireland.
One could surmise that they may place additional responsibilities on the
trustees of ports to publish information and make it available. But one would
be uncertain about borrowing powers and the right to invest in certain businesses,
such as shipping companies and airports or property development.
Mr Galway, are you saying that the competition between Belfast and Larne
is really between two companies - Stena and P&O?
You are saying that it is only in roll-on/roll-off. The port of Belfast does
not own the roll-on/roll-off facility. It only provides the facility for a
private company, so you are really saying that the competition here is between
two private companies - P & O and Stena.
No. On the Loch Ryan route - the short sea route - there are Stena, Sea Containers
running Seacat and P & O European Ferries. But Larne is not limited to
one route; it has routes to Lancashire and to further north in Scotland. The
competition is Ireland-wide - Norse Irish Ferries, Belfast Freight Ferries,
Seatruck from Warrenpoint, Irish Continental and Merchant Ferries.
The point is that all those places which you have mentioned are owned by
P & O. Fleetwood -
Fleetwood is not owned by P & O.
Well, it is leased by P & O. Are we talking about the competition
between two private companies or between two harbours?
It is not just a matter of two private companies. It is much broader because
a large proportion of our freight traffic goes on routes to Lancashire which
are not operated by Stena. We ship some 100,000 loads a year into Lancashire,
competing head-on with the services to Heysham and Liverpool. There is a choice
of services, and that is good for the customer.
I want to ask you for some clarification, Mr Galway. At the start of
your submission you stated that your catchment area was the whole of the island
of Ireland. I was interested to hear the debate between you and Mr Hutchinson.
It seemed from that that the competition is between Larne and Belfast. Am I
right in assuming that you are subject to tax at 31%? Do you pay tax at the
rate of 31% on your profits?
Do you accept then that from day one you are on a very uneven playing field?
I understand, for instance, that Dublin does not pay any tax. I think that
the gross amount that it is going to have to pay is either 12% or 12·5%. How
do you see this unlevel playing field being changed to ensure that you are
not always going to be at a disadvantage? Danny O'Connor said that you
playing not just uphill but into the wind as well. It is infinitely worse than
that - you are going to be playing into a gale-force wind. Do you accept that
It would be lovely to have tax at 12·5%. With our increased efficiency we
can compete fairly effectively with Dublin. However, access to Dublin port
is being vastly improved, with 85% Cohesion Fund assistance. Taking Northern Ireland
as a whole, in 1990 the ports of Larne, Belfast and Warrenpoint handled 70%
of all of Ireland's roll-on/roll-off freight. By 1995 the figure had reduced
to 65%, and by 1997 it had gone down to 58% - all because the playing field
had been levelled, indeed tilted slightly the other way.
The figure has gone from 70% in 1990 to 58% in 1997. What about 1999 - is
the trend continuing?
The figure for 1997 was 58%. While we know our own figures for 1998, not
all the other ports have published theirs, particularly the southern ports.
We guess that they are probably slightly lower still.
You are on a falling trend.
Northern Ireland is on a falling trend, as a whole. Access to ports in the
Republic is being improved rapidly. For example, people in the Industrial Development
Authority in the South used to ring me frequently to ask whether they could
bring customers up to Larne. They wanted to attract business to the South by
taking advantage of the easy access to the North. Heinz established a base
in Dundalk because of easy access to the North. I have not had a call from
the IDA for a couple of years.
The ability of Northern Ireland industry to compete commercially is being
eroded daily because of the lack of improvement to the infrastructure. The
ports of Larne and Belfast could be super-efficient. Belfast is an efficient
port, but unless all the infrastructure facilities are linked to the ports,
they will be only as good as their weakest link.
Obviously, everyone wants to pay less tax on profits, but how does taxation
impact on your efficiency? Profits are the end of the process.
Higher taxation leaves us less money to reinvest, and it certainly forces
us to sweat blood to make maximum use of our assets. Before we can acquire
new assets, I have to justify them to our board and to our ultimate paymasters
- the P & O Group. We have to show an acceptable rate of return
on our assets, and obviously that ultimately depends on how much is left in
the piggy bank. That is how we decide whether it is worth developing an asset.
You referred to yesterday's Budget statement and to the fact that fuel costs
will now be another factor to be taken into account. Will that accelerate the
decline to a figure even below 58%?
Yes. I did a quick mental calculation on the way up in the car, and I reckon
that diesel will cost about 73p per litre up here. In the South of Ireland
it costs 50p per litre. When the exchange rate is taken into account, the differential
is about 30p per litre - 40%. Even before the Budget, a truck driver could
save £100 to £150 by filling up south of the border. A haulier I know in Ballymena
has not bought fuel in the North of Ireland for two years. The situation is
being dramatically distorted, and that is not related to the Belfast privatisation.
Some members of the Committee still wish to ask questions. As time is running
out, I ask them to be brief.
You said that you did not think that the organisation of a private, semi-private
or trust port was the most important factor. However, you said that a crucial
factor in allowing a port to compete is the availability of funds for investment,
and that in that context trust status is hampering Belfast port. What is Larne's
experience of the proportion of money which was reinvested, whether it came
from profits, from bank loans - which trust ports cannot obtain - or from shareholders?
Up to the moment, we have been able to develop from within our own funds.
We have not had to seek bank loans.
From re-investing profits?
Yes. In the mists of time - the '50s and '60s - things were slightly different.
Then the company was totally locally owned, and developers had to go for loans
and the like. But for more than 20 years we have not had to go for bank
loans; we have been able to do all our development with our own funding.
So, out of the 40% profit which you currently have on turnover, you are able
to obtain enough funds to replace equipment, to upgrade the port without going
for bank loans?
Are you saying that if Belfast, which is operating on the same kind of profit
margin, were to re-invest its profits it should be able, from within its own
funds, to replace worn-out capital to develop the port?
One would have thought so, but it would depend on what type of business they
wished to go into. But certainly up until now we have been able to find the
My point is to do with the creation of fair competition, bearing in mind
the existing trust status of the Belfast Harbour Commissioners and the various
options which are being proposed. There is a 2,000-acre land bank, which is
largely not related to port activity, and that creates unfair competition.
That excess land could subsidise the port activity if the operators so wished.
Mr Beggs, I would love to have access to the level of rentals which Belfast
enjoys - allegedly in excess of £15,000 per acre per annum. I would also love
to have access to the rental income they are deriving from it, but they are
in a different environment from us. They have a big population in Belfast,
so certain developments may be more attractive there than they would be in
Larne. In many ways we are not comparing like with like.
If the tax position in Dublin makes the situation unfair, could it not be
classed as a Government subsidy and a case be taken to the European Court?
My second point relates to the Government's policy on fuel taxation. If you
travel to London via Larne you have an increased road journey of 200 miles.
You would save 200 miles by using the Belfast-Liverpool route. That would amount
to a saving of 40 gallons of diesel on each trip - £240. Surely the Government
policy on fuel taxation is also creating unfair competition by making Belfast
more attractive than Larne. Do you think that is a reasonable statement? If
so, how can we address it?
Mr O'Connor, I cannot advise you as to how you can best address it.
We have already hammered out the fuel issue, and I think that the Chancellor
needs to anticipate and appreciate that what is right for London is not necessarily
right for the peripheral regions. It will disadvantage our industry.
As regards the Dublin tax and the European courts, I would love to see the
12·5% rate, but I very much doubt if that will happen. I am a member of the
British Ports Association, and we are hoping to avoid having subsidies to the
continental ports in other ways. I doubt that you would have any chance of
taking the matter to a successful conclusion. I certainly could not advise
you on that one.
Mr Galway, you talked about access. Larne is very fortunate in that the railway
goes straight into the port. If the Larne line were upgraded, as it urgently
needs to be - indeed, if the rail network throughout Northern Ireland
were upgraded to facilitate freight traffic as well as passenger traffic -
could that have a positive impact on the port of Larne?
We are fortunate to have direct rail access. Even the most enthusiastic railwaymen
reckon that, in Ireland, rail freight could account for a maximum of 3% or
4% of the total freight. We, along with Irish Rail, funded a study several
years ago. We also did a practical test on rail freight from Larne, but that
is a niche market. The infrastructure within Ireland is not big enough to be
of practical use. When goods have to be put on the roads at one end of the
journey, transfers are costly.
We hope that Irish Rail and Northern Ireland Railways can work together to
maximise the tourist potential of the rail network. We see that as a bigger opportunity.
Rail freight is relatively straightforward, but it may not be cost-effective.
Much of Ireland's traffic is fresh agricultural produce. It has to get into
and out of the country quickly, so railways are not applicable, and in many
cases longer sea journeys do not suit.
Firms such as Desmonds in Derry, Moy Park, the mushroom firms, and supermarkets
have to get their goods to the market quickly and on time. That is where the
frequency of services and the short sea journeys to and from Larne can enable
Northern Ireland industry to compete.
I propose to draw the questions to a close. We are almost out of time. Would
you like to make any concluding remarks, Mr Galway, or are you happy with
what you have said?
I should like to thank you, Mr Chairman, and the other members of the
Committee for inviting us. Should further information become available on the
definitive proposals, we should like an opportunity to meet you again.
We shall certainly consider that.
Thank you, Gentlemen, for coming.
AD HOC COMMITTEE
(PORT OF BELFAST)
MINUTES OF EVIDENCE THURSDAY 11 MARCH 1999
(Mr A Maginness in the Chair) Witnesses:
Mr F Cushnahan, Ms A McLaughlin
and Mr G Irwin
(Belfast Harbour Commissioners)
Mr Cushnahan, Ms McLaughlin and Mr Irwin, you are welcome.
Mr Cushnahan, I understand that you intend to read a statement. We should
like to put as many questions as possible, so could you confine your opening
remarks to 10 minutes?
As the Committee is aware, Belfast Harbour Commissioners have been presenting
to political parties and other interested groups our preferred option for the
way forward for the port of Belfast. We have termed that option the public/private
partnership - otherwise known as the PPP. On 25 February the Ad Hoc Committee
was the beneficiary of our presentation document. Our submission today is a
follow-up to that presentation and additional to previous documentation that
you received from us.
In our presentation to consultees, we highlighted the fact that the port
of Belfast had reached a trading plateau. That was after substantial investment
over the past decade via the utility of ERDF grant which we used to modernise
and restructure the port's facilities. We consider that further ERDF grants
There is already competition pressure from other ports, particularly those
outside Northern Ireland. Those ports are modernising and providing integrated
transport services. We will have to respond to such developments if we are
to remain competitive. That will require further investment. The status quo
is no longer an option. If the port of Belfast is to play its full part in
the economic growth of the Province, we must significantly modernise our constitution,
and we need access to suitable financial facilities.
Integrated business is essential to our vision. If we are to direct our future
business, it has to be vertically integrated. We consider it necessary for
us to continue to manage the harbour estate, and we wish to maintain a head
office in Northern Ireland. If we can achieve those objectives we will contribute
significantly to the economy.
We have identified two main corporate structures that are necessary to move
forward the port's business activity. The options are a trust port with extended
powers and/or a semi-state body and a public/private partnership. Our preferred
option is the public/private partnership.
I strongly emphasise that, whichever corporate structure is chosen, the associated
commercial powers will have to cover the activities of this vertically integrated
business. We have to encourage port activities such as transport, logistics
and port property.
We had to decide which corporate structure represented the best prospect
of creating a Northern Ireland-based company to operate in those business segments.
We identified four key requirements.
First, we had to have access to appropriate types of finance. Secondly, and
more critically, we had to ensure flexibility in our commercial dealings. Thirdly,
we recognised that to achieve our vision we had to attract high-calibre executives
with entrepreneurial skills for our management team. Most importantly, we did
not want to engage in a process unless we could ensure that there were adequate
safeguards that the port of Belfast would be operated in the best public interest.
To move that forward, we had to match our financial resources with our commercial
objectives. All members of the Committee will know that the two forms of finance
associated with that are equity and debt. Equity is obtained by the issue of
shares, and also includes money retained from the port's earnings.
Debt finance is provided by lending institutions, which traditionally are
risk-averse. This is usually cheaper, because the lending institutions require
considerable assurances that the borrower has the capability to repay both
the capital and the interest. Traditionally, lenders like to see an adequate
equity base to support the borrowing.
The development of an integrated transport business will require significant
capital investment and additional funding for the renewal of port facilities.
As a public limited company operating within a public/private partnership,
BHC would have access to the capital and debt equity markets to fund those
Two ports have been very successful in developing their core activities
in a similar fashion.
Since 1992, Forth Ports has spent £195 million to acquire additional
facilities and improve infrastructure. Of that amount, £87 million was
provided by the equity shareholders, £57 million came from internally-generated
earnings, and only £51 million was provided by lending institutions.
Since 1993, Mersey Docks and Harbour Company has spent £240 million.
That is a substantial sum, of which the equity shareholders provided £99 million.
Some £65 million came from retained earnings, and the banks provided the
remaining £76 million.
As a trust port with extended powers or as a semi-state body the port could
raise debt, but the gearing that lenders are willing to accept limits the amount
that could be raised. In addition, irrespective of what the banks would do,
we have to be sure that the repayment of capital and interest is possible within
our profitability profile, otherwise our future could be threatened.
One way of increasing the availability of funding for Belfast harbour would
be to have it remain as a trust port, or convert to a semi-state body, while
encouraging the Government to provide guarantees. That, of course, would make
the banks extremely comfortable - and I speak as an ex-banker. The question
is whether the Government would be happy to provide such guarantees. I think
not, because the provision of guarantees to the Belfast port would open a Pandora's
box for organisations even larger than ours. Contingent liabilities are covered
by the public sector borrowing requirement.
We would go further to say we believe that if the Government or, indeed,
in this case the Northern Ireland Assembly were to provide us with the guarantee,
that would, as a consequence of fiscal accountability, require the Government,
prior to the issuance of the guarantees, to examine the risks and evaluate
each proposed project. That would create an additional tier of management,
which would have a number of undesirable consequences for the port.
First, Belfast Harbour Commissioners, we believe, would be at a disadvantage
compared to their competitors, who would be able to respond with greater speed
and effectiveness. Secondly, given that Government ratification could be questionable,
with timescales being an imponderable, our counterparts, in their dealings
with us, would have no confirmation that we could consummate any deal.
If you have those two factors, combined with the fact that you are looking
for a high-quality executive team, will you be able to get that level of resource
so that there is no impediment to the decision-making process? We suggest not.
But that does not represent the modus operandi we see as moving the business
Setting aside the commercial applications and the finance, one of the things
we regard as essential to the future of the port is the containment of public
safeguards. Therefore, in our public and private partnership, we would want
to see a situation where a golden share was held by the Department of Regional
Development. In addition, we would want the opportunity for the Department
to hold a fairly substantial minority share - up to 20% of the equity.
We would like the golden share to contain certain rights, including the right
to veto an unwanted takeover and to prevent any group of shareholders from
exercising undue control or influence over the affairs of the company. For
the users of our port, we would want safeguards concerning port charges, and,
in recognition of its historical importance, the provision of safeguards for
the harbour office and its artefacts.
We also recognise that the public and private partnership would have to comply
with the existing legislation, which covers such matters as the maintenance
of an open-port policy, the right of appeal against port charges and the preservation
of the port infrastructure and public navigable waters.
I now turn to the harbour estate. In our consultation process, we have confirmed
to all parties that within the port precincts there are only 85 acres
left. All the other land is either port-operational or occupied on long-term
leases. Therefore, from our perspective, the issue to be addressed is the estate
management of the port. The Harbour Commissioners are firmly of the view that
the public and private partnership represents the best way to carry out this
function, in particular to ensure that the requirements of the port are kept
to the forefront in land-use decisions.
Belfast Harbour Commissioners are of the view that liaison - the creation
of a public and private partnership - is the only route that will enable them
to achieve their vision of creating an integrated transport business. By doing
this, they will, in our opinion, safeguard the port's long-term viability,
realise its full potential and thereby enable it to play its full role in the
development of the Northern Ireland economy. The golden share, which is
integral to the public and private partnership, would adequately safeguard
the public interest that exists under trust port status.
Finally, I am not ignoring the other two options - the trust port with the
extended powers, and the semi state body. - but they do not provide the commercial,
financial and managerial flexibility that the port requires to achieve its
Thank you very much, Mr Cushnahan. I would like to welcome your colleagues
individually. Mr Gordon Irwin, who is the Chief Executive of the Port,
and Ms Anne McLaughlin, Harbour Commissioner, you are very welcome
here this morning.
There are two or three issues that I want to take up. The first is a fundamental
one. When the issue of privatisation was first raised, the Harbour Commissioners
along with others ran a very successful campaign to enlist the support of the
political parties in Northern Ireland against it. We have been told that
you were unhappy with the nature of the privatisation at that particular stage.
Having researched the matter, I find that there was no prescribed formula laid
down by the Minister. Let me just quote the Minister from Hansard:
"While the guidelines will be concerned primarily with privatisation
by trade sale, other methods are not ruled out."
Indeed he went on - after being pushed by Mr McNamara - to say that
he wanted to ascertain the opinion of the Harbour Commissioners, saying that
if they brought forward a view of their own he would be happy to look at it.
He actually mentioned an opinion put forward by HSB Bank as being the
most favoured option in a survey you commissioned. So why were you so opposed
to privatisation then, yet happy to embrace a form of it now? That is the first
Secondly, I notice you say at the end of this that neither the trust port
with extended powers nor the semi-state body provide the port with commercial,
financial and managerial flexibility. Larne said that to run a port one needed
to be able to do deals quickly and to be able to make best use of one's assets.
They did not feel that the managerial arrangements under trust port status
affected that at all.
Thirdly, you mentioned the need to raise money. Larne said that they had
a similar profit margin to your own and that they were able to finance, not
just the replacement of their capital, but also improvements to the port. The
director told me that this could be done purely with re-invested profits. You
have told us that you need to have access to bank loans and that you also need
to have access to shareholders funds. As a semi-state body, would you have
the same powers as Dublin, which can raise loans worth up to 50% of its capital?
Would a semi-state body not give you that flexibility, if that is what you
Let me take the issue of trade sale. As Mr Wilson quite rightly says,
the Commissioners previously took the decision that they were not going to
trade sale the port. At that stage they took the view that a trade sale would
be the preferred option of a Tory Government. Certainly, from a Tory Government's
point of view, it would have been a clean way of moving ports into the private
There was a chance that it would realise the highest sale proceeds for the
Government, and at that stage the Commissioners were firmly of the opinion
that they would not sell the port of Belfast by auction. We have reiterated
that view, and have confirmed it in our presentations.
We wrote to the Minister late last year telling him of our strong opposition
to the trade sale of this port. We were adamant that we would not put the port
up for auction, considering that we would have no idea of who the purchaser
might be. It could be a major competitor, it could be an out-of-state port,
and the Commissioners felt very strongly that this was not the best way forward
for the port of Belfast. We are still adamantly against a trade sale.
I was very much involved in that process. The first thing that the Committee
needs to realise is that the Ports Act 1991 and the subsequent 1994 Order were
drafted clearly for trade sales.
That is not what the Minister said.
There is a major complication that had to be overcome by Forth Ports, who
insisted that they would not trade sale their port, but agreed that they would
float it. The legislation provides for half the proceeds to be kept by the
purchaser. If you translate that into a flotation it is very difficult to see
how the shareholders can keep part of the money they paid for their shares.
That is the problem with the legislation. It was a trade sale piece of legislation,
and, as Ms McLaughlin said, the Commissioners were very much against it.
She has given the reasons. The compulsory powers associated with it were well
recognised and well promulgated.
The port of Ipswich was compulsorily privatised and put to the trade sale.
The port of Tyne was nearly put to the trade sale but managed to filibuster
until there was a change of Government.
Another important feature is that, in the past, European Union grant aid
for a trust port was more generous than that for a private-sector company.
We were involved in a major restructuring of the facilities at Belfast port,
and it was not in our interests to support a mechanism which was financially
to the detriment of Belfast port. This is why the port of Belfast Commissioners
did not support that legislation.
May I ask Mr Irwin to respond to the second question put by Mr Wilson.
May I ask for the question to be repeated?
It was in connection with managerial flexibility. Larne indicated that managers
need to be able to do deals quickly and to make the best use of assets. A trust
port did not rule out that kind of managerial flexibility, although your paper
says that it does.
The port of Larne is a subsidiary company of P&O and, from P&O's
point of view, the business of Larne is that of running a ferry port in the
Province. Decisions with regard to expansion plans or development plans for
the port of Larne are all taken in P&O's head office in London. Local management
in Larne do not have the final say in the future direction of the port.
For many years head office has been content to have the port of Larne maintain
its infrastructure and to provide adequate facilities for P&O's shipping
services to go to P&O-owned or leased ports across the water. It is a total
vertical integration body in which final decision-making capability does not
lie with the port of Larne. Port of Larne management have operational responsibility
for the port. In terms of business strategy, the port of Larne is part of a
totally vertically integrated business.
May I deal with the question Mr Wilson raised regarding the financial
applications. He referred to Larne and the semi-state body. Mr Irwin answered
the question to a point when he stated that the port of Larne is a subsidiary
of a plc. I honestly cannot speculate or comment as to how it is financing
its particular investment. As Mr Irwin said, the head office sets out
standard criteria on the return on capital employed, return on assets and necessary
financial applications before permitting the port to make an expansion. This
is only an external view. We have to deal with the Belfast Harbour issue in
relation to the historical application of this. £150 million was spent
on Belfast Harbour between 1985 and 1995. Effectively we no longer have the
availability of aid from the European Regional Development Fund.
We were the beneficiaries of that to the extent of 50%. It follows from that
sort of level - and I am talking about the substantive level - that we need
to do the things we have addressed here under a vertical integrated business
which would command those sort of sums. There must be availability. We do not
have a plc head office - we are our own plc. The only way we can avail of those
funds is through a structured finance arrangement which gives us accessibility
to both equity and debt.
Mr Wilson mentioned the 50% debt-to-equity requirements of a semi-state body
such as Dublin. I do not have Dublin's balance sheet in front of me, but I
am fairly certain that 50% of the debt equity would not allow it to take too
much debt on its balance sheet. It certainly would not be able to undertake
to the level that we would consider necessary for the sort of vertical integrated
business that we want. I am speaking purely on the basis of what is in the
best interests of Northern Ireland, not the port of Dublin.
Mr Roche is time-pressured, so I will invite him to speak next.
Thank you, Mr Chairman. I have to go at 12.20 pm, but I wish to raise
three issues with Mr Cushnahan.
First, from your argument that the vertical integration proposals are crucial
to how you see the port developing as a successful commercial enterprise and
the statistics on the distribution of trade between ports in Ireland provided
by the Larne delegation earlier today, it seems that it is absolutely imperative
that we establish the commercial success in the future of Belfast as a port.
Perhaps the best way for you to raise the finance for the vertical integration
and replace the existing capital to account for depreciation is through your
own proposals. Will you clarify what precisely will be required in terms of
My second point is in relation to competition with other ports. The submission
made earlier this morning mentioned competitive factors that are crucial to
competition for any port, but it was not clear to me how, for example, the
public and private partnership proposals - or, indeed, any other proposal for
the future of Belfast harbour - would give rise to unfair competition in relation
to any other port in Northern Ireland, or specifically Larne. That was not
clear to me.
Access and the differential price of fuel were mentioned as being important
competitive factors in relation to any port, and I gather that, in the past,
you received a differential funding from the EU, although I understand that
that would simply continue if it did give rise to some competitive advantage
in any future scenario. It was not specifically related to the question of
how, if you change your status now, it will affect competition - unfairly or
My third point is on the use of the land around Belfast harbour. There seems
to be a fear that this land could be used for purely speculative purposes and
that the funding from that could help finance your activities all of which
could enhance your competitive capacity. Some people would call that unfair
competition, but my view is the more competition the better.
There are three questions, and they are, in a sense, intertwined. The first
asks about the extent of the vertical integration, the second about what the
issues are for us in terms of the business activity and the third about whether
I tend to look at the matter from a management perspective rather than from
a financial one. Mr Irwin might like to respond?
This is at the core of the issue. In our presentation we said that we, as
a port utility, are at the crossroads. We wait for people to come and go. We
are not active in the whole transport chain, which is basically from door-to-door.
A lot of things happen to products between leaving the factory door - if I
may use that example - and arriving at the customer's door. Ports are pivotal
in the transport chain. Port utilities, who want to be bigger players in the
world of transport, can decide on a forward-going strategy, which seeks to
ensure the viability of their core ports through added-value activities.
Since the national supermarkets came to Northern Ireland we have developed
a number of what they would call logistic centres and what we would call sophisticated
warehouses. The reality of locating those warehouses at, and locking them into,
the port of Belfast is that the supermarkets are more likely to use the port
of Belfast's shipping services. The fact that the warehouses are close to the
ferries means that we have an emerging vertical-integration operation.
A substantial amount of warehousing is being built at the moment, and for
that reason there has been a significant movement of traffic from ferries that
use Larne to ferries that use Belfast. That is a fact and an example of vertical
There are other integration issues. As an island economy, do we always wish
to be in control of only one end of the bridge? Northern Ireland ports have
had opportunities to secure a foothold in Europe and a west-coast port in Great
Britain. That is vertical integration, and that will add value. On the Great
Britain side you could also have all the activities that centre round a port.
We had to forego becoming seriously involved in what we call the lift-on/lift-off
- not roll-on/roll-off - movement of containers. Lift-on/lift-off requires
a much more sophisticated terminal and provides a direct link to the continent.
That in itself leads to added value.
It is interesting to note that people who are very closely tied into that
facility have now extended their vertical operations to owning a direct European
shipping service and to opening up logistics centres and warehousing in Rotterdam.
If a factory in Northern Ireland wants to send something to a customer in Holland
or wherever, one company can monitor it from door-to-door. It now has an office
in Rotterdam, which I will have the pleasure of opening in about four weeks'
People in the transport game can either sit and do their own little thing
or not and there is a range of things that they can do. Companies such as P&O
are involved in warehousing and shipping. They are a major transport business
and completely vertically-integrated. No matter where you go in the European
Union, you will bump into P&O companies, and I take my hat off to them.
They have developed a superb strategy in which their ports, shipping, haulage
and warehousing are integral parts.
We are not inventing anything new. This is a well proven, strategic way forward
for people in the transport business, and ports are pivotal to it, because
they have the basic resources of water and quayage. They are a key link in
the transport chain. They can either build on that or just simply provide the
If I understand correctly, Mr Chairman, Larne has said that we have
obtained more grant-aid. I do not understand how that can be said as the Department
of the Environment, which administers the European Regional Development Fund
grant-aid, insists that all Northern Ireland trust ports receive only 50% grant-aid
for roll-on/roll-off facilities and the reason for that is to maintain a level
playing field. The port of Larne, as a private company, is only entitled to
receive a 50% grant. So, where Larne competes with Warrenpoint or Belfast,
the grant-aid, at Government insistence, is kept at 50%.
Interestingly, the other point is that the level of European Union grant
aid over our period of investment also averaged out at 50%. Therefore, it is
50% in the sector where we compete with Larne. In the overall port sector -
in which Larne is not very active - we also averaged out at 50%. From either
perspective, I really do not understand that point.
The final point was about the use of land. Belfast Harbour Commissioners
- as a port authority -is a different business from that of the Port of Larne.
However, having said that, I am not clear about the statistics. The Port of
Larne does have its own - what I would call - industrial or warehousing estate.
Again, that is clearly another form of vertical integration within the overall
From our point of view there is income from non-port land. We identified
that through ground rentals. There is, however, a cost to generating that income.
Infrastructure in the harbour estate has to be provided and maintained. The
land has to be decontaminated when the site is made available. So there is
a return on an investment, although this should not be construed as a free
gift - in a cross-subsidy sense - to the port. We have also said that the level
of non-port rentals is about 10% of our turnover, so that is not a significant
feature. I hope I have covered all Mr Roche's points - I am sure he will
tell me if I have not.
I think you have covered everything. I propose to move on to Assemblyman McGimpsey,
and I have other people on the list.
I want to ask you about the land, because that is something that has raised
a great deal of public interest.
You have around 2,000 acres in your land holding, the non-port element
now contributes 10% to your profit. You appear to be operating on an income
and profit of roughly 40% on your port operation. It is comparable to Larne;
is that right?. You are showing a turnover in one year of £18.8 million,
and your profit after tax is £6.5 million. I assume that you are operating
at around 40% on your gross, which is roughly comparable with Larne. Interestingly,
despite what you have just said, we have discussed this matter with Larne Harbour
and it manages to do this without the advantage of a large landbank and without
the advantage of property development.
When you are talk about vertical integration such as warehousing, shipping,
transport, investing in a west coast port and so on, surely that does not all
have to be done by the Harbour Commissioners. You agree that P&O have a
very good strategy and a good operation. However, if the land is not part of
the harbour commissioners but is available and is tightly controlled - from
a land-use planning strategy - these uses will come about anyway.
You will recall - and we have had this discussion at the city hall, and,
Mr Chairman, I will make this documentation available to all members of
the Committee - that you wrote to me in January 1998 saying that you had
2,000 acres in the harbour estate. There were 600 acres on the County
Antrim side and approximately 1,400 acres on the County Down side. You
then produced your brochure and, lo and behold, we discovered that those figures
were not accurate.
Instead of having 600 acres on the County Antrim side, you had 440
- you had lost 160 acres. You told me previously that you had 1400 acres
on the County Down side. That has now jumped to 1510 - you have managed to
find an extra 110 acres in the year between producing this document, which
went round members of the council and this other documentation.
We have been through this before. I have your letter saying that 440 acres
on the County Antrim side and 1510 acres in the County Down side are the
accurate figures, so I assume that the figures that I got from you the previous
year should be discounted.
You say that a comprehensive exercise had never been undertaken by the Belfast
Harbour Commissioners before, and, therefore, there are no earlier figures.
It is a matter for the commissioners and your management to work out how you
managed to lose so many acres - the excuse being that this was the first time
a comprehensive exercise had been done.
You go on to say that the computed areas are intended as guidelines for comparison
purposes rather than for definitive value. Can you give an indication of what
the valuation of the land is? Presumably, since you have come this far and
are now ready to make a recommendation, you know the definitive value of your
land holdings. I would be interested to see that and the calculations.
You are also responsible for this brochure. Again, there are discrepancies
in it. For example, you show "port" and "other users",
but you are missing bits of land. You are showing all of this area as "Harland"
when on this other map some of it appears as "port-related". You
have left out D3 completely as far as I can see, and also, on this side, there
seem to be mistakes. In the brochure all of this area has been shown as "port-
related" which in this document it is a mixture of "port-related",
"warehousing and distribution", and "nature conservation".
There are also other discrepancies.
You seem to be developing a history of discrepancies in how you describe
I am very conscious of time, but, quite apart from that, Mr McGimpsey,
you have introduced documents which you say that the Harbour Commissioners
and Mr Irwin in particular, are aware of. The problem is that members
of the Committee do not have these documents, and the Harbour Commissioners
were not on notice that you were going to refer to them specifically. I think,
in fairness to the witnesses, that it would be proper to proceed to a question.
However, it might be unfair to ask them to comment on the details you have
referred to without their having had an opportunity to look at them and deal
with any discrepancies that there might be. Could you ask a quick question?
Your question relates to valuation.
I appreciate that. All of this documentation will be made available to members
of the Committee. This is not the first time that we have discussed the matter.
I want to know -
The problem is that other members are not aware of the documentation. The
Harbour Commissioners have had notice of this at previous meetings but not
specifically in relation to this meeting. It is a little unfair to raise the
matter now, but they could come back to it later.
These are vital questions.
We should proceed with the question of valuation.
You have given evidence - I heard you say it at your previous presentation
- that the privatisation cannot go ahead unless the land is lumped in on 2,000 acres.
That is what I heard you say.
How can Larne operate without this huge land bank and be profitable? It can
operate on a similar profit level to yourselves. What level of valuation are
you putting on the land, broken down by categories? It is vital that we know
how, for example, you value land for port-related activities, land given over
to the harbour airport and land used for Harland and Wolff, both on a long-term
lease and leases that are due to expire over the next 20 years.
If we knew those sorts of values then we would have a rough notion of what
you are asking for your port operation, an operation which produce a turnover
of £18 million per annum, of which only 10% is land value and of which
£6.5 million remains after tax.
I appreciate the observations about the discrepancies which Mr McGimpsey
has noted. May we respond formally to that?
Yes, I would like you to address the valuation aspect.
The process of moving the port into a public and private partnership would
involve a significant independent land valuation exercise. That would be carried
out by the Government, either by the Valuation and Lands Agency or by somebody
else, and the Belfast Harbour Commissioners. It would be an extensive task,
requiring independent professional assistance. We have not done that. The process
of moving to a public and private partnership has stopped. All processes have
In the normal course of life, you would not obtain independent professional
valuations of your land - you would ask for an independent valuation of your
rents, or review them every five years. You do not keep assessing the capital
value of your land, you review the income from your land. What Mr McGimpsey
is talking about is the capital value. That is a valid point in the context
of entering into a PPP, but it is a different exercise. If that information
is needed, we could set about putting such an exercise in place, but it is
not to hand.
I cannot understand how we can compare the ports of Larne and Belfast. Larne
is, fundamentally, a ferry port. It operates ferry services. We operate a total
port. We handle six or seven million tonnes of bulk cargoes, and are the seventh
or eighth largest port in the United Kingdom. Larne is akin to a port
like, Dun Laoghaire or Holyhead. For a proper comparison with the port
of Belfast, you need to look at the Mersey, the Forth ports, Bristol or Hull.
It is not valid to compare Larne with Belfast. We are a totally different business.
Part of our business is the same as Larne's- our roll-on/roll-off ferry services
- but that is not, by any stretch of the imagination, the total business of
the port of Belfast.
Are you saying that the competition between Larne and Belfast is between
two private ferry companies?
The competition between Larne and Belfast is the competition between P&O
salesmen, Stena Line salesman and Belfast Freight Ferries salesmen. They go
and knock doors and say "Will you put your container on my vessel?".
Those men can adjust prices on their ships by sums of money which far exceed
the charges as applied by the port authority to the shipping company. The competition
is between the ferry companies operating on the Irish Sea.
With regard to the land issue, I can confirm that Mr McGimpsey's understanding
is correct. Our financial advisers have given us clear advice that, without
the land, this public and private partnership will not work. Our business alone
is not financially strong enough to float.
I have just a couple of questions. I regret that I have to go to another
meeting. When the Larne representatives were here they expressed concern about
the fact that the review on the trust ports was not published in Northern Ireland.
Do you agree that its publication here would have informed our debate? When
Mr Irwin spoke about the impact of head office on the operations of Larne
port, Mr Galway indicated dissent. When the record of our deliberations
has been published, it would be helpful if those who have given evidence had
a chance to express their views on other evidence.
My main concern is about the proposed flotation. Many people share my view
that the valuation is greatly underestimated. If there is a surplus, do the
Harbour Commissioners know whether that money can be reinvested in Northern
Ireland, for example in the road infrastructure which everybody seems to be
debating in relation to the port's development?
Is there anything within the terms of the flotation that could prevent one
investor, let us say P&O, from taking the lion's share of the share flotation?
The first question from Mr Neeson was about the failure to publish a
report in Northern Ireland. The trust port review was published in Great Britain
by the Department of the Environment, Transport and the Regions. My understanding
is that the review was split between Northern Ireland and GB. I do not think
the Northern Ireland body has produced a major report. I guess it was waiting
for the one from GB. The issues arising from that are interesting.
The review recognises that trust ports have their place. The report deals
primarily with very small ports because the only major trust ports are Dover
port, which is primarily a ferry port, and the Port of Tyne, which is declining.
The rest are small ports, but issues such as accountability and fiscal responsibility
have arisen, and it is quite clear that on the Great Britain front, DETR intends
to change the whole methodology by which trust ports operate.
I think it would be helpful for the Committee to have a copy of the GB report.
Perhaps I may help Mr Neeson. That report on Northern Ireland ports
is in being, but the Department of the Environment refuses to make it available.
I think that that is the issue Assemblyman Neeson raises. Perhaps we
could return to it. Some members of the Committee told me some time ago that
they wanted to ask questions. I regret that I may not be able to afford everyone
an opportunity. Technically, we have five minutes left. I am prepared to sit
until about 12.45 pm. After the next batch of questions I will take questions
from as many members as possible, and they can be answered as fully as the
allotted time allows.
I will quickly respond to Mr Neeson's other two points. In relation
to proceeds of the sale and to what will happen if the proceeds exceed the
cost of the road infrastructure programme, the Government never discussed with
the commissioners what was going to happen. When the Chancellor made his statement
on 12 May we had no idea that he was going to link the proceeds of the
harbour to the roads programme. We just do not know.
The second question was in relation to any proposed safeguards, which would
ensure that no single shareholder, or group of shareholders, would, in effect,
control this new public and private partnership. We are suggesting that a number
of safeguards could and should be included in the golden share, and let me
summarise them if I may. We are suggesting that the golden share should include
a clause to the effect that no single shareholder may own more than 10% of
the shares in the new business. The second safeguard would ensure no concert-party
voting, if I can describe it as that. This would ensure that, collectively,
no shareholding could exceed 10%.
I think that that is everything in relation to Mr Neeson. Now I have
Mr Hutchinson, Mr Morrow, Mr Beggs and Mr Tierney, who
indicated much earlier.
I indicated half-an-hour ago.
I am coming to everybody who indicated. Mr O'Connor and Mr Morrice,
please be as succinct as possible when asking your questions. The panel will
attempt to answer them as best it can, given the short period of time we have
left. We have 10 minutes left.
When Mr Wilson asked the first question it was interesting that Ms McLaughlin
said that when they were considering the proposals, they thought that the Tory
Government would pick trade sale as the best option. I want to ask about the
golden share and the protection it would give in view of the fact that the
Labour Government sold their golden share in North Sea oil. What I want to
know is what safeguard there would be in the golden share to ensure that the
port operated in a manner consistent with the best interests of Northern Ireland.
If the Government can sell the golden share, what protection is there? Parties
like my own, the Progressive Unionist Party, who do not have many Members in
the Assembly, will not be able to prevent the Department from actually selling
it, if it so wishes. We believe that stopping this from happening would be
in the best interests of the people.
Assemblyman, that is a sufficient question. I will stop you and move to Mr Tierney.
First, I do accept what you say about the land, and this land was one of
the matters that I wanted to ask about. However, if we are going to have a
formal reply to Mr McGimpsey's question, I would be satisfied. There is
one point, however, I would ask you to clarify. You say that there are only
85 acres there, the rest being port-related or on long-term leases. However,
other people seem to think that you have more land than you are telling us
about. When you write to us formally, will you go into bit of detail on that?
Mine is a simple question, one which is important to a lot of members of
the Committee, and you have not answered it in your submission today. Are you
saying, as part of your proposal and your submission, that the proposals you
are putting forward will not affect the other ports in Northern Ireland?
I am concerned that the estate - the port and also the land - should be dealt
with in the best interests of the people of Northern Ireland. Earlier, you
talked about your income stream and the need to have all the land included.
Given that the land only accounted for 10% of the almost £19 million income
in 1997, I fail to understand why all the land has to be linked to the sale.
More particularly, with this huge land bank, do you not agree that there
is a real possibility that in the long term, property deals will take place
involving existing lessees and any new structure? Huge profits could be made
by freeing up land for property development. That profit would not come to
the public but would be made by private companies.
A reference has been made to Belfast's being a total port. However, to compare
Larne with Belfast is unfair as Larne could not obtain the same level of grant
for lift-on lift-off services.
On what do you base you assertion that, just because somebody has his warehouse
next to your port, he will use it in spite of its being £100 dearer? I
fail to see the logic behind that. People use the cheapest and most competitive
service and, just because they are located in your area does not mean they
will actually use your service.
It was said that P&O was directing the port of Larne. Are you telling
me - and I want this put on record - that Denis Galway does not have commercial
freedom to make decisions about the port of Larne? I may be wrong, but it seems
that the whole focus of this presentation has been on Larne, that it has been
used as a sledgehammer to beat the port of Larne. I suggest that there is a
difference between seeking approval to do something and being directed to do
I have two points to make. One has been raised by Billy Hutchinson and
the other has been raised by Roy Beggs.
I would like to emphasise the point made by Roy Beggs about sitting
tenants such as Shorts and Harland & Wolff. The sitting tenants are in
control of a considerable land bank. Would it not be sensible, if they became
shareholders in any new set-up, for them to release their leases - that would
enhance further the value of the land.
My other point relates to what Sammy Wilson said earlier. The Minister
said - and we are dealing here with a written reply, not hearsay - that
"while the guidelines will be concerned primarily with privatisation
by trade sale, other methods are not ruled out."
This is not made up; it is there for anyone who wants to read it, and it
was commented on earlier.
Secondly, if profits have reached a plateau, how do the commissioners envisage
going forward from there? Diversification or development - what exactly do
you have in mind?
I will keep it simple. We have stated that we wish to act in the best interests
of Northern Ireland. I assume that this is the view of everyone around this
table, and not just of the politicians among us. Normally one believes that
the Government act in the best interests of the people. Why would a public
and private partnership be the best option?
That concludes our questions. We will be as flexible - [Interruption]
Mr Chairman, the land issue seems to be one of the main areas of concern.
This has been evident throughout the discussions. I suggest that Gordon Irwin
bundle together the various aspects of this issue in a manner that will allow
him to be as helpful as possible in his answering. Would that be helpful to
you, Mr Chairman?
The land and the golden share issues are both important. Ms Morrice
has also made the general point about acting in the people's best interests
and how that is to be gauged.
If we take the land situation we will be able to clarify Mr Tierney's
point about the amount of land not under lease or port operational. I will
not go into the detail of that here.
I have been asked why it is important to include all the land in the harbour
estate when rental income provides only 10% of turnover. As we seek to develop
this business in a Public and Private Partnership (PPP) and put together a
prospectus, we have to demonstrate how we will maximise the value of the assets.
Clearly, there will be opportunities in the future to develop land in the harbour
The current figure of £1·8 million in rental income will increase. Land
regeneration is already happening. For example, Sydenham Business Park has
85 acres to develop. By the end of this week that will probably be down
to 80 acres, because there is a tenant who wants to come in.
Land will continue to be available for lease. Business is going on in the
harbour. I am not sure whether the harbour exchange development will proceed,
but if the planning permission comes through, that will come on stream in a
few years' time, and add to the attractiveness of the overall business.
Mr Beggs made the point, if I picked it up correctly, that Short's and Harland
& Wolff could become shareholders and release their leases. I cannot believe
that the boards of Short's and Harland's would give up such valuable documents.
They have leases on serious amounts of land; I cannot imagine that they would
give that up. Should they ever want to get out of the harbour estate, I can
imagine that they might want to sell their leases or do other things with them.
There is a claw-back provision in the legislation.
We have said in our submissions that if the Assembly were to allow the PPP
to go ahead, it should seek to use that provision to punish any property speculation
by the PPP - we totally agree with that - but should seek to encourage urban
regeneration of the land.
I cannot go into the details here, but it is a basic point. Over the years,
the port has been good at urban regeneration in those areas where land was
not leased to other people. We cannot go into areas of land that are derelict
- and we can all see them - if they are under lease to Harland's. We cannot
trample over its property rights.
Somehow or other we are going to have to work out a deal on that. It does
not matter whether we are the lessors or somebody else is. Harland and Wolff
is the lessee, or Short's is the lessee, or somebody else is the lessee with
a piece of paper saying "I have this land for 110 years and provided
I pay my ground rent and comply with the covenants in the lease you will not
trample over my property rights." You may want urban regeneration, you
may want things for Belfast, you may want things for the Province, but if the
lessee is not prepared to play ball, you cannot walk in and trample all over
There are three other ports to consider. If you are going to look at what
can impact on ports in Northern Ireland, you must not stop at the border. You
have to say "What is Drogheda doing? What is Dublin doing? What is Dún
Laoghaire doing?" That is a fact of life.
In terms of the Northern Ireland ports, clearly there is a competitive scene
with Larne between the ferry operators. They are in the marketplace competing.
Londonderry is a substantial distance away from Belfast, and it has no unit
load services. It is in the business of bulk cargoes, and the cost of moving
bulk cargoes by road haulage far exceeds the cost of importing them by sea.
In Londonderry, they are closer, obviously, to their natural marketplace. Road
haulage and proximity to the customer are much more important than any cost
reductions offered on port charges.
The port of Warrenpoint is in a slightly different position. It is on the
eastern seaboard caught between Larne, Belfast, Drogheda, Dundalk, Dublin and
Dún Laoghire. And which of those ports is going to have the hardest
impact on it? Geographically, from the point of view of the port scene, it
is in a very competitive part of Ireland.
By the way, we have all been in the competitive scene. I do not think we
have all been lying sleeping. People should not assume that up to now it has
been a cosy club which is suddenly going to be broken up.
We compete today, and we will continue to compete tomorrow. Most importantly,
and this was on the news last night, one cannot act unfairly - the Competition
Act 1998 does not permit that. One can be fined up to a level of 10% of annual
turnover for doing that. Our particular view is that competition will continue.
The fact of becoming a PPP will not alter that.
Thank you, Mr Irwin. May I deal with the question from Mr Hutchinson
about his concerns over the golden share and with Ms Morrice's comments
on why a PPP is better and why we should support it.
Mr Hutchinson is quite right. In our scheme we have suggested that
the Government or their nominee hold the golden share. We have presumed that
that might be the new Department of Regional Development. He is also quite
right in saying that while it is held by the Department, it can be released.
That would be up to the Minister and the Department. When we considered the
scheme we had to consider who might hold the golden share. In previous privatisations
of ports the share has been held by a Government Department at Westminster.
We ruled that out. We feel that there is a greater chance that it will be held
on to if it is held locally. It will be in the hands of our new Minister.
I want to respond to the final question which Ms Morrice posed. That
is the key question: why is what we are suggesting better than what we have
now? Why do we feel that it is in the best interests of Northern Ireland? Sitting
here today the commissioners are very clear that the PPP is not only in the
best interests of the port of Belfast but in the best interests of the Northern
As commissioners we have no vested interest in the port; our businesses are
not in the port, and we have nothing to gain financially from suggesting that
this scheme go forward. If anything other than what was in the best interest
of Northern Ireland was being suggested, my colleagues and I would have
left long ago.
Why is it better? It is better for a number of reasons. It would give the
harbour a chance to develop and grow. It would give us a chance to build a
very strong Northern Ireland based-company, and we need more of those here
in the new climate. It would give business access to the capital which is needed
over the next decade if there is to be continued growth and investment in Northern
With the golden share held by the Department of Regional Development - the
shareholding which we are suggesting - very strong safeguards would have to
be put in place. We are suggesting that the Department of Regional Development
hold 20% of the shares and have representation on the board. That would give
local people a very clear input into the future direction of the business.
The golden share also offers protection for the Northern Ireland economy.
We have mentioned, in answer to earlier questions, the issues of share-holding
and limits on share-holding which would ensure that there was no concert-party
voting and that no one party dominated the business. We also referred in our
golden share to safeguards for the artefacts in the Harbour Office and to safeguards
for port users on charges. If I may sum up by saying that we firmly believe
that this PPP is the best way forward - in fact, we believe that it is the
only way forward for this business.
Mr Cushnahan do you want to say anything very very quickly?
My questions have not been answered.
I am sorry. We really have run out of time - I have been as flexible as I
Mr Chairman, I want it recorded that the commissioners refused to answer
I am sorry, Mr Chairman, may I interject here? I cannot have that comment
They had the opportunity, Mr Chairman, and they did not address them.
I want that on record.
If your Chairman gives us the opportunity, Mr O'Connor, we will address
I will give you one minute to do that.
If I remember correctly, Mr O'Connor, you suggested that people in logistics
and warehousing are not tied in to the adjacent shipping services. You feel
that they will move to other ports and shipping services to follow the money.
They will move to Warrenpoint, or Dublin, or Larne, and that by having the
logistic centre there -
Whatever is most commercially viable for them.
Well, one of the things that is commercially viable for them is to be right
beside the shipping services. We have proof from our own business that this
is a fact of economic life. That is the reality for the people with whom we
deal - it is a proven fact of business.
Those who are not doing this are not customers of ours, and I cannot comment
on them. But it is what our customers are doing, and I am quite happy to have
Mention was made of Larne investment decisions. I know of very few satellite
companies or subsidiaries able to spend £10 million, for example, on a piece
of port infrastructure. Will that decision be made totally, autonomously and
independently in the town of Larne, or will it have to be referred to the head
office of P&O?
With respect, that is not what you said at the time -
I am not going to permit any further discussion on this issue. I am going
to ask the Chairman of the Harbour Commissioners to make a succinct concluding
remark. Thank you very much for your patience.
Mr Chairman, from one Chairman to another I realise that you want to
get this over and done with therefore I do not wish to add to what has been
said. We are glad to have been here, and we have done our best in all sincerity
to answer the questions put to us. If by any chance there is any other information
which Mr Tierney would like, we would like to respond to him. We will
deal of course with the issues raised by Mr McGimpsey. If there are others
who would like to talk to us - and I mean any of the people here today - we
will do our best Mr Chairman, to get in touch with them.
Thank you very much, Mr Cushnahan, Ms McLoughlin and Mr Irwin.
This has been a very useful session, and I am sorry that time has beaten us.
AD HOC COMMITTEE
(PORT OF BELFAST)
MINUTES OF EVIDENCE THURSDAY 25 MARCH 1999
[Mr P Roche in the Chair] Witnesses:
Mr M McAree, Mr L Murray and
Mr D Malseed
(Belfast Harbour Users Group)
On behalf of the Committee, I welcome the representatives of Harbour Users
Group. Mr McAree, perhaps you could give your presentation, after which
members of the Committee will put questions to you.
I am Michael McAree, secretary of the Belfast Harbour Users Group. Our
chairman, Mr Ian Webb, is unable to attend and has asked me to make this presentation
of our group's views. My colleagues are Leslie Murray, the group's deputy
chairman, and David Malseed, who is a committee member. We appreciate
this opportunity to make a presentation to the Ad Hoc Committee. If we
run out of time I shall be happy to respond to written questions from any member
of the Committee.
Belfast Harbour Users Group has 24 paid-up members, more than 1,000 direct
employees and over £135 million of fixed-asset investments in Belfast
harbour. Belfast harbour development over the past two centuries has been based
upon the dues paid by both harbour users and ship owners.
Apart from European Regional Development Fund grants, which came on stream
in the 1980s, the port receives no public funding. Those grants go some way
towards offsetting the considerable disadvantage inherent in not having a tunnel
or bridge connection to Great Britain or to the continent. ERDF grants have
been used in part to enable port charges to be set at levels which give the
peripherally located industries of Northern Ireland some chance to compete
in the single European market on a more level playing field.
Like every other interested party, Belfast Harbour Users Group feels that,
as yet, insufficient detail has been put on the bones of the Harbour Commissioners'
proposals. In particular, we are unclear about the fundamental rationale of
the suggested public/private partnership scheme. The first question that needs
to be answered is why does Belfast harbour need this change? It is reasonable
to ask the Commissioners to make a clear and detailed statement about what
they perceive to be the advantages that may accrue to current and future users
from a public/private partnership scheme.
An obvious question that must be answered by anyone seeking to alter the
status of Belfast port relates to its ownership. The sale of the port, by whatever
means, will introduce shareholders into its affairs. That raises the likelihood
of financial institutions in London making decisions about Belfast port in
the interests of their shareholders rather than in the interests of the current
and future port users or, indeed, of the Northern Ireland economy more
The Ad Hoc Committee will need to consider the potential impact of the Harbour
Commissioners' proposals on other local trust ports and, particularly, the
possibility of a privatised Belfast harbour competing unfairly with Larne,
Warrenpoint or Londonderry.
Our fundamental message to the Committee is that there are alternative options.
The Harbour Commissioners' proposals are currently the only option on the table,
but a discussion about the future of such a key economic asset should consider
in some detail other possible ways forward.
In trying to examine the issues in the wider context of the Northern Ireland
interest, the Belfast Harbour Users Group questions whether selling one of
the primary assets that remains in public ownership in Northern Ireland
sends the correct signal to outside investors.
The IDB is continuously looking for inward investment for Northern Ireland,
yet the proposal suggests that the people of Northern Ireland have no
faith in a commercial enterprise which is critical to the Northern Ireland
economy. We must also be aware that the sale of Belfast harbour would be an
irrevocable step which should be taken only after detailed analysis and comprehensive
It is unlikely that the intrinsic value of the business will diminish over
the next five years, and if it was still felt then that privatisation was the
only way forward, the business could be sold at that later time.
One option is to allow Belfast harbour to continue developing as a trust
port, but with wider powers. The Department of the Environment, Transport and
the Regions review of ports in Great Britain makes it clear that trust ports
can be as effective in economic generation as privatised ports.
Even if Belfast harbour were to continue as a trust port, it could still
be given increased powers which would allow it to make a substantial one-off
contribution towards generating the cash that is needed to fund some of the
road schemes proposed by the Chancellor.
The Belfast Harbour Users Group opposes the separation of the port's operations
from its landbank. However, in extremis, it would be preferable for the commissioners
to mortgage or even sell part of their non-operational land rather than introduce
shareholders whose interests would be very likely to conflict with the interests
of the Northern Ireland economy.
If it were ultimately decided that a PPP scheme represented the best way
forward for Belfast harbour, it would be appropriate to consider the extent
to which a privatised port should be regulated.
The Belfast Harbour Commissioners have suggested that a golden share would
be adequate to protect the interests of the port users and the wider Northern Ireland
community. The Belfast Harbour Users Group is emphatic in not believing this
to be the case. We would favour a regulator with responsibility for safeguarding
the public interest.
In addition to being able to prevent a resale, a regulator could be empowered
to require continued maintenance and improvement of the port, to set charges,
to prevent the creation of new charges and to ensure fair competition between
Belfast and other Northern Irish ports.
We welcome the Committee's inquiry and hope that it will consider options
which have been rejected by the Harbour Commissioners. We suggest that it would
be possible for Belfast to continue as a trust port and still generate the
revenue needed for the Westlink over the next few years.
Except as a last resort, port operations must not be separated from the landbank
as the harbour estate provides a vital commercial core for Belfast and Northern Ireland.
If the Committee recommends the PPP proposals, those proposals must be modified
to provide the effective regulation that is normal for privatised utilities.
I thank the Committee again for inviting us here. I hope that this brief
oral statement has clarified what we regard as one of the most important issues.
We suggest that the Committee re-examine the Harbour Commissioners and probe
their proposals much more closely than it has been possible to do so far.
You introduced yourself as the secretary of the users group. How many people
does the users group represent?
The users group has 24 paid-up members, representing approximately two thirds
of trade through the port. There is a list of the member companies at Appendix 1.
These are the core businesses that operate within the confines of Belfast harbour,
and they generate most of its revenue.
I am interested in the users group's attitude to the suggested PPP scheme.
I can understand your reservations about the port being put in the hands of
financial institutions in the City of London. To get to the nub of this concern,
what would the partial privatisation of the port mean? Is the users group concerned
that there would be, ad nauseam, continual price hikes? Would that follow on
from your concern about financial institutions?
Belfast harbour handles 60% of Northern Ireland trade by volume. It
is a very important artery for the economy. If there were unfettered private
ownership of what is really a quasi-public utility, we would run the risk of
someone's deciding to increase the costs of using that port.
The costs of going through the port are borne by the companies who do business
there, but eventually those costs are passed on to the consumers in Northern
Ireland. It is like hiring a taxi: whatever the actual cost of a taxi, the
price just gets added on. If the cost of using the port of Belfast increases,
over a period of time those costs will filter down into the economy generally.
Our key point is that the peripherality of Northern Ireland within the
European Union puts us in a weak situation, and, as a result, industry in Northern Ireland
cannot really bear any extra costs.
One of the reasons that the ERDF grant system was put in place - and a lot
of that money was spent in the port of Belfast - was to reduce the extra costs
of Northern Ireland's distance from European markets. If that were worn
away over time, we would still be left with the peripherality of Northern Ireland,
but we would no longer have the cost advantages that were envisaged in the
I want to be clear on this. Is it the case that your concern about possible,
you might say inevitable, cost increases for the port users lies behind your
concern about partial privatisation? If that point were addressed in some way,
would there still be an interest in partial privatisation?
This is a quasi-public utility and, therefore, as is the case with a public
utility, some regulation would be appropriate.
Looking at the matter from another aspect, we have not seen any suggestion
that the management of Belfast harbour have been doing a bad job; in fact,
we think they have been doing a good job. We have a successful port - one of
the most successful in the British Isles. It is a trust port; it is working
well, and, so far, no one has told us that there is anything wrong with it.
So, why do we need the change?
Belfast Harbour Commissioners are saying that they need shareholders and
the services of financial institutions in order to obtain money for future
investment, but this port has developed over 200 years without any of
that. Investment in the Port of Belfast was based on the business going through
the port and was paid for by the people who used it - whether land-based companies
or merchant shipping. This has been successful for 200 years. We are not
entirely sure what benefits would accrue by introducing a new class of "shareholders"
who would have to be paid for the money which they would be putting into the
business. They are not going to invest in Belfast harbour for altruistic reasons;
they would be putting money in because they believed it would be a good investment.
Thank you. That was a concise, interesting and useful presentation. I have
First, how much consultation was there between you, the users of the port,
and the Harbour Commissioners before they decided to take this option forward?
Secondly, you said that the sale of the port indicates a lack of confidence
in Northern Ireland plc. Could you develop that point and explain
why you think that that is so? The last question follows on from the one asked
by Gregory Campbell. The harbour obviously needs cash; it has had major
injections of European funding, but the aim is to replace that funding by other
means such as shareholders. In the absence of European money can you suggest
ways of getting additional cash for investment?
I will take the questions in order. There was no real consultation with the
users - the customers who provide the revenue streams for Belfast harbour.
We were not consulted as to whether privatisation was a good idea. Indeed,
at one of our first meetings, my colleague Mr Malseed asked Belfast Harbour
Commissioners to provide us with five good reasons why the port should be privatised.
What was this going to do for us as users or customers of Belfast harbour and
for the general population of Northern Ireland? After having had four meetings
and one presentation we are not entirely sure what benefits will accrue to
the users or the general population.
As to the sale indicating a lack of confidence, the point I was making is
that we have a very successful, well-run business - as I have said, Belfast
seems to be one of the more successful ports in the British Isles - and the
trust port status can still work in the future. If you were thinking about
selling a business, it would possibly be because you were intending to retire.
If this had been our family business and we needed £75 million for some
development - say a road or something else - we asked ourselves if selling
the business was the only option or was there an alternative strategy? We do
not, of course, own the business; the business is considered to be owned by
the people of Northern Ireland, and, looking at it from that perspective,
we thought that selling the business was an indication that there was no confidence
in that at all.
As regards future investment we have had meetings with the Harbour Commissioners.
We listened attentively to the presentation, but we were taken aback by the
notion that the harbour is strapped for cash and would not be able to borrow
money to fund future development. Obviously we are not privy to all the details
the harbour commissioners have in mind, and we do not know what finances are
available to them, but someone should be asking challenging questions about
this concept that the only way forward is to introduce equity participation.
May I comment on that? The harbour users have been the main source of income
for 200 years and the lifeblood of the harbour. Nothing has changed over
the years and we have £135 million invested in the harbour. If the harbour
fails, we all face a very difficult time as a lot of money is invested in its
infrastructure. We, the harbour users, own all our infrastructure in the harbour
- an infrastructure largely constructed with our money. We have a very large
interest in the harbour, but our interest is also Northern Ireland plc's
interest in the harbour. There should have been consultation much earlier than
this. We had to press to be allowed to make representations. The Harbour Commissioners
have probably spent a couple of years and a lot of money on consultancy agencies
to provide them with a plan.
We have been presented with a copy, as I am sure you and others have, of
that plan, but has there been any independent audit of what has been happening?
What is the value of the landbank? What are the alternative methods of raising
funding? I am not sure. We are told that this is the best way forward. We are
not unintelligent people. Are there alternatives, and have they been properly
examined? We are not saying a strident "No" to everything or "You
must look after the harbour users". There is a lot at stake for Northern Ireland
here and for the harbour users, and an independent audit is necessary. Again,
what is the value of land?
Two houses were sold on the Malone Road yesterday for £1 million. According
to the estate agent they were worth half a million. What is an acre of land
on the harbour estate worth? I do not know. How would privatisation affect
the value of the harbour? Are there other ways of generating funds and running
the harbour? These are our prime concerns.
There are one or two points that I would like to raise with you. The first
of these concerns the land. I see from your submission that you think that
the land and the port should not be broken up. According to the Harbour Commissioners,
the 2,000 acres attached to the harbour would have to be included in any
sell-off. However, they also told us that there are only 85 acres available
for development and that the income from the land represents only 10% of their
earnings. This seems to be a contradiction. I would like you to comment on
your suggestion that the land and the harbour and the port should stay together.
Dennis Galway of Larne Harbour was frankly incredulous that you said that you
needed to have such a huge landbank to make the port work. I would like you
to explain that first.
Secondly, you say that the golden share does not work. Many of us are a bit
unclear about the golden share. You suggest having a regulator in the event
of the port's being privatised. How would that work? Your third, and most interesting,
suggestion is to develop the harbour as a trust port, but with wider powers.
What would these wider powers be? How would they affect the port's ability
to borrow money and to spend money where it was required? I understand that
the Harbour Commissioners have over £20 million in the bank. They tell
us that they cannot use this money, and yet they say that they are strapped
for cash. This strikes me as a major contradiction. If you could address those
points, I would be grateful.
Part of our reasoning and rationale is based on the fact that the port has
been very successful. That success is partly due to not only traffic but the
landbank, including the reclaimed land, that has built up. We see no real reason
to naturally separate the landbank from the port operations unless that is
seen as the only way forward. We say that we should not go down that route
just yet but should first examine all the alternatives.
My colleague Leslie Murray spoke about current property values. If it
was decided to sell the 85 acres at the harbour at auction next Wednesday,
all that that would establish is the value of that land on that day. Its worth
in two, five or 10 years time would remain unknown. My understanding is
that the other parts of the landbank are on long lease - like Harland & Wolff
- and that under current circumstances neither the tenant nor the landlord
can make much use of that land. I further understand that if the port of Belfast
were privatised there would be time-limited provisions for clawbacks if land
were sold and windfall profits were to accrue. There might be a five- or 10-year
A commercial operator could ensure he did not sell any land and create windfalls
until after the expiration of the time element. Under privatisation, the new
landlord could approach the tenant, who could have a long lease on the land,
and suggest a joint operation to develop the land and share the profits. If
that is what a privatised entity might do, why not take that idea back into
the trust set-up? My understanding is that Belfast, as a trust port, cannot
develop property. If the powers of the trust port were widened to allow it
to develop the property, that would avoid some of the land lying idle because
of the tenant's restrictive lease and the fact that the landlord cannot do
anything because the tenant is there. Widening the powers would enable the
trust port to enter a partnership with the tenant to develop the land and release
some of that value back into Belfast harbour. That is one of our reasons for
saying that not separating the landbank would be the right approach.
My colleague Mr David Malseed will comment on golden shares because
he has some experience of them.
I am a director in a subsidiary of a major plc. I have spent all my working
life in plcs. Rule 1 of a plc is to ensure that the shareholders are looked
after. Everybody else is secondary and tertiary. That is a fact, and I live
by that rule.
One of my current employers was a semi-state company but is now a plc. We
introduced a golden share in 1991 to allay people's fears and assure them that
all would be well in the future and that their jobs would be secure. The issue
is highly complex and would be well above today's discussion. Most of the company's
chief executives have gone. The golden share, and probably the fact that it
exists, has been forgotten, and the bottom line is that the Government, who
own it, could sell at any moment. People who get golden shares think that they
know a lot about them, but they are highly complex, and the bottom line is
that everything, including a golden share, has a market price.
Regulation is the better option, but no one should be falsely persuaded about
the regulation of golden shares. They are very exposed.
I will give an example. One of the ideas contained in the PPP proposals and
the golden share is to have price increases in Belfast harbour - whether we
are talking about payment for ships coming in, for cargo, for passengers, or
for renting space in the harbour - restrained to be not higher than the retail
That sounds innocuous and very good. We are operating in the commercial world
every day, and we would love to have a business in which we could raise our
prices by the rate of inflation every year and thereby increase our profitability.
Most straightforward commercial interests cannot do that.
There is a second point buried here and an illustration of it is Northern Ireland
Electricity, that was privatised in 1993. It is a regulated public utility.
If Northern Ireland Electricity had been allowed to adopt the same policy as
the PPP is proposing, that is retail price index increases, electricity prices
in Northern Ireland would have gone up over that period by 18·8%. That
is the aggregate amount of inflation since 1993. In fact, what we have had
with regulation is a reduction in the price of electricity from Northern Ireland
Electricity, notwithstanding the very difficult situation with the power generation
costs in Northern Ireland. In other words, allowing a quasi-public utility
to raise its prices year-on-year has the ultimate effect of making industry
in Northern Ireland uncompetitive.
Regarding the matters of wider powers and the borrowing of money, you have
made one of the points yourself. Our understanding too is that Belfast harbour
has £20 million. We also believe that some of the revenue that will come
from the development of part of the land has not yet been put into the books.
In other words, some of the property has not yet been properly developed. The
development of the D5 area has not been completed, but when it is completed,
the rents from that will increase the revenue stream for the harbour. Its amount
will increase perhaps by 10% of its revenue. We are not sure what the exact
increase will be. So the business will have good cash-generating facilities:
it has £20 million sitting there, land that has not yet been utilised, and
unrealised potential in the landbank.
If we decided that this was our family business and that we wanted to find
£75 million to fund some road-building project, we might consider a mechanism
to widen the powers of the harbour to allow it to borrow against its future
income from part of the landbank to free up the money.
With regard to the road-building process, we recognise that an improvement
in the transportation system into Belfast and the port would automatically
improve the ability of the port of Belfast to compete and keep costs down.
Time is money in the trucking business, and it costs money if a truck coming
into Belfast gets delayed for an hour on the Westlink. Anything done to speed
traffic up lowers the costs for everyone in Northern Ireland.
Mr Chairman, may I come in here?
Would you please wait until later.
Your last observation has led into what I was going to ask. I represent a
rural community in mid-Ulster, and we felt that we were on the periphery of
the debate about the harbour until Lords Dubs informed us that the Toome bypass
was contingent on the sale of the harbour. That changed our attitude, and that
has created tensions between the rural and urban constituencies. A peripheral
issue had become a central one. What are your observations on the proposition
that the sale of the harbour would be contingent on road improvements, and
in particular the Toomebridge bypass?
I understand. There is a very special set of circumstances here. The chance
is being offered for a privatisation, the proceeds of which - or so we are
being told - will be kept in Northern Ireland. They will be set aside,
ring-fenced and used in Northern Ireland. That is a very laudable idea unless
you consider that what we are really doing is selling ourselves cheap for the
here and now and not protecting the future.
We have tried to address the problem from both angles. We have tried to say
that Belfast harbour is a very useful entity to keep within the public domain,
but we recognise that money has to be found to balance the books. If the port
is not to be privatised there will be a shortfall which will need to be made
up in order to build these roads.
What we are trying to do, in a sense, is let the money escape from Belfast harbour
in order to produce the £75 million needed. We have not detailed exactly
how this could be done. It may prove to be impossible, and we may find that
a public and private partnership is the only route available. We do not know
enough about this, and we want to make sure that all of the options have been
If, by clever financial engineering, Belfast harbour can borrow £75 million
- £20 million in cash and the rest by mortgaging some of the property - the
future development of the port would not be dramatically hindered and the people
of Northern Ireland would still own it. We were trying to come up with
a win-win situation.
Belfast port is Northern Ireland. It does not seem right to make a wrong
decision about Belfast port because of a one-off such as a road bypass.
Have alternatives been examined? We do not see any evidence that that was the
I would like to return to the issue of costs, which Mr Campbell raised earlier.
The Harbour Commissioners expressed concern that they have now reached a plateau,
and they do not see a great deal of development opportunity for the port.
The Commissioners said that they have had a relatively free ride up to now.
Dublin was not that competitive as a port, and they have been able to grow
continuously over a number of years. However, they are now facing greatly increased
competition from Dublin as its port costs are dropping dramatically. Dublin
is also in a position to get very favourable government financial assistance
and would benefit from the building of the new tunnel.
When Mr Campbell talked about costs you said that one difficulty with a public-and-private-partnership
arrangement is that costs could be allowed to grow. There could be no restriction
on costs once the port became a private development. Such costs would automatically
be passed on to the consumer.
Would you explain that further? We have a competitor, 100 miles down
the road, who is becoming more and more aggressive and who is cutting costs
dramatically. The difference between the cost of petrol or derv in Northern
Ireland and the Republic is astronomical, and some Northern Ireland-based
companies are talking about moving into Southern Ireland because it would be
more cost-effective for them. What incentive would there be for a privatised
company to go on increasing costs in such circumstances?
Is it not the opposite? In order to compete with Dublin, would the private
companies not drive the cost down, not up?
It is a complicated situation. It depends on whether it is a business with
very slim gross margins or one that is getting very little added value on its
products. For example, if one of its customers were based within 20 miles of
Belfast, and the road haulage cost from the port of Belfast to Lisburn was
£2 a ton and the cost from Dublin to Lisburn was, possibly, £5 to
£6 a ton, that customer would be unlikely to move his business centre to Dublin
to execute his business with Lisburn.
There is a natural hinterland to Belfast. The volume that goes through Belfast
has been increasing over the years. It has widened its circle of influence,
and the business volume on the periphery of Belfast could swing towards Dublin.
If Belfast harbour wants to float, it will be interesting to see how the business
is presented. Shareholders may require assurances about higher charges if volumes
are said to be static or falling.
The real problem is that in terms of tonnage, the port of Belfast has plateaued
out. In terms of volume, it has nearly reached its pinnacle. Anyone running
a public utility might be prepared to sacrifice some of Belfast's tonnage because
it cannot compete with the midlands of Ireland, and one way of getting back
some of the lost revenue would be to increase the charges to the people who
need to come through the port.
But how can we go to the financiers in the City of London and say "Here
is a port. Its tonnage has plateaued out. There will be no further grant funding
for the port of Belfast, and Dublin will become more competitive. How will
we sell this business?" It is not a business that you could really sell.
There is an inconsistency somewhere.
Mr Chairman, I wish to make a second point.
This still does not answer my question. If this is going to be a public and
private partnership, your concern was that the Belfast Harbour Commissioners
would actually drive costs up and that eventually - as they always do - those
costs would percolate down to the consumer. This is not about the hinterland,
not about Lisburn; it is further afield than that. As regards keeping the costs
down, the harbour has been very successful in taking trade away from Dublin,
but when the volume falls, because of the fixed costs, the price for using
the port will obviously rise anyway. The volume is very important and the Harbour
Commissioners have said that it has plateaued out with which you agree, but
how can a commercial company survive against a competitor down the road when
they keep increasing costs year after year?
It depends on your starting point. We are starting from the point of view
that we agree that Belfast is a very competitive port. In general, by being
very competitive, Belfast is not at the high end of the range of port costs
in Ireland. At the moment, Dublin is more expensive, but it has not yet had
the benefit of ERDF grants. It will build the tunnel. It has got government
investment, it will get ERDF grants, and it will then reduce its charges. At
the moment we have a very competitive port in Belfast. A public and private
partnership has the opportunity - not the obligation of course - to raise charges
up to the retail prices index under the scheme proposed. Meanwhile a competitor
100 miles away will be reducing charges. Somewhere between those two things
it will balance out. There is a point at which Belfast harbour could increase
charges without losing too much volume. Dublin's prices are currently above
those in Belfast, but it is likely that Dublin's prices will be reduced in
the next five years.
Yes, but companies on the periphery of Belfast will be affected quicker than
companies in places like Lisburn. If I had a company in Newry which was using
Belfast port and costs were closing as quickly as described, I, with other
peripheral traffic, would be attracted more quickly to Dublin. But if I lived
in Lisburn it would be far harder to drive to Dublin. You are saying that there
is going to be a happy medium in this and that a figure will be arrived at
which both Dublin and Belfast will be happy with.
You work for a private company. If I were a private investor, aware that
in five or six years we were going to have this happy medium, and someone
was trying to sell me shares, I would not be rushing to buy those shares, and
I do not think anybody else would.
There is a distinction between the people who have fixed assets in Belfast,
who cannot really move, and those with mobile businesses. A mobile business
could relocate to Dublin or elsewhere. At the moment it is more cost-effective
for someone in Newry, Dundalk, Monaghan or parts of the midlands of Ireland
to come to Belfast rather than Dublin. This is because of the costs of going
through the port of Dublin and the time taken to get through the Dublin traffic.
A tunnel in Dublin will become a key factor.
Fixed assets invested in the port, and which are valued at over £135 million,
were referred to in the presentation. Following on from what Fred Cobain
was saying, it is obvious that these cannot be picked up and taken somewhere
else. They represent a major investment in the port, and I see that as giving
any new privatised company particular leverage to drive prices up. While in
the very long term you may be able to think of moving, grain silos and oil
tanks will not be moved, and any privatised company would want to pitch the
price to maximise income.
In addition to that, the cost of land haulage to the nearest competitor makes
it impractical to move bulky items from Dublin. If privatisation goes ahead,
there must be a regulator.
Are you aware of how port charges have altered in ports that have moved from
trust status? You may be able to demonstrate what I fear in that area.
In relation to the land bank and the possibility of property speculation,
it is the port-leased land that is central to your business. The Belfast Harbour
Commissioners have said that they want to keep everything together. Can you
see why land leased for non-port use is considered to be essential to their
With regard to the first question, I work for a company which has ports in
Britain, Ireland and all over the world. I do not have the details in front
of me, but I will give you a written reply. The answer should be able to reflect
whether the ports were in a poor state, if charges had been particularly high
and were reduced following increased efficiency, et cetera. We are working
from an efficient port so we have to obtain those details.
I fear that prices will go up.
As a managing director I would again stress that shareholders must be paid
dividends - and better dividends - every year. If this does not happen, as
has been seen with Marks & Spencer locally, shares are dumped and the price
goes down. It is as sensitive as that. This is a successful business we are
talking about, not an unsuccessful business, as the previous one, which needed
that change. I will give you a written answer with as much detail as possible.
The rate of increase of charges in Belfast over the past five or six years
has been about 1% per year. This has been below the rate of inflation
and has helped to keep Belfast very competitive. It has been part of the success
If the philosophy that currently prevails were to continue under a PPP, we
would not see any difficulty. It is the introduction of new shareholders, who
would have a different agenda, which could place a strain on the existing set-up.
As for your question regarding the land bank, it is a matter of whether we
should treat this as a complete package. We are aware that the Belfast Harbour
Commissioners view the port operation and the landbank as mutually complementary.
I suppose one could say that that part of the land bank which is not actually
used for port operation is not necessarily required for Belfast harbour, but
without having to hand the reason why it must remain part of Belfast harbour,
it would be difficult to make a convincing counter-argument to that.
In terms of the day-to-day operation of our business, the sale of some of
the 2,000 acres probably would not have a dramatic effect. We cannot really
answer that question properly, because we do not have enough information.
We have less than 10 minutes left, and there are three members still
wishing to ask questions. We should be as brief as possible.
I would like to comment on the make-up of the Belfast Harbour Users Group.
Apart from Corry's, they all seem to have fixed assets. I am surprised that
none of the shipping companies or agents - organisations such as Stena, Sea
Containers or Norse Irish Ferries - is in your group. Stena is not on the list
I have here.
The important thing about a port is that it should be used for trade. Clearly,
the whole situation has become very blurred, because of the land bank which
Belfast harbour holds. In recent years, I have been greatly concerned at the
demise of small ports in Northern Ireland. The port of Carrickfergus -
my own home town - was, at one stage, dealing with half a million tons of cargo
a year and was able to compete with Belfast because it could fix its prices
at a lower rate. The same thing applied to Coleraine and Bangor. My main concern
- and it has already been partly addressed by Mr McAree - is about the
matter of port charges. Harbour users have come to me and expressed the worry
that privatisation - in whatever form - will mean an increase in port charges.
I would like more clarification as to how you feel port charges would be affected.
My other question concerns the golden share. We expect that if there is to
be a golden share, it will be held by the Assembly - if it gets off the ground,
and I certainly hope that it does. If that were to be the case, would you still
have the same worries?
Port charges may, or may not, be a major issue. That will depend on the restrictions
placed on the privatised entity. The proposals that we have seen so far leave
us feeling a little uncomfortable, because they are rather vague. There is
the possibility that it might not be permissible to increase charges beyond
the level dictated by the retail prices index. However, running a port is a
very complicated business, and, while there may be no increase in charges,
the owners, operating as a private entity, may decide to reduce the level of
service being offered as another way of enhancing their profits. For harbour
users, this would mean that, where we would have been paying a certain amount
for a certain level of service, we would suddenly find ourselves paying the
same amount, or more, for a reduced level of service. How can we ensure that
the level of service that has been provided over the past 200 years will
Belfast Harbour Commissioners, for example, say we can refer to the Harbours
Act (1970), but, under that legislation, the maximum fine for an infringement
is £100. So, you would have to go to court, spend £100,000 to fight your case
- all for a £100 fine. Perhaps we are being unnecessarily gloomy, assuming
that we will be dealing with an unscrupulous privatised entity, prepared to
ride roughshod over the interests of people operating in the port and those
in the wider community. Maybe it will not come to that.
The golden share would probably need stricter conditions. We have elaborated
on that by saying that it might be simpler to have a Regulator, and that even
if the cost of that resulted in the users of Belfast having to pay increased
fees, that would probably be safer for them in the longer term.
A Regulator could make sure that the public/private partnership is profitable
and gets a good return on its investment, but he would not allow it to abuse
its dominant position to the detriment of smaller ports or to cross-subsidise
by increasing the charges for trade that tends to be captive to the larger
port and using some of that income to try to win back volume from smaller ports
in Northern Ireland.
My question stems from the fact that I come from Warrenpoint, but I also
ask it out of curiosity. You expressed some concern that if Belfast went down
the PPP route, it would damage the other three ports in Northern Ireland.
As a Belfast harbour user, why are you concerned about that?
There is a need for other ports in Northern Ireland, and they need enough
business to remain viable. In the long term, if those other ports were to go
out of business, Belfast would have a complete stranglehold. We need other
It would not be easy for us to relocate our business, but while other ports
are operating, an attempt can be made to retain the competition and to keep
prices in check. We need other viable ports. Obviously, a dominant port with
much money behind it and unfettered could decide to make life difficult for
the smaller ports. I am not saying that it would do that, but we are discussing
a port that has been successful for 200 years and trying to look forward
to the next 100 or 200 years.
We can perhaps give the Committee an idea of what might happen in the next
five years, but who can tell what will happen in the year 2050? As a regulated
port, Belfast would give Northern Ireland's smaller ports some room to
breathe and to manoeuvre.
May I put a supplementary question?
Yes, but quickly please because we are running out of time. Mr McGimpsey
may wish to speak and other members of the Committee may want to respond.
The problem of increasing Belfast port charges was raised, and it was also
said that if the proposals were implemented they would be detrimental to the
other ports. The two statements seem contradictory.
In a privatised entity charges would not increase across the board. For example,
if it was decided to increase charges to a mobile ferry operator, he would
simply take his ship elsewhere because he has no investment in the port. He
would go to Warrenpoint or to Larne, or he might go to Dublin. Trade within
Belfast makes up part of the 15 million tonnes. For example, Belfast has
grain silos and oil terminals, and that business has to go through the port
almost regardless of port charges. It would be hard to take that business elsewhere.
An extra burden could be placed on that business, and charges could be reduced
for other operators.
The discussion has been useful. Belfast Harbour Users Group represents those
who contribute 80% of the volume of trade through the port and owns £130 million
worth of the infrastructure. You said in your evidence that when the Harbour
Commissioners produced their plan they did not talk to you, did not consult
you and did not negotiate. You said that you knew nothing about it. Why was
that? Was it simply arrogance on their part? Is that how they operate? Your
group contributes 80% of the volume of trade, and has a huge investment in
the port, yet the Harbour Commissioners propose to sell it out from under you
and they will not even talk to you about it. That seems absolutely fantastic.
They did not exactly rush to give us the full details.
The Belfast Harbour Users Group was formed to bring together people who are
interested in the development of the port and to allow them to have a unified
voice. If we meet the commissioners as single companies we do not have the
same clout that we have as a group of companies who represent the majority.
If one could wind the clock back it might have been better for Belfast Harbour
Commissioners to convince the customers that this was a good idea. If we have
concerns - and perhaps our concerns are not real or we are overstating them
- then the very least that can be done is to make us feel more comfortable
with the concerns that we have raised. We would probably have preferred a wider
debate with the Harbour Commissioners, to say "Is this a good idea?"
Some of the points that we have raised here go back to the very first meeting
at which David Malseed asked the harbour side to give five good reasons
why this was a good idea for the users. To date we have not received one good
In fact, we sent them a letter on that subject, which was never replied to.
Mr McAree, maybe you would like to take a couple of moments to wind up in
light of the questions that have been put to you.
Thank you, Mr Chairman. From our approach today you can take it that we think
that this is a very serious step. Whatever happens to Belfast Harbour is of
great significance to Northern Ireland. We hope that we have been able
to give the Ad Hoc Committee more information - we recognise that this is a
very specialised area. Even though we work every day within the port and are
very familiar with some of the concepts, we do not have enough information
to tell you what the right answer is. We can understand the great difficulties
that the Committee would have in deciding where to go next. We hope that we
have opened up the debate and given you some extra information. We hope that
Belfast Harbour Commissioners may have to come back so that you can ask them
more questions. We will be happy to come back to answer any further questions
that you might have.
Thank you, Mr McAree, Mr Murray and Mr Malseed.
AD HOC COMMITTEE
(PORT OF BELFAST)
[Mr P Roche in the Chair] Witnesses:
MINUTES OF EVIDENCE THURSDAY 25 MARCH 1999
Mr B Graham, Mr A Quirey
and Mr J Quinn
(Port of Belfast Harbour Trade Union Side)
Mr Graham, welcome to the Ad Hoc Committee. I invite you to make your
Thank you, Mr Chairman, for the opportunity to address the Committee. I have
with me Mr Quirey and Mr Quinn, representatives of the harbour's
shop stewards from the trade union side.
The trade union has been involved in negotiations about the future of the
port of Belfast for a long time - since 1994, or earlier, when the Tories brought
forward their privatisation proposals - and our position has remained unchanged.
In 1994 we were encouraged by the cross-party support for our opposition to
the privatisation of the port of Belfast, and we are encouraged that that cross-party
support seems to continue today.
The trade union side has always accepted that there is a case for change.
Our proposal is that there should be a full commercialisation of the port,
but the benefits should accrue to the Northern Ireland economy. Detailed
proposals were set out in our submission to the Government as part of the consultation
process on the trust port review in Northern Ireland, and copies of our
submission were made available to Assembly Members.
Since our original submission as part of the trust port review there have
been further developments in the harbour such as the D5 planning outcome, the
Odyssey millennium project and other projects that the Harbour Commissioners
have in the pipeline. So the harbour continues to develop and play an important
and critical role in Northern Ireland's economy.
We believe that the port's role has become increasingly important for the
Northern Ireland economy, and we hope that the economic benefits that
should accrue from the Good Friday Agreement will be significant, and that
the role of the port of Belfast, as identified in paragraphs 6-12 of our submission,
will be essential in assisting the economic enhancement of the Province which
will result from a lasting and durable peace process.
The economic role of the harbour is recognised by the Government also in
chapters 12 to 14 of the Department of the Environment's report 'Shaping
The previous Tory Government and, indeed, the new Labour Administration,
have failed to recognise that the port of Belfast is not like the Mersey Docks
and Harbour Company, Forth or Tilbury; it is the key port in a relatively small
On an all-Ireland basis, there is competition that is not there for other
British ports. We have seen significant developments in the Republic, which
has restructured its ports as semi-state bodies. The Republic's decision to
move into European monetary union, and Britain's to stay out, could have further
serious implications for the Northern Ireland economy, and particularly for
the port of Belfast, unless changes are made. We accept that commercial powers
should be given to the port, but it is how those commercial powers are applied,
who controls them and their accountability that are crucial.
We propose a publicly controlled body with full commercial powers and with
a board made up of representatives of the social partners, in particular the
Irish Congress of Trade Unions and the CBI, and also direct nominations under
the Nolan and Peach arrangements. This would be a balanced board that would
work in the interests not just of Belfast but of the whole of Northern Ireland
and, indeed, parts of the Republic. It should be remembered that the port does
a lot of trade with the Republic, particularly with the north-west counties
and some of the other border counties as well.
In proposing the extension of the port's commercial powers, we have the support
of others. The CBI's original submission to the trust port review did not favour
privatisation but did favour extended powers. We also have the support of various
trade unions as well as many individuals and other diverse interested groups
such as historical societies and environmental groups who are worried about
what might happen to the port if it were to go fully into the private sector.
In moving forward, the harbour must remain a single entity. There is a synergy
between the harbour land bank and the functions of the harbour. If the harbour
is allowed to extend its powers, it can increase that synergy and use its natural
resources to further develop the economy within the harbour and the economy
within Northern Ireland. The harbour should be allowed to benefit, not just
from the leasing of its land, but also from putting buildings onto that land.
Any profits generated from that should be used to keep port charges at a reasonable
level and keep the port's charging regime competitive to provide for growth,
both in direct employment by the Belfast Harbour Commissioners and also in
spin-off areas within the harbour.
We want to co-operate closely with Government - in the form of the Executive
and the Assembly - and with management to secure the benefits that we believe
can be obtained by following the route that we propose. We believe that the
Labour Government's proposals for selling off the harbour, which do not differ
significantly from those of the Tories before them, would be a wrong move.
What they are offering is a better deal than that on Northern Ireland's
airport but considerably worse than what we believe should be available to
the people of Northern Ireland.
If the harbour remains in public control, if it is allowed to grow, then
it will make considerable profits. Through a business planning process, those
profits should be looked at, in conjunction with the Government, to determine
what moneys the harbour will need over a three- or five-year period to reclaim
further land, to invest in new cranes and new machinery or to put in new roll-on/roll-off
facilities. There will then be a balance of moneys and we believe that, on
a regular basis, that balance should come to the Assembly for use in other
Northern Ireland infrastructure programmes. That money should be additional
to the block and not offset by London clawing it back.
With regard to benefits, there is a significant difference when our proposal
is compared to that of the Labour Government. Gordon Brown proposes to
give back to the people of Northern Ireland some of the money that would
be generated from the sale of the port of Belfast on a once-off and once-only
basis. The ultimate beneficiaries from the sale of the port of Belfast would
be the Treasury in London and those privateers who purchased shares in the
I know that the Government and the Harbour Commissioners say that there are
safeguards in their proposals; in particular they talk about the golden share.
That is the key tenet of their position which seeks to give the impression
that we will not end up in a Northern Ireland airport situation, that
the future of the port of Belfast and the interests of Northern Ireland
will be secure.
We have given papers to the Clerk which show that golden shares are now under
attack from the European Commission. Commissioner Monti has determined
that they are anti-competitive and has taken legal action in the European courts
against a number of member states. That means that the golden share is not
worth the paper it is printed on, in spite of civil servants from the Department
of Finance, the Department of the Environment and London saying that this difficulty
can be surmounted.
The British Government have an abysmal track record in Europe where it has
lost case after case. Some have involved the trade union movement, for example
the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE
Regulations), which implement the Acquired Rights Directive of the European
Community. So the golden share is not a safeguard; it will be blown apart by
European Commission action. This raises a serious question for the Harbour
Commissioners: if they do not have the golden share, what safeguards have they
to offer the Northern Ireland economy and the workers employed at Belfast
One also has to look at the history of privatisation, in particular privatisation
within the ports industry. I have copied to you a study of the matter by Saundry
and Turnbull of Leeds University. The final sentence of their report reads
"Privatisation has not only proven costly, but unnecessary, ineffective,
and in many respects counter-productive."
We endorse this view. One has only to look at how Northern Ireland has
suffered as a consequence of the privatisation of the airports and the Northern Ireland
We believe that public/private partnership is a gloss. It is privatisation
by another name, and especially dangerous given the developments on golden
shares. Our proposals envisage changes in the scope, role and function of the
harbour, but they do not differ substantially from the vision of the commissioners.
The key difference between us concerns the control and the use of the profits.
Our proposals are not geared towards fat cats or share dividends or benefiting
the few. The trade union solution would provide for public ownership and control,
the economic benefits of a competitive low-cost port operation and a continuous
revenue stream to the Northern Ireland block, which would provide additional
funding for infrastructure improvements. It would not be a one-off Gordon Brown
package which would yield only partial returns to Northern Ireland of our assets
with the remainder going to the Treasury in London.
In conclusion, we say that what you have heard, particularly from the Harbour
Commissioners and the Government, gives a false impression of how things would
be run, because due diligence has not been paid to developments in Europe such
as the one on the golden-share issue. Not enough attention has been paid to
the history of privatisation of ports in the United Kingdom even when academic
papers are available. Not enough attention has been paid to the history of
privatisation within Northern Ireland and, more importantly, not enough
attention has been paid to the views of the public, the political parties,
the trade unions and their own workforce. We do not need, nor do we want, privatisation
of the port of Belfast.
I would like to deal with the trust port review. The trust ports have, in
general, operated in a very narrow commercial field. There has always been
a strong feeling that they should be allowed to operate in a wider field. That
was certainly your opinion.
What effect, if any, would that have on the smaller ports in Northern Ireland?
I believe that whatever happens to the port of Belfast will have an effect
on the smaller ports in Northern Ireland. That is my first question. My
second is this: have you met the users of the port to discuss your proposals
and ideas with them?
I would like to deal with the first point. The original paper did seek to
address, to some degree, the relationship with other ports, and we were of
the opinion that the port of Belfast should not be allowed to become a monopoly;
it should not be allowed to take over the other trust ports. As far as the
trust ports are concerned someone should be appointed to oversee their roles
and responsibilities so that all the trust ports operate together in the interests
of the Northern Ireland economy, the Northern Ireland people and
the areas in the Republic that they serve.
Our submission has been widely available during the time in which we have
been fighting privatisation. A significant number of port users will have seen
it, because it was made available to former commissioners, such as the former
chairman and other members of the board, who have a substantial interest as
You seem to be looking at new ways in which the port of Belfast could operate
more commercially and on a wider field and saying that that is what the smaller
ports should be doing as well. You are saying that the trust ports review should
enable all ports to operate commercially.
I do not think that we in Northern Ireland should allow a situation to develop
where there is not some form of public control to ensure that the best use
is made of all our resources. We can only hope that the Assembly will be able
to ensure better management of our resources than either the Tories or Labour
We all wish to see Belfast Port continue to trade successfully in the interests
of the trade unions, public representatives and, indeed, the people of Northern
You feel it important that the land remain attached to the port, and you
admitted that you think that it should be used to subsidise and replace equipment,
for instance, in the port in the future. I represent East Antrim and I would
like to see fair competition between all the ports in Northern Ireland.
I realise that the main competition will be coming from Dublin, in terms of
bulk-handling facilities and so on, but it is important that, whatever else
happens, all the ports operate from a level playing field.
During a presentation from the Larne port a couple of weeks ago we were advised
that it was trading off a port area or using a port land base of about 60 acres.
The Belfast Harbour Commissioners say that they have 800 acres of port
operational land and a further 50 acres for housing and distribution.
I am concerned that the additional property of over 1000 acres, which
is under the control of the Commission, may be used to create unfair competition
within Northern Ireland in terms of the smaller ports - Londonderry, Warrenpoint
and Larne. Whatever changes occur we have to recognise that we cannot create
unfair competition. That would not be in the public interest. Would Mr Graham
care to comment?
There are some misconceptions about land in the harbour. Much of it is on
125-year leases to Harland & Wolff and Shorts, who play an important role
in employment in Northern Ireland and get the land leased to them very
reasonably. Some might argue that they get the land at unfair rates because
they are not charged its full economic worth.
While I accept your interest in your own constituency, the fundamental difference
is that Larne is a private port and the money from Larne is going into the
pockets of P&O's shareholders. Our proposals for the port of Belfast would
put the money back into every citizen's pocket because the profits of the port
would be used to improve the Northern Ireland economic infrastructure.
The big concern here is the golden share. If the proposals for a public/private
partnership are accepted, the golden share may well be held by the Assembly.
What are Mr Graham's feelings on that?
I have received an assurance from Lord Dubs that any profits from the
public/private partnership above the amount set aside for the roads programme
will be invested in Northern Ireland. Would Mr Graham care to elaborate?
The port users suggested that, rather than have a golden share, a regulator
should be brought in who could safeguard the interests of all concerned, the
public and the harbour users.
As a public service trade union official, I have spent all of my working
life dealing with the Government. One thing I have learned since I became involved
in the union in 1978 is never to trust a Government Minister, no matter what
political party he is from. If Mr Neeson feels comfortable with assurances
from Lords Dubs, that is his prerogative.
I am more worried about the killing hand of the British Treasury and Gordon Brown.
The Treasury in London will want whatever money it can get into its coffers.
You might get money in one hand, but it will be taken away on the other.
We are well used to debates in Northern Ireland, particularly in terms
of European money, about additionality. If we received an extra £10 million
through this process, the Northern Ireland block would be cut by £10 million
next year, and at the end of the day we would be no better off. I have considerable
fears about the way in which the Treasury deals with Northern Ireland
We still see a need for regulation, even within our proposals. There is a
need to ensure that everyone who makes use of the port is dealt with fairly,
and if anyone feels that he has been unfairly treated, he has access to the
ombudsman. Certainly we would not be averse to looking at other regulatory
The role of regulators may come under scrutiny from people in Europe who
will want to see whether the regulatory bodies are infringing upon the European
concept of freedom of movement of capital and commerce, et cetera. That takes
us back to the point made about the golden share. If the golden share were
there and could be guaranteed, it would be sensible for it to be operated by,
and on behalf of, the Assembly. But the research that we have done, particularly
since the recent decisions by Commissioner Monti, shows that golden shares
are illegal. This blows out of the water not just this proposal, but the proposals
that the British Government have for the likes of air traffic control as well.
I have been talking to colleagues in other public service unions about this
Mr Graham, the Labour Government gave a guarantee that the North Sea golden
share would not be sold, and six weeks later it was away.
We are back to the point that if the Treasury thinks it is to its benefit
at any time, it will cash in on it.
Mr Graham, Mr Hay asked if you have met with the port users. I
would like to know if you have had a meeting and full discussions with the
You made the point that the money made from any sell-off of land should go
back into the port. Do you accept that the money proposed for the roads would
benefit the port as well because of the improved road infrastructure? If the
money made by any sell-off of land were to go back into the port to up-grade
it, would any profits come back to the Assembly in five years' time?
I agree with what you have said about the trust administrators, and particularly
the one whom you are talking about - if this is set up, he will not be here
that long to answer to it. However, the infrastructure of the roads is as important
to the port as the buildings in the port, yet it may take five years for the
money to be available for the roads. Are you saying that the £75 million
needed for the roads should come out of the block grant and not from the sale
of land or anything else?
I am a commissioner. I have the Irish Congress of Trade Union's seat on the
board, but I am the lone voice that opposed the other commissioners' proposals
and therefore, because of a conflict of interest, I am no longer permitted
- and rightly so - to sit on the ad hoc committee of the Belfast Harbour Commissioners.
We have had full and frank discussions with the commissioners throughout,
going back to the time of the original proposals on privatisation under the
Tory Government. They are well aware of our proposals, and they accept that
there is only one difference between us and that is on the issue of control
and ownership - we want public-sector control and ownership, and they want
private-sector control and ownership.
We are not advocating the sale of land. The land is a necessary part of the
harbour and should be used to maximum capacity to provide further commercialisation
of the port and generate more profit. Taxpayers would benefit in two ways from
that: further profits would add to the £3 million plus per annum that
the harbour pays to the Treasury in corporation tax, and excess profits would
be raised as a result of that.
Members, from the point of view either of a Department or of the Assembly
as a whole, should look at the needs of the Harbour Commissioners over a three-
or a five-year period in order to provide for re-investment in the harbour
infrastructure. The balance left could then be used for roads, et cetera.
That would produce a re-occurring amount of money, whereas, as I said earlier,
the Labour proposals are for a one-off amount of money. The money is not going
to come immediately. Even if the commissioners' proposals are given the green
light, it will probably be at least two years before the money is generated.
The £75 million proposed as part of Brown's package was a clever con and
I received a letter from Mr Irwin dated January 1998 in my capacity
as a member of Belfast City Council. In that letter, which I know you have
not seen, and which is now being circulated to members of the Committee, Mr
Irwin detailed the amount of land which was under the control of the Harbour
Commissioners. The letter states that they have 600 acres on the Co Antrim
side of the port and 1,400 acres on the Co Down side. Mr Irwin gave
a breakdown of the Co Down land holdings, stating that there are 330 acres
of port operational land under the control of the Belfast Harbour Commissioners.
Mr Irwin, in his oral evidence to the Committee, said that he has 440 acres
on Co Antrim side- not the 600 acres given in his letter. Also, in
his oral evidence, Mr Irwin said that he had 1,510 acres on the Co Down
side - not the 1,400 acres given in his letter. There are major discrepancies
My point is that Mr Irwin said in his letter that the area of port operational
land on the Co Down side is 330 acres, yet, in his oral evidence,
that figure jumped to 435 acres. That represents a 33% increase in the
area of land used by the port directly for port operations.
From your knowledge - and you represent the workforce - have the Harbour
Commissioners acquired an extra 130-odd acres of land on the Co Down side
as part of their port operations? Has the area under port control on the Co Down
side suddenly increased by a third? It is perhaps unfair to ask you that question.
I would much prefer Mr Irwin to answer for his own inadequacies.
My reason for asking you this question is that Mr Irwin has a difficulty
Mr Irwin, in his oral evidence, said that he has 440 acres on the Co Antrim
side, 420 acres for port operation and only 20 acres for non-port
operations. That seems fairly clear to me, but it contradicts the figure of
600 acres given in his letter. The differences are vast, and they are
not the sort of things you could make a wee mistake over. I therefore assume
that the Harbour Commissioners have increased the port operation business on
the Co Down side by one third.
I was astonished when the Belfast Harbour Users Group told us that they represent
80% of business volume in the port and own infrastructure worth £130million
yet were not consulted when the Harbour Commissioners were producing their
plan. They were merely told about it afterwards and got a presentation. Were
you consulted as a representative of the port's workforce, and did you have
any input into the preparation of the Harbour Commissioners's plan for privatisation?
I will deal with the last question first. The trade union side did not have
any input into the Harbour Commissioners' proposals. I, in my capacity as the
Irish Congress of Trade Unions's nominee on the board, sought to dissuade the
Harbour Commissioners from their proposals. I wanted them to follow the route
that is in the trade union submission.
The trade union side, like others, was involved in the consultation process,
as the Harbour Commissioners call it, inasmuch as we were invited to the Harbour
Office for the glossy presentation of the proposals that they feel represent
the best way forward.
At times the port users can be somewhat economical with the truth. The previous
board, which was in place until October last, had more key port users on it
than trade union representatives. They have had a more indirect route in than
others. There have also been meetings between the Port Users Committee and
the Harbour Commissioners - many more than were afforded to us.
On the question of land, there are glaring inconsistencies in the evidence
that was presented in the earlier document to the Committee and, indeed, to
us. I cannot explain all of that. From the trade union perspective, the Co Antrim
side is almost exclusively port operational land, and we welcome the progress
that has been made between the Harbour Commissioners and the Government in
trying to reclaim more of the seabed. It is helpful to get further downstream
into deeper water and to increase the amount of land for port operations.
There is a mixed use of land on the Co Down side - port operations; long-term
lease to Harland & Wolff and Short's; on-stream developments such as the
D5 project and the Odyssey project. That is playing an important role
in the functioning of and relationships in the harbour. Most of the land is
reclaimed land. The Harbour Commissioners have been responsible for that since
the inception of the harbour and there is no reason for the fruits of that
not continuing to be used in the total functioning of the harbour.
I wish to ask a question that perhaps follows on from the previous one. In
presenting your submission you are representing the interests and the views
of your members. However, the Belfast Harbour Commissioners have actually balloted
the staff about their proposals. The result from 131 ballots was: 74 for;
2 against; and 1 for the other proposal. Will you comment on that result?
We were not consulted about this. I was away last week when it took place.
I have already had a serious word with the chief executive. It is disgraceful.
They did not consult the trade union movement about their proposals, and they
did not consult us about this ballot. It was a ballot of the workers in the
harbour, not solely a ballot of trade union members. It includes the management
team and the police, who are denied the right to be members of the trade union
movement. The management side has also spent thousands of pounds in bringing
in PR consultants and consultancy firms and on presenting their vision to every
member of staff. They have been economical with the truth not just about the
golden share but about what has happened with other privatisations.
The trade union represents not just the interests of the direct employees
but also the wider interests of the trade union movement, including the thousands
of other people that work in the harbour estate. We believe that our proposals
represent the best interests of our members in terms of job security, growth
in direct employment in Belfast harbour and indirect employment in the harbour
estate. In any situation involving the balloting of members, the employer should
sit down with the unions and agree the process and the information to be placed
in front of people. That did not happen. I suspect that they took advantage
of my absence from Northern Ireland last week, coupled with the fact that
they knew we were coming here today.
It was a shoddy attempt to undermine the role of the trade union movement
within the port of Belfast, and I hope the members of this Committee will recognise
it as such.
Mr Chairman, you mentioned that 74 were in favour of privatisation. Was that
No. 74 members out of 130.
I thought that there were thousands working in the port.
These are people who actually work for Gordon Irwin?
All right. So secretaries and so on are included?
I do not wish to use my position as Chairman to supplement my question -
that would probably be inappropriate - so Mr Tierney will ask the supplementary
Mr Graham, are you asking us to ignore the findings, or are you asking for
a new ballot which the trade union movement will be involved in?
Balloting the workforce is not the way forward on this one. People have been
subjected to management's views, which were backed by pressure, money, media
people, bankers and specialist consultants from London. There is no way that
the trade union movement could compete with that type of approach. We have
carefully researched this issue over the years, and we have an alternative
set of proposals which we believe are in the best interests of our members
directly employed by the Belfast Harbour Commissioners. They are also in the
interests of all the members of our unions and the other unions involved in
the harbour estate. More importantly, they are in the interests of all workers
and families in Northern Ireland and the border counties.
I accept the point.
In relation to my question and in light of the outcome of this ballot, are
you sure that you have the backing of your members? Also, I understand that
the ballot was conducted with shop steward agreement. Are you saying that,
without the guidance of the trade unions, the employees - the people who are
directly employed by the harbour commissioners - could not assess the proposals
put to them in terms of job security and their own self-interests?
Let me put it like this. In an election, how would you like to go to the
polling booth on election day to find that all the other political parties
were allowed to sell their wares, but you had been prevented from selling yours?
That is what happened, and the harbour authorities spent considerable amounts
of money in the process. Such resources are not available to us. The Irish
Congress of Trade Unions has debated this point over the years. Independent
unions, such as those represented round this table, have debated it. My union,
the Northern Ireland Public Service Alliance, has had motions at its annual
conference virtually every year. Another motion will be going in front of conference
this year. Those are the democratic means by which independent free trade unions
operate. We are not in some sweetheart deal with employers.
I am interested in the idea that some of the profits should come to the Assembly.
On the one hand, there was the view that there might be a problem finding money
without privatisation or transfer, but you seem to be suggesting that so much
profit could be made that there would be enough for reinvestment in the port
with some left over for a dividend to hand over to the Assembly - a dividend
which could be passed on to the people of Northern Ireland. I am surprised
that you think that so much money could be made without recourse to the equity
market - without borrowing, without funding from Government or EU sources.
How could that be done?
The Harbour Commissioners' submission to the Committee showed a pre-tax profit
for 1997 of £8·7 million on a turnover of £18·8 million. That is a very
substantial profit margin. The submission also showed their profits from 1985
to 1997. Profit represents a very high proportion of income - somewhere in
the region of 40% - and that is on the basis of the limited commercial activity
currently ongoing at the harbour: it would increase considerably if there were
unlimited commercial activity. There would be an increase in both turnover
Our belief, based on the historical profits that the harbour management has
made and been able to reinvest without drawing down money from the Government
- the only money it has received is European grant aid, which is available
to any port, and is still available, though access to European grants is becoming
more difficult - is that the harbour would continue to be in a high-profit
position. The management of the port could look at the profits for any three-
or five-year period, assess what would be needed for, say, the replacement
of cranes or the improvement of the harbour's road structure but would still
enjoy substantial profits. The benefits of this would be twofold: corporation
tax would be paid directly to the Treasury and a residual amount - which we
believe would be quite healthy - would be available for economic infrastructure
How much would that be?
It is difficult to say, because we do not know what additional scope there
would be, but, if the harbour commissioners are relying on the big profits
envisaged in their proposal to convince the financial institutions, then our
proposals should generate those same profits, while using them in the interests
of the public.
I want to go back to the vote - or consultation, I should say - about which
we were informed for the first time today. Although the views of employees
should be considered, I do not think that 74 people should be determining
what happens to the port of Belfast. It is a much bigger issue than that. It
involves huge amounts of money and is of considerable significance to a great
number of people, including harbour users, workers elsewhere on the estate
and, indeed, the entire population of Northern Ireland. I would like to
emphasise that. It is clear that some of your members do not support the views
contained in your submission. Can you tell us how you consulted your members
before drawing up this submission, so that we know how much support it has?
Since it was first agreed, our position has been refined over the years.
It goes back to before 1994, when we were dealing with the direct threat of
privatisation. Our policies are determined by union members at annual delegate
conferences. That is where we get our policies from, and we follow them, both
as individual unions and together in the Irish Congress of Trade Unions.
Over the past four or five years at three of the five conferences that I
have attended with my union, motions opposing privatisation were discussed
and passed. Not just the 60 NIPSA members who are directly employed at
Belfast Harbour but all 35,000 members of the union recognise the port's
valuable role. The employment that is provided in the harbour estate benefits
the Northern Ireland economy as a whole and leads to the employment of
others throughout the Province and beyond.
Is that the ICTU view rather than the view of the port unions?
No. In the strategy against privatisation, the response to the Trust Ports
Review came from the Port of Belfast trade union side and has been endorsed
by the Irish Congress of Trade Unions.
I am slightly worried about the ballot that has been mentioned. Roy Beggs
is right. We should not be dictated to by 74 people as to what might happen
in Belfast port. The Harbour Commissioners will use it in their PR exercise.
They would be foolish if they did not. Joe Public will probably hear all sorts
of stories. Does the union have plans to address what is happening? It is obvious
that the commissioners have taken the advantage of the unions being "out
of town". You need to look at the figure of 74, or whatever it is. Have
you any plans to address that again? If you were asked by the Harbour Commissioners
to sit down with them and look at a ballot in which you and they would be involved
would you accept the invitation?
Trade unions have an obligation to consult and to keep in touch with their
members. We obviously have to address that point, but the issue goes beyond
that. That has been correctly identified this morning. It is not, nor should
it be, within the gift of Gordon Irwin and every member of staff in the
Belfast Harbour to determine the future of a key economic asset of Northern Ireland.
I suspect that there was a hard sell in which people were told about the wonderful
benefits that would flow from the opportunity to be preferential shareholders
and so on.
Do you have any plans to counter or address that?
We shall certainly have to look at that, discuss it in the joint trade union
forum and take it forward from there.
It is important to recognise that the Committee is being presented with a
trade union submission. We shall take on board what the trade union is saying
when making our minds up.
As there are no more questions, perhaps you would like to make a winding-up
submission in the light of the questions that have been put to you, Mr Graham.
I again thank the Committee for the opportunity to make the presentation
on behalf of members. We are available if you require additional information.
We shall obviously have to follow up some issues, including the one that has
just been mentioned. We shall also carefully follow the progress of the EC move
against golden shares, not just in respect of Belfast harbour but also because
of the implications of that for many other privatisations, both past and planned.
Our key interest in this is protecting our members' terms and conditions
of employment and, more importantly, their job security. We could have been
as narrow as that. However, we decided from the outset of our program of action
to concentrate not just on the small limited numbers of direct employees of
Belfast harbour but to focus on the economic role of the harbour in Northern Ireland's
economy, the job security and jobs spin-off from its role. We want to try to
ensure that the harbour is utilised properly and fairly for port users in the
interests of the Province. Our solution is one that is innovative, one that
operates in many other countries. A semi-state body with full commercial powers
is in the interests of our members, directly employed, other workers within
the harbour estate and all other workers and families in the Province.
We believe that the privatisation route has failed and will fail again. We
are not in the position of having potential investors out there saying "Well,
what could we do for the good of the port of Belfast? What can we do for the
good of Northern Ireland?" Potential investors out there are saying "Give
us a chance to get in and get more profits to put into share dividends and
into the hands of the corporate management teams". We would see again
what has happened everywhere else. Initially Northern Ireland institutions
or individuals may hold the bulk of the shares, but over a period they will
become part of a multinational-type organisation. The benefits from the port
would haemorrhage out of Northern Ireland into city institutions and into
the hands of one or two individuals who would benefit considerably from it.
Our proposals are in the interests of every citizen of Northern Ireland
and we hope that in your deliberations you would take that on board.
Thank you very much, Mr Graham, for a very informative report.
AD HOC COMMITTEE
(PORT OF BELFAST)
(Mr S Wilson in the Chair) Witnesses:
MINUTES OF EVIDENCE THURSDAY 1 APRIL 1999
Mr N Dodds, Ms C McAuley
Ms M T McGivern, Mr B Hanna
and Mr R Stoker
(Belfast City Council)
I would like to welcome you all to the Committee. I apologise for the delay
as we have had some difficulty in reaching a quorum. I am sure you will understand
that people have other things to do today. It was touch-and-go as to whether
we were going to convene the Committee at all, but we decided to go ahead.
A lot of Committee members are absent, so we had to press-gang some people
who may not be au fait with the subject, as they have not been at previous
meetings. Rather than bring you here for no purpose, we thought that you might
like to make a formal presentation to us and then answer some questions. Afterwards,
we would like to adjourn and, if possible, come back for a longer question
session on Thursday 22 April. I am sure that there are many members who
would have liked to have been here this morning to put some fairly rigorous
questions, but who have been detained by previous commitments. I know this
is not a very satisfactory arrangement, but if it is acceptable to you, we
will proceed on that basis.
We understand the difficulties facing Assembly Members today and we are glad
that the Committee is able to proceed. All the members of the Committee should
have received a copy of the paper prepared by the development committee of
Belfast City Council. I should say that I am speaking in my capacity as chairman
of that Committee and I am accompanied by Cllr Stoker, Cllr McAuley,
the chief executive of Belfast City Council, Mr Brian Hanna,
and the director of development, Marie-Thérèse McGivern.
The development committee is a relatively new committee of the council which
has been set up to look after economic development, tourism and the promotion
of Belfast and the arts. We see ourselves as having a strategic role in the
development of Belfast, and since the formation of the new committee and the
new department we have made a considerable impact on development issues in
Belfast; we certainly intend to build on that work.
The views that we express today are the views of the development committee.
Belfast City Council has not yet had the opportunity to come to definite conclusions
on the proposals of the Harbour Commissioners, though the development committee
has discussed these at length. We have met with the Minister responsible, and
with the Harbour Commissioners, and have received presentations from them and
from others. The views that we express are therefore the views unanimously
agreed by the members of the Committee.
I do not intend to go through this whole paper but instead to highlight some
of the main points. You may question us about any issues at this stage, but
we would be very happy to come back on another occasion to answer questions
We see Belfast port as being integral to the development of the City of Belfast.
Belfast was built around the port, and the port has, and will continue to have,
major importance in relation to the economic and strategic development of the
city. One cannot divorce the future of Belfast port, and the land in it that
is the responsibility of the Harbour Commissioners, from the well-being of
the city and the people of Belfast and greater Belfast. One must take into
account the economic importance of the port to Belfast and to the whole of
I am sure you are aware that 60% of the entire seaborne trade of Northern Ireland
goes through Belfast. It is the biggest port on the island of Ireland; it takes
one quarter of the entire trade coming into and out of the island of Ireland;
and we have been pleased about the phenomenal growth in passenger traffic through
Belfast, much of which used to go through Larne. You have all the facts and
figures about how important the port is and about the great strides that have
been made in recent years to make the port a very efficient and effective harbour,
thanks in large part to European funding.
I now turn to some of the issues of real concern to us. There are nearly
2000 acres of land in the harbour - 1950 to be precise - 855 acres
of which are directly related to port activities while the remaining 1095 acres
are not. This is something that the Committee must focus on: the large amount
of land that is the responsibility of the Harbour Commissioners yet not at
all directly related to port activities. Clearly, what happens to that land
and how it is developed will have a major impact upon Belfast and the whole
of Northern Ireland.
Our primary concern is to ensure that that land is developed in the interests
of all the people and the economy and not merely in the interests of a few.
Inevitably we are concerned that if the port is privatised, it will be the
interests of the shareholders' private capital which will be to the fore and
not the interests of the wider economic concerns of the people of Belfast and
Of the 1095 acres of land that is not directly port-related, 760 acres
are held on long leases by Bombardier Aerospace Short Brothers plc and
Harland & Wolff. Shorts Bombardier holds 460 acres and Harland &
Wolff holds 300 acres. The land is held on 125 year-long leases which
were negotiated on generally favourable terms when those companies were privatised
- low rents and so on. The important thing is that that land can only be used
in relation to the core activities of those businesses. Any profits yielded
have to be shared with the Harbour Commissioners, and development has to be
agreed with them.
We would vehemently oppose any suggestion that the land should pass into
private ownership. It is a large swathe of land and in the case of Harland & Wolff,
who own a lot of land right on the waterfront, there would be the potential
for a port within a port. Another 160 acres is leased to tenants such
as Laganside and the Odyssey project and 90 acres which is given over
to conservation purposes. That leaves about 85 acres available for development.
The Belfast Harbour Commissioners are very keen to stress that there are
only 85 acres available for development. Do not get sidetracked by the
issue of how much land could be used for non-port activities. There is currently
a large amount of land which is held on long leases by Harland & Wolff
and Bombardier Aerospace Short Brothers, and there is the potential for
that land to be released for non-port activity and development purposes if
those leases were renegotiated under some new regime or if those companies
managed to get hold of that land in freehold themselves.
We have to look very carefully at the Belfast Harbour Commissioners' claim
that there is only a small amount of land left for development. They have pointed
out that they can reclaim land and thereby make more land available. The Harbour
Commissioners Annual Report for 1997 states
"Development of the Commissioners' land resources continued during the
year with due attention being given, as always, to land required or likely
to be required for port operational uses, particularly irreplaceable deep water
Furthermore, the commissioners plan to
"reclaim additional land north of the Victoria Terminals, which will
accommodate a further 40,000 sq m of transit warehousing".
Therefore it is impossible, in our view, on the current information from
Belfast Harbour Commissioners, to accurately estimate the amount of land available
for development in the future. Those issues need to be looked at very carefully
before decisions are made which are based purely on this information.
We have a number of other concerns. We believe that the consultation process
has been woefully inadequate so far. There are a number of stakeholders who
have not been properly consulted - the Freight Forwarders Association, the
Confederation of British Industry, Belfast Shipping Agents Association and
the Port Users Committee. There also has not been adequate consultation with
Belfast City Council.
I remind the Committee that a member of Belfast City Council is a commissioner
and is appointed to the Belfast Harbour Commissioners' board. Therefore, under
the present regime, the importance of the council and the people it represents
is recognised by the Belfast Harbour Commissioners in the making of their decisions,
yet throughout this consultation process, so-called, we do not believe as a
council that we have been adequately and properly consulted in terms of having
a proper and effective input.
We have been told that the flotation is expected to yield some £100 million
and the Department of the Environment has already anticipated that the proceeds
will finance a series of major infrastructure and road projects across Northern Ireland.
In our view, the announcement that was made by the Chancellor, Gordon Brown,
when he came to Northern Ireland last spring was an attempt at blackmail.
It was put to elected representatives that they would not get money for road
developments such as the Toomebridge bypass, the development of the Loughbrickland/Newry
road as a dual carriageway and improvements to the Londonderry/Ballygawley
road unless the privatisation went ahead.
Many people, including members of Belfast City Council and others elected
representatives, very much resented that pre-emptive strike. We in Belfast
City Council feel that it is not right that the proceeds from the sale of the
port should already be accounted for in this way. It is an attempt to set elected
representative against elected representative, community against community,
constituency against constituency and council against council. We have very
strong views on that. We have no objection to roads and infrastructure projects
going ahead; we would welcome that. However, regardless of whether the privatisation
of Belfast port is a good idea, we do not feel that it is right for the Government
to influence the issue in this way.
Belfast City Council believes that it has played a major role in terms of
the developments that have taken place in Belfast. Lanyon Place, the gasworks
site, the renovation of St George's market and the north foreshore are
all examples of major developments in which Belfast City Council has played
a leading role in partnership with other bodies both public and private.
We believe that, given our track record and our electoral mandate to represent
the people of Belfast, we have the right to be fully consulted, in a real and
effective way, about what is going to happen to our port. That right must be
taken into account in relation to the privatisation process. We hope that locally
elected representatives will take the decision on the port's future. We would
However, we urge the Assembly, when taking that decision, not to repeat the
mistakes of the present Government and previous Governments; nor should it
adopt the attitude of the Harbour Commissioners. We urge the Assembly to keep
Belfast City Council, as the elected body in Belfast, fully involved in the
decision-making process concerning the port's future.
Belfast City Council fully recognises that the port has operated under certain
constraints and that there are certain changes which need to be made in order
to face the challenges of the coming years.
We recognise what the Harbour Commissioners have said in relation to European
funding. They have been very assertive in their view that no more European
funding will be available. However, given the changes which are taking place
in relation to structural funding, it remains an open question as to whether
the harbour may be able to call down urban regeneration funds, for instance.
That is an area which should not be closed off. Belfast City Council thinks
that the wider context of the new structural funding apparatus and changes
needs to be borne in mind in relation to the future.
The Port of Belfast is a substantial local employer. It is the largest landlord
in Belfast. Previous examples of privatisation in Northern Ireland have
not benefited the people. They have benefited some fat cats, and we do not
want to see some more fat cats being created from the privatisation of Belfast
The Harbour Commissioners are saying that, in relation to the public and
private partnership proposal, a golden share should be retained by the Department
- whatever it is to be called. Given its important role in representing the
people of Belfast - it is represented on the Harbour Commissioners - the council's
concerns about the golden share should be recognised. I am sure that the new
Minister will want to look closely at that. We would not like that to go by
There has not been proper consultation, and further consultation is needed.
The preferred option that has emerged has come without the necessary detailed
analysis and consultation. Further work needs to be done - for instance in
relation to the concept of a semi-state body - and the council can help with
those deliberations. We should not sacrifice a set-up that is in the public
good and in the wider interests of Belfast and Northern Ireland for the
sake of advancing a few shareholders' profits in a private company.
I wish to ask about your summary. There are about four or five different
options and most of those who have already given evidence have favoured one
or another of them. I am surprised that your written submission does not contain
Belfast City Council's preferred option. I accept the point about discussion
and consultation. Some other witnesses have agreed that there has not been
enough discussion and consultation on the matter.
I should like Belfast Council to give the Committee its preferred option
or rule out other options. If it does not have a preferred option, I would
be interested in its views on other options. Perhaps it will have had a full
discussion with the Belfast Harbour Commissioners by the next meeting and we
could look at this at that stage. I agree that Belfast City Council is an important
wheel in this whole exercise, and I should like to know which options it is
for and against.
I apologise for the absence of colleagues who are engaged, as are many others,
in meetings elsewhere. We are fairly up to speed on the situation surrounding
At the last meeting, I said that Belfast harbour did not really affect people
in rural constituencies. Those on the periphery did not pay much attention
to it until Lord Dubs came to a meeting of Magherafelt District Council
and said that the Toome bypass project was contingent on the sale of Belfast
harbour. Cllr Dodds has rightly said that that has created tension between
rural and urban constituencies.
People who live outside Belfast are ignorant about what is going on at Belfast
harbour. They were not even aware that Belfast City Council had set up a committee
to deal with the harbour. It would be useful for that committee to arrange
to visit areas such as Magherafelt and others west of the Bann. It would help
to put people in the picture and would enable them to air concerns about how
the future standing of Belfast harbour might affect or disadvantage those areas.
A few more questions can be taken, and then they can be responded to as a
What distinguishes Belfast from other ports is the fact that there is a substantial
amount of land attached to the port. Does Belfast City Council have a definitive
view on how that land could be developed in the public interest? The question
that many people are now asking, leaving aside the port and its operations,
is "How can that land be developed in the public interest, and under public
control, if that is necessary to protect the public interest?"
Mr Dodds, you have three comments there. Two or three members still want
to speak. To avoid forgetting some of the points that have been made, do you
want to deal with those before taking the next few questions?
Yes, Mr Chairman, and I am happy for colleagues to come in on this.
The first point was about the council having a definite view on the matter.
Certainly the council and the committee will look at this issue in considerable
detail. We did not want to do what is sometimes the easiest thing to do, which
is to pass a resolution after a cursory hour or hour and a half of debate and
adopt it as the council's position. The committee has tried, and will continue
to try, to reach decisions that are based on full consultation, discussion
and looking at the options, thus preparing our views before submitting them
to the full council. We are doing that in relation to a whole range of issues.
Individual councillors have their views on preferred options, but it would
be wrong for me to advise on any particular option in advance of the council
reaching a decision. We will come to a view on this. However, I can say that
the options of doing nothing, undertaking a simple trade sale - as was done
in relation to the airport - or perhaps remaining as a trust port would not
find much support.
Much work should be done in considering whether the port should become some
sort of semi-state body as opposed to simply opting for public/private partnership.
We do not think that enough work has yet been done in exploring that option,
and that issue could be developed further when we come back.
The views expressed on the proceeds of the sale are echoed by all parties
across the Province. I do not want to make a political point and there is no
particular edge to what I am about to say, which is that when Chancellor Gordon Brown
came to the Province, his announcement about all the money that was to be made
available for infrastructure projects got many headlines just in advance of
a certain very significant vote.
Some of us in Belfast were busily trying to publicise the fact that it was
at the cost of Belfast port. That somehow seemed to get buried in the detail,
and we were trying to point out that there is no such thing as a free lunch
and that something would have to be sold off to pay for it.
The Council's job is to take these issues on board. We shall talk to people
in Belfast and in government, and we should also talk to local government colleagues
throughout the Province. We should deal with concerns and inform people of
our views and of Belfast City Council's role in relation to the port. We must
follow up such matters.
With regard to the final point about the development of the land, the guiding
principle should clearly be that the land be developed as part of a wider,
strategic plan for Belfast and Northern Ireland. Our concern is that the
land will be developed, without reference to what is going on elsewhere, in
Belfast and in the Greater Belfast area, in the interests of private companies
who will be selling off or developing land in a piecemeal fashion. We have
already seen this happening at the harbour in the case of the D5 area,
which is being used for supermarket development and so on.
The unanimous view of Belfast City Council's planning committee, which includes
representatives of all parties - and the Chairman knows this, as he has been
heavily involved in the work of that committee - was that this was a bad development
for Belfast because it would take shops and customers out of the city centre
and increase traffic in that part of the city. This was not in keeping with
the overall plan for the city - and, yet, it went ahead.
We want to see that land being developed as part of a strategic plan for
all of Belfast, and not just as a sort of island where things happen without
regard to what is being done elsewhere. It is right in the heart of the city,
and, as Alban Maginness has already said, represents a massive amount
of land, the majority of which is not used for port-related activity. That
is what we must bear in mind when we are discussing the privatisation of the
port, and we have to be very careful about who has control of the land and
the implications of that for the future of the city and of Northern Ireland
as a whole.
We tried to arrange meetings with the Harbour Commissioners and with Lord Dubs,
and the first time we succeeded in meeting them was in February of this year.
So, for two or three years, they put us off, before, eventually, coming
along with their own proposals. We do not believe that that is true consultation.
We will be taking a different approach. We will actually be consulting the
people, rather than just giving them a list of options from which to pick.
We will listen to all their views and come up with a proposal which will suit
not only the people of Belfast but the people of Northern Ireland as a
whole. We are talking about the future of the port and not just about its future
for the next five or ten years. This is a long-term issue, and we have to get
it right this time for the benefit of all the people. There must be proper
consultation with the people about their wishes for the future of the port.
There is a need for a more comprehensive options analysis and appraisal,
and - as we have just heard, with regard to the Toome bypass - that should
be done alongside consultation with the local council. We need to consider
examples of successful practice elsewhere, including the port of Dublin, and
we need to understand that there is a broader picture.
We would fully support an extension to the consultation process to ensure
that all interested parties have their say. We felt that the council had been
snubbed and our views on this issue ignored. It took a long time to get Lord Dubs
to meet the council to discuss its proposals, and, in general, the process
has not been sufficiently transparent.
We need wider consultation. This Committee should consider afresh the views
of Belfast City Council, which take into account the overall context of sustainable,
economic development for the city and for the rest of the North of Ireland
I want to take two more questions because, although we will be returning
to this issue on 22 April, some people have expressed a wish to speak
I will be very brief. I may be reiterating some of the concerns of Mr Tierney,
but he will keep me right if I am not. It seems to me that, in general, your
presentation fails to address, first of all, the commercial considerations
that have given rise to the consideration of the future of the port. I think
that those commercial considerations are threefold.
First of all, in terms of commercial activity, as indicated by its profitability
levels, the port has reached a plateau after a considerable rise associated
with very considerable amounts of European Union funding, which under any future
possible scenario - and whatever possible scenario exists should be utilised
for the future - would simply not be available. The third consideration is
that we have within a small island the potential for very considerable competition
All of those factors give an imperative and an urgency to the consideration
of the commercial structures that will guarantee the future of the port. As
has been quite rightly said, this is integral to the future prosperity of Belfast
and, indeed, to Northern Ireland as a whole. However, having established
all that, legitimate concern has been expressed about the issue of the land
and how that land might properly be developed in the interests of Belfast.
You have suggested that it should be done in terms of an overall strategy for
the development of the city - I am not aware that such an overall strategy
exists. As well as that, when it comes to a consideration of the PPP option,
that is somewhat dismissed on the basis of a fairly low-level argument involving
resorting to the concepts of fat cats and feeding shareholders.
The simple fact is that any commercial business will not, in some irresponsible
way, feed its shareholders. First of all, to feed its shareholders, it has
got to make a profit. Secondly, it has to retain out of that profit some of
the resources for future capital investment, replacement of capital, and so
on. If it does not do that, it will go bust. The market will destroy it.
The golden share option also needs to be considered. Can it just be dismissed
as of no significance? The PPP option is seen as a sort of fat cat option.
That is, I think, not taking the PPP proposal seriously. The final difficulty
with your presentation, as has already been mentioned, is that, despite your
emphasis on the urgency of the situation, it is quite obvious that you have
no options and very little idea about what options you might favour. You talked
about further consultation. There is not an unlimited amount of time available
for all of this. A responsible council, which I consider yours to be, might
at least have been expected to come up with some sort of prima facie position
that it might want to support without committing itself to any given option.
I was going to preface my comments by saying, like Paddy Roche, "I
will be brief". I would concur very much with what Mr Roche said
and with what my colleague John Tierney said earlier, that there is very
little in the presentation that I could disagree with. However, I am very concerned
that on one hand we have this sense of urgency and on the other hand, while
you have dismissed the five proposals, you have not been very forthcoming in
bringing forward your own proposals, although Cllr Stoker has said that
the wider available options will be considered. So I agree with what has been
said. There is a sense of urgency but there has also been a failure to look
at other options.
I have one specific question. Could Cllr Dodds or the chief executive,
Mr Hanna, advise me if there is a precedent of other cities buying out
ports and if that is a possible option that you might look at?
May I deal with this. The sense of urgency arose, in our view, because the
Harbour Commissioners wanted to complete this privatisation before the Assembly
was up and running. There was no sense of urgency on our part. The sense of
urgency has all been generated by the Harbour Commissioners. The profit is
£6·5 million a year after tax, so, in my mind, there is no sense of urgency.
It has been generated by the Harbour Commissioners themselves.
If there is a precedent for a city buying out the port, will you look at
I know of none in the United Kingdom. I understand that Dublin Corporation
has been involved in the arrangements for the port in the Irish Republic. However,
given the arrangements for ports in the United Kingdom- trust ports and
various others- I am not aware of any local authority having a direct ownership
arrangement. Obviously this is something that we could look into.
The port of Dover is a trust port with extended powers, but the council does
not own it. That is probably the closest to such an arrangement, and it operates
The Committee should be aware that the first time that Belfast Council was
briefed by the Harbour Commissioners on their proposals was 8 February.
Lord Dubs only came to see us after that and in spite of the fact that
we have been asking for meetings and briefings for a long time. There was no
lack of attention or diligence on our part, unlike the Harbour Commissioners.
We, as elected representatives, will be doing everything in our power to deliver
in the best interests of the people we represent.
I will pick up on a number of points that were made. Mr McClelland alleged
that we had dismissed the five proposals. We made it very clear that we have
not done that at all. Mr Roche surprisingly, given his enthusiasm for
the privatisation approach, has not mentioned the golden share. I thought that
he would want rid of that, because it is clearly a drawback to the tremendous
profits that could be made by privatisation. The Harbour Commissioners have
said that the tension of a golden share, 25% et cetera, would actually be a
brake on the commercial success of the port. It would not allow a totally free
hand. I did not hear him say anything about that but he may have on other occasions.
He said that we should remind ourselves of the success of Dublin port but
that is not a privatised port, it is a semi-state port, and when we talk about
a semi-state port, we do have some substance to what we say. He should look
carefully at how Dublin is actually set up.
His sweeping comment about EU funding is entirely the line of the Harbour
They say we will get no more funding from Europe under any circumstances.
I do not know how they can say that. Certainly they will not receive any under
this single programming document. We have pointed out in our document - and
I hope that Committee members have read it - that the European Commission has
published a framework for action for 'Sustainable Urban Development in the
European Union'. This framework aims at better co-ordinated and targeted community
action for urban problems.
Consideration should be given to this document as there are many issues to
do with the proposed privatisation of Belfast port and things associated with
that which fall under its remit. We cannot say definitely that the port of
Belfast will get European funding, but neither can we say that it never will.
Mr Roche said that he was not aware of an overall strategy. The strategy
is made clear in the Government's paper 'Shaping our Future' and in the follow-up
to that as well. A Belfast metropolitan strategy is to be developed, and it
will be the overall strategy.
Mr Dodds has come as near to misrepresenting my position totally as anybody
possibly could, and I will take this up on a future occasion.
The Harbour Commissioners stated in their verbal submission that, in future,
there would be no European funding. However, in their written executive submission,
they provided a slightly different slant, because they claimed that no further
grants were likely.
Section 7.3 of Belfast City Council's written submission states
"Furthermore, the European Commission have published a framework for
action for 'Sustainable urban development in the European Union'."
Section 7.4 states
"The issue of urban development will receive much higher priority in
the new Structural Funds Agenda 2000. It is therefore important that the future
considerations for the Port take these issues on board so that potential resourcing
can be maximised."
According to Belfast City Council, European funding will be available. Please
explain how one comes to this conclusion.
I read in one of this week's national papers that the golden share will not
be recognised in European law. However, Belfast City Council claims that there
will be no objection to the golden share under European law. It seems that
in future the golden share will have a different status under European law.
We shall need to look carefully at that anomaly.
I should also like further clarification on Mr Dodds's submission regarding
the sale of Belfast port.
The document which Cllr Dodds showed to the Committee - and copies will
be made available to committee members - clearly states that, when considering
applications for the next structural funds round, the European Union will give
a significantly higher priority to the concept of sustainable urban development
than had been the case in previous rounds. The Harbour Commissioners have always
assumed that there would be no further European funding.
However, the document shows that there will be many opportunities to attract
and maximise European funding for the port and, in particular, to develop the
land around it, under the framework of sustainable urban development. That
funding opportunity, which the Harbour Commissioners dismissed, should be considered,
regardless of the port's future structure. If the port were privatised, the
new private developer would seek European funding. To say different would be
The document details the European Commission's plans for the new structural
funds and the elements that it will be looking for in any application for a
single programming document for Northern Ireland. Ultimately it will be
for the Assembly to shape that new single programming document.
I apologise to our visitors for the brutal onslaught by our colleague Mr Roche.
I hope that it will not prejudice our search for the subtleties of the details.
I am at a disadvantage in that, like some other members of the Committee,
I have a foot in both camps. The rumoured valuation of the Belfast port at
£100 million seems ridiculous. I should like to have the port valued.
Perhaps the council could comment that.
Two issues emerged from Mr Dodds's presentation. The functioning of
the port - which is perceived by many as the primary issue - is the lesser
issue when compared with the use of the land bank. Perhaps Mr Hanna could
outline the implications for Belfast of the port's privatisation.
Mr Dodds also spoke about the golden share. Like Mr Morrow, I think
that the golden share is of no value as it can be removed at a stroke.
Is there a case, or are you making a case, for Belfast to have a meaningful
equity stake in the port in future? My main point relates to the valuation
of the port. What happens if this land is allowed to go? Are you saying that
the use of the land is a more important issue for Belfast than the functioning
of the port?
There is no doubt that the use of the non-port land is the crucial issue
for many people. The golden share certainly merits further exploration. One
of the great selling points of the preferred option is the protection that
will be provided by the golden share. If a golden share is not available, or
if it is not worth much, that would raise questions about that option. That
will have to be explored. If an effective golden share were to proceed, there
would be a role for the council in relation to its ownership or management.
When we discuss Belfast, we tend to mean the metropolitan area. Belfast is
almost surrounded by hills, and it has a lough in front of it and a fairly
tight boundary. There is little development land in the city outside the port.
For some years, out-of-town developments have been causing considerable difficulties.
There are proposed developments at Knocknagoney, Castlereagh and Newtownabbey,
and the city centre is undoubtedly beginning to creak at the seams, certainly
in terms of retailing.
In other areas of the city development is proving beneficial, but developments
such as the Waterfront Hall and the Odyssey project are not so much in
the retailing area. It will be for the Assembly to decide the matter, but whatever
its decision the question of land development is crucial to the future development
of Belfast City Council.
The 'Shaping Our Future' document is not yet in its final form. It is still
the subject of discussion and consultation, and we made substantial submissions
about it through our consultants, Building Design Partnership. The authors
of that document rightly take the view that the city is the heart of the region
and that the region needs a healthy, vibrant city.
We have lost 25% of our population since 1973. Some of that was to be expected;
people are better housed than they used to be. Like many other cities, Belfast
has the problems of out-of-town development and the associated increase in
traffic. At a meeting yesterday, the Department of the Environment's Roads
Service again proposed driving a new road through the city centre. That road
would cross the gasworks site, potentially ruining a development site which
could have been of major assistance to people from both sides of the community
in Donegall Pass, the Markets, Lower Ormeau and other parts of the
The port and the development land are crucial. We have not come to a final
view, which is hardly surprising given the way we have been consulted. The
city council will continue to try to come to a rational view. It affects other
people as well, and they will also have to adopt a view. You have only to walk
around Belfast to realise that, unlike other cities, it does not have the development
sites, outside the port, that it needs. Liverpool, for example, which has,
in many ways, been struggling in recent times, has plenty of land available
for development. Other cities have that benefit too; we do not.
I want to emphasise what has already been said: this issue must be taken
seriously, and we must not be left a hostage to fortune in terms of future
When we referred to the urgency of the matter, we were not criticising your
committee - we appreciate that you were not consulted in a way which enabled
you to reach a decision - but the urgency lies with this Committee. We have
to present a case to the Assembly and make a recommendation on the way forward.
When we have heard all the evidence and there is no final decision from Belfast
City Council - a major player in the port - then it will become urgent. We
must know your final decision.
It is important for us to know how urgent urgent is. There is a difference
between what is urgent and what is important. We do not know how quickly the
decision will be taken. Let us be honest: we were being bounced on the basis
that if this were not done, roads around the Province were not going to be
Wearing another hat, I could say that there may be a substantial argument
for saying that bypasses on the Westlink are a good thing, but normally, if
you go to hospital for a bypass, it is not because your circulation is good,
you go because you have a problem with it. We should reduce the amount of traffic,
get people to use public transport; we should not continue to swathe roads
through the city destroying inner-city communities; we should provide adequate
development that will create jobs.
We appreciate what has been said, and we look forward to speaking to the
Committee again. If and when there is a new Minister we hope he will not just
come in and make a decision. Your Committee has an agenda, and we would also
need to talk to the new Minister or the existing one about this issue in some
detail so that he and the Assembly can take fully informed decisions. It is
an issue for us, and, much to our anger as a council, we have not been involved
as we should have been until recently. We will now be working hard and diligently
to take the matter forward.
Thank you for the submission. We have had a good session; we did not expect
it to last quite so long. Some very important questions have been asked and
have been well answered. There will be another opportunity to talk to you on
22 April when you will, perhaps, elaborate on the responses you have given
today. Thank you very much.
Have members received this framework document which relates to sustainable
urban development in the European Union?
If it is left with the Committee Clerk I will make sure it is copied and
distributed. Again, thank you all very much.
AD HOC COMMITTEE
(PORT OF BELFAST)
(Mr S Wilson in the Chair) Witnesses:
MINUTES OF EVIDENCE THURSDAY 29 APRIL 1999
Mr C Doherty, Mrs M Breslin
Mr S McIlvenny and Mr S Gillespie
(Londonderry Port and Harbour Commissioners)
Welcome to the Committee. We have all received your very comprehensive document.
We would like you to take about 10 minutes for a presentation and then
we will ask you some questions.
The Londonderry Port and Harbour Commissioners are grateful for the opportunity
to appear before the Committee. We wish you every success as you undertake
the difficult task of shouldering the burden of political direction for us
at the dawn of a new millennium.
We wish to state from the outset that the Londonderry Port and Harbour Commissioners
are opposed to the transfer of the port of Belfast to the private sector. Such
an important and profitable transport infrastructure, well managed and operated,
should remain in the public sector where its assets and profits may be a source
of investment and an economic catalyst for the benefit of the stakeholders,
who are not only the harbour employees and its customers but the people of
the Province and beyond.
The Londonderry Port and Harbour Commissioners are charged with operating
at all times in the best interest of our port. We have therefore considered
the options for changing our status. The option to transfer the undertaking
into the private sector has only recently become available by way of legislation
enacted under the previous Administration.
It is our view that social performance is just as important as economic performance.
As a trust port we have a unique relationship with the Government, our customers
and our community. We are a part of the city that we work in, of the lives
of the people we employ and of the country and island that we live in. It would
be short-sighted to pretend otherwise. Adherence to an ideology is not sufficient
ground for contemplating a change of status: any change must demonstrate life-cycle
benefits to all interests. However, as one would expect of a board charged
with good corporate governance, we regularly give the issue an airing. Currently,
there is a consensus among the Commissioners that we should continue the existing
system of ownership.
Both Warrenpoint and Londonderry have elected to remain trust ports. It is
widely recognised both by the Government and by our customers, the port users,
that the Northern Ireland ports are efficient, cost-effective and flexible
insofar as they operate within restrictive legislation. The Government have
acknowledged that the trust port has an important part to play in regional
regeneration. Indeed, Warrenpoint was expressly set up for that purpose in
1971. The Government and ports both now recognise the importance of public
facilities being strategically located in the south-east and north-west of
the Province. They can be catalysts for inward investment, underpinning existing
indigenous business and, therefore, jobs, and they can, if unshackled from
restrictive legislation, become regional and economic dynamos while retaining
their assets within the public sector.
To this end the Warrenpoint Harbour Authority and the Londonderry Port and
Harbour Commissioners have undertaken to produce new model legislation to prevent
this from happening. Many months of discussions and consultation have produced
the documentation which is enclosed with our submission. You will see from
that documentation that it is counsel's opinion that such powers might be conferred
by way of a Harbour Revision Order using the 1970 Act as a vehicle - in other
words, simple secondary legislation. It is our opinion that this is the road
that the port of Belfast should follow.
You have told us, Mr Doherty, what Derry port is doing and what you are pushing
forward, and you have said that the port of Belfast is in a similar situation.
Can you give us an assessment of the detrimental effects on Derry, Warrenpoint
and other ports should what is proposed for Belfast actually happen?
This is a grey area, and it is difficult to give an answer. You will notice
that in trying to be extremely honest we included in our submission a report
from ERM Economics, a firm that was contracted by the Department of the Environment
to analyse the impact of a privatised port of Belfast upon the ports of Larne,
Derry and Warrenpoint. This report suggests that the impact on Derry would
be negligible, but it was written without any consultation with Derry, and
I understand that Larne and Warrenpoint were not consulted either. We have
the opinion of London-based consultants, although they have some knowledge
of Northern Ireland since they have done work for many ports here.
Recently we tried to redress the balance by suggesting to the Department
that another report be produced, again using ERM Economics, but this time with
consultation with the ports. In my opinion that report, if it is published
- and I sincerely hope that it will be - will suggest that the effect on Derry
would be significant.
Derry is particularly peculiar in that it is geographically isolated in the
north-west, and that would protect some of its business. I have no doubt, however,
that a privatised port which was answerable to shareholders and institutional
investors would be compelled to develop its business. Its profitability to
shareholders, to investors, would come about by its developing the business.
Now if you, as a rough rule of thumb, consider the gross domestic product (GDP)
in Northern Ireland to be between 2% and 2½%, if nothing unexpected happened
in the ports, you would expect growth to be at about the same level. But if
the port of Belfast were to grow significantly, it could only grow at the expense
of those other ports which are closest to it - Warrenpoint and Derry.
So, to answer your question directly, it would not take very much business
to be removed from the north-west or the south-east for that to have a serious
impact upon those ports. Derry, for instance, is unique in that it is an "effective-bulk"
destination, and if you remove one of the major bulk customers, the impact
Derry is a new port. To anyone from Derry I ask forgiveness - I know that
there has been a port there for 1,000 years. But we like to think that it is
a new port, five years old, in that it was relocated from inner-city Derry
to Lisahally. Thus it is brand new and in that sense under-infrastructured.
We carry a significant amount of current debt because we are trying to develop
the business and act as the engine of economic regeneration for the north-west,
one of the things that we were set up to do by Act of Parliament.
I am sorry if I sound a bit vague, but in our opinion the impact would be
severe simply because a privatised port of Belfast would have to reward its
shareholders by developing its business, and it could only grow above the level
of GDP by taking business from us.
Mr McIlvenny's comments lead me on to my question. This discussion is
about Belfast port's possible change of status and whether that will have a
knock-on effect. You obviously feel strongly that it would have an effect on
Londonderry, and I am sure that Warrenpoint feels similarly. You will be aware
of the rationale behind the possible change of status and the amount of money
that would be tied up in capital roads programmes should that change in status
take place. Given the fact that both Londonderry and Warrenpoint have a particular
niche market at either end of the Province - albeit one that could be eaten
into by a radical change in Belfast - if we were faced with Belfast's status
quo not being tenable, we would obviously want to see what safeguards could
be built in, not only for Belfast but for Northern Ireland.
Have you looked at what possible options might safeguard not only Londonderry
port but the whole of Northern Ireland - quite apart from the Belfast submission
in relation to a public and private partnership? If there were sufficient safeguards,
if Londonderry and Warrenpoint ports were safeguarded, and there was a move
to enhance Belfast and help it to grow - but not at the expense of Londonderry
or Warrenpoint - is that something that you would be prepared to contemplate?
Or are you saying that maintaining the status quo is the best option for Belfast
as well as the rest of Northern Ireland?
It is our view that the assets should be retained in the public sector. Belfast,
along with Warrenpoint and Derry, should be allowed to act more commercially.
The outcome of our own review process and that of the Department of the Environment,
Transport and the Regions (DETR) in London suggests that trust ports are doing
a magnificent job. For the most part they are well-run, well-managed, very
efficient and cost-effective, but they are restricted by the legislation under
which they operate.
What we are saying is that Belfast port should be allowed to act more commercially,
and, in order to do that, it could, perhaps, acquire powers similar to those
Warrenpoint and Derry wish to achieve. This would enable them to act as commercially
as they like but also retain the assets and profits to be reinvested in the
For instance, representatives from Belfast port will tell you - and may already
have told you - that the current restrictions on the Westlink are a major impediment
to doing business with the port of Belfast. I understand that they have tried
to do something about that in the past but were restricted by the legislation
under which they have to operate. They should be unfettered and unshackled
from restrictive legislation and permitted to operate under legislation similar
to that which we have proposed. This, we believe, would not have to be primary
legislation but could be done by simple harbour provision order, which lies
before Parliament for six weeks. If it is supported by the Government, of course,
there is no difficulty. With such legislation they could double the size of
the Westlink if they so wished; they could dual the carriageway from Belfast
to Warrenpoint if they thought it was an imperative that would allow their
business to grow.
I hope I have answered your question. What we are suggesting is that if the
appropriate legislation were in place, they could act as commercially as they
wished and could ensure that everything that the general public in Northern Ireland
and you, the elected Assembly, want to happen did happen.
I have a brief question. Mr McIlvenny, you said in your submission that
Belfast growth could only come about at the expense of the other ports'port-related
That is the case.
Paragraph 2.4.1 of your submission is about the move to Lisahally and the
growth in throughput there. Between 1993 and 1996 there was - admittedly from
a small base - a 40% growth in throughput. The Belfast port has seen low growth
in the past three or four years. Presumably Londonderry's growth was not at
the expense of anyone else; it was just intrinsic growth in the north-west.
Do you see that growth continuing?
It was because customers realised the benefits of the reduction in unit costs
from allowing bigger ships to come in - that was the rationale for moving to
Lisahally. There is a limit to how big Derry port can grow because it is a
bulk-import destination and its principal commodities are animal feed and coal.
The coal business is declining in most of the Province yet consolidating in
the north-west, although there is some decline taking place there, and that
will probably accelerate if other issues come into play.
Because we serve a rural and agricultural community we do not have a vast
industrial base like Belfast has. Animal feed was a major component for our
port, but BSE and the strong pound have put paid to that. Now we are diversifying,
and developing the ability to diversify, to create the unitised business which
is lo/lo and ro/ro. As our report says, that probably would not happen if Belfast
went into the private sector.
I have a question on your porposals for restructuring or for changing the
port status as described, for instance, in section 6 of your document. On the
financing aspect your stated that the trust should be able to borrow and raise
money in any manner to secure the repayment of the money borrowed et cetera.
The Belfast Harbour Commissioners have said that if you were to diversify
in all of the other ways that you have talked about in previous sections of
the submission, the power to borrow would simply not be sufficient. There needs
to be access to equity capital. That was the rationale behind their proposal
for the public/private partnership, that there would be proper gearing and
leverage of funds. Your idea of diversification would be more modest than Belfast
port's. Are you satisfied that those extra financing powers would be sufficient
to enable any trust port to fulfil the kind of diversification aspirations
which are outlined in sections 1, 2 and 10 of your proposed changes?
Forgive me if I hesitate to comment on Belfast specifically, but this is
probably best demonstrated by giving an example. Our borrowing powers in Derry
are restricted to about £300,000 yet we have just come through a period during
which we have spent £30 million on constructing a new port. Clearly you could
not do that with a bank overdraft of £300,000.
Although restrictive, there is provision in the current legislation to allow
us to approach the Minister. We could simply write to him and say that the
port was going through a phase of expansion and that we needed him to lift
our borrowing requirement to £4 million. The Minister has done that on several
occasions in the past and I sincerely hope that he will do it in the future.
So the matter is controlled by the Minister although we have not found that
very restrictive in the past. We have had sufficient funds to allow us to do
what we wanted.
Dover Harbour Board, which runs one of the most successful trust ports in
the United Kingdom, invests tens of millions of pounds and is controlled
by similar legislation. They do not find it in any way restrictive. However,
one wonders how much more finance you would need if you had £20 million
cash in the bank.
Your submission is somewhat similar to the view given by Belfast Harbour
Commissioners though it is at variance with some of the evidence we have received
from other people in respect of EC or EU grants. Paragraph 6.2 of your
"it is most unlikely that EC funds will be available to ports in the
next, and subsequent, EC programmes".
Later in the submission there is a reference to the fact that you had discussions
with the Department of the Environment and with another organisation whose
name I cannot recall. The reference refers mostly to Objective 1 status.
Did you specifically raise the question of the availability of infrastructure
funds from the funding with the Department of the Environment, and was that
the information you were given?
There is a great reluctance to allow the ports to access any more funds from
Europe in the structural funding programme post-1999. We put it to the Department
of Finance and Personnel, during the consultation process, that we were a special
case. We were a brand new port, we were under-infrastructured, and we asked
that it not let us swim by ourselves just yet.
There will be a change in emphasis in the new peace and reconciliation funding,
which I understand has been secured in Europe. It will be economic-regeneration
based, and we hope to tap into some of those resources.
We are about to go through a major expansion programme without the benefit
of structural funding. It is a major challenge for the port of Londonderry,
and we will be borrowing very significant sums of money to put the infrastructure
in place. We believe it is right and proper to do this to allow not only the
port but the north-west of the Province to benefit from the new economic order
which we hope is round the corner.
Let us be clear. You have been given no clear indication by the Department
that funding will not be available from the EU towards this?
There is a suggestion that no funding will be available post-1999 for the
ports, but we have not heard anything definitive on that.
What you are saying is similar to what the Belfast Harbour Commissioners
were saying though it is at variance with what other people have said.
I have a number of questions. I think the three ports have argued that extending
the legislation in some way would assist them. Belfast Harbour Commissioners
said it would free them up to a certain extent. It would cover some, but not
all, of their difficulties. You have referred to the possibility that there
is sufficient scope within the present legislation for borrowing and for ensuring
that a more commercial aspect is brought into the whole thinking of the ports
in Northern Ireland.
There are a number of issues that people have not really looked at. We do
not want to ensure that the public sector is a cover for uncommercial operations.
People, even those in the public sector, have commercial targets. It seems
to me that the Belfast Harbour Commissioners were saying - and I think Mr Campbell
mentioned it before - that as far as they were concerned they had really reached
a plateau, and they did not expect any growth in the field within the foreseeable
There is a dark cloud on the horizon in the shape of Dublin port. Over the
last two or three years Dublin has become more commercially active, and this
will increase in the next three or four years with the help of the Government
down there, the opening of the new tunnel and the reduction in the number of
people working in the port. These factors are driving costs down to such an
extent that it will become as commercially attractive to people in Northern Ireland
as some of the ports here.
In the future, with the restrictions in the EU grants to ports, it is likely
that some of the trade going through the ports here will move south to Dublin.
The derv issue is an additional difficulty, with enormous benefits being generated
south of the border. Indeed, some companies are thinking about relocating in
or near Dublin because of the enormous savings to be made in that field.
If we are talking about making ports more commercially active, then why not
be totally commercial, come out of the public sector altogether and compete?
What is the difficulty in saying that we have a product that cannot compete
and that therefore we should remove all public interference and go totally
There are merits in that. There is already intense competition among the
ports in Northern Ireland and the ports on the island of Ireland. Belfast does
compete with Dublin, but it is not necessarily the port itself which determines
where the traffic goes. Most of the competition is not necessarily among the
ports per se but among the shipping companies. That is what drives competition.
The port provides the infrastructure and, in Northern Ireland terms,
provides a liberal charging regime. It is largely the ferry companies that
create the competition, and the ports' primary function is to create the necessary
infrastructure. Port charges are not necessarily a major portion of the cost
of shipping. For example, there is the cost of getting a box from the middle
of Ireland through one of the ports to Great Britain. The major factor is the
shipping cost, and the competition lies within the shipping industry.
That is one of the costs. The other costs are in getting the box to the port.
Yes, transport costs.
The point that I am trying to make involves the differences in the commercial
cost of fuel for taking the box from here to the port. The differential between
here and Dublin is so massive that I am sure it is going to affect commercial
operators - even ferry companies - once it reaches the point where it is cheaper
to ship a box through Dublin than Belfast. People are looking at this from
a commercial aspect.
It is difficult to understand how a privatised Belfast port would operate
any differently from a Belfast port in the public sector to alleviate haulage
costs. It is something that the port has no influence over.
Perhaps I could return to the question of difference. If Derry and the other
ports had more modern legislation to allow them to act almost as commercially
as a privatised company and Belfast port went into the private sector, the
difference would be that the profits of Belfast port would be distributed among
its shareholders but the profits in Derry would be retained for further investment
in the port. That is the only difference - it is private profit and public
That is not the question that I am asking. You are talking about driving
this to almost the point of commercialisation but still within the public sector.
What would the benefit be of those companies going totally commercial? The
benefit to people who live in Northern Ireland is that there would be
no public subvention at all, yet corporation tax and income tax would have
to be paid.
There seems to be a belief - and I am not saying that it is necessarily wrong
- that everything, including in this instance all the ports, must be kept within
the public sector because that is the only way to ensure a benefit for all
the people of Northern Ireland. Might it not be the case that it would
be more beneficial to the people of Northern Ireland if all the ports
I suppose it could be the case. All commercial judgements include an element
The size of the landbank at Belfast has been a major issue. Can you tell
us what size of landbank the Londonderry Commissioners control, and whether
you consider that the 2,000-acre landbank controlled by the Belfast Harbour
Commissioners creates an unfair advantage with regard to any private development
of that port, given the potential of that land for development and for the
subsequent generation of what could be substantial profits?
With regard to the first part of your question, in the city of Derry we retain
an area of about 14 acres which is on long-term lease to the Ministry
of Defence. At Lisahally, we have contracted to buy 10 acres, subject
to planning; and we have another area of approximately 16 acres situated
just slightly above the port, although its topography is not awfully good,
and it would be quite difficult to develop.
The landbank at Belfast has been acquired by the port over the years, and
one can see the benefits to the city of developments such as Laganside. There
is, without doubt, a significant and valuable landbank there. We hope, however,
that, if Belfast port were to transfer to the private sector, any extraordinary
profits that might be made from that land would not be used to reduce charges
and undermine the ability of other ports to compete. Nevertheless, that landbank
has grown up around them - they have reclaimed it, and it is part of their
I should like to change tack, because, so far, we have talked only about
privatisation. What would your view be if it were to become a semi-state body
or a trust port with extended powers. I should not want you to get the impression
that we have already taken a decision to privatise it. Other things could happen,
and we need to explore those as well. If it were to become a semi-state body
or a trust with extended powers, what would that mean for the Province as a
whole, and what effect would that have on competition with other ports?
We wish the port of Derry to remain a trust port. We believe it brings particular
benefits, the principal one being that we can retain our profits for reinvestment.
We operate as a trust port, and those profits are not our money. They belong
to our customers and, under the legislation, there is an expectation that they
will be reinvested for the benefit of our customers and of the public.
We favour the option of a trust port with extended powers. This is not because
of the impending privatisation of Belfast port, but because of the new legislation
enacted in the Republic which gives extremely wide powers of discretion as
regards commercial activity to their ports, which were essentially trust ports,
albeit with semi-state sector status. The legislation in the Republic grants
these ports freedom to act commercially. They may be semi-state bodies, and
they may have to cope with the heavy hand of the relevant Minister, but they
have the ability to do just about anything they wish. It is similar to what
we are proposing for the draft legislation to allow us to act commercially.
Our draft legislation is framed in a style that is not normally used by parliamentary
draftsmen. In the report that was published by the Department of the Environment,
Transport and the Regions, Glenda Jackson says quite specifically that
trust ports have operated round the legislation. An examination of some of
the activities in which we get involved shows that we do that, and such a practice
is not good for a modern business. We agonised over whether we should frame
the draft legislation in a way that only parliamentary draftsmen would understand,
but elected to draft it in a style that everyone would understand so that there
would be no doubt as to what we could or could not do.
I have a question which relates to a comment by Mr Beggs. One of the
matters that we have had difficulty in establishing is the value that would
attach to the port if it were privatised. You have included a useful public
profit and loss account paper. It startled me to learn that the profitability
of some private companies is lower than the profitability of some of those
that have remained in public ownership. Your figures show that within a year
of privatisation the value of some concerns had increased because they were
sold again for about 100% more than the amount received on privatisation. Why
it is difficult to attach a value to a port? Belfast Harbour Commissioners
could not specifically state the value of Belfast port. We have had wide variations,
ranging from £100 million to well over £200 million. Why should there
be difficulty over such valuations?
Historically, because of the restrictions under which we were working, we
operated strictly as a port on port-related business. A private investor has
a much wider vision of assets. Within our legislation there is a sort of community
care factor, and that would disappear with a private investor who would simply
assess each asset and estimate its maximum value. The people who are involved
in takeovers or privatisations are experts. There are examples of public companies
that are not exposed to the wider world.
The value of Belfast port is anybody's guess. It could be based on rental
income, but whatever criteria are used, the private investor who buys it would
certainly look at its potential rather than at its current earnings. A private
company would have the ability to close the port if it did not work. That is
an extreme case, but if it had trust port status it could not close. Perhaps
that answers your question to some extent.
My chairman says that I also have a vision. We also have entrepreneurial
skills, but what restricts us is the legislation under which we operate. The
port should be seen simply as a facility, a place to which ships come and go.
That is what we are about, and that is the core of our business. However, all
ports, including those in Belfast, Warrenpoint and Derry have assets that are
utilised for other purposes.
You spoke about the need to expand the business. It is clear that not all
your energies are devoted to the port. People in Belfast say that if the port
is to survive, we need to look at it as a whole and not just at the facilities.
Is that what you are saying?
I think that vertical integration was mentioned in connection with Belfast.
Are you saying that for these ports to survive, not just port facilities
but other linkages into the port need to be looked at?
I can speak only for Derry. Ports have to act more commercially and there
will always be restrictions on what can be done. We had a massive injection
of public funds, albeit European structural funding, to produce a new port
after many years of decline. It was an old inner-city trust port, and there
will always be a conflict between civic aspiration and port activities. It
was right to move the port. If we are not to be a drain on the public purse,
whether it be a European purse or a local one, it would be better to allow
us to act more commercially so that we could replenish our assets over the
Could you expand on the impact of Dublin continuing to grow as it has grown
over the past three or four years. Will ports north of the border be completely
isolated or insulated against the commercial drive in Dublin, or will Dublin
be bound to take some business away from ports here?
The renaissance of Dublin port probably stems from the reorganisation of
its labour force under Noel Shandley about seven years ago. Dublin port
is also shackled by the appalling traffic problems around Dublin, but those
may be alleviated by the tunnel. It has managed to bring its costs down quite
significantly over recent years and has become more entrepreneurial.
Will it be a threat?
I do not see it being any more of a threat in the future than it is now.
Part of Dublin's success is due to the "Irish tiger" economy, which
has grown by 8% to 10% per annum over the past five or six years. That in itself
gives massive impetus to transport. Added to those factors are lower costs.
There will always be competition. There is currently intense competition between
Dublin and Belfast, and the business of both ports continues to grow. The acid
test may be if the Irish economy, north and south, declines in future years.
One might then see a better picture of which port the hauliers prefer to take
their business through. I do not see Dublin as a particular threat. It is certainly
not a major threat to Derry. I can see Belfast, Warrenpoint and Drogheda and
perhaps Waterford and Cork having difficulty with the port of Dublin. In terms
of Belfast, I really cannot answer the question as I do not honestly know.
There is intense competition between them now and they hold their own. I do
not see any reason why Belfast port should lose out significantly to the port
Even though the transport costs are enormous?
Even though the haulage costs, currently, are significantly higher.
That is the important point. Varying fuel prices and the changing value of
the pound come into play. Much significance has been attached to the current
position without the recognition that such values can fluctuate very rapidly.
Not so long ago the benefits operated in the other direction.
It was the opposite a few years ago. Most haulage companies have taken steps
to avail of cheaper fuel in the Republic. That is certainly the case in the
north-west and the south-east. I suspect that some of the larger hauliers in
Belfast have put some infrastructure in place to allow them to avail of fuel
in the Republic.
Let us say that privatisation of the port of Belfast does not go ahead. The
Government have placed a sword of Damocles over our heads because a lot of
the changes in the infrastructure, such as the Toome bypass, et cetera, hinge
on money being made available from privatisation. Would that have any impact
on the port of Londonderry? Would the building of a bypass around Toome have
an impact on the port?
The recent changes at Toome have greatly alleviated the situation there.
There are roads in the Province with traffic difficulties. But on the infrequent
occasions when I am caught in the massive traffic jams on the M25, on which
millions of people conduct their business daily, I wonder how they get their
goods from A to B. From time to time there are difficulties with the road at
Toomebridge and with other roads in the north-west, but it is hard to quantify
the impact of these difficulties on the port - all I can say is that it would
be awfully nice to have them fixed.
The potential extension of natural gas to the north-west and the drop in
demand for animal feed are fixed factors that seem to affect adversely the
port of Derry. These two bulk cargoes represent a fairly significant part of
your port's tonnage. The port of Derry is going to be adversely affected by
the predicted decrease in the tonnage of these two cargoes whether or not the
port of Belfast is privatised or its powers extended. These factors are going
to affect your port adversely, and, on looking at ERM's analysis, these factors
seem to be constant and inescapable. How do you react to these predictions?
Like any other manager I have to find ways of enabling our business to go
on in the face of competition from other ports. I do not think that we face
a fait accompli.
With regard to animal feed, our port serves a rural and agricultural community,
and it is expected that some level of animal feed will continue to come through
the port- particularly since the port serves the west coast of Ireland as opposed
to south Derry or the rest of Northern Ireland. This remains our expectation.
Coolkeeragh power station will finish anyway - it has a generation contract
until 2002 with a possible extension to the year 2004. We have recognised this
fact in our long-term corporate plan. These are threats, and we may have to
face them, but we will have to manage the process as best we can.
Looking at the ERM report I could not see where the actual decrease in the
use of the port would occur as a result of the port of Belfast being privatised.
Can you clarify this for me, leaving aside animal feed and coal which we have
We would worry about unfair predatory competition, the sweetheart deals which
are not unheard of in industry and business. Rather than discussing specific
matters, it is these deals that would concern us generally as they could result
in a complete commodity, rather than part of a cargo, being lifted out of the
jurisdiction of the port.
ERM talked about a decrease in the business of the port of about 5% over
a number of years and said that if the port were not privatised there would
be an increase in business in the port of Derry of about 16%. What I cannot
understand is, leaving aside coal and animal feed, what is the factor that
would cause the decrease?
The ERM report was compiled without any input from us, and I too wonder where
some of the figures came from. It would have been nice to have been approached
That seems to be a serious flaw in the compilation of the report. If Belfast
port were privatised or, indeed, if its powers were extended and Belfast was
able to compete - to use your term - "more aggressively", and given
a situation where you also had extended powers, do you not think that you would
be able to compete with Belfast on a level playing field?
I have no difficulty whatsoever with a level playing field. However, it is
the redirection of resources - and I have to choose my words very carefully
- that might, perhaps, encourage the lifting of a complete commodity out of
one port and placing it into another.
If there were no predatory deals or activities on the part of Belfast port
and if legislation and controls were in place to prevent that happening in
any event, would you then be in a position to compete with Belfast port in
whatever new form it had adopted?
Yes, that is right. However, perhaps I could add one thing.
We do not consider that the Competition Act is sufficient in itself. A person
who has been mugged will feel gratified when the mugger is subsequently apprehended
and sent down, but he will still have been mugged. For example, Volkswagen
was recently fined $64 million - or Deutschmarks - for anti-competitive
practices. They had no difficulty paying the $64 million, because they
had already acquired the business anyway. The Competition Act can, in our opinion,
only be used after the fact, and that is too late.
Thank you all for the presentation. The written and oral evidence has helped
with our deliberations. We will be hearing further evidence from others and
will be making a report at the end of the process.
AD HOC COMMITTEE
(PORT OF BELFAST)
MINUTES OF EVIDENCE THURSDAY 29 APRIL 1999
(Mr S Wilson in the Chair) Witnesses:
Mr D Connolly, Mr Q Goldie
and Mr E Curtis
(Warrenpoint Harbour Authority)
Mr Connolly, Mr Goldie and Mr Curtis, I welcome you to the
Committee. You were present during the previous session, so you will be aware
of the format. Perhaps you would give a brief summary of your views for five
or ten minutes, after which members of the Committee will, no doubt, have some
questions for you.
As chairman of Warrenpoint Harbour Authority, I wish to thank you for the
opportunity to address the Committee about the proposed privatisation of the
port of Belfast. May I introduce Mr Quintin Goldie, our chief executive,
and Mr Edwin Curtis, who is the enterprise development officer for
Newry and Mourne District Council and an expert on economic conditions in our
area. We also have in our team Mr Jim McCart, a member of the board
and the council.
The board of Warrenpoint Harbour Authority is opposed to the privatisation
of Belfast harbour. We believe that such a course of action would not be in
the best interests of Northern Ireland for the following reasons.
First, it is our opinion that such action would be detrimental to regional
economic development within Northern Ireland and would impose additional financial
burdens on businesses in the south-east and the north-west of the Province.
Warrenpoint Harbour Authority was established by parliamentary Order in 1971,
and the port of Warrenpoint was reconstructed by the Department of the Environment
for Northern Ireland during the period 1972-74. The construction of the
port was intended to be a catalyst for economic regeneration in an area which
was, and remains, one of the most socially-deprived areas, not only in United Kingdom
but in Northern Ireland terms. Mindful of this, the authority has adopted a
mission statement consistent with our objectives. It states
"Warrenpoint harbour will seek to operate profitably within fair and
competitive tariff arrangements so that the port is economically sustainable.
Its aim is to contribute as much as possible to the generation of economic
wealth in the port and its regional hinterland. Consequently, profit optimisation
to achieve its primary mission rather than profit maximisation will be pursued."
That is, or should be, the essence of trust port activity.
Over the past 25 years the port of Warrenpoint has played a key role in facilitating
the economic regeneration of south Down and the border counties. Currently,
200 people are directly employed within the harbour complex, and these
jobs are supported by more than 800 others in transport and related service
industries. The fact that the port contributes to an efficient cost base for
the area is of great importance. This facilitates local business keeping overall
supply costs as low as practicable. This effect is difficult to measure accurately,
but what is certain is that it is important to local business, as the economic
agencies can confirm. Any action which places in jeopardy these jobs and the
significant contribution which the port of Warrenpoint makes to keeping the
supply-chain costs of local business as low as possible is to be deprecated.
Our second main objection is that Northern Ireland as a whole may be
better served by the retention of Belfast harbour as a trust port with additional
powers, as recommended for trust ports following the recently completed review
of trust ports. Mr Goldie will explain further our reasons for some of
It is widely recognised that a network of modern and efficient ports is a
key element in the promotion and facilitation of the creation of economic wealth
in any region. Nowhere is this so important as in an island economy such as
our own. The key element of economic development strategy at European Union
national and local level has been the development of such a network in Northern Ireland
and substantial investment in the ports of Belfast, Larne, Derry and Warrenpoint.
Warrenpoint operates profitably and provides local companies with access
to Great Britain via the daily roll-on/roll-off service. Access to continental
Europe is facilitated through a twice weekly container service to Rotterdam,
a weekly service to Norway, Sweden and Denmark, and a scheduled service to
Finland. The management of Warrenpoint port is concerned that the port's viability
would be irretrievably damaged by a privatised Belfast port.
An independent report, which is enclosed in your papers at section 9,
was prepared by ERM Economics for the Department of the Environment in Northern
Ireland. It indicates the following potentially critical impacts that could
threaten the survival of Warrenpoint harbour were Belfast to be privatised.
First, the planned privatisation of Belfast port would pose a considerable
threat to the commercial viability of Warrenpoint, and that would have an impact
on the cost base of local businesses with consequent danger to fragile economies.
Secondly, the privatisation of Belfast and its consequent competitive behaviour,
notwithstanding the protection that will be afforded by the Competition Bill,
would adversely affect Warrenpoint's current price advantage with implications
for port throughput. ERM estimates that 25% of Warrenpoint's traffic could
be displaced within a 10-year period.
Thirdly, Warrenpoint will consequently be increasingly restricted to niche
markets serving local hinterlands, and its ability to offer a comprehensive
range of port services is likely to be adversely affected.
Fourthly, if as the result of the privatisation of Belfast a number of shipping
services relocate from Londonderry and, in particular, from Warrenpoint to
Belfast, existing users of those ports will suffer longer road haulage distances
than previously. For users of Warrenpoint those additional costs are estimated
to amount to some £2·5 million per annum less any net reduction that is
implicit in the relocation. In reality, if Warrenpoint harbour were to lose
25% of its revenue, the port would no longer be economically viable in the
long term. It is Warrenpoint Harbour Authority's view that the future of the
port and its ability to act as a catalyst and contribute to the economic regeneration
of south Down and the border counties will be seriously jeopardised by
the privatisation of Belfast harbour.
So that the port could continue to contribute fully to the economic welfare
of Northern Ireland while remaining a trust port, Warrenpoint would seek
the commercial powers and the increased borrowing capacity that were recommended
following the review of trust ports in GB and Northern Ireland. That matter
is addressed in detail in sections 7 and 8 of our submission.
To protect the existing traffic and provide the facilities that are necessary
to meet future demands, Warrenpoint port has spent two years in the conduct
of studies aimed at creating a deeper berth and additional half standing, and
at reducing ongoing dredging requirements at the harbour. Projected costs of
the project, which is currently at the planning stage, will be about £6·5 million
for which we will seek grant aid. We are convinced that if Northern Ireland
is to continue its economic growth and benefit from membership of the European
Union, it is essential that regional ports receive the Government support that
is necessary for the developments that are needed to meet current and future
For all those reasons, Warrenpoint Harbour Authority opposes the privatisation
of Belfast harbour and asks for your support in enabling us to fulfil the role
for which the authority was created.
You referred to the ERM report in your submission. It says
"a privatised Belfast harbour due to its size, resources post privatisation,
and revenues derived from non port activities would be in a position to distort
competition within the Ports sector and effectively assume a monopolistic position."
The ERM report states that at present your port has an advantage in that
your charges are lower and that enables you to operate in your niche of the
Is it possible that, whether you have privatisation or not, if the port of
Belfast, as a trust port, a private port, or a semi-private port, wished to
engage in aggressive marketing, it could take trade away from your port? Is
your complaint not really about the size of Belfast port rather than about
the kind of legal status that it might have?
It is more involved than that. There are various aspects, as was indicated
by the chief executive of Derry port, and I have made the observation in our
report. The protections offered by the Competition Act are illusory. They are
post-fact events in that a company can be fined 10% of turnover, irrespective
of whether the competition is no longer in existence.
Port charges are one aspect. The service offered by the port is another -
certainly the overall cost package. Belfast harbour does market aggressively.
However, there are constraints which are imposed upon trust ports which do
not apply in the private sector. First of all, they can be judicially reviewed,
and, secondly, they are not subject to the demands of shareholders for a commercial
return. As they are in the public sector they can be expected to adopt a course
of action which is in the best interest of the public as a whole, as opposed
to the commercial interest of shareholders. Also, the board is appointed by
the Minister and is subject to reappointment every three years. So there is
an element of control which can be exercised and under the remedies which are
available would not be available to other ports transferred to the private
So, in your view, if Belfast port decided to adopt a really aggressive commercial
approach to its activities it could do much more damage than at present?
An unfair aggressive commercial approach would not be in the public's interest.
And you feel that its present state constrains it from doing that?
What effect would European funding have? Also, with regard to cross-border
trade with Dublin, if Belfast were privatised and the road structure were upgraded
- for example, we have discussed the Toomebridge bypass and the Newry bypass
through Banbridge - would that help the haulage companies in the area?
Well, let us look first at European funding. At section 4 I have indicated
the funding which has been made available to the various ports since 1989,
and the source of these figures was the Department of the Environment for Northern Ireland.
There appears to be a disproportionate amount of investment in the port of
Belfast. With regard to development, it is difficult to see what they want
to develop in terms of port facilities. They have new ro-ro facilities, new
container facilities, new coal facilities, and so on, and there is a finite
market to be served. Also, the European funding which has been made available
could distort the issue if a transfer takes place into the private sector.
At the end of December 1997 the port of Belfast had on its balance sheet
approximately £60 million in European grant aid, which was being released
into its profit and loss account at the rate of over £3 million a year.
If the port is privatised that £60 million will not go away. A private
company will transfer it into its profit and loss account at the rate of £3 million
a year for perhaps the next 15 to 18 years. The ports of Derry and Warrenpoint
do not jointly make a profit of £3 million. In our opinion it is wrong
that that level of European funding should be transferred to the benefit, substantially,
of private shareholders.
When you talk about funds being released do you mean when the return on the
£60 million of EU money invested is released?
No. If a company were to purchase an asset at £10 million and it got
75% grant aid it would receive £7.5 million. If the asset had a life of
10 years then the £10 million would depreciate at £1 million
per annum, and that would be a cost of the business. However, if, over that
same 10-year period, the company released the £7.5 million of grant aid
at the rate of £750,000 per annum, the depreciation in charge over
the 10 years would be one quarter of the real value of the asset.
This would mean that a private shareholder's depreciation charge over the
life of the assets of the port of Belfast, to which the £60 million refers,
would be substantially reduced with a consequent increase in profitability.
The other question asked was on the issue of roads. The difficulty of road
improvements from a port's viewpoint is that roads have two ends, and traffic
flows in two directions. The benefit of improving roads between Belfast and
Dublin would, in fact, be of equal benefit to everyone. We could get traffic
to Dublin more easily, we could get traffic to Belfast more easily and, equally,
they could withdraw traffic from our region more easily. The Toome bypass would
probably enable Belfast to access Derry traffic more so than it can at the
I welcome the deputation. I am interested in teasing out the opinions of
the various harbour authorities about possible changes in Belfast. People have
taken a particular view of what should, or should not, happen, but obviously
no decision has been reached as yet.
Warrenpoint, like Londonderry, has created a particular niche market. Although
they are small ports they have become vital to the economic regeneration of
their own areas. However, if some sort of change in the status of Belfast port
is to be contemplated, there is a fear that a radical change may allow Belfast
to become so aggressive, so competitive that Warrenpoint will be hit dramatically.
Do you think that a change in the status of the port of Belfast, even one
restricted by a safeguard which would allow it greater commercial freedom but
which would not allow it to become a private entity and do the things that
you are concerned it may do which would impact upon Warrenpoint, would impinge
upon the niche market that you have? Do you think that even a limited change
in status is something that would jeopardise Warrenpoint?
No. We advocate a change in status. All trust ports should be allowed to
operate commercially. However, the size of asset that would be created were
Belfast Harbour to be privatised in its present form - and I appreciate what
the Committee has said on the difficulties of evaluating this asset - and the
potentials for development would be such that it would become the major economic
determinant in Northern Ireland.
Belfast should have additional commercial powers, but it is currently making
profits of £10 million to £11 million per annum, which will end up
being distributed to shareholders as opposed to being retained for the benefit
of the people in Northern Ireland. With commercial powers it will be able
to grow and develop as desired. The major element of potential damage is the
sheer scale of the operation as it exists at present, particularly with the
land asset, which appears to be grossly undervalued.
Further to that, my board's view is that while it is reasonable to expect
changes, the landbank is a major factor. The landbank has a huge potential
value, and we would respectfully suggest that it should be isolated and privatised.
The money realised from that sale could go a long way to solving some of the
problems regarding the road infrastructure. The port of Belfast should be retained
as a trust port with enhanced powers. We are therefore suggesting a variation
as a solution to the overall long-term problem.
The landbank would be difficult to value, but it could be done by independent
valuers. Currently, the values of commercial sites in Belfast, as I think everybody
knows, are on the rise, with no sign of abating. Private property and commercial
sites are reaching colossal values.
There are a number of factors in relation to any change in status for Belfast,
not least the roads infrastructure and the increasing competitiveness of the
Dublin port. Obviously Warrenpoint is in a very invidious position - probably
more so than any other port in Northern Ireland - but these factors may
or may not open the door for a change of status for Belfast port, allowing
it to become increasingly competitive. Do you believe that there is any way
of restricting Belfast's appetite, which could impinge on Warrenpoint, or of
curtailing the sort of open-ended privatisation which might eat into Warrenpoint's
share of the market, but which would, at the same time, allow Belfast to develop
a greater competitive edge to try to stave off Dublin's advances?
I know of no legal mechanism, in terms of Companies' Act legislation or trust
port legislation, which would guarantee these safeguards.
At the moment.
At the moment. In terms of benefits, the great difficulty is that companies
seek limited liability status, and shareholders can invest in them in the knowledge
that they have certain protections and powers established by the Memorandum
and Articles of Association.
It would be difficult to isolate Derry and Warrenpoint or the trust ports.
I do not see how legislation that allowed for the privatisation of the port
of Belfast - or of any other port, apart from a trust port - could be framed
in such a way that it would stick.
In your response to Mr Campbell's questions, you seemed to suggest that
you would be looking for extra powers for all the ports.
That would be your preferred option. Are you saying that, even with the extra
powers that would be given to all ports, including Warrenpoint and Derry, you
would still be looking for extra safeguards?
Irrespective of the extra powers, our view is that the port of Belfast should
not be privatised, and, if it is, this will have such an impact that it will
threaten the trust ports.
And what would be your view if Belfast were to be given extended power status,
along with yourselves?
If Belfast, along with the other ports, were given extended powers then we
would be in a situation similar to that in which we currently find ourselves
- we would be able to compete. We are currently competing, but I would like
to give you two reasons for seeking additional powers.
First, Warrenpoint Harbour Authority's current borrowing powers are limited
to £10,000. I cannot buy computer software for £10,000.
Secondly, we are very aware of the competitiveness of the ports of Belfast
and Dublin. A few years ago, we lost our ro-ro service, operated by Merchant
Ferries. That caused a dramatic drop in our tonnage from about 2.5 million
tonnes to one million tonnes. Fortunately, although we lost a lot of our tonnage,
we did not lose much of our profitable tonnage. This made a difference, and
the port's profitability continued to increase.
More recently we lost our coal business to Belfast, following the construction
of their new coal facility and their conclusion of a lease agreement - which
included shortfall arrangements - with the company that had been our importer.
In view of the falling market, this company was anxious to concentrate its
coal imports in Belfast. I can understand that.
After we lost the ro-ro service we sought to get another company up and running,
and we took counsel's opinion. The port authority was prepared to make an initial
investment to attract other monies - in a public and private partnership -
in order to move things forward and get a replacement service in. Counsel's
opinion was that we did not have the powers to do this. This is how you lose
two thirds of your traffic overnight. The management of a trust port does not
have the power to invest in a shipping company and must just hope that another
company comes along. Fortunately, thanks to some very aggressive marketing,
we found a replacement service within six months, and the tonnage of the port
has continued to grow annually since that happened.
I welcome the delegation from Warrenpoint. My question will be of interest
to members of the Committee who may, one day, have to take major decisions
- and it is addressed to the economic development officer. Looking beyond the
question of the future of the port itself, I would like Mr Curtis to tell us
about the importance of the survival of Warrenpoint harbour in terms of the
district council's economic development strategy for the area.
The council's economic action plan, which runs for the period from 1995 until
the end of 1999, includes a section which states the importance of the harbour
for the future of the Newry and Mourne area. It currently supports at least
1,000 jobs in the area, and we are concerned that, if the port of Belfast gets
the status that it is looking for, that will have a significant detrimental
effect on the Newry and Mourne area.
The ERM report states that the tonnage moving into the port or harbour inside
our area would be reduced by approximately 25% over a five-year period. That
would dramatically reduce the number of actual jobs being supported there at
present and would also have a major effect on the large number of small and
medium-sized enterprises that have set up in and around the harbour since its
inception in 1971.
It would also have a major effect in respect of the council's efforts to
secure inward investment. We are currently negotiating with two large organisations
from the USA who have stated that one of the reasons they are prepared to look
at the Newry and Mourne area is the fact that we have a port and that there
is land available in and around the area. I must point out that the overall
effect would be serious and would cause immediate hardship in and around an
area that has had reasonable success since about 1971.
Who is your greater threat - Dublin or Belfast?
It is very difficult to look at two lions and say which is the more dangerous.
Which has the bigger appetite?
You did say lions, did you not?
The scale of both is similar. As a commercialised port, Dublin received extremely
wide-ranging commercial powers - powers which are so extensive that commercialised
ports in the Republic of Ireland can invest outwith Ireland. They have the
powers which would be available to a privatised harbour - including a privatised
Belfast - although they are subject to some ministerial control. One took our
ro-ro traffic, the other took our coal traffic. I have got them surrounded,
however, and I am going to do my best.
You are in a very vulnerable position: you are being squeezed between Belfast
and Dublin. History, even recent history - indicates that Dublin has damaged
you, and could damage you in the future. If Belfast is privatised or develops
a sort of semi-state status, it could still damage you. Does that not have
more to do with your geographic position rather than the status or the nature
of the competing ports? Whether you like it or not, you are slap bang in the
middle of two major ports, and you are going to suffer because of their relative
If you examine the figures which we have provided, you will find that as
the ports of Dublin and Belfast have become more aggressive and have grown,
the profitability of Warrenpoint Harbour Authority has increased year in, year
out. That is not based solely on the fact that our prices are more competitive.
The level of service that we offer is superior as well. We have grown a number
of commodities very successfully and profitably.
Equally, it has to be very clearly stated that Warrenpoint will never become
either a Belfast or a Dublin - you cannot do that with 33 acres of land
and 700 metres of quay - but in terms of the economic status and well-being
of south Down and the border counties area, it is absolutely essential that
the port of Warrenpoint continue in existence; and it will.
Another important factor is that the port of Warrenpoint has been in existence
for 25 years and has never had a strike. Although it has not happened
all that often, we have benefited from strikes in Dublin and Belfast.
I will add one final point to that. There is a natural hinterland to Warrenpoint
that extends north and south of the border. If we could be assured of a level
playing field - and that is all we are asking for - Warrenpoint will continue
to trade and trade handsomely.
There are plans for a deep-water quay, but they are still in the pipeline.
They have not been fully approved yet.
A planning application is in process at the moment along with a submission
for funding. The deep-water quay is needed due to the increased size of vessels
being used by a company which has been operating out of Warrenpoint for 24 years.
The company provides the service to Rotterdam.
You would be in great difficulty if you did not obtain this.
We would not achieve our full potential.
In the long term it would be a very serious situation?
In your submissions one of the reasons you cite for opposing the privatisation
of Belfast port is the revenue it derives from non-port activities. You say
that this could distort competition from other ports. What revenues, if any,
do you generate from non-port activity?
Secondly, what prevents unfair competition currently? All the ports have
said that there is intense competition. What failings are there in the current
mechanisms to ensure fair competition and what would you deem necessary, in
the future, to ensure that there is fair competition between all ports?
We derive no revenue from non-port activities - absolutely none. Unlike the
other ports, we are involved in stevedoring, which I regard as a port activity
- the dischargeof cargo from the ships. The ports of Belfast, Larne and Londonderry
all license stevedores. That is a historical thing. The port of Warrenpoint
has no non-port revenues.
The ports have been looking, over the past 10 to 15 years, to the receipt
of European funding. If you are going to get involved in uncompetitive or unfair
trading, there is the possibility that you will be obliged to forego, or lose,
that level of grant aid. That would certainly give one cause for concern.
The Competition Act is not a reasonable future safeguard - it is too little,
too late. There is the potential, which did not exist with private corporations,
for either control of board membership or judicial review.
What revenue does the port of Belfast receive from non-port activities?
It receives substantial rents, and an examination of the last two sets of
published accounts will show that just under £2 million was derived from
trading in the port's land holding. The value of this land was considered to
be minimal, yet the port appears to have made some £2 million from the
sale. I do not know what money would be derived from the sale of land that
the balance sheets argue is worth £15 million.
These are major factors. However, there could be other factors. A privatised
port of Belfast could decide to invest in west coast Great Britain ports.
Many of the trust ports in Great Britain which privatised have grown as a result
of the acquisition of other businesses, including other port businesses. If
the port of Belfast were to exercise control on the west coast of Great Britain,
it could impact on the direction of traffic to Ireland.
What effect would that have on your port, and how would such an acquisition
be considered unfair competition?
In order to suggest that there would be unfair competition one would have
to examine the purpose of trust ports. If the trust ports in Northern Ireland
have been set up as economic regeneration catalysts, then the Assembly will
have to consider whether it wants that to continue.
For example, the privatisation of the port of Belfast could have an immediate
and direct effect on the port of Heysham. Warrenpoint's roll-on/roll-off service
operates to Heysham, and other services from Belfast and Dublin also go there.
If the port of Belfast were privatised, it might decide to buy the port of
Heysham. That could affect the service to Warrenpoint, and it could equally
affect the service to Dublin.
When Warrenpoint lost the roll-on/roll-off service to the port of Dublin
- to an EU-funded new terminal - many of the haulage companies in the south
Down and border areas came close to going out of business, because the owner-drivers
could not handle the incremental costs of having to drive to Dublin or Belfast
and perhaps having to stay overnight. Had we not found a replacement service
in less than six months, many of these companies would probably have gone to
I have two questions concerning the letter you received from the Department
of the Environment on 8 April. One is to do with your request for a harbour
order that would enhance your powers. I notice that for such a legislative
change the Department of the Environment requires you to submit a policy and
commercial case to justify the full commercial powers that are reflected in
the draft harbour order. Are they looking for further submissions from yourselves
or from other ports, or is this an assessment that is being done by the Department?
I also notice that the Department produced a report - and the letter refers
to it - following its review of trust ports. The Department indicates that
the report is not being published and that it is not being made available because
it contains information of a commercial nature. Are you aware of what information
in relation to your port is contained in this report, and would the release
of this information be damaging to you?
The full content of our submission to the trust ports review has been given
to the Committee in the papers. I understand that the Committee has been given
the full submission from Derry, so that only leaves Coleraine and Belfast.
I do not think that it will damage Coleraine - as it has only a limited commercial
operation. Therefore, I do not know who will be damaged by the release of the
You have no difficulty because you released the information yourselves?
We have put our information into the public domain.
With reference to your question regarding additional powers, notwithstanding
the DETR report and the Secretary of State's statement, the feeling is that
trust ports should have full commercial powers. It has been the Department
of the Environment's position that both Derry and ourselves should give full
reasons for wanting individual and particular powers. If I knew what the circumstances
would be at Warrenpoint Harbour Authority in 30 years time, I would probably
be able to do that.
Do you see this as a delaying tactic on the part of the Department?
Very much, Mr Chairman.
Did ERM consult you before it issued its report?
I was here during the Derry session and am aware of the concerns.
ERM did not consult us during the preparation or prior to the preparation
of the report for the Department of the Environment. However, I should make
it very clear that ERM has been involved in the evaluation of Warrenpoint Harbour
Authority's capital investment programmes for the past eight years and
is, therefore, intimately familiar with our business traffic.
ERM has also been involved with Londonderry and has carried out considerable
economic development work for the Department of the Environment, so it is intimately
familiar with that too. That being said, Belfast harbour has submitted a report
by Transmodal, which said that there would be no impact on the other trust
ports. This is a fascinating document - I have never had any conversation with
Transmodal. Transmodal has no knowledge of the background of Londonderry port
or Warrenpoint harbour yet appears to be qualified to say that there would
be no impact, whereas ERM has had an intimate knowledge of the development
status of both ports for a considerable time.
Does ERM have an intimate knowledge of the Belfast port?
Yes, ERM has been used by the Department of the Environment to draft the
transportation programmes for Northern Ireland for the past few years. That
cannot be done without gaining knowledge of Belfast harbour.
It is curious that it was not used as a vehicle for creating a view on Belfast
port; perhaps there are other reasons?
Mr McIlvenny said that the Department has asked ERM to re-examine this. I
am obliged to say that this is not the full ERM report. During other discussions
with DOE I became aware that this report had been commissioned and insisted
on seeing it. In fairness, ERM was instructed that I should see the report
insofar as it related to Warrenpoint, although obviously in the conclusions
there are cross-references. The heading at section 9 is "Privatisation
of Belfast Port: Strategic Issues (WHA)". It is, however, a report that
has been signed by one of the directors of ERM and therefore has some status.
Derry included the report in its submission to the Committee and if it had
not been for that, I would not have seen its section. I do not know what is
said about Larne and Belfast.
According to the report, coal tonnage dropped dramatically in 1996 to 87,000
tonnes. But the table that you have provided shows that it got even worse,
because it fell to 70,000 and then plummeted to 18,000. Will that worsen in
We budgeted for no coal in 1999, so it can get worse. Unfortunately, the
figure will not rise. To date we have handled one cargo of about 4,000 tonnes,
but I have no expectations of any more.
Is this having an adverse effect overall?
We have been able to deal with this catastrophic decline. We have been actively
involved in the investments undertaken in the port in the last few years. The
tonnage increase in other cargoes has been significant, and these are cargoes
which might provide more revenue.
I am aware that the section that I refer to has a health warning on it: it
says that the report contains confidential commercial information. How many
people do you employ?
Warrenpoint harbour has about 44 full-time employees at the moment,
and we employ about another 20 people on a part-time basis.
According to your report there are 48 employees, 20 of whom you employ directly.
I am sorry, on which page is that?
On page 2 the number of employees is given as 48. In section 5, page 7, it
states that you directly employ 20 people.
They are stevedores. Of the 48 employees, 20 are employed as stevedores,
crane drivers, dockers and so on.
I read on page 17 that Warrenpoint harbour found a site on which Hayes Chemical
Distribution Ltd constructed a bulk liquid chemical reception and storage facility
at a cost of approximately £1·5 million. Did you receive £1·5 million?
No, the construction cost Hayes £1·5 million.
Could you clarify the following for me? Question 21: Do you plan to undertake
any investments jointly with the private sector? The answer is yes. Question
23: Do you have any plans to use or sell your surplus land? The answer is no?
We do not have surplus land. The investments in the joint venture arrangements
which we are considering would be very similar to those with Hayes. The purpose
of providing a site for Hayes to build on was so that Hayes would send the
ships to Warrenpoint; we would handle the cargo and get the ships to use the
dues on the goods. The other developments that we are considering are of a
similar nature: to get involved with a company which is moving a product and
needs a port facility. We can provide a site in order to get its cargo through
the port, but we are not interested in supermarket manufacturing set-ups. We
are interested in cargo-related business.
Have you no surplus land?
We have only 33 acres in total.
Are they being fully used?
You cannot expand?
That is part of the project that we have in mind. We want to create additional
land immediately behind the quay for port-related purposes.
How much land?
About six acres.
I have a question about the figures. Mr Morrow mentioned the confidentiality
"health warning"; does that apply to table 2 at the beginning?
Those figures are from our audited, published accounts, so they are already
in the public domain.
I see from table 2 that Warrenpoint has a turnover of £2·75 million,
making a profit before tax of £750,000. You also state that the company is
valued at about £12 million. Did you also say that you have an overdraft
facility of £10,000?
Yes. At the moment I have about £2·6 million in cash.
You are a good risk for £10,000, then.
To put that in perspective, if we had to replace a gantry crane on the dockside
tomorrow, it could cost us between £2·5 million and £3 million.
Thank you for your submissions and for answering our questions here today.
Your answers have been very helpful to us.
Thank you, Mr Chairman, and good luck in your deliberations.
MINUTES OF EVIDENCE WEDNESDAY 5 MAY 1999
(Mr A Maginness in the Chair) Witnesses:
The Parliamentary Under-Secretary of State
Mr R McMinnis and Mrs B Faloona
(Department of the Environment)
Good morning, Minister. You and your companions, Mr Robin McMinnis
and Mrs Barbara Faloona, are very welcome to the Ad Hoc Committee on the
Port of Belfast. We are making a little bit of history here today, and we are
looking forward to hearing what you have to say. We have already received copies
of the Department of the Environment's memorandum, so, without further ado,
I invite you, Minister, to speak. I realise that you have time constraints.
Mr Chairman, thank you for inviting me and allowing me to give evidence on
Belfast Harbour Commissioners' proposals for the future of the port of Belfast.
If we are making history in the process, so much the better. I apologise for
the fact that my time with you is limited. When I accepted the invitation I
was not aware that it would be, so please bear with me. The restriction was
imposed upon me later.
You have already received the Department of the Environment's statement,
and it would be pointless to repeat everything in it. But let me deal with
certain aspects - and I am going to be political.
I am not a fan of privatisation, as I have made clear in, for example, the
consultative document on the water industry. In the introduction to that document
I said that, personally, I am against privatisation. I opposed the thrust of
Tory policy on privatisation through the 1980s, when I was in the House of
Commons. However, I think it is right that I should put the arguments about
the Belfast Harbour Commissioners' proposal in the light of my own instinct
not to be in favour of that approach. But I am in favour of it. Let me explain
I did not like the idea that there were fat cats in the privatisations. I
did not like the fact that there was a lack of any public influence over privatised
industry. I did not like the fact that money from previous privatisations went
into the Treasury and never reappeared except in tax reductions. There are
certain basic principles which govern my approach to the matter. There must
be no fat cats from this process, but there will be a golden share which will
give the Department of the Environment and the Minister who succeeds me important
control over the way the new operation will function. It is also quite likely
that the Department of the Environment will have an equity stake in the new
business. But, above all, every penny will stay in Northern Ireland.
The only purpose of doing this is to see whether the resources that are tied
up in the harbour are best left that way or whether they could, in the interests
of the people of Northern Ireland, be better used for other purposes in
Northern Ireland. And because I believe that that is the case I support
the proposal. I am concerned, first of all - and this is the bottom line -
that there would be fundamental safeguards and, secondly, that the benefits
would be for the people of Northern Ireland. If the harbour is left as
it is-making some changes-its potential will not be released for other benefits
in Northern Ireland.
Some people have said that there is an element of political blackmail in
the way the Chancellor's package was introduced. I am not happy about that
type of wording because - here I am teaching you to suck eggs - with every
political decision where you are choosing one priority over another you are,
in a sense, saying "I prefer this to that. I forgo one for the sake of
the other" if money is finite. We are doing the same here.
Having assessed the priorities, we believe that there are urgent needs in
terms of the announcements made by the Chancellor of the Exchequer, in terms
of the economy of Northern Ireland and of the transport infrastructure-needs
that everybody accepts are crucial. Those are more important than whether the
harbour is kept in one type of ownership or another. That is what drives me
on. Otherwise we would simply be locking up the assets and keeping them without
the benefit. There are other models for dealing with the harbour, most of which
do not realise the money or provide the safeguards. The model BHC proposes
We significantly extended the informal consultation period because of representations
from Members of the Assembly. I think that was right. I was very unhappy to
learn that the legislation provided for a formal-consultation period of only
six weeks. That was quite wrong, and I was taken aback when I heard it. Although
this is an informalconsultation period because the final detailed proposal
has not come forward, it gives everybody - particularly this Committee - a
chance to go through the matter in detail, as is proper. I hope that the Ad
Hoc Committee will be a model for other Committees of the Assembly.
I want to make one or two further points. I have given you my political position.
The Department has a number of duties which are, as it were, quasi-judicial
in considering the Belfast Harbour Commissioners' final proposals. I have to
be careful that I do not do what I should not do, or that the Department does
not do what it should not do, which is to get involved in the details when
the Department and my successor will have to adjudicate on some of the details
and make a decision. That would not be proper. I can only talk about the main
The commissioners' proposals must be robust, the technical details must meet
the needs, and we must get full value from any sale of the port. There must
be no question of losing out - and that includes judging the right point at
which to float the shares. If the market is down we will have to hold off,
otherwise we will not get full value. We have had some experiences in the past
that were not good.
The Department also needs to address the widest strategic issues arising
from the commissioners' proposals. There is the question of the effect on other
ports in Northern Ireland. We are still working on that. We have been
consulting particularly with Lisahally and Warrenpoint about their plans to
change their trust status a little. Those are under consideration. I want to
ensure that any change in Belfast does not damage the economic prospects of
any other port.
It is a competitive business. Essentially, Belfast is competitive with Dublin.
Dublin has had some difficulties, but is sorting those out. I would not want
to see Belfast constrained and unable to continue to enjoy a good share of
the total port business in Ireland as a whole. Much of Belfast's business comes
from the Republic, and I do not want that to change. We must make sure that
Belfast stays as competitive as possible, while doing what we can to protect
the legitimate interests - economic and otherwise - of the other ports.
In looking at this issue, I have considered the long-term interests of the
port of Belfast and of the economy of Northern Ireland. I have sought
to show you that I want to learn the lessons of other privatisations, and do
not want to repeat the mistakes that were made. I also want to find a way to
fund the road schemes that were announced by the Chancellor. I have stressed
that the Department must remain neutral on these proposals because we may,
at some stage, have to adjudicate.
One of the key points to emerge is that the original proposal by the Harbour
Commissioners has already been modified to give Northern Ireland residents,
including port users, the opportunity to have a stake in the business. I should
be interested to know, Mr Chairman, when you expect to report on what
you have done, because that will clearly have an influence on our thinking.
My final point is that I suspect that many of you, if you were to put yourselves
in my place, would adopt a position very close to that which I have adopted,
regardless of the perspective from which you approached the issue. Equally,
if I had been on your side of the table over the past few months I might well
have taken a very hostile attitude to the proposal that BHC are putting forward.
However, we must be flexible. I have suspended some of my ideological principles
in order to look at this in the best interests of Northern Ireland. I
suspect that if you were sitting in my chair, with all the information that
we now share, you might well come to the same conclusions as I have.
The period for consultation has been extended, and I can think of no similar
situation in the past 20 years where a Government has been as open and
transparent as this one about what we are seeking to do, taking people's views
and answering their questions. I believe we have fulfilled the wishes that
were expressed earlier in the process by Members of the Assembly with regard
to the procedure that we have adopted.
Thank you, Minister, for your frank statement. You asked when our deliberations
might conclude. We hope to finish in the latter half of June.
May I seek clarification on that point? The Minister says that he awaits
the outcome of our deliberations. I thought it had been decided that the Assembly
would make the final decision. Is Lord Dubs saying that he is waiting
for our report so that the Department can make the decision?
Nothing has changed. All I am saying is that the Department is very interested
in the work of the Committee and in its conclusions. Those will inform the
Government, but they will not change our agreement on the way to take the matter
I asked for clarification because the Minister said that the Committee's
report would go to him.
The Committee will, of course, report to the Assembly. The report will be
the property of the Assembly.
Nevertheless, Mr Chairman, given the work that you and members of the
Committee have put into this matter, you will want the Department to be interested
in what you are doing. As soon as we have access to the report, after it has
been presented to the Assembly, we shall, of course, consider your conclusions
On page 8 the submission states
"should the Assembly decide to reject the Belfast Harbour Commissioners'
proposals, as presented ... it is highly unlikely that the Commissioners would
bring forward a Transfer Scheme".
The phrase "highly unlikely" does not rule it out entirely. This
is the point that Mr Tierney was making.
These proposals came from the Harbour Commissioners. They were not the Government's
proposals; they were not Department of the Environment's proposals. The Government
said simply that there would be no compulsory privatisation but that if any
of the trust ports came forward with other schemes the Government would consider
them. That is what we have done. The wording to which you refer says simply
that the Harbour Commissioners are independent people who will decide what
to do in the light of changing circumstances.
I have read the brief that we got from the Department and have listened to
what you have said, and a number of concerns immediately spring to mind. I
noted your words carefully when you were referring to the decision about the
transfer of the port or to the possible privatisation of the port. I do not
know whether it was a slip of the tongue or if there is any significance in
it, but you said "if it comes to me". I always understood that this
decision had been passed over to the Assembly, yet it appears from what you
have said today that it is not quite clear whether it will rest with the elected
representatives in Northern Ireland or not. Perhaps you will clarify what
you meant by that phrase.
The second thing is that I am concerned that the Department has already made
up its mind on this matter. Let me quote from the brief that you sent us. In
the House of Commons on 12 May the Secretary of State said
"The Department accepts that transfer of the port to the private sector
and the establishment of a public/private partnership, as outlined in BHC's
proposal, represents the best option for the future."
I hardly think that that fits with your statement here this morning that
we have got to stay rather neutral. That hardly seems like a neutral statement.
The third thing is that it appears that the Secretary of State's judgement
was made in the context of the review of the trust ports in Northern Ireland
and, indeed, was based on the conclusions of that review. You have said that
you await with interest the information which we will produce and that you
want us to go through the matter in detail, but your Department has refused
to make that review of the trust ports available to us. The reason you have
given is that it contains sensitive commercial information.
However, all those we have questioned here, apart from the Belfast Harbour
Commissioners, say that they have absolutely no difficulty with the information
contained in that review being put into the public arena. In fact, they have
said that it is already in the public arena. Why, if you value the work of
this Committee so much, has the Department decided to withhold from it a document
on which it has based its own tentative conclusions?
I noticed in the report that the loss to the public sector's spending programme,
if the sale does not go ahead, will be about £70 million. You say that
that is a conservative valuation. Are you really saying that 2,000 acres
of land in Belfast's city centre, albeit with restrictive leases and everything
else, together with a port infrastructure, is worth only £70 million or
thereabouts? If that is a conservative estimate, how far are we out on this?
Lastly, with regard to the fat cats, we were told by the Harbour Commissioners
that about £6 million worth of shares would be made available to the workers
in the harbour. That works out, by my estimation, at about £60,000 worth of
shares each. I suspect that most workers in Belfast harbour would not be able
to buy shares on an equal basis and that some employees will buy a substantial
amount. If the harbour is valued at £70 million there will be great potential
for the fat cats when it is resold. What control would the Government have
over the pay of chief executives and so on? We have seen fat-cattery in that
area. Will the Government place wage limits on those who hold executive positions
in the harbour?
There are about six questions there. I used the phrase "if it comes
to me or my Department" simply because I was not sure when the Committee
might report. June has been mentioned, which is next month. If the details
come to me I may have to think about the matter, but that does not change the
Government's overall position.
The Government expect the Assembly to take over soon. In that event the Assembly
and a local Minister will be responsible for deciding policy. That is our stated
position, and that is still expected to be the case. I am responsible for the
Department, and if issues are put to me I may have to say something. I do not
want to prejudice the way in which the Department will make an objective, quasi-judicial
decision by commenting on the details in advance. That would prejudice the
Department even if the final decision were made by a new Minister.
The Government have said all along that they are committed in principle to
this policy. The Secretary of State said so in reply to the parliamentary question.
Following the Good Friday Agreement and the prospect of an Assembly taking
over, the Government agreed to the request from Members that the Assembly could
make the decision. The Chairman was at one of the earlier meetings.
There is a difference between the Government saying that they believe that
this is the way forward in principle and giving all the details. The Committee
should bear in mind that the legal scheme has not yet been put forward by Belfast
Harbour Commissioners. When it is, the Department and the Minister will have
to act in a quasi-judicial manner.
The next question was about trust ports. The Northern Ireland trust ports
review was carried out in consultation with various ports. It was made clear
from the outset that the report would not be published because it would contain
commercially sensitive information. That was the basis on which the consultation
process was started, and it would be bad faith for us to depart from the undertakings
that were given to the trust ports. It is for individual trust ports to decide
whether to release commercially sensitive information. Our approach is the
same as the one that was adopted by the Department of the Environment, Transport
and the Regions when it handled the parallel Great Britain review.
The £70 million is not a valuation of the port, which I hope is worth
a great deal more; it is a working figure to show how the Chancellor's package
was made up. If the sale of the port realises more than that there will be
more money for the roads, but at least £70 million - depending on how
large an equity stake the Department retains, among other factors - would go
towards the road package.
I have said emphatically that I do not want any scheme that would result
in fat cats. That has already taken place at the airport, and I resent the
fact that cats have been allowed to get fat over the past 15 to 20 years.
Shares for the workers is a detail of the scheme that the Department would
want to look at. At this stage, it is not appropriate to comment on that because
the Department might have to decide the basis of such a scheme. Perhaps you
will allow Robin McMinnis to say some more about that and about the control
of the wages and salaries that would result from the scheme going forward.
The proposals from the Belfast Harbour Commissioners on the shares which
might be available to their employees have not yet been presented to the Department.
We will have to discuss that with them in the future. The legislation does
provide certain parameters within which they are required to operate. The Minister
has made it clear that no fat cats will be created as a result of this privatisation.
It is normal practice for a private company to determine the wages of its senior
managers, and if the Belfast Harbour Commissioners were privatised, the board
of directors would charge an audit committee with overseeing their affairs.
I was responsible for leading the review of trust ports. As the Minister
has said, we were at pains from the start to respect the confidential nature
of the information we were privy to. We consulted the DETR, and its approach
was exactly the same as ours. While the review of trust ports coincided with
the Harbour Commissioners coming forward with their proposals, those proposals
did not stem from the review of trust ports: the legislation which permitted
that had already been in place for two or three years.
A number of things concern me. In spite of what you have said about political
blackmail, I am concerned that the sale of the harbour is linked to the roads
I am angry that the A2 Carrick-to-Belfast road has once again been left out
of all the schemes. I hope that the money made on the sale will be kept in
Northern Ireland and spent on improving its infrastructure. Translink was given
a grant, yet a clause allowed a clawback on the profits it made in the last
year. Can you give me a cast-iron guarantee that any money realised on the
sale will be spent in Northern Ireland?
Harland & Wolff and Shorts rent vast tracks of land which they
clearly will not need in the future. How do you intend to safeguard the public
interest in the event of this land being sold?
The point that I would like to make about Translink is that it has to do
with the public-sector borrowing requirement and the EFL. Translink is getting
more public money in subsidy than may be clawed back from it. These may seem
very technical points about the way in which the Treasury controls public expenditure,
but I assure you that Translink gets more money than has been taken from it.
The Chancellor of the Exchequer gave an undertaking that the proceeds from
the sale of Belfast harbour would stay in the Northern Ireland block and therefore
would be spent for Northern Ireland purposes. The Secretary of State and
I have reiterated that on a number of occasions. I cannot see that the Assembly
would do otherwise, because it would be their money. It is unusual for the
Treasury to give such a commitment in relation to a privatisation, but one
has clearly been given in this instance. It is there in black and white.
The land belonging to Harland & Wolff and Shorts is a more complicated
issue. I will ask Mr McMinnis to answer that question.
The proposals drafted by the Belfast Harbour Commissioners, which we are
considering at the moment, provide that the holder of the golden share would
have to consent to the disposal of any asset. Our understanding is that the
Commissioners have no plans to sell land. Indeed, it would be against their
policy to do so; they hold the land in trust. It is intended that they would
come to the Department, as the golden shareholder, for any approval that was
needed in the event of their considering the sale of land.
Your concerns about this land are well known to us and to the Commissioners,
so it may be worth exploring the issue further with them.
I see the golden share as a safeguard that would allow the Department of
the Environment and my successor to say "No, we do not accept that scheme
to dispose of land."
Thank you, Minister. May I say, in relation to the Chancellor's statement,
that Belfast harbour is a trust port. Over the years it received no money from
the state. It raised money from its own operations, and it developed as a profitable
organisation within the city of Belfast and benefited Northern Ireland in general.
It is a Northern Irish asset, and the funds of the central exchequer, or indeed
the Northern Ireland exchequer, not having been called upon, it is only right
and proper that that asset and any proceeds from it should remain within Northern
I believe that I reflect the views of the Committee in saying that the Chancellor
is not really being generous in allowing those moneys to remain within Northern
Ireland. Those funds belong to the people of Northern Ireland.
He is generous in comparison to the Conservative Chancellors of the last
20 years, but I agree entirely that it is right and proper that every penny
of the proceeds should stay here. That is the bottom line.
You asked about the timescale of this Committee. Are you on a timescale?
The reason I ask is that when you addressed my earlier question you said that
the matter was going back to you and not to the Assembly. If I understood your
answer, you said that if the Assembly is not set up, somebody else will make
I did not quite say that.
It was along those lines. I would like the Assembly to have been up and running
yesterday, but is there a point at which you consider that a decision will
have to be made in the absence of devolution?
You said that other options would not release the money. According to some
of the submissions that we have received, other options could release the money.
I do not know whether you have looked at other options such as increasing powers.
I accept Mr Neeson's point, but the Chancellor's announcement of money
for the roads infrastructure, which we later found out was subject to the sale
of the port, put a heavy burden on this Committee. It is blackmail to a degree,
if nothing else.
Have you looked at other options, and could they release the money needed?
The submissions that we have received say that they could.
Another submission mentioned the golden share. We have been told that the
European Commission is looking at this issue and that there is a possibility
that it will be cancelled. Has the Department of the Environment considered
First, the timescale is influenced by the fact that we have already started
on some of the schemes mentioned in the Chancellor's initiative. We had to
do that because we had given an undertaking that there would be no unnecessary
delay. We started in good faith.
If there is slippage, there will come a point when we do not have the money
with which to finance the schemes announced by the Chancellor. The Treasury
will not advance the money to us unless there is a clear undertaking that the
whole matter will be proceeded with otherwise difficulties will arise.
The Government and I are still acting on the assumption that the Assembly
will assume responsibility as soon as possible. However, the Assembly will
be faced with the same timing difficulties when making the decision. Either
the money for road schemes is released from the sale of the port of Belfast,
or is found elsewhere, or the schemes do not go ahead. That is the Treasury's
There are other options. First, we are dealing with the proposal from the
Harbour Commissioners. Secondly, I am not satisfied that other options can
release the money and provide the safeguards to the extent to which this one
can. Those are the two aspects: providing safeguards and finding the necessary
money. There are other options. We have looked at all of them, and I am satisfied
that this one seems the best to achieve those two ends.
There are some doubts about the golden share. I am acting on the assumption
that the golden share will be there and that it will be a safeguard. If, for
some reason, the Harbour Commissioners eventually decided to proceed in some
other way, the Department and my successor would want to be satisfied that
the necessary safeguards for the Department of the Environment and the public
were there. The golden share, in our view, would do that.
The European Commission has been looking at the concept of the golden share
in a number of member states, and there are some mutterings from Brussels.
The Commission has not approached us about any of the existing, or planned,
golden-share provisions in the United Kingdom. We believe that we can argue
the case for the golden share given the importance of the port to the Northern
Ireland economy. If it is a Brussels dilemma, we shall resist it - or my successor
Minister, in view of the time constraints, I intend to invite Committee members
to ask questions and then give you an opportunity to answer them as quickly
I am really embarrassed about this. When you invited me my day was clear
for hours after this meeting was due to end. Now I have had a royal visitor
thrust at me. [Laughter]
Is that what they do with royal visitors?
The Ministers from Scotland and Wales are all campaigning in Scotland and
Wales, so I have had to take over. Perhaps I should withdraw that remark and
be more tactful. Anyway, I am most embarrassed about this. I am happy to answer
the questions quickly. Mr McMinnis will stay, or I would be very happy to come
back on another occasion. I have taken up your time, and I do apologise, although
the prevailing circumstances are outside my control.
The Committee understands your difficulty. Members should put their questions
as succinctly as possible so that the Minister may reply quickly.
I have two questions, and I will be as brief as possible. The first is about
the block grant, and the second is to do with the golden share.
I am concerned about the block grant. At the beginning you said that this
was not being put forward as a threat. However, in at least three places your
document states that if we do not go with this, there will be a £70 million
deficit. You do say that it should remain in the block grant. I accept that,
but is this meant to replace a block grant, or is it new money?
It is new money.
This document does not say that; in fact, it says the opposite. Even the
press statement released by the Secretary of State said that if this were to
fail, there would be a shortfall of £70 million in the next financial
With regard to the golden share - I have to be honest with my colleagues
here - I am not convinced that the people who are going to be in government
would not sell it at some stage. When there was a golden share in North Sea
oil the Labour Party had clause IV - you do not have this now, and therefore
it is no longer an ideological problem - but you went against your ideology
and sold it off. So golden shares are not necessarily any guarantee. If the
Government want to sell, they can do so. The other thing is that it may become
illegal in terms of trading in groups.
Bearing in mind the time constraints, I will be brief. The Minister's suggestion
that he come back and talk to us is an excellent one, as this is one of the
biggest sales - if not the biggest - that Northern Ireland has ever seen.
I will start by making a political statement. In my opinion the harbour and
the land are held in trust for the people of Belfast in particular and Northern Ireland
in general. I do not believe that the Harbour Commissioners - or anybody else
- have the right to have put forward these schemes the way they have done.
I have a deep sense of unease about this - and have had right from when it
was first mooted. I think that what we are talking about here is a giant land
sale with a port thrown in. I do not understand how the Harbour Commissioners
can come here and boldly say that privatisation cannot go ahead if the land
is separated from the port. I do not believe that, and I do not accept it.
I asked the Harbour Commissioners for their valuation of the land. They could
not tell me. I asked for a valuation - even a notional amount - that they thought
they would get, but they could not tell me. It is irrational and illogical
that nobody seems to have any idea - or we are told that nobody has any idea
- how much money is going to be realised. We discovered that there was £22
million lying in their bank account. When that became public knowledge we were
told that this land would go back into the Treasury; the money would go back
into the public purse. What would have happened to that money had the sale
gone ahead at the start?
The planning approval which you recently gave for the D5 site is something
which, as you know, everybody, including Belfast City Council, the Chamber
of Trade and the Chamber of Commerce, opposed because of the doughnut-city
effect on Belfast. I put it to you that that D5 approval would be worth around
£35 million, at current market prices, to a developer. It seems to me that
that decision alone has enriched the Harbour Commissioners by that amount.
The figure talked about for the roads is £70 million - this came out at that
time as the notional value of the harbour - bearing in mind that there is about
£22 million lying in the account and that you have a further £35 million
to come in terms of the valuation. These are my concerns.
I am concerned also about the membership of a board which represents nobody.
This is a super-quango. Your documentation says that the Government neither
control nor own it. If the Government appointed all these people I would be
concerned about their being asked beforehand, either officially or privately,
what their feelings were about privatisation of the port.
Finally, have you looked at the Dublin trust port model? We are told that
part of Belfast Harbour Commissioners' problem is that they cannot utilise
the profits they make, but there is an example of how you can hold onto a port
for the greater good - the public good - and at the same time free it up to
make its own decisions and borrow money on the open market.
Minister, I think you said something to the effect that you want to ensure
that the privatisation of Belfast port does not have any adverse effects on
ports such as Warrenpoint. I was a little surprised that you are so much in
support of the privatisation of Belfast port when we have not yet heard of
any safeguards for other ports such as Derry or Warrenpoint. How can you bring
those ports on board if there are no safeguards or incentives? How can you
even bring representatives from those areas to accept privatisation thinking?
Mr Goldie and Mr Doherty expressed their fears very clearly. Those
fears are very real. I have heard nothing from you this morning, Minister,
that would make those people any happier.
I intend to stop the questions at this point as I know that the Minister
is under stringent time constraints.
First of all, there will be a £70 million deficit if the sale of the
harbour does not go ahead. The sale of the harbour is to provide new money
in the sense that the schemes announced by the Chancellor were additional to
those which were to be afforded out of the block. If the money does not come
from the harbour, either it will have to come from elsewhere - through cuts
in other areas - or the schemes will not go ahead. Apart from the Chancellor's
initiative on the harbour, the proceeds of the sale of the harbour will represent
additional resources to be spent in Northern Ireland.
It seems to me that the golden share is a permanent safeguard. The Department
of the Environment might also have equity that could be sold, but it is my
understanding that the golden share should stay in perpetuity. It depends on
the details of the scheme. You mentioned your sense of unease. I understand
that. Indeed, we have talked about it before. I believe that £70 million is
a gross underestimate of what we would get for the harbour, even if we kept
between 20% and 25% equity within the Department of the Environment, plus the
golden share. The golden share and keeping equity are two different things.
I do not want to go into the details of the D5 approval, but I would be happy
to come and discuss it with you on another occasion. Certainly it has increased
the assets of the harbour, and therefore £70 million may well be a gross
underestimate of what might be achieved if market conditions were right and
the sale were properly handled.
We have looked at the Dublin model. My understanding is that the authorities
in Dublin do not act under controls from their finance people such as are imposed
on by the Treasury. They have a different approach. I also understand, if I
am not certain, that the Dublin model was set up as a preparatory move to possible
privatisation there. So they are doing the same thing. We would need a different
legislative basis for Belfast harbour and a different Treasury aim to allow
Belfast harbour's surplus money to be released in the way in which you are
suggesting it should have been and in the way I wanted it released when I first
came on the scene.
The last question about the effect on other ports is difficult. We are discussing
with the trust ports how they might have a more competitive edge and fewer
constraints. There are legal and other difficulties.
We cannot shelter any port from competition. We do not want Belfast to suffer
from competition from Dublin, but it is a competitive business. We want the
vitality of Warrenpoint - indeed, the vitality of all the ports in Northern
Ireland - to continue. We will have to look at that matter in more detail.
I can give no guarantees, just as I cannot guarantee that the present arrangements
in Belfast harbour would not have a damaging effect on other ports here. I
cannot guarantee that now, so I cannot guarantee it under the new set-up, but
we would consider what safeguards there might be.
Thank you very much, Minister. The Committee will consider your kind offer
to come again.
Mr Chairman, I would be happy to come again, especially as this session has
had to be cut short - certainly shorter than I would have wished. If you want
me to return I will make sure that there is nothing in my diary - nothing foreseeable.
Thank you for your forbearance, your questions, the interest that you are showing
and the work you are doing. If you do invite me again I will be happy to come.
Lord Dubs withdrew.
Mr Chairman, are the proceedings ending now, or will we be able to continue
by putting questions to the Minister's civil servants?
Mr Chairman, I think the Minister must come back. One of the most important
questions is the separation of the land from the port operation. The Minister
did not address that issue. I appreciate that he was not trying to evade the
question, but it is an important matter. Membership of the quango that is guiding
the process is another important issue.
It is unfortunate that there is a royal visit today, and the Minister's time
Is it unfortunate that there is a royal visit, or is it just unfortunate
in relation to this? [Laughter] Mr Chairman, are you making a political point
You can interpret that in whatever way you wish - perversely or otherwise
- but it is unfortunate that the Minister was unable to stay longer. It is
up to the Committee to consider a suitable date for his return.
We have reached a critical stage in our deliberations, and it is important
that this happen quickly.
Mr McMinnis may be able to assist us.
I am happy to stay, but I realise that I am a poor substitute for the Minister.
[Laughter] I am sure that the Minister would be happy to come back on a convenient
date. If you wish me to relay that message to him I will be happy to do so.
The Committee Clerk will talk to the Department and arrange a suitable date
as soon as is practicable. I wish to thank Mrs Faloona and Mr McMinnis
for coming today.
AD HOC COMMITTEE
(PORT OF BELFAST)
MINUTES OF EVIDENCE THURSDAY 13 MAY 1999
(Mr J Tierney in the Chair) Witnesses:
Mr V McGovern, Mr J Thornton
and Mr N McPartland
(Warrenpoint Port Users' Association)
On behalf of the Committee I welcome the representatives of Warrenpoint Port
Users' Association. Mr McGovern, perhaps you could give your presentation,
after which members of the Committee will put questions to you.
I am honorary secretary of Warrenpoint Port Users' Association and owner
of Trans Europe Express Ltd. My colleagues are Mr McPartland, director
of McCalla Freight Ltd., and Mr Thornton, director of the Kersten Hunik
On behalf of Warrenpoint Port Users' Association we thank the Committee for
this opportunity to make a presentation. We should like the Committee to note
that this submission is totally independent to any information that may be
provided by Warrenpoint Harbour Authority.
We take this opportunity to highlight the fact that it is the port users
who provide the tonnage and services via the port, and as such any effect on
the cost structure of the port carries a direct consequence for the users.
At this juncture we shall provide an overview of our submission. The full detail
is separately available.
It is the firm belief of Warrenpoint Port Users' Association that the privatisation
of Belfast port would have a dramatic negative effect on the viability and
cost effectiveness of the port of Warrenpoint, thus adversely affecting the
cost structures that enable port users to maintain competitively priced services.
Such a development would create a distortion of competition between the Northern
Ireland trust ports. It would lead to predatory pricing and evolution towards
monopoly dominance for certain important trades.
That dominance would be driven by the profit motive, ultimately leading to
increased costs for the Northern Ireland economy as a whole, and creating a
significant consequent danger to local business and the fragile economies of
the localities served by, and dependent upon, the existing port structure and
utilisation within the Province.
We contend that, currently, there is healthy and intense competition between
the Northern Ireland ports, and that that is allied to the influence of key
ports in the Republic of Ireland. That vigorous competition has enabled the
Northern Ireland ports to provide cost effective services both to their immediate
natural hinterlands and to the Province overall, benefiting the economy with
lower transport costs and a variety of scheduled services, and basically providing
a range of realistic options.
Current statistics show that Belfast port services in excess of 60% of existing
Northern Ireland tonnages, import and export. Warrenpoint caters for approximately
5% of the total. Being the premier port, Belfast will always enjoy that percentage.
By comparison, the Republic's premier port, Dublin, caters for about 35% of
throughput, albeit within a larger market.
We are aware that the basic requirement of Government policy over recent
years is to have regionalised, cost effective, efficient and modern ports.
This to sustain local employment and economies, and to provide facilities to
allow Departments that are entrusted with securing inward investment to offer
realistic choices to potential investors.
The long-term effect of the privatisation of Belfast port would be to endanger
and ultimately destroy such policies at a time when we should be looking for
the economic benefits to be had from the peace process. Because of its size,
Warrenpoint port is more cost effective than Belfast or Dublin and offers a
service to a number of local users who would be unable to sustain the higher
costs involved in using the port of Belfast, particularly increased haulage
costs. The overall consequence would be to reduce the amount of traffic going
through the port of Warrenpoint, thus restricting the port to a niche market
serving only the immediate hinterland. The port would no longer have the critical
mass of business necessary to sustain its current cost-effectiveness.
We contend that a competitive, cost-effective trust port at Belfast would
make a significant contribution to the Northern Ireland treasury. In the long
term, this would be more beneficial to the economy, than the income generated
by a one-off privatisation.
I hope that our views will be of help to you in your deliberations.
It is important to have the views of port users, as they have substantial
vested interests in its future. First of all, I would like to ask Mr McGovern,
what he means by the privatisation of the port of Belfast. Secondly, I would
like to know how important the planned expansion of the port at Warrenpoint
is to the users - this is something which, I know, is causing considerable
controversy in the local area. Are the port's main competitors not Greenore
and, to a lesser extent, Dundalk, or even Dublin - to where Merchant Ferries
transferred its business from Warrenpoint?
As we stated in our submission, Warrenpoint is a trust port, and we feel
that Government control would act as an honest broker. If the Government retained
their control in the port of Belfast, they would be there to act as an honest
broker. The privatisation of Belfast, while it may not have any immediate impact,
would lead to a situation where the managers of the port of Belfast would regard
the traffic currently coming through ports such as Warrenpoint or Londonderry
- or Derry - as target business which they would pursue.
In addition, the landbank at Belfast gives it a distinct advantage over Warrenpoint
and the other ports, which can generate income solely from port activity. Belfast
port has a landbank from which it can generate substantial income in the form
of ground rents and other rents.
Realistically, the Belfast Harbour Commissioners could charge absolutely
nothing for their port activities and make the cost of moving cargo through
Belfast minimal. That would be the impact of privatisation, and there is no
way in which Warrenpoint could compete on an equal footing.
To develop Warrenpoint the port needs deeper water and more space. Ships
are getting larger. The container users, in particular, use the four ports
at Cork, Waterford, Dublin and Warrenpoint. Ships can easily enter the ports
at Cork, Waterford and Dublin, but unless Warrenpoint gets deeper water, their
entrance could be restricted. Warrenpoint is currently using all the space
that is available to it. During the last 12 months ships have been turned away
from the port, as there is not enough space to cater for the cargo. If a business
is not going forward, it is going backwards, so Warrenpoint needs more space
to develop its facilities.
At present Greenore is not considered strong competition. However, if Belfast
is privatised to the detriment of Warrenpoint, the Southern Government could
be encouraged to invest in Greenore, to the further detriment of Warrenpoint.
Greenore will not be developed to any great extent as long as Warrenpoint remains
economically viable and healthy.
You are concerned about the intense competition that would result from the
privatisation of Belfast, but does Warrenpoint not already face strong competition?
Is your particular objection to the privatisation because of the incorporation
of the landbank in the sale?
The answer to your first question is yes. The shipping, transport and freight
industry is one of the most competitive businesses in Ireland. Warrenpoint
is a trust port, and unfair pricing based on revenue not derived from shipping
activities would be unfair. The landbank could subsidise the actual shipping
activity in Belfast. What we need is an honest broker.
Would the privatisation of Belfast port have any detrimental effect on the
future development of Warrenpoint? You referred to the loss of trade and the
distortion of competition. What trades would be affected?
In our summation we highlighted the specific activities which would be vulnerable
to intense competition from Belfast. The containerised traffic and the roll-on/roll-off
traffic, which constitute a substantial part of the traffic moving via Warrenpoint,
would be affected. Warrenpoint has greater economies of scale - probably because
of its size. The cost structure is finally balanced, and a very marginal reduction
in the rates offered by Belfast per movement of container could entice Warrenpoint's
container and roll-on/roll-off traffic to Belfast.
It may not be immediate or in six months. Regardless of what happens, we
as businessmen are competing with Belfast and Dublin ports on a daily basis.
That situation is not going to change. We are a service industry and do not
get any help from the Government. That is a bit of a bugbear; however the freight
and shipping industries have to stand on their own feet and, regardless of
what happens, will continue to do that. The freight business at Warrenpoint
will fight tooth and nail to maintain its business, but our main concern is
that we are able to do that on a level playing field.
The argument that a privatised Belfast port with a targeted pricing structure
would affect Warrenpoint has been made before. One can see how that could happen,
and it is obvious that that is your primary concern. However, we should look
at the problems in a wider context - in the context of the port of Dublin and
its constantly developing infrastructure. If, over the next two or three years,
Dublin continues to expand - which seems likely from the figures - and becomes
much more aggressive in attempting to attract the type of business that you
currently have, what problems will that create for Warrenpoint and Belfast?
If Belfast were allowed to compete against Dublin and there were sufficient
safeguards for ports such as Warrenpoint and Londonderry so that they were
able to continue to operate, and if we were to try to establish those trust
ports with sufficient flexibilities that you were not only able to exist but
were able to expand within the existing parameters, would that be a solution?
I am really talking about how an expanding Dublin port will affect all of
It should be Northern Ireland ports plc fighting Dublin rather than Belfast
specifically. It is all very well to mention the public relations aspect of
Dublin and the fact that it is very healthy and aggressive, but for Dublin
to take a sizeable percentage of the 1.8 million tonnes of business going through
Warrenpoint - for the sake of argument - would currently be virtually impossible.
Dublin has severe quay congestion; it also has an infamous traffic congestion
problem, which is costing a huge amount of money. From a port users viewpoint,
a Northern Ireland aspect and, obviously, from the point of view of our own
businesses, Warrenpoint's advantage - and this is something which we touched
on in the background to the presentation - is its location. About 50% of Warrenpoint's
trade is Republic of Ireland orientated. Business is actually originating from
the northern and western sides of Dublin. Goods are being transported to Warrenpoint,
because it is easier for the haulier to get them there than to Dublin. I realise
that in four or five years time new roads might be built, et cetera, and it
may be that these problems will not exist in the future.
There is a niche there for Northern Ireland in general and for Warrenpoint
in particular. It is a market which we as operators are trying to exploit.
The worst case scenario from our point of view would be a privatised port of
Belfast (and there are different types of privatisation) competing with Warrenpoint.
The port of Mersey was privatised and now operates ferry and container services,
which enable it to compete on the sea with us.
A privatised port of Belfast with such advantages could easily develop a
monopoly which would effectively destroy the trade of Warrenpoint. Privatisation
could see Belfast become the only container port in Northern Ireland; Warrenpoint
simply could not compete. If Belfast were the only container port in the North
of Ireland, it would add another 90 miles to the round trip in the fight with
to the Republic of Ireland. The congestion in the Republic of Ireland gives
a market opportunity to the Northern Ireland ports, and this is something that
we should be looking at.
If Dublin, as seems likely, deals with its traffic problems in the next few
years, that will create more problems for Warrenpoint.
The port of Dublin is not able to deal with the sheer volume of traffic passing
through it. There is a plan to ease the traffic problem by building a tunnel
from the docks to the M50, which should take about five years. However, the
growth in the Republic's economy will see a doubling of traffic in the near
future, and it is unlikely that Dublin's infrastructure will be able to cope
quickly enough. Warrenpoint can move cargo to Dublin almost as quickly as the
port of Dublin can: it takes cargo between an hour and a half and two hours
to get from the port of Dublin to the M50; Warrenpoint can match that. Warrenpoint
does not merely service its immediate hinterland, it can move cargo economically
to Sligo, Galway and the midlands.
The aim of Northern Ireland plc should be to get all the ports of Northern
Ireland working together to compete for trade from the Republic of Ireland.
Am I right in saying that your plan is to increase tonnage at the expense of
Southern competitors, and that that could be done through co-operation between
all the ports in Northern Ireland? Following from that, does there have to
be a level playing field for all the Northern Ireland ports, recognising that
they will not eat into each other's share, to allow you to work together? If
Belfast remains a trust port, can you rely on the Government to be an honest
broker so that Belfast is not as aggressive as a commercial operator?
I do not see the cargo for Galway and the midlands ever going through Belfast.
We contend that that cargo will be lost to Northern Ireland plc. If Warrenpoint
becomes uncompetitive and unable to sustain itself, Belfast will find it extremely
difficult to compete with Dublin for that cargo.
So that trade will go south?
The short answer is yes. The economy of the Republic is more buoyant. We
hope that when things settle down here, we will see all this money coming into
Northern Ireland. Everyone will benefit one way or the other, and we hope that
it will be in terms of timber, steel and containers.
Because of Dublin's problem with congestion, it is possible for us to service
the north side of Dublin more quickly than someone coming from Dublin city.
This is a service industry, and it is time-sensitive. People want their cargo
moved quickly and efficiently. We are competing in the Republic of Ireland.
I know where we are sitting. This is not official policy, but we liaise with
the Irish Development Authority the IDA as well as with the Industrial Development
Board. If the IDA is talking to a potential importer in Sligo about inward
investment, it does not talk about bringing cargo through Dublin, it talks
about Belfast and Warrenpoint. It talks about Derry or Londonderry in terms
of air cargo potential. While it may not be official, from a practical viewpoint,
when citing the benefits of its region, it thinks, as does Dundalk, of Warrenpoint
before it thinks of Dublin. There are some things which cannot be official,
and probably never will be official, but they are little brownie points in
our favour. It is essential that we exploit them, because the economy in the
North is not growing as quickly as the economy in the Republic, and there is
less scope for increase in volume.
If you entered into co-operation with the other Northern Ireland ports, would
you be satisfied to retain the current distribution of market share?
If we did that, we would be going down the road of anti-competition and we
would be in danger of breaking European Union regulations. We have to have
open and free competition. The issue is this "honest brokerage".
Looking at what has happened across the water, in terms of the Mersey situation,
there is potential for the operators of a port such as Warrenpoint to lose
out, and that is our major concern. Let us be very honest about this. It is
quite easy for me to say that we operate out of Belfast, Dublin, Waterford
or Cork and that for me it does not make a difference because my office is
There is a loyalty and a moral responsibility to try to maintain what we
can. Warrenpoint has been there for 25 years, and we have been working
with them for virtually 25 years. A lot of people depend on us for employment,
so we have a responsibility to keep it running well. We also have a responsibility
to our Dutch owners to make as much profit as possible. That, bluntly, is our
main reason for being there.
In terms of competition, we would fight tooth and nail with our competitor
operating through Belfast, as would Mr McPartland with steel or Mr McGovern
with timber. That is what the Northern Ireland manufacturer wants us to do.
Coming from your area, as I do, may I welcome you to Stormont to see, if
nothing else, that despite what you might read in the papers, there are some
Assembly Members and civil servants working. I will be repeating, more or less,
what I said during the presentation by the Warrenpoint Harbour Authority.
Under paragraph 5.1 of your submission you have highlighted the economic
impact for the local area, and I would ask Members to take that on board. The
success which is being enjoyed by Warrenpoint is due to your efforts as port
users over the years. It is a success which we cannot afford to lose at this
stage. I do not have a specific question. However, I would fear that if anyone
was to ignore the plight being put by the Warrenpoint Harbour Authority and
yourselves, then the 1000 port-related jobs at Warrenpoint would disappear
in a flash. I am addressing these comments more towards the members of the
Committee than to the Port Users' Association.
I thank you for the presentation and highlight what I said to the Warrenpoint
Harbour Authority. I am not asking you to reveal any trade secrets but do you,
as port users, have plans for future development? No business can stand still
so I imagine that each of you would be planning to expand.
It is vital for all of the businesses that they continue to grow. I would
like to make the point - although this may not be the proper audience - that
when we see the growth which is taking place in the southern economy there
is no reason why that growth should not be happening 100 miles up the road.
As far as Ms Morrice's question about competing and maintaining the
share we have of the existing business is concerned, we want to increase our
share of the new business but we also want to see the export level of Northern
Ireland plc doubling every two years at least. There is no reason why that
cannot happen. We want to see the Northern Ireland economy growing over the
next five or 10 years in the way in which the southern economy has grown.
There is a responsibility on all of us to make that happen.
When Members are making a decision for the common good it has to be for the
common good of the Northern Ireland economy and not of Belfast, the port of
Derry or Warrenpoint. Warrenpoint can certainly play its part.
As port users, what limitations do you feel the existing port has as a trust
port? Would you envisage any adjustments or changes to the existing status
of the port irrespective of what happens in Belfast? What are the present handling
limitations at Warrenpoint? Which type of port traffic has the best chance
for expansion over the next 10 years?
Would you repeat the first question?
What limitations do you feel there is in the fact that it is -
That it is a trust port?
Yes, that it is a trust port. We are quite aware that there are limitations
in that there are strict legislative guidelines.
As an aside to that question, I am sure that members of the Committee are
aware of the difference between port authorities and port users.
I am asking you as a user.
I wanted to make the point that there is a difference between a port authority
and port users. The port authority is responsible for providing a facility.
It is up to the port users to exploit that facility and bring trade through
that facility. That is the difference.
We, as port users in Warrenpoint, have worked well with the Warrenpoint Harbour
Authority. If we had not, we would not have the volumes coming through the
port that we have. The Warrenpoint Harbour Authority has facilitated the port
users, in whatever way it can, to enable us to attract cargoes through Warrenpoint.
As port users, we are all competitors. Port users, whether they are in Belfast
or wherever, by their nature are competing with each other for business. I
do not see any great restriction on Warrenpoint, as a trust port. We get good
co-operation and assistance, on an independent and honest basis.
I covered earlier the restrictions on Warrenpoint. We need deeper water.
We are using all the space that is available, and we need more. The current
development proposal would provide Warrenpoint with sufficient ground for development,
allow us to maintain the existing container business and enable us to attract
new container business. Space is a day-to-day problem. People will phone to
say they have a 1000-tonne cargo coming in the next week or fortnight and ask
if we can handle it. If we have not got the space, we cannot handle it. The
current space is being fully utilised, and we need more.
Which port traffic offers the best potential for growth and expansion?
We all have a personal interest in that. I am basically involved in the road
freight industry. There are different types of cargo for different types of
activity. The ro-ro facility, in my opinion, is a vital part of Warrenpoint
port - a twice daily link with the rest of the United Kingdom. I move cargoes
to Scandinavia. I can move trailers out of Warrenpoint on a Friday night and
they are in Gothenburg, Oslo or Copenhagen on a Monday morning - Helsinki on
a Wednesday. This is because we can send it from Warrenpoint on Friday evening;
it is in Great Britain on Saturday morning and forwarded on to Gothenburg,
arriving on a Sunday evening or a Monday morning.
This means that a customer in Warrenpoint can produce goods on a Friday and
his customer will have them on a Monday afternoon in Sweden - basically the
next day, leaving out the weekend. There is room for development. The facilities
are there, but the frustrating thing is that we need more industry, producing
more cargo. We can guarantee to get cargo to Europe by the next day or within
How quick and efficient is Warrenpoint in actually handling the import and
export of cargo in comparison with other ports in Ireland?
We have container facilities in each of the five ports in Ireland - from
Belfast right through to Cork- and Warrenpoint, truthfully, is the most efficient.
A vehicle picking up a container in Belfast can wait for three to four hours
to get loaded. Someone in Dungannon can be waiting for a container that could
come through either port, but in Belfast the driver has to spend his time traipsing
across the Westlink.
The average turn-around time in Warrenpoint is 25. In Dublin, it takes four
to five hours for the truck, never mind trying to get through the traffic onto
the main roads. In Cork it takes about 35 to 40 minutes, and in Waterford it
takes about 20 minutes. That is similar to Warrenpoint, but it is a smaller
port than Dublin or Belfast. Those times are because of port and traffic congestion.
I endorse what Mr McGovern said. Because of the buoyancy in the Republic
of Ireland's construction industry, timber and steel are growth tonnages, as
is the container business. There is still tremendous growth in those areas,
and they are probably the three main segments. There is also grain.
The bulk of quality paper coming into Ireland comes through the port of Warrenpoint.
I spoke about the timescales for freight or goods from Northern Ireland to
Europe. Much of the paper that comes through Warrenpoint is high quality newsprint.
It arrives in Warrenpoint one day and is ready for use by the press the following
day. That is a reflection of the economies and efficiencies of Warrenpoint.
It is probably the prime receiver of paper into Ireland.
I wish to ask about the impact of the demise of smaller commercial ports
on Northern Ireland. I am thinking particularly the ports of Carrickfergus
and Coleraine, which is now almost extinct. I was chairman of Carrickfergus
harbour committee for some time. The port was successful because the pricing
structures could be set lower than those at Belfast. Warrenpoint has benefited
from that; Hays Chemicals has relocated within the area of the port. Mr McGovern
spoke about the impact of pricing.
The other issue is in relation to Merchant Ferries and its relocation to
Dublin. Seatruck Ferries is a locally-owned company. Is that an advantage or
a disadvantage, bearing in mind that it does not have the resource benefits
of multinational companies, and that the roll-on/roll-off business is one of
the targeted areas of growth within your business?
Merchant Ferries decided to move to Dublin for its own reasons. I am sure
that we are all aware of the economies that result from running a roll-on/roll-off
business. We are talking about large-scale economies and investment, and Seatruck
is making money while operating through Warrenpoint. Mr Neeson asks about
local interest. Should we simply step aside and let the multinationals dictate
business locations? I do not think that it is a secret that Seatruck is controlled
by local people but also financed by international money. People could see
that it was a viable proposition because of the congestion in Dublin and, to
a lesser extent, in Belfast.
Seatruck is now a stand-alone profit-making company offering two sailings
a day to Great Britain and working very well. >From out point of view it
is great to see it and we have to take our hats off to the company. If it were
not for the initiative and drive of some local people that business would not
With regard to Seatruck you are right in a sense. However, on the negative
side it is a niche company. Seatruck is operating within an area, the border
counties, which, traditionally and historically, has spawned many haulage companies.
It is the truck driver, quite often, who decides which ferry he is going to
use based on his hours and the cost. Seatruck has succeeded in the area because
of the preponderance of trucking companies but should have moved to Dublin
as well as staying in Warrenpoint. Staying only in Warrenpoint is a potential
weakness, but the strength of Seatruck is that it is serving its niche so well
that it is able to maintain merchant ferries.
Your point about Carrickfergus and Coleraine relates to the earlier question
about small ports. It comes down to size. The cost per tonne of bringing small
coasters into Carrickfergus would beat the pants of everyone else. However,
in terms of handling and port costs and the charter cost of hire from the port
of loading to Carrickfergus, the most economic type of vessel in use today
cannot access small ports like Carrickfergus and Coleraine. Thus we have the
unfortunate demise of these ports. A similar fate awaits Warrenpoint it things
do not evolve properly.
Mr Neeson would be very aware of the impact on the local economy and local
morale when ports like Carrickfergus and Coleraine close down. It is important
to let factories locating in Newry and Banbridge know that Warrenpoint and
its facilities are there. Is all the industry going to be located within a
50-mile radius of Belfast if Warrenpoint closes?
May I say that I appreciate how the port authority has adapted to change.
I can remember when everything at Warrenpoint was dominated by Cawoods.
I arrived late and you may have already dealt with my question. If so, I
apologise. In your submission you state that it is the firm belief of your
association that the privatisation of Belfast port would have a dramatic negative
effect on the viability and cost-effectiveness of the port of Warrenpoint.
Two things are not clear to me. First, why, in detail, do you believe that?
The second point, and here I must declare my own hand, is that if you are saying
that the privatisation of Belfast would enhance its competitiveness to the
extent of putting Warrenpoint out of business, that, in itself, is not an argument
against the privatisation of the port of Belfast. What you would have to establish,
concretely, to sustain an argument against privatisation is that such action
would lead to an unfair advantage for Belfast. In the long-term interests of
the Northern Ireland economy we cannot be opposed to the increased competitiveness
of a major port because it would lead to the closure of small ports.
With respect, we have covered that issue. To some extent we are unsure, but
while the port is in Government control - Warrenpoint is a trust port - the
trust and the Government should act as honest brokers.
On the issue of competitiveness, Belfast, because of its landbank and the
revenues that it can derive therefrom, is able to subsidise its port activities
unfairly. Warrenpoint cannot do that. It is not a case of Belfast being more
competitive than Warrenpoint.
Belfast's revenues allow it to operate a predatory policy, and if it achieves
overall control, income from the landbank will enable it to reduce shipping
and handling costs to levels that would be unrealistic for Warrenpoint. Warrenpoint
does not have a landbank and is therefore limited to the tonnage through the
port each day. Belfast is not dependent on tonnage as its landbank income subsidises
port activities. As a businessman I accept the principle that the cheapest
price should win, but this is not a level playing field.
Other aspects to be considered include the effect on the local economy and
the fact that if Warrenpoint port ceased to operate, £12 million per year would
be lost to the Treasury. Other factors are involved - it is not simply a matter
of comparing the costs of shipping a tonne of cargo through Belfast and through
The concept of Northern Ireland plc, mentioned in the response to Jane Morrice
and me is interesting, as is Warrenpoint's geographical location in relation
to the Southern trade and the problems in Dublin. A five-year "window",
or thereabouts, exists, before Dublin can make significant progress on its
roads infrastructure - which may or may not affect Warrenpoint's traffic -
to promote the Northern Ireland plc concept.
It is unlikely that the three main ports, given their competitive nature,
would join such an arrangement. However, in relation to the concept, is there
merit, from a user's point of view, in looking at the advantages of Warrenpoint,
if its deep water, road and space problems could be addressed, in looking at
Belfast's wanting to compete with Dublin, and in looking at Londonderry, which
could have, and does have, a sizeable market in Donegal? Is there merit in
looking at greater flexibility which would allow the main ports to market themselves
- together or separately - in that context over the next five years, before
intense competition arises from Dublin's problems being solved?
Yes, I hope that that will be the case and that one of the consequences of
debating the privatisation of the port of Belfast is that people like you will
get to know a lot more about the shipping industry, the port activity and how
important the ports of Northern Ireland are to the local economy. That
is where the honest broker comes in again. Let us be honest: what local politicians
have we had controlling Belfast port? I may be speaking out of ignorance, but
as far as I am aware, Belfast port is run by the Belfast Harbour Commissioners
and civil servants. Assembly Members are local politicians and should think
in terms of Northern Ireland plc - surely that is the way forward. The
Assembly should be asking how Warrenpoint port, Londonderry port and Belfast
port compete with Dublin.
The privatisation of Belfast would go in the opposite direction because that
would be predatory. Belfast would feel that if it got all of Northern Ireland's
business, it would be happy enough for Dublin to get the South of Ireland's
business. The long-term interest of Northern Ireland plc is not the short-term
gain of people sitting in banks or whatever and increasing profits and stacks
of money for some.
That is a very pragmatic viewpoint. I can understand that it is black and
white from your perspective, a sort of business decision. If there is a loss
here and a gain there, how do we juggle it, and what is the bottom line?
There is huge competitiveness, if you like friction, between the users of
Warrenpoint and the users of Belfast. The big concern - and maybe this did
not come across strongly enough at the presentation - is this predatory pricing
and the discrimination towards the smaller port. For example, today there are
business moves from a factory 2kms away from the port of Warrenpoint via container
into Germany through the port of Belfast. Why can Warrenpoint not do it; why
does the guy in Belfast handle it?
Local competitiveness could be eroded because there could be massive savings
from working on the continent -you would be gaining a larger area for travelling
in yet saving money. Let us come back to the Mersey port and dock situation.
There is a land bank there, a huge amount of money, and a certain limited element
of control on the port. There a climate can be created in which, no matter
how hard we try, no matter what cost measures we take, we cannot win. We are
coerced, for example, into taking the hard decision of maybe moving to Belfast
against our will, because that is the only way in which we can survive in the
If Belfast port is privatised to the detriment of Derry and Warrenpoint,
it does not take a genius to work out that Belfast will not have to worry about
competing with Warrenpoint and Londonderry in five year's time. It is guaranteed
that the price of a tonne of cargo going through Belfast will be much dearer
then than it is now.
Thank you for your presentation and for answering the questions. Would you
like a couple of minutes to sum up, or are you happy enough?
No. We really appreciate this opportunity to give the Committee our views.
Obviously we think that this is a very serious issue. We have mentioned our
own businesses; we have mentioned the port of Warrenpoint; we have mentioned
the surrounding area of Warrenpoint; and we have mentioned Northern Ireland
plc. We are simply asking that Belfast is not privatised.
I thank you all very much.
AD HOC COMMITTEE
(PORT OF BELFAST)
(Mr A Maginness in the Chair) Witnesses:
MINUTES OF EVIDENCE WEDNESDAY 19 MAY 1999
The Parliamentary Under-Secretary of State
Mr R McMinnis and Mrs B Faloona
(Department of the Environment)
Good morning, Minister. You and your two colleagues, Mrs Barbara Faloona
and Mr Robin McMinnis, are very welcome. We are pleased that you
were able to come back again to assist us in our deliberations.
I understand that you wish to make some introductory remarks, after which
you will take questions.
Thank you, Mr Chairman. Thank you also for being so understanding about my
difficulties last time. Once again I apologise for the fact that I had to run
off. Let me assure you that in case you want to go into this in more detail,
I can stay until 2.30 pm, although I suspect you will not want to spend
that much time on it.
However, I appreciate your understanding, and thank you very much for giving
me another opportunity.
A number of questions were asked last time to which, given freedom from time
constraints, I could develop answers. If you are agreeable, I would like to
deal with the questions that were not fully dealt with before, and then I will
take any other questions.
Thank you very much for a second opportunity to discuss these issues with
you. Since my last visit, Robin McMinnis has written to you about the
possibility of a meeting with your advisors from the University of Ulster.
Given how complicated these issues are, it would be useful if you would let
some of my officials have a meeting with the people from the university so
that we have a better understanding of the university's thinking. But I will
leave that with you.
The Committee will certainly consider that.
Having looked at the report of the last session I found there were some questions
which I can answer more fully, now that I have the time. The first, raised
by Mr McGimpsey, was about separating the landbank from the port business.
Would you like me to proceed?
Yes. Mr McGimspey is not present at the moment, but he may be along
The first three I have a note of are all Mr McGimpsey's questions.
The Committee would appreciate an enlargement of your response to his questions
even though he is absent.
In fact, the first five came from Mr McGimpsey. The first point is a
key one - and one which I know the Committee is concerned about - and that
is the possibility of separating the landbank owned by the harbour from the
ongoing port business. That is probably the most crucial point that has concerned
the Committee - at least that was the impression that I got.
The Commissioners' proposals envisage the transfer of all of the port's assets
to the private sector. That is consistent with the Ports (NI) Order (1994).
There is no provision in that legislation to permit the port operational land
to be dealt with separately. The Department explored that possibility, but
the Commissioners and port users did not favour that approach. Both the Harbour
Commissioners' advisors and the Department's advisors have said that without
the development potential offered by the land, they feared it might not be
possible to attract the interest of institutional investors.
Therefore, if that were the case, the business could not be floated and that
a trade sale would not offer the same benefits in terms of an equity stake
in the business or shares for local investors. They are not saying that it
could not be disposed of, rather that the better way of doing so with the various
safeguards might not be possible and that they would, therefore, have to do
it in a different way and possibly get less money for it. The Harbour Commissioners
see the landbank as a very key part of the assets and without it there would
be less interest in the harbour. Any decision to separate the land from the
port business would reduce the total proceeds from the sale.
I know that the Commissioners are aware of your Committee's concerns and
I am sure that you put those points to them when they appeared before you.
I understand that the Harbour Commissioners are shortly to submit a further
paper on the question of how they intend to proceed. It is not for me to tell
the Commissioners how to do so, but no doubt you will put to them options such
as how the concerns of Belfast City Council might be incorporated in any way
There is also a master plan for the port lands and there is the planning
system, which, for all the criticism of it, does still have a number of possible
safeguards with regard to development. I am anxious that there should be safeguards
and that the concerns expressed here and by Belfast City Council should be
addressed, but in the first instance that has to be up to the Harbour Commissioners.
Thank you, Minister.
Assemblyman McGimpsey, the Minister specifically directed that response to
your question from the last time.
I apologise for being late, and I missed part of the Minister's answers.
As I came in he was talking about a master plan for the harbour. We are all
aware that the master plan for the harbour did not work when it came to the
D5 application for the huge shopping centre. This was land zoned for service
and light industrial job creation, but we ended up with another out-of-town
supermarket, so the master plan is by no means set in stone. When the Belfast
City Council and North Down Borough Council, Carrickfergus Council and a number
of other councils unanimously opposed it, the planning system just did not
work in that situation. Uniquely, in Belfast, every single party represented
opposed it, ranging from the Ulster Unionist Party through the SDLP across
DUP, Sinn Féin and PUP, yet it still went ahead. The views of the people
living in Belfast and further afield, as represented by their political representatives,
counted for nothing.
My concern relates to the argument that the land has to go with the port
in terms of privatisation. Who says so? The Harbour Commissioners say so. They
say that the harbour cannot be privatised unless the land is tagged on. Who
says so? The Harbour Commissioners say so. They claim that they have a report
from experts which backs this up. We have asked them for it and they will not
let us see it. The Minister makes the point about differentials in terms of
cash realised between sale of port without land and sale of port with land.
There are no figures to back that up.
I repeat that there is deep unease over this proposal and it seems to me
that we are not talking about privatisation of a port but about a grand land
sale with a port thrown in. Those deep concerns remain. We cannot get answers
to our questions. How much is the port, with land, going to realise? There
must be a rough idea of idea of that. How much will the port realise without
the land? In other words, what is the value of the land? Before we get into
the commercial benefits, what are the benefits going to be in cash terms? The
argument is that the Harbour Commissioners are strapped for cash, yet they
have over £20 million lying in their bank account, and they say that they
cannot release that. It seems to me that if it is their wish to develop the
port, that money could be released and ways could be found to allow them to
borrow money on the open market, without going through all of this process.
May I comment on what the Minister has said about this specific issue. I
am becoming increasingly concerned about the Department's neutrality on this
matter. Your arguments sound like those of Gordon Irwin.
They are almost exactly the words and propaganda that we heard from the Harbour
Commissioners on this issue. One of the reasons for the huge concern about
the sale was the cavalier way in which the Harbour Commissioners dealt with
the landbank and the way in which, in the past, they have overridden their
own plans. Michael has alluded to the fact that this was done despite the huge
shortage of land in east Belfast for light industrial use. The part that was
set aside for that purpose was put into retail use because it was more profitable,
and the Harbour Commissioners simply tore up their master plan for the harbour.
There is concern about such an amount of land being handed over to a privatised
company that is driven by profit by an organisation that was not primarily
profit making. I do not think that that fear about the landbank transfer will
go away. It is reinforced by your point that if the sale were to go ahead without
the development land there would not be the same degree of interest by institutional
investors. Is this just about getting development land into the hands of institutional
investors or, as you have said in your brief, is it about enabling the port
to better meet the challenges ahead and to ensure the long-term security of
The emphasis that is being placed on this land by you and by the Harbour
Commissioners, leads us to the conclusion that the port is simply a side issue,
and that the 2000 acres of land in the heart of Belfast is the main issue.
If privatisation is to go ahead, we should like to see the landbank removed
from the equation.
You said that under current legislation, the land and the port have to be
dealt with as one issue. Surely you and your Department appoint the Commissioners,
and if it was in the public interest I am certain that it would be possible
to introduce new legislation to ensure that that is not the case. Do you accept
that the matter is under your control, and that you could deal with it differently?
I agree that I appoint the Harbour Commissioners, although some are nominated.
Belfast City Council has one nomination and my function is to ensure that that
person is a proper individual to be a Harbour Commissioner. I cannot otherwise
second guess the City Council's approach. I have never seen it as part of my
responsibility to use my power of appointment in as specific a way as is implicit
in your question - in other words, you play ball or you do not get on.
That would not be the proper way for me to approach it, and it is certainly
not any suggestion that I have acted on in the past in relation to appointments.
Prior to devolution the Government have the power to bring in new legislation.
The difficulty is legislative time. We would have to have new primary legislation
to deal with this, to give to the Government the powers that you want them
to have in relation to this, and it would take a long time to have the legislation
drafted, to consult on it and then find parliamentary time.
Obviously if devolution happens quickly, the Assembly will be in the driving
seat, and all of these problems will be for the Assembly to deal with, but,
even so, developing entirely new legislation will inevitably bring about a
lot of delay. What we are doing at the moment - and what we have done - is
to act on existing legislation, and it is on that basis that the Harbour Commissioners
came forward with their proposals. It may be possible to do some fine tuning,
but that is the position.
Mr Wilson said that I sounded like the Harbour Commissioners. In a sense,
of course, the initiative for this proposal has come from the Harbour Commissioners,
and they have had a lot of experts advising them on the way forward, so if
I am quoting what they have said to you on other occasions, it is hardly surprising,
because on this issue, they have had more expertise than we, as a Department,
have had. I am simply saying that that is the advice I received from them,
and I do not have enough independent advice which has gone in a different direction
- any advice we have had has gone along the same lines.
Yes. It has generally supported what the Harbour Commissioners have said.
It is not surprising that on this issue I have not taken a different line
from the one the Harbour Commissioners have given you, because all advice has
come from the same source.
How neutral is the Department in all this? When the Harbour Commissioners
first came up with their proposal I said to them "Yes, in principle that
is fine. Would you like to develop the proposal?". We went public at that
point, because I wanted it to be absolutely clear that nothing underhand was
going on, that the Government were not doing anything that was not in any way
absolutely clear and transparent. So I said publicly what I had said to the
Harbour Commissioners "Yes, go ahead. In principle we go along with that".
The Chancellor of the Exchequer's initiative is another factor. I mentioned
this before, but I will elaborate. The Chancellor announced that an additional
£70 million would be made available to the Northern Ireland block
but that figure was clearly based on the amount that would be raised from the
sale of the harbour. The Department is not neutral on that one.
I am not in a position to get involved in the details of the scheme that
the Harbour Commissioners will eventually come forward with. The Department
will have to satisfy itself that that scheme is satisfactory and act on it,
and we do not want to prejudge that. I think that deals with the neutrality
What is the motive? Is the motive the land, or is it the well-being of the
economic effectiveness of the port of Belfast. I believe that doing nothing
as regards the port operation would be damaging to Belfast's future. Ports
are an increasingly competitive business - I mentioned when I was here last
time that Dublin is becoming increasingly competitive in terms of what it has
to offer - and if we stand still, we shall simply lose business from here to
Dublin. I am concerned that Belfast, as a port, should be as competitive as
possible, consistent with the need to improve the local economy. I am also
concerned that Belfast port should not have to operate under constraints which
counteract its ability to be as effective as possible. For example, Belfast
port is currently very limited in terms of making investment decisions.
If, for example, Belfast Harbour Commissioners wanted to upgrade port facilities
in England to improve movement of goods and people from Belfast, at the moment
they are precluded from doing that even though they might want facilities at
the other end to improve things for customers.
With regard to the £20 million that you mentioned, they are very limited
under their present status as to how they can spend that. Indeed, they would
have been happy to spend it on improvements to the Westlink which would improve
access to Belfast harbour. However, under the trust port status they are simply
not allowed to do that.We need to have some change so that Belfast harbour
can actually make use of assets and resources such as that £20 million.
Now that is the harbour side and that alone seems to me to justify a significant
change in the status of Belfast harbour from its present position.
With regard to the land, the Government's general view is that the public
sector should not be sitting on assets which are not being used in the best
interests of the people of Northern Ireland. It is wrong in principle
that the Government should sit on chunks of land which are not being properly
used when there are ways in which they can be used to the benefit of the local
economy. Indeed, after the election we did a review of all public sector assets
to make sure we were not inadvertently sitting on things which should be disposed
of and put to better use rather than just sitting idly in Government possession.
The landbank of the harbour is the biggest single chunk of land, and it is
not right to allow a situation to develop wherein land is not being properly
used. That holds back the economy and is not proper in the interests of Northern Ireland.
Both interests apply, although my initial concern was that I wanted Belfast
harbour to be as competitive as possible.
The land issue was a more general one, but it had a specific application
in relation to Belfast harbour because of the size of the landbank and because
there was land in the middle of our major city. Therefore it is of crucial
importance to the city's future and to Northern Ireland's future. Both
are important but even if there were no land attached to the harbour we would
still have to take action to enable the harbour to develop in the way I have
Mr Wilson wants to ask a supplementary question. Would you like to respond
now and then move on to Mr McGimpsey's point?
That is fine.
It refers to something you said, Minister. You say your conclusions are based
on the information you received from the Belfast Harbour Commissioners and
the independent advice which you have received. We are not aware of what other
advice you have received - perhaps you could enlighten us. The only advice
we have been informed of is in paragraph 4 of the brief which you sent us for
the last meeting and that was in relation to the review of the trust ports.
The Department mentioned only two recommendations. They were that the legislative
powers should be extended and that public accountability should be improved
by increasing district council representation on the boards. Maybe you have
received other independent advice which is not mentioned in this document.
However, it is significant that the only recommendation which you told us you
had received from other findings does not mention privatisation but does mention
extended powers and greater accountability.
May I ask Mr McMinnis to comment on that. I have had advice from Mr McMinnis
and maybe he will tell you where he got his advice from.
Mr Wilson, I explained last time that Belfast Harbour Commissioners' proposals
came forward at a time when the review of trust ports was underway. I said
then that it was largely a coincidence. If we think back, the legislation which
governs the privatisation was two years before that. The Harbour Commissioners
were working on these proposals for the best part of two years before the review
of trust ports came forward.
As we explained in the paper we have commissioned PricewaterhouseCoopers
and a firm of Glasgow solicitors, McGrigor Donald, to advise the Department
and assist us in evaluating Belfast Harbour Commissioners proposals.
Belfast's initial proposals which came to us in December 1997 were simply
an outline, and we looked at them with the assistance of Ernst and Young.
We did that quite separately from the review of trust ports, because the terms
of reference for that review, which we have shared with Mr Wilson in the
past, were much wider and did not focus on whether the port of Belfast should
As the Minister said, the Government came to the view that, in principle,
it was right that the matter should proceed and that Belfast Harbour Commissioners
should develop their proposals. The Government received BHC's detailed proposals
at about the same time as you did. The Government wants to hear from the Assembly
before doing anything further, which means that, in a sense, we await the reaction
of the Committee and the Assembly to those proposals.
Did the Government consider the other ports and the problems that could arise?
We are looking closely at the other ports. We commissioned further work by
a firm called ERM, which is familiar with such work and has been employed in
the past by Warrenpoint and Lisahally ports. ERM has intimate knowledge of
the port scene in Northern Ireland, and we have asked it to carry out
further studies on the likely effect of the privatisation of Belfast on the
activities of other ports. Belfast Harbour Commissioners are equally aware
of the fact that we are looking at that and have commissioned separate advice.
I think that it is incorporated in their submission to you.
I do not agree that we received the same information as the Department. We
read in the newspapers that infrastructure work was subject to the sale of
Belfast port. Surely before the Department or Ministers support anything, they
should have all the necessary information. We are told that the Department
is in favour of privatisation and that it is seeking more information from
the other ports to enable it to assess the damage that might result from privatisation.
Decisions by the Government or by the devolved administration come into it
in two ways. I made the decision in principle to ask Belfast Harbour Commissioners
to work out their scheme in detail. Any further decision by the Government
has not yet been made. It has been entirely left to the Harbour Commissioners
to work out their scheme and for consultation to take place between the Commissioners
and interested parties. The Assembly decided to set up this Committee to work
on its behalf, and we have not made any further decisions. We are partly in
the Committee's hands and those of the Harbour Commissioners. After devolution,
it will be a matter for the Assembly.
There was a review of trust ports. We are now considering the views put forward
on behalf of Warrenpoint and Lisahally ports. There are some difficulties,
which we are discussing with them, relating to the problem of how to reconcile
the degree of freedom of action which they wanted with the necessary public
accountability. We need to discuss this further, and no final decision has
yet been made.
With regard to Mr Tierney's point, I have to say that, even after this stage
of the consultation, Belfast Harbour Commissioners still have to submit a formal
transfer scheme. This will have to be advertised in the 'Belfast Telegraph'
and other local newspapers, after which there has to be a 42-day public consultation
period. It would be quite wrong, therefore, for this Department to reach any
final decision on the privatisation of the port of Belfast in advance of that.
Why were the plans to improve the road network announced if no decision on
the port had been made? I understood that those plans depended on income from
the sale of the port.
The Government agreed in principle to the Harbour Commissioners' proposal
and asked them to work out the details. This was on the assumption that the
Commissioners would submit a scheme which would be - or could be made to be
- acceptable to the Department. The Chancellor, in good faith, announced a
package of schemes, £70 million of the cost of which would come from income
generated by the sale of the harbour, representing a net increase in the money
available for Northern Ireland. The Government did this because it supported
the proposal, but the precise details of the scheme have not been finalised,
for the reasons which I have set out. We have not received details of the transfer
scheme from the Harbour Commissioners, but I imagine that they are taking note
of the views of this Committee, and that these views will have an influence
on the scheme which the Commissioners will, eventually, submit.
Would you like to address the points raised by Mr McGimpsey?
I am not sure that it would be proper for me to take up the Committee's time
in discussion about the D5 issue, although I would be happy to discuss it on
another occasion. Could we put this to one side for the moment?
I do not wish to get involved in another discussion about D5. That is water
under the bridge. We discussed it previously, and our views were not -
It would be best if we were to avoid a discussion on D5.
We are talking about a breach of the masterplan - the planning system which,
you said, gave some sort of protection. I mentioned the case of D5, because
that shows that it does not.
I understand what you are saying, but I would like to move on to the next
point, concerning valuations. We do not have a valuation for the harbour, with
the land. That will have to be worked on, and I understand that it will be
a detailed, complicated and costly exercise. The Harbour Commissioners will
want to have this done when they are preparing a prospectus for the sale of
the harbour. I too would like to know the difference between the value of the
harbour together with the land and their separate values. The information I
have received - most of it from the Commissioners' advisers as well as some
from our own - states that the harbour would be worth much less without the
land, than it would with it. I do not know the answer, but I agree that it
is an important question. Nevertheless, the Harbour Commissioners will want
to be careful about spending large sums of money on such exercises, given that
the prospectus for the sale, which they will, eventually, produce, ought to
be as up to date as possible, and that market forces can influence the valuations.
I do not know the answer, but the golden share, which, it is clear, will be
part of the scheme, will give the Department a key input to any decisions about
the disposal of assets.
A privatised harbour could either sell off the land, though the golden share
could prevent the Belfast Harbour Commissioners from doing this, or they could
develop it through short-, medium- or long-term leases. I understand that the
Belfast Harbour Commissioners would prefer to lease the land rather than sell
Mr McGimpsey has expressed his concern about the valuation of the land. May
I assure him and the Committee that the Department takes this matter very seriously.
In Great Britain, when the privatisation of a port was contemplated, the
port authority undertook the valuation and the Department did a second check.
With regard to the port of Belfast, we have enlisted the Valuation and Lands
Agency to help us recruit independent valuers to check the Belfast Harbour
Commissioners' valuation. In addition, due to the commercial advantages that
the holder of the landbank would have, we are also seriously considering employing
someone with the necessary business acumen to assess its true value. All that
information will then be considered. We must ensure that we get full value
from the sale. We are very conscious that we will have to answer to the Assembly
if we get the valuation wrong.
I do not believe the Belfast Harbour Commissioners when they say that they
have no idea of the value of the land. It is an absolutely fantastic proposition
that the Belfast Harbour Commissioners could be sitting on this land for generations,
and when they decide to sell it, they ask us to believe that they do not even
know its notional value. We are discussing 2,000 acres in the heart of
Belfast, and as Mr Wilson mentioned, whoever owns that land will literally
have Belfast in the palms of their hands in terms of development. Through owning
this city centre land, they will be able to determine how Belfast develops
for generations. This is one of our deepest concerns.
There is a view that this is all pre-cooked. We are told that the Westlink
upgrade and the Toome bypass are both dependent on the sale of the land. I
do not wish to labour the point but it almost sounded like blackmail - that
these roads are dependent on the sale of the harbour. I would refer you to
a letter that you sent to Belfast City Council a few weeks ago which detailed
the roads that were to be included in the next five-year programme. In one
of them, lo and behold, half of the money is the Westlink allocation of £36 million.
We may be seeing things that do not exist, but we are concerned that this has
Mr McMinnis referred to the Pricewaterhouse Coopers report, a McGrigor Donald
of Glasgow report - I have never heard of that one - and an Ernst and Young
report. We cannot make an informed decision unless we have all the information.
We asked the Belfast Harbour Commissioners for a sight of the reports, and
we are still waiting. These reports should be in the hands of the Committee.
This might not be within their remit, but are you aware that the Belfast
Harbour Commissioners have employed a public relations company to sell their
view on the privatisation? If everything is being done strictly upfront, I
do not see why they need spin doctors to help them.
I should like to make some comments and Mr McMinnis may amplify some
of the points. I do not know what type of assessment the Belfast Harbour Commissioners
have made on the value of the land. I suspect that their reluctance to comment
is because whatever they say that might be grossly inaccurate. As the value
of their assets will be crucial to the prospectus for the eventual sale of
the harbour, I can see that they do not want to say anything publicly that
might be at variance with the final valuation. They would naturally be cautious
at this stage because, should the valuation be out of line, it would cast doubt
on the way in which the prospectus is presented. Historically, they would have
some knowledge about it, but we are debating a valuation for a prospectus that
will interest potential investors. This is crucial, and I suspect that their
sensitivity stems from the fact that they do not want to make a mess of the
final prospectus and the way in which it would be perceived.
I can understand that, but on the open market, the valuation will be determined
by the market at that point. I understand that the proposals are for placements
of shares, which means that someone rings his chums in the London money markets.
It is that sort of closed bidding that makes this so important.
When one has a piece of property to sell, one gets an agent to value it,
and he may get it right or wrong. People bid for it and the final price becomes
the market value at that time. That will not happen here. I understand from
the Belfast Harbour Commissioners' proposal that fund managers in the City
of London will be asked to consider shares. There will be no bidding, and that
is why the valuation is absolutely crucial.
I agree that the valuation is crucial. However, there are other ways. Theoretically,
they could be advised of a value for the shares and then put them on the market.
If they are undervalued, people would make a killing overnight, and we are
anxious that there should not be any overnight killings. The advice that I
have received is that the suggested method of offering the shares will maximise
the return and is consistent with providing a safeguard against people mounting
a takeover in the way that has happened elsewhere. We are trying to avoid fat
cats and takeover bids and are hoping to maximise the return. The advice that
I have received is that the way suggested will better achieve those ends. I
am not an expert in this area, and I have to listen to the people who are.
I was asked about how much information from our advisers could be made public.
I shall ask Mr McMinnis to comment on that. The Department needs advisers
to enable it to carry out informed scrutiny of the harbour proposals. Independent
advisers enable us to make a critical assessment of the Belfast Harbour Commissioners'
proposals rather than simply having to accept them on the basis of their advice.
Mr McMinnis will comment on whether any of that can go public and at what
point. After that I shall deal with the Westlink and blackmail points.
PricewaterhouseCoopers and McGrigor Donald are providing ongoing advice
to us on the proposed sale of Belfast harbour. There is no report that we can
simply hand over to you. The Minister is right to say that this is a sensitive
commercial issue. For the reasons that I gave earlier, we have not pronounced
on the Harbour Commissioners' proposals. We are waiting to hear from this Committee
and from the Assembly, and the transfer scheme has still to be published.
On the value point, it is important to remember that not just the land but
a brand new business would be up for sale.
Once they have established themselves as a successful business, BHC can get
involved in the kind of things that the Minister was talking about, such as
engaging in a joint venture with port authorities in Great Britain. That
is one of many ideas being discussed by the board at the moment. These would
be described in the prospectus, allowing prospective investors to form an opinion
on the value of the new business. As Mr Gimpsey said, the land will be
of crucial importance, as will existing-and potential- profits. Our advisors
will study the price/earnings ratio of ports in Great Britain and compare
them with those of Belfast Harbour Commissioners to see if they compare favourably.
All of these considerations will have to be taken into account before a final
decision is reached.
Let me deal quickly with the method of sale. The initial proposals from Belfast
Harbour Commissioners were concerned only with encouraging financial institutions
to take a stake in this business. However, we in the Department encouraged
the Commissioners - we are Northern Ireland people after all - to make
their offer more widely available to the public. We proposed that they use
local intermediaries, banks and building societies to make shares available
to the general public. We are pleased that they agreed. It is no longer a question
of selling the port to five or six financial institutions. We intend to discuss
the business with these financial institutions as part of a book building process
in order to determine how much the port is worth and how much they are prepared
to pay for it. Clearly, we will be keen for it to realise its full value.
Mr McGimpsey used the words "pre-cooked" and "blackmail"
when he talked of Westlink. Before the Chancellor's announcement, the Government
were under enormous pressure to increase investment in the infrastructure of
Northern Ireland, not just roads but a whole range of things. One important
element in the Chancellor's announcement was that £70 million would be
spent on important roads in Northern Ireland. I am deeply unhappy about
the use of the word "blackmail". As devolution was some time in the
future, the Government had to find ways to raise the money necessary for the
successful economic development of Northern Ireland. The strategic roads
mentioned by the Chancellor are an important part of that. We felt that speed
was of the essence; we would not hold up schemes. We would do the preparatory
work, because we felt that we owed it to people to get these schemes under
way as soon as possible.
Doing nothing about the ownership of the harbour was not an option for the
Government. If the Harbour Commissioners were to develop the land themselves,
the money raised could not be used for the roads. If that had not been the
case, we might have looked at the matter differently; but it is the case. We
had to use the assets for the economic betterment of Northern Ireland rather
than leave them as they were.
We felt that there was a way forward which would help Northern Ireland
economically, based on the Chancellor's announcement and the proposals that
the Committee is currently considering. If we do not do this, the harbour will
be left as it is. Some changes will have to be made as per the Trust Ports
Review, but it will remain the way it is, and there will be no assets to use
for the good of Northern Ireland. That is the alternative. I do not like
the word "blackmail", but it seems to me that a simple choice will
have to be made.
We wanted the Assembly to take the driving seat on this; difficult decisions
will have to be made, and we cannot see any way of avoiding that. The Chancellor
has produced a net increase of £70 million for Northern Ireland through
the sale of the harbour. If the Assembly's view is that they do not want this
or they have a better suggestion, so be it. I sound as if I am preaching; I
do not mean to. That decision falls properly within the remit of the Assembly.
You have to decide what is most important; should you cut expenditure on roads
or cut expenditure on other things and keep roads going? Some very clear choices
will have to be made. The Government did not wish to put improper pressure
on our successors, but the Chancellor, in good faith, was merely saying that
this was the best way forward.
We were told originally that the roads would not be built unless the sale
of the harbour went ahead, but your letter to Belfast City Council says that
the road schemes are going ahead.
There are two sets of road schemes. I announced certain other schemes, but
we are talking about the main road schemes announced by the Chancellor.
The Westlink was the big project announced by the Chancellor; it is also
the big project mentioned in your letter.
We are proceeding because the Government have said, in good faith, that we
will proceed with those schemes. We have also said that it will be up to the
Assembly, when it takes over, to decide on the priorities that it thinks are
proper for Northern Ireland. I have said on a number of occasions that choices
will have to be made, and if the Assembly does not wish to proceed with the
plans for the sale of the harbour, £70 million will have to be found from
elsewhere or cuts will have to be made. Those are the day-to-day political
choices that Governments have to make.
I am concerned that we are rushing towards a predetermined outcome. You are
presenting us with a dilemma over the £70 million that is needed for the
roads. A proper economic appraisal of the development potential of these 2000 acres
has not been done. According to the recent unemployment figures, 25,000 people
in Belfast are out of work. We have a duty to ensure that this land is utilised
so as to address that problem.
At the same time, we have to consider the existing harbour and its potential
for future development. It is worrying that Belfast has slipped back as a port
facility and that Dublin has moved ahead of us. The Harbour Commissioners'
submissions do not emphasise how they intend to develop the port; they seem
preoccupied with utilising the landbank as a resource. If there is no proper
economic appraisal of its development potential, I do not know how the land,
as it presently stands, can be valued.
Mr McGimpsey mentioned the shortage of land in Belfast for industrial units.
It seems to me that it is not good enough for the Department of the Environment
solely to be handling this matter. We need to have an interdepartmental approach
involving the Department of the Environment and the Department of Economic
Development as this is a vital resource, not only for the people of Belfast,
but also for the people of Northern Ireland.
I am also concerned that it is only now that we seem to be talking about
the other ports - Warrenpoint and Lisahally in Derry. The Warrenpoint Port
Users' Association wants to see Warrenpoint port expanded and developed. There
has to be a comprehensive examination of how the three ports can be developed
to their potential, be it niche-market services or whatever for the smaller
Finally, I am sure that there are other things which could be looked at.
Surely we should not be afraid of looking at developing a free port enterprise
park in Belfast, if need be. This is an ideal location for people from north,
west and east Belfast. We want Belfast, as a city, to revitalise itself from
a retail and general business perspective. The Department of the Environment
is looking at this from a very narrow perspective at the moment. The Harbour
Commissioners are looking at it from a very subjective perspective. The Committee's
remit enables it to be wider in its deliberations.
I do not like the problem concerning the £70 million required for road
improvements. The Minister will be aware that I have lobbied for many years
about the roads in my part of the world. I do not want to see this asset being
frittered away purely for the roads.
The whole consultation process greatly concerns me. We were told initially
that the whole future road infrastructure in Northern Ireland depends
upon the sale of the harbour. That, to say the least, is quite outrageous.
Furthermore, what is being handed down to us is ludicrous. It is a case of
"this is what we are going to do, and before you agree to do it we are
going to read it out to you and tell you". Paragraph 12 of the Minister's
written submission states
"In considering the Commissioners' proposals the Department has been
drawing on the advice of PricewaterhouseCoopers, and McGrigor Donald".
Pricewaterhouse only considered the proposals of the Harbour Commissioners.
Are there other proposals which we should know about?
The Department of the Environment has established a project team led by a
senior civil servant and consisting of officials with experience of earlier
privatisations. Who are they? Does the team exist yet? May we have access to
the information which they have? May we have this information made available
With regard to the sale of the harbour, I suspect that it will be sold in
the same way as every other asset has been sold - wrongly. There is no redress
after something has been sold. It is put up for sale and it is sold. If you
get it wrong you shrug your shoulders and walk away. That happened with the
sale of the airport, British Airport Authority, British Telecom and the building
societies. Do I need to continue? Tell me of one which was sold correctly?
How can we guarantee that we will get this one right? There is no guarantee
that this will be the case. It is most likely, if past experience is anything
to go by, that the harbour will not be sold correctly.
I would like to know a bit about the team which the Department has established.
How far has its study progressed? Can we have access to it?
Mr Byrne asked about the development potential of the land. At the risk of
upsetting my officials, I may say that I do not think that Government Departments
are very good at dealing with matters that involve commercial decisions. There
is a view that Government should be good at this, but my experience of civil
servants and Ministers is that they are not good at that sort of thing.
At the same time they should not give the land away.
Of course not. Although there may be better ways of proceeding, we have to
take action on the landbank, and there will be no action if the harbour is
left as it is. Even if the Department could take the lead on this matter, we
do not have the legislative power. Land gets developed because individual enterprises,
mostly private companies, although there may be some publicly-owned businesses
as well, feel that they can do it in a way that is economically advantageous.
The skill lies in maximising the benefit of such decisions, slotting them into
the scarce resource of land. Even if the Department had the powers, I do not
think that that would be the right way forward.
Although I am a long-standing Labour Party member, I have to say that in
some fields the private sector is better than the Civil Service. This is one
such field in which the private sector can work for the economic benefit of
the people of Belfast and of Northern Ireland. We must ask ourselves whether
there are better options than the one that we are discussing. In terms of broad
principles, I am not sure that there are. We need to make sure that the public
sector is not putting an artificial brake on the development of an asset. We
must allow development to proceed, and we must encourage it for the benefit
of Northern Ireland's forward-moving economy. In what way could one develop
the land to achieve that other than in the way that is being discussed?
Part of the benefit of the review of Trust Ports is that the ports of Warrenpoint
and Lisahally have come up with proposals. We are not happy about all aspects
of them but at least the issues are being discussed and we wish to resolve
matters in the wider interest of Northern Ireland. I am reluctant to hold
Belfast back, although I understand the difficulties and sensitivities over
Warrenpoint and Lisahally. My fear is that Dublin would benefit.
Larne port should also be considered.
Larne is a private enterprise port. As far as I am aware, it has not approached
us on this matter.
We have considered Larne's interests as well as those of the ports of Warrenpoint,
Lisahally and Coleraine.
Larne is in the private sector and has to accept the virtues of competition.
Dublin is getting its act together rather well and is developing its competitive
edge. Northern Ireland's ports need to keep a good cutting edge, and that
applies to Belfast more than to the others. I understand the concerns of Warrenpoint
and Lisahally, but I do not want all the port business in Northern Ireland
to decline and Dublin to benefit. I want ports in the whole of Ireland to do
The emphasis in the proposals is on land disposal through flotation. There
is no great emphasis on the development of port facilities or on how Belfast
could get itself back to a premier position. Those are serious defects in the
I am not aware that they have not done that but perhaps Mr McMinnis
would care to comment?
My understanding of the Harbour Commissioner's position is that trade through
the port has more or less levelled out. They see the future growth and potential
of the port to be through diversification, and they wish to move into the private
sector to be able to capitalise on ideas which they are currently unable to
pursue. They recognise that there is a natural level which they are close to
reaching. They refer to that level as a plateau, and they do not wish to slide
down the hill by standing still. Instead they wish to develop and move into
new business ventures.
Mr Byrne raised another point about the interdepartmental approach. I set
up and chaired the first interdepartmental group which brought together every
Northern Ireland Department. We sought their views on every conceivable
issue that could be raised by the privatisation of the port of Belfast, ranging
from ensuring proper medical cover for persons with infectious diseases arriving
in ships from overseas to more major matters such as future war planning, emergency
planning, the implications for Northern Ireland if the port of Belfast
were to move into the private sector and how we would handle or address that.
All of these issues are being considered but we cannot put the final seal on
the matter until we know the Assembly's views on the whole concept.
Mr Byrne asked about the feasibility of a free port or an enterprise park.
I am unsure as to whether or not such a suggestion has already been put forward,
but if it subsequently is then the Government would wish to consider it. I
am interested in all ideas which might prove helpful, and if the Harbour Commissioners
support the proposal then I will wish to hear their views. If the Harbour Commissioners
pick up on such an idea from other sources then they will, no doubt, put forward
The senior management teams at the other ports are much better equipped than
we, as civil servants, are to suggest how those ports might be developed -
for example Mr Byrne suggested niche markets. We are there to provide
help and support with matters such as the development of a deep-water quay
at Warrenpoint. In this instance we intend to made a bid to Brussels for grant
assistance with a £7 million project and this is currently being advanced.
We can do this type of thing to help but they are the people with the business
acumen, and they must initiate and lead such ideas.
It is up to the Harbour Commissioners, who have no doubt been busy with this
particular aspect, to develop the most businesslike way forward for the harbour.
The Government have published integrated transport proposals, and I would like
to see Belfast Harbour Commissioners playing their part.
There are other considerations such as the requirement for extra warehousing,
docking facilities for ships, logistic centres and integration of the railway
system with the harbour. These are some of the ideas which I hope would flourish
under the impetus of the new structure that we are talking about. I have not
met with the Harbour Commissioners for some time, and so I am unaware of their
latest thoughts on these matters. Certainly there is no point in developing
the proposals unless we have an entrepreneurial surge within the harbour to
ensure that it expands.
Mr McMinnis said that the Belfast Harbour Commissioners believe that they
are on a plateau. With the Northern Ireland economy doing so well at present
- and I hope it will continue to do so - I would not wish to see them accepting
that things are levelling off. All the pressure is for expansion. This is how
the economy should be moving and the harbour along with it.
I would not be happy for the Harbour Commissioners to say that this is going
to be it for all time. That is why there are opportunities for the other ports
as part of the expansion.
Mr Morrow said that he was unhappy about the whole consultation process.
I am bound to say that we have tried to bend over backwards in this matter.
That is why we want to put the Assembly in the driving seat and why we have
expanded significantly the amount of time for discussion before the formal
consultation period begins. At an earlier meeting, which you attended, Mr Chairman,
a view was strongly expressed both by you and your colleagues that the formal
statutory 42-day period for consultation was not adequate. I agreed with that
view totally - for a scheme of this complexity it was not proper to limit the
consultation period to 42 days, whatever the minimum statutory requirements.
That is why, before entering the 42-day period, we felt that there should be
a lengthy period, of which this meeting is a part, to enable full discussions
to take place and to allow the Belfast Harbour Commissioners to meet the political
parties, this Committee and others. Consultation is continuing, and that is
both healthy and proper. The Government are very anxious to hear the Committee's
As to the existence of other proposals in addition to the Harbour Commissioners,
I am not aware of any. The original initiative came from the Harbour Commissioners.
I do not know if they had other internal proposals before putting forward the
present outline document.
Your last point concerned privatisation and whether the harbour is likely
to be sold wrongly. I am concerned that the Government learn from past mistakes,
and there were some mistakes. Indeed, I had to defend my Department against
some of the actions of the last Government when the Westminster audit processes
were very critical of past sales, particularly the sale of the airport. We
have learnt from the past. We shall not repeat those mistakes. The people of
Northern Ireland must get the maximum benefit from their assets. That
is why we have said that the £70 million will stay in Northern Ireland,
that there will be no fat cats and that there will be a golden share. All that
will safeguard the public interest.
We know that the Belfast Harbour Commissioners did look at other options,
which were rejected, before coming forward with this proposal. The existing
legislation provides a means by which they can move from the public sector
to the private sector. The Harbour Commissioners have come forward with a scheme
to achieve that end. That is what they are engaged in and that is the process
that we are embarked upon.
Certainly the only proposal they have put our way is the one we are talking
The difficulties facing this Committee have been mentioned in the Minister's
response - for example, the increasing competitiveness of other ports. We are
united in trying to ensure that, whatever happens, Belfast is able to ward
off competition from other ports and become even more competitive. We are attempting
to build in safeguards into whatever process is agreed upon.
Leaving the mechanism to one side, there is no realistic valuation - or,
indeed, valuation of any sort - in the equation as suggested by Mr McGimpsey.
If it eventually transpires that a valuation is arrived at, perhaps through
a prospectus, and it is considerably in excess of the Chancellor's valuation
of about £70 million, what would happen to the additional funds?
That decision will have to be made at the time. The Department may retain
some of the equity - keep a proportion of the harbour's value - for use in
the future, thus maximising the proceeds of the sale. That judgement will be
made by the Department, based on the price realised.
The £70 million, to be used as a contribution towards roads' schemes
was the minimum amount that the Chancellor thought would be realised; it is
not meant to be a limit on the value of the harbour. If it emerged that the
harbour was worth £140 million, the Department could keep a 50% equity
stake for use in the future; other options are also available.
My concern, which is probably shared by others, is that in the future, depending
on how much is required to top up existing infrastructural development we may
have to look at the valuations of other assets to see if the roads' infrastructure,
water developments and other projects can proceed.
If the Government or the public sector are sitting on assets which are not
being properly used - and this also applies to local government - it is their
responsibility to ensure that those assets are being properly used, and the
best way of doing that may be to dispose of them to a developer.
However, I do not believe that a stream of assets for disposal will come
to light to enable significant additions to be made to public expenditure in
Northern Ireland. There are smaller pockets of assets that the Government
could decide to dispose of but nothing on the scale of Belfast harbour. The
assets do not exist to allow for a Belfast-harbour type event every two or
three years. When I use the word "Government" I mean the continuity
of the civil service and the Administration - albeit in a different Departmental
structure. All these issues will be for the Assembly to decide on.
In May 1998 the Government agreed in principle to Belfast harbour establishing
a public/private partnership. The summary of the Department of the Environment's
written submission refers to that agreement, and I quote from page 8
"In doing so, however, the Government recognised that this particular
option may not be appropriate to all Trust Ports and has announced its intention
to extend the statutory powers and ease the financial controls of the other
Trust Ports, in order to better equip them to meet the challenges ahead."
It is 12 months since the Government announced their support for the
public/private partnership. Is the Minister able to reveal the Government's
intentions towards the trust ports - and how advanced those intentions are?
We have had the review, and Warrenpoint and Lisahally have presented proposals.
I am not sure whether Coleraine did that as well. They said that they wanted
maximum freedom of action, almost akin to being privatised. We were concerned
that if they were to have that, there would have to be good structures for
public accountability. We are not sure whether some of their proposals would
be possible without primary legislation. We are engaged in discussions with
them. I am sorry that discussions are taking longer than the trust ports might
have hoped, but their suggestions went much further down the path of commercial
freedom of action than we had anticipated. We have to see what statutory provision
would be needed to enable them to move in that direction and whether we can
achieve public interest and public accountability safeguards that are consistent
with that. Those issues are being discussed.
Do you agree that it would be difficult for this Committee or the Assembly
to make final decisions until we know those intentions?
Many matters are interdependent, but I hope that the Committee's deliberations
will not be delayed by its members wanting to wait to know the outcome of discussions
between the Department and the trust ports in Northern Ireland. Those
discussions may finish quickly, but if they do not, I hope that that does not
cause delay. I am anxious to see the harbour decision resolved quickly because
there needs to be a clear way forward for public spending that has already
started based upon the £70 million from the harbour. We could get into
real financial difficulties.
I would have a completely opposite view on that. I should like to think that
all matters on all ports would be on the table. The proposals for Belfast should
not proceed until the consequences are fully known.
I think that the consequences of the proposals in Belfast are known or can
be assessed when the Harbour Commissioners present their scheme. However, we
do not know how the new structure and new operational methods will affect the
other trust ports in Northern Ireland. I am not sure whether the decision
on Belfast harbour will depend on how Warrenpoint is structured. It may be
the other way round, and Warrenpoint may wish to move forward when it knows
what Belfast harbour intends to do.
The proposals from Warrenpoint and Londonderry ports are incorporated in
their written submissions to this Committee. We respect those proposals which
we have looked at. There is an honest difference of legal opinion as to whether
we can enact the changes that they are contemplating without primary legislation.
They think that we can do it by way of a harbour Order, which means that, under
direct rule, a senior civil servant would sign the instrument and it would
simply go to Westminster and that would be that. As the Minister said, the
changes go far beyond what was envisaged at the time of the review of trust
ports. They are comparable to private company powers but do not mention the
public accountability aspect that was covered in the review of trust ports.
The draft is silent on that issue. One of the proposals that we were running
with as a result of the review was an increase in district council representation
on the boards of the ports.
As I have said, there is an honest difference of opinion and we are getting
senior Crown counsel advice on the matter. Even if we had that today, I am
not aware of any relevant Northern Ireland legislation currently going
through Parliament. This issue will come before the Assembly, and it will decide
exactly how much the powers of Trust Ports should be widened. In a sense, the
decision almost comes back to the Assembly whose Members will decide whether
to endorse the Confirmation Order on the port of Belfast.
May I add another point? If the Assembly should decide not to proceed with
the plans for the privatisation of Belfast harbour, then the powers of the
harbour in that new context would need to be looked at. The harbour could not
be left as it is; there would have to be some changes, albeit less than those
envisaged by the current scheme. I speak on the assumption that the Assembly
will think likewise.
Minister, the submission from both Warrenpoint Harbour Authority and the
Derry Port and Harbour Commissioners included what seemed to be a very clear
legal opinion - although I do not pretend to have expertise in such matters.
Their submission stated that they were discussing that opinion - the one they
had sought from counsel in London - with the Department, and that opinion was
very clear in terms of making a Harbour Order. Why it is necessary to go any
further? Why can that opinion not be accepted?
Dover port was given additional powers to enable it to do the kind of things
that Belfast Harbour Commissioners want. Were those powers granted through
primary legislation or through the same mechanism as the Harbour Order?
I do not know the answer, nor does my colleague. We will come back to you
on that point. In reply to your point, Mr Chairman, the legal advice we
received from our solicitors suggested that the legislation that had come forward
could not be enacted other than by primary legislation. The initial draft contained
provisions for amending primary legislation. You know better than I that subordinate
legislation cannot be used to amend primary legislation. So there has to be
a change in the draft to address that.
However, there remains a difference of opinion - respected legal opinion
- obtained by Londonderry and Warrenpoint ports. It is only fair that we should
seek the views of senior Crown counsel on that opinion. Our solicitors have
said "Fine. We hear what they say. Let us see what senior Crown counsel
have to say". However, whether implemented by primary or secondary legislation,
the proposals are so far-reaching that it is only proper that the Assembly
should have time to consider them in detail, and perhaps the best way of doing
that is by means of primary legislation. If it can be done by subordinate legislation
- by means of a Harbour Order - that too could be considered by the Assembly
in due course.
I would like to approach this in a very simplistic way. I fear that we could
be blinded not only by economic but also by maritime science.
We should try to imagine that we are in the position of a family whose chief
asset is the family home. Obviously, if the family needs a short-term solution,
it would want to sell quickly, get the money and hand the house over to someone
else. However, if it were looking for long-term, rather than short-term, benefit,
a financial adviser would tell the family to rent out the property, in order
to make more money in the long term, and, thus, to keep hold of the asset.
The family may sell the garden to developers, who will provide cash which can
be used to refurbish the house - but, again, why would the family sell the
garden to the developer, thus allowing him to make money out of it, when the
family itself could make money out of it? Is this not a case where we appear
to be looking for a short-term fix, when we should be looking for long-term
I would assume this family is not restricted by legislative structures and
does not have the Treasury looking over its shoulder. I appreciate the way
in which you have described the issue, and it might help to clarify our thinking
if we were to see it in those terms. The difficulty is, however, that, as things
stand, even if the Commissioners were to use the land as you suggest, the financial
benefits from that would not accrue to the people of Northern Ireland
but would relate solely to the limited expenditure which the Harbour Commissioners
are legally allowed to incur. The current legislation does not allow the Commissioners
to do even those things which, they feel, might enhance the commercial attractiveness
of the port, whereas the plans which we envisage - disposing of the port's
assets, while retaining a public interest - would produce a pot of money which
could be used for whatever is in the wider interests of Northern Ireland.
In the short term.
No. The road schemes are of long-term benefit. The problem is that most of
the options relating to the future of the harbour either constrain the harbour
management's freedom of action, or, if they do not create constraints, do not
produce any money which can be used for other purposes.
The real political question is whether the money - £70 million, at any
rate - should be used for the road schemes, thus providing one kind of benefit
for Northern Ireland, or retained to allow the harbour to operate in the
way which you have suggested, thus creating a different kind of benefit. That
is, clearly, a political decision. The Government felt that the former option
would be better, because it would enable us to do what we would have had to
do anyway, namely make the harbour more entrepreneurial, to allow it to compete
more successfully. You can devise other models, such as Dublin, to which reference
was made last time. But, one of the drawbacks - apart from the fact that Dublin
port managers are watching the Belfast situation very carefully, as they may
want to privatise at some point in the future - is that that model would not
allow us to use the income generated as freely as the harbour managers might
like. Certainly, there would be no money for the road schemes if we were to
follow that model. There are problems with trying to do all these things under
the same scheme, but it can be done, if it is politically acceptable.
Mr M Murphy:
The Minister places great emphasis on the £70 million for the road schemes.
What happens if, 10 years from now, the same situation arises, and we
again need money for roads? If we have sold off all our assets, where is that
money going to come from?
Most of the money for the roads of Northern Ireland, including the five-year
schemes I announced a few weeks ago, is drawn from normal public expenditure.
We do not, at present, have any income from the sale of Belfast port, but we
feel that there is an enormous opportunity to generate money from the sale
of the port to improve the strategic road network. Once those improvements
are made, all that is needed is the money for maintenance.
Improving the strategic road infrastructure in the way suggested should be
of long-term benefit to the Northern Ireland economy.
It is claimed that the privatisation of the port of Belfast is needed to
allow it to develop and to fight off competition from other ports. I am concerned
that this is spin. What is actually happening, and you have alluded to it,
is that the port's trading profits have actually plateaued. Do you agree that
they have plateaued because efficiencies have already been achieved, and so
the proposed privatisation is unlikely to provide additional and significant
benefits for the present trading operation at the port?
The trade through the port of Belfast is related to the future development
of Northern Ireland in terms of gross domestic profit and exports. The
privatisation will not have a significant effect on the port's trading operation.
The port is being sold under false pretences as it is the release of the landbank
that provides the greatest potential for the future owners of the port. Do
you agree that expertise in port operations is entirely different from expertise
in property development?
Warrenpoint has 33 acres, Lisahally has a similar small acreage and Larne
has 60 acres. The Belfast Harbour Commissioners have over 2,000 acres
to be privatised. About 500 acres of the landbank is used in port related
activities. I have not heard an explanation why the 1,500 acres of non-port
related land is to be sold to a private consortium that would be able to profit
by property speculation. Can you explain why the 1,500 acres should be
sold off in this manner?
Although the profits at the port of Belfast have plateaued, and the Belfast
Harbour Commissioners do not see the situation changing, I believe that it
ought to change. There is continuing growth in the Northern Ireland economy
in the gross domestic product. I would be dismayed if the ports in Northern Ireland
were not to derive an increasing benefit, although perhaps not proportionate,
from the growth in the economy, because so much of our economy depends on trade,
exports and so on. There is a problem caused by changes in the type of products
exported. For example, there has been a decline in coal and animal feeds. This
means that some of the volume in port trade has gone and the harbours have
had to look for other forms of business. That is why this has become a more
competitive area. But I would expect the port of Belfast to expand as the economy
expands, and the profitability from its operations should also expand.
Secondly, much can be done to increase the attractiveness of the harbour,
such as improved access. I do not want to criticise the port of Dublin but
it has access difficulties. It is hard to get transport in and out of the port
of Dublin because of the congestion, and they are trying to resolve this difficulty.
We have to achieve ease of access to the port of Belfast for haulage companies,
not just for those based in Northern Ireland, but also for those from
the Republic. That requires expenditure on the roads that lead to it. The Belfast
Harbour Commissioners would have liked to put their own money into the Westlink
upgrade, but that was not allowed. The Harbour Commissioners would have provided
£20 million for the upgrade as it would have made the port more competitive.
It is clear that there are some things that need to be done to improve the
competitive edge of the port of Belfast. These are some of the ways in which
the Assembly and Belfast Harbour Commissioners could help the port of Belfast
The Minister has just returned to the point that I was going to raise with
him. Minister, you said earlier that you were not aware of any other ways for
the harbour to go forward. Your Department carried out a review of trust ports,
and a way forward was suggested as outlined in your document. It said that
the ports should have extended powers which would enable them to better meet
the challenges ahead. On the public accountability aspect it said that district
councils should have greater representation. Some of those challenges were
outlined in your submission; the need for diversification; the need to be able
to raise capital for infrastructure and developments, both inside and outside;
and the need to engage in other ventures. Evidence from others suggests that
all of that can be done under extended powers. The Department's review said
that the way forward to meet challenges was through extended powers. Evidence
has come from other ports - and Dover is a prime example of this. Under extended
powers it has been able to raise money, to diversify and to engage in infrastructure
development. Why have you not proceeded down that road? Why are you tied down
to the Harbour Commissioners' proposals for privatisation?
It is partly because the Harbour Commissioners' proposals came forward and
were a way of achieving the two ends that you referred to earlier. One is to
give the harbour a more competitive cutting edge, and the other is to put the
land assets that are within the ownership of the harbour to good use.
Essentially we looked at the smaller ports when we carried out the review
of trust ports. Belfast harbour is an enormously important port in the UK.
I am not saying that the others are unimportant, but Belfast is crucial in
terms of its relationship to the Northern Ireland economy.
But the review of trust ports included Belfast harbour, so the recommendations
must have applied to Belfast harbour as well. I know that you are keeping that
review secret, from us, so perhaps I am not in a position to make a judgement,
but I imagine that those recommendations apply to all trust ports.
The Belfast Harbour Commissioners' proposals came forward separately from
the review of trust ports. As I said earlier, Belfast harbour and, indeed,
other ports are structured in such a way that they are constrained and cannot
spend money in ways that would allow them to enhance the competitiveness of
their operations. That seems to be particularly critical for Belfast harbour
because of its size and competitive position in relation to Dublin. I know
of no other comparable Trust Ports scheme which could easily and readily -
with Treasury consent - give Belfast harbour a way of spending their money
in the interests of the development of the harbour. Earlier I gave the example
that it might want to expand its activities, or make them more effective, by
developing some port installations in parts of England or Scotland. I am not
saying it will do this, but it is an option.
There are other things that Belfast harbour may do such as developing access
into the harbour and into warehousing and other facilities on the harbour land.
Some of this may not be possible or may not be permitted. The Treasury, I believe,
would never allow the trust ports to borrow money in the same way that a privatised
Belfast harbour could.
What about Dover?
Dover was mentioned, but I am not aware of that being permitted. Certainly,
other publicly owned businesses have not been allowed to operate that way.
They operate under the public service borrowing rate within the external finance
limits, and they do not have that freedom. Belfast harbour does not have that
freedom at the moment, because the Treasury will not allow it.
I propose to finish at this point. Perhaps the Minister will make his concluding
Mr McGimpsey raised a question about the membership of the board of
Belfast Harbour Commissioners. The decision on the future of Belfast harbour
was made by the board which was appointed in 1994, so when three replacements
were appointed last year there was no question of their being vetted on their
attitudes to the area under proposal. We wanted to be sure that they were au
fait with all the developments, but it was not a question of vetting them.
I am not normally in favour of privatisation, unless there are exceptional
justifications for it. However, I believe that there are exceptional justifications
in this particular case. I have no ideological axe to grind. I would be in
favour of privatising the port of Belfast if the benefits to the economy of
Northern Ireland and of Belfast outweigh the benefits of leaving it as
it is. The suggestions of the Belfast Harbour Commissioners would be to the
advantage of Belfast's economy. Inaction benefits no one.
I understand your members' reservations, but I believe that this privatisation
proposal is different from others which have been marked by political opposition,
including my own. I believe that the Government have learnt from the mistakes
of past privatisations, and that all the essential safeguards have been put
in place. May I remind you of some of them? There is a guarantee that all the
£70 million will be spent in Northern Ireland. We will guarantee
that there will not be a repetition of what happened at Belfast International
Airport by preventing people buying shares and then selling them on. It is
likely that the Department will retain a share of equity, which might be 25%,
to be disposed of later or retained. There will also be the golden share which
will give the Department the power to ensure that the public interest is protected.
These safeguards go a long way to meeting the concerns expressed by the Committee.
The safeguards persuade me that the transfer of the harbour to the private
sector represents a move that will benefit both the harbour and the economy
of Northern Ireland in the long term.
I know that the disposal of the landbank causes great concern and that the
Committee is pursuing the matter with the Belfast Harbour Commissioners.
The Harbour Commissioners themselves are looking at your concerns to see
how they can be met. I hope that they will be sensitive to your point of view,
which I am sure they are aware of. I am very sensitive to this and I am sure
that they will be equally so. There are real potential benefits in these proposals,
which I support in principle. The details have still to come forward. The full
value of the port, including the cash reserves of £20 million, will be
realised through the levy mechanism.
The Government or, on devolution, the new local administration, is being
offered the chance to retain an equity stake in the company, which can be held
or cashed in at a later stage. The form of the sale will afford local residents
and port users, for the first time, an opportunity to take a real stake in
the future of the port. The Harbour Commissioners would have to queue up for
shares along with the residents. Employees will have a limited facility to
acquire shares, but the Commissioners have accepted that they will have to
queue up if they want to do that. The transfer of the port to the private sector
will allow the port to develop its full potential and so ensure its long-term
Taking the wider view, steps will be taken in parallel with the sale of the
port of Belfast, subject to the views of the Assembly, to extend the powers
of the other trust ports so that they can continue to compete on as level a
playing field as possible and consistent with their need to be publicly accountable.
This is a balanced package which promises much, and will enable us to fund
a number of much-needed schemes. Despite the safeguards contained in the proposals,
you may decide that further modification is desirable. Whatever view you come
to, I urge you not to reject the proposals out of hand. I hope you will feel
able to go back to the Commissioners and suggest changes if you are unhappy.
Equally I would caution against giving the Harbour Commissioners a blanket
endorsement of the proposals as they stand at present.
I do not think there is any chance of that.
Many details have still to be worked out between the Department and the Commissioners,
including clawback terms, share offer structure and so on. It would not be
in the public interest to prejudice those negotiations. The focus should be
on the broad concept at this stage. Even if the Assembly were to endorse the
Harbour Commissioners' proposals, the formal transfer scheme has still to be
published and will be subject to a further six weeks' statutory consultation
on the specific details of the scheme. There will be further opportunities
for elected representatives to influence the proposals and, on the assumption
that we move to devolution quickly, any Confirmation Order made by the Department
would only come into effect if affirmed by the Assembly.
We are all agreed on the importance of coming to the right decision, in the
interests of both the port and the wider local economy. However, it cannot
be postponed indefinitely, as the uncertainty would be damaging to the port's
development and, indeed, to the port users. The most immediate problem is the
potential shortfall of £70 million in this year's public expenditure should
the decision to proceed with the sale not be made. In the absence of a firm
decision fairly soon - by the end of June - cuts may well have to be made.
I appreciate that that is something the Assembly will want to wrestle with,
and I am sorry to put you in the position of dealing with such a difficult
Thank you very much indeed. This has been an interesting and useful discussion,
and we will be interested to learn the outcome of your deliberations. I wish
you good luck and look forward to hearing from you, even if it is only by means
of a leak.
In my experience of Northern Ireland, leaks do not come from just one
Thank you, Minister, and thank you to your colleagues as well.
AD HOC COMMITTEE
(PORT OF BELFAST)
MINUTES OF EVIDENCE THURSDAY 20 MAY 1999
(Mr S Wilson in the Chair) Witnesses:
Ms N Skelly, Ms C McAuley,
Ms M T McGivern, Mr B Hanna,
Mr M McGimpsey and Mr R Stoker
(Belfast City Council)
Welcome back again. I know that there were difficulties last time because
so many members were not available. We have received your revised submission.
Thank you for that. We have been advised that Mr Dodds cannot attend this
morning. Mr McGimpsey is going to have to be a bit schizophrenic and introduce
the delegation. [Laughter]. Are you going to speak to the paper, Mr McGimpsey?
No. As you know, and for the benefit of my colleagues, I am deputy
chairman of the development committee. The committee is responsible for the
council's response. Mr Dodds is the chairman and, as you have explained,
is unable to be with us.
Rather than wear two hats, I want to, in my role as deputy chairman, introduce
the members of the delegation. The team will then give the presentation. We
have Bob Stoker, the deputy Lord Mayor; Brian Hanna, the Chief Executive;
Chrissie McAuley, a member of the development committee; and Marie -Therese McGivern
our director of development. They are the team responsible for preparing the
submission and therefore they will present it to the Ad Hoc Committee.
There are other officials from Belfast City Council here also. If responses
are required from the people sitting behind those at the table would those
individuals please come forward. The microphones will not pick up responses
from anyone sitting away from the table.
As chief executive of Belfast City Council, I am going to say a few words
and I will then hand over to Ms McGivern, who will give a more detailed
outline of our submission.
We are grateful for a further opportunity to come before the Ad Hoc Committee,
given that we had very limited time on the first occasion and in that time
we made some important points. In the interim we have had the chance to look
at the matter in more detail and seek further guidance from other sources.
In summary, our presentation covers the following areas. First, we have tried
to set the presentation in the planning context. We have reviewed statutory
and non-statutory documents which cover planning and economic development within
Northern Ireland, and the references made in each of those in relation
to the significance of the port. These are items such as the 'Shaping Our Future'
process, 'Strategy 2010', which has recently emerged, various transportation
documents, planning policy statements, 'The Belfast Harbour Local Plan 1990-2005',
and the 'Belfast Urban Area Plan 2001', which we anticipate will be updated
following on from the regional strategic framework. I will leave the detail
of those, and the conclusions that we came to, to Ms McGivern.
The second area we looked at was the contribution of the port to the regional
and Belfast economies. We were looking at the economic impact of the port on
the city and the region, primarily focusing on trade, employment and tourism.
We looked at things like port traffic, effect on the city, employment and tourism.
Thirdly, and this is an important part of our submission, we have tried to
look carefully at the experience of port privatisation elsewhere. We have looked
at the consequences in six examples of trust ports that were privatised and
also the ports at Dover and Tyne which have retained trust status. We have
also tried to do a critique of the proposals by Belfast Harbour Commissioners
- a number of aspects of that are covered in our submission.
Finally, we were pressed to produce an option. Initially we felt that we
did not have sufficient time to consider an option and the council had not
come to a considered view at that stage. We now feel that we can make a proposal,
but we are qualifying it by saying that it is of course possible that some
other option may be better than ours. We have done a lot of research in a short
time. We find it hard to understand why more detailed research has not been
done to date, on such an important issue. In a four-week period we have come
up with a lot of information that contradicts some of the points made by others.
One of our concerns is that we have not had sight of the Department of the
Environment's review of trust ports. Now that the evidence has come out into
the open, it is quite clear that that study basically recommended that the
legislative powers be extended and that the financial controls be eased with
the aim of enabling the Harbour Commissioners to better meet the challenges
ahead. We entirely agree with that. It was also recommended that the public
accountability of trust ports would be improved by increasing district council
representation on the boards. I find it quite pleasing to agree with something
in the Department of the Environment's submission, even though it was not published.
I will now hand over to my colleague, the director of development, who will
put more flesh on the bones of our presentation.
I am not going to talk for very long. There is a lot of detail in our report
and it would be better to take questions, which my colleagues who have done
the research will be able to answer.
In the section on planning context, we are saying that every significant
policy document emerging currently from the various Government Departments
indicates the importance of the port and the significance of it in terms of
planning related to the 'Shaping our Future' document, economic development
related to the 'Strategy 2010' report and the whole issue of the transportation
infrastructure, citing, in that context, 'Transportation in Northern Ireland:
The Way Forward' and the 'Moving Forward: Northern Ireland Transport Policy
We conclude from all of those that the common theme that connects every document
and statement relating to the port area is its recognised importance, both
locally and, more importantly, regionally. The decision whether or not to privatise
should not be made without careful consideration and detailed analysis of its
potential impact and after a comprehensive consultation.
In the second section we turn to the contribution of the port to the economy
of Belfast and the regional economy of Northern Ireland. We analyse the economic
impact of the port in terms of trade, employment and tourism. I will not go
into every fact and figure that we have used. Suffice it to say that we have
produced clear evidence on the issues related to its impact on tourism, the
amount of employment that the port provides and the amount of traffic going
through the port, which has risen significantly over the last eight to ten
years, and it is evident that the port of Belfast has made a significant economic
impact on Belfast and on Northern Ireland as a whole.
It is the primary gateway for tourism and trade into Belfast and Northern
Ireland and therefore sustains and creates substantial direct and indirect
employment in Belfast and the region.
The third section of our submission relates to the experience of port privatisation
elsewhere. In it we analyse the consequences of port privatisation in terms
of its capital expenditure, financial performance and business and traffic.
We relied heavily upon the work carried out by Richard Saundry and Peter
Turnbull from the University of Cardiff. They are acknowledged as world experts
on ports and port privatisation. They have recently completed a major research
study which looked at the performance of privatised and public ports in the
United Kingdom. Their conclusions did not confirm the claims made by Belfast
Harbour Commissioners about privatisation.
Having carried out this significant and major piece of research, Saundry
and Turnbull found that there were - somewhat surprisingly - lower levels of
private sector investment, somewhat surprisingly, in the private ports than
in the public sector ports. They found, overall, that the performance of public
ports was superior to their private counterparts and cited that in the majority
of private ports there was a decline in traffic.
They also referred to the failure of private ports to deliver higher levels
of investment, an improved financial position or significant traffic growth
and concluded that privatisation had constrained competition because, in many
of the privatised ports, one major firm or organisation had come to dominate
the port and was therefore operating almost as a monopoly.
They gave strong evidence that the six trust ports which were privatised
after the 1991 Act were significantly undervalued and that enormous profits
were made in the sell-off which each of those ports were subjected to following
the initial sell-off to the public.
They also cited the fact that the Audit Office severely criticised the Government
in respect of a number of those sales. Their conclusion echoed the conclusions
of the Department of Environment, Transport and the Regions and the Department
of the Environment which was that the success of ports generally was primarily
down to good management; it was not a matter of whether they were publicly
or privately owned.
They went on to look at two ports which retained their trust status and did
not privatise. These are the Ports of Dover and Tyne. The Port of Dover consultants
concluded that privatisation would not be in the long-term interests of either
the port or its users. Dover therefore became a trust port with extended powers,
and the port has continued to grow and to increase its traffic share - and
all this despite the Eurotunnel. It has continued to be a successful and effective
port against stiff competition from Eurotunnel. It has increased its traffic
share; it has developed a cruise line, has amassed more land, successfully
diversified its operations and has encountered absolutely no difficulties in
raising additional finance in order to do the things that it wants to do. It
is also tied in to the local district authority and regularly consults widely
on its proposals. So it operates almost as a model trust port in public ownership.
The Port of Tyne can also boast many of the same success figures in respect
of how they have developed as a trust port with extended powers.
Further research by Dr A J Baird relates to privatisation and public ownership
on an international scale, and we found, having examined much of this research,
that most of the major ports in the United States are not privately owned;
they are publicly owned. Most of the successful ports on the European mainland
are also publicly rather than privately owned, and in Asia, many of the large
ports in Thailand, Indonesia and Australia are also publicly owned.
So international evidence suggests that the most common model of ports administration
involves some privately-owned stevedore and shipping lines operating within
the context of a publicly-owned port authority which continues to function
as both landlord and regulator and controller of maritime traffic. This section
of our submission concludes that the evidence indicates that the United Kingdom
Government are out of step with the rest of the world in terms of their pursuance
of port privatisation.
We turn in section 4 of our submission to the proposals which the Belfast
Harbour Commissioners have put forward, and we offer a critique of those. I
am not going to go into detail but will simply emphasise a few of the points
which we bring to the table. We were hampered by the fact that the Department
of the Environment would not release to us its review of trust ports but I
know the Committee has been privy to parts of it. We have been informed by
other ports, who have been very co-operative in the preparation of our document,
that the Department has concluded in the review that there is a need to broaden
and extend powers to allow increased commercial and financial flexibility to
ports in Northern Ireland.
It seems, therefore, that the Department of the Environment may well be at
odds with itself. We cite a number of comments made by the Secretary of State
for Northern Ireland and Lord Dubs which would lead one to believe that privatisation
is not necessarily the best option for the port of Belfast. The Belfast Harbour
Commissioners claim that the creation of an integrated transport company is
the way forward and that all other major United Kingdom ports have taken
that model. What the Commissioners forget to say in their submission is that
these include the trust ports which are retained in public ownership. So the
model is irrelevant to privatisation. To argue that privatisation is the only
way forward is a false argument.
Our evidence would indicate that access to competitive finance, a reason
cited by the Belfast Harbour Commissioners in favour of privatisation, is not
a reason for privatisation - the trust ports of Dover and Tyne have access
to major competitive finance and are not privatised.
As in our earlier submission we again mention the Belfast Harbour Commissioners'
claim that European Union funding would stop and so be no longer a factor.
However, it is the case that the framework document 'Sustainable Urban Development
in the European Union', issued by the European Union, will inform the views
of the Department of Finance and Personnel when it draws up a plan for Northern Ireland.
It states clearly that port funding, infrastructural funding, gateway funding
and tourism funding can still legitimately be accessed through structural funds.
It is our view that a publicly-owned concern is more likely to access such
funds than a privately-owned one.
We argue that the appraisal of the options, to date, do not the satisfy the
Government's regulations as set out in the Green Book. We cite and quote from
this Treasury document and also the Department of the Environment's handbook
which is produced as an aid to the interpretation of the Green Book.
We are somewhat amazed that the Belfast Harbour Commissioners claim that
privatisation will attract a more entrepreneurial management team. It makes
us wonder how they view their current management team. Are the Commissioners
arguing against themselves? The management seems to have been relatively entrepreneurial
and successful in their current model. What is the problem here? Why should
privatisation make them even more entrepreneurial?
The Harbour Commissioners also talk about the need for flexibility and speed
of reaction as an important issue in privatisation. Our view is that the management
of ports and of land masses is such that flexibility and speed of reaction
are not seminal criteria. We feel that the planning for ports is a long-term
project. While flexibility is important it is not a major concern.
We have a number of issues to raise about the question of the golden share
which has been put forward by the Department of the Environment as an argument
for ensuring that the public concern will continue to be important.
We know from a number of rulings that the European Commission has made, in
the cases of Italy, Belgium and the Republic of Ireland, that the golden share
issue is not regarded favourably by the EU. One wonders therefore if the Department
of the Environment will manage to get the EU to agree to the golden share concept,
as it proposes.
We have some difficulties with the current valuation of the port. We have
indicated in our submission the fact that many of the ports that have been
privatised have later been shown - in some cases within 18 months - to
have been so undervalued that it resulted in the Government receiving audit
Also, the research carried out by the ports of Warrenpoint and Londonderry
indicates that they will be adversely affected by the privatisation of Belfast
port. In terms of those bigger infrastructure issues, when the Department of
the Environment places the sale of the port against the building of roads,
is it taking account, in the cost-benefit analysis, the adverse effect that
the privatisation will have on other ports?
We also have concerns about the lack of consultation, and there are difficulties
in linking the sale of a port with an infrastructure project - the development
of the Westlink. One of the desires of the Belfast Harbour Commissioners is
to see the Westlink developed, as they believe that it will significantly enhance
the port. We have difficulties with the Government's suggestion of selling
off one asset to build another asset - which will become the asset of a private
We also have difficulty with the prospect that Belfast City Council, representing
the citizens of Belfast, and Assembly Members, representing the citizens of
Northern Ireland, would have very poor, if any, representation on the
port if it were privatised.
We conclude, with the assistance of the University of Ulster and the University
of Cardiff, that there is significant evidence to suggest that the establishment
of a public/private partnership would not be the most appropriate or beneficial
option for the port of Belfast or the future of Northern Ireland.
As the Chief Executive has outlined, the option now favoured by the Council
is a trust status port with extended powers. That would enable the port to
operate on a fully commercial basis, allow it to diversify and give it enhanced
borrowing powers. The ports of Londonderry and Warrenpoint have produced new
model legislation and have appointed counsel in London to prepare draft constitutions
to provide extended powers - so it is possible.
We have undertaken a lot of work in the six or seven weeks since we
were last here. It is not exhaustive, but it gives further evidence that a
full and independent economic appraisal and further consultation are required.
In that context the Council could happily live with any new evidence arguing
against trust status, but its current view is that trust status with extended
powers is the best way forward for Belfast port.
Thank you very much, Ms McGivern, for that very full explanation of
the document. Some Committee members wish to ask questions at this point.
I asked the Council to arrive at an option, so I am delighted that it has
I would like to explore that option a little further. The issue of the land
- its size and value - is a major issue.
Your submission states that if they were given extended powers they would
be able to do a number of things - it would, and we are fully aware of that
- but what would be the position regarding the land? If, under these extended
powers, they were able to sell off the land would the proceeds from that sale
go back into the port to be put towards running costs or could some of that
money be used for infrastructure? I take your point about the Westlink; improvements
there could be regarded as being of help to the port, but the Government announced
that other road schemes would benefit from the sale of this land. Would any
of this money go into the Northern Ireland purse?
There are some difficulties with this whole issue and the valuation of the
land. Take the port of Dover, for example, it has retained land in its environs,
not just within the port itself, and has used that very successfully to generate
large profits, so we would not necessarily argue that the land be sold off
and the proceeds used for infrastructure. What I want to bring to your attention
is the fact that Belfast Harbour Commissioners are currently retaining a large
asset base, and I have views about whether that could be used for infrastructural
development in Northern Ireland. There is an argument for its going back
into the port, but if they were to be given extended powers, they could make
Belfast Harbour Commissioners currently have a large amount of money sitting
in a bank account - about £26 or £27 million. That is a considerable amount
of money, and it seems to me that if the port were retained in public ownership,
the public purse might have some call on it. That might be another way around
This will not be an easy option; it will not be an easy option for the Assembly
if it is to be asked to make judgements between the sale of one asset against
the development and improvement of infrastructure. Perhaps we need to investigate
more fully how we could turn the port into a profit-making entity so that some
of the profits could be put back into the public purse and used for infrastructure;
but we also need to look at the assets that are in the bank.
The other advantage of approaching it in the way we have suggested is that
there could be a fairly substantial element of local and regional political
control; if it were to be in the private sector, that control would simply
not exist, or if it did exist, it would be not be as far reaching.
We know that they have over £20 million in the bank, but the Government's
announcement on infrastructure said that £70 million would be needed from
this sale. In your opinion if it is done this way should we still be able to
get the £70 million? Or should the money be taken out of the pot altogether?
I can give you a personal view only. I cannot see a very strong argument
for improving infrastructure around the Province out of the resources of a
port which is in the public sector. How the money should be raised is a political
issue, but, arguing against the privatisation route, we have been placed in
a difficult position, in that some members of other councils have been saying
to us that we are preventing their areas getting a road improvement. That is
setting one district council area against another, which I think is a very
unfortunate consequence of the line that is being taken here. It is not our
business to argue against a bypass at Banbridge, Toomebridge or anywhere else
- I am sure they are highly merited - but we have a Roads Service, we have
a roads budget, and it is a question of where priorities lie. If the priority
is strong enough, then surely the resources should be made available.
Section 5.8 in our conclusions covers that. The trust port with extended
powers is our preferred option, but we are always prepared to consider others.
It is not just an open-and-shut case. We believe that there should be ongoing
One thing that has come through very strongly over the last six weeks is
the subject of the actual role of Government - what governance is about. First,
it has to be representative of all the people, and that is fairly evident from
this gathering. Secondly, it must deal with the day-to-day matters of running
a city or a country. Thirdly, and most importantly, it must make provision
for the future. Now, we cannot be put down in black and white what is the best
provision for the future as it is always an ongoing consultation process. In
the situation of a trust port having extended powers, it would be for the best
for the city -and for Northern Ireland as a whole - if all money and profits
were not retained within the port. A system could be devised that would allow
the profits to be distributed evenly throughout Northern Ireland for the benefit
of the whole country.
In terms of the additional money that is required for roads infrastructure,
as Ms McGivern has said, we need to be looking towards the European structural
funds. We need to see how best that money can be used for the additional infrastructure.
The privatisation of the port is a very shortsighted approach by the Government
in terms of playing one thing off against the other-infrastructure against
port privatisation. We need to do our research and set ourselves up in a position
where we can best use the European structural funds for the betterment of all
the people and to ensure that the trust continues to be in public hands.
I welcome the comprehensive nature of the Belfast City Council submission,
and I am glad that it is considering the interests of the other two ports and
also the whole region of Northern Ireland. One of my main concerns about the
Harbour Commissioners' report is that they do not seem to be setting out a
plan for the development of the port facilities in trying to regain the port-handling
position that they had in the island of Ireland. If we want to develop the
Northern Ireland economy it is important for the port-handling facilities at
the Belfast port to be developed in tandem and complemental with those at Warrenpoint
How do you see the landbank being successfully developed on an economic level
for the city and for the wider region in terms of employment, trade and tourism?
I believe that there is a need for a full and independent economic development
appraisal. It is no good simply to have an economic appraisal of the asset
as it currently is. It needs to be an appraisal of its development potential.
Belfast has 25,000 people unemployed, so this is the ideal location for an
employment-driven strategy. Perhaps it could help to unite the different parts
of the city, and that would be very important.
It is important to place Belfast and its port in the context of Northern
Ireland as a whole, and, indeed, in the context of the island of Ireland as
a whole. That is what the regional strategic framework process is all about,
and we are moving on soon to public hearings. We have consistently argued that
Belfast should retain its heart-of-the-region position. That is not just for
the good of the people of Belfast, although clearly those elected to Belfast
City Council have to consider them very carefully.
However, many people who work in Belfast do not live in Belfast. Any day
in Belfast the population is very substantially increased by people who travel
to work there. If we are to be honest about this, we should admit that the
Harbour Commissioners have been very successful, and, over time, have made
significant improvements to the port. This may have been achieved with the
help of structural funds, but, as Ms McGivern has already said, there is no
reason why, under the arrangements agreed in Berlin, we would not continue
to have access to some of the money included in structural funds, as we will
have a form of Objective 1 status for five of the next six years.
If the port, including the landbank, were to be run as a trust port with
extended powers - subject to the relevant planning controls and to a certain
amount of political influence on the board and, we hope, from a new Northern
Ireland Executive - the Harbour Commissioners, under these new arrangements,
should be able to continue to develop the port successfully and for the general
good. There will be checks and balances in the planning process and other aspects
of the port's operation, so I am not unduly concerned about that. The Commissioners
should be given the opportunity to develop and expand the port, as long as
the correct balance is struck. The evidence does not suggest that privatising
the entire port will be a huge success - although it might be; it suggests
that there are other ways of doing this.
Belfast contains roughly one fifth of the population of Northern Ireland
- I remember being at a conference where I argued that Belfast was the heart
of Northern Ireland, only to be told by my colleagues from Ballymena that,
if Belfast was the heart, then Ballymena was the brains; a fair riposte - but
we are not here to argue a narrow case for Belfast City Council. The fact is
that Belfast has a very important role to play in the future development of
Does the Development Committee of Belfast City Council intend to identify
a model whereby the landbank could be developed in such a way as to provide
industrial units and, thus, create employment, making it a more economically
viable area? Also, if the port is to assume the status of trust port with extended
powers, as you are suggesting, how can we ensure that there is sufficient regional
representation - as referred to by Mr Hanna - on whatever management body is
As regards the options for the future of the landbank, it is easy to come
up with a wish-list, but we must be realistic about what is feasible. It is
not simply a matter for Belfast City Council to decide what should be done;
any decision should be taken in a wider context, taking into account the wider
interests of all of Northern Ireland. This is a massive site, and there
are not enough people in Belfast to provide a new workforce; obviously, people
will be travelling into Belfast for any jobs created there. It is not just
a matter of our deciding what is the best option for this site.
In this context, the development of the regional strategic framework has
been an excellent exercise. There has been ample opportunity for interested
parties to have an input, and, when it is complete, we will have, for the first
time, a proper regional framework for planning and sustainable development.
We must look not just at the technical details of planning, but also at ways
to secure sustainable development for the whole Province, particularly those
areas where there has not been enough in the past. There are great opportunities
for employment creation in this area.
The regional strategic framework will set the broad pattern. A local plan
will then be drawn up, which will include plans for the optimum development
of the area. Some plans already exist, such as the Belfast Harbour Local Plan
- and I remember spending a week in the pavilion at CIYMS arguing about how
different parts of the land should be used - but, in the context of the regional
strategic framework, we will have local area plans, including one for Belfast,
a key element of which will be the future of the harbour. Some of this land
- for example, 300 acres on the north foreshore, which the City Council created
and could, I hope, be developed further - is not, actually, under the authority
of the Harbour Commissioners.
It is crucial for the future of the city and the Province that the land be
developed for the benefit of everyone. Members of the Assembly should be asking
whether privatisation would be in everyone's best interests.
May I congratulate you on this very substantive report, characterised by
substituting detailed argument for assertion. We seem to have, unfortunately,
become preoccupied with the problem of where we get the £80 million that
is required for the road improvements, if we do not privatise the port of Belfast?
The key point is that the argument for or against privatisation should not
be based on whether or not it is going to provide a one-off windfall.
In response to an earlier question, our discussions seem to be overshadowed
by the view that if the port of Belfast retained its status with extended powers,
we could periodically look at the balance sheet and raid the coffers when we
needed some money. That is commercial nonsense. If the port of Belfast is to
have extended powers, it must be free to operate and utilise whatever profits
it accumulates as a commercial enterprise.
The contrast in your conclusion is between the option of a trust port with
extended powers which will ensure that it remains an independent statutory
body with all decisions being made in the interests of the port and Northern Ireland,
as opposed to a private organisation motivated by the need to return profits
to its shareholders. That does not spell out the alternative. The danger of
moving away from an organisation geared to maximising profits is that we move
towards an organisation that is under the control of politicians who could
move it in ways that would secure them a few votes in their local areas. The
port of Belfast must retain commercial autonomy, and if it accumulates profits,
those must be made available to help it develop in the market place.
It is not up to Belfast City Council to decide what the level of the extended
powers should be. That should be the subject of further consultation. We could
ask that the extended powers should give Belfast City Council a final veto
over all port matters. That would be sufficient for Belfast City Council, but
it would not be in keeping with the general principles of inclusiveness, openness
and partnership with others.
Despite the port of Belfast's limited powers, all the evidence shows that
it has been successful and that it has retained money to allow for further
investment. The only constraints that the port of Belfast should have are the
normal ones, such as planning, which I referred to earlier.
I did not want to give the impression that we would be dipping into the port's
coffers every time we wanted to build another road. It could be argued that
there should be some residual cost to the port of Belfast if, for example,
it benefited directly from the building of the Westlink. That link could possibly
That is normal practice. That is what happened to Sainsburys when they built
a store at Forestside and had to widen the road.
In Northern Ireland the issue of infrastructure will have to be grasped
for the long term. How do we continue to build roads? How do we develop the
infrastructure? Belfast City Council is at loggerheads with the Department
of the Environment regarding the inner ring road, how it will be funded and
whether it is the solution to congestion in Belfast. People as well as cars
should form part of the equation. We need to consider the issue of public transport
in Northern Ireland because that locks into the question of whether we
need the number of roads that we say we need. Can traffic congestion be dealt
with in other ways?
The protection of the landbank has been the main vein of the questioning
so far, although perhaps there are other areas that we should be moving on
to. The current view seems to be that if the port is retained in trust status
or in some kind of public ownership, the landbank will be protected. Belfast
City Council has been critical of, for example, the Harbour Commissioners'
decision to apply for a rezoning of the D5 site - from light industrial
use to retail use - and the implications of that.
If extended powers were to be given to a trust port, would that give the
port authority an even greater autonomy to do the type of thing that Belfast
City Council has already been critical of? Have you any views on how landbank
might be protected so that whatever is put on the land more closely reflect
the needs of the city?
You have been chairman of Belfast City Council's planning committee for many
years and will understand my answer. There will be times when Belfast City
Council will disagree with whoever is running the port. There will be times
when it will not like the planning decisions, and, inevitably, as happens in
a democratic world, situations will occasionally arise - such as D5 - where
it will not get its way. Nevertheless, it has to accept that whoever is running
the port has the right, within the law and the planning framework, to do what
is considered best for it. The planning system and the democratic systems,
such as the council and the Assembly, need to weigh in with other wider issues
which the system will be able to take into account.
There are other issues. The majority of the Harbour Commissioners' land is
leased to Harland & Wolff and Shorts Bombardier. Much of
that land has lain derelict for many years, although the area is now being
stimulated by projects such as Odyssey and Harland & Wolff's
proposal for a Titanic park. An effort is being made to make things happen.
However, it will be a matter for the trust port or whatever organisation is
in charge to consider all aspects of the port's development for the overall
good of its business. If it does not like something that has been proposed,
the council will have to argue within a planning context, or in other ways,
and it will not always win that argument.
If the final arbiter on the use of the land will be the planning system,
does it matter whether this is a trust port or a private port?
Representatives from Belfast City Council might be sitting on the board,
for example, and be able to influence its direction. No one from Belfast City
Council could sit on the board of a privatised company.
Your submission did not suggest what type of increase there would be in public
representation on the board.
I feel strongly about that. It is important that there be proper democratic
public representation. We all know what has happened in Northern Ireland. A
wide range of bodies has been set up here that have very little democratic
public representation - in some cases none. I am not saying that the majority
of the board members should be democratically elected, but there should be
a substantial democratisation of institutions such as this to take account
of the issues that you mentioned. The view of elected persons may still not
prevail, but we must live with that as part of the cut and thrust of debate.
The extensions that Londonderry and Warrenpoint are seeking will significantly
increase the public representation on their boards. That is something that
we would welcome in a Belfast context. There are larger questions, but you
have asked a very important one about how the port is to be controlled even
though it remains in public ownership.
A public authority intending to make a profit should do so for the benefit
of the public. This is an issue which should be examined, and we would like
to see further consultation on the options available. The landbank is significant
and will play a role in the development of Belfast. We know, for example, that
local residents have difficulties with the proposed extension of the airport.
A decision could be taken to turn the whole place into an airport, and no one
could stop it. The decision on privatisation is far too important to make on
what we consider to be grossly insufficient information. We do not have a definitive
answer. It is important that we find a means which allows the port the financial
independence to operate, while at the same time ensuring that it is for the
good of Belfast and of Northern Ireland as a whole.
We may have been opposed to the D5 concept, but in twenty years it may prove
a tremendous success, although I doubt it.
We spoke to the Minister yesterday about ports with extended powers, in particular
the case of Dover. He seemed unaware of the situation in Dover - his officials
probably kept it from him. He said that, under public-sector borrowing requirements,
ports would have difficulty borrowing money. According to your submission,
Dover has undertaken significant capital expenditure in recent years - £22 million
last year alone. Has it done that with recycled profits or has it borrowed
The powers which Dover has been given have allowed it to borrow substantially.
Dover Harbour Board has borrowed a substantial amount from the Bank of Nova
Scotia. Its extended powers meant that it experienced no difficulties in borrowing
And Treasury rules did not curtail that borrowing?
The Department officials said that the extended powers which Warrenpoint
and Londonderry wanted would require primary legislation. Was primary or secondary
legislation necessary to grant Dover extended powers?
I would need to clarify that with Dover, but, according to the counsel appointed
by Warrenpoint and Londonderry in London, only secondary legislation would
The Department would disagree.
I am sure that you have seen the submissions from Londonderry and Warrenpoint.
Dover says that it has changed and extended its powers as the need arises,
and in doing that it has encountered no difficulties. However, I can check
to find out if that requires primary or secondary legislation.
This is a very refreshing document, cogently argued and of great assistance
to the Committee. For the record, however, it states that the Harbour Commissioners
suggested that European funding was unlikely to be forthcoming in the future.
You disagree with that, and you refer to the framework for sustainable urban
development, which was published by the European Union. Does that framework
not indicate that funding could be available for development of the land attached
to the port for sustainable urban growth, as well as for infrastructural development?
That is correct. The four principles underpinning the framework are as follows:
creating prosperity; enhancing social inclusion; developing environmental awareness
and good health; and local governance, which is another issue that they are
keen on at the European level. But certainly it could be interpreted that the
money could be used directly for the port and also for the development of land.
Ms McGivern and I attended a Department of Finance and Personnel seminar
on Tuesday. The First Minister and Deputy First Minister spoke briefly at the
start, and then we broke into workshops. This seminar was part of the consultation
process for the next round of structural funds, which - given that they will
be running from 2000 to 2006 - seems a little late in the day. I understand
that Assembly Members are to get a similar briefing next week. It might be
pertinent for you to ask whether the arrangements being put in place will exclude
the possibility of the port authority getting money from structural funds.
From our reading of the document we think there are opportunities to get money
if you have a substantial case. I understand that following the Berlin summit,
we are to have five years of Objective 1 status followed by a transitional
This idea that we come along with a paper in May, have a chance to discuss
it in July and August so that there can be a final decision in September is
the usual problem, which I know that you will all put right when the Assembly
is running in its substantive form.
You may not be the right people to answer my next question. The Harbour Commissioners
say that they have £20 million in cash. That is derived from their profits,
which are very healthy indeed - about 40% of turnover, I think - and as far
as I can recall, their net profit is roughly £5 million per year. They seem
to have no difficulty in generating that high level of cash reserves. What
would they need to raise additional cash for? Have the Commissioners given
any indication that they are contemplating future large-scale development that
would require moneys beyond the level of cash reserves they currently have
and the level of profit they reap annually?
That is one of the arguments contained in the document. We have scant evidence
from the Belfast Harbour Commissioners as to why they wish to raise this additional
money. They have not produced a business plan. We do not know which way the
Belfast Harbour Commissioners are indicating that the port should go. This
is one of the difficulties.
It seems to us that if one sets up a proper trust port with extended powers
so that it could diversify and could move on, then one of the first actions
would have to be the drawing up of a large-scale business plan. That would
be the case for any business. It would then be able to assess the amount of
money it needed to borrow. Given the amount of money which Belfast Harbour
Commissioners have currently sitting in the bank, I do not think that they
will have to do too much borrowing in the short term. Perhaps, in the longer
term they will need money for larger infrastructural matters.
European funding should be used judiciously. We are only going to have it
for another five years and if the port is very profitable there may be arguments
as to why we are putting European money into it. We could link it to the infrastructure,
which is the Westlink connection and other roads going into the city which
might benefit the port. However, to emphasise again, we have no evidence from
the Belfast Harbour Commissioners - at least we have not seen any evidence
in the public domain - indicating what they need this money for. They talk
about making the port larger, changing it and enhancing it. However, we have
no indication as to the direction in which they wish to take the port, what
specifically they want to do, and what the borrowing requirements for that
They have talked about buying other ports and vertical integration. They
have talked about working towards having an integrated port and transport facility.
Have you any views on the use of funding for that purpose?
I do not think we would be supportive of ports buying each other. Ms Skelly
spoke to Mr Turnbull about this issue at some length.
Our concern about the creation of an integrated transport company was how
that would benefit Northern Ireland. We were concerned as to where the market
research was which showed that there was a need for the creation of an integrated
transport company. One of the examples we came across involved the port of
Felixstowe. It decided to diversify into road haulage, and that turned out
to be completely unsuccessful.
The Belfast Harbour Commissioners have not produced conclusive market research
which shows openings for such businesses. There is a clear lack of a business
plan. We are asking what the creation of an integrated transport company means,
and how it will benefit Northern Ireland. That does not seem to have been answered.
Thereby hangs the whole tale of this. There is a lack of real, detailed,
hard investigations. Those who want to do something like this should argue
their case in a very detailed manner. It should not be left to the local district
council to go to the trouble of carrying out the type of research which we
have had to do. I am quite happy that we have done it, and I know that members
expected us to do it. However, I really do think that it is for those in government
to substantially investigate all aspects of this. One is left with the sneaking
suspicion that some money was needed for roads and this was a good way of getting
it. That is the real, fundamental problem. The hard, detailed research has
not been carried out. Those who want to do these things should argue their
case in depth.
Is there a real danger of a monopoly situation being created by the vertically
integrated transport structure which has been mentioned and which, in the proposal
currently before us from the Belfast Harbour Commissioners, would be handed
over to a private company? Is there a real danger in what is being developed?
The simple answer to that is "Yes".
We have two examples from an academic, Dr Baird, who is based in Napier University,
Edinburgh. He cites two companies with which Belfast Harbour Commissioners
have compared themselves. They are Forth Ports plc and the Mersey Dock and
Harbour Company. These are companies which Belfast Harbour Commissioners are
aspiring to be like. We have examples of where both of these companies have
engaged in behaviour which has been viewed as being directly uncompetitive.
They have created monopolies. These examples have been included in our submission.
The example of Forth Port plc involved a small shipping company which wanted
to open up another jetty further down the harbour and which was being prevented
from doing so by Forth Ports plc. The Chamber of Shipping asked Forth Ports
plc to explain why they were doing this as the matter was purely uncompetitive.
There is academic evidence that both companies with which Belfast Harbour
Commissioners have compared themselves have entered into behaviour which can
be considered uncompetitive.
Thank you very much for your very full submission. As other members have
mentioned, it will be helpful. The opportunity to ask questions about it has
been very useful also. When we are preparing our final report much of what
you have said will be helpful to us in reaching our conclusions.