for Regional Development
Wednesday 10 April 2002
MINUTES OF EVIDENCE
Mr P Robinson
Mr N Hamilton)
Mr R McMinnis) Department for
Mrs B Faloona) Regional Development
- The Chairperson: Good morning, Minister. Minister, would
you like to start off, or Mr Hamilton?
- Mr P Robinson: Nigel is washing his hands off that one completely.
Mr Chairman and members, I am grateful for the opportunity to attend
the Committee's meeting this morning given the importance of this
issue, both to yourselves as a Committee and, indeed, myself. My officials
and I have been working on the matter that you are considering this
morning in detail since I was first made aware of the problem by Sir
David Fell, the chairman of Harland & Wolff group of companies.
I understand that Belfast Harbour Commissioner's chairman, Frank Cushnahan,
and the chief executive, Gordon Irwin have already met with the Committee
chairman, and deputy chairman, and I am also aware that the Committee
has taken evidence from Sir David Fell.
- You will therefore know that the proposition which Sir David has
put forward forms part of the new business plan for Harland &
Wolff Heavy Industries Limited, which is intended to ensure the survival
of shipbuilding in Belfast, while at the same time facilitating the
regeneration of a sizeable area of land no longer required for that
- Both Sir Reg Empey at DETI and myself have ministerial roles to
perform in relation to this proposition. Sir Reg, as industry Minister,
has been required to make an assessment of the viability of the company's
new business plan. In contrast my role emanates from the memorandum
of understanding the "MOU" as we call it, between Belfast
Harbour Commissioners and my Department under which the Commissioners
must obtain our approval for any change in land use, or any planned
disposal of harbour lands.
- As you are aware the MOU Agreement was set in place last year as
a direct result of the concern expressed by many elected representatives
about the manner in which the original Titanic Quarter deal was concluded
between Harland & Wolff and BHC. Because of the existence of the
MOU the situation this time is very different. There has been extensive
consultation by both parties with Government Departments, Belfast
City Council as well as this Committee.
- In addition, the proposed land deal cannot be implemented without
the specific approval of my Department. Thus, the current process
is much more transparent and characterised by greater public accountability.
The approach I have taken in relation to the issue has been guided
first and foremost by a concern to safeguard the public interest whatever
the outcome. It follows from this that if the lands in question are
no longer needed for shipbuilding, as the Minister for Regional Development
I am keen to see them developed as soon as possible in the best interests
of the people of Northern Ireland.
- I have also made it clear that while I am keen to facilitate Harland
& Wolff, and would hope that the new business plan will result
in a marked improvement in the company's fortunes, I am equally concerned
that any land deal must be justified in its own right, and produce
clear, economic benefits.
- Although Sir Reg and I, supported by our officials, have had several
joint meetings with Sir David Fell, my officials and I have also had
detailed bilateral discussions with BHC. Right from the outset we
established a number of key principles for the conduct of the matter.
These were that any deal must not only be in the best interests of
Harland & Wolff and BHC, but also in the best interests of Northern
Ireland plc, given the clear public interest. We have also looked
at potential land use issues.
- Recognition that there are read-across implications for any deal
in relation to other tenants, or the same tenant, on other land. Recognition
that the move requires BHC to engage with the Department prior and
post any dealings on the land and to obtain our formal consent. That
there should be no secrets between BHC and DRD in terms of any commercial
negotiations. Recognition that the land issue arises from the new
business plan, not the reverse. Recognition that the original lease
was intended to support the Harland & Wolff shipbuilding business,
it was not designed to facilitate other future business ventures.
- Furthermore prior to BHC entering into negotiations with Harland
& Wolff I had discussions with the Chairman and Chief Executive
to identify those matters which we considered needed to be taken into
account. This discussion and a subsequent aide-memoire reflecting
that discussion built on the key principles and identified a number
of negotiating objectives including the need for the developers to
address the infrastructure issue, the need for Harland & Wolff
to establish arrangements to demonstrate that the required level of
funding had been injected into the company, and arrangements for the
monitoring of the progress.
- Things have obviously moved on considerably since then as a result
of the DETI examination of the company's business plan and through
the negotiations between Harland & Wolff and BHC. The position
which we have now reached is that while nobody can ever guarantee
the success of any business plan, the position which we have now reached
indicates that the review undertaken by PricewaterhouseCoopers for
DETI has, at least confirmed that the company has access to the necessary
finance, which it considers is required to successfully meet the costs
of carrying through its restructuring proposals. Therefore they consider
that the plan is capable of implementation. An important point to
bear in mind in relation to this is that no public funds would be
involved, the commercial risk will be borne entirely by the parent
company, Fred Olsen Energy.
- Turning to the proposed land deal, a further six acres have been
introduced bringing the total to just over 78 acres. The proposed
development is on a 50/50 basis, similar to the arrangement reached
relating to the Titanic Quarter site. This is being recommended to
the boards of the respective companies. Those boards have yet to meet
to ratify that part of the proposal.
- The Department must now seek to satisfy itself in relation to the
actual legal agreements and is arranging for the Valuation and Lands
Agency to examine the valuations of the site. We will also want to
be satisfied that the proposed deal will not give rise to any state
- I can also advise you that most of the objectives set out in our
original aide-memoire seem capable of realisation. For example, within
the framework to which I referred the developers have accepted the
need for a statement up front on the funding of internal and external
infrastructure and have agreed to liase with all interested parties
in preparing a development plan for the area. Quite separately, DETI
is seeking to agree with the company suitable arrangements to demonstrate
that the necessary funds raised on the back of the proposed land deal
have been invested in Harland & Wolff Heavy Industries Ltd to
enable the new business plan to be implemented.
- There is still much to be done and I am conscious on the basis of
the information given to me by Sir David Fell of the relatively short
amount of time left before the company finds itself in serious financial
difficulty. I am clear on the direction and shape of the deal, whether
it can be realised, I cannot yet say. However because of the public
interest in this matter there are wider political consultations which
I feel are essential and it is important for the Executive to have
some further information and to consider the issues. Assuming, however,
that the proposed land deal passes the legal and valuation tests and
the resolution of the remaining issues, I am minded to agree to BHC
concluding an agreement with Titanic Quarter Ltd which is a sister
company of Harland & Wolff Heavy Industries, for the development
of the site. In coming to this view, I have been influenced by several
factors. First with the injection of significant funds, it would afford
Harland & Wolff the opportunity to implement its new business
plan and so ensure the survival of shipbuilding operations in the
- This will retain jobs and also allow the two RO-RO vessels to be
completed. It also will improve the yard's prospects in the longer
term by making it more compact and efficient and promote new jobs
in the construction of renewable plant.
- The alternatives of mothballing or closure frankly have little to
offer in comparison. Second, it would facilitate the regeneration
of a substantial area of the harbour estate, a prime site close to
the city centre, which if it is left will rapidly become an eyesore.
Development of the land offers further job opportunities. Both Harland
& Wolff or BHC accept that the site lends itself to development
at least in part for light industrial use. Taken together with the
adjoining Titanic Quarter site and the new Science Park, this could
become a dynamic new development area extending to over 160 acres
in the form of an urban village or major enterprise park. The uses
would of course be subject to the full rigours of the planning process.
- Finally, I have asked myself about the risks in agreeing to the
proposed deal. At worst Harland & Wolff will fail in its effort
to revitalise the yard. In which case the need for the regeneration
of the surrounding area becomes all the more important in the interests
of creating new job opportunities. Subject, therefore, to the completion
of our due diligence checks and the Board approvals - and of course
subject to the views of my political colleagues - I have come to the
conclusion that in principle the proposed land deal would be in the
public interest. As I see it there is nothing to be gained from withholding
the Department's consent if the shape of the deal is right.
- I hope that you have found this update and my analysis useful. I
have given it in the detail that I have because I believe there is
a prime need for openness and transparency. I should be glad to have
the Committee's own thoughts on the Harland & Wolff proposal.
- The Chairperson: Thank you very much Minister for that very
detailed and comprehensive statement. I am sure it has caused great
interest around the table here.
- Mr McFarland: Thank you for coming. We heard obviously last
week from Harlands and I think there were one or two areas that the
Committee was concerned about. The first one was, as we understood
it, there was serious concern about the viability of the business
plan by the consultants who examined it.
- One of the issues is these areas that Harlands are planning to go
into, in particular the wind farm. My understanding is that there
are wind farm manufacturers or windmill manufacturers all over the
place who are actually sitting on large quantities of constructed
windmill generating towers. There was a suggestion that they were
actually trying to go into an area where it was extremely unlikely
that they would be able to become the cutting edge and all the things
that they were saying that they were doing.
- The other point that was made and perhaps it is a more important
one is that if we are going to do this deal and the business plan
does not work out in a year's time and we end up back where we are
now with a death of a thousand cuts. There would seem to be a degree
of sense in simply grabbing the nettle now and saying "Right
well hang on a minute, shipbuilding as we have known it in Belfast
is not going to survive in the longer term". We would be better
now to produce a proper regeneration plan for this whole area which
would produce 5,000 to 8,000 jobs and allow us to do what we
started off doing with Titanic. This would be a phase two Titanic
and if and when Harlands went under, it would be a Phase III Titanic.
- Is it the time to perhaps be realistic about this and simply accept
the fact that the world does need to change? We need to grasp this
now. We need a proper plan for redevelopment. Let us hold our nose
and get on with it now, rather than simply having a thing now and
ending up in two years' time with you sitting at the end of the
table here, Minister, coming up with another plan for this other part
of Harlands. That is obviously a concern.
- Mr Robinson: Yes thank you for the question. First of all
Mr Chairman I think you will be aware that in relation to the
viability of the business plan that is a matter for DETI and Sir Reg
and I am very grateful for the close relationship that Sir Reg
and I have had in looking at all of these matters. To some extent
any business plan is viable at the point when it is being considered,
it is how it actually operates. The viability is always dependent
on whether people get orders for the work, that depends on whether
they are competitive. There is no doubt that this business plan makes
them more competitive than they have been before now. Ultimately it
is a matter for market forces whether people get orders and whether
they can get the business. I have had to approach this leaving almost
to one side the viability of the business plan to look at whether
the land deal makes sense in its own right, I have looked at it if
you like under three headings. One of the consequences is if we do
a deal with Harland & Wolff at this stage under the
kind of circumstances that I have referred to, or whether we do a
deal at a later stage after Harland & Wolff would have
gone down because that is a consequence of not proceeding on the first
basis or thirdly not doing a deal at all. The reality is that the
business plan and the arrangements which are being considered at the
present time give Harland & Wolff a chance. Without
them we are talking about the closure of Harland & Wolff
and the end of shipbuilding in Belfast. The misconception that I think
a number of people have is that if Harland & Wolff was
to close that there is some public asset that becomes available to
us to do whatever we would wish to do with it, that is not the case.
Harland & Wolff have a lease which lasts until 2114
so if Harland & Wolff were to close tomorrow I am pretty
sure that they would be capable of putting on site such arrangements
that they might think would keep their lease intact. Of course Government
could attempt to vest the ground but at that stage at least we would
be talking about protracted legal arrangements. We would also be talking
about a considerably different arrangement because effectively I suppose
the Valuation Office along with the Lands Tribunals would be deciding
issues of the amount of money that Harland & Wolff would
get. So we are going into an area where nobody knows what the outcome
would be and the likelihood of us being able to have some planned
development of the site would be much more remote, particularly as
they already have control of the Titanic Quarter element of it. My
Department has of course responsibility for the Regional Development
Plan and we assigned our Chief Planner to the task of looking at this
site and which he concentrated on for a significant period of time
and has produced some recommendations for us to look at. Of course
the Heads of Agreement that we would have with Harland & Wolff
would incorporate some joint consultation in terms of bringing forward
whatever the regeneration proposal would be. The fact that the public
interest is protected by a 50% arrangement by BHC also indicates that
we have further influence in the shape of the proposal. By my new
Harbours Bill, I hope I said when it gets through the Assembly, Belfast
City Council will have an even more influential role on BHC so there
are a number of areas where the public interest will be protected
to a greater degree, on top of which you have the influence of DRD
with BHC and as important as any of those the full rigours of the
planning process. So there are a number of protections as to how the
land will be developed but I think that an area of land of about 160 acres
is a substantial development, one that has to be carried out very
carefully and one which no doubt the Department of Environment, Planning
Service will be looking at very closely as indeed will BHC and the
wider public interest.
- The Chairperson: Thank you very much, Minister. Mr Ervine.
- Mr Ervine: Thank you, Minister. It seems to me that you used
the word I think "ensure", I presume you were reading from
a prepared script. To "ensure" a continuum of work in Harland
and Wolff. It seems to me that that is an impossibility to "ensure"
that in the absence of orders and that the business plan, as far as
I am aware, does not have any investigative detail about who the potential
customers might be. Not only who the potential customers might be
but what indeed the product might be other than the suggestion of
a company in Holland who are prepared to share knowledge with Harland
and Wolff for the windmill generators. As I understand it that is
pretty much all there is, a suggestion, but I do not see that there
is any investigating into this. In other words, we did not get these
companies in as focus groups and say 'Look, if Harland and Wolff existed
and they were selling X, Y and Z, would you buy it off them?".
- One more bit that worries me is the suggestion that the financial
package which the release of the land, results in money from Olsen,
makes Harland and Wolff more competitive, I think this is a nonsense.
We did hear from Sir David Fell the difficulty in relation to shipbuilding
and that perhaps an abandonment of that may, in terms of building
pods or pods coming in and being fitted out by the shipyard, may be
an opportunity for them, and I emphasise the word "maybe".
- But my experience with Harland and Wolff and my experience with
an extremely flexible workforce in Harland and Wolff is that the workforce
have done everything required of them. They have made every manoeuvre
that Harland and Wolff have asked of them and yet we are still uncompetitive.
Sir David Fell said that our productivity in Harland and Wolff was
not great and yet we have a workforce that not only is our productivity
not great we have no orders. We are sitting on a two Roll On Roll
Off that we would not have got if it had not have been for political
pressure. There is a complaint from management about the productivity
of the workers.
- So my argument will be is that the effectiveness of Harland and
Wolff, assuming they get an order in terms of their financial capacity,
will fall on the shoulders of the workforce. There will be changes
in practice and custom and we I think as politicians in this Assembly
and indeed yourself as a Minister, will be facilitating a harsher
regime on the workforce and all in the name of keeping their jobs
alive with a management that frankly so far have proven incapable.
- Mr P Robinson: Well, first of all let me read to you the
reference to "ensure" so that you will see the caveat that
I put in at the time which maybe my speed of reading missed. I said
that "it would ensure the survival of shipbuilding operations
in the short-to-medium term."
- Whether the short-term is the completion of the Ro/Ros, whether
there is work beyond that, only the out working of the business plan
we will be able to show.
- Mr Ervine: I greatly appreciate that clarification, Minister.
- Mr P Robinson: You are right. Simply injecting money into
the company does not make the company more competitive. What it does
is keeps the company going while a business plan which reduces their
overheads, both in terms of the overheads that they have in running
the size of the site that they presently have and the overheads in
terms for instance of steel fabrication where they are bringing in
modules under the business plan as opposed to the present arrangements,
those they indicate make the company more viable and make them more
competitive in the market. Time alone will see. It is clear that Mr
Ervine has some doubts. Perhaps he can express his more clearly than
I could. But I again come back to the issue. I have not taken any
decisions on the basis of the viability in my terms of the future
of Harland and Wolff.
- I have had to look at the issue in terms of a stand alone arrangement
because of the possible read-across to other tenants that there might
be in the Harbour Estate and obviously the wider interest of developing
that site in the interests of the people of Northern Ireland.
- If the thrust of what Mr Ervine is saying is true, that it is not
going to be competitive and it is not viable then it will ultimately
close and in those circumstances it becomes all the more important
that we have job opportunities on that site and that the site is developed
in such a way as to be in the interests of the wider community.
- Mr Ervine: It seems to me that Harland & Wolff are determined
to be property developers and I cannot stop them being property developers,
they are already involved with Titanic Quarter which I supported.
However, at this stage I have no proof that they are good property
developers. We know that there are lots of good property developers
out there and the question I have is, is there satisfaction in the
mind of the Minister that Harland & Wolff on the assumption that
they do get the opportunity to develop that land will make a good
job of it.
- Mr P Robinson: Let us get it clear. Harland & Wolff will
not be developing that land on their own. Harland & Wolff will
be part of a partnership that will be developing that land. You do
have some evidence that the land itself is very attractive, and Mr
Ervine will know from his East Belfast experience, there is a vast
potential with that land. Therefore, it is important that it is developed
- A lot of those controls are controls that as elected representatives
we have some say in. We have say in it through the planning processes
and it is important that we exercise those elements of control that
we have. We also have a role in terms of the Belfast Harbour Commissioners
and I hope the increased role the City Council will have in that.
- Mr Byrne: Given that we are talking about a Harland &
Wolff survival plan in relation to ship building engineering and maritime
engineering and given that DETI are really looking after that, we
are limited as to the influence we can have on that.
- I think the key issue is the type of development that is likely
to be placed on this land that is going to be freed up as a result
of the lease. Therefore, I am wondering if the Minister or his Department
has any thoughts on putting in any criteria regarding the mix of type
of development that needs to take place on that land. There may be
very attractive immediate, short-term dynamic benefits to the Titanic
Quarter Company if they go for a particular type of development which
may be lucrative but may not be in the best interests of creating
or providing a mix of employment opportunities.
- Mr P Robinson: Can I indicate that Titanic Quarter Company
will not be taking the decisions on its own? It will be taking them
in conjunction with Belfast Harbour Commissioners in terms of the
development and all of it will be subject to the full rigour of the
- However, we do have some views as to how it should be developed.
I think that the last thing that any of us want to see is a whole
swathe of apartments from the Odyssey right through to the new concentrated
site. It has to be some form of mixed development but we have an emphasis
on the light-engineering, light-industry element. Happily there is
no argument with Harland & Wolff in terms of the attractiveness
of that element to the site. They believe that the site lends itself
to that kind of use. Obviously there will be other uses as well.
- We have gone to the extent of preparing, if you like, a draft in-house
plan ourselves, so we have some view of what should be done to the
site. We will, I suspect, have some influence, at least through Belfast
Harbour Commissioners on what is eventually put forward by way of
- There is an added value in this piece of ground being added to the
Titanic Quarter site and being developed as one site, which I think,
will have massive job opportunities for Northern Ireland.
- Mr Byrne: The only concern I have is the definition of light
engineering. I think we all have an obligation to make sure that we
have some value added sophisticated engineering potential retained
in Belfast as regards of the development of the overall Northern Ireland
economy. A very loose definition of light engineering may not be in
our best interests in the long term, it is only an observation Chairman.
- Mr P Robinson: I can only respond to that in terms of I share
the desire but point out the use classifications within planning law
are such that they have a fairly wide interpretation under that classification.
- Mr McNamee: I would just like to ask the Minister if he is
satisfied that the public interest is being well served in terms of
the valuation that is put in the added value of the lease on the restrictive
cover. If a rescue package is not secured at Harland & Wolff
and the company will go into liquidation or rather Titanic Properties
Ltd would still hold the lease to the year 2114 on that piece of land.
But they would hold a lease which is restricted for that property
to the use for harbour related activities. Now if agreement is reached
and the restrictive covenant is removed there is a significant added
value to the lease itself. Potentially there may be other people in
those circumstances not disregarding the fact that if Harland & Wolff
goes down, that there are consequences in terms of jobs and potential
development of other parts of the Harbour Estate. But in those circumstances
there will be the potential for another party to be interested in
acquiring the lease in partnership with Belfast Harbour Commissioners.
The question I am asking the Minister is, is he satisfied that the
value being put on the improved value of the lease is serving the
- Mr P Robinson: Although I do have some background in estate
agency I would not dare to satisfy myself on those matters. Therefore
the Valuation and Lands Agency have been asked to look at the matters.
We are still awaiting a report one of the outstanding issues that
has to be dealt with. Their view of the four valuations that have
already been carried out independently of the land, there is some
commonality between the valuations that have been carried out by private
companies on the land but I would await for the assessment of the
Valuation and Lands Agency on that. In terms of the added value of
the site, there are several factors. They have to value a site as
it presently sits, the site will become much more valuable after infrastructure
improvements have been made to it. They themselves have a cost and
I have not emphasised it much to date but perhaps I should now. It
is very strongly the view that I have argued throughout this whole
process, that whereas Titanic Quarter was very much based on an arrangement
between BHC and Harland & Wolff, there is a third party
who wants to be very certain about what it is going to get out of
any arrangement done and that is Northern Ireland PLC. Not only is
it a job potential that we have referred to, not only is there safeguards
which we are attempting to put within the process but there is also
infrastructural improvement. We are talking about very significant
infrastructural improvement that is necessary, not just within the
Harbour which of course makes the Harbour more attractive, but the
area leading to the Harbour. So there are many benefits for the wider
community which when they are carried out increase the value hopefully
of the site. To increase the value of the site they are going to have
- The Chairperson: Could I just ask the Minister in a sense,
or quite correctly, we are not dealing with the viability of the business
plan and the reconstructed Harland & Wolff that might or might
not emerge from the present situation? Indeed, if Harland & Wolff
were to close tomorrow or at the end of this month, the reality would
be that we would be faced as an Assembly with a situation in which
we had, or the public had an interest in a piece of land which Harland
& Wolff still held an interest. In that situation we would have
to deal with that in any of that. So whether Harland & Wolff is
restructured and continues or closes, we still have to deal with the
situation of what or how is this still going to be developed. Is that
the reality of the situation? It is the reality from this Committee's
point of view and the remit that this Committee has.
- Mr P Robinson: In relation to this piece of land it is even
more clear because what Harland & Wolff are saying to us whether
Harland & Wolff survive or not, this piece of ground is surplus
to our requirements. So what are we going to do with this piece of
ground irrespective of what happens to Harland & Wolff. So from
a Committee view as well as from a Department's view we have to look
at what the best arrangements are for this piece of ground, which
Harland & Wolff have through their business plan indicated is
no longer going to be used for shipbuilding purposes.
- The Chairperson: So we have to focus on how this land is
going to be developed, how it is going to be used. What you are telling
this Committee is irrespective of whether Harland & Wolff continues
or closes that lease still continues in some form, some shape or form.
That Harland & Wolff will still continue to have interest in that
land and it would be very difficult for somebody to come along and
say, "Well we will take over the lease and we will now develop
this land". Is that really the situation?
- Mr P Robinson: It is impossible for anybody just to take
over the land. If anybody wants to take over the Harland & Wolff
interest in the lease then they either have to negotiate it or else
they have to go through vesting procedures if it is going to be Government
we would be doing it. Vesting procedures obviously would be long drawn
out, protracted and indeed there will be a figure at the end of it.
Nobody knows what that figure might be.
- The Chairperson: Now assuming that the company is restructured
and the rescue plan goes through, who would continue to lease the
land? What company would it be?
- Mr P Robinson: What land are we talking about now?
- The Chairperson: The piece that the 76 acres or thereabouts
which is now surplus to the requirements of Harland and Wolff.
- Mr P Robinson: My understanding is that it would form part
of the same arrangement as the Titanic Quarter. I am looking to Robin
- The Chairperson: We very loosely use the term Harland &
Wolff, but I want to identify..
- Mr P Robinson: It would be a 50/50 arrangement if the Boards
agree in the same way as Titanic Quarter so Belfast Harbour Commissioners
and Titanic Quarter Limited.
- The Chairperson: So it would be that company effectively..
- Mr P Robinson: Those companies. Belfast Harbour Commissioners
will have a 50% interest. It may seem unclear because I think it is
important because the general language out there is that Harland &
Wolff or Titanic Properties are the ones that are going to develop.
They are not. It will be a partnership between Titanic Quarter and
Belfast Harbour Commissioners. Both in terms of the costs involved
in developing and indeed in the profits from development.
- The Chairperson: What I am trying to do is to tie down who
the actual company, the Belfast Harbour Commissioners will partner
with? I think that is important because we blandly use the term "Harland
& Wolff" and of course we are dealing with different companies
who are related as it were to Harland & Wolff, but it is not necessarily
Harland & Wolff itself as the public out there might understand
- Mr P Robinson: I hope I am right in this, if I am not I will
ask officials to come in. My understanding is that upon agreement
between Belfast Harbour Commissioners and Harland & Wolff about
the future use of that part of their lease, the Titanic Quarter Ltd
would invest in the Harland & Wolff Heavy Industries the amount
of money that is referred to in the agreement that is being considered,
therefore the leases would go to Titanic Property Ltd and the development
arrangement will be one between Titanic Quarter Ltd. and BHC.
- Mr Ervine: It is a Harland in sheep's clothing.
- The Chairperson: Of course that means that if there is a
potential development plan put in place for the vacated land that
would then be surplus to Harland & Wolff requirements, it would
mean that Titanic Quarter itself would become a more valuable asset.
- Mr P Robinson: The two pieces of ground - Titanic Quarter's
existing site and this new site - will have a greater value than the
value of the two added together if they are developed as one whole.
The valuations support that view.
- The Chairperson: What I am trying to get at is what is talked
about is somewhere in the region of £20 million to £30 million being
put into Harland & Wolff by Olsen. Of course people are saying
that he is putting this money in to a project which may or may not
work. What is the benefit to his company financially? Of course there
is the benefit is there not to Titanic Quarter Ltd if all this goes
ahead, a fairly considerable benefit.
- Mr P Robinson: He will have paid for whatever benefit he
can attract to it along with BHC. The reality is that if Fred Olsen
was to invest from the benefit that he would attract by way of the
arrangements that are being considered into Harland & Wolff Heavy
Industries, he is doing that in advance of him knowing whether he
even has planning permission for the site that he intends to develop.
So from his point of view there is considerable risk involved. He
is also in effect taking a significant amount of money and investing
it, whereas if he was to allow Harland & Wolff to go down he would
not have to therefore invest that money in Harland & Wolff. People
cannot be unkind to Fred Olsen in a way that if they scrutinise the
arrangements further, they might not be.
- Mr McFarland: We remarked to Sir David Fell about the timing
of all this. We are in an election year, both Ministers involved are
East Belfast MLA's and if one was unkind about it all you might wonder
why at this particular stage all this has arrived with us. The reality
is that unless Harland & Wolff can do something with all this
land it is useless to them because the lease is for metal-bashing
and the moment you stop metal-bashing that is useless land and all
they can do is then sit on it. There were enormous potential benefits
for them, if they can get this land off into Titanic Quarter. The
predictions for profit and development for that whole area are enormous
both in terms of jobs and profits for those have shares in it. Fred
Olsen will get all his money back, he also owns something like 90%
of the shares in Harland & Wolff through a number of little companies,
but in the end it is all owned there, so he is definitely not going
to lose, but he will win mightily if they can swing this deal.
- I am wondering if we are being robust enough about this. I know
it fits in well and it is comfy and it is not going to annoy anybody.
I am just wondering whether in the end in the same way that those
who made the deal in 1986 with Harlands where we basically gave them
hundreds of years leases for two pence a year or whatever, it was
in order that they bail out what was a nationalised industry at that
stage. I am just wondering whether we are being robust enough with
a longer-term view to all this because you can be absolutely certain,
Fred Olsen industries are not going to loose anything out of this.
In fact they stand to make enormous gains out of it.
- Mr P Robinson: Can I first of all say that if Harland and
Wolff or Fred Olsen felt that they had an advantage with the two Ministers
who represented East Belfast and the proximity of an election, I think
that in the meetings that Sir Reg Empey and I have had with them,
that will long ago have been dispelled. In fact because we are representatives
for East Belfast both of us, I suspect are hoping to continue to be
representatives for East Belfast, what happens on that site is vitally
important to us from a constituency point of view as well as our ministerial
responsibilities. I would have thought that on closer examination
he might well have concluded that we would have much more sensitivity
and be taking much more care about the detail of the arrangements
because of our constituency interests than if we did not have such
- Nonetheless, I know that Sir Reg Empey and I have both approached
this from a wider, and I might say higher interest and that is the
interests of Northern Ireland as a whole. I am convinced that anybody
when the full detail is capable of being examined, will recognise
that for Northern Ireland if it is agreed by the boards of the Belfast
Harbour Commissioner and the Harland and Wolff companies, if it is
supported by the wider consultations that I have to have politically,
I think that they will judge that it is a good deal. Set aside Titanic
Quarter, I think they will see it as being a better deal.
- Titanic Quarter leases of course were not as attractive as are the
leases that we presently have in terms of the number of years to go.
- Sorry, I think I had not picked up the second part of your question
which was about the huge benefits that might flow to Fred Olsen or
- There are potential benefits not only for Fred Olsen and his companies
but also for Belfast Harbour Commissioners and also for Northern Ireland
because of the development potential of the land. But to secure that
advantage there is significant infrastructural investment that will
be required. So not only is he in some way giving up an interest in
the lease because that money is going back into Harland and Wolff,
but he is also going to have to invest in the roads and water infrastructure
in that area. I am talking about a significant investment.
- Mr Hay: We should not forget this. Fred Olsen, the parent
company, have continued to support Harland and Wolff under difficult
circumstances. I think we need to remember that, and did not get much
in return is an issue. But one issue that did come out of the briefing
with Sir David Fell was the issue of timing and it was something that
we all I suppose got into trying to tease out as to what stage would
decisions have to be made by them in running the company down, if
their cash-flow problem came to a situation where they had no other
option but to bring people in to either run the company down or look
at the whole issue of cash-flow. Certainly, we got the clear impression
from them and from the whole delegation that morning that time was
not on their side in doing this deal. I am just wondering when can
the deal be done and dusted to allow Harland & Wolff that breathing
space to continue?
- Mr P Robinson: Yes. Sir David on the earliest moment of our
discussion, made clear that he and his colleagues on the board of
Harland & Wolff have fiduciary responsibilities and legal responsibilities
under the Companies Act, which requires them to take action if certain
things did not happen, and he made his best assessment of when they
might happen. I must say that both Sir Reg and I have a responsibility
to ensure that whatever considerations we give, cannot be forced into
timeframes that are unrealistic. We have therefore already taken longer
than Harland & Wolff would have like us to take in considering
the matter. In fact, we have taken considerably longer than they would
have liked us to take.
- From our point of view we could not have done justice to the issues
within the original timeframe. Therefore, it was essential that we
properly considered the matter at all of the check studies carried
out that we needed to. There are many outstanding issues, all of which
are capable of resolution in a matter of weeks. I believe that the
timeframe that we are now operating to and, indeed, could meet is
one that would be consistent with the needs of Harland & Wolff.
- All of this, of course, is subject to a number of matters, which
are still being considered. I do not want to give the impression that
it is a done-deal; it is not. Both boards have to consider the matter.
There are further political consultations, and we are still waiting
on some reports - valuation was mentioned earlier. So, there are still
matters to be tidied up. There are still some provisions that we have
not reached final agreement on as well. So there are still outstanding
- Mr Byrne: If I accept what the Minister has said that there
has been negotiations involving BHC, Titanic Quarter and Harland &
Wolff, if all of this were to be agreed, mutually satisfied, when
do you think there would be a comprehensive development plan published?
- Mr P Robinson: Because it is not my Department's responsibility
it would be difficult for me to say. I am pretty sure that there will
be some reference to the type of mixed development at an early stage.
The detailed planning process will take much longer, and needs to
take much longer. Indeed, the full application would be much longer
still. While we might have a picture at an early stage, detail will
take much longer and certainly well outside the period when it will
be necessary for a decision to be taken to invest in Harland &
Wolff by the Olsen companies.
- I should just say because there has been some criticism of Harland
& Wolff, I found Sir David to have been forthright and honourable
in all the dealings that I have had with him, and I would not want
to give any other impression. You are dealing usefully with someone
who has a very well recognised and respected interest in Northern
Ireland. I believe that in any dealings in which he would be involved
he will have that wider backdrop as an interest.
- The Chairperson: I think we will draw to a close there. Minister,
are you content. Are there any matters that you want to deal with?
- Mr P Robinson: No. As I said, Mr Chairman, I want to be as
open and transparent in the matters because of previous experiences,
though I was not in office at the time, but I think it is important.
BHC, I should add, have worked with us throughout this process. There
have been no aspects of the negotiations that have been hidden from
us, and it has been a very useful relationship that we have had with
them in this process, and I think that should be put on record.
- The Chairperson: I appreciate that. Thank you very much,
27 March 2002 / Menu
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