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 price index.

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 examined.

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 case.

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 core business?

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 story.

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 be maintained?

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 ports.

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 reason.

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)

MINUTES OF EVIDENCE THURSDAY 25 MARCH 1999 [Mr P Roche in the Chair] Witnesses:
Mr B Graham, Mr A Quirey
and Mr J Quinn
(Port of Belfast Harbour Trade Union Side)

The Chairman:

Mr Graham, welcome to the Ad Hoc Committee. I invite you to make your presentation.

Mr Graham:

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 our Future'.

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 economy.

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 port.

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 harbour?

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 Electricity debacle.

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.

Mr Hay:

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?

Mr Graham:

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 port users.

Mr Hay:

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.

Mr Graham:

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 have.

Mr Beggs:

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 Ireland.

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?

Mr Graham:

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.

Mr Neeson:

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.

Mr Graham:

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 and additionality.

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 powers.

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 particular aspect.

Mr Hutchinson:

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.

Mr Graham:

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 Tierney:

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 commissioners.

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?

Mr Graham:

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 nothing more.

Mr McGimpsey:

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 here.

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.

Mr Graham:

I would much prefer Mr Irwin to answer for his own inadequacies.

Mr McGimpsey:

My reason for asking you this question is that Mr Irwin has a difficulty with it.

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?

Mr Graham:

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.

The Chairman:

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?

Mr Graham:

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 McGimpsey:

Mr Chairman, you mentioned that 74 were in favour of privatisation. Was that 74%?

The Chairman:

No. 74 members out of 130.

Mr McGimpsey:

I thought that there were thousands working in the port.

Mr Graham:

There are.

Mr McGimpsey:

These are people who actually work for Gordon Irwin?

Mr Graham:

Yes.

Mr McGimpsey:

All right. So secretaries and so on are included?

The Chairman:

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 question.

Mr Tierney:

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?

Mr Graham:

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.

Mr Tierney:

I accept the point.

The Chairman:

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?

Mr Graham:

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.

Ms Morrice:

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?

Mr Graham:

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 and profit.

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 proposals.

Ms Morrice:

How much would that be?

Mr Graham:

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.

Mr Beggs:

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?

Mr Graham:

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.

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