Mr Beggs:

Is that the ICTU view rather than the view of the port unions?

Mr Graham:

No. In the strategy against privatisation, the response to the Trust Ports Review came from the Port of Belfast trade union side and has been endorsed by the Irish Congress of Trade Unions.

Mr Hay:

I am slightly worried about the ballot that has been mentioned. Roy Beggs is right. We should not be dictated to by 74 people as to what might happen in Belfast port. The Harbour Commissioners will use it in their PR exercise. They would be foolish if they did not. Joe Public will probably hear all sorts of stories. Does the union have plans to address what is happening? It is obvious that the commissioners have taken the advantage of the unions being "out of town". You need to look at the figure of 74, or whatever it is. Have you any plans to address that again? If you were asked by the Harbour Commissioners to sit down with them and look at a ballot in which you and they would be involved would you accept the invitation?

Mr Graham:

Trade unions have an obligation to consult and to keep in touch with their members. We obviously have to address that point, but the issue goes beyond that. That has been correctly identified this morning. It is not, nor should it be, within the gift of Gordon Irwin and every member of staff in the Belfast Harbour to determine the future of a key economic asset of Northern Ireland. I suspect that there was a hard sell in which people were told about the wonderful benefits that would flow from the opportunity to be preferential shareholders and so on.

Mr Hay:

Do you have any plans to counter or address that?

Mr Graham:

We shall certainly have to look at that, discuss it in the joint trade union forum and take it forward from there.

Mr Tierney:

It is important to recognise that the Committee is being presented with a trade union submission. We shall take on board what the trade union is saying when making our minds up.

The Chairman:

As there are no more questions, perhaps you would like to make a winding-up submission in the light of the questions that have been put to you, Mr Graham.

Mr Graham:

I again thank the Committee for the opportunity to make the presentation on behalf of members. We are available if you require additional information. We shall obviously have to follow up some issues, including the one that has just been mentioned. We shall also carefully follow the progress of the EC move against golden shares, not just in respect of Belfast harbour but also because of the implications of that for many other privatisations, both past and planned.

Our key interest in this is protecting our members' terms and conditions of employment and, more importantly, their job security. We could have been as narrow as that. However, we decided from the outset of our program of action to concentrate not just on the small limited numbers of direct employees of Belfast harbour but to focus on the economic role of the harbour in Northern Ireland's economy, the job security and jobs spin-off from its role. We want to try to ensure that the harbour is utilised properly and fairly for port users in the interests of the Province. Our solution is one that is innovative, one that operates in many other countries. A semi-state body with full commercial powers is in the interests of our members, directly employed, other workers within the harbour estate and all other workers and families in the Province.

We believe that the privatisation route has failed and will fail again. We are not in the position of having potential investors out there saying "Well, what could we do for the good of the port of Belfast? What can we do for the good of Northern Ireland?" Potential investors out there are saying "Give us a chance to get in and get more profits to put into share dividends and into the hands of the corporate management teams". We would see again what has happened everywhere else. Initially Northern Ireland institutions or individuals may hold the bulk of the shares, but over a period they will become part of a multinational-type organisation. The benefits from the port would haemorrhage out of Northern Ireland into city institutions and into the hands of one or two individuals who would benefit considerably from it.

Our proposals are in the interests of every citizen of Northern Ireland and we hope that in your deliberations you would take that on board.

The Chairman:

Thank you very much, Mr Graham, for a very informative report.

AD HOC COMMITTEE
(PORT OF BELFAST)

MINUTES OF EVIDENCE THURSDAY 1 APRIL 1999 (Mr S Wilson in the Chair) Witnesses:
Mr N Dodds, Ms C McAuley
Ms M T McGivern, Mr B Hanna
and Mr R Stoker
(Belfast City Council)

The Chairman:

I would like to welcome you all to the Committee. I apologise for the delay as we have had some difficulty in reaching a quorum. I am sure you will understand that people have other things to do today. It was touch-and-go as to whether we were going to convene the Committee at all, but we decided to go ahead.

A lot of Committee members are absent, so we had to press-gang some people who may not be au fait with the subject, as they have not been at previous meetings. Rather than bring you here for no purpose, we thought that you might like to make a formal presentation to us and then answer some questions. Afterwards, we would like to adjourn and, if possible, come back for a longer question session on Thursday 22 April. I am sure that there are many members who would have liked to have been here this morning to put some fairly rigorous questions, but who have been detained by previous commitments. I know this is not a very satisfactory arrangement, but if it is acceptable to you, we will proceed on that basis.

Mr Dodds:

We understand the difficulties facing Assembly Members today and we are glad that the Committee is able to proceed. All the members of the Committee should have received a copy of the paper prepared by the development committee of Belfast City Council. I should say that I am speaking in my capacity as chairman of that Committee and I am accompanied by Cllr Stoker, Cllr McAuley, the chief executive of Belfast City Council, Mr Brian Hanna, and the director of development, Marie-Thérèse McGivern.

The development committee is a relatively new committee of the council which has been set up to look after economic development, tourism and the promotion of Belfast and the arts. We see ourselves as having a strategic role in the development of Belfast, and since the formation of the new committee and the new department we have made a considerable impact on development issues in Belfast; we certainly intend to build on that work.

The views that we express today are the views of the development committee. Belfast City Council has not yet had the opportunity to come to definite conclusions on the proposals of the Harbour Commissioners, though the development committee has discussed these at length. We have met with the Minister responsible, and with the Harbour Commissioners, and have received presentations from them and from others. The views that we express are therefore the views unanimously agreed by the members of the Committee.

I do not intend to go through this whole paper but instead to highlight some of the main points. You may question us about any issues at this stage, but we would be very happy to come back on another occasion to answer questions in detail.

We see Belfast port as being integral to the development of the City of Belfast. Belfast was built around the port, and the port has, and will continue to have, major importance in relation to the economic and strategic development of the city. One cannot divorce the future of Belfast port, and the land in it that is the responsibility of the Harbour Commissioners, from the well-being of the city and the people of Belfast and greater Belfast. One must take into account the economic importance of the port to Belfast and to the whole of Northern Ireland.

I am sure you are aware that 60% of the entire seaborne trade of Northern Ireland goes through Belfast. It is the biggest port on the island of Ireland; it takes one quarter of the entire trade coming into and out of the island of Ireland; and we have been pleased about the phenomenal growth in passenger traffic through Belfast, much of which used to go through Larne. You have all the facts and figures about how important the port is and about the great strides that have been made in recent years to make the port a very efficient and effective harbour, thanks in large part to European funding.

I now turn to some of the issues of real concern to us. There are nearly 2000 acres of land in the harbour - 1950 to be precise - 855 acres of which are directly related to port activities while the remaining 1095 acres are not. This is something that the Committee must focus on: the large amount of land that is the responsibility of the Harbour Commissioners yet not at all directly related to port activities. Clearly, what happens to that land and how it is developed will have a major impact upon Belfast and the whole of Northern Ireland.

Our primary concern is to ensure that that land is developed in the interests of all the people and the economy and not merely in the interests of a few. Inevitably we are concerned that if the port is privatised, it will be the interests of the shareholders' private capital which will be to the fore and not the interests of the wider economic concerns of the people of Belfast and Northern Ireland.

Of the 1095 acres of land that is not directly port-related, 760 acres are held on long leases by Bombardier Aerospace Short Brothers plc and Harland & Wolff. Shorts Bombardier holds 460 acres and Harland & Wolff holds 300 acres. The land is held on 125 year-long leases which were negotiated on generally favourable terms when those companies were privatised - low rents and so on. The important thing is that that land can only be used in relation to the core activities of those businesses. Any profits yielded have to be shared with the Harbour Commissioners, and development has to be agreed with them.

We would vehemently oppose any suggestion that the land should pass into private ownership. It is a large swathe of land and in the case of Harland & Wolff, who own a lot of land right on the waterfront, there would be the potential for a port within a port. Another 160 acres is leased to tenants such as Laganside and the Odyssey project and 90 acres which is given over to conservation purposes. That leaves about 85 acres available for development.

The Belfast Harbour Commissioners are very keen to stress that there are only 85 acres available for development. Do not get sidetracked by the issue of how much land could be used for non-port activities. There is currently a large amount of land which is held on long leases by Harland & Wolff and Bombardier Aerospace Short Brothers, and there is the potential for that land to be released for non-port activity and development purposes if those leases were renegotiated under some new regime or if those companies managed to get hold of that land in freehold themselves.

We have to look very carefully at the Belfast Harbour Commissioners' claim that there is only a small amount of land left for development. They have pointed out that they can reclaim land and thereby make more land available. The Harbour Commissioners Annual Report for 1997 states

"Development of the Commissioners' land resources continued during the year with due attention being given, as always, to land required or likely to be required for port operational uses, particularly irreplaceable deep water frontage".

Furthermore, the commissioners plan to

"reclaim additional land north of the Victoria Terminals, which will accommodate a further 40,000 sq m of transit warehousing".

Therefore it is impossible, in our view, on the current information from Belfast Harbour Commissioners, to accurately estimate the amount of land available for development in the future. Those issues need to be looked at very carefully before decisions are made which are based purely on this information.

We have a number of other concerns. We believe that the consultation process has been woefully inadequate so far. There are a number of stakeholders who have not been properly consulted - the Freight Forwarders Association, the Confederation of British Industry, Belfast Shipping Agents Association and the Port Users Committee. There also has not been adequate consultation with Belfast City Council.

I remind the Committee that a member of Belfast City Council is a commissioner and is appointed to the Belfast Harbour Commissioners' board. Therefore, under the present regime, the importance of the council and the people it represents is recognised by the Belfast Harbour Commissioners in the making of their decisions, yet throughout this consultation process, so-called, we do not believe as a council that we have been adequately and properly consulted in terms of having a proper and effective input.

We have been told that the flotation is expected to yield some £100 million and the Department of the Environment has already anticipated that the proceeds will finance a series of major infrastructure and road projects across Northern Ireland. In our view, the announcement that was made by the Chancellor, Gordon Brown, when he came to Northern Ireland last spring was an attempt at blackmail. It was put to elected representatives that they would not get money for road developments such as the Toomebridge bypass, the development of the Loughbrickland/Newry road as a dual carriageway and improvements to the Londonderry/Ballygawley road unless the privatisation went ahead.

Many people, including members of Belfast City Council and others elected representatives, very much resented that pre-emptive strike. We in Belfast City Council feel that it is not right that the proceeds from the sale of the port should already be accounted for in this way. It is an attempt to set elected representative against elected representative, community against community, constituency against constituency and council against council. We have very strong views on that. We have no objection to roads and infrastructure projects going ahead; we would welcome that. However, regardless of whether the privatisation of Belfast port is a good idea, we do not feel that it is right for the Government to influence the issue in this way.

Belfast City Council believes that it has played a major role in terms of the developments that have taken place in Belfast. Lanyon Place, the gasworks site, the renovation of St George's market and the north foreshore are all examples of major developments in which Belfast City Council has played a leading role in partnership with other bodies both public and private.

We believe that, given our track record and our electoral mandate to represent the people of Belfast, we have the right to be fully consulted, in a real and effective way, about what is going to happen to our port. That right must be taken into account in relation to the privatisation process. We hope that locally elected representatives will take the decision on the port's future. We would welcome that.

However, we urge the Assembly, when taking that decision, not to repeat the mistakes of the present Government and previous Governments; nor should it adopt the attitude of the Harbour Commissioners. We urge the Assembly to keep Belfast City Council, as the elected body in Belfast, fully involved in the decision-making process concerning the port's future.

Belfast City Council fully recognises that the port has operated under certain constraints and that there are certain changes which need to be made in order to face the challenges of the coming years.

We recognise what the Harbour Commissioners have said in relation to European funding. They have been very assertive in their view that no more European funding will be available. However, given the changes which are taking place in relation to structural funding, it remains an open question as to whether the harbour may be able to call down urban regeneration funds, for instance. That is an area which should not be closed off. Belfast City Council thinks that the wider context of the new structural funding apparatus and changes needs to be borne in mind in relation to the future.

The Port of Belfast is a substantial local employer. It is the largest landlord in Belfast. Previous examples of privatisation in Northern Ireland have not benefited the people. They have benefited some fat cats, and we do not want to see some more fat cats being created from the privatisation of Belfast port.

The Harbour Commissioners are saying that, in relation to the public and private partnership proposal, a golden share should be retained by the Department - whatever it is to be called. Given its important role in representing the people of Belfast - it is represented on the Harbour Commissioners - the council's concerns about the golden share should be recognised. I am sure that the new Minister will want to look closely at that. We would not like that to go by default.

There has not been proper consultation, and further consultation is needed. The preferred option that has emerged has come without the necessary detailed analysis and consultation. Further work needs to be done - for instance in relation to the concept of a semi-state body - and the council can help with those deliberations. We should not sacrifice a set-up that is in the public good and in the wider interests of Belfast and Northern Ireland for the sake of advancing a few shareholders' profits in a private company.

Mr Tierney:

I wish to ask about your summary. There are about four or five different options and most of those who have already given evidence have favoured one or another of them. I am surprised that your written submission does not contain Belfast City Council's preferred option. I accept the point about discussion and consultation. Some other witnesses have agreed that there has not been enough discussion and consultation on the matter.

I should like Belfast Council to give the Committee its preferred option or rule out other options. If it does not have a preferred option, I would be interested in its views on other options. Perhaps it will have had a full discussion with the Belfast Harbour Commissioners by the next meeting and we could look at this at that stage. I agree that Belfast City Council is an important wheel in this whole exercise, and I should like to know which options it is for and against.

Mr Kelly:

I apologise for the absence of colleagues who are engaged, as are many others, in meetings elsewhere. We are fairly up to speed on the situation surrounding Belfast harbour.

At the last meeting, I said that Belfast harbour did not really affect people in rural constituencies. Those on the periphery did not pay much attention to it until Lord Dubs came to a meeting of Magherafelt District Council and said that the Toome bypass project was contingent on the sale of Belfast harbour. Cllr Dodds has rightly said that that has created tension between rural and urban constituencies.

People who live outside Belfast are ignorant about what is going on at Belfast harbour. They were not even aware that Belfast City Council had set up a committee to deal with the harbour. It would be useful for that committee to arrange to visit areas such as Magherafelt and others west of the Bann. It would help to put people in the picture and would enable them to air concerns about how the future standing of Belfast harbour might affect or disadvantage those areas.

The Chairman:

A few more questions can be taken, and then they can be responded to as a block.

Mr Maginness:

What distinguishes Belfast from other ports is the fact that there is a substantial amount of land attached to the port. Does Belfast City Council have a definitive view on how that land could be developed in the public interest? The question that many people are now asking, leaving aside the port and its operations, is "How can that land be developed in the public interest, and under public control, if that is necessary to protect the public interest?"

The Chairman:

Mr Dodds, you have three comments there. Two or three members still want to speak. To avoid forgetting some of the points that have been made, do you want to deal with those before taking the next few questions?

Mr Dodds:

Yes, Mr Chairman, and I am happy for colleagues to come in on this.

The first point was about the council having a definite view on the matter. Certainly the council and the committee will look at this issue in considerable detail. We did not want to do what is sometimes the easiest thing to do, which is to pass a resolution after a cursory hour or hour and a half of debate and adopt it as the council's position. The committee has tried, and will continue to try, to reach decisions that are based on full consultation, discussion and looking at the options, thus preparing our views before submitting them to the full council. We are doing that in relation to a whole range of issues.

Individual councillors have their views on preferred options, but it would be wrong for me to advise on any particular option in advance of the council reaching a decision. We will come to a view on this. However, I can say that the options of doing nothing, undertaking a simple trade sale - as was done in relation to the airport - or perhaps remaining as a trust port would not find much support.

Much work should be done in considering whether the port should become some sort of semi-state body as opposed to simply opting for public/private partnership. We do not think that enough work has yet been done in exploring that option, and that issue could be developed further when we come back.

The views expressed on the proceeds of the sale are echoed by all parties across the Province. I do not want to make a political point and there is no particular edge to what I am about to say, which is that when Chancellor Gordon Brown came to the Province, his announcement about all the money that was to be made available for infrastructure projects got many headlines just in advance of a certain very significant vote.

Some of us in Belfast were busily trying to publicise the fact that it was at the cost of Belfast port. That somehow seemed to get buried in the detail, and we were trying to point out that there is no such thing as a free lunch and that something would have to be sold off to pay for it.

The Council's job is to take these issues on board. We shall talk to people in Belfast and in government, and we should also talk to local government colleagues throughout the Province. We should deal with concerns and inform people of our views and of Belfast City Council's role in relation to the port. We must follow up such matters.

With regard to the final point about the development of the land, the guiding principle should clearly be that the land be developed as part of a wider, strategic plan for Belfast and Northern Ireland. Our concern is that the land will be developed, without reference to what is going on elsewhere, in Belfast and in the Greater Belfast area, in the interests of private companies who will be selling off or developing land in a piecemeal fashion. We have already seen this happening at the harbour in the case of the D5 area, which is being used for supermarket development and so on.

The unanimous view of Belfast City Council's planning committee, which includes representatives of all parties - and the Chairman knows this, as he has been heavily involved in the work of that committee - was that this was a bad development for Belfast because it would take shops and customers out of the city centre and increase traffic in that part of the city. This was not in keeping with the overall plan for the city - and, yet, it went ahead.

We want to see that land being developed as part of a strategic plan for all of Belfast, and not just as a sort of island where things happen without regard to what is being done elsewhere. It is right in the heart of the city, and, as Alban Maginness has already said, represents a massive amount of land, the majority of which is not used for port-related activity. That is what we must bear in mind when we are discussing the privatisation of the port, and we have to be very careful about who has control of the land and the implications of that for the future of the city and of Northern Ireland as a whole.

Mr Stoker:

We tried to arrange meetings with the Harbour Commissioners and with Lord Dubs, and the first time we succeeded in meeting them was in February of this year. So, for two or three years, they put us off, before, eventually, coming along with their own proposals. We do not believe that that is true consultation.

We will be taking a different approach. We will actually be consulting the people, rather than just giving them a list of options from which to pick. We will listen to all their views and come up with a proposal which will suit not only the people of Belfast but the people of Northern Ireland as a whole. We are talking about the future of the port and not just about its future for the next five or ten years. This is a long-term issue, and we have to get it right this time for the benefit of all the people. There must be proper consultation with the people about their wishes for the future of the port.

Ms McAuley:

There is a need for a more comprehensive options analysis and appraisal, and - as we have just heard, with regard to the Toome bypass - that should be done alongside consultation with the local council. We need to consider examples of successful practice elsewhere, including the port of Dublin, and we need to understand that there is a broader picture.

We would fully support an extension to the consultation process to ensure that all interested parties have their say. We felt that the council had been snubbed and our views on this issue ignored. It took a long time to get Lord Dubs to meet the council to discuss its proposals, and, in general, the process has not been sufficiently transparent.

We need wider consultation. This Committee should consider afresh the views of Belfast City Council, which take into account the overall context of sustainable, economic development for the city and for the rest of the North of Ireland and beyond.

The Chairman:

I want to take two more questions because, although we will be returning to this issue on 22 April, some people have expressed a wish to speak today.

Mr Roche:

I will be very brief. I may be reiterating some of the concerns of Mr Tierney, but he will keep me right if I am not. It seems to me that, in general, your presentation fails to address, first of all, the commercial considerations that have given rise to the consideration of the future of the port. I think that those commercial considerations are threefold.

First of all, in terms of commercial activity, as indicated by its profitability levels, the port has reached a plateau after a considerable rise associated with very considerable amounts of European Union funding, which under any future possible scenario - and whatever possible scenario exists should be utilised for the future - would simply not be available. The third consideration is that we have within a small island the potential for very considerable competition from Dublin.

All of those factors give an imperative and an urgency to the consideration of the commercial structures that will guarantee the future of the port. As has been quite rightly said, this is integral to the future prosperity of Belfast and, indeed, to Northern Ireland as a whole. However, having established all that, legitimate concern has been expressed about the issue of the land and how that land might properly be developed in the interests of Belfast. You have suggested that it should be done in terms of an overall strategy for the development of the city - I am not aware that such an overall strategy exists. As well as that, when it comes to a consideration of the PPP option, that is somewhat dismissed on the basis of a fairly low-level argument involving resorting to the concepts of fat cats and feeding shareholders.

The simple fact is that any commercial business will not, in some irresponsible way, feed its shareholders. First of all, to feed its shareholders, it has got to make a profit. Secondly, it has to retain out of that profit some of the resources for future capital investment, replacement of capital, and so on. If it does not do that, it will go bust. The market will destroy it.

The golden share option also needs to be considered. Can it just be dismissed as of no significance? The PPP option is seen as a sort of fat cat option. That is, I think, not taking the PPP proposal seriously. The final difficulty with your presentation, as has already been mentioned, is that, despite your emphasis on the urgency of the situation, it is quite obvious that you have no options and very little idea about what options you might favour. You talked about further consultation. There is not an unlimited amount of time available for all of this. A responsible council, which I consider yours to be, might at least have been expected to come up with some sort of prima facie position that it might want to support without committing itself to any given option.

Mr McClelland:

I was going to preface my comments by saying, like Paddy Roche, "I will be brief". I would concur very much with what Mr Roche said and with what my colleague John Tierney said earlier, that there is very little in the presentation that I could disagree with. However, I am very concerned that on one hand we have this sense of urgency and on the other hand, while you have dismissed the five proposals, you have not been very forthcoming in bringing forward your own proposals, although Cllr Stoker has said that the wider available options will be considered. So I agree with what has been said. There is a sense of urgency but there has also been a failure to look at other options.

I have one specific question. Could Cllr Dodds or the chief executive, Mr Hanna, advise me if there is a precedent of other cities buying out ports and if that is a possible option that you might look at?

Mr Stoker:

May I deal with this. The sense of urgency arose, in our view, because the Harbour Commissioners wanted to complete this privatisation before the Assembly was up and running. There was no sense of urgency on our part. The sense of urgency has all been generated by the Harbour Commissioners. The profit is £6·5 million a year after tax, so, in my mind, there is no sense of urgency. It has been generated by the Harbour Commissioners themselves.

Mr McClelland:

If there is a precedent for a city buying out the port, will you look at that option?

Mr Hanna:

I know of none in the United Kingdom. I understand that Dublin Corporation has been involved in the arrangements for the port in the Irish Republic. However, given the arrangements for ports in the United Kingdom- trust ports and various others- I am not aware of any local authority having a direct ownership arrangement. Obviously this is something that we could look into.

Mr Stoker:

The port of Dover is a trust port with extended powers, but the council does not own it. That is probably the closest to such an arrangement, and it operates very successfully.

Mr Dodds:

The Committee should be aware that the first time that Belfast Council was briefed by the Harbour Commissioners on their proposals was 8 February. Lord Dubs only came to see us after that and in spite of the fact that we have been asking for meetings and briefings for a long time. There was no lack of attention or diligence on our part, unlike the Harbour Commissioners. We, as elected representatives, will be doing everything in our power to deliver in the best interests of the people we represent.

I will pick up on a number of points that were made. Mr McClelland alleged that we had dismissed the five proposals. We made it very clear that we have not done that at all. Mr Roche surprisingly, given his enthusiasm for the privatisation approach, has not mentioned the golden share. I thought that he would want rid of that, because it is clearly a drawback to the tremendous profits that could be made by privatisation. The Harbour Commissioners have said that the tension of a golden share, 25% et cetera, would actually be a brake on the commercial success of the port. It would not allow a totally free hand. I did not hear him say anything about that but he may have on other occasions.

He said that we should remind ourselves of the success of Dublin port but that is not a privatised port, it is a semi-state port, and when we talk about a semi-state port, we do have some substance to what we say. He should look carefully at how Dublin is actually set up.

His sweeping comment about EU funding is entirely the line of the Harbour Commissioners.

They say we will get no more funding from Europe under any circumstances. I do not know how they can say that. Certainly they will not receive any under this single programming document. We have pointed out in our document - and I hope that Committee members have read it - that the European Commission has published a framework for action for 'Sustainable Urban Development in the European Union'. This framework aims at better co-ordinated and targeted community action for urban problems.

Consideration should be given to this document as there are many issues to do with the proposed privatisation of Belfast port and things associated with that which fall under its remit. We cannot say definitely that the port of Belfast will get European funding, but neither can we say that it never will.

Mr Roche said that he was not aware of an overall strategy. The strategy is made clear in the Government's paper 'Shaping our Future' and in the follow-up to that as well. A Belfast metropolitan strategy is to be developed, and it will be the overall strategy.

Mr Roche:

Mr Dodds has come as near to misrepresenting my position totally as anybody possibly could, and I will take this up on a future occasion.

Mr Morrow:

The Harbour Commissioners stated in their verbal submission that, in future, there would be no European funding. However, in their written executive submission, they provided a slightly different slant, because they claimed that no further grants were likely.

Section 7.3 of Belfast City Council's written submission states

"Furthermore, the European Commission have published a framework for action for 'Sustainable urban development in the European Union'."

Section 7.4 states

"The issue of urban development will receive much higher priority in the new Structural Funds Agenda 2000. It is therefore important that the future considerations for the Port take these issues on board so that potential resourcing can be maximised."

According to Belfast City Council, European funding will be available. Please explain how one comes to this conclusion.

I read in one of this week's national papers that the golden share will not be recognised in European law. However, Belfast City Council claims that there will be no objection to the golden share under European law. It seems that in future the golden share will have a different status under European law. We shall need to look carefully at that anomaly.

I should also like further clarification on Mr Dodds's submission regarding the sale of Belfast port.

Ms McGivern:

The document which Cllr Dodds showed to the Committee - and copies will be made available to committee members - clearly states that, when considering applications for the next structural funds round, the European Union will give a significantly higher priority to the concept of sustainable urban development than had been the case in previous rounds. The Harbour Commissioners have always assumed that there would be no further European funding.

However, the document shows that there will be many opportunities to attract and maximise European funding for the port and, in particular, to develop the land around it, under the framework of sustainable urban development. That funding opportunity, which the Harbour Commissioners dismissed, should be considered, regardless of the port's future structure. If the port were privatised, the new private developer would seek European funding. To say different would be nonsense.

The document details the European Commission's plans for the new structural funds and the elements that it will be looking for in any application for a single programming document for Northern Ireland. Ultimately it will be for the Assembly to shape that new single programming document.

Dr McDonnell:

I apologise to our visitors for the brutal onslaught by our colleague Mr Roche. I hope that it will not prejudice our search for the subtleties of the details.

I am at a disadvantage in that, like some other members of the Committee, I have a foot in both camps. The rumoured valuation of the Belfast port at £100 million seems ridiculous. I should like to have the port valued. Perhaps the council could comment that.

Two issues emerged from Mr Dodds's presentation. The functioning of the port - which is perceived by many as the primary issue - is the lesser issue when compared with the use of the land bank. Perhaps Mr Hanna could outline the implications for Belfast of the port's privatisation.

Mr Dodds also spoke about the golden share. Like Mr Morrow, I think that the golden share is of no value as it can be removed at a stroke.

Is there a case, or are you making a case, for Belfast to have a meaningful equity stake in the port in future? My main point relates to the valuation of the port. What happens if this land is allowed to go? Are you saying that the use of the land is a more important issue for Belfast than the functioning of the port?

Mr Dodds:

There is no doubt that the use of the non-port land is the crucial issue for many people. The golden share certainly merits further exploration. One of the great selling points of the preferred option is the protection that will be provided by the golden share. If a golden share is not available, or if it is not worth much, that would raise questions about that option. That will have to be explored. If an effective golden share were to proceed, there would be a role for the council in relation to its ownership or management.

Mr Hanna:

When we discuss Belfast, we tend to mean the metropolitan area. Belfast is almost surrounded by hills, and it has a lough in front of it and a fairly tight boundary. There is little development land in the city outside the port. For some years, out-of-town developments have been causing considerable difficulties. There are proposed developments at Knocknagoney, Castlereagh and Newtownabbey, and the city centre is undoubtedly beginning to creak at the seams, certainly in terms of retailing.

In other areas of the city development is proving beneficial, but developments such as the Waterfront Hall and the Odyssey project are not so much in the retailing area. It will be for the Assembly to decide the matter, but whatever its decision the question of land development is crucial to the future development of Belfast City Council.

The 'Shaping Our Future' document is not yet in its final form. It is still the subject of discussion and consultation, and we made substantial submissions about it through our consultants, Building Design Partnership. The authors of that document rightly take the view that the city is the heart of the region and that the region needs a healthy, vibrant city.

We have lost 25% of our population since 1973. Some of that was to be expected; people are better housed than they used to be. Like many other cities, Belfast has the problems of out-of-town development and the associated increase in traffic. At a meeting yesterday, the Department of the Environment's Roads Service again proposed driving a new road through the city centre. That road would cross the gasworks site, potentially ruining a development site which could have been of major assistance to people from both sides of the community in Donegall Pass, the Markets, Lower Ormeau and other parts of the city.

The port and the development land are crucial. We have not come to a final view, which is hardly surprising given the way we have been consulted. The city council will continue to try to come to a rational view. It affects other people as well, and they will also have to adopt a view. You have only to walk around Belfast to realise that, unlike other cities, it does not have the development sites, outside the port, that it needs. Liverpool, for example, which has, in many ways, been struggling in recent times, has plenty of land available for development. Other cities have that benefit too; we do not.

I want to emphasise what has already been said: this issue must be taken seriously, and we must not be left a hostage to fortune in terms of future land development.

Mr Tierney:

When we referred to the urgency of the matter, we were not criticising your committee - we appreciate that you were not consulted in a way which enabled you to reach a decision - but the urgency lies with this Committee. We have to present a case to the Assembly and make a recommendation on the way forward. When we have heard all the evidence and there is no final decision from Belfast City Council - a major player in the port - then it will become urgent. We must know your final decision.

Mr Hanna:

It is important for us to know how urgent urgent is. There is a difference between what is urgent and what is important. We do not know how quickly the decision will be taken. Let us be honest: we were being bounced on the basis that if this were not done, roads around the Province were not going to be improved.

Wearing another hat, I could say that there may be a substantial argument for saying that bypasses on the Westlink are a good thing, but normally, if you go to hospital for a bypass, it is not because your circulation is good, you go because you have a problem with it. We should reduce the amount of traffic, get people to use public transport; we should not continue to swathe roads through the city destroying inner-city communities; we should provide adequate development that will create jobs.

Mr Dodds:

We appreciate what has been said, and we look forward to speaking to the Committee again. If and when there is a new Minister we hope he will not just come in and make a decision. Your Committee has an agenda, and we would also need to talk to the new Minister or the existing one about this issue in some detail so that he and the Assembly can take fully informed decisions. It is an issue for us, and, much to our anger as a council, we have not been involved as we should have been until recently. We will now be working hard and diligently to take the matter forward.

The Chairman:

Thank you for the submission. We have had a good session; we did not expect it to last quite so long. Some very important questions have been asked and have been well answered. There will be another opportunity to talk to you on 22 April when you will, perhaps, elaborate on the responses you have given today. Thank you very much.

Mr Stoker:

Have members received this framework document which relates to sustainable urban development in the European Union?

The Chairman:

If it is left with the Committee Clerk I will make sure it is copied and distributed. Again, thank you all very much.

AD HOC COMMITTEE
(PORT OF BELFAST)

MINUTES OF EVIDENCE THURSDAY 29 APRIL 1999 (Mr S Wilson in the Chair) Witnesses:
Mr C Doherty, Mrs M Breslin
Mr S McIlvenny and Mr S Gillespie
(Londonderry Port and Harbour Commissioners)

The Chairman:

Welcome to the Committee. We have all received your very comprehensive document. We would like you to take about 10 minutes for a presentation and then we will ask you some questions.

Mr Doherty:

The Londonderry Port and Harbour Commissioners are grateful for the opportunity to appear before the Committee. We wish you every success as you undertake the difficult task of shouldering the burden of political direction for us at the dawn of a new millennium.

We wish to state from the outset that the Londonderry Port and Harbour Commissioners are opposed to the transfer of the port of Belfast to the private sector. Such an important and profitable transport infrastructure, well managed and operated, should remain in the public sector where its assets and profits may be a source of investment and an economic catalyst for the benefit of the stakeholders, who are not only the harbour employees and its customers but the people of the Province and beyond.

The Londonderry Port and Harbour Commissioners are charged with operating at all times in the best interest of our port. We have therefore considered the options for changing our status. The option to transfer the undertaking into the private sector has only recently become available by way of legislation enacted under the previous Administration.

It is our view that social performance is just as important as economic performance. As a trust port we have a unique relationship with the Government, our customers and our community. We are a part of the city that we work in, of the lives of the people we employ and of the country and island that we live in. It would be short-sighted to pretend otherwise. Adherence to an ideology is not sufficient ground for contemplating a change of status: any change must demonstrate life-cycle benefits to all interests. However, as one would expect of a board charged with good corporate governance, we regularly give the issue an airing. Currently, there is a consensus among the Commissioners that we should continue the existing system of ownership.

Both Warrenpoint and Londonderry have elected to remain trust ports. It is widely recognised both by the Government and by our customers, the port users, that the Northern Ireland ports are efficient, cost-effective and flexible insofar as they operate within restrictive legislation. The Government have acknowledged that the trust port has an important part to play in regional regeneration. Indeed, Warrenpoint was expressly set up for that purpose in 1971. The Government and ports both now recognise the importance of public facilities being strategically located in the south-east and north-west of the Province. They can be catalysts for inward investment, underpinning existing indigenous business and, therefore, jobs, and they can, if unshackled from restrictive legislation, become regional and economic dynamos while retaining their assets within the public sector.

To this end the Warrenpoint Harbour Authority and the Londonderry Port and Harbour Commissioners have undertaken to produce new model legislation to prevent this from happening. Many months of discussions and consultation have produced the documentation which is enclosed with our submission. You will see from that documentation that it is counsel's opinion that such powers might be conferred by way of a Harbour Revision Order using the 1970 Act as a vehicle - in other words, simple secondary legislation. It is our opinion that this is the road that the port of Belfast should follow.

Mr Tierney:

You have told us, Mr Doherty, what Derry port is doing and what you are pushing forward, and you have said that the port of Belfast is in a similar situation. Can you give us an assessment of the detrimental effects on Derry, Warrenpoint and other ports should what is proposed for Belfast actually happen?

Mr McIlvenny:

This is a grey area, and it is difficult to give an answer. You will notice that in trying to be extremely honest we included in our submission a report from ERM Economics, a firm that was contracted by the Department of the Environment to analyse the impact of a privatised port of Belfast upon the ports of Larne, Derry and Warrenpoint. This report suggests that the impact on Derry would be negligible, but it was written without any consultation with Derry, and I understand that Larne and Warrenpoint were not consulted either. We have the opinion of London-based consultants, although they have some knowledge of Northern Ireland since they have done work for many ports here.

Recently we tried to redress the balance by suggesting to the Department that another report be produced, again using ERM Economics, but this time with consultation with the ports. In my opinion that report, if it is published - and I sincerely hope that it will be - will suggest that the effect on Derry would be significant.

Derry is particularly peculiar in that it is geographically isolated in the north-west, and that would protect some of its business. I have no doubt, however, that a privatised port which was answerable to shareholders and institutional investors would be compelled to develop its business. Its profitability to shareholders, to investors, would come about by its developing the business. Now if you, as a rough rule of thumb, consider the gross domestic product (GDP) in Northern Ireland to be between 2% and 2½%, if nothing unexpected happened in the ports, you would expect growth to be at about the same level. But if the port of Belfast were to grow significantly, it could only grow at the expense of those other ports which are closest to it - Warrenpoint and Derry.

So, to answer your question directly, it would not take very much business to be removed from the north-west or the south-east for that to have a serious impact upon those ports. Derry, for instance, is unique in that it is an "effective-bulk" destination, and if you remove one of the major bulk customers, the impact is severe.

Derry is a new port. To anyone from Derry I ask forgiveness - I know that there has been a port there for 1,000 years. But we like to think that it is a new port, five years old, in that it was relocated from inner-city Derry to Lisahally. Thus it is brand new and in that sense under-infrastructured. We carry a significant amount of current debt because we are trying to develop the business and act as the engine of economic regeneration for the north-west, one of the things that we were set up to do by Act of Parliament.

I am sorry if I sound a bit vague, but in our opinion the impact would be severe simply because a privatised port of Belfast would have to reward its shareholders by developing its business, and it could only grow above the level of GDP by taking business from us.

Mr Campbell:

Mr McIlvenny's comments lead me on to my question. This discussion is about Belfast port's possible change of status and whether that will have a knock-on effect. You obviously feel strongly that it would have an effect on Londonderry, and I am sure that Warrenpoint feels similarly. You will be aware of the rationale behind the possible change of status and the amount of money that would be tied up in capital roads programmes should that change in status take place. Given the fact that both Londonderry and Warrenpoint have a particular niche market at either end of the Province - albeit one that could be eaten into by a radical change in Belfast - if we were faced with Belfast's status quo not being tenable, we would obviously want to see what safeguards could be built in, not only for Belfast but for Northern Ireland.

Have you looked at what possible options might safeguard not only Londonderry port but the whole of Northern Ireland - quite apart from the Belfast submission in relation to a public and private partnership? If there were sufficient safeguards, if Londonderry and Warrenpoint ports were safeguarded, and there was a move to enhance Belfast and help it to grow - but not at the expense of Londonderry or Warrenpoint - is that something that you would be prepared to contemplate? Or are you saying that maintaining the status quo is the best option for Belfast as well as the rest of Northern Ireland?

Mr McIlvenny:

It is our view that the assets should be retained in the public sector. Belfast, along with Warrenpoint and Derry, should be allowed to act more commercially. The outcome of our own review process and that of the Department of the Environment, Transport and the Regions (DETR) in London suggests that trust ports are doing a magnificent job. For the most part they are well-run, well-managed, very efficient and cost-effective, but they are restricted by the legislation under which they operate.

What we are saying is that Belfast port should be allowed to act more commercially, and, in order to do that, it could, perhaps, acquire powers similar to those Warrenpoint and Derry wish to achieve. This would enable them to act as commercially as they like but also retain the assets and profits to be reinvested in the business.

For instance, representatives from Belfast port will tell you - and may already have told you - that the current restrictions on the Westlink are a major impediment to doing business with the port of Belfast. I understand that they have tried to do something about that in the past but were restricted by the legislation under which they have to operate. They should be unfettered and unshackled from restrictive legislation and permitted to operate under legislation similar to that which we have proposed. This, we believe, would not have to be primary legislation but could be done by simple harbour provision order, which lies before Parliament for six weeks. If it is supported by the Government, of course, there is no difficulty. With such legislation they could double the size of the Westlink if they so wished; they could dual the carriageway from Belfast to Warrenpoint if they thought it was an imperative that would allow their business to grow.

I hope I have answered your question. What we are suggesting is that if the appropriate legislation were in place, they could act as commercially as they wished and could ensure that everything that the general public in Northern Ireland and you, the elected Assembly, want to happen did happen.

Mr Campbell:

I have a brief question. Mr McIlvenny, you said in your submission that Belfast growth could only come about at the expense of the other ports'port-related activity.

Mr McIlvenny:

That is the case.

Mr Campbell:

Paragraph 2.4.1 of your submission is about the move to Lisahally and the growth in throughput there. Between 1993 and 1996 there was - admittedly from a small base - a 40% growth in throughput. The Belfast port has seen low growth in the past three or four years. Presumably Londonderry's growth was not at the expense of anyone else; it was just intrinsic growth in the north-west. Do you see that growth continuing?

Mr McIlvenny:

It was because customers realised the benefits of the reduction in unit costs from allowing bigger ships to come in - that was the rationale for moving to Lisahally. There is a limit to how big Derry port can grow because it is a bulk-import destination and its principal commodities are animal feed and coal. The coal business is declining in most of the Province yet consolidating in the north-west, although there is some decline taking place there, and that will probably accelerate if other issues come into play.

Because we serve a rural and agricultural community we do not have a vast industrial base like Belfast has. Animal feed was a major component for our port, but BSE and the strong pound have put paid to that. Now we are diversifying, and developing the ability to diversify, to create the unitised business which is lo/lo and ro/ro. As our report says, that probably would not happen if Belfast went into the private sector.

The Chairman:

I have a question on your porposals for restructuring or for changing the port status as described, for instance, in section 6 of your document. On the financing aspect your stated that the trust should be able to borrow and raise money in any manner to secure the repayment of the money borrowed et cetera.

The Belfast Harbour Commissioners have said that if you were to diversify in all of the other ways that you have talked about in previous sections of the submission, the power to borrow would simply not be sufficient. There needs to be access to equity capital. That was the rationale behind their proposal for the public/private partnership, that there would be proper gearing and leverage of funds. Your idea of diversification would be more modest than Belfast port's. Are you satisfied that those extra financing powers would be sufficient to enable any trust port to fulfil the kind of diversification aspirations which are outlined in sections 1, 2 and 10 of your proposed changes?

Mr McIlvenny:

Forgive me if I hesitate to comment on Belfast specifically, but this is probably best demonstrated by giving an example. Our borrowing powers in Derry are restricted to about £300,000 yet we have just come through a period during which we have spent £30 million on constructing a new port. Clearly you could not do that with a bank overdraft of £300,000.

Although restrictive, there is provision in the current legislation to allow us to approach the Minister. We could simply write to him and say that the port was going through a phase of expansion and that we needed him to lift our borrowing requirement to £4 million. The Minister has done that on several occasions in the past and I sincerely hope that he will do it in the future. So the matter is controlled by the Minister although we have not found that very restrictive in the past. We have had sufficient funds to allow us to do what we wanted.

Dover Harbour Board, which runs one of the most successful trust ports in the United Kingdom, invests tens of millions of pounds and is controlled by similar legislation. They do not find it in any way restrictive. However, one wonders how much more finance you would need if you had £20 million cash in the bank.

The Chairman:

Your submission is somewhat similar to the view given by Belfast Harbour Commissioners though it is at variance with some of the evidence we have received from other people in respect of EC or EU grants. Paragraph 6.2 of your submission states

"it is most unlikely that EC funds will be available to ports in the next, and subsequent, EC programmes".

Later in the submission there is a reference to the fact that you had discussions with the Department of the Environment and with another organisation whose name I cannot recall. The reference refers mostly to Objective 1 status. Did you specifically raise the question of the availability of infrastructure funds from the funding with the Department of the Environment, and was that the information you were given?

Mr McIlvenny:

There is a great reluctance to allow the ports to access any more funds from Europe in the structural funding programme post-1999. We put it to the Department of Finance and Personnel, during the consultation process, that we were a special case. We were a brand new port, we were under-infrastructured, and we asked that it not let us swim by ourselves just yet.

There will be a change in emphasis in the new peace and reconciliation funding, which I understand has been secured in Europe. It will be economic-regeneration based, and we hope to tap into some of those resources.

We are about to go through a major expansion programme without the benefit of structural funding. It is a major challenge for the port of Londonderry, and we will be borrowing very significant sums of money to put the infrastructure in place. We believe it is right and proper to do this to allow not only the port but the north-west of the Province to benefit from the new economic order which we hope is round the corner.

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