Mr Bryne:

How quick and efficient is Warrenpoint in actually handling the import and export of cargo in comparison with other ports in Ireland?

Mr Thornton:

We have container facilities in each of the five ports in Ireland - from Belfast right through to Cork- and Warrenpoint, truthfully, is the most efficient. A vehicle picking up a container in Belfast can wait for three to four hours to get loaded. Someone in Dungannon can be waiting for a container that could come through either port, but in Belfast the driver has to spend his time traipsing across the Westlink.

The average turn-around time in Warrenpoint is 25. In Dublin, it takes four to five hours for the truck, never mind trying to get through the traffic onto the main roads. In Cork it takes about 35 to 40 minutes, and in Waterford it takes about 20 minutes. That is similar to Warrenpoint, but it is a smaller port than Dublin or Belfast. Those times are because of port and traffic congestion.

I endorse what Mr McGovern said. Because of the buoyancy in the Republic of Ireland's construction industry, timber and steel are growth tonnages, as is the container business. There is still tremendous growth in those areas, and they are probably the three main segments. There is also grain.

Mr McGovern:

The bulk of quality paper coming into Ireland comes through the port of Warrenpoint. I spoke about the timescales for freight or goods from Northern Ireland to Europe. Much of the paper that comes through Warrenpoint is high quality newsprint. It arrives in Warrenpoint one day and is ready for use by the press the following day. That is a reflection of the economies and efficiencies of Warrenpoint. It is probably the prime receiver of paper into Ireland.

Mr Neeson:

I wish to ask about the impact of the demise of smaller commercial ports on Northern Ireland. I am thinking particularly the ports of Carrickfergus and Coleraine, which is now almost extinct. I was chairman of Carrickfergus harbour committee for some time. The port was successful because the pricing structures could be set lower than those at Belfast. Warrenpoint has benefited from that; Hays Chemicals has relocated within the area of the port. Mr McGovern spoke about the impact of pricing.

The other issue is in relation to Merchant Ferries and its relocation to Dublin. Seatruck Ferries is a locally-owned company. Is that an advantage or a disadvantage, bearing in mind that it does not have the resource benefits of multinational companies, and that the roll-on/roll-off business is one of the targeted areas of growth within your business?

Mr McGovern:

Merchant Ferries decided to move to Dublin for its own reasons. I am sure that we are all aware of the economies that result from running a roll-on/roll-off business. We are talking about large-scale economies and investment, and Seatruck is making money while operating through Warrenpoint. Mr Neeson asks about local interest. Should we simply step aside and let the multinationals dictate business locations? I do not think that it is a secret that Seatruck is controlled by local people but also financed by international money. People could see that it was a viable proposition because of the congestion in Dublin and, to a lesser extent, in Belfast.

Seatruck is now a stand-alone profit-making company offering two sailings a day to Great Britain and working very well. >From out point of view it is great to see it and we have to take our hats off to the company. If it were not for the initiative and drive of some local people that business would not be there.

Mr Thornton:

With regard to Seatruck you are right in a sense. However, on the negative side it is a niche company. Seatruck is operating within an area, the border counties, which, traditionally and historically, has spawned many haulage companies. It is the truck driver, quite often, who decides which ferry he is going to use based on his hours and the cost. Seatruck has succeeded in the area because of the preponderance of trucking companies but should have moved to Dublin as well as staying in Warrenpoint. Staying only in Warrenpoint is a potential weakness, but the strength of Seatruck is that it is serving its niche so well that it is able to maintain merchant ferries.

Your point about Carrickfergus and Coleraine relates to the earlier question about small ports. It comes down to size. The cost per tonne of bringing small coasters into Carrickfergus would beat the pants of everyone else. However, in terms of handling and port costs and the charter cost of hire from the port of loading to Carrickfergus, the most economic type of vessel in use today cannot access small ports like Carrickfergus and Coleraine. Thus we have the unfortunate demise of these ports. A similar fate awaits Warrenpoint it things do not evolve properly.

Mr McGovern:

Mr Neeson would be very aware of the impact on the local economy and local morale when ports like Carrickfergus and Coleraine close down. It is important to let factories locating in Newry and Banbridge know that Warrenpoint and its facilities are there. Is all the industry going to be located within a 50-mile radius of Belfast if Warrenpoint closes?

Mr Neeson:

May I say that I appreciate how the port authority has adapted to change. I can remember when everything at Warrenpoint was dominated by Cawoods.

Mr Roche:

I arrived late and you may have already dealt with my question. If so, I apologise. In your submission you state that it is the firm belief of your association that the privatisation of Belfast port would have a dramatic negative effect on the viability and cost-effectiveness of the port of Warrenpoint. Two things are not clear to me. First, why, in detail, do you believe that? The second point, and here I must declare my own hand, is that if you are saying that the privatisation of Belfast would enhance its competitiveness to the extent of putting Warrenpoint out of business, that, in itself, is not an argument against the privatisation of the port of Belfast. What you would have to establish, concretely, to sustain an argument against privatisation is that such action would lead to an unfair advantage for Belfast. In the long-term interests of the Northern Ireland economy we cannot be opposed to the increased competitiveness of a major port because it would lead to the closure of small ports.

Mr McGovern:

With respect, we have covered that issue. To some extent we are unsure, but while the port is in Government control - Warrenpoint is a trust port - the trust and the Government should act as honest brokers.

On the issue of competitiveness, Belfast, because of its landbank and the revenues that it can derive therefrom, is able to subsidise its port activities unfairly. Warrenpoint cannot do that. It is not a case of Belfast being more competitive than Warrenpoint.

Belfast's revenues allow it to operate a predatory policy, and if it achieves overall control, income from the landbank will enable it to reduce shipping and handling costs to levels that would be unrealistic for Warrenpoint. Warrenpoint does not have a landbank and is therefore limited to the tonnage through the port each day. Belfast is not dependent on tonnage as its landbank income subsidises port activities. As a businessman I accept the principle that the cheapest price should win, but this is not a level playing field.

Other aspects to be considered include the effect on the local economy and the fact that if Warrenpoint port ceased to operate, £12 million per year would be lost to the Treasury. Other factors are involved - it is not simply a matter of comparing the costs of shipping a tonne of cargo through Belfast and through Warrenpoint.

Mr Campbell:

The concept of Northern Ireland plc, mentioned in the response to Jane Morrice and me is interesting, as is Warrenpoint's geographical location in relation to the Southern trade and the problems in Dublin. A five-year "window", or thereabouts, exists, before Dublin can make significant progress on its roads infrastructure - which may or may not affect Warrenpoint's traffic - to promote the Northern Ireland plc concept.

It is unlikely that the three main ports, given their competitive nature, would join such an arrangement. However, in relation to the concept, is there merit, from a user's point of view, in looking at the advantages of Warrenpoint, if its deep water, road and space problems could be addressed, in looking at Belfast's wanting to compete with Dublin, and in looking at Londonderry, which could have, and does have, a sizeable market in Donegal? Is there merit in looking at greater flexibility which would allow the main ports to market themselves - together or separately - in that context over the next five years, before intense competition arises from Dublin's problems being solved?

Mr McGovern:

Yes, I hope that that will be the case and that one of the consequences of debating the privatisation of the port of Belfast is that people like you will get to know a lot more about the shipping industry, the port activity and how important the ports of Northern Ireland are to the local economy. That is where the honest broker comes in again. Let us be honest: what local politicians have we had controlling Belfast port? I may be speaking out of ignorance, but as far as I am aware, Belfast port is run by the Belfast Harbour Commissioners and civil servants. Assembly Members are local politicians and should think in terms of Northern Ireland plc - surely that is the way forward. The Assembly should be asking how Warrenpoint port, Londonderry port and Belfast port compete with Dublin.

The privatisation of Belfast would go in the opposite direction because that would be predatory. Belfast would feel that if it got all of Northern Ireland's business, it would be happy enough for Dublin to get the South of Ireland's business. The long-term interest of Northern Ireland plc is not the short-term gain of people sitting in banks or whatever and increasing profits and stacks of money for some.

Mr Thorton:

That is a very pragmatic viewpoint. I can understand that it is black and white from your perspective, a sort of business decision. If there is a loss here and a gain there, how do we juggle it, and what is the bottom line?

There is huge competitiveness, if you like friction, between the users of Warrenpoint and the users of Belfast. The big concern - and maybe this did not come across strongly enough at the presentation - is this predatory pricing and the discrimination towards the smaller port. For example, today there are business moves from a factory 2kms away from the port of Warrenpoint via container into Germany through the port of Belfast. Why can Warrenpoint not do it; why does the guy in Belfast handle it?

Local competitiveness could be eroded because there could be massive savings from working on the continent -you would be gaining a larger area for travelling in yet saving money. Let us come back to the Mersey port and dock situation. There is a land bank there, a huge amount of money, and a certain limited element of control on the port. There a climate can be created in which, no matter how hard we try, no matter what cost measures we take, we cannot win. We are coerced, for example, into taking the hard decision of maybe moving to Belfast against our will, because that is the only way in which we can survive in the long-term.

Mr McGovern:

If Belfast port is privatised to the detriment of Derry and Warrenpoint, it does not take a genius to work out that Belfast will not have to worry about competing with Warrenpoint and Londonderry in five year's time. It is guaranteed that the price of a tonne of cargo going through Belfast will be much dearer then than it is now.

The Chairman:

Thank you for your presentation and for answering the questions. Would you like a couple of minutes to sum up, or are you happy enough?

Mr McGovern:

No. We really appreciate this opportunity to give the Committee our views. Obviously we think that this is a very serious issue. We have mentioned our own businesses; we have mentioned the port of Warrenpoint; we have mentioned the surrounding area of Warrenpoint; and we have mentioned Northern Ireland plc. We are simply asking that Belfast is not privatised.

The Chairman:

I thank you all very much.

AD HOC COMMITTEE
(PORT OF BELFAST)

MINUTES OF EVIDENCE WEDNESDAY 19 MAY 1999 (Mr A Maginness in the Chair) Witnesses:
The Parliamentary Under-Secretary of State
(Lord Dubs),
Mr R McMinnis and Mrs B Faloona
(Department of the Environment)

The Chairman:

Good morning, Minister. You and your two colleagues, Mrs Barbara Faloona and Mr Robin McMinnis, are very welcome. We are pleased that you were able to come back again to assist us in our deliberations.

I understand that you wish to make some introductory remarks, after which you will take questions.

Lord Dubs:

Thank you, Mr Chairman. Thank you also for being so understanding about my difficulties last time. Once again I apologise for the fact that I had to run off. Let me assure you that in case you want to go into this in more detail, I can stay until 2.30 pm, although I suspect you will not want to spend that much time on it.

However, I appreciate your understanding, and thank you very much for giving me another opportunity.

A number of questions were asked last time to which, given freedom from time constraints, I could develop answers. If you are agreeable, I would like to deal with the questions that were not fully dealt with before, and then I will take any other questions.

Thank you very much for a second opportunity to discuss these issues with you. Since my last visit, Robin McMinnis has written to you about the possibility of a meeting with your advisors from the University of Ulster. Given how complicated these issues are, it would be useful if you would let some of my officials have a meeting with the people from the university so that we have a better understanding of the university's thinking. But I will leave that with you.

The Chairman:

The Committee will certainly consider that.

Lord Dubs:

Having looked at the report of the last session I found there were some questions which I can answer more fully, now that I have the time. The first, raised by Mr McGimpsey, was about separating the landbank from the port business. Would you like me to proceed?

The Chairman:

Yes. Mr McGimspey is not present at the moment, but he may be along later.

Lord Dubs:

The first three I have a note of are all Mr McGimpsey's questions.

The Chairman:

The Committee would appreciate an enlargement of your response to his questions even though he is absent.

Lord Dubs:

In fact, the first five came from Mr McGimpsey. The first point is a key one - and one which I know the Committee is concerned about - and that is the possibility of separating the landbank owned by the harbour from the ongoing port business. That is probably the most crucial point that has concerned the Committee - at least that was the impression that I got.

The Commissioners' proposals envisage the transfer of all of the port's assets to the private sector. That is consistent with the Ports (NI) Order (1994). There is no provision in that legislation to permit the port operational land to be dealt with separately. The Department explored that possibility, but the Commissioners and port users did not favour that approach. Both the Harbour Commissioners' advisors and the Department's advisors have said that without the development potential offered by the land, they feared it might not be possible to attract the interest of institutional investors.

Therefore, if that were the case, the business could not be floated and that a trade sale would not offer the same benefits in terms of an equity stake in the business or shares for local investors. They are not saying that it could not be disposed of, rather that the better way of doing so with the various safeguards might not be possible and that they would, therefore, have to do it in a different way and possibly get less money for it. The Harbour Commissioners see the landbank as a very key part of the assets and without it there would be less interest in the harbour. Any decision to separate the land from the port business would reduce the total proceeds from the sale.

I know that the Commissioners are aware of your Committee's concerns and I am sure that you put those points to them when they appeared before you. I understand that the Harbour Commissioners are shortly to submit a further paper on the question of how they intend to proceed. It is not for me to tell the Commissioners how to do so, but no doubt you will put to them options such as how the concerns of Belfast City Council might be incorporated in any way forward.

There is also a master plan for the port lands and there is the planning system, which, for all the criticism of it, does still have a number of possible safeguards with regard to development. I am anxious that there should be safeguards and that the concerns expressed here and by Belfast City Council should be addressed, but in the first instance that has to be up to the Harbour Commissioners.

The Chairman:

Thank you, Minister.

Assemblyman McGimpsey, the Minister specifically directed that response to your question from the last time.

Mr McGimpsey:

I apologise for being late, and I missed part of the Minister's answers. As I came in he was talking about a master plan for the harbour. We are all aware that the master plan for the harbour did not work when it came to the D5 application for the huge shopping centre. This was land zoned for service and light industrial job creation, but we ended up with another out-of-town supermarket, so the master plan is by no means set in stone. When the Belfast City Council and North Down Borough Council, Carrickfergus Council and a number of other councils unanimously opposed it, the planning system just did not work in that situation. Uniquely, in Belfast, every single party represented opposed it, ranging from the Ulster Unionist Party through the SDLP across DUP, Sinn Féin and PUP, yet it still went ahead. The views of the people living in Belfast and further afield, as represented by their political representatives, counted for nothing.

My concern relates to the argument that the land has to go with the port in terms of privatisation. Who says so? The Harbour Commissioners say so. They say that the harbour cannot be privatised unless the land is tagged on. Who says so? The Harbour Commissioners say so. They claim that they have a report from experts which backs this up. We have asked them for it and they will not let us see it. The Minister makes the point about differentials in terms of cash realised between sale of port without land and sale of port with land. There are no figures to back that up.

I repeat that there is deep unease over this proposal and it seems to me that we are not talking about privatisation of a port but about a grand land sale with a port thrown in. Those deep concerns remain. We cannot get answers to our questions. How much is the port, with land, going to realise? There must be a rough idea of idea of that. How much will the port realise without the land? In other words, what is the value of the land? Before we get into the commercial benefits, what are the benefits going to be in cash terms? The argument is that the Harbour Commissioners are strapped for cash, yet they have over £20 million lying in their bank account, and they say that they cannot release that. It seems to me that if it is their wish to develop the port, that money could be released and ways could be found to allow them to borrow money on the open market, without going through all of this process.

Mr Wilson:

May I comment on what the Minister has said about this specific issue. I am becoming increasingly concerned about the Department's neutrality on this matter. Your arguments sound like those of Gordon Irwin.

They are almost exactly the words and propaganda that we heard from the Harbour Commissioners on this issue. One of the reasons for the huge concern about the sale was the cavalier way in which the Harbour Commissioners dealt with the landbank and the way in which, in the past, they have overridden their own plans. Michael has alluded to the fact that this was done despite the huge shortage of land in east Belfast for light industrial use. The part that was set aside for that purpose was put into retail use because it was more profitable, and the Harbour Commissioners simply tore up their master plan for the harbour.

There is concern about such an amount of land being handed over to a privatised company that is driven by profit by an organisation that was not primarily profit making. I do not think that that fear about the landbank transfer will go away. It is reinforced by your point that if the sale were to go ahead without the development land there would not be the same degree of interest by institutional investors. Is this just about getting development land into the hands of institutional investors or, as you have said in your brief, is it about enabling the port to better meet the challenges ahead and to ensure the long-term security of the port?

The emphasis that is being placed on this land by you and by the Harbour Commissioners, leads us to the conclusion that the port is simply a side issue, and that the 2000 acres of land in the heart of Belfast is the main issue. If privatisation is to go ahead, we should like to see the landbank removed from the equation.

Mr Beggs:

You said that under current legislation, the land and the port have to be dealt with as one issue. Surely you and your Department appoint the Commissioners, and if it was in the public interest I am certain that it would be possible to introduce new legislation to ensure that that is not the case. Do you accept that the matter is under your control, and that you could deal with it differently?

Lord Dubs:

I agree that I appoint the Harbour Commissioners, although some are nominated. Belfast City Council has one nomination and my function is to ensure that that person is a proper individual to be a Harbour Commissioner. I cannot otherwise second guess the City Council's approach. I have never seen it as part of my responsibility to use my power of appointment in as specific a way as is implicit in your question - in other words, you play ball or you do not get on.

That would not be the proper way for me to approach it, and it is certainly not any suggestion that I have acted on in the past in relation to appointments.

Prior to devolution the Government have the power to bring in new legislation. The difficulty is legislative time. We would have to have new primary legislation to deal with this, to give to the Government the powers that you want them to have in relation to this, and it would take a long time to have the legislation drafted, to consult on it and then find parliamentary time.

Obviously if devolution happens quickly, the Assembly will be in the driving seat, and all of these problems will be for the Assembly to deal with, but, even so, developing entirely new legislation will inevitably bring about a lot of delay. What we are doing at the moment - and what we have done - is to act on existing legislation, and it is on that basis that the Harbour Commissioners came forward with their proposals. It may be possible to do some fine tuning, but that is the position.

Mr Wilson said that I sounded like the Harbour Commissioners. In a sense, of course, the initiative for this proposal has come from the Harbour Commissioners, and they have had a lot of experts advising them on the way forward, so if I am quoting what they have said to you on other occasions, it is hardly surprising, because on this issue, they have had more expertise than we, as a Department, have had. I am simply saying that that is the advice I received from them, and I do not have enough independent advice which has gone in a different direction - any advice we have had has gone along the same lines.

Mr McMinnis:

Yes. It has generally supported what the Harbour Commissioners have said.

Lord Dubs:

It is not surprising that on this issue I have not taken a different line from the one the Harbour Commissioners have given you, because all advice has come from the same source.

How neutral is the Department in all this? When the Harbour Commissioners first came up with their proposal I said to them "Yes, in principle that is fine. Would you like to develop the proposal?". We went public at that point, because I wanted it to be absolutely clear that nothing underhand was going on, that the Government were not doing anything that was not in any way absolutely clear and transparent. So I said publicly what I had said to the Harbour Commissioners "Yes, go ahead. In principle we go along with that".

The Chancellor of the Exchequer's initiative is another factor. I mentioned this before, but I will elaborate. The Chancellor announced that an additional £70 million would be made available to the Northern Ireland block but that figure was clearly based on the amount that would be raised from the sale of the harbour. The Department is not neutral on that one.

I am not in a position to get involved in the details of the scheme that the Harbour Commissioners will eventually come forward with. The Department will have to satisfy itself that that scheme is satisfactory and act on it, and we do not want to prejudge that. I think that deals with the neutrality aspect.

What is the motive? Is the motive the land, or is it the well-being of the economic effectiveness of the port of Belfast. I believe that doing nothing as regards the port operation would be damaging to Belfast's future. Ports are an increasingly competitive business - I mentioned when I was here last time that Dublin is becoming increasingly competitive in terms of what it has to offer - and if we stand still, we shall simply lose business from here to Dublin. I am concerned that Belfast, as a port, should be as competitive as possible, consistent with the need to improve the local economy. I am also concerned that Belfast port should not have to operate under constraints which counteract its ability to be as effective as possible. For example, Belfast port is currently very limited in terms of making investment decisions.

If, for example, Belfast Harbour Commissioners wanted to upgrade port facilities in England to improve movement of goods and people from Belfast, at the moment they are precluded from doing that even though they might want facilities at the other end to improve things for customers.

With regard to the £20 million that you mentioned, they are very limited under their present status as to how they can spend that. Indeed, they would have been happy to spend it on improvements to the Westlink which would improve access to Belfast harbour. However, under the trust port status they are simply not allowed to do that.We need to have some change so that Belfast harbour can actually make use of assets and resources such as that £20 million. Now that is the harbour side and that alone seems to me to justify a significant change in the status of Belfast harbour from its present position.

With regard to the land, the Government's general view is that the public sector should not be sitting on assets which are not being used in the best interests of the people of Northern Ireland. It is wrong in principle that the Government should sit on chunks of land which are not being properly used when there are ways in which they can be used to the benefit of the local economy. Indeed, after the election we did a review of all public sector assets to make sure we were not inadvertently sitting on things which should be disposed of and put to better use rather than just sitting idly in Government possession. The landbank of the harbour is the biggest single chunk of land, and it is not right to allow a situation to develop wherein land is not being properly used. That holds back the economy and is not proper in the interests of Northern Ireland. Both interests apply, although my initial concern was that I wanted Belfast harbour to be as competitive as possible.

The land issue was a more general one, but it had a specific application in relation to Belfast harbour because of the size of the landbank and because there was land in the middle of our major city. Therefore it is of crucial importance to the city's future and to Northern Ireland's future. Both are important but even if there were no land attached to the harbour we would still have to take action to enable the harbour to develop in the way I have suggested.

The Chairman:

Mr Wilson wants to ask a supplementary question. Would you like to respond now and then move on to Mr McGimpsey's point?

Lord Dubs:

That is fine.

Mr Wilson:

It refers to something you said, Minister. You say your conclusions are based on the information you received from the Belfast Harbour Commissioners and the independent advice which you have received. We are not aware of what other advice you have received - perhaps you could enlighten us. The only advice we have been informed of is in paragraph 4 of the brief which you sent us for the last meeting and that was in relation to the review of the trust ports. The Department mentioned only two recommendations. They were that the legislative powers should be extended and that public accountability should be improved by increasing district council representation on the boards. Maybe you have received other independent advice which is not mentioned in this document. However, it is significant that the only recommendation which you told us you had received from other findings does not mention privatisation but does mention extended powers and greater accountability.

Lord Dubs:

May I ask Mr McMinnis to comment on that. I have had advice from Mr McMinnis and maybe he will tell you where he got his advice from.

Mr McMinnis:

Mr Wilson, I explained last time that Belfast Harbour Commissioners' proposals came forward at a time when the review of trust ports was underway. I said then that it was largely a coincidence. If we think back, the legislation which governs the privatisation was two years before that. The Harbour Commissioners were working on these proposals for the best part of two years before the review of trust ports came forward.

As we explained in the paper we have commissioned PricewaterhouseCoopers and a firm of Glasgow solicitors, McGrigor Donald, to advise the Department and assist us in evaluating Belfast Harbour Commissioners proposals.

Belfast's initial proposals which came to us in December 1997 were simply an outline, and we looked at them with the assistance of Ernst and Young. We did that quite separately from the review of trust ports, because the terms of reference for that review, which we have shared with Mr Wilson in the past, were much wider and did not focus on whether the port of Belfast should be privatised.

As the Minister said, the Government came to the view that, in principle, it was right that the matter should proceed and that Belfast Harbour Commissioners should develop their proposals. The Government received BHC's detailed proposals at about the same time as you did. The Government wants to hear from the Assembly before doing anything further, which means that, in a sense, we await the reaction of the Committee and the Assembly to those proposals.

Mr Tierney:

Did the Government consider the other ports and the problems that could arise?

Mr McMinnis:

We are looking closely at the other ports. We commissioned further work by a firm called ERM, which is familiar with such work and has been employed in the past by Warrenpoint and Lisahally ports. ERM has intimate knowledge of the port scene in Northern Ireland, and we have asked it to carry out further studies on the likely effect of the privatisation of Belfast on the activities of other ports. Belfast Harbour Commissioners are equally aware of the fact that we are looking at that and have commissioned separate advice. I think that it is incorporated in their submission to you.

Mr Tierney:

I do not agree that we received the same information as the Department. We read in the newspapers that infrastructure work was subject to the sale of Belfast port. Surely before the Department or Ministers support anything, they should have all the necessary information. We are told that the Department is in favour of privatisation and that it is seeking more information from the other ports to enable it to assess the damage that might result from privatisation.

Lord Dubs:

Decisions by the Government or by the devolved administration come into it in two ways. I made the decision in principle to ask Belfast Harbour Commissioners to work out their scheme in detail. Any further decision by the Government has not yet been made. It has been entirely left to the Harbour Commissioners to work out their scheme and for consultation to take place between the Commissioners and interested parties. The Assembly decided to set up this Committee to work on its behalf, and we have not made any further decisions. We are partly in the Committee's hands and those of the Harbour Commissioners. After devolution, it will be a matter for the Assembly.

There was a review of trust ports. We are now considering the views put forward on behalf of Warrenpoint and Lisahally ports. There are some difficulties, which we are discussing with them, relating to the problem of how to reconcile the degree of freedom of action which they wanted with the necessary public accountability. We need to discuss this further, and no final decision has yet been made.

Mr McMinnis:

With regard to Mr Tierney's point, I have to say that, even after this stage of the consultation, Belfast Harbour Commissioners still have to submit a formal transfer scheme. This will have to be advertised in the 'Belfast Telegraph' and other local newspapers, after which there has to be a 42-day public consultation period. It would be quite wrong, therefore, for this Department to reach any final decision on the privatisation of the port of Belfast in advance of that.

Mr Tierney:

Why were the plans to improve the road network announced if no decision on the port had been made? I understood that those plans depended on income from the sale of the port.

Lord Dubs:

The Government agreed in principle to the Harbour Commissioners' proposal and asked them to work out the details. This was on the assumption that the Commissioners would submit a scheme which would be - or could be made to be - acceptable to the Department. The Chancellor, in good faith, announced a package of schemes, £70 million of the cost of which would come from income generated by the sale of the harbour, representing a net increase in the money available for Northern Ireland. The Government did this because it supported the proposal, but the precise details of the scheme have not been finalised, for the reasons which I have set out. We have not received details of the transfer scheme from the Harbour Commissioners, but I imagine that they are taking note of the views of this Committee, and that these views will have an influence on the scheme which the Commissioners will, eventually, submit.

The Chairman:

Would you like to address the points raised by Mr McGimpsey?

Lord Dubs:

I am not sure that it would be proper for me to take up the Committee's time in discussion about the D5 issue, although I would be happy to discuss it on another occasion. Could we put this to one side for the moment?

Mr McGimpsey:

I do not wish to get involved in another discussion about D5. That is water under the bridge. We discussed it previously, and our views were not -

The Chairman:

It would be best if we were to avoid a discussion on D5.

Mr McGimpsey:

We are talking about a breach of the masterplan - the planning system which, you said, gave some sort of protection. I mentioned the case of D5, because that shows that it does not.

Lord Dubs:

I understand what you are saying, but I would like to move on to the next point, concerning valuations. We do not have a valuation for the harbour, with the land. That will have to be worked on, and I understand that it will be a detailed, complicated and costly exercise. The Harbour Commissioners will want to have this done when they are preparing a prospectus for the sale of the harbour. I too would like to know the difference between the value of the harbour together with the land and their separate values. The information I have received - most of it from the Commissioners' advisers as well as some from our own - states that the harbour would be worth much less without the land, than it would with it. I do not know the answer, but I agree that it is an important question. Nevertheless, the Harbour Commissioners will want to be careful about spending large sums of money on such exercises, given that the prospectus for the sale, which they will, eventually, produce, ought to be as up to date as possible, and that market forces can influence the valuations. I do not know the answer, but the golden share, which, it is clear, will be part of the scheme, will give the Department a key input to any decisions about the disposal of assets.

A privatised harbour could either sell off the land, though the golden share could prevent the Belfast Harbour Commissioners from doing this, or they could develop it through short-, medium- or long-term leases. I understand that the Belfast Harbour Commissioners would prefer to lease the land rather than sell it.

Mr McMinnis:

Mr McGimpsey has expressed his concern about the valuation of the land. May I assure him and the Committee that the Department takes this matter very seriously. In Great Britain, when the privatisation of a port was contemplated, the port authority undertook the valuation and the Department did a second check. With regard to the port of Belfast, we have enlisted the Valuation and Lands Agency to help us recruit independent valuers to check the Belfast Harbour Commissioners' valuation. In addition, due to the commercial advantages that the holder of the landbank would have, we are also seriously considering employing someone with the necessary business acumen to assess its true value. All that information will then be considered. We must ensure that we get full value from the sale. We are very conscious that we will have to answer to the Assembly if we get the valuation wrong.

Mr McGimpsey:

I do not believe the Belfast Harbour Commissioners when they say that they have no idea of the value of the land. It is an absolutely fantastic proposition that the Belfast Harbour Commissioners could be sitting on this land for generations, and when they decide to sell it, they ask us to believe that they do not even know its notional value. We are discussing 2,000 acres in the heart of Belfast, and as Mr Wilson mentioned, whoever owns that land will literally have Belfast in the palms of their hands in terms of development. Through owning this city centre land, they will be able to determine how Belfast develops for generations. This is one of our deepest concerns.

There is a view that this is all pre-cooked. We are told that the Westlink upgrade and the Toome bypass are both dependent on the sale of the land. I do not wish to labour the point but it almost sounded like blackmail - that these roads are dependent on the sale of the harbour. I would refer you to a letter that you sent to Belfast City Council a few weeks ago which detailed the roads that were to be included in the next five-year programme. In one of them, lo and behold, half of the money is the Westlink allocation of £36 million. We may be seeing things that do not exist, but we are concerned that this has been pre-cooked.

Mr McMinnis referred to the Pricewaterhouse Coopers report, a McGrigor Donald of Glasgow report - I have never heard of that one - and an Ernst and Young report. We cannot make an informed decision unless we have all the information. We asked the Belfast Harbour Commissioners for a sight of the reports, and we are still waiting. These reports should be in the hands of the Committee.

This might not be within their remit, but are you aware that the Belfast Harbour Commissioners have employed a public relations company to sell their view on the privatisation? If everything is being done strictly upfront, I do not see why they need spin doctors to help them.

Lord Dubs:

I should like to make some comments and Mr McMinnis may amplify some of the points. I do not know what type of assessment the Belfast Harbour Commissioners have made on the value of the land. I suspect that their reluctance to comment is because whatever they say that might be grossly inaccurate. As the value of their assets will be crucial to the prospectus for the eventual sale of the harbour, I can see that they do not want to say anything publicly that might be at variance with the final valuation. They would naturally be cautious at this stage because, should the valuation be out of line, it would cast doubt on the way in which the prospectus is presented. Historically, they would have some knowledge about it, but we are debating a valuation for a prospectus that will interest potential investors. This is crucial, and I suspect that their sensitivity stems from the fact that they do not want to make a mess of the final prospectus and the way in which it would be perceived.

Mr McGimpsey:

I can understand that, but on the open market, the valuation will be determined by the market at that point. I understand that the proposals are for placements of shares, which means that someone rings his chums in the London money markets. It is that sort of closed bidding that makes this so important.

When one has a piece of property to sell, one gets an agent to value it, and he may get it right or wrong. People bid for it and the final price becomes the market value at that time. That will not happen here. I understand from the Belfast Harbour Commissioners' proposal that fund managers in the City of London will be asked to consider shares. There will be no bidding, and that is why the valuation is absolutely crucial.

Lord Dubs:

I agree that the valuation is crucial. However, there are other ways. Theoretically, they could be advised of a value for the shares and then put them on the market. If they are undervalued, people would make a killing overnight, and we are anxious that there should not be any overnight killings. The advice that I have received is that the suggested method of offering the shares will maximise the return and is consistent with providing a safeguard against people mounting a takeover in the way that has happened elsewhere. We are trying to avoid fat cats and takeover bids and are hoping to maximise the return. The advice that I have received is that the way suggested will better achieve those ends. I am not an expert in this area, and I have to listen to the people who are.

I was asked about how much information from our advisers could be made public. I shall ask Mr McMinnis to comment on that. The Department needs advisers to enable it to carry out informed scrutiny of the harbour proposals. Independent advisers enable us to make a critical assessment of the Belfast Harbour Commissioners' proposals rather than simply having to accept them on the basis of their advice. Mr McMinnis will comment on whether any of that can go public and at what point. After that I shall deal with the Westlink and blackmail points.

Mr McMinnis:

PricewaterhouseCoopers and McGrigor Donald are providing ongoing advice to us on the proposed sale of Belfast harbour. There is no report that we can simply hand over to you. The Minister is right to say that this is a sensitive commercial issue. For the reasons that I gave earlier, we have not pronounced on the Harbour Commissioners' proposals. We are waiting to hear from this Committee and from the Assembly, and the transfer scheme has still to be published.

On the value point, it is important to remember that not just the land but a brand new business would be up for sale.

Once they have established themselves as a successful business, BHC can get involved in the kind of things that the Minister was talking about, such as engaging in a joint venture with port authorities in Great Britain. That is one of many ideas being discussed by the board at the moment. These would be described in the prospectus, allowing prospective investors to form an opinion on the value of the new business. As Mr Gimpsey said, the land will be of crucial importance, as will existing-and potential- profits. Our advisors will study the price/earnings ratio of ports in Great Britain and compare them with those of Belfast Harbour Commissioners to see if they compare favourably. All of these considerations will have to be taken into account before a final decision is reached.

Let me deal quickly with the method of sale. The initial proposals from Belfast Harbour Commissioners were concerned only with encouraging financial institutions to take a stake in this business. However, we in the Department encouraged the Commissioners - we are Northern Ireland people after all - to make their offer more widely available to the public. We proposed that they use local intermediaries, banks and building societies to make shares available to the general public. We are pleased that they agreed. It is no longer a question of selling the port to five or six financial institutions. We intend to discuss the business with these financial institutions as part of a book building process in order to determine how much the port is worth and how much they are prepared to pay for it. Clearly, we will be keen for it to realise its full value.

Lord Dubs:

Mr McGimpsey used the words "pre-cooked" and "blackmail" when he talked of Westlink. Before the Chancellor's announcement, the Government were under enormous pressure to increase investment in the infrastructure of Northern Ireland, not just roads but a whole range of things. One important element in the Chancellor's announcement was that £70 million would be spent on important roads in Northern Ireland. I am deeply unhappy about the use of the word "blackmail". As devolution was some time in the future, the Government had to find ways to raise the money necessary for the successful economic development of Northern Ireland. The strategic roads mentioned by the Chancellor are an important part of that. We felt that speed was of the essence; we would not hold up schemes. We would do the preparatory work, because we felt that we owed it to people to get these schemes under way as soon as possible.

Doing nothing about the ownership of the harbour was not an option for the Government. If the Harbour Commissioners were to develop the land themselves, the money raised could not be used for the roads. If that had not been the case, we might have looked at the matter differently; but it is the case. We had to use the assets for the economic betterment of Northern Ireland rather than leave them as they were.

We felt that there was a way forward which would help Northern Ireland economically, based on the Chancellor's announcement and the proposals that the Committee is currently considering. If we do not do this, the harbour will be left as it is. Some changes will have to be made as per the Trust Ports Review, but it will remain the way it is, and there will be no assets to use for the good of Northern Ireland. That is the alternative. I do not like the word "blackmail", but it seems to me that a simple choice will have to be made.

We wanted the Assembly to take the driving seat on this; difficult decisions will have to be made, and we cannot see any way of avoiding that. The Chancellor has produced a net increase of £70 million for Northern Ireland through the sale of the harbour. If the Assembly's view is that they do not want this or they have a better suggestion, so be it. I sound as if I am preaching; I do not mean to. That decision falls properly within the remit of the Assembly. You have to decide what is most important; should you cut expenditure on roads or cut expenditure on other things and keep roads going? Some very clear choices will have to be made. The Government did not wish to put improper pressure on our successors, but the Chancellor, in good faith, was merely saying that this was the best way forward.

Mr McGimpsey:

We were told originally that the roads would not be built unless the sale of the harbour went ahead, but your letter to Belfast City Council says that the road schemes are going ahead.

Lord Dubs:

There are two sets of road schemes. I announced certain other schemes, but we are talking about the main road schemes announced by the Chancellor.

Mr McGimpsey:

The Westlink was the big project announced by the Chancellor; it is also the big project mentioned in your letter.

Lord Dubs:

We are proceeding because the Government have said, in good faith, that we will proceed with those schemes. We have also said that it will be up to the Assembly, when it takes over, to decide on the priorities that it thinks are proper for Northern Ireland. I have said on a number of occasions that choices will have to be made, and if the Assembly does not wish to proceed with the plans for the sale of the harbour, £70 million will have to be found from elsewhere or cuts will have to be made. Those are the day-to-day political choices that Governments have to make.

Mr Byrne:

I am concerned that we are rushing towards a predetermined outcome. You are presenting us with a dilemma over the £70 million that is needed for the roads. A proper economic appraisal of the development potential of these 2000 acres has not been done. According to the recent unemployment figures, 25,000 people in Belfast are out of work. We have a duty to ensure that this land is utilised so as to address that problem.

At the same time, we have to consider the existing harbour and its potential for future development. It is worrying that Belfast has slipped back as a port facility and that Dublin has moved ahead of us. The Harbour Commissioners' submissions do not emphasise how they intend to develop the port; they seem preoccupied with utilising the landbank as a resource. If there is no proper economic appraisal of its development potential, I do not know how the land, as it presently stands, can be valued.

Mr McGimpsey mentioned the shortage of land in Belfast for industrial units. It seems to me that it is not good enough for the Department of the Environment solely to be handling this matter. We need to have an interdepartmental approach involving the Department of the Environment and the Department of Economic Development as this is a vital resource, not only for the people of Belfast, but also for the people of Northern Ireland.

I am also concerned that it is only now that we seem to be talking about the other ports - Warrenpoint and Lisahally in Derry. The Warrenpoint Port Users' Association wants to see Warrenpoint port expanded and developed. There has to be a comprehensive examination of how the three ports can be developed to their potential, be it niche-market services or whatever for the smaller ports.

Finally, I am sure that there are other things which could be looked at. Surely we should not be afraid of looking at developing a free port enterprise park in Belfast, if need be. This is an ideal location for people from north, west and east Belfast. We want Belfast, as a city, to revitalise itself from a retail and general business perspective. The Department of the Environment is looking at this from a very narrow perspective at the moment. The Harbour Commissioners are looking at it from a very subjective perspective. The Committee's remit enables it to be wider in its deliberations.

I do not like the problem concerning the £70 million required for road improvements. The Minister will be aware that I have lobbied for many years about the roads in my part of the world. I do not want to see this asset being frittered away purely for the roads.

Mr Morrow:

The whole consultation process greatly concerns me. We were told initially that the whole future road infrastructure in Northern Ireland depends upon the sale of the harbour. That, to say the least, is quite outrageous. Furthermore, what is being handed down to us is ludicrous. It is a case of "this is what we are going to do, and before you agree to do it we are going to read it out to you and tell you". Paragraph 12 of the Minister's written submission states

"In considering the Commissioners' proposals the Department has been drawing on the advice of PricewaterhouseCoopers, and McGrigor Donald".

Pricewaterhouse only considered the proposals of the Harbour Commissioners. Are there other proposals which we should know about?

The Department of the Environment has established a project team led by a senior civil servant and consisting of officials with experience of earlier privatisations. Who are they? Does the team exist yet? May we have access to the information which they have? May we have this information made available to us?

With regard to the sale of the harbour, I suspect that it will be sold in the same way as every other asset has been sold - wrongly. There is no redress after something has been sold. It is put up for sale and it is sold. If you get it wrong you shrug your shoulders and walk away. That happened with the sale of the airport, British Airport Authority, British Telecom and the building societies. Do I need to continue? Tell me of one which was sold correctly? How can we guarantee that we will get this one right? There is no guarantee that this will be the case. It is most likely, if past experience is anything to go by, that the harbour will not be sold correctly.

I would like to know a bit about the team which the Department has established. How far has its study progressed? Can we have access to it?

Lord Dubs:

Mr Byrne asked about the development potential of the land. At the risk of upsetting my officials, I may say that I do not think that Government Departments are very good at dealing with matters that involve commercial decisions. There is a view that Government should be good at this, but my experience of civil servants and Ministers is that they are not good at that sort of thing.

Mr Byrne:

At the same time they should not give the land away.

Lord Dubs:

Of course not. Although there may be better ways of proceeding, we have to take action on the landbank, and there will be no action if the harbour is left as it is. Even if the Department could take the lead on this matter, we do not have the legislative power. Land gets developed because individual enterprises, mostly private companies, although there may be some publicly-owned businesses as well, feel that they can do it in a way that is economically advantageous. The skill lies in maximising the benefit of such decisions, slotting them into the scarce resource of land. Even if the Department had the powers, I do not think that that would be the right way forward.

Although I am a long-standing Labour Party member, I have to say that in some fields the private sector is better than the Civil Service. This is one such field in which the private sector can work for the economic benefit of the people of Belfast and of Northern Ireland. We must ask ourselves whether there are better options than the one that we are discussing. In terms of broad principles, I am not sure that there are. We need to make sure that the public sector is not putting an artificial brake on the development of an asset. We must allow development to proceed, and we must encourage it for the benefit of Northern Ireland's forward-moving economy. In what way could one develop the land to achieve that other than in the way that is being discussed?

Part of the benefit of the review of Trust Ports is that the ports of Warrenpoint and Lisahally have come up with proposals. We are not happy about all aspects of them but at least the issues are being discussed and we wish to resolve matters in the wider interest of Northern Ireland. I am reluctant to hold Belfast back, although I understand the difficulties and sensitivities over Warrenpoint and Lisahally. My fear is that Dublin would benefit.

Mr Beggs:

Larne port should also be considered.

Lord Dubs:

Larne is a private enterprise port. As far as I am aware, it has not approached us on this matter.

Mr McMinnis:

We have considered Larne's interests as well as those of the ports of Warrenpoint, Lisahally and Coleraine.

Lord Dubs:

Larne is in the private sector and has to accept the virtues of competition.

Dublin is getting its act together rather well and is developing its competitive edge. Northern Ireland's ports need to keep a good cutting edge, and that applies to Belfast more than to the others. I understand the concerns of Warrenpoint and Lisahally, but I do not want all the port business in Northern Ireland to decline and Dublin to benefit. I want ports in the whole of Ireland to do well.

Mr Byrne:

The emphasis in the proposals is on land disposal through flotation. There is no great emphasis on the development of port facilities or on how Belfast could get itself back to a premier position. Those are serious defects in the proposals.

Lord Dubs:

I am not aware that they have not done that but perhaps Mr McMinnis would care to comment?

Mr McMinnis:

My understanding of the Harbour Commissioner's position is that trade through the port has more or less levelled out. They see the future growth and potential of the port to be through diversification, and they wish to move into the private sector to be able to capitalise on ideas which they are currently unable to pursue. They recognise that there is a natural level which they are close to reaching. They refer to that level as a plateau, and they do not wish to slide down the hill by standing still. Instead they wish to develop and move into new business ventures.

Mr Byrne raised another point about the interdepartmental approach. I set up and chaired the first interdepartmental group which brought together every Northern Ireland Department. We sought their views on every conceivable issue that could be raised by the privatisation of the port of Belfast, ranging from ensuring proper medical cover for persons with infectious diseases arriving in ships from overseas to more major matters such as future war planning, emergency planning, the implications for Northern Ireland if the port of Belfast were to move into the private sector and how we would handle or address that. All of these issues are being considered but we cannot put the final seal on the matter until we know the Assembly's views on the whole concept.

Lord Dubs:

Mr Byrne asked about the feasibility of a free port or an enterprise park. I am unsure as to whether or not such a suggestion has already been put forward, but if it subsequently is then the Government would wish to consider it. I am interested in all ideas which might prove helpful, and if the Harbour Commissioners support the proposal then I will wish to hear their views. If the Harbour Commissioners pick up on such an idea from other sources then they will, no doubt, put forward their views.

Mr McMinnis:

The senior management teams at the other ports are much better equipped than we, as civil servants, are to suggest how those ports might be developed - for example Mr Byrne suggested niche markets. We are there to provide help and support with matters such as the development of a deep-water quay at Warrenpoint. In this instance we intend to made a bid to Brussels for grant assistance with a £7 million project and this is currently being advanced. We can do this type of thing to help but they are the people with the business acumen, and they must initiate and lead such ideas.

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