COMMITTEE FOR REGIONAL DEVELOPMENT

OFFICIAL REPORT
(Hansard)

Ports Policy

28 November 2007

Members present for all or part of the proceedings:
Mr Fred Cobain (Chairperson)
Mr Willie Clarke
Mr John Dallat
Mr William Irwin
Mr John McCallister
Mr Raymond McCartney
Mr Stephen Moutray
Mr George Robinson
Mr Brian Wilson

Witnesses:
Mr Len O’Hagan ) Belfast Port and Harbour Commissioners
Mr Roy Adair, )

Mr Garvan O’Doherty ) Londonderry Port and Harbour Commissioners
Mr Brian McGrath )
Mr Stephen Gillespie )

Captain Pat McKeegan ) Coleraine Harbour Commissioners
Mr Ian Donaghy )

Mr Peter Conway ) Warrenpoint Harbour Authority
Mr Jim Stewart )
Mr Kieran Grant )

The Chairperson (Mr Cobain):
Representatives of the trust ports are present to brief the Committee on matters arising from the proposed Northern Ireland ports policy. First, we will hear evidence from representatives from the Port of Belfast, who will have 10 minutes to make a presentation and 10 minutes to answer questions. Following that, we will hear evidence from representatives from Londonderry, Coleraine and Warrenpoint. Good morning to all of you.

Mr Len O’Hagan ( Belfast Port and Harbour Commissioners):
Good morning; thank you for the invitation. Given that 75% of Northern Ireland’s seaborne trade goes through the trust ports, the ports policy is obviously an issue of national importance. The Belfast port accounts for 60% of that trade. In addition, one in three businesses that employ people in Northern Ireland relies on the Belfast port to handle its imports and exports, and approximately 17,000 people are employed in the port estate.

Therefore, from our perspective, it is essential that Belfast port remains a public asset for public purposes, with public accountability.

We must double our port capacity by 2025, and that will involve expenditure of £630 million. We make it clear that we are not in favour of privatisation — that is not in the interest of Northern Ireland. We must be mindful that we do not lose our land by stealth, because that would be the first step towards privatisation.

Mr Roy Adair ( Belfast Port and Harbour Commissioners):
The four issues are reasonably clear. There is the debate about public corporation status. There is the issue of the commercial powers that the ports enjoy. In the case of Belfast, there is a land stewardship question, and all of those issues are linked to the question of suitable accountability mechanisms for those public assets.

I shall go through those issues one at a time. Belfast Harbour, as a business, is clear that public corporation status is not fit for purpose with regard to public ports. It is interesting to note that all of the Department for Regional Development’s consultees agreed with that, and that the ports should be removed from the public-expenditure regime. Furthermore, they felt that the ports should be able to respond more adequately to the marketplace. The Committee will be aware, from briefings provided by the Department, that, to achieve those aims, the ports must be removed from the ability of a Minister to privatise or direct, and that the appointments process must change.

A briefing paper has been provided, with a few ideas about the appointment process. Perhaps, that is not a matter for consideration today; however, we are willing to come back to those ideas, if a way could be found to satisfy requirements.

The second issue concerns commercial powers. Again, it was gratifying to note that all consultees bar one — the only private-sector port in the country — supported the principle of more commercial powers for trust ports. The case for extending commercial powers is readily made; it was considered by the previous Assembly, and the situation has not changed since then.

I will remind the Committee of some facts. Currently, the port’s activities are constrained by statute — the trust ports cannot behave like ordinary, private companies. That means that it is difficult for them to vary their business model easily to respond to market conditions. That can, and does, lead to suboptimal business performance, and it reduces the amount of profit that can be generated from all of the trust ports. Given Mr O’Hagan’s earlier comments, all of the ports need to fund future capacity growth via profitability. That is absolutely essential to delivering that capacity growth without recourse to the public purse.

We group the specific changes in the commercial powers into four categories. First, there is a case for being much clearer about what the ports do. What is the trust ports’ core business? The current legislation alludes to that; however, difficulty is created by its not being as specific as it might be, and it could be open to legal challenge. Therefore, we see an opportunity to remove that legal threat — small as it may be — by making more specific the powers that are implicit in the legislation.

Secondly, the ports currently have certain powers, but those are somewhat restricted, and Belfast Harbour Commissioners advocate widening some of them. In addition, several new powers ought to be introduced.

I hope that the briefing paper has explained those powers in clear detail. I will not take up my 10 minutes by going into the details, but I will answer any questions that the Committee might have.

The third category involves land stewardship. I repeat myself: it was good that all of the consultees who expressed an opinion agreed that Belfast Harbour should remain the steward of its land holdings. Mr O’Hagan stated, at the outset, that all of the ports, particularly that of Belfast, are critical to Northern Ireland’s economy. We have stated the economic impact.

We have undertaken some work to find out where port capacity needs are heading. In Northern Ireland, there is clear linkage between economic growth and port throughputs. It is practically a straight-line relationship, which means that, as the economy grows, port capacity needs to grow. We have put together a programme that aims to double the capacity of the Port of Belfast by 2025. That has a price tag of some £630 million, and we suggest strongly that, without stewardship of the land and the benefits of extracting value from it, it would be difficult to deliver that investment programme without recourse to the public purse.

We also ask the Committee to note our strong track record in urban development. We have not banged that drum loudly, but experts have examined our record over the last 15 years. Apart from the harbour activities, the total value of all the developments in non-harbour and non-core harbour activities adds up to £700 million. That strong track record of stewardship has been accomplished without any public money.

Land stewardship was central to the debate that occurred in this Building a few years ago. One outcome of that was a memorandum of understanding, accountably tying all of the trust ports in respect of what they did with their lands. I contend, and I hope that the Committee agrees, that that memorandum of understanding works well. It is called upon when necessary, and the Department, Ministers and the broader church of the public sector have contemplated several propositions.

The last of the four issues is the availability of accounting mechanisms, of which there are several. Those are: legally binding agreements, such as the memorandum of understanding to which we referred; guides and codes; and the provision of information. I will shortly return to each of those, because, if the Committee is minded, there is scope for improvement in those areas.

In addition to those mechanisms, stakeholders are on the board. That is an important part of the governance mechanism and it works exceptionally well. There is ministerial sanction: if a port misbehaves, the Minister can seek — and I am sorry for my chairman when I say this — to dismiss the chairman and find another that the public accepts as more fit for purpose. That is one of the strongest sanctions. The last safeguard, but not the least, is that this Committee, at any time, has the ability to tell any of the trust ports to behave itself.

Mr O’Hagan said at the outset that we are strongly committed to public accountability, and we will welcome any opportunity to explain ourselves to the public. The Committee has a powerful role in delivering the accountability that the public requires.

There are, perhaps, three ways of enhancing accountability, and opportunities exist in all of them. Consideration may be given to further legal agreements. They are a little unwieldy, but are possible to implement if the Committee is so inclined. We will be happy to engage in the provision of additional information to improve transparency. Finally, codes of practice provide a framework in which performance of the trust ports may be judged. An updated code of practice will make it clear to all of us how a good job should look.

In summary, I remind the Committee that the Port of Belfast is vital to the economy. It provides jobs. Economic research shows that one job in four in the Province is linked to the performance of the Port of Belfast. To include the ports represented by my colleagues enlarges the number significantly.

All ports need the tools and the flexibility to do the job. A removal from public corporation status and the granting of commercial powers are vital if ports are to do the best possible job in the public interest. The need to double capacity is clear. Accountability is something that we welcome and will fully embrace in any form that the Committee sees fit.

The Chairperson:
Roy, everyone is convinced of your point about the relationship between growth in the economy and the ability of the ports to handle that. The other main issue is to ensure that ports can operate in a commercial environment. There is a tremendous opportunity for ports in Northern Ireland to become competitive on an all-island basis. The business is competitive; therefore, if a port is competitive, there is a chance for overall growth. That message has come through in the briefings to the Committee. It is a tremendous business, and it has a chance to increase in size and provide additional employment.

Mr Dallat:
It is said that land is the root of all evil, but this case there might be an exception. How important is the retention of the land bank to the harbour commissioners in light of competition from other harbours and long-term capability? I anticipate the answer, as Mr Adair has pretty much given it.

Given that, and with all the restrictions, how can the port and the city integrate? For example, the harbour police, the big gates, the security passes and the rest of it send out the message that the port is not really part of the city.

Mr O’Hagan:
I will answer the first part of that. People tried to drive a wedge between the land and the port in Belfast. All ports throughout the United Kingdom are major land holders; reclaiming land is part of the business. That is vital if we are to double the size of the port.

Mr Adair:
Interaction between the port and the city is vital. Although it is a wee bit twee, I like the phrase Team Belfast — my colleagues probably have similar phrases for other parts of the Province — and the attitude is like that. I have worked at the Port of Belfast for a few years and feel that we enjoy an excellent relationship with Belfast City Council. We, with the council executive and councillors, work at that relationship; it is not taken for granted.

The executive teams from the Port of Belfast and Belfast City Council put a lot of effort into making sure that there are regular meetings — usually about three times a year. There is a large agenda, which has been carried out successfully; we co-participate with Belfast City Council and put money into the international marketing of Belfast. We are working together on an idea of branding for Belfast, which shows an exceptional level of co-operation. Belfast City Council is also contemplating what to do with the north foreshore land; we have assisted in shaping their policies, and our doors are also open to help on the commercial front. The relationship with Belfast City Council is very strong. Perhaps the Chairperson can comment on the relationship from the viewpoint of a councillor. Despite what some say about meritocracies, having political representatives on the Port of Belfast board works.

Mr O’Hagan:
It works exceptionally well. There are four Belfast City councillors on the board, and they give us direct access to what people and councillors in the various areas of Belfast think. Whatever governance system is implemented, it would be helpful if those four councillors were retained on the board.

Mr Adair:
I did not answer the policing question. We are constrained by the requirements of international law.

Mr Moutray:
Thank you for the presentation. In it, Roy outlined his desire for new powers. What opportunities, and what scope might new powers provide?

Mr Adair:
We see the way forward as continuing the job we currently do to facilitate shipping and trade. However, the capacity requirements mean that a great deal of money must be invested; therefore, we need to extract better value from our land holdings. The current powers are very restrictive in that they are not clear. We could debate with lawyers what can and cannot be done, but our abilities to work on land holding are frustrated.

We need to move forward. For example, there is a level of demand in Belfast for a marina development in the Abercorn Basin beside the Odyssey Arena. Many people believe it would bring some vibrancy to the city, might generate income and, from a point of view of appearance and aesthetically, could deliver many benefits.

In our current legal framework, we could probably do that; however, we might be open to legal challenges. It does not explicitly say on the tin that something like a marina can be developed, and we want that to be made explicit. At the moment, if someone does not like the idea and wants to be mischievous, he or she could seek a judicial review.

I can give another example. During embryonic discussions we have found people who want to work in partnership with us; however, under the current legislative framework, it is very difficult, if not impossible, for us to work in a risk-sharing situation with other partners, which is quite unusual for a business.

Extended powers would be useful in those examples.

Mr B Wilson:
I think we all agree that you need additional powers for business reasons, but obviously it is important to get a balance between the powers and public accountability.

I am particularly interested in the land stewardship and management. Do you have vesting powers, and powers to sell land?

Mr O’Hagan:
We do not have vesting powers, and, under the memorandum of understanding, we have to get permission from the Department to sell land Where accountability is concerned, those that are on the board are there because they want to do something to improve the port and make it part of Belfast.

Mr B Wilson:
Whatever the new arrangements are, do you anticipate still having to get approval for selling land from the Department?

Mr O’Hagan:
Yes.

The Chairperson:
You are fortunate that you have land to develop, because some of the other ports are constrained. There is an opportunity for Belfast to grow, because the land is there to develop and diversify into other things. Commercial companies do not stand still, do they?

Mr McCartney:
Thank you for the presentation. Stephen Moutray covered the first part of my question.

Can you give clarify the point “undertake any business activity” in your presentation? Have you been held back on anything specific?

Mr Adair:
Sorry, where is that?

Mr McCartney:
Under General Additional Powers.

Mr Adair:
I do not have that slide. If you tell me what it says, I will do my best to answer.

Mr McCartney:
It is the idea that you can undertake any business activity.

Mr Adair:
The Department has done a lot of work over the years to try and move towards our present position, and some of the documents that the Committee received refer to a very general commercial power. If the Committee members have had a chance to read the briefing paper that we provided, you will notice that we have made subtle changes, and have sought to be restrictive. Belfast is not currently saying that it wants to do absolutely anything, so we have no ambition to start up a —

The Chairperson:
An insurance business, as someone said. [Laughter]

Mr Adair:
The example that our financial director uses is that of a toothbrush factory. In our suggestions we welcome the business being defined in a certain way, and we can work inside that vertical value chain. We are keen to do all that is associated with running a port and trading in it, as well as maximising the benefits of the land holdings. That is why we try to make the point clearly in our document that the definition of the business is actually quite important. We will have no problem with a restrictive definition, as long as it provides flexibility.

I would certainly not criticise my colleagues in the Department, and the commercial power in the ports policy has been openly drafted; however, issues may arise from it. We do not say that we would not accept a fully open power; we accept that there may be a more restrictive interpretation of the business definition that sits more comfortably with the public interest. If that is the case, and, given that we are committed to the public interest and accountability, we would be happy to have such restrictions placed on us.

Mr McCartney:
As your capacity increases, how many more jobs will you create?

Mr Adair:
In the port, there are probably 1,000 people who are directly involved with what goes in or out. That figure would double. However, the benefits to come from the harbour estate are more important. For example, driving along Airport Road, one sees the Titanic Quarter emerging from the ground, and, although an occupancy deal has not been finalised, we have taken an option on office space that will house approximately 1,500 jobs. As the area is developed, that figure will be multiplied many times over — perhaps generating 20,000 jobs over the next 15 years.

Mr McCallister:
My colleagues and I would be concerned about harbour land being sold, and it is good news that such a deal must, at least, be approved by the Department of Regional Development, and, indeed, that the Department of Finance and Personnel could not use the proceeds of such a deal to plug holes in other areas.

How long does it take to arrange commercial borrowing, compared to the Government’s process? How long does it take even to get an answer from the Government?

Mr O’Hagan:
If we found it necessary to compete against other projects in Northern Ireland, we might not get approval for borrowing. It would not only be a matter of getting through the process; the Government would have to decide whether it was right to put money into the Port of Belfast rather than into a road or a school. The major point for us is that we want to be in a position in which it is not necessary to engage in such a process, but, rather, to be in a position in which we are able finance growth for ourselves.

Currently, we can quickly arrange commercial borrowing from the banks. The necessity for us to join a list of projects that await assessment against every other need in Northern Ireland would put the port’s capacity at risk, and, by definition, that might create a bottleneck for the Northern Ireland economy.

Mr McCallister:
Is there much difference between Government and commercial borrowing rates?

Mr O’Hagan:
There is not much in it. However, the problem is that we might not even get to the point of —

Mr McCallister:
Would commercial borrowing be cheaper?

Mr O’Hagan:
Given our current balance sheet, we could negotiate a good deal, although, Government rates would not be much different.

The Chairperson:
The big difficulty would be that you would have to speak to every other —

Mr Adair:
Yes. That would come out of the block grant. Over the next five years, our plan is to spend £160 million. If public-corporation status is maintained, that £160 million —

The Chairperson:
It must come from somewhere else.

Mr Adair:
Government lending to ports would be recognised as public expenditure. We do not intend to borrow £160 million; however the money that we need to borrow would come at the expense of something else. As citizens, we do not want to —

The Chairperson:
In that instance, the rate of borrowing is not the issue. You may not even be able to borrow money.

Mr McCallister:
Public expenditure.

The Chairperson:
Of course, given some of the Executive that we have — who are almost to the right of Genghis Khan — [Laughter.]

A Member:
Oh, now, Fred; now, Fred.

Mr McCartney:
During the consultation process, a further power was identified that would enable ports to undertake business outside their jurisdictions. Will you expand on any projects that Belfast port might consider?

Mr O’Hagan:
That power would, for example, allow for the establishment of the other end of a sea bridge. If, we wished to develop a new route from Belfast to a port on the west coast of Scotland or England, and a crane or a piece of equipment was required to join the bridge, that power would cover such an eventuality. It is as simple as that. We could probably cover that by having an agreement with the Department. It is not that we particularly want to invest in other assets just to join the bridge.

The Chairperson:
Are there possibilities for the ports in the north of Ireland to compete commercially with other ports, and to extract business from them?

Mr O’Hagan:
It is a possibility. There is competition on a number of fronts, including getting shipping lines to use our ports, especially as there is currently a shortage of ships. For example, we always compete against Dublin to ensure that one of our operators, Norfolkline, puts the biggest, best, quickest, and newest ships on the Belfast route. There is a lot of competition.

We compete against other ports, such as Cork, who are perhaps trying to get business that should be ours from a mid-GB port. Therefore, we do a lot of work with the shipping companies, because that determines the availability of capacity. The Chinese demand has resulted in a shortage of ships, and that has increased the competitiveness of the market.

Mr G Robinson:
My question is regarding the board members.

The Chairperson:
That is a touchy subject, George.

Mr G Robinson:
How are the board members appointed, and for how long?

Mr O’Hagan:
Board membership is by public appointment. I spent three days last week with the Department and commissioners for public appointments as part of the public appointments system. Members are appointed for four years. The maximum any commissioner can serve is 10 years; therefore, that would require them to be re-appointed twice. The chairman is appointed for four years and can be re-appointed.

We are lucky in that we have a strong board that includes people with public interests at heart, such as the chairman of a health board. They put a lot of time into the port, and there is no personal gain in it for anyone. We are lucky that, over the years, we have had commissioners who have delivered what we have been talking about today, which is a fantastic port of Belfast with a land bank that will help to ensure that we can double the size of the port within 25 years.

Mr Irwin:
The power of Belfast Harbour Authority to undertake its functions outside Northern Ireland was mentioned earlier. The Harbours Act ( Northern Ireland) 1970 limits your ability to act in that fashion. Are you seeking more power than that Act grants?

Mr O’Hagan:
I refer to the point that I made earlier regarding the development of a bridge; we have no problem with requiring the Department’s permission to do that. It is not as if we are going to try to develop a skyscraper in Stranraer.

The Chairperson:
Thank you.

Mr Garvan O’Doherty ( Londonderry Port and Harbour Commissioners):
I am chairman of Londonderry Port and Harbour Commissioners, on whose behalf I thank the Committee for inviting me to brief it on the future of Northern Ireland’s trust ports.

Derry Port and Harbour Commissioners submitted their response to the ports policy review in September 2006, and are pleased that key areas of concern have been addressed in the Minister’s letter to the Committee’s Chairman on 22 October 2007.

The Minister identified three key areas to be addressed, namely public corporation status; the extent of commercial powers; and the future scrutiny of trust ports through the transparency of information. With regard to public corporation status, the Commissioners believe that the Minister has recognised the inherent difficulties with regard to trust ports being classified in that manner. The Commissioners are charged with acting commercially and generating sufficient revenue to invest for future generations.

As a public corporation, the port must borrow through the public expenditure system, which could result in the loss of commercial opportunities, as well as time and money shortages bringing constraints to further development.

Trust ports can leverage sufficient funds for expansion from private financial institutions, without having to compete with other Government priorities for capital funds. The port has no wish to alter its status beyond that stated by the Minister, and then only to remove the classification of public corporation. That would allow the ports to be thriving, efficient commercial operators and to contribute to the local economy.

With regard to extended powers, the Londonderry port welcomes the proposal. We operate in a commercial environment that requires commercial flexibility. By increasing the Commissioners’ commercial powers the port will be able to take advantage of new business opportunities. It also follows the UK Government’s policy recommendation that allows the ports sector to have considerable commercial freedom.

The Minister, in his letter, says that if trust ports are no longer to be classified as public corporation, the Department for Regional Development will be required to remove certain powers, namely, the ministerial power to direct and the power to privatise. Furthermore, the Minister must appoint less than half of the board. However, by removing those powers, an issue arises about how the Assembly scrutinises the ports with regard to transparency and accountability. The Minister has suggested that one solution, which was proposed in England and Wales, was to introduce a set of key performance indicators.

We remind the Committee that trust ports, in Northern Ireland, currently operate with greater levels of transparency than most ports in Great Britain, where the Freedom of Information Act (2000) does not apply. In addition, Londonderry port’s strategic plans and monthly board papers are circulated to the Department for Regional Development. The port has always conducted its business in an open and transparent fashion. It has always been open about its performance and activities, and operates under a comprehensive set of financial indicators.

The commissioners strongly believe in developing a culture of sustainability in the organisation. It is considered best practice in the private and public sectors to produce a corporate social responsibility report. Currently, we are evaluating how a three-strand approach would address the financial indicators, and expand on the environmental and social aspects of the business. That would provide a comprehensive report for the benefit of our stakeholders, which could be a stand-alone document or could be contained in the annual report.

Another issue — which is not necessarily on the Committee’s agenda — is that of planning approval. As we strive to be commercial, the difficulty in obtaining planning approval prevents the maximisation of commercial activities that would allow the ports to be at the forefront of the local economies. In due course, we would like to debate the issue with the Committee for Regional Development, as a separate matter.

Mr Dallat:
Committee members have visited all of the ports. We noticed the poor road infrastructure on the way to the port in Derry. I imagine that that is a priority for the port’s commissioners. How important is it that the ports retain control over their land banks? Will it be important, in future, to be able to acquire additional land?

Mr O’Doherty:
With regard to Roy Adair’s “team Belfast”, we take a “team Derry” approach. There was the issue over the Fort George military base, over which the port had control. When the Government formed Ilex Urban Regeneration Company, we took the decision to concentrate on our core activity, which is the port. We sold our land to the Department for Social Development so that Ilex could maximise its potential in the regeneration of the city of Derry. In the realm of the port’s base, at present, it is important that we accumulate as much land as possible to allow the port to grow, and we are in the process of doing so.

Mr Brian McGrath ( Londonderry Port and Harbour Commissioners):
Mr O’Doherty’s comments relate to a non-core port land asset that was sold back into the system for the greater public good. We have also taken steps to secure a port land bank. To that end, we bought a 30-acre plot from NIE. Therefore, Londonderry Port, in its existing strategic plan, has addressed the land asset question to ensure that future generations have the growth to expand the business. We continue to consider that as something that is of key importance. We are mindful not to allow ourselves to be boxed in without the necessary capacity for growth. We are satisfied that, in the medium to long term, we have that aspect well covered. However, we will continue to review that. Where necessary, we will acquire land to support and protect our fiduciary duty.

Mr O’Doherty:
We raised around £12 million from the sale of Fort George, and we put that money into the port infrastructure. That has allowed us to expand our asset base and to diversify our core business into other growth areas. We turned around £5 million for £1 million profit this year.

Mr Dallat:
I was referring to infrastructure that was outside your control, in other words, the roads.

Mr McGrath:
There is a substantial land bank outside of the port’s ownership in a corridor adjacent to the port, so there is huge potential for scope there. In relation to the roads, it is paramount to get products from the port to their destination in the most efficient manner. At the moment, there could be some improvement in that area. However, dualling on the Maydown corridor, for example, will significantly improve the distribution of products from the port.

Linkages into the Republic are important to us in the north west, in what is known as an Atlantic corridor, to ensure that we can extend our circle of influence in the goods that we distribute throughout the country.

The Chairperson:
Are you satisfied that you are in a commercial position to compete on that part of the island?

Mr McGrath:
Yes. We compete, day in and day out. Everything that we do is measured against competition in some shape or form or from one place or another. There is healthy competition in Northern Ireland in relation to the existing ports — for us, in particular. We are under assault from the competitiveness dimension from the Republic of Ireland. In fact, there is a massive issue at the moment, as we are competing with Killybegs for specific developments. We are concerned at our collective ability to address our issues of competitiveness and markets in respect of how a different jurisdiction applies its attitude to similar things. We are left well behind in some of those areas.

The Chairperson:
Will you give us an example of that?

Mr McGrath:
We are currently competing for a major development that will possibly be located in Scotland, very possibly in the Republic of Ireland or in Londonderry port. We are fighting tooth and nail to secure the economic investment and the advantages that that will bring to the north-west economy. However, there is something lacking in a joined-up approach to how those investments and opportunities can be brought over the line.

Mr O’Doherty:
It is important to consider what the ports can do for the economy. It is important for the helms of Government to consider that issue. This is a €50 million project. It is important for the north west, especially as we have suffered job losses. We are finding it extremely difficult to get all the Departments to engage positively in the project to allow it to maximise its potential. In the South we deal with a set of alternative legalistic issues that are more relaxed and focused on getting the business done. However, we find here that people are more concerned with keeping their power to themselves and not sharing it to allow commercial enterprise to maximise the potential for the local economy.

The Chairperson:
That is an extremely important issue. Please let us know where you have experienced those blockages, as we are all striving to make this thing prosperous.

Mr O’Doherty:
In commercial life, the Planning Service is the obstacle to progress.

The Chairperson:
If you provide us with a written note highlighting those issues, the Committee will follow them up quite quickly.

Mr McCartney:
I am familiar with those problems, which relate to the fish plant. Mr McGrath gave some insight into that during the Committee’s visit to the port. That brings me to my question, and I asked the same question to the Belfast commissioners. How restrictive is the current policy? If it changes, what is your projected growth, particularly to the economy in the north west?

Mr McGrath:
There is consistency in the current regime. Being classed as a public corporation and being part of that borrowing requirement completely hampers the potential growth of the business.

As long as the ports use their own money without borrowing, that is acceptable. However, we have identified a borrowing requirement that would bring us within the expenditure system. We are encouraged to see that both the Committee and the Minister are minded to remove us from that restriction. That would allow us to return to an even keel; it would keep us on target, within our current five-year plan. We are in the process of developing our next medium-term plan, which presupposes that we will have the ability to borrow from the financial markets.

In the period of the last plan, the port’s activity levels and profit doubled, largely within a four- to five-year period and we are now examining the growth potential for the next five- to 10-year period. We are optimistic that we will also see step-changes of growth in that period.

Mr O’Doherty:
May I expand on that? The issue is that it takes so long to get a project through the Government system; it is much quicker to do it commercially. With the current liquidity crisis in the financial markets, banks are looking towards infrastructure-type operations. They are comfortable with lending money for them. There is a double benefit: banks want to lend to our type of enterprise and we have the potential to get businesses onto the sites. However, we need time and flexibility.

Mr McCartney:
I have a second question. Aside from the criticism of the Planning Service, did your current status hold you back in any way in relation to the fish plant?

Mr McGrath:
The public corporation element did not hold us back, because the entire investment was from an internal investor. There were no constraints in relation to that.

However, if it were something where we would have to put port infrastructure in to support the project, we would have significant difficulties with it.

The Chairperson:
The Committee would appreciate it if you would provide information on the planning issue. Thank you.

Mr Ian Donaghy ( Coleraine Harbour Commissioners):
Chairperson and Committee members, I will keep my presentation short, as the key points have been well presented by the representatives from Belfast and Londonderry.

As members are aware, Coleraine is the smallest of the commercial trust ports and handles 70,000 tonnes of cargo per annum. Nevertheless, my board is of the opinion that Coleraine should receive treatment similar to that accorded other trust ports. It agrees with the Minister that trust ports should be taken out of public corporation status and the range of commercial powers available to them extended.

Extending the board’s commercial powers would allow it to borrow for activities outside of our core functions and promote leisure activities and tourism, such as providing marina facilities as well as existing harbour facilities.

The board does not agree that the interests of the port and the wider interests of Coleraine would be best served if Coleraine port were passed into the ownership of the borough council. It believes that a body such as itself, charged specifically with looking after the interests of the port and the navigation of the River Bann, best serves the wider interests of Coleraine as a whole.

The Chairperson:
I have a couple of points. When the Committee visited the port, you spoke about activity in tourism and working towards a different strategy outside ports. Could you elaborate on that?

Mr Donaghy:
The lands we are considering are those at the Cushowen part of the site, which is totally unused at the moment.

We are undertaking a feasibility study to assess whether a marina could be built there and some onshore facilities provided. We already store leisure craft in some of our warehouses and on our hard stand. If the growth in leisure and recreational activities on the River Bann and beyond is to expand, onshore facilities will be required as well. We are considering that at the moment.

Mr Cobain:
Are you happy that you can mesh such activities with the port activities?

Mr Donaghy:
We can, for the moment. The leisure and commercial sides are somewhat separate at the moment, but, eventually, the leisure side may grow into the commercial side.

Captain Pat McKeegan ( Coleraine Harbour Commissioners):
We still see the core activity of the harbour as being commercial; any leisure activity would be in addition to that.

Mr Dallat:
When the Committee members visited the port, we did not pick up on any degree of cohesion among the harbour commissioners, and we are still confused as to what is the main objective. Is it primarily to focus on the commercial activity? At the moment, that involves — to use the correct term — recycled metal. Is any serious effort being made to integrate the harbour with the town, as was the ambition of the Department for Social Development and the Department for Regional Development? How united are the harbour commissioners now on what the future holds?

Mr Donaghy:
We are developing a plan at the moment, and we are working through the process. We have a relatively new board. The new representatives were appointed in June, and they are finding their feet at the moment. I am putting together some financial forecasts, and, as I said, we are working on some feasibility studies to progress those aspirations. Therefore, we are in the process of addressing this matter.

Mr Dallat:
How restricted are you by the long leases that were signed recently, which may well tie you in for the next 20 years?

Mr Donaghy:
It certainly has us tied in to developing right up towards the town; however, if we viewed that as an obstacle, we could overturn it at some stage, if that were considered desirable. However, at the minute, we run a commercial port.

Mr Dallat:
I cannot speak for the Committee, but my impression was that something drastic needed to be done to undo the handicaps that have been imposed on your development. On the day of our visit we certainly thought that it was not an easy job. It almost seemed a hopeless case.

Mr Donaghy:
I would not see it as a totally hopeless case. We will get our plan together, and our longer-term plan, and if something needs to be done, we will do it.

Mr Dallat:
I wish you all the best, Ian; I am on your side.

Mr Donaghy:
Yes, I know that.

Mr G Robinson:
I am sorry that I did not make it to the port that day, but I, too, wish you all the best. You said that a new board has been set up fairly recently, and that can only be for the good. Like John, I wish you all the best in your progress from here on in.

Mr McCallister:
I agree with John that you certainly need much clearer direction. I have concerns about how the commercial side — John was kind to describe it as recycled material — will mesh with the tourism side. The whole area is one of the jewels in the crown of our tourist industry. I have difficulty with how the two sides could be married. We certainly did not get the impression that the board was of one view with the direction that the port was going.

Mr McCartney:
My first visit to the port was the Committee visit, so I am no expert on it, but it seems to be a bit landlocked and restricted. Are there any plans to broaden the port’s perimeters?

Mr Donaghy:
There are longer-term plans. If development were to go ahead, with the co-operation of Coleraine Borough Council, access to the whole site could be opened up. That issue was discussed at earlier meetings with a group that met Coleraine Borough Council and the Department for Social Development. We looked at all of those possibilities.

Mr McCartney:
With regard to tourism and yachts, is there any possibility of your moving the proposed marina to another site, or does it have to be on that site?

Mr Donaghy:
The site that we have earmarked is quite useful, in that it is accessible to the town. The problem with some of the other marina sites along the River Bann is that they do not offer access to anywhere. People can come ashore — and that is the height of it. At least, our marina site would be in walking distance of Coleraine town, which may make it a more appealing.

Captain McKeegan:
The area which we have earmarked for the marina is at the opposite end of the harbour, away from where commercial activities take place, and it is an area which is not really suitable for commercial shipping. It would be suitable as a marina site.

Mr Donaghy:
In addition to that, part of the land, especially that along the shoreline, is leased from The Honourable The Irish Society for 1,000 years, provided that we use it for marine activity. Therefore, if it were used for housing development, that society would want it back again. As long as we have that land, we need to use it for some sort of marine activity, and we see that as being a leisure, marina-type development.

The Chairperson:
Thank you very much.

Mr Jim Stewart ( Warrenpoint Harbour Authority):
On behalf of Warrenpoint Harbour Authority, I welcome the opportunity to address the Committee. I am in my fourth year as chairman of the authority. One of my first roles was to appoint a new chief executive and develop a strategy for going forward. Our performance in the past four years, relative to our size, has been exceptional. We have fully adopted the trust ethos by reaching out and building relationships with other regional stakeholders, including the Newry and Mourne District Council, and the councillors that were on the board.

Warrenpoint Harbour Authority has adopted openness and transparency in the full disclosure of key performance measures, for which we fully accept that there is a need. We have had substantial support from the Department of Regional Development, for which we are grateful. We have submitted the views of the Warrenpoint Harbour Authority board to the Committee. We believe that there is no logic in restricting our commercial management by invoking the regulations of the Office of National Statistics. On that basis, we fully support the consultation proposal for special powers that would allow us to continue to be an economic driver for the region.

Mr Peter Conway ( Warrenpoint Harbour Authority):
Warrenpoint port is the second port as regards containerised traffic in Northern Ireland. Moreover, it is the third port as regards ro-ro in Northern Ireland and the fifth on the island of Ireland. As the chairman said, we have come a long way in recent years. The port has been supported — in the past year — by a grant of £14.7 million from the Exchequer, because it is recognised that we provide a service of general economic interest. That means that Warrenpoint Harbour is recognised as a useful benefit as a business and is a major economic driver for South Down and the Newry and Mourne region. With that in mind, Government has given us the ability to develop our business and the opportunity to grow. On looking at the maps, the geography will clearly determine that we are on the border and that we have to compete with the other ports in the island of Ireland, as well as with our colleagues in Northern Ireland.

Our concern is that fully-implemented corporation status would disadvantage us, particularly with regard to the Republic of Ireland ports, which operate de facto as free commercial organisations. Currently, 48% of Warrenpoint Harbour’s trade is to or from the Republic of Ireland, and it is critical to our ongoing development.

As other witnesses have said, if the port’s reserves were to revert to public ownership, as they would under corporation status, we would be required to bid for further development funding. Once every five years, we are required to fund approximately £1 million-worth of dredging. Over the years, we have managed to meet those costs from our reserves. However, if we were forced to bid for funds against the Health Service or the education sector, such costs would be much more difficult to meet.

In 2001, the Assembly were moved to grant extended commercial powers, and we advocate that, in order to work in the commercial market that I have outlined, further freedom is required.

For example, in our presentation, we submitted two photographs, and it is said that a picture speaks a thousand words. The first of those shows the current layout of Warrenpoint harbour, which sits at the mouth of the Newry estuary, is close to the city of Newry, and is in a favourable position on the economic corridor between Belfast and Dublin. The photograph shows the port’s restricted land holdings, which we hope to expand in the direction of Newry. When dealing with the Planning Service, we will attempt to ensure that that land is not made available for, for example, residential development, which would cause problems for the port’s development.

The area at the bottom of the picture is more clearly defined in the second photograph, in which an artist’s impression of a marina has been added. We are working with Newry and Mourne District Council to develop a 200-berth marina at that location. Unless we can be sure of the freedom conferred by extended commercial powers, we will be unable to progress that project because, as Mr Adair said, under existing harbour orders, there could be a legal challenge.

The idea that Warrenpoint could develop in that way is simple — we own the breakwater and adjacent land, which is in the harbourmaster’s jurisdiction, and, in conjunction with Newry and Mourne District Council, we could seek development funding. More importantly, such a development would provide another income stream that would help to maintain the harbour as a living business entity.

Opportunities that occasionally arise to work with other businesses offer further examples of how the port’s development potential could be enhanced by extended commercial powers. Recently, such an opportunity was brought to our attention by a customer who requires storage for his products at the port. Currently, we do not have storage facilities, and I would like to be able to rent or purchase sheds in the nearby industrial estate that would facilitate that customer and allow our business to grow.

On the matter of stakeholder dividends, perhaps unlike the other ports, we recently had to submit a detailed business plan to the Department for Regional Development as part of our investment programme. That involved the development key performance indicators in order to compare ourselves with other ports in the United Kingdom and the Republic of Ireland. Using those key performance indicators, we would be delighted to work with the other ports and the Department to demonstrate greater public accountability.

The Chairperson:
The importance of infrastructure to the ports has been raised several times. Could you say a little about the proposed bridge at Narrow Water?

Mr Conway:
This issue is controversial locally, but we have to consider it from a business perspective. As I said, Warrenpoint port is situated almost halfway between Dublin and Belfast, and can deliver to the end consumers — potentially some two million people — in an hour and 10 minutes. The problem is major traffic delays at Newry. To relieve that, Warrenpoint Harbour Authority, Newry Chamber of Commerce and many people from south Down are pushing for the construction of a southern relief road at Newry. I am afraid that a bridge at Narrow Water would not address the problem. Thus, we are very much in the camp that supports the building of a southern relief road, rather than a bridge at Narrow Water.

Mr W Clarke:
Gentlemen, you are welcome here today. My point concerns the southern relief road. I believe that such a road is necessary, and I understand your arguments. Such a road would benefit your industry, the tourist industry and the whole economy of south Down.

Our understanding is that the Southern Government will basically pay for the bridge at Narrow Water, and that it will be a tourist attraction. However, the Committee should be aware that a southern relief road is necessary. People get mixed up, and think that it should be a case of building one or the other, but that is not so. The Committee must be mindful of that, because Warrenpoint harbour and Newry, are an all-Ireland hub — one of the most important on the island of Ireland. The Committee needs to get its head around that.

The Chairperson:
And that is not a party-political point. [Laughter.]

Mr W Clarke:
It is very rare that I get a chance to even talk about places outside of Belfast. I am getting to my question — this is a bit like being in the Chamber.

Are you considering purchasing land and acquiring a land bank in the Southern jurisdiction? Would the new commercial powers make it easier to develop the port?

Mr Conway:
Our existing landholding is 44 acres, which is obviously within close proximity to the quays — that is critical. Our next ambition would be to take the next portion of land between us and Narrow Water roundabout, which is about another 30 acres, before we would look towards anything on the Southern shore. There are all sorts of reasons for that; for example, accessibility, costs, and, of course, jurisdictional concerns. We are not looking to buy land on the southern side of the estuary. Apart from anything else, that land is not close to our existing quay area. We do not need to extend our quays —our throughput could be doubled by using the same number of quays, but by increasing the number of ships. Our need is for storage land adjacent to the port.

Mr Stewart:
There are two key issues that all ports face: deep water and land. We have addressed the deep-water issue. However, as regards the land, we have been very restricted. We believe that, over time, Warrenpoint Harbour should have acquired land right up to the roundabout because there is a significant shortage of storage.

As regards the southern relief road, at the moment traffic North or South from the harbour is severely restricted. Another very important reason for the construction of that road will be if Newry goes ahead with its development application, which is one of its major projects. Newry is definitely buoyant at the moment, and it is very important that that is given consideration.

Mr W Clarke:
Could you elaborate on how you will expand the port, particularly the container business?

Mr Conway:
Traditionally, there was a 30-year link between Warrenpoint port and the port of Rotterdam. However, because of the nature of competition between ports, that link was lost some years ago. Links have been re-established in the last couple of years with a link to the port of Zeebrugge. Two vessels travel each week from Zeebrugge to Waterford and then on to Warrenpoint. We are working on developing that business, and we hope to expand that with the existing shipping line.

Mr Moutray:
My first question is along the same lines as the previous one. Warrenpoint Harbour is somewhat constrained in respect of additional land around the port. How confident are you that, in the medium to long term, you can compete with ports across the water, such as Greenore?

Mr Stewart:
I will give the Committee some information on analysis of the key KPIs. One of those concerned efficiency related to land usage, and Warrenpoint came out top in that regard in a UK survey. We are, with support, in the process of acquiring an additional four-and-a-half acres. In the longer term, it is essential that the port continues to acquire land right up to the Narrow Water roundabout. We must be more efficient with the land we have now. A much quicker turnaround is necessary, and we have achieved that. Our efficiency is monitored very closely, and we believe that we will be able to continue developing it.

Mr Conway:
We also have vesting powers through the Department for Regional Development. If we can make a case to the Department that we need the land, that it is adjacent to us, and is commercial — in fact, some of it is fairly ragged and not in proper use — we can seek vesting.

The Chairperson:
The quickest way to restrict port activity is not to give it the land that it needs to expand. It is good that there is adjacent land into which the port can extend its business.

Mr Dallat:
How important will it be for the port to have the powers to vest land in the future? It struck me that other types of development encroach on land around the port. If longer-term decisions are not made, in the short to medium term, there could be problems, as there is serious competition for that land from elsewhere.

I would love to know how you have managed to create cohesion between the leisure attractions of Newry city and the very clear commercial activity of the port. That seems to be a major achievement, and perhaps sometime I will find out how you managed that.

Mr Stewart:
As regards your second point, one of the key things that we have tried to do is recognise the needs of all of our stakeholders. We have forged relationships within the community, which meant that when two public meetings were held on our proposals, although they were by no means easy, the proposals got through with the support of the local people. We have a very good relationship with Newry and Mourne District Council. When the European-funded project to improve and regenerate Warrenpoint town dock in the town centre was introduced, it was very strongly supported by the town of Newry itself. As an organisation, that has brought us much closer to both Newry and Warrenpoint.

Mr Conway:
I want to return to the question about Greenore, because this issue must be nailed down. Greenore port has plans for development, of which we are well aware. However, for Greenore port to get to where we are will take a long time. We are already there; we have the facilities in place, and we are spending the money. A lot of people seem to forget that, although Greenore port has deeper water, the deep-water facilities that we are installing are adequate for the type of vessels that are required to plough the Irish Sea between here and Great Britain, or between here and Europe.

Moreover, Warrenpoint port is much closer to the market than Greenore port. Warrenpoint port is six miles from the A1, the major route, and Greenore port is 14 to 20 miles away. From both an economic and an environmental point of view, it is much cheaper to send goods on a ship into the centre and then distribute by truck, than it is to send them to outside the centre and then make longer journeys by truck.

Therefore, even though Greenore port is developing, we are prepared to keep our heads down and bash away. There is plenty of business in the Republic for the Northern Ireland ports, so we cannot sit back and worry about Greenore port.

Mr Dallat:
The question was: how important is it for Warrenpoint port to have the maximum freedom to stay in the position that it is in?

Mr Conway:
It would allow the port to keep ahead.

Mr Stewart:
However, there is nothing to say that we would not, at some time or another, consider some sort of strategic relationship with Greenore port.

Mr Dallat:
And why not.

Mr Stewart:
That might be in the best interests of the overall region. We have had some discussions of that nature with Greenore port.

The Chairperson:
The important issue is to ensure that, at present, the port is as commercially viable as possible.

Mr Stewart:
As a commercial business, we need that flexibility — otherwise, it is like being in a straitjacket.

The Chairperson:
It is a commercial jungle. If you cannot provide what people want, they will simply drive down to the next port — it is as blunt as that.

Mr Stewart:
Also, our location is a factor because we are located so close to ports in the South of Ireland, which have that freedom, at the moment.

Mr McCallister:
I certainly support that commercial freedom. If we would be better with one project, that should be the southern relief road. Further to John Dallat’s comment about commercial activity and the prospect of the marina, I would like your views on whether the proposed national park will be a benefit or a threat to the port. Do you see it as being good, or bad? Will it restrict any of the port’s commercial activities, or enhance its role in tourism?

Mr Conway:
I know that Mr McCallister has visited the port on a few occasions. The port authority takes a neutral stance on the issue of the national park, although board members may hold private views on the matter. We submitted a consultation response to the Mourne national park working party, when the park was mooted. I am glad to say that the working party observed and took note of that submission. The working party has put in its plans that a national park can be developed and that the port will be part of it. That is not an unusual circumstance. Similar circumstances occur in other parts of the UK. The port’s opportunity to develop will not be restricted by the national park. We are in an area of outstanding natural beauty and an area of special scientific interest, and we work well in those. As a trust port, it is important that we recognise that we have all of those different stakeholders. We are more than happy to operate.

With regard to working on a marina development — leisure activity and commercial — one only has to look at Southampton, one of the largest ports in the UK, which has the largest yachting fraternity in these islands. Importantly, the Harbourmaster’s view — and that of the board and its management group — is that, for all sorts of navigational and safety reasons, it is much better for the harbour authority to be involved in any marina development at Warrenpoint rather than let it develop independently. It works in harmony with the commercial port.

Mr McCallister:
One certainly sees that, and that it gives you the commercial freedom to pursue those types of activities.

Mr Conway:
That would be one of the most dramatic economic benefits to the region, not just to the port.

Mr Stewart:
The way in which we have managed the town dock is a good example of that. During the summer, we have recreational vessels in the town dock. During the rest of the year we have mussel boats in the dock. We feel that that complements the rest of our business.

Mr G Robinson:
During the period of time that you talked about, did the port authority have any planning constraints with regard to the extra land? I believe that Londonderry port had problems in that regard.

Mr Conway:
To support our colleagues in Londonderry port, we agree that there are serious concerns about the slowness in the grant of planning. Because we are a public trust port, if there are works in the harbour that are considered to be permitted development, we are allowed to progress on that basis. However, that still requires environmental impact assessments and so on. Anything that is outside of that, has been snarled up in the planning process. We have a new proposal at present. Although we are working with regard to bringing it to Warrenpoint, that proposal is stuck in the planning process. We cannot even announce it, for commercial reasons.

Mr McCartney:
Four councillors are on the board of Belfast port, and Derry port has three. Are there any on the Warrenpoint board? Are they from Newry and Mourne?

Mr Stewart:
There are three and they have been extremely supportive of the harbour for as long as I have been there.

Mr Irwin:
Am I correct in thinking that ports already have the power to vest land?

Mr Conway:
Yes — they have.

Mr Irwin:
You tell us that the port has a shortage of land. Is there any reason why that you have used that option in the past or was it because of financial restraint?

Mr Stewart:
It was a strategy that we should have adopted in the past. A strategic plan that recognises the need for additional land is going forward. That is why it was included in our investment proposal that was approved under the SGE1 route..

The authority has acquired land from the Aylesford House Hotel, which became available next to the harbour, as well as the Engalv ( Ireland) Ltd site. Therefore, it has already made progress and identified all of the land from the harbour to the roundabout, should the opportunity arise for it to continue to expand. That is one of the harbour authority’s long-term ambitions, which would secure the port for the future.

Mr Irwin:
The authority would need to put a strong case forward for that.

Mr Conway:
Yes. It must demonstrate that all other commercial negotiation strategies have been exhausted. The authority is still involved in the negotiation process. However, the vendors are aware that the authority has vesting powers, which is helpful.

The Chairperson:
I am somewhat confused about that. Can you clarify that ports do not have vesting powers and that they must vest land through the Department?

Mr Conway:
Yes, through the Department.

The Chairperson:
Therefore, the harbour authority does not have the power to vest land.

Mr Stewart:
That is correct. However, the land that the authority has acquired through the SGEI has been crucial to our development. It was important for the authority to reach a long-term agreement and to be able to demonstrate that it was necessary for the strategic development of the port.

The Chairperson:
Thank you very much. It has been an interesting meeting.

Adjourned at 12.01 pm.