COMMITTEE FOR REGIONAL DEVELOPMENT
OFFICIAL REPORT
(Hansard)
Ports Policy Review
5 December 2007
Members present for all or part of the proceedings:
Mr Fred Cobain (Chairperson)
Mr Jim Wells (Deputy Chairperson)
Mr Cathal Boylan
Mr John Dallat
Mr Raymond McCartney
Mr Stephen Moutray
Mr George Robinson
Mr Brian Wilson
Witnesses:
Mr Conor Murphy ) The Minister for Regional Development
Mrs Doreen Brown ) Department for Regional Development
Mr Brian White )
The Chairperson (Mr Cobain):
I welcome the Minister for Regional Development, Mr Conor Murphy, to the meeting.
The Minister for Regional Development (Mr Murphy):
Thank you, Chairman.
The Chairperson:
The Minister will outline to the Committee the Department’s ports policy.
Mr Murphy:
The Committee has been considering the ports policy. I also know that it has met with some of the trust ports’ boards and visited most of the trust ports. I am sure that, in discussions with board members, the Committee has gained a strong sense of the key economic roles that the three largest trust ports — Belfast for the entire region, and Warrenpoint and Derry for their regions — play.
The Committee will be aware that one of the first Committees to be set up during the Assembly’s first mandate was an Ad Hoc Committee to examine the role of, and options for, Port of Belfast. That Committee first met in February 1999. Therefore, the debate has been ongoing.
The ports are thriving. It is generally understood that the ports’ management have been doing a fairly good job. Coleraine harbour has different issues, of course. However, business has been going well, and the ports’ authorities are keen to get more freedom in order to develop the ports.
The briefing paper with which we provided the Committee attempts to strike a balance between obtaining greater freedom for the ports, which will allow them to continue to thrive and contribute to the economy, and retaining public interest in them. Discussions in the first mandate revealed a sensitivity to retention of public interest in the ports because they were such key economic drivers. We have drawn the Committee’s attention to the report that the Department for Transport conducted into trust port status and other issues.
The first issue is that of the ports’ public-corporation status, which reduces their freedom to act, because the Department must cover any borrowing in which the ports are involved. As the Committee will know from last week’s debate on the draft Budget, covering those costs presents difficulties for the Department and restricts trust ports’ freedom to act quickly on commercial ventures, because they must receive departmental approval in order to do so.
The ports made a very strong case to the Department for Regional Development (DRD), as I am sure that they did to the Committee, for removing themselves from public-corporation status. That would require the introduction of legislation, so if we were to go down that road, the Committee would find itself scrutinising any proposed change to the ports’ status. A number of controls would be removed, such as the power of compulsory privatisation. The Government, local government or the public sector would appoint a minority of board members, and the Department’s power to issue directions would be removed. DRD’s power to control borrowings by means of a prescribed overall ceiling would also probably be removed. Those are some of the restrictions that would be lifted were we to go down the route of removing ports from public-corporation status. However, the Department would retain some important controls.
The Office for National Statistics (ONS) decides whether a body has public-corporation status, so if we decide that the trust ports’ status is to change, and there appears to be consensus among Committee members on that, we must ensure that we do it properly. There is no point in proceeding with the exercise if, at its conclusion, the ONS tells us that the ports remain a public corporation. We must ensure that what we propose to do produces the intended outcome.
As I have said, the Department would retain a number of controls. The ports would be required to provide accounts, and information or forecasts, to the Department. Powers would remain that would prevent privatisation, unless the Department agreed to it, and the disposal, or change of use, of land. Nor could the ports levy unduly heavy harbour charges. Departmental powers would enable ports to acquire land through vesting, and to make loans and grants for harbour works. The Department could also exert influence over the governance of the ports through appointment of some of the members, including the boards’ chairmen.
The Department would welcome the Committee’s views on how to achieve the balance between taking the ports out of public-corporation status and the Department’s retaining some degree of control. I have raised this matter with the port authorities, which are keen to have the greater freedom that removal from public-corporation status would give them.
There is obviously a great deal of interest in the political and public aspects of the ports policy review, because ports are such key economic drivers across the region. The review will raise questions about the degree of influence that the Department will exercise over transparency. The PricewaterhouseCoopers report, which the Department for Transport commissioned, floated the notion of transparency, and we are keen to look at how there might be greater transparency when it comes to how the trust ports conduct their business.
The trust ports have been arguing for additional commercial powers and freedoms, some of which are already available to harbour authorities in Britain and in the South. Some of the additional commercial powers that the ports seek are quite specific, but they have also asked to have more general commercial powers. I am minded to grant additional commercial powers to the ports to ensure that they continue to thrive and to do the business that they are doing very well. However, in drafting any legislation, we must ensure that we retain some degree of control, particularly over what business that port authorities are permitted to undertake outside of their own ports. Would that business benefit the port and the region’s general economic prospects, or would it be conducted completely off-site? When we draft the legislation, we must have a clearer perspective of the commercial freedoms that the Department will offer and of how it can retain some degree of control over the trust ports.
In short, it is a balancing act between granting ports greater freedoms to operate that will allow them to continue to thrive and operate commercially and retaining a degree of public interest in the ports. The Department must ensure that the public interest is served and that it does not lose control of such an important economic asset. I am happy to listen to Committee members’ views and to answer questions.
The Chairperson:
We have discussed the issue on several occasions, and the Committee is beginning to come together on a number of ideas. As far as public-corporation status is concerned, the Committee’s view is that the trust ports must be granted additional commercial powers. As you said, Minister, it is a matter of incorporating sufficient checks and balances to ensure that the public interest is protected. The ports operate in a commercial market.
One way in which to ensure transparency and accountability is to have elected members on the boards. The restoration of the Assembly means that additional safeguards are in place — at any time, this Committee can call as witnesses the people who are involved, including you, Minister.
Members will get the opportunity to speak for themselves, Minister, but another issue is that of land. In the Republic, the main barrier to ports becoming more efficient is that some, including Dublin Port, are unable to expand, whereas Derry/Londonderry, Warrenpoint and Belfast all have some strategic land on which to expand. The Committee wants to see that land being developed as part of the overall ports strategy.
However, we are not keen for the Department of Finance and Personnel (DFP) to take the land and sell it for other purposes, because ports are highly commercial businesses. A great opportunity exists for the ports on this part of the island to grow commercially and become more competitive.
Mr Murphy:
I agree with the Committee’s view, which mirrors mine, that the ports need greater freedom. They have been doing a very good job and contributing significantly to the economy here, and we want them to continue to be able to do so. The restrictions that are placed on them by their having public-corporation status hamper their ability to grow, as well as place a burden on the Department. It would help the Department’s overall budget were we to be freed from that financial load
The land issue differs from port to port. Derry and Warrenpoint would eventually seek to acquire land for expansion, whereas Belfast already has land banked. The other day, the Department met with the capital realisation task force, and that issue was not on its agenda. When the usage of Port of Belfast’s land was considered in Committee in 1999, it was a sensitive issue. However, Port of Belfast can now make a compelling case for using the land that has been banked in order to generate income that will subsequently be invested in the port.
DFP has not raised the issue, because the capital realisation task force has not raised it. It does not feature in the early stages of the task force’s assessment of which assets can be realised. However, the task force may, as the Treasury tried to do on several occasions, revisit the issue further down the line. However, there is a compelling case to resist any attempt to realise those assets, because the land can make a valuable contribution to the overall commercial development of the ports.
The Chairperson:
It is an issue that we wanted to raise.
Mr Wells:
There has been remarkable unanimity among the various consultees. Everybody, including the ports themselves, the Institute of Directors, the Confederation of British Industry, and the SDLP even —
Mr Dallat:
Are you sure? You have not heard me yet.
The Chairperson:
Remember what has been happening downstairs.
Mr Wells:
Yes; I am not meant to be party political in Committee. This is one of those rare occasions on which people coalesce around a common theme. Does the Department perceive any downside to what is being called for by such a wide and disparate group of bodies?
Mr Murphy:
I agree that there is a fair degree of unanimity. However, we must get down to the detail. There are two things that must be done properly. First, there is no point in our making changes if the ONS says that those changes are insufficient and that it still considers the ports to have public-corporation status. Any changes that we make might not do the ports any favours, or might not remove departmental involvement.
Secondly, if the trust ports took off in inappropriate directions, were a threat to the region or were not contributing properly to its economic development, and we were found not to have sufficient controls with which to influence any of those scenarios, we would rightly be criticised. The only downsides might be that we would not do enough to release the ports from public-corporation status, or that we would not retain sufficient control to ensure that the Committee and the Department could protect the public interest in the development of the ports. Any proposals that we want to make must be tested by the ONS, and the Committee will have a key role to play in ensuring that any ensuing legislation achieves the right balance.
Recently, I have seen some articles written by economics correspondents in certain newspapers that have suggested that, although they are an important asset, the trust ports are kept away from public scrutiny. There is a degree of public interest in what the ports are doing. If we lost control of the activities of the ports in future, we would be criticised for that. It is less about whether there is a negative side to the proposed changes than it is about ensuring that we take the time to get things right.
Mr Wells:
Is there a benefit to DRD if the ports are given the freedom to acquire loans at commercial rates through the normal channels? Does that free up money in the Department to bid for loans for other purposes? Is there any public gain to be made?
Mr Murphy:
It should free up money. However, very little provision was made in the draft Budget to cover any loans. If the Department were to receive the allocation that it has asked for, money could be freed up. However, the fact is that there is very little in the draft Budget allocation to cover bids for loans, so not much money will be released.
Mr Wells:
Has DFP, knowing that it would be freeing up money for DRD to bid for loans for other purposes, pre-empted your Department’s intentions? Is that its budgetary process?
The Chairperson:
You might say that; I could not possibly comment.
Mr Wells:
DFP believed that that would happen, so —
Mr Murphy:
DFP did not discuss the matter with us in those terms. It did not say that we did not need money for the ports because we were going to do something with them ourselves
Mrs Doreen Brown (Department for Regional Development):
That is quite correct. Not all our bids could be met, and looking down the order of priority, DFP took the view that money for the ports was not as high a priority as other areas in which we wanted to invest were. Perhaps it is the case that DFP is anticipating a decision, but it did not express that to us. If the decision to remove the trust ports’ public-corporation status does not materialise, we will be in difficulties, because the current draft Budget allocation does not provide enough to cover the borrowings that the ports will require over the next three years.
Mr Wells:
We have visited all the ports, except Larne, which is privately owned. All have plans, apart perhaps from Coleraine, which has some difficult issues.
Mr Dallat:
I wish that you would not mention that.
Mr Wells:
The trust ports all have ambitious plans to expand. They see that Dublin Port is developing a bottleneck, because it is having difficulty dealing with demand, and they want to divert as much trade north as possible. We would all agree with that. Are you saying that, if something stops the process to remove the ports from public-corporation status, we could have real problems in this financial year in meeting the loan requirement?
Mr Murphy:
Yes.
Mr Wells:
That is a serious situation.
The Chairperson:
It was a good guess, was it not?
Mr Murphy:
The first question to ask is whether money for the Department will be freed up. Unfortunately, that will not happen, because we did not get any money to cover loans.
Mr Wells:
That is interesting.
The Chairperson:
It was a good guess by DFP.
Mr Murphy:
The Minister of Finance and Personnel obviously has his ear to the ground in East Belfast.
The Chairperson:
A package will be put in place and transmitted to the ONS, which will consider it and decide that the Department has done enough, and the trust ports’ public-corporation status will be removed. Will that be done before legislation is introduced?
Mr Murphy:
Brian White will brief the Committee on that. The Department will want to test some of the ideas before it puts them to the ONS so that we are not found to be wasting our time or going down the wrong route.
Mr Brian White (Department for Regional Development):
I understand that the Department will not engage directly with the ONS; that would normally be done through DFP and the Treasury. However, we will take the opportunity to engage as early as possible to try to ensure that what we are doing is fit for purpose.
The Chairperson:
Will that be done through DFP?
Mr White:
Yes.
The Chairperson:
What is the time frame for that engagement?
Mr White:
We do not have a time frame. It depends, at least in part, on the outcome of the discussion that the Department is having.
The Chairperson:
I am thinking about the Department’s budget considerations if the removal of the trust ports’ public-corporation status does not happen.
Mr Murphy:
The Department intends to bring a paper to the Executive early in the new year. Those discussions can continue in order to ensure that, as the paper is developed, it meets the requirements. Unfortunately, it must go travel a circuitous route from DFP to the Treasury to the ONS, but that is the way in which business is done.
Mr Dallat:
Jim continues to bring up the problem with Coleraine harbour, so there is no point in trying to keep it a secret any more.
I was impressed by the three largest ports. I am conscious that we are in times of expansion and development, and that everything is going great and that the people involved have a good vision. However, it is important that any legislation provide for times when things might go Coleraine-shaped. I am particularly interested in the relationship that the ports have with the outside world. In different ways, the three large ports seem to have achieved the right relationship. The exception to that, and perhaps it is a model to avoid, is Coleraine harbour, where a particular viewpoint was taken by a majority who have no conception of what the relationship with the rest of the town should be. That relationship has been effectively destroyed for the next 15 years, because a long lease was signed. Although, Coleraine harbour is small, it must be reflected on when legislation is provided for the other trust ports. Other than that, I am delighted to see that the ports are doing extremely well, and that the people in control have such vision. My local experience of Coleraine makes me fearful of what might happen were the checks and balances not in place should a different situation arise in future.
Mr Murphy:
I understand what you are saying. I have had discussions with the ports, and, in more recent times, they have understood their responsibility to interact with the community. Representatives from Port of Belfast told me that they had been living in an ivory tower for too long and that they had to start interacting and engaging. Warrenpoint Harbour Authority and the harbour in Derry have realised that.
Coleraine harbour is a different issue because, to be blunt, it does not have the same economic importance as the other three harbours. Under the review of public administration (RPA), the Department decided that the local council would have responsibility for Donaghadee harbour. That is also an option for Coleraine harbour, because it is not really in the same category as the other three trust ports. It does not have plans to become the same type of commercial port, and there are competing ideas about its future — whether it should become a leisure facility or a business that happens to operate alongside a river. I am interested to hear the Committee’s views, as one of the options that was not considered under RPA was that the council might have more of a role to play than the Department in interacting with Coleraine Harbour Commissioners.
Mr Dallat:
In order that you can store this in your memory, Minister, the local council and Coleraine Harbour Commissioners had a rather interesting relationship, with the commissioners wearing two hats for much of the time. They were saying one thing at council meetings only to do something different. Therefore, even that what you suggest is not a solution in itself. I was most impressed that the other ports had long-term plans — Port of Belfast has plans for perhaps 100 years ahead.
At some stage in the future, although it would be a relatively small project, the reopening of the Ulster Canal would mean that the River Bann navigation would become critical to the Coleraine and Foyle areas, and to attracting international tourism.
I am glad that the Minister appears to be well briefed on the project, and I want to acknowledge the past work of DRD and the Department for Social Development on developing the master plan, which was then scuttled. I feel sorry for the officials from both Departments who worked so hard, only to find that, in the end, nothing came from it and that we had been left with a scrapyard.
The Chairperson:
The Committee is keen on the proposed non-port activities, which we believe offer enormous potential, especially for Warrenpoint and Belfast. Representatives from those ports gave evidence, in which, as John has said, they laid out their visions of how they might do more.
On the subject of tourism, the Warrenpoint harbour representatives spoke about developing a new marina, and those from Port of Belfast talked about engaging with communities in their area. We are keen for the trust ports to seize the tremendous opportunities that exist to become economic drivers, and the Minister was right to say that we must not suffocate them with bureaucracy.
Mr Murphy:
The trick with non-port activities is to ensure that they contribute to the port. If ports begin to drift off in a different commercial direction —
The Chairperson:
On 21 November, Brian Wilson mentioned their branching out into selling insurance; however, I do not think that —
Mr G Robinson:
The Warrenpoint representatives suggested that the road infrastructure, especially around Newry, was hampering their business. That same point applies to Londonderry.
Mr Murphy:
I am reasonably aware of the problem in Warrenpoint — I visited the port before I became a Minister, and I have visited it since.
Mr Wells:
All we are looking for is a commitment to build the southern relief road — by midday today.
Mr Murphy:
On Monday, in the Chamber, during oral answers to questions, Committee members may have heard my Department’s ideas about the Narrow Water bridge project and the southern relief road.
I am conscious of the fact that traffic near Warrenpoint harbour will expand. The new ro-ro facility will increase the number of heavy-goods vehicles that uses the port, and 98% of the port’s traffic goes through Newry rather than in the direction of south Down. Those factors obviously create problems, and we are carrying out a study into that traffic congestion in order to find a solution. The Irish Government are also considering issues that relate to the Narrow Water bridge project. However, on its own, a bridge will not solve the port’s traffic problems. Therefore, we will consider both strands of the potential solution.
People have advanced ideas about the traffic infrastructure around the ports. Obviously, we will consider all ideas. The ports are key economic drivers, and the purpose of infrastructure is to support economic development. Therefore, within DRD’s budget and other available finances, it is important that we do what we can to assist the ports. For example, the work on the Westlink, which is a major project, is about assisting Port of Belfast, and it will have a positive impact on traffic access to the port. Therefore, we are conscious about road infrastructure, and we are considering how it affects Warrenpoint and Derry harbours.
Mr McCartney:
In January, a process with the ONS will begin. When will that be wrapped up, and when we will be able to introduce legislation?
Mr Murphy:
Work must be done in conjunction with the ONS to ensure that what we are doing is correct. In January, we will submit our proposition to the Executive in order to get a slot for introducing legislation. Around September —
Mr White:
Given the hoops that must be jumped through, including the various consultations that must be undergone with the Committee, among others, it is difficult to envisage our being able to introduce primary legislation much before this time next year. Enough time should be made available to deal with issues with the ONS in parallel with those that relate to the legislative process.
Mr Wells:
That is quite serious. Mrs Brown has said that there is little money in the Department’s budget. Therefore, if any of the three major trust ports wants to proceed with a major investment programme in the next 12 months, that programme will have to be put it on hold for at least one year. Even if the ONS consents to our introducing the relevant legislation, are you saying that it will take at least 12 months for that to happen?
Mr Murphy:
It could take up to one year to progress a Bill through all its legislative stages. We have been talking to ports’ officials about our plans, so they know the timetable to which we are working, and they know that it can be changed before the end of the financial year.
We want to introduce legislation, but we need to get it right for the ONS, and so that the Department can ensure that it retains the appropriate controls. All being well, draft legislation could be introduced in the autumn, but it could be the winter of 2008-09 before it was completed. However, it is to be hoped that it would become law this time next year.
Mr Wells:
Effectively, there will be a freeze on investment in ports in 2008.
Mrs Brown:
That will not be a problem for the ports. Warrenpoint harbour is in a somewhat different position, because it already receives funding. However, the timescale will not delay any plans that the other ports would have wanted to introduce sooner.
Mr Murphy:
The ports officials are aware of the time frame to we are working, and they have not raised any concerns with us. None of them has said that they must make certain investments in the summer of next year. The ports are optimistic about what is shaping up, and they are comfortable with our envisaged time frame. Therefore, I do not foresee any major difficulties.
The Chairperson:
Are we talking about the Department’s budget for 2008-09?
Mr Wells:
As far as I can see, there is no allocation for 2008-09.
Mrs Brown:
No, but we do not envisage that that will cause any problems.
The Chairperson:
Provided that the legislation goes through.
Mr Murphy:
Yes; that is correct.
The Chairperson:
I thank the Minister and his officials for attending.