Select Committee on Environment, Transport and Regional Affairs Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



  20. Most of the trade moving in and out of the ports is international. In these circumstances your competition is not within the UK, it is within Europe.
  (Mr Wadsworth) Yes.

  Mr Donohoe: In these circumstances you are not going to be able to compete very well unless there is a coordinated plan.


  21. You are talking about Europe as a region, are you? When you talk about regional cooperation, you are not talking about The Region of the United Kingdom, you are talking about The Region of Northern Europe, etcetera.
  (Mr Wadsworth) The effective geographical extent of competition varies very considerably from one part of the ports industry to another. It varies in character. In the container distribution market, there is certainly competition between some of our east coast facilities and the ports of Rotterdam and Antwerp, for example.

  22. Forgive me. The Government aims to promote UK and regional competitiveness in the ports industry. That is the phrase. Is this meant to deal with over capacity? Is it meant to deal with decisions on infrastructure? Is it meant to define regions within the United Kingdom? Perhaps we could have a go at those three for a start?
  (Mr Reeves) May I just make an observation? It is a long-standing principle that customers choose where to send their traffic, not the other way round.

  23. I do not think that entirely surprises the Committee.
  (Mr Reeves) The core thing is that we want to try to ensure that ports are able to compete on level terms as far as possible, both domestically and internationally, that they offer long-term value to their customers and value-added where there is potential for that as well, to ensure that our ports can handle UK trade and the potential development of that trade both sustainably and efficiently.

  24. In other words you expect ports to behave like ports.
  (Mr Reeves) Broadly yes. We also look to the other strategic players who have a responsibility for the road network, for the railway network to play their part in taking account of the development of ports and the trade to and from them in formulating their plans.

  25. How does the Government intend to ensure that?
  (Mr Reeves) That is one of the reasons why the SRA announced very recently plans to upgrade the freight links from Felixstowe to the West Coast Main Line, schemes costing £450 million. Southampton docks to the West Midlands via Reading and Banbury. They are also looking at other schemes with a group including Railtrack and the industry. They are looking for things like improved links to Immingham and Hull. We would look to a strategic player like the SRA to develop that coordination on the railway side obviously.

Mr Bennett

  26. You talk about competition between the east coast ports and some of the ports in the low countries. Is there really fair competition between those ports?
  (Mr Wadsworth) We have distinct reservations about that at the present time.

  27. Can you expand on that?
  (Mr Wadsworth) Yes. Many continental ports are in public ownership and there has been a long-standing practice in a number of continental countries to regard the port itself as an infrastructure platform analogous to the provision of public highways, that it is a public asset available to society at large and to world markets and that the cost of the asset should be partly defrayed from public funds. So there is quite a substantial element of subsidisation of some continental ports. It is quite difficult very often to ascertain how substantial because in fact there is not a lot of published information available on that matter.

  28. Do you mean to say that with all the resources you have at your disposal you cannot actually find out the difference?
  (Mr Wadsworth) At lunchtime today the Commission actually issued a communication on ports policy. It is called A Package of Measures Aiming to Improve Quality Service in Ports. It is largely about the Access to Services Directive, but it does, I believe, include some details of a study which they carried out two years ago into port charging in different EU Member States. There may be some useful information in that but we have only just received it.

  29. Basically things like light dues, the costs of actually taking a ship in are, in your view, considerably dearer in the UK than in Europe.
  (Mr Wadsworth) The costs in the UK are defrayed by the user, whereas in Europe they are often largely defrayed by the taxpayer.

  30. For the user it is much more expensive.
  (Mr Wadsworth) That particular aspect, yes.

  31. What representations have you made to the Commission that it is hardly fair competition?
  (Mr Reeves) Just a little bit of history. In December 1997 the Commission published a Green Paper on seaports and maritime infrastructure which set out various suggestions on charging and funding and indeed it also had a chapter on port services. The Government welcomed that Green Paper at the end of 1997 because it set out objectives for increasing port efficiency, improving port infrastructure on the basis of free and fair competition and pointed the way forward, acknowledged that there was greater private sector involvement and commercialisation of ports across Europe, not just in the UK, pointed the way forward to more of a user-pays-cost-recovery approach. We welcomed that under the UK presidency in the first half of 1998. We ensured that there was some discussion of this at the Transport Council in June in Luxembourg. As a result of that the Commission was tasked to take forward work flowing from that Green Paper and that was one of the things they did, although I regret to say one of the few things they did in the year or two following that was to undertake this inventory of port charging and so on, which they published today as part of their ports package. There have been a number of changes in the Commission, both at Commissioner level and amongst officials in what is now DG TREN. Some time last year there was a hiatus and subsequently there seems to have been a change of direction. Now there is a package which certainly on an initial glance looks as though it does not take us much further forward on state aids, charging funding, in other words competition between ports, but it does have this draft Directive for competition within ports.


  32. Have they actually published the Directive today or is it just a press notice?
  (Mr Reeves) It is a draft Directive, a communication including a draft Directive and a report on the inventory work.

Mr Bennett

  33. What you are really saying is that after four years' activity nothing has happened and nothing is likely to happen.
  (Mr Reeves) The fact that they have now produced a communication is renewed evidence that they now actually want to do something.

  34. You have just told us that there is not much in there.
  (Mr Reeves) What I am saying is that it does not seem quite what they had in mind when they published the Green Paper. The short of it is that we have been keeping in touch with the Commission. I probably talk to them once a month as they developed this package, but of course we did not know exactly what was going to be in it until it appeared today. We have to study that in detail.

  35. You think you are disappointed with it.
  (Mr Reeves) An initial reaction is some disappointment that it does not seem to take us much further forward on the state aid, charging side because basically it is a restatement as far as I can see of their interpretation of the position on state aid. All I am saying is that there will be a lot of issues for us to discuss now, with the Commission, with the industry, with other Member States. We should be submitting an explanatory memorandum to Parliament within the next several weeks. We plan to conduct a very wide-ranging consultation exercise on the whole communication with the ports industry, with port users, with shipping lines, with trade unions, etcetera. That will take us over the next three or four months.

  36. Take us through the election without having to make a decision.
  (Mr Reeves) We have to consult people and take a view. I could not take a view on when the election will be.

  37. What you are really telling us is that as far as British ports are concerned they consistently lose out to European ports. What about ports within the UK? How many of the Regional Development Agencies (RDA) have actually come up with suggestions that any region is disadvantaged either because of poor access to ports or poor facilities at ports?
  (Mr Reeves) As I understand it, a number of regional studies with RDA involvement have started. We are in touch with some of them; I believe some of them are more advanced than others, the one for example for the North East. Following publication of Modern Ports one of the items on our agenda is to have a series of regional seminars with port users, port operators, RDAs, Government Office, a variety of interests to which we can go and explain where we are coming from and hear where they are coming from. The first of these will be in the North West and the North East in March. We are making a start. We do not pretend Modern Ports has all the answers but we have tried to set out a framework in which we can take the policies forward and find more information.

  38. Specifically then on development in the North West, Liverpool's position as one of the major ports has been in pretty steady decline. What steps are the Government looking at to revive Liverpool as a port and perhaps as a gateway to Europe? Is it almost impossible because of the much cheaper charges in Europe than Liverpool could impose, or is it impossible because of lack of rail links to Europe from Liverpool?
  (Mr Reeves) If I may say so, I am not sure I would necessarily accept your analysis of recent fortunes of Liverpool. I cannot immediately lay my hands on any time series data but certainly they handled nearly 30 million tonnes of traffic last year. Of course there have been huge changes since the 1970s and the demise of the then company and the restructuring which took place, huge changes. However, the Irish Sea trades are a booming market.
  (Mr Wadsworth) In 1999 Liverpool handled 29 million tonnes, which was almost equal to its 31.7 million tonnes handled in 1965.
  (Mr Reeves) They went down to 10 million.

  39. In terms of UK trade they would not be doing that well.
  (Mr Wadsworth) They were second in 1965 and ninth now.

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