Examination of Witnesses (Questions 20
WEDNESDAY 14 FEBRUARY 2001
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
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,
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
(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
(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
25. How does the Government intend to ensure
(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
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
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
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.
33. What you are really saying is that after
four years' activity nothing has happened and nothing is likely
(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
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
(Mr Wadsworth) In 1999 Liverpool handled 29 million
tonnes, which was almost equal to its 31.7 million tonnes handled
(Mr Reeves) They went down to 10 million.
39. In terms of UK trade they would not be doing
(Mr Wadsworth) They were second in 1965 and ninth