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

Memorandum by The Bristol Port Company (P 22)



  The Bristol Port Company is a major UK port. It is one of the county's foremost car importers, the biggest dry bulk handler in the South of England (with 30 per cent of the total UK capacity for handling animal feedstuffs) and it is also the South West UK regional distribution centre for refined petroleum products. Since The Bristol Port Company was privatised in 1991, throughput has increased from 3.4m tonnes to 9.6m tonnes in 2000. With £300m of investment the port has attracted significant new business and has created new business opportunities for existing customers. A total of nearly 3,000 jobs exist within the revitalised port areas.

  The Bristol Port Company is a member of the United Kingdom Major Ports Group (UKMPG) and endorses fully their submission to this inquiry. In addition, we welcome the opportunity to provide directly our own evidence, which relates specifically to the problems currently facing UK ports with respect to European regulations (the Habitats Directive and the proposed Access to Ports Services Directive) and their potential damage to the competitive position of UK ports in comparison to their European counterparts.


  It is now over five years since the UK conservation bodies selected their first lists of recommended Special Areas of Conservation (SAC) as part of UK Government's implementation of the EC Habitats Directive. Considerable areas of coastal waters and estuaries around the UK coast have now been selected for designation and protection in a series of marine SAC sites. In the UK, operational areas within or adjacent to a number of ports are proposed for designation. In a few estuaries, including the Severn and Humber Estuary, the proposed SAC designation covers the entire estuary site, including the main navigation channels of the major ports within them, Bristol, Grimsby and Immingham and Hull.

  The Habitats Directive introduces more stringent management and control of both operations/activities and projects/plans in SACs in order to protect habitats and species in these sites. The UK port industry, including the Bristol Port Company, supports the environmental principals of the maintenance of biodiversity and promotion of sustainability, and fully recognises its responsibility to safeguard the environment. However, in order to achieve the Government's commitment to the concept of sustainable development a balance must inevitably be struck between the needs of economic development and conservation requirements. We believe that it is clear that the implementation of the Habitats Directive in the UK has shifted this balance too far in the favour of conservation. As a consequence of this considerable doubt must exist as to the future growth of any major ports located within or near designated sites.

  Because of this major concern, the Bristol Port Company has over the past five years expended considerable effort and resources in addressing major problems relating to the implementation of the Habitats Directive.

  One of these major problems is the perception by considerable parts of the UK port industry that there is a flawed and unaccountable process for the selection of SACs in the UK. This is illustrated by the absence of any adequate scientific justification for the proposed designation of the Severn Estuary as a SAC, in particular with regard to the subtidal habitats. Our scientific advice is that the Severn Estuary is intrinsically non-conservable on the grounds of its highly dynamic and impoverished nature. Substantial areas of the subtidal zone of the Severn Estuary are in fact barren and may not meet the criterion of being habitat at all, including the sand substrates of the navigation channels and deep water approaches. In general, the habitats and species in the estuary are not unusual or special, but are simply stressed examples of communities found in better condition, abundance and diversity elsewhere. English Nature seeks to conserve the site because it is so bad. When considering the limited resources available to conserve the UK's important marine environment, it is folly that a large proportion will be spent in attempting to conserve an ecologically poor and essentially unconservable site.

  Two further problems of great concern to the Bristol Port Company and, we believe, the UK port industry in general, are discussed in turn below, namely:

    (1)  The socio-economic consequences of the designation of SAC's.

    (2)  The lack of a level playing field in Europe for port operators due to differences in the application of the EC Habitats Directive between the UK and other Member States.

The Socio-Economic Consequences of the Designation of SAC's

  The Habitats Directive introduces major barriers to development in SAC's in the form of additional and more stringent requirements for environmental assessment. Consequently the likelihood of gaining approval for any new developments in the vicinity of proposed SACs is reduced substantially. Irrespective of the scale of a proposed project, the new assessment process results in considerable delays in the timescales normally required to obtain consents and approvals, and introduces major uncertainty over a port's ability to deliver a project to potential users.

  Any such customer faced, not only with very large mitigation, compensation and monitoring costs, but also with no guarantee that project approval will be obtained within a reasonable period of time, will therefore be likely to look elsewhere. Hence there is a sharp increase in the likelihood of relative decline in the ability of these UK ports to sustain and attract new markets. We believe that trade and investment will be lost to other UK or to Continental ports not so affected.

  However, if the proposed designation covers a port's main navigation channel, the severity of the problem is increased. This is because an affected port's ability to deepen its approaches and main navigation channels to match the demand of international trading markets for increasingly larger vessels will be restricted severely. Large scale deepening of port approaches to accept large vessels is occurring throughout Europe and the world. UK Ports must be able to respond to similar demands in order to physically accept these larger vessels in the future in order to maintain their competitive position.

  In summary, if the potential consequences of SAC designation outlined above are not properly acknowledged UK ports affected risk losing development opportunities and long-term trade to other European countries, with clear adverse affects on the UK port industry and consequently regional and national economies.

  We therefore seek support from the Government to promote a more balanced approach to sustainable development in all areas of special economic importance.

Lack of a level playing field in Europe for port operators due to differences in the application of the EC Habitats Directive

  The less stringent application of this Directive by other Member States is a major and overriding concern. The Bristol Port Company has undertaken an investigation of SAC designation elsewhere in Europe, collecting information on SAC selection in the vicinity of competitor ports. This has been done in consultation with, and in some cases visits to, EU Government Departments, Nature Conservation Agencies and Port Authorities. The results of this investigation are presented in the enclosed report using a series of maps and correspondence. This evidence shows clearly that other Member States are apply the Habitats Directive differently to estuaries containing their major ports than in the UK.

  The following is a synopsis of the evidence in the enclose report, the key finding of which include the following:

    —  No major European ports have been found in the Atlantic-biogeographic region outside the UK whose port operational areas or port approach channels have been proposed for designation under the Habitats Directive.

    —  Other Member States, including Denmark, Germany, Netherlands, Belgium, France and Ireland, are only partially designating their estuary sites as SAC's and are excluding the navigation channels leading to their major ports. (this is in sharp contrast to the approach taken in the UK where there is a blanket designation of the entire estuary system includes the navigation channels of any major ports within them).

  These marked discrepancies in approach to the implementation of the Directive between the UK and other Member States potentially leaves all UK ports so affected at a serious competitive disadvantage, in particular the Severn and Humber Estuary ports whose navigation channels are included in the possible SAC's.

  As outlined in the previous section, the overwhelming reason for this major competitive disadvantage is the perception by any would be developer that proposed port developments in an SAC will inevitably require an additional environmental assessment process that will span a considerable number of years, with no ability to judge the likelihood of a successful outcome. In such circumstances of delay and uncertainty he would, at an early stage, seek alternative locations not encumbered by SAC designation or where a balance between economic and conservation requirements had been found in the pre-designation process. Our evidence demonstrates that the latter situation only occurs in port areas and navigational approaches in continental Europe.

  Little or no justification was obtained from other Member States documenting the reasons why navigation channels and other operational areas have not been designated as protected areas. There is some evidence of certain Member States taking account of economic, social and cultural considerations in the site selection process and such details are submitted as an appendix to the enclosed report. Following the recent ECJ ruling, we now know that to do so would be an improper interpretation of the Directive.

  Other Member States may have not designated parts of estuary sites, namely navigation channels, on scientific grounds. However, it seems highly improbable that out of all the European estuaries continuing major ports only two UK estuaries with major ports should qualify for total designation for estuary habitat on the grounds of their ecological merit. In the minds of most people (port customers, would be developers and the general public) SAC designation carries the implication of very high ecological worth. Therefore it could be perceived that in the UK those navigation channels in designated areas are ecologically important and in continental Europe they are not (because none are designated).

  Perversely, it is generally acknowledged that regularly maintained shipping channels are ecologically degraded and cannot therefore be important for the diversity and abundance of wildlife. Thus, if other Member States have justified the exclusion of the deep channels on scientific grounds an equally powerful case exists in the Severn and Humber Estuary for similar exclusions.

  In those Member States where the economic importance of ports is institutionalised in the federal and regional government fabric the exclusion of port channels will be seen as a clear demonstration of the fundamental importance of ports. Hence, whether port areas and channels are excluded on the basis of scientific and/or economic considerations is irrelevant, the perception will exist that such ports are more open for development as opposed to a port whose approach channel is designated.

  Furthermore, if a Member State has acknowledged the importance of the port industry at the site selection stage, they are likely to take a similar line when determining development applications—for example by taking a more balanced and supportive line when assessing applications stating reasons of over-riding public interest. A port which can give assurances that their government understands and is sympathetic to the position of the port industry is more attractive to the developer than a port which can give no such assurances.

  In summary, it is clear that either the UK is gold-plating the requirements of the Habitats Directive or that other European countries are not applying the Directive correctly. The net effect of this obvious disparity of approach between the UK and other Member States is the lack of a level playing field for port operators and the consequential loss of the competitive position of the affected UK ports compared with their European counterparts.

  We therefore seek support from the Government to ensure parity of treatment for UK port operators with our competitor ports in the near Continent.

Proposed EC Directive on Access to Port Services

  The Commission proposes to publish a draft Directive on access to port services in the near future. The proposed Directive would make it a requirement that there should be (artificially) enforced competition in the provision of commercial port services in order to reduce the costs to users. These services inter alia pilotage, towage, mooring and cargo handling. The latter is of the greatest significance in that it is the most capital intensive of the services.

  The draft of the Directive requires that where the number of service providers in a port is limited for any reason (eg size, geography) and the port is already the service provider then it must submit itself to an authorisation procedure conducted by an independent competent authority. Under transitional rules this procedure distinguishes between situations where a service provider (ie the port) has made significant investment into moveable or immovable assets. This is an important distinction as it is often the case that larger investments are also immovable (such as the £300m investment at Bristol). Moreover, the draft Directive rules that where the (present) authorisation was not granted in accordance with this Directive (hardly possible) and in the case where there is only a sole service provider a new authorisation procedure must be carried out within five years.

  Stated simply the above means those privatised ports which provide an integrated service including cargo handling (there are many in the UK) will, after five years, have to submit to a tendering procedure which could require them to handover their assets to a third party. In these circumstances the latter would bear no commercial risk as that will have been borne earlier by the present provider ie the port. This is an extraordinary and extremely unfair position for the many ports which have led the privatisation and investment process in the UK during the past decade.

  We believe, therefore, that such a Directive is inappropriate for the UK port industry and will be extremely damaging. Further reasons for this include the following:

    (a)  Extant UK legislation already permits written objections to be made against the level of dues charged to port users (Harbours Act, 1964).

    (b)  The European Treaty already contains provisions designed to deal with anti-competitive practices, abuse of dominant position or illegal state aids. To the extent that there is a problem in some European ports the remedies to deal with this already exist. The proposed directive is therefore unnecessary.

    (c)  The UK, because of its long coastline, has more ports than any other European country. There is thus ample competition between UK ports which ensures that the monopoly profits which the Commission are concerned about do not arise in this country.

    (d)  UK ports receive no significant financial support from central or local Government. The Commission's concern with public subsidies does not therefore arise here.

    (e)  UK ports are much smaller than the major continental ports. These latter ports are typically organised on the "landlord" basis whereby the state/federal government provides the infrastructure (dredging, breakwaters etc) but cargo handling is provided by independent private operators who enjoy leases or concessions from the port authority. The patter in the UK is very uneven, but a number of major ports, such as Felixstowe, Bristol and the Forth have deliberately chosen to offer an integrated service, with some or all port services under their direct control, in the belief that this is the best way to offer customers an efficient service.

    (f)  If services, such as cargo handling, were required to be offered to competitive tender this would tend to encourage greater use of poorly trained or casual staff and consequential reduction in safety standards. Following the repeal of the Dock Labour Scheme most dockworkers now enjoy full time pensionable employment. Competitive tendering would be a retrograde move.

    (g)  Although our main concern is with cargo handling, there would be particular problems with pilotage, In the UK the provision of pilotage services is the responsibility of a port, and it forms part of the port's total safety management system, an approach endorsed in the Government's recent Port Marine Safety Code. If ports were required to offer concessions for the provision of pilotage there would be a tendency to try to cut costs, which could detract from safety.

    (h)  The proposal for an independent body to supervise the award of concessions is bureaucratic and inappropriate for privately owned ports.

    (i)  Privatised and modernised ports are now highly mechanised and labour efficient. Thus the requirement of the Directive to tender separately for the handling of each different cargo type would mean, for example at Bristol, the splitting of the stevedoring workforce in to six separately managed companies, with consequently increased total workforce number and corresponding decrease in manpower and cost efficiency.

    (j)  The City of London's financial market views the UK port sector as under-performing in terms of return on investment. This seemingly indicates that the present level of costs in the industry is not excessive.

    (k)  The "integrated" ports have made significant investment in facilities. If they were to be deprived of the use of these facilities they would look to the Government for substantial compensation. Depending on the length of the concessions further future investment almost certainly will be jeopardised.

  We support fully the concept of free and full open competition but on the basis that all ports operate on a level playing field. Because of the major structural differences between UK and continental ports, a "one size fits all" Directive such as is proposed will inevitably have substantial adverse effects on UK ports. Moreover, because of the significant threat to future investment noted above this would also damage the UK economy.

  We therefore seek support of the Government to ensure that the draft Directive is either withdrawn or heavily modified to reduce its adverse effects.

January 2001

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