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


Memorandum by the Department of the Environment, Transport and the Regions (P 28)

OPPORTUNITIES AND DEVELOPMENT PROSPECTS AT MAJOR PORTS

  The Government welcomes the Committee's decision to conduct an inquiry following publication of the ports policy paper, Modern Ports—A UK Policy[22], and its invitation to submit this Memorandum. This Memorandum is to be read with the policy paper. Alongside Modern Ports, DETR has prepared a detailed statistical survey of the industry Focus on Ports[23], as a companion document to the policy paper, and intended to assist discussion of the policy.

INTRODUCTION

  2.  Modern Ports is the first comprehensive policy survey of the ports industry for a long time. Ports policy is directed to the public interest which port operations serve or affect. Firstly, they provide the principal route for the international movement of goods. They are used similarly for domestic transport of goods for example between the various British Isles. Ports support the major offshore industries, oil production and fishing. Any revival of coastal and inland waterway traffic will depend on ports.

  3.  Port customers moved over 388 million tonnes of international freight through UK ports in 1999—95 per cent of the UK's international freight tonnage movements and 75 per cent by value. Another 177 million tonnes of domestic freight moved through UK ports. 32 million international passengers used UK ports in 1999. Another 38 million use them for domestic journeys, including river crossings.

  4.  The Committee has not defined "major ports" in its terms of reference. About 100 UK ports are commercially active. Of these, 36 handle over two million tonnes per year and these are treated as the "major ports" in Focus on Ports. The four biggest estuary ports—London, Tees and Hartlepool, Grimsby and Immingham and Forth—handle over 200 million tonnes between them. Focus on Ports provides a lot more detail on the tonnage through major ports. There are, of course, other measures of port size—such as the number of vessel movements and number of passengers. There are few, if any, reliable and comprehensive measures of economic activity in UK ports, such as value added or employment.

  5.  Ports are economically important to local and wider communities and, even those no longer used commercially are assets for recreation and tourism. Even though mass employment in docks is history, ports remain major direct and indirect sources of work. Harbour authorities are important managers of activities on the coast, including many protected habitats. They have responsibilities for the safety of harbour users, and for the conservation of the port environment, which might be adversely affected both by port development and port operations.

  6.  Ports policy must be developed in the context of—and with an understanding of—all these considerations, and of the need of those the people and industries which use their services, as well the ports industry itself. The Government sees ports as an important component in an integrated transport policy linked to other policies—for the national economy, regional prosperity, planning and sustainable development.

  7.  Government's relationship with the ports industry has been confined largely to the endowment of duties and powers. There has been a strong recent emphasis on deregulation in the industry, aiming to stimulate it by exposure to market forces. Modern Ports aims to take a broader approach to ports policy. The Government consulted widely before Modern Ports was drafted. It is clear that there is widespread interest in such an approach—well beyond the industry itself, but that understanding of the context for ports policy needs development. Modern Ports does not offer all the answers from the outset but provides a basis for further work—and plenty of discussion, not only with the ports industry, but with other related interests on how ports policy is taken forward and applied.

  8.  Government does not decide the ports industry's commercial strategy, or direct or fund its investment; nor does it manage port operations. These are matters which Parliament has entrusted to local statutory authorities, who fund their investment and operations from levies on users. Bearing this in mind, the three key aims in Modern Ports are to promote—

    —  UK and regional competitiveness;

    —  high nationally agreed safety standards;

    —  the best environmental practice.

  These aims are directly linked to the Committee's terms of reference.

INTEGRATED TRANSPORT WHITE PAPER

  9.  The Government's integrated transport White Paper, A New Deal for Transport[24], published in July 1998, set four key aims for policy on ports:

    —  promote UK and regional competitiveness by encouraging reliable and efficient distribution to markets;

    —  enhance environmental and operational performance by encouraging the provision of access to markets by different forms of transport;

    —  make the best use of existing infrastructure in preference to expansion, wherever practicable; and

    —  promote best environmental standards in port design and operation, including where new development is justified.

TRANSPORT 2010—THE TEN YEAR PLAN

  10.  In July 2000, Government published Transport 2010: The 10 Year Plan[25], which set out plans for substantially increased spending of £180 billion over the next 10 years to modernise the transport system. It does not cover the role of shipping, which was set out in a separate paper British Shipping—Charting a New Course[26]. Nor does it look in detail at private investment in the ports industry. The Plan does, however, flag up the importance of major ports as transport hubs within their regions and the need for their integration into the wider transport network. The Plan, and actions in the shipping and ports papers will be taken forward together.



ROLE OF DETR

  11.  Modern Ports explains that responsibility for ports policy is now shared between the Department of the Environment, Transport and the Regions (DETR), the Scottish Executive, the National Assembly for Wales and the Department for Regional Development in Northern Ireland. Chapter 2.2[27] describes the different divisions between devolved and reserved matters in relation to each Administration. Modern Ports shows that the boundary with the devolved administrations is clear; the consistency of policy is a good example of the co-operation with them. While Modern Ports represents a UK policy, shared with the devolved administrations, the Memorandum relates directly to the Department's interests.

  12.  DETR is responsible for policy on, and regulation of, the ports industry in England and (apart from some small fishery harbours) in Wales. It is about to assume some responsibilities for fishery harbours in England now undertaken by the Ministry for Agriculture, Fisheries and Food (see para 3.2.11.).

THE COMMITTEE'S QUESTIONS

  13.  The Committee has said that it wishes to consider, in relation to major ports in England and Wales, their hinterlands, including land transport links, and their sea approaches:

    —  what contribution such ports make to the economy of the United Kingdom;

    —  what problems and opportunities currently face such ports, particularly with respect to co-operation with each other, safety, the environment, and regulation;

    —  whether the proposals contained in the Government's document Modern Ports: A UK Policy are adequate to address the difficulties and opportunities faced by such ports; and

    —  what other policies should be pursued to benefit such ports.

  This Memorandum assumes that the Committee will identify "major ports" in a way similar to Focus on Ports (see above).

MAJOR PORTS AND THE ECONOMY

  14.  It is in the national interest that our ports remain able to handle current UK trade and its potential development efficiently and sustainably. They must succeed not only to meet the immediate demands of their customers, but also to invest in new facilities, in safety, and to safeguard communities and the environment. This applies to ports of all sizes. Very many ports are vital to their local economies; others are also regionally and nationally important. The national economy depends upon thriving regions and local economies. It is in the national interest that ports should contribute to this at all levels.

  15.  The Government aims to promote UK and regional competitiveness by encouraging reliable and efficient distribution to markets. Sustainable transport policy seeks to make the most of the existing transport infrastructure (including ports) and to ensure that it works effectively. The performance of transport hubs, including ports, is vital to promoting greater use of inland freight and the use of rail for trunk haulage. It is equally vital to efficient trading links with continental neighbours.

  16.  Focus on Ports shows (page 35) that a small group of major ports has always dominated overall port tonnage, but membership of this group has changed over time as trading patterns have evolved and as specific commodities or types of business have come to the fore. Oil and oil products now dominate tonnage figures, and are handled predominantly by a handful of specialist facilities. Among the major ports, Sullom Voe, Milford Haven and Flotta are effectively oil ports.

  17.  Modern Ports describes (para 2.1.3) how containers and ro-ro trailers have taken the place of loose cargo shipments. This accounts for the emergence as major ports of Felixstowe and Dover, with leading shares in the deep and short-sea sectors, with the Humber, Southampton, Liverpool and Thamesport, as others with substantial shares. Rapid growth in these sectors is linked to the globalisation of trade.

  18.  UK container ports are well served by direct deliveries from international container lines. Shipping companies also use them for transhipping goods to or from other countries. Over 30 per cent of containers handled at Felixstowe are in transhipment. This in turn increases the range of markets available to UK customers, bringing competitive benefits to our industry and maintaining our attractiveness for inward investment.

DEMAND FOR CAPACITY

  19.  Government's role in relation to port development is primarily regulatory. The planning and financing of port capacity is a matter for the operators—ultimately, it is paid for by the users. There is therefore no Government port development plan as there is, for example, for publicly-funded roads projects. Port developments have also not so far had the impacts of major road scheme, or of airport projects. However, Modern Ports recognises a need to understand better the demands for additional capacity in order to issue properly informed planning decisions, Regional Planning Guidance and Regional Transport Strategies. Modern Ports identifies various pieces of new work being undertaken to this end (see paras 2.4.10 to 13.). The Department is also associated with a research project at Imperial College on modelling the decision-making process in UK container transport.

  20.  The major ports have responded successfully to recent changes in the industry, developing facilities for which there has been new demand. A proven strength of the ports industry is that capacity is flexible. The efficiency and intensity of facility use and ship turnaround times can substantially influence the throughput possible with the same infrastructure.

PORT EXPANSION

  21.  The ports industry needs to be able to meet demand. One consequence if it does not is that shipping lines may divert primary services to overseas ports. This would make it harder to meet some objectives of integrated transport policy. More UK trade would arrive in or depart from this country on road trailers although the pattern of port use might alter to be closer to the inland origin or destination. There would be a significant effect on the cost of UK trade, and thus on competitiveness, as well as on the volume and pattern of road traffic.

  22.  Modern Ports does not identify the ports where expansion should be authorised. It recognises that the pressure for expansion is greatest at ports handling container and roll-on roll-off traffic and that the main players in these sectors feel it most. Future demand may require substantial new port development in a relatively small number of cases. The public interest does not relate only to that need—where it is established. The impacts of developing new capacity, and alternatives, have to be fully considered and sustainable solutions identified.

  23.  Where there is a clear need, therefore, the Government will support sustainable port projects, but each case must be looked at in detail on its merits. The approach to these assessments is outlined in para 49 below. This Memorandum does not discuss particular cases. The Committee will be aware that formal planning applications have been made in respect of projects at Southampton (Dibden Bay) and Felixstowe. Others are reported under development at Bathside Bay (Harwich), Shellhaven (Thames) and Thamesport (Medway). It would not be appropriate for the Department to comment on schemes that are subject to formal planning procedures; or on the details of others not yet public which would be subject to those procedures if they are to proceed.

LINKS TO OTHER TRANSPORT MODES

  24.  Major ports are in general well served by the trunk road network, although port traffic is affected by general congestion and will benefit from the current programme of multi-modal studies and other measures set out in the 10 Year Plan. Overall the strategic roads network has capacity to absorb expected growth in port traffic. Particular schemes will be evaluated using the NATA project appraisal criteria being developed by the Department[28].

  25.  The Government wants to see more freight moved by rail. Modern Ports says that rail operators must rise to the same challenges that face ports—providing efficient, reliable services to increasingly demanding customers. Transport 2010: The 10 Year Plan envisages an 80 per cent increase in rail freight, over the next decade, giving it 10 per cent of the domestic freight market, provided that the rail freight companies deliver performance improvements. Winning port traffic will be a key to this target. Prioritising individual schemes will be a matter for the Strategic Rail Authority, but the 10 Year Plan specifically envisages gauge and capacity enhancements on freight routes to major ports such as Felixstowe, as well as the elimination of strategic bottlenecks on the rail network and better integration with other modes through investment in new freight terminals.

  26.  Shipping is one of the most environmentally sustainable means of transport. Although port expansion is not always straightforward, shipping is subject to fewer capacity constraints. Freight grant can help tip the balance in favour of waterborne freight, and the Transport Act 2000 allows these grants to be extended to coastal and short sea shipping, and the Government will consult on the details of the scheme. Some larger canals and river navigations still carry some freight and might be able to carry more. They are particularly suited to low value, bulk cargoes whose origins and destinations are directly accessible by water. Most of the freight carried on what are classified as inland waterways travels on the major tidal rivers. The Government is sponsoring an inland waterways freight study group to examine cost-effective and practical ways to increase freight transport on inland waterways.

PLANNING GUIDANCE

  27.  Modern Ports discusses the need for regional and other plans to address the needs of port users. It is important that these plans are properly informed both about the demands, and the consequences of meeting them. Modern Ports and Focus on Ports aim to help here. Having published them, the Government intends to promote discussion, and welcomes the Committee's involvement. It is also planned to have a series of regional events hosted by each of the Government Offices with its Regional Development Agency. The aim is to establish good contacts with officials responsible for ports and regional policy. The aim is also to attract a wide attendance, including (but not limited to) local authorities and port operators.

  28.  The Government recognises that clear statements of national policy can help to streamline the planning process for major infrastructure projects. In drawing up Regional Transport Strategies and draft Regional Planning Guidance (RPGs), Regional Planning Bodies will need to consider whether expansion of ports within their region should be encouraged and supported. The Government will consider Regional Planning Bodies' proposals against its overall assessment of the national picture when drawing up revised RPGs for consultation.

CO-OPERATION BETWEEN MAJOR PORTS

  29.  The Committee propose to consider what problems and opportunities currently face such ports with respect to co-operation with each other. The Committee will find, if it makes international comparisons, that the UK ports industry is uniquely diverse. Modern Ports notes (para 1.1.6.) that, unlike some of our European partners, the UK has a long tradition of allowing free access to our shipping trade to vessels from all nations. We benefit in return from a major historic role in shipping trade between other countries, and in the shipping business itself. As a counterpart, access to our ports is also open, subject to payment of reasonable port tariffs.

  30.  Figures given in Focus on Ports demonstrate that overall tonnage handled has grown slowly in recent years. It explains (see page 6) that, as economies become highly developed, structural changes tend to mean that gross domestic product (GDP) tends to grow faster than tonnes of output or tonnes of trade, reflecting a shift from primary products to trade in higher value commodities. This effect is also related to the shift to containerised cargoes which have replaced loose and break-bulk cargoes handled by traditional ports; so there has also been a shift of trade to major gateway ports handling container and ro-ro services.

  31.  One result is that much of the traffic won at one port is likely to be at the expense of another. UK ports therefore compete keenly with each other, as well as with nearby continental ports and with other modes. There is a long-standing principle that customers may choose which UK port they use—not the other way round. So ports must compete by offering long-term value, and must be allowed to do so—domestically and internationally—on level terms. The aim is to ensure that our ports remain able to handle UK trade and its potential development efficiently and sustainably. Ports must serve the needs of their users. It is Government policy to ensure that those operating port facilities, and those using them, should be allowed to compete on level terms.

  32.  There has been some concentration of port ownership in recent years. This has followed the programme of privatisation of trust ports. Control of primary container capacity is now highly concentrated with common ownership of Felixstowe, Harwich (including the planned Bathside Bay development) and Thamesport. The Government is not actively promoting further joint operations between the major ports. The Competition Act 1998 requires the Government to ensure that those who run ports, or provide services in them, do not abuse any dominant position.

PROPOSED EC PORT SERVICES DIRECTIVE

  33.  The European Commission are preparing a draft Port Services Directive which may be published during the Committee's work. Officials have kept in touch with the Commission's thinking. Once proposals are public an Explanatory Memorandum will be prepared for parliament in the usual way. The Government will also consult widely, aiming to take account of the full range of views on their possible impact, including port and terminal operators, port service providers, port users and customers, trade unions and other interests. There will also be opportunities for discussions with other member states. A number of important issues will need to be addressed and a balance may need to be sought between varying responses. Modern Ports (in chapter 2.3) summarises a general policy to support the broad principles of liberalisation and competition in the provision of port services, subject to appropriate safeguards and standards.

TRUST AND MUNICIPAL PORTS

  34.  Ports policy emphasises the accountability of harbour authorities entrusted with statutory powers, whatever their particular constitution. There are still major ports in the trust sector (London, Milford Haven and Dover). The Government stopped the compulsory privatisation of Tyne in 1997 but it recognised the need to modernise corporate governance in the trust port sector. The trust ports have agreed national standards, published in January 2000 as Modernising Trust Ports—A Guide to Good Governance[29]. This is now being implemented.

  35.  Commercial municipal ports compete with private and trust ports. The largest municipal port in England is Portsmouth. The Local Government Act 1999 in England and Wales requires local authorities to carry out Best Value reviews of all their functions over a five year period. A Best Value review must look at all municipal port facilities. Modern Ports says (para 3.1.13.) that the Government will review existing management structures and practices to make sure that municipal ports are playing a full and accountable part in the local and regional economy. The Government will review how the form of management for municipal ports compares with the standards being set for trust ports.

  36.  Modern Ports says (para 3.1.20.) that the Government will help trust and municipal ports to realise their full potential. This may require significant changes to their structure and status. Where the proposals involve new powers, they will be considered on merit. Where a port's managers identify sound commercial opportunities, they will be helped to introduce public-private partnerships to develop the port. This may, for example, take the form of concessions or long leases covering all or part of the port's assets.

SAFETY

  37.  The Government attaches considerable importance to the promotion of high, nationally agreed safety standards in the ports industry, and to associated training. It works closely with the Ports Safety Organisation (PSO) and British Ports Industry Training (BPIT). BPIT, as a national training organisation (NTO) also receives significant Government funding related to the development of national occupational standards. PSO and BPIT were formerly part of the British Ports Federation (BPF). There is no longer a single trade association representing the ports industry: PSO and BPIT have operated as free-standing entities since BPF broke up.

  38.  All major ports subscribe to PSO, but not all contribute to BPIT or support its role. The Government aims to promote a greater awareness of, and commitment to, the importance of raising safety standards and training in the industry on the part of senior port management. Higher profile support is needed to the national industry bodies concerned with safety and training.

DOCK SAFETY

  39.  The Health & Safety Executive (HSE) are making a separate submission to the Committee. The Government and the Health and Safety Commission (HSC) have recently published the Revitalising Health and Safety Strategy Statement[30]. Modern Ports describes the linkages to ports policy (chapter 4.1). Work in docks is dangerous and the high accident rate is a concern. The underlying causes are considered to be not only the inherent danger of the work but inadequate management control, training and risk assessments, compounded by the commercial pressures on docks to load and unload ships quickly.

PORT MARINE SAFETY

  40.  The Government has promoted a new approach to safety management in port waters. Following the Sea Empress grounding in Milford Haven in 1996, and the report on it from the Marine Accident Investigation Branch (MAIB)[31] in July 1997, the Government developed a Port Marine Safety Code[32] with all sides of the industry. There has been welcome co-operation and strong support for the Code from all round the industry. The code is a national standard and a guide to best practice. It applies the well-established principles of risk assessment and safety management systems to port marine operations. It also offers a framework for harbour authorities preparing policies and plans in consultation with local users and other interest.

TRAINING

  41.  The Government believes that training is a route to raising workplace safety standards throughout industry. NTOs use Government funding to develop national occupational standards within a national framework. Their primary aim is to develop job competence. Many working in ports have no formal recognition of their competence. There is also an imminent shortage of qualified people for port positions that need marine skills. Modern Ports links this issue (para 4.3.8.) with the Government's aim to promote maritime careers. Ports, as major employers of former seafarers, have a stronger interest in this then they have so far recognised. It is not enough for ports to establish adequate internal training arrangements: major ports especially must be encouraged to recognise obligations to the industry as a whole, and the wider maritime community, in relation to training and the development of incentives such as formal qualifications.


  42.  The recently increased use of non-permanent employees for dock work has revived concerns about adequacy of training. PSO and the industry's trade associations are introducing a national scheme with the support of the unions under which non-permanent employees on dock work should carry proof of their identity, qualifications and/or training. This is in effect, a health and safety "passport" scheme. The scheme will only cover safety induction training and is not a replacement for full-scale training and qualifications throughout the ports industry. HSE supports this initiative but would like to see it expanded so that it applies to all those employed in dock work and their qualifications.

  43.  The Port Marine Safety Code project includes the development and application of national occupational standards for port marine professionals. MAIB's report on the Sea Empress proposed national standards of pilot training and examination. The Government has accepted and extended this recommendation to other professionals such as harbour masters. Accredited national qualifications for port marine professionals are a way of recognising their special skills. In time, they could underpin harbour authorities' recruitment, authorisation and pilotage exemption standards. The Port Marine Safety Code includes requirements to use the national occupational standards in this way.

ENVIRONMENT

  44.  A New Deal for Transport made it an aim of ports policy to promote best environmental standards in port design and operation, including where new development is justified. Port development and port operations can affect both the natural and historic environment, as well as other users and local communities. Modern Ports explains (para 2.5.12.) that Parliament has placed duties on harbour authorities to consider this in carrying out their work—whether managing and maintaining a harbour, or planning a new development. There are also specific duties relating to sites designated for their international importance under the EC Wild Birds and Habitats Directives.

  45.  Some ports have been created to take advantage of deep water reaching far inland. These deep water estuarial environments are often still of high importance to wildlife, showing that port operations need not be incompatible with nature conservation. The ports where there is most pressure on capacity, and where there is demand for expansion, each have internationally protected wildlife habitats in their area. The Government is committed to safeguarding the integrity of these sites: sustainable development policy aims to strike a balance without prejudice to the environment. Para 2.4.13. of Modern Ports anticipates a framework for the appraisal of cases (see also para 49 below) and para 2.4.19. describes the special tests that will apply to any port development proposals affecting designated sites. Sometimes—as in the recent channel deepening for Felixstowe, it will be agreed that an overriding public interest may allow a development which will have an adverse effect on nationally or internationally designated sites. The Felixstowe project included sophisticated measures to compensate for potential adverse effects, and there are other examples.

  46.  Harbour authorities are very experienced in managing coastal activities and are primary regulators of some uses of coastal waters. There is a wide variety of other interests and a range of regulators in the coastal zone, including harbour authorities. An integrated approach to estuary and coastal management brings regulators together. Many harbour authorities are committed to these partnerships. Harbour authorities can seek additional environmental duties and powers, including powers to make environmental byelaws.

  47.  The ports industry feels that new environmental regulation, which has to be applied in often complex circumstances where the science is under-developed, has become a burden, impeding both port development and operations. It is accepted that regulatory impact assessments need to be followed by the development of clear practical guidance and standards. Para 2.5.29 describes some work already undertaken here, and Modern Ports promises more.

REGULATION

  48.  Modern Ports explains (Chapter 3.2) that Government regulates port operations in many ways. Ports policy aims to maintain a modern and efficient system of regulation, developed in consultation with all whom it affects. Government must ensure that procedures for revising statutory powers work efficiently so that they do not become a barrier to necessary change and improvement.

  49.  The Government will work with all those with interests in the industry to provide guidance on regulation generally and to spread good practice and has assigned resource specifically to making significant progress. In particular, Modern Ports proposes (para 2.4.13.) to apply the concept of project appraisal criteria developed for trunk roads (see para 24 above) to provide a framework for the presentation for approval of port development proposals. The success of this better-regulation exercise will depend upon a contribution from the industry, identifying not only the difficulties but the successful practice too.

  50.  Modern Ports notes (para 3.2.10.) that port operators deal with a wide range of Government departments. It promises that Government departments dealing with ports will co-ordinate their activities and that the scope for streamlining will be examined. This will be addressed as an important element of work on better regulation to which the Government is committed.

OTHER POLICIES

  51.  The Committee proposes to consider whether the proposals contained in Modern Ports: A UK Policy are adequate to address the difficulties and opportunities faced by ports; and what other policies should be pursued to benefit them.

  52.  Modern Ports comprises a comprehensive package of measures to achieve the aims identified in the paper. The Committee will note that many of the specific initiatives listed in Annex 1 to Modern Ports relate to aspects of ports policy where Government has not been active. Many are already in progress. The Department expects to make an early start on all the others. Some already have objectives for implementation—for example the trust ports review and the Port Marine Safety Code. It is proposed to undertake a general review, with the devolved administrations, about three years after publication.

January 2001


22   Published by DETR (November 2000) ISBN 1 85112 444 6. Back

23   Published by The Stationery Office (November 2000) ISBN 0 11 552216 6. Back

24   Cm 3950 published by DETR (July 1998) ISBN 0 10 139502 7. Back

25   Published by DETR (July 2000) ISBN 1 85112 413 6. Back

26   Published by DETR (December 1998) ISBN 1 85112 144 7. Back

27   Chapter and paragraph references in this Memorandum are to Modern Ports-A UK Policy unless otherwise indicated. Back

28   See Annex B to A New Deal for Trunk Roads in England (published by DETR (July 1988) ISBN 1 85112 096 3. Back

29   Published free by DETR (January 2000). Back

30   Published free by DETR (June 2000). Back

31   Published by The Stationery Office (July 1997) ISBN 0 11 551890 8. Back

32   Published by DETR (March 2000) ISBN 1 85112 365 2. Back


 
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