Order for Second Reading read.
I beg to move, That the Bill be now read a Second time.This is a short Bill, which essentially follows the assurances given to the Port of London Authority by the previous Government. We recognise the obligation that that has imposed upon this Government. Specific help has been promised—and some of that help has been paid over. There were then both legal and moral obligations. In other words, this was an inherited obligation and not a new path of policy. Equally, I made clear in my statement of 7 December—and I make clear again tonight—that we are talking about a financial limit. The Bill gives effect to the strict financial limit that I have already set. At the same time, we clearly hope that it will help the PLA to continue the excellent start that it has made to restoring profitability. Before turning to the detail, I hope the House will permit me to paint in some of the background. As the House knows, the nature of the ports industry has changed dramatically over the last 10–15 years. This is mainly due to freight-handling technology, which has meant changes from traditional labour-intensive methods to cargo handling—in other words, the container revolution. Consequently, there has been a dramatic reduction in demand for labour in the ports. In London, for example, the number of registered dock workers has declined by over 70 per cent. since 1966—a fall from 25,000 to 6,500 in that period. I acknowledge the social and human impact that such a reduction involves, and I pay tribute, to the cooperation that was necessary to secure it. But further reductions in manpower are still needed. There has also been a movement towards bigger ships and a consequent need to move nearer to the sea. The Port of London has been particularly affected by this change. Traffic has moved out of the upper dock into the facilities down river at Tilbury, or to specialised river wharves, and in some cases it has left London altogether and gone to other ports. There has also been a reduction in London's share of Britain's port traffic, particularly in general cargo, which represents the major part of traffic in the upper docks. The amount of general cargo has fallen from 6 million tonnes in 1970 to about 1 million tonnes in 1979. The dramatic decline in manpower requirements of the port have made it necessary for the PLA to reduce the size of its own work force, both registered dock workers and staff. The authority's problems have been increased by the need in some cases for it to take on surplus registered dock workers from other employers who have gone out of business. Since 1973 the PLA has had to take over almost 5.000 registered dock workers from other employers, so there is no question whatever that the cost of surplus manpower is the overriding problem facing the authority. However, it is fair and important to say that there has, in general, been excellent cooperation by the trade unions in the manpower rundown But the fact is that payroll costs account for over 70 per cent. of the authority's operating costs, and its problems have not been made any easier by the continuation of some restrictive working practices, which are inappropriate to the efficient working of a modern port. Since 1975 the authority's financial position has deteriorated rapidly, mainly be cause of the slump in world trade and the changes in traffic which I have already mentioned. In 1976 the previous Government appointed Price Waterhouse and Company to provide an independent report on the authority's financial position and prospects, and in June 1977 they agreed to stand behind medium-term loan facilities of £15 million made available by Lazard Brothers as agent for a consortium of banks. This loan was intended to help the PLA to pay for the severance of surplus staff and to refinance certain short-term borrowings. The PLA's financial position continued to deteriorate, however, and in July 1978 the then Secretary of State for Transport—the right hon. Member for Stockton (Mr. Rodgers)—announced further assistance in the form of £35 million in grants towards severance costs, and backing for a further £10 million of commercial borrowings. He also insisted that, contrary to the PLA's proposals, the Royal group of docks should be kept open. But the grant towards severance costs was made conditional on agreement with the trade unions of specific targets for manpower reductions. In October 1978 the PLA and the trade unions submitted a jointly agreed short-term trade and manpower plan covering the period May 1978 to June 1979, which provided for manpower reductions of nearly 1,500, divided about equally between registered dock workers and staff. In the event, about 1,100 severances were achieved. Under a second short-term plan submitted in June 1979, a further 1,000 severances have been achieved to date, and more are in the pipeline. Last June, the PLA submitted to me its strategic plan for the five years from 1979 to 1983, together with a second short-term plan. The strategic plan presented two options. One was the concentration option, which would have involved concentrating the PLA's operations in reduced facilities at both the India/Millwall and Royal docks. The other was the transfer option, which would have meant transferring the operations from the Royal docks to the India/Millwall docks and Tilbury. The PLA preferred the concentration option but Price Waterhouse, which I asked to review this plan, advised that it did not appear to chart a course to viability. I thought it right to publish that report, and there are copies of it in the Library. In reviewing policy in the light of that report it was important to take one initial decision, namely, the extent to which the Government should be involved in the management of the PLA. I came to the conclusion that we should not be involved in those management decisions. The PLA would be subject to a strict financial limit. The decisions on the options on the retention or closure of docks are and continue to be a matter essentially for the PLA board. So the Government have agreed only to maintain the minimum level of financial assistance that is needed to continue with the most rapid possible rundown of manpower and to plan for the quickest possible return to viability at least cost to the taxpayer. Subject to adjustments to cope with inflation and the latest forecasts, I have, therefore, set the limit of financial assistance at the level promised by the previous Government in July 1978. I have also told the PLA that it must follow policies that will enable it to recover profitability within that limit. My belief is that problems such as those facing the PLA can become permanent if the limit of Government help is not clearly spelt out. That is why the Bill sets a strict limit on Government help. I have every confidence that the authority is determined to achieve viability. As the House knows, it announced on 3 March that PLA general cargo handling in the India and Millwall docks would have to cease because it had concluded that it was no longer possible to pursue the concentration option. In making that decision, the main factors that the board gave were losses amounting to £4 million in the first two months of this year, including about £2 million arising from the two-week strike over pay, and the insufficient movement towards implementing the changes in working practices which have been identified as being essential to the improvement of the PLA's competitive position. The authority therefore concluded that it could not continue to operate both of the upper river dock systems and at the same time stand any chance of staying within its financial limit. Clearly, this was a difficult decision. Nevertheless, I am convinced that the approach that I have mapped out is the correct one and that it is now imperative that the PLA and the unions continue to work together to achieve an efficient, modern and profitable port, which will play an important part in the prosperity of London and of the British ports industry. The decision of a well-attended mass meeting in the upper docks last Wednesday to lift the blacking of vessels and cargo transferred from the India and Millwall docks should, I believe, be welcomed by the House, as it provides encouraging evidence that registered dock workers and staff in London want to make a success of this port. The authority and its customers also want to make the remaining PLA docks at Tilbury and the Royals succeed. I am sure that with the good will of the work force these docks can be competitive. Turning to the specific provisions of the Bill, the House will see that it provides for financial assistance for measures to restore the authority's profitability through a reduction in the number of its employees and assistance for the carrying on of the undertaking while these measures are being taken. I should perhaps say that although the broad order of the figures that I am about to give is consistent with those in the Price Waterhouse report, there are some small differences of detail. The first form of assistance consists of grants for severance payments, and these fall into two categories. First, clause 1(1)(a) encompasses grants paid by my Department to the PLA for severance of surplus staff. Secondly, clause 1(3) encompasses grants paid by the Department of Employment to the National Dock Labour Board in respect of registered dock workers who take voluntary severance. Payments of severance grants were made in the financial years 1978–79 and 1979–80 on the authority of the Estimates and the confirming Appropriation Acts pending this legislation. The total grant to be provided under the Bill amounts to the £35 million promised by the previous Labour Government plus an allowance of up to £5 million to take account of inflation. So far, grant of £19 million towards the cost of severance has been paid, made up of £11·4 million for registered dock workers and £7·6 million for staff. Under clause 1(1)(b), the second form of assistance is for the carrying on of the undertaking while the measures to reduce manpower are being taken. This is provided by the two commercial loans, totalling £25 million, which again the previous Government agreed to stand behind. At present, the Government's liability under this head amounts to £23 million. I should add that I also agreed, last year, to stand behind the PLA in negotiating the postponement of a £3 million loan repayment due in 1980 and a similar repayment due in 1981, but, as this does not increase the Government's liability, it does not count against the financial limit in the Bill. Finally, as I indicated in my statement last December, I have agreed, if necessary, to stand be- hind the PLA's existing overdraft facility up to a total of £5 million. Clause 1(4) provides that the aggregate of assistance given, whether in the form of grants, loans or guarantees, may not exceed £70 million, and that assistance that has already been given will count against this limit. The total assistance that I have outlined, including that already given, conies to £65 million plus an allowance of up to £5 million for inflation. Therefore, the Bill exactly provides for the financial limit that I have set and does not allow for any further increase. As I have already indicated, the £70 million limit in the Bill does not represent new money, since much of the financial help has already been given to the PLA. Perhaps before I finish I should say a word or two about why we have not felt able, in present circumstances, to accept the proposal in the PLA's strategic plan for a capital reconstruction involving a substantial write-down of the authority's outstanding debt to the Government. My first point is the one that I made basically in my statement last December: that the Government can see no justification for such a write-down, since it would conflict with our aim of keeping assistance from public funds to the minimum. Secondly, as Price Waterhouse has pointed out, the case for a capital reconstruction has not yet been demonstrated. We believe that the first task is for the PLA to restructure its business so as to achieve a profitable port operation, in particular through the elimination of uneconomic working practices and surplus manpower. It has to be remembered that we are already providing substantial sums in grants to assist in this very process.
I am grateful to the Minister for giving way at this stage, but it may save time later. I understand why Price Waterhouse made that judgment. However, is the right hon. Gentleman satisfied that Price Waterhouse was sufficiently aware that the Port of London Authority was not the port in London and that that, in competition with some of its tenants, as I shall point out, placed it in a very different position in respect of capital repayments than if it had the monopoly in ports handling and cargo work throughout the Thames estuary?
I do not think that there is any question but that Price Waterhouse is as informed about the position in the Port of London as any outside body can be. The survey and report that it did for me was only one of three which have been done. I give the hon. Gentleman the assurance that Price Waterhouse is certainly aware of that point. However, it is a point that he will no doubt wish to develop in his own speech.Also, on the question of capital reconstruction, I do not think that it would be right to relieve the PLA of the obligation to repay or service a large amount of its existing debt, because it would remove the incentive to continue with the remedial action already so effectively under way. There will undoubtedly be some who will argue that it is wrong for a major port of London's importance to have to meet tests of commercial viability, on the ground that we should try at all costs to avoid any further dock closures, even though the upper docks have been losing at the rate of about £7 million a year on operating account. But, if we take an opposite view, the argument surely is that it will mean supporting the Port of London at the expense of other ports, which have to operate profitably in a competitive environment. The Government believe that the ports of this country should operate in full competition, one with another, meeting the normal tests of commercial viability of being able to cover operating costs and service capital and without making any call on public funds.
My right hon. Friend says that the ports should act in competition with one another, and the whole gist of his speech seems to be to recognise that the Government take responsibility for redundancy payments of dock workers. Does he recognise that responsibility with regard to other ports, such as Merseyside? Once the Port of London is so subsidised, the Mersey Docks and Harbour Company is left to pay for redundancies out of its commercial profits.
My right hon. Friend raises an important point. There are two answers to what he said. First—and this is the basis of my speech—what we are doing in the Bill is to recognise an obligation inherited from the previous Government. I think that Opposition Members would agree that it does not chart a new path of policy but simply recognises an obligation laid down by the previous Government. That is why I have been specific about the cash limit.The second point, which I will develop for a moment, refers to the position of the Mersey Docks and Harbour Company. That company approached me last year asking for financial assistance on the same lines as the aid being given to the PLA. I told the company then that I was not prepared to make amounts available towards its severance costs but that I would continue and, indeed, increase the normal assistance by way of loans under the Harbours Act 1964 towards its capital development. This was on the understanding that the company would take remedial action to reduce costs and increase revenues. Towards the end of last year, the company approached me again saying that it expected a trading loss in 1979 of about £2 million and was concerned about the position in 1980. So I invited the National Ports Council to carry out a rapid study of the company's forecast. This showed that there were a number of ways in which the company could improve its financial position, primarily by a faster rate of manpower rundown and some increases in traffic. The company has accepted that these improvements are feasible and has undertaken to put them into effect. It has also agreed to carry out a more far-reaching study of its business in all its aspects, with a view to drawing up a new profitability plan, again with the aid of the NPC. The results of this study should be available in the summer. I am sure that my right hon. Friend will wish to develop his arguments during the course of the debate, and clearly my hon. Friend the Parliamentary Secretary will wish to respond to them. What I am clear about is that it would not be right for any message or suggestion to go forward from the House that in any way talks the Mersey Docks and Harbour Company into a crisis.
The only message that I want to deliver to the Minister—it is coming from all hon. Members—is that the Bill has wide implications not only for Merseyside but for the Manchester Ship Canal Company and every other port. The Minister has made it clear that he is aware of the implications of the Bill, which is the only point I want to put forward.
I am aware of the implications of the Bill, but it would be wrong for me to give the hon. Member for Liverpool, West Derby (Mr. Ogden) the impression that what we are doing in dealing with an inherited obligation is to create a precedent for dealing similarly with other ports. That is a point that I have made clear in the discussions that I have had.
My right hon. Friend has said that he is concerned about meeting inherited obligations, but is he aware that there are considerable obligations under the regional aid programmes which have been cut? A further point he should be aware of is that the special development area status which has attracted a grant of 22 per cent. to Merseyside is not available to the docks which are treated as a service industry. Therefore, the docks are discriminated against from all sides and the Bill will discriminate against them even more.
My hon. Friend the Member for Liverpool Wavertree (Mr. Steen) is being neither fair nor accurate when talking about discrimination. Nor do I think that it is reasonable for him to press such comments at a time when the Mersey Docks and Harbour Company and the NPC are considering the whole position of that company. I believe that I have made my general position and the position of the Government clear on this matter, in that we are dealing with an inherited obligation. It should not be seen as a precedent. But I say to my hon. Friend sincerely that I hope that in the speech he will doubtless make he will not seek to give the impression, which I believe would be wrong, of a crisis or talk the Mersey Docks and Harbour Company into a crisis.The Government basically believe that the ports of this country should operate in full competition with one another and meet the normal tests of commercial viability. I do not agree with suggestions that it is wrong for London and other ports to seek to operate port facilities profitably. Indeed, I put the converse suggestion, which is that it would be unfair to other ports and British industry generally if I were to pursue any other policy. Nor am I persuaded by talk about the subsidies that are provided to certain Continental ports because they apply only to a limited range of charges and dues and not to the costs of cargo handling, which represent the major cost facing port users. I do not believe that Continental ports can be compared with ports in this country, and there is no evidence that what they do has a significant effect on the traffic handled by British ports. Those who argue for continuing subsidy for uneconomic operations perhaps have little confidence or faith in the ability of the PLA management and its work force. The Port of London can once again return to profitable operation given the vigorous action that the PLA chairman, Victor Page, and the management have shown their intention of taking, and also given the co-operation that the work force has recently demonstrated so convincingly. At Tilbury I believe that we have one of the finest modern container ports in this country, if not in Europe. The Port of London plays an important role in the economy of this country, and it must continue to do so. I hope that the House will give the Bill a Second Reading.
In proposing the Bill, the Minister is asking the House to endorse a financial undertaking given by his predecessor—my right hon. Friend the Member for Stockton (Mr. Rodgers)—to the Port of London Authority. For that reason, it would be most improper for me to oppose the Bill. I cannot, therefore, recommend any hon. Member to vote against it. Having said that, the brief moment of consensus comes to an end.One can see set out in the long title of the Bill a proposition which is completely untenable and shows how unrealistic the Minister's approach is to the problem of the PLA. The long title says that the Bill will provide financial assistance to the PLA to enable it to restore the profitability of its operation by reducing its labour force, and that is all. I believe that that is totally unrealistic; it carries with it the assumption that the only cause of the unprofitable operation of the PLA is the fact that it is overmanned. That is a gross simplification. It is unrealistic and it does not take into account a series of important factors that have led to the difficulty that is now facing the Port of London Authority. For example, it ignores the technological development that has taken place in cargo handling. That has had an immense impact on the Port of London as a major general cargo-handling port. It ignores completely the degree to which specialist cargo-handling has hit the Port of London. It ignores—the right hon. Gentleman has made this crystal clear—the competition policy which exists between ports in Britain and between United Kingdom ports and other EEC ports. If the Minister seriously believes that the ports of other countries determine their charges on a basis that does not take into consideration how many long-term deep-sea cargoes they get compared with British cargo ports, he is flying in the face of the experience not only of those who operate the ports but of those who have made a detailed study of the issue over the past 10 years. The Minister seems to ignore work practice, which has a great bearing on profitability. Some might say—I might join them—that the way in which the port has been managed over recent years has had a great bearing on its present difficulties. I go along with one factor that the Minister mentioned, although he appears not to want to take it fully into account—namely, the special problems which face the Port of London because of the National Dock Labour Board scheme, with the PLA being the employer of last resort. That has been a special problem for London. Also ignored is the fact that there is a world slump. All these factors must be put together to form a complex relationship which I do not claim fully to understand. However, I can assert even from my knowledge of the Port of London that all the factors that I have mentioned have a considerable bearing on the problem. It is an utterly prejudiced and, therefore, unrealistic view to say that it is only the number employed in the Port of London that needs to be tackled and that only in that area is it proper for the Government to step in with financial assistance. The Minister says that all that it is proper for the Government to do is to set a strict financial limit. Incidentally, it is a limit determined by his predecessor for an entirely different purpose. To say to the Port of London "That is all that you need me to do and you can now go ahead and sort out the problem in terms of profitability" is to ignore a number of important factors and some responsibilities of the House and the Government. I shall deal first with the issue in the terms in which the Minister has posed it before I turn to what I consider to be a more realistic appraisal. I question how far the £70 million will achieve the narrow objectives which the Minister sets for the Bill. I take it from what he has said that £35 million of the £70 million was agreed in July 1978 as being available for severance as from that date. It has already been in use for almost two years. I think that the Minister said that £19 million of it had already been used. I understand that it has been used in part to support the National Dock Labour Board's registered dock workers' severance scheme. It was used in that way until February 1980, when, as a result of a special levy of about 8 per cent. on employers, the Port of London element of the scheme came into surplus. The Minister has not indicated whether he expects that any more of it will be needed in that regard—that is, whether he thinks that the levy that the employers now pay to the scheme will finance any further redundancies of registered dock workers or whether more will be required for that part of the scheme. There are severance schemes in existence within the province of the Port of London Authority that are even more expensive to the employer than the registered dock workers' scheme. These schemes will have to be financed. For example, the NALGO-negotiated scheme produces rather better severance terms than the registered dock workers' scheme. If the sum provided in the Bill is to deal only with further severances that arise from the Port of London Authority having decided on the transfer option—namely, taking work out of the India and Millwall docks to place it in the Royal docks, and some of it at Tilbury—is it seen as being sufficient to finance all the severance that the Minister considers necessary to enable the PLA to operate profitably again? I understand that £25 million of the £70 million is to cover loans taken from Lazard Brothers to stand guarantee and that £n is to allow for inflation since the figures were first set. Presumably £ will be the working capital, or the extent to which the Port of London can operate an overdraft to carry on through the period in which it must operate if it is to return to viability. Bearing in mind the losses being sustained on Port of London cargo-handling operations, I question whether the financing that I have described is realistic. In 1978 the losses were about £12 million I understand that the current losses on the two upper docks are about £9 million. Against that horrendous financial background, it is not by any means clear how the Minister contends that they are set on the road to viability. One of the difficulties that faces us in trying to debate the issue sensibly is the way in which relevant information has been withheld from the House. The Minister received the Price Waterhouse report containing the five-year strategic plan of the Port of London Authority in September 1979. By December he had the summary, which he chose to make available to us yesterday afternoon. The right hon. Gentleman must appreciate that there is considerable difficulty in preparing properly for debates on this issue.
The right hon. Gentleman is talking utter rubbish. The Price Waterhouse report was not made available only yesterday. It was published in the press last week. If the right hon. Gentleman consults the press, he will find it there. At the same time, it was placed in the Library. As a courtesy, I had my office telephone his office to ensure that he had noticed its appearance. He is on a doubly dud point. There have been three Price Waterhouse reports. The only one to be published is the one that I commissioned. The two commissioned by the previous Labour Government were not published.
I apologise to the Minister and to the House for referring to yesterday when I should have referred to the report being available in the Library last week. However, my argument is not dud. It is totally relevant. The decision of my right hon. Friend the Member for Stockton to guarantee money being available to the PLA, which led to the Minister bringing the Bill before the House, required the PLA, as a condition of receipt of the money, to accept certain options—namely, to maintain the upper docks in operation while an examination was carried out to ascertain whether it was feasible to restore their viability. The Minister has taken a different view from that of the chairman of the board, who wanted to close the docks.The Price Waterhouse report is relevant because it gives the first indication of how far an independent accounting examination bears out the decision made by my right hon. Friend the Member for Stockton. He decided that it was right to require the Port of London Authority to continue working the upper docks. The report provides a basis on which to judge the relevance of the Bill. I accept that the report has been available in the Library since last week. However, we have been given precious little time to make a serious examination of the issue. If the Minister had been more forthcoming, he might have obtained a greater degree of understanding. This subject is fraught with suspicion and uncertainty. It is impossible to discuss it with those who are deeply concerned and affected by it without realising that for a number of years they have felt that either the Government or the management should give some clear indication that a massive rundown of labour would ultimately lead to a viable operation. The decision affected not only the management and unions but local authorities and everybody whose livelihood was dependent on docklands remaining viable.
Is the right hon. Gentleman condemning the right hon. Member for Stockton (Mr. Rodgers) for failing to publish the previous Price Waterhouse reports?
I am not condemning or approving the non-publication of the previous reports. I would welcome more information. However, this report has a special significance that did not attach to the previous reports. A Labour Minister of Transport decided, against the advice of the chairman of the Port of London Authority, to require—as a condition of providing the money—that the Royal docks, West India dock and Millwall dock should be maintained. The report makes a judgment on that issue that is favourable to his decision. It says that it was right to examine further whether there was a sound basis upon which to keep the docks running.The massive rundown of labour has had an enormous impact on the thinking of those affected by the development of the Port of London Authority. I would take a longer time scale than the Minister. I do not disagree with his figures. They are relevant. However, in 1961 29,000 people were working in the docks. That figure has decreased to about 8,000. That represents a tremendous drop. Such a reduction cannot take place without major industrial disturbance. The Bill is related to a proposal that will run down the labour force still further. A severance of a further 500 is required in the transfer of work from the West India and Millwall docks to the Royals and to Tilbury. Of those, more non-registered workers will be transferred. Such a rundown within that time scale was achieved at an enormous social cost to the upper docklands area. A thriving, bustling, and vital community has become an urban desert. I was slightly encouraged when I went there the other day and saw some signs of a return of industrial activity. However, one could not help but be terribly depressed by seeing that such a great area had had the life knocked out of it. I realise that the impact of events has gone well beyond the livelihoods of those who used to work in the docks. It has affected a great many other people in the community.
Perhaps my right hon. Friend will bear in mind that I and many of my hon. Friends who represent London constituencies have been trying to draw the attention of successive Governments to that very point. All Governments have refused to recognise it.
I fully accept that my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) and several other hon. Members who represent London constituencies have drawn that point to the attention of previous Ministers. A distinction can be made between the previous Minister and the present one. The previous Minister said that a condition of providing any money was that an operation should be maintained. However, the Minister today has said nothing like that. He has said that the money is available on the sole condition that the labour force is run down. He has not sought any assurance that there will be any restructuring or co-operation between the Government, the Port of London Authority and local authorities in the area to ensure a viable operation.It is cloud-cuckoo-land nonsense to say that the Port of London Authority is well on the way to achieving viability or profitability. I do not know how that is defined by accountants. However, in its five-year strategy the Port of London Authority defined "viability" in clear and straightforward terms. I would have thought that those terms would have been acceptable to the Minister. The Port of London Authority has said that the correct financial objective is to reach a point at which it can earn enough on its working assets to pay the interest charges and debts that it has to meet and to service its working capital. It is not within a mile of obtaining that objective. Nor is it likely to come within a mile if it is limited to this type of operation.
Does not my right hon. Friend find it difficult to understand the Government's posture? The Minister said—and his hon. Friends have also said from time to time—that the Government will not intervene. They assume that that has some sort of political virtue. The Minister said that we should not be involved in management decisions. However, the Government naively and glibly tried to persuade the House that they are not involved in any decisions, while providing millions of pounds to sustain management decisions. They will not provide money elsewhere on more important things. Is not that a rather odd posture?
My hon. Friend the Member for Hartlepool (Mr. Leadbitter) has me at a loss. I can see the incongruity of the Minister's position and, at the same time, a certain strange consistency in his remarks. Together with some of his Cabinet colleagues, the Minister has said on other issues that it is not the role of the Government to become involved in management decisions. To that extent he is consistent. However, how one can square that with bringing forward a Bill that provides £70 million for the special case of the Port of London while refusing to give money to other cases and how they can say that they are not involved in management decisions evades me. I cannot explain that away.Closure of the docks—the Royals or the upper docks—would be a social crime in all the circumstances as we now know them. If a sensible basis for maintaining them can be properly established, because of their effect on the area in which they operate, it must be examined very carefully. The Price Waterhouse report says that it is too early to determine whether there is a totally viable basis on which the docks could operate. In fact, to that extent the report disagrees with the judgment of the previous chairman of the PLA. I believe that the PLA has a major job to do in its co-operation with the local authorities of dockland in the redevelopment of that area. As more and more of the PLA's land becomes available because it is no longer required for dock usage, the PLA should be under an obligation to see that that land is released to other usage in a way that will ensure alternative employment and revitalisation of the dockland area. In the five-year strategic plan of the PLA, it is made abundantly clear that there is no realistic prospect of achieving the minimum cash flow objective that I have just outlined by 1983 without some form of capital reconstruction. The Minister has not said whether he disagrees with that. He has tended to imply—quite unrealistically, in my opinion—that somehow there can be a return to a viable operation without any sort of capital reconstruction. The Minister must face the fact that there is no way that he has outlined in which the PLA could generate sufficient cash flow to pay its interest charges and meet its capital debts while maintaining the assets which it requires. This applies to the PLA's existing working assets, not to the introduction of more modern cargo-handling facilities. The reason for this is simple. The PLA has a capital and physical structure which is far more appropriate to the Port of London at a time when London was the heart of a trading empire than it is to the Port of London as it exists today, with its different trading relationships with other ports in the United Kingdom and those in Europe. It will be necessary for the Port of London to develop much better marketing techniques and to modernise some of its cargo-handling facilities so that it can operate viably. Undoubtedly, it must achieve better working practices in certain areas of its operation before it can achieve the financial target that we have been discussing. While the future of the docks remains in doubt and while a question mark hangs over the Royals, it will be very difficult for the PLA to build the sort of customer relationship that it must have. It must be much more difficult to persuade a shipping line to start to use the Royals if there is no evidence that there is a convincing plan ahead to return those docks to viability. Of equal, if not greater, importance is the fact that the PLA cannot reach sensible agreements with its unions on the introduction of more modern equipment unless those unions have some confidence that they are working towards a future for which there is a sound framework. They need a target that makes sense. To tell them to reach viability with no more than the provisions of the Bill is not a sensible framework on which to work. I believe that the greatest defect in the Bill is that it fails to grasp the central issue of the problem of the London docks. It fails to provide any convincing basis for the future of the upper docks. It concentrates, as its long title makes crystal clear, on the reduction required in the labour force. It ignores all those other factors which must be tackled simultaneously with labour reduction in order to put the Port of London upper docks on a sound basis. Therefore, I urge that during the course of our debates on the Bill we must press for further reconsideration by the Government and the Minister and for a wider and more realistic approach. They must make clear to the PLA, its employees and its customers the options that are open to them which will give to unions and management within the PLA, and to dockland authorities, a framework on which to build a future for London dockland.
The right hon. Member for Barrow-in-Furness (Mr. Booth) has complained that the purpose of the Bill is to provide financial assistance if, and only if, redundancy payments are to be made. In other words, it is compensation, as it were, for thinning out the manpower in the Port of London. That is perfectly well explained in the first sentence of the explanatory and financial memorandum, which says:
It was also well explained in the Minister's speech. I believe that that is perfectly right. The Bill should be restricted to that kind of assistance rather than try to cover the whole management and future of the PLA."financial assistance for measures to reduce the manpower of the Port of London Authority".
Will the right hon. Gentleman be arguing the case for the ports on Merseyside?
If the hon. Member would wait for me to make my speech, he might find that I shall steal all his thunder in supporting the case for the Mersey docks.Having recognised that this is the only purpose of the Bill, we must recognise that the Government have accepted a responsibility to compensate ports for the redundancy payments which they must make in order to ensure that those ports are viable—not necessarily for all redundancy payments in every industry, but certainly in this case the payments to that special kind of worker, the registered dock worker. The Bill is very careful and deliberate in limiting the financial assistance to that subject—the reimbursement of redundancy payments. In almost every line of the Bill one reads that if there is no redundancy there is no financial assistance. Of course, it is said that this is all with a view to making a port viable. It is true also that the Minister is standing by previous loans and guarantees, but redundancy is the condition precedent to the present grant and the Bill recognises the Government's responsibility when redundancy of this sort occurs. My right hon. Friend the Minister said in December:
That is the purpose of the Bill, but the other arrangements relating to the PLA will stand. It will still be substantially subsidised in other ways, for example, by the refund of £35 million redundancy payments made before the end of February and by the £15 million loan in 1977–78 and another commercial loan of £10 million. I think that my right hon. Friend the Minister referred to two loans of £25 million."The Government can only agree to maintain the minimum level of financial assistance to the authority that it will need to continue with the most rapid possible run-down of manpower".—[Official Report, 7 December 1979; Vol. 975, c. 385.]
No—two loans totalling £25 million.
That is, then, a further £25 million subsidy to the PLA, together with two £3 million loans and a £5 million overdraft, all backed by the Government.The PLA may say that it is in competition with the State-owned and subsidised ports, such as Hull and Southampton, which have a Government loan of about £57 million at the preferential rate of interest of 3·6 per cent. The Mersey docks are not State-owned and they do not get that sort of subsidy. When they borrow money from the Government, they have to pay interest not at 3·6 per cent. but at the Treasury rate of 15 per cent.
Is the right hon. Gentleman aware that that is exactly the same policy as applies to the British Transport Docks Board if it borrows from the public sector?
Yes, but those docks already have capital to play with from the Government in that £57 million loan.There is an injustice in the Bill. The Mersey Docks and Harbour Company has to compete against State-owned and subsidised ports and it will now have to compete against the heavily subsidised PLA. Liverpool is the second largest port in the land. We rely on it for a considerable amount of international trade. The company employs 6,600 workers, and there are about 10,000 employees in all in the port. In addition, the jobs of many workers on Merseyside rely on port activities. In 1979, the company set aside £5½ million to cover the cost of redundancies and in 1978 it set aside £3 million. In those two years it had to find £8½ million, without subsidy from the Government, for redundancies.
Does my right hon. Friend agree that it is nonsense to discriminate against the Mersey Docks and Harbour Company by giving extra money to London while, on the other hand, establishing enterprise zones and urban development corporations to compensate for the injustice?
I do not want to complain about the zones and corporations coming to Merseyside. I hope that they will compensate, to some extent, for the unjust way in which the Mersey docks are being treated by the increase in competition against them caused by the subsidy provided for in the Bill.The Mersey docks have carried out their duty to the economy, as the Government see that duty, in reducing the number of employees and making the docks as viable as possible. Compared with the Port of London, the Mersey docks have been a success—if we cut out the £8½ million that they have had to find for redundancy. In fair competition, the Mersey docks can be successful and profitable. If they have unfair competition from subsidised State-owned and State-subsidised docks, and from the subsidised Port of London Authority, they may well suffer. If one compares the Mersey docks figures with those for the Port of London Authority, one sees that the Bill is investing in the Thames failure. I ask the Government to invest in the Merseyside success.
The right hon. Member for Crosby (Sir G. Page) has the right to comment on what he believes to be the effect of the Bill on his constituency. I do not deny that he may have a small part of a case, but I commend to him two points. First, the Port of London Authority is not the Port of London. I shall have a good deal more to say about that. Secondly, competition among British ports is to some extent regionalised. I shall not say that there is not a degree of competition between the two ports for the Midlands traffic, but there is also competition in relation to the trade facilities and the regular shipping services that each provides The competition may be much less than the right hon. Gentleman hinted.The first thanks of every hon. Member who wishes to take part in the debate must go to the Leader of the House for putting down a protecting motion, which allows us to have a four-hour debate if we wish. That is a graceful gesture, which gives the House a reasonable amount of time to deal with a complex matter. I intend to take perhaps an undue part of that time, because my constituency contains the whole of the Royal docks, and my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) is today in Zimbabwe, for obvious reasons, and I am sure that he would have wished to contribute from the Back Benches, because he represents the whole of the area in which the West India docks are situated. We have been round the closure course a number of times. I want to be as bipartisan as I can be tonight, because the origins of the Bill were with the previous Government and my right hon. Friend the Member for Stockton (Mr. Rodgers). I do not want my hon. Friends to think that I am necessarily in favour of the Government's way of going about things. I am not. I hope to show that even if I accepted their criteria I do not believe that the Bill would achieve what they want to do. The Bill explains itself in the long title:
I believe that that is dangerously simplistic. I do not think that it is right for us to pass the Bill, which we must pass tonight, without some heavy qualifications. That is my first qualification. I commend the courtesy of, and the apparently reasonable introduction by, the Minister of Transport. But the mere fact that he has permitted a Bill with a long title of that kind shows that, although he has learnt a great deal in the past few months—all Governments, including my own, have learnt a great deal about the Port of London authority—he has not learnt enough. If I am slightly tedious, but not repetitious, tonight, it is because I want to put on record certain factors that have been ignored by Governments of all persuasions. Governments will ignore them in future at their peril. I make no apology for the length of my contribution, because the people of East London know that what happens in respect of the Bill may determine the whole future of the Port of London. The Bill may not be as good as and may be far more dangerous than the Government realise. My second qualification is that clause 1(2) of the Bill says that, in giving assistance, the Minister may require"To provide financial assistance for and in connection with measures taken by the Port of London Authority to restore the profitability of their undertaking by reducing the number of persons employed by them."
I cannot reconcile that with the Minister's statement that he will be taking no power to intervene in the operation of the port authority. We should examine that in Committee. My third qualification is that the Minister believes that any port in the United Kingdom, be it Liverpool, Whitstable or Felixstowe, can operate entirely on a commercial basis, bearing in mind the effect that it has on other United Kingdom ports. If the Minister wants ports in the United Kingdom, and particularly London, to compete, they may compete themselves into oblivion with ports of the near Continent. For those reasons, while we do not oppose the Bill, my hon. Friends and I have grave apprehensions about its effect. We fear that it will be a slipway to further reduction in the Port of London Authority's activities and consequently the activities of the Port of London, which is not the same thing. That is why we have given notice of a motion, which may not in the end be put, that the Bill be committed to a Select Committee of the House. By voting money, we shall be approving a policy. The two cannot be separated. That is the classic position in which the elected representatives of the people must challenge the Executive. The assumptions on which the Bill is based can be properly examined only by a Select Committee. When a Private Bill comes to the House, the long title has to be proved. I do not believe that this long title can stand up, and a Select Committee should decide that. I shall divide the remainder of my speech into two parts. First, certain aspects of the port should be placed on record—its physical nature and importance, port organisation in London and human dimensions. I then wish to deal with administrative, management and financial factors and international competition. Those are the six parts of the main burden of my remarks. Other than those who live and work in the area, people consistently confuse the Port of London authority and the Port of London. It is easy to do. People talk of the docks as if the docks equal the port, which is not correct. The Port of London was there for centuries before the Port of London Authority was created by this House. The operations of the Port of London are more concerned with—and always have been—with the river than the docks. Technical and shipping trends in the past few years have intensified the superiority of the river over the docks, which were started over 180 years ago, as a result of the then monopoly of the West Indian merchants and others, as a secure and safe haven for sailing ships and to maintain easy cargo handling. It has gone on from there. Indeed, as I have said, everyone constantly confuses the two. In terms of those for whom I am speaking, the East London community, I am not concerned, frankly, with either management or with unions within the Port of London Authority legal network. I am concerned, but not concerned tonight. My concern is with the efficiency and the health of the Port of London writ large and its effect upon East London in particular."a grant to be repaid in specified circumstances and conditions as to the future management of the Authority's undertaking and the services and facilities to be provided by the Authority."
I am only seeking information, although I might add that the hon. Gentleman seems to be getting dangerously close to making a case for the closure of the enclosed docks. Can the hon. Gentleman inform the House what proportion of the traffic is taken through the upper docks and how much is handled in the river as a whole?
I could quote the figures from a recent PLA report. I shall try to find them as soon as I can. But if I were to find them they would be dangerously misleading, because traffic in the river includes oil, and it is necessary to do quite a lot of calculation.When the hon. Gentleman intervened, I was about to mention the GLC port, which is the upper port—the area which is popularly supposed to be at a disadvantage. About 12 million tonnes of cargo go up and down the river upstream of the GLC boundary at Crayfordness, of which about 1 million to 1½ million tonnes goes into the docks. I do not think that that necessarily represents the ratio for the whole of the port. I shall try later on to let the hon. Gentleman know the answer privately. The point is that the upper docks could fulfil a different function from those for which they were built. The hon. Gentleman suggested that I have been coming close to making a case for their closure, but that is not so. I am saying that their capital cost, and the fact that they are there, can mean that they can be used for new functions and to under-gird what everyone wants to see—the sustenance of East London, and urban reconstruction. My doubt is whether the PLA has been sufficiently enterprising in that direction. I should like to mention some of the physical characteristics of what are generally regarded as the upper docks, and which are said to be so small and out of date. There are no fewer than 16 miles of deep water quay in the West India and Royal docks. The entrance lock of the Royal docks is very large. The channel up to the Royal docks entrance is 47 ft. deep at high water by 600 ft. wide. It is twice as wide as the Panama Canal and much deeper. This is the case right up into Greater London. Indeed, at Tower Bridge there is a 34 ft. channel, 300 ft. wide. The idea that it is out of date, or that this great natural waterway, a great highway for London, has had it, is just not true. Many ships—not as many as we would like—are still in the river. But, of course, there has been a considerable rundown. In the Royal docks, there is a dry dock which is no less than 750 ft. long. Unfortunately, it cannot be used. It is impossible now to get any size of ship in a dry dock repaired in London, because the economics and the labour relations of ship repair in London have had a tragic history, which I shall not repeat to the House. It was mentioned by me in some detail in the Adjournment debate on 21 December. There is virtually no ship repair of any size at all in London, Britain's premier port. When the Thames water authority wished to get some of its sludge vessels repaired, it considered sending them to Falmouth, and may yet do so. That is the position in the United Kingdom, a maritime Power. That is the position in London, Britain's premier port. The sort of Greek tragedy, almost, which in miniature was found inside River Thames Ship Repairers could, without too much stretch of the imagination, be found also within the Port of London. That is why I believe the debate to be so important. I turn now from physical and background factors to the organisation of the port. I have drawn the distinction between port and river. Let us have a look at the Port of London Authority. The Port of London Authority was flung together by the House after one or perhaps two abortive Bills resulting from a Royal Commission at the turn of the century. In its wisdom, the House put together a wide-ranging organisation with a number of disparate and, to some extent, conflicting functions. It invested in the authority powers of conservation and navigation and those of a harbour authority. The basic operation would continue whether or not there were docks. The House vested in the authority the functions of a dock company. It amalgamated all the competing dock companies which competed themselves into oblivion. It put them together in a monopoly but did not include river warehousing. The authority also had a function for cargo handling, storage and, now, groupage, which is not the same. One can own a dock but not necessarily handle a tug. The PLA is involved in cargo handling. For that, it must employ dock labour. In the Royal docks the PLA did not employ labour until recently. The work was done by labour contractors. When hon. Members talk about dockers, they must remember that the function of the PLA as an employer of registered dock labour is of relatively recent significance. In the West India dock the PLA has handled cargo since the days of the West India Company. In addition to those functions, the House vested in the PLA the responsibilities of a landowner. I shall not describe them as responsibilities of a land speculator, but the PLA has dealt in land in recent years. The Community Land Act was of significance. I have no doubt that the repeal of that Act will also be significant to the balance sheet and finances. It would be feasible in abstract terms for the PLA to operate with a commercial return without operating a dock at all or, indeed, without employing registered dockers. That is because the accounts are consolidated. If the Government's criteria involve commercial viability and return on capital or cash flow and if they leave the PLA to juggle as it thinks fit—or as it must as a result of Government restraint—the capital and cash considerations might force it to take actions which it might not wish to take and which are not in the best interests of the Port of London, the United Kingdom or, indeed, British shipping. That must be borne in mind. The capital structure for the functions that I have outlined is not suited to the present conditions. It has been said that London was well organised in 1908 when it was empired. That is correct. The Port of London's motto is "Floreat Imperii Portus"—let the imperial port flourish. If the empire goes, what happens to the port? That is almost the history of the port. It is not as simple as that, but there is much truth in it. We face a large problem. It is much bigger than the Government realise. I turn to the human dimensions, which are considerable. There has been a great improvement in communications, understanding and dialogue in the Port of London in the last two or three years. Before the PLA went broke, it acted like the Kremlin. It was an imperial power. One can forgive it because it was vested in the dock companies, one of which went back to the East India Company. Some people say that the PLA acted in the same way as that company, but things have changed. I pay tribute to Sir John Cuckney, who gave out a lot of information and did his best to change things, but it is very difficult to make changes after 200 or 300 years of tradition, particularly with a middle management that has been used to an entirely different style of operation. Nevertheless, information and knowledge are very important, and while the responsible people in management and the unions may understand that things have to change, it takes a long time for that realisation to filter down the line. I am not convinced that we have allowed enough time for that to happen. There is now a different basis for registered dock labour. At one time ships' crews handled the cargo. Then a shipping contractor came on the scene and provided auxiliary labour to take over the work of the crew. The dock company handled the work on the quay, in the sheds and through delivery to rail transport. Some of the practices built up at that time may not now be relevant, but they are regarded as bargaining counters and are guarded jealously. The PLA and the Government must take that into account. The Minister was generous and right in his tribute to the work of the unions and their leaders. The process has been extremely complex and we must remember that registered and unregistered dock labourers are all members of unions and are organised as between the riverside and the dockside. The Minister must not forget that in many ways the PLA is providing services for its competitors. A ship goes into a dock and enjoys the convenience of security, a constant level of water and warehousing, yet an operator is providing a floating jetty or quay which can be run much more cheaply. The PLA has a difficult job in providing services for its competitors. That brings me to the dilemma of management. I have paid tribute to what the PLA has done in terms of information and the way in which the present management is devoting all the time and effort it can to solving the problems that exist. But it would be wrong not to mention that that management never had and still does not have the confidence of many people who work in the docks and of East London's municipal leaders. One chap said to me "They are a nice lot of young men—solicitors and accountants—but there is not a dock operator among the senior management." That may not be true, but that view is held by many people. Confidence and good communications lie at the root of success for the Minister's plan. It is said in East London that the PLA has always wanted to close the upper docks. Some of our people say that it is suffering from the disease of Maplinitis. In order to make the port profitable they will close everything down, run the concern as a land company, and say that if it had been allowed to build at Maplin it would have been even more profitable. There is always a degree of mistrust. The London borough councils have had to face four different plans for closure. Only recently has the port begun to be marketed as a total port. The Port Trade Development Committee was set up in 1976 under Frank Cousins, and it made a number of recommendations, some of which were followed up rather slowly. One of them, and this is a moral tale, was that inside the West India docks there should be a crane to deal with containers. It is called the Nellen container crane. I shall not deal with the problems, but the crane has been there for several months. A loan was granted by the harbour board. I believe that the crane cost more than £1 million. It has not been used. One side blames the other, and I shall not take sides on that issue. The fact is that the West India docks, which are favoured by many of the shippers, could have been operating in a different way had that matter been smoothed out. I do not know who is to blame. It may be that no one is to blame. It may be that these communications should be considered very carefully. Certainly, management cops the blame from the community even if, after investigation, it turns out that this example of apparent deadlock cannot be faulted on either side. Without a Select Committee, or without some investigation into the port, these problems will continue. That is why many people in East London have called for some sort of investigation into the PLA and, by that token, those who work for it—one cannot be investigated without the other—to see what can be done. In the end, it will be the community who will lose. People may receive redundancy pay or top-hat pensions under the provisions in this Bill, but if the matter goes wrong it is the community which will have to carry the can. The community is asking for more details and an investigation.
Does my hon. Friend know that it is not known whether the crane to which he referred—which has never been used and is not likely to be used—can be moved to any other part of the docks so that it could be used?
I am grateful to my hon. Friend. He brings me to my next point, namely, the way in which the present proposals for transfer have been handled. Apparently the reason for transfer is to save the overhead cost of some 500 persons, many of whom are not registered port workers, so as to come within the Government cash limits. We understand that the Government wish to impose cash limits. I do not want to drag in any contentious material. However, that appears to be the reason for this change and why it has been expedited.The management said to the unions "The ships will go to the Royals"—where there is a different working practice—"like it or lump it." I think that the reason for the meeting to which the Minister referred was that the unions felt that if they went along the road that the management have been pressing—in the sense of imposing what they regard as an unreasonable condition which leads to blacking—they would lose the lot. However, I do not know whether that is correct, as I do not speak for the unions. But, in risking that—a risk which has been partly lifted—the management were playing Russian roulette with the trade of the port. There is nothing easier than to take a ship away from a port and not send it there again. There will be many ports around the coast that would gladly take the West India trade. Shippers like to use the West India docks because the working practices are historically superior—or so it is thought by the users—to those at the Royals. That gives rise to a certain amount of distrust. There is another matter of distrust. People in East London say "Ah, well, they will sell it to the urban development corporation. It will be nice land for an enterprise zone. That is what is motivating the PLA." I am not saying that that is so. All that I am saying is that that is a natural and understandable reaction. People in East London know what is happening. I do not intend to deal with the urban development corporation or enterprise zones. In this speech, I shall assume that they are good things for East London. However, if they are good for East London—and the Minister and the Government think that they will be—would it not be a good idea to keep open the West India docks so that they can be fed by water, and the enterprises which the Government hope that the UDC and other projects may bring could be part of a port? People in East London say "What will happen to the West India installations? What will happen to the very good Olsen terminal? What will happen to the facilities there? Will it be let to tenants?" Why not? Why cannot the West India docks be used in a constructive and positive way, not necessarily operated by the PLA but perhaps by other persons who could use it for the benefit of the port as a whole? There is the dilemma for the PLA. If it did that, it would say "Ah, well, if we do that we shall undermine the viability of Tilbury." The PLA would, therefore, have to take a very difficult decision. I should like to put to the Government two other factors which I think will impede the success of their plan. Let us assume that all problems of confidence, management, unions and the relationships between them are solved. Let us assume that there are none of the difficulties which I have just outlined. I still do not think that the Bill will achieve its purpose, because there are the lead weights of the interest. The Minister said that the Price Waterhouse report justifies the continued trust port status. But how can he justify interest of £8 million or £9 million a year, which has to be paid whether or not the enterprise is profitable? All the other wharves on the river are operating at a surplus. But if they make a loss they do not have to pay their shareholders, whereas by statute the PLA does, because the 1908 conditions, whereby a monopoly was exchanged for an obligation to pay interest on capital, no longer exist. The 1908 monopoly which London had by virtue of its physical building, which to some extent is now outdated, has disappeared. Therefore, can one apply the same financial principle? I suggest that one cannot. Even if one gets rid of that, one is left with the final factor about which I believe there will be considerable problems. That relates to competition, and not just with other ports which can act as ferry terminals. Techniques have changed, and, because of dredging, lighting and tugs, London is at a physical disadvantage. However, the major point relates to what is known in the trade as the Touche Ross report, which was published by the National Ports Council some years ago. It showed that Continental ports, by virtue of their municipal or national management, grew up in a quite different tradition from the Port of London. Indeed, they were created and sustained by the nations and towns of which they were part in order to compete with London. Many of the developments at Dunkirk, Antwerp and Rotterdam were pursued by the municipalities in order to compete with London. They have a quite different financial structure. I shall not go into the details, but the Minister will know that the Touche Ross report calculated that port dues in London could be dramatically reduced if London was funded on the same basis as the Continental ports. I do not think that those facts can be denied. However, the difference is in the effect which that has on the trade of London. That is where I have disagreed with my hon. Friends and the previous Government, just as I now disagree with the present Government. Here I must thank the Minister for his courtesy in replying to a letter which I sent him last week—I shall be sending another next week—part of which I should like to read. In reply to my point about trans-ship trade and the Continental ports taking trade from London by roll-on/roll-off or short-sea traders, the Parliamentary Secretary says:
I would have thought that we have plenty of that in London. He added:"Although there is some trans-shipment of goods from the continent to the United Kingdom it represents only a small proportion of port business; it takes place not so much because continental port charges are lower, but because shipping costs benefit from the economies of scale of the employment of large bulk carriers, extensive port facilities and storage accommodation."
That is fine. That sentence in itself reveals a great deal. The letter continued:"In any case, since Britain is an island, transshipped goods must still enter the country through a port."
I shall not pursue that very much further, but I believe that the matter must be thoroughly examined. I do not believe that what has been said is correct. Even if labour relations and management were right, and even if the PLA obtained its capital reconstruction, it would still have to compete against trans-shipment trade from the Continent, the roll-on/roll-off trade, the Channel tunnel, and possibly Whitstable, which also takes trade from Rotterdam. Therefore, in passing the Bill tonight, and by providing money for redundancy in a search for viability, we may end up with less than we had, and maybe even less than that. As I demonstrated, it would be possible for the PLA, as an organisation, to be profitable and viable without dealing with ships, and acting only on land and on its other assets. That danger must be examined. It could be examined by a Select Committee. I hope that the Minister who replies to the debate will be able to tell the House that these matters will be examined. Perhaps the Select Committee procedure would be too lengthy for the purposes that the Minister has in mind. But we need a measure that will induce confidence in order to ensure efficiency. Something must be done in order to clear the air. If it is not done by the House, it should be done by another body and the matter should be settled. At the turn of the century, a Royal Commission was set up. We need a similar body now. Unless such a body is set up, the purpose of retaining the Port of London in its entirety, let alone the successful operation of a smaller PLA, will not be achieved."This means that there is no real competition between United Kingdom and continental ports; London's real rivals are other United Kingdom ports. We believe that ports should compete freely with each other on the basis of price and service without Government subsidy."
The hon. Member for Newham, South (Mr. Spearing) has given an intriguing social and historical tour of the Port of London. I am sure that the House is indebted to him for that, and we shall be interested to read a report of his remarks tomorrow to find out what he is advocating in relation to the Bill. I assure the House that I shall not embark Linen a similar social and historical tour of the Merseyside area, because I am sure that it would take even longer, and I hope to confine my remarks to a more specific response to the Bill and to the Minister's opening speech.First, I shall explain why a Member from Liverpool wishes to address the House on a Bill which appears to deal exclusively with the Port of London. Perhaps I can do no better than explain that this morning I received—I suspect that all Liverpool, and possibly all Merseyside, Members received it—a communication from the chief executive in Liverpool in which he informed us that the city council had passed a resolution relating to the financial position facing the port of Liverpool. I think that I have an obligation to read it to the House. The resolution states:
That resolution and approach of the Liverpool city council will explain at the outset why I believe that, as a Liverpool Member, I have a particular interest in speaking about the Bill and the effect that it will have on Merseyside. With the chief executive's letter was an ample and interesting report produced by the Mersey Docks and Harbour Board. It may be worth reading to the House the final paragraph of that report. In effect, the board is saying that the Government should apply the same principles to Liverpool as they have to London. Expenditure on manpower accounts for about 80 per cent. of the Mersey docks running costs, and the company accepts the need to continue to reduce its labour force in line with rapid changes in trade patterns and new methods of transport. It is obvious that if Liverpool is to continue to bear voluntary severance costs, which are now accepted as a national charge in London, the competitive position of Liverpool will be weakened. Even if Liverpool were not a special development area, this would be manifestly unfair. If one takes into account the considerations of regional policy, it makes no economic sense whatsoever. The Bill seeks to intervene by making funds available to help the London docks. Yet the Government have been dedicated to fight against public intervention. They have repeatedly stated that public funds should not be used to support ailing industry or to prop up projects which are unable to support themselves. In line with that policy, the Government have rightly reduced regional aid and, under the Local Government, Planning and Land (No. 2) Bill, are seeking to do away with a number of bureaucratic obstacles to allow free market forces to operate. Yet, by intervening in this way, they are distorting the very opportunities that they seek to give to the private sector to operate without public intervention and control. Regional aid distorted the economic situation by encouraging companies to go from one area of the country to another for no particular reason other than that the Government were giving substantial aid and it was so attractive that companies felt they had to go to areas with special development area status. The funds were so attractive that companies felt that they could go to those areas and, if the economic situation turned rough, they could get out without losing too much. Regional status on Merseyside has meant that many major companies have in the last two decades gone to the area and created a great deal of employment. But as soon as there has been a downturn in the economy those companies have packed their bags and gone out equally quickly, creating massive unemployment and throwing away a great amount of Government aid which had been provided over a long period. That was the justification for not continuing with a regional aid programme to the extent and at the level which has been created up till now."The city council urges Her Majesty's Government to take immediate steps in the interest of the economy of the city and Merseyside to grant a subsidy to the Port of Liverpool, proportionate to that recently given to the Port of London, so that the port charges in Liverpool should not be rendered so high as to be uncompetitive due to Government discrimination in favour of another port at a time of soaring unemployment in Liverpool."
Will the hon. Gentleman also note that the destruction of London was the result of that policy? Industry left London and went to places such as Merseyside because it was encouraged to do so.
I am grateful to the hon. Gentleman for that comment. It merely strengthens the case that I am about to unfold and to which I hope the Government will listen with great care.The intervention was not confined to industrial dislocation. It went further. The compulsory purchase orders used by city councils destroyed much of the older housing in the inner areas around the docks, both in London and in Liverpool, and transferred the people to the vast council estates on the edges of and often outside the city boundaries. That dislocated the neighbourhoods and communities and reduced the rate income which the local authority would have enjoyed had the people still been living in the inner city area. The decanting of the population from the inner to the outer areas resulted in the loss not only of homes but of population and rate income. It is not surprising that one-fifth of the population of Liverpool has been decanted to the outer areas over the past two decades. What one is arguing about is massive central Government or local government intervention which has been damaging to the local economy and often to the national economy. Far more than achieving an improvement, it has made matters worse. When the Government decided to relocate workers on Merseyside to the outer city areas, it cost the taxpayer £14,000 for each job that was relocated, destroyed many green field sites on the edges of the city which were good agricultural land and drove farmers further out into the waste lands and the rural fringes beyond. So the experience of public intervention has not been an unmitigated success. Therefore, the policy of the Government to reduce the amount of public intervention both locally and nationally and to allow free market forces to operate unhindered was something which Conservative Members welcomed. However, it seems that the proposal in the Bill is to discriminate in favour of the London area, propping up the docks there, which in turn will distort and discriminate against the docks on Merseyside. If the Government intend to intervene, they may take the view that the London docks are a special case. That is always an attractive way for a Government to proceed. They may say that the docks should be treated as part of the infrastructure like the roads, electricity services or putting derelict waste land to good use—in other words, that the docks are a special case and should be treated as part of the infrastructure. The Government may say that they distinguish between the docks and the manufacturing and service industries on the basis that one produces goods which should not be interfered with and the other is part of the Government's infrastructure programme. If that is the argument that the Government are putting forward, surely they must deal with it as part of the national strategy. The docks cannot be part of the infrastructure if at the same time the Government say that they will treat them as such in only one area. If it is a national strategy, it must apply to all areas. On Merseyside we have suffered from a great deal of unco-ordinated Government action. For example, we have a Minister with responsibility for small firms, yet only last month small firms in my constituency were being pulled down to make way for more public housing, with the result that jobs were lost and £100,000 worth of export trade was lost. We cannot have a Minister responsible for one aspect of Government policy when the local authority is doing something else. The airport on Merseyside has doubled its throughput in the past year and now has more cargo than Stansted, yet the Government discriminate in favour of Manchester airport. It may well be that the argument is that there is a national airports policy and the Government have taken a decision to support Manchester airport to the detriment of Liverpool airport. But as regards the docks the Government cannot say on the one hand that they will discriminate in favour of London and on the other hand that they will not have a national ports policy. We need a clear indication from the Government of the basis for continued intervention, albeit following the previous Government's policy. Is it that it is part of an infrastructure programme? If so, let it be applied to Merseyside. Or is it a one off and the start of a process of the Government intervening and putting public funds into the docks because of the difficulties there? One of the problems that the docks have on the West Coast of Britain is that they face the wrong way. They face out to the United States, whereas the docks on the East Coast have the advantage of Europe. Merseyside needs special help to counteract the problems that it faces in persuading others to come to the North-West. Therefore, to give favour to London without giving favour to Merseyside is an added insult. Further problems will be created. As I said in my intervention in the speech of my right hon. Friend the Minister of Transport, we cannot get regional aid for the docks because they are considered to be part of a service industry. Regional aid does not go as far as providing money for service industries. I am asking the Minister to realise that by the Bill he is indicating that he is involved in a programme of discrimination against Merseyside. He is also indicating that he is subsidising a port in the East in favour of a port in the West. By enacting a Bill of this magnitude, he will ensure that Merseyside is less competitive. What is the point of enacting a Bill that will make Merseyside less competitive when only last month it was announced in the Budget that enterprise zones would be introduced, which we shall probably have on Merseyside? It does not make sense for one Ministry to say "We shall help Merseyside" and for another Ministry to enact Bills that will do a disservice to Merseyside. I ask my right hon. Friend the Minister to say that he will extend the support that he is offering London to the Merseyside docks, which are in a virtually identical phase in their history.
At times I found it difficult to relate the remarks of the hon. Member for Liverpool, Wavertree (Mr. Steen) to the long title, which reads:
I shall confine my remarks to that title and question the underlying assumption. In common with my right hon. and hon. Friends, I do not wish to oppose the Bill. I, too, want the money to be made available to assist with the redundancies that unfortunately will still be necessary. The long title seems to imply that the profitability of the PLA can be restored merely by reducing the number of persons employed by it. It ignores two aspects of the PLA's problem. First, it ignores the special features of the port. Secondly, it ignores the competition that Britain's largest and principal port faces from other European ports. It has to compete with them on an unfair basis. Reference has already been made to the Touche Ross report. I shall refer to it in rather more detail. It is interesting to note that the report came to the conclusion that if the port of Hamburg prepared conventional accounts it would be shown to make a large operating deficit. The analysis shows it to operate at a loss even before account is taken of depreciation and interest on capital. In other words, the port of Hamburg in West Germany—a country that is the great idol of the Conservative Party—continues to operate with a large deficit. There are reasons of a historical nature that underlie the way in which the Port of London has grown up and developed. However, there are other reasons, and important reasons. It is recognised that the existence of a thriving port serves as a catalyst. It produces other jobs in surrounding firms. Conversely, as the activities of the Port of London decline, the number of jobs in the inner London area, and even in my constituency of Thurrock, decline. Many jobs depend and exist solely as a result of the existence of the Port of London. Others recognise that fact and are prepared to put in subsidies at the appropriate point rather than introduce the notion of a free enterprise zone. They are prepared to provide the necessary subsidies and to let them produce other jobs. Let us look in detail at the estimates given in the report. Let us use its method of comparison and take not only Hamburg but the other three ports that are analysed. If the Rotterdam conditions applied to London, the percentage change in port charges would be 14 per cent. If the Hamburg conditions applied, the percentage change in charges would be 84 per cent. If the Dunkirk conditions applied, the percentage change would be 30 per cent. and for Antwerp, 34 per cent. The Port of London Authority is operating in the face of competition from ports that arc subsidised in a variety of ways. In addition, it has to take on more extensive responsibilities than some of them. Those responsibilities may not represent large elements in the financial accountability of the Port of London Authority, but they play their part. For example, the Port of London is responsible for maintaining and dredging the river as far as Teddington. It is not a great burden, but it is an additional one. Its main competitors do not have to bear that burden. The Bill should take that into consideration. The Minister's underlying philosophy implies that one needs simply to reduce the number of those employed by the Port of London Authority to make it viable. That ignores those other features. The money is designed to cover severance payments. It seeks to reduce the number of registered dockers on the A and B lists. However, no provision has been made for the problems that will arise as a result of reducing the work force. Some of those problems will be matters of union negotiation, and understandably they may be a cause of union resistance. For example, men on the category B list cannot be particularly encouraged to leave before men on the category A list. I do not quarrel with that, because those on the category B list will usually be those who have sustained injuries in the course of their work. Many of them will be elderly. They therefore worked there before decasualisation and they suffered all the iniquities of that system. I am not criticising the fact that severance payments cannot be used to encourage category B men to leave before category A men. However, reducing the number of those employed by the Port of London Authority will not solve the problem. A further factor has been ignored, namely, the age of those employed. The age profile of dockers in the Port of London Authority shows a peak in the 50–55 age range. In fact, 72 per cent. of the registered men are over 40. The PLA has not been taking on younger men for a number of years now. That means that the authority is put in a rather difficult position—it has an ageing work force with very little input of newer, younger men. One cannot ignore the special employment difficulties, because they contribute to the viability or otherwise of the Port of London. In addition, there is another issue to which the Price Waterhouse report refers rather delicately on page 7. It does not go into any detail but it says:"to give financial assistance for measures to reduce the manpower of the Port of London Authority with a view to restoring the profitability of their undertaking".
The version of the Price Waterhouse report that has been made available to us—an expurgated version, which leaves out certain features that the PLA would regard as commercially confidential—does not give any information to back up that point. Many dockers, through their unions, have complained that the administrative side of the PLA is top-heavy. They also complain about the lack of experience, skill and imagination of those employed on the administrative side. They suggest that delays in getting ships in and out of the port are due not to the unwillingness of the dockers to carry out the job well and efficiently but to deficiencies on the administrative side. Whether or not these allegations are true, it is difficult to judge, but surely these are matters that require investigation. Simply to produce a Bill that seeks the reduction of the work force is not enough. When one reads any speech made by a member of the Government, or any press comment, or when one looks at the Price Waterhouse report, one sees that the reduction in the work force means a reduction in the number of dockers. The staff side is rarely discussed in detail and is not discussed in the report. That is an aspect that should be thoroughly examined if the Minister intends to exercise his powers under clause 1(2), which says:"Severances of non-registered men have been delayed because of difficulties and delays in negotiations, though we understand that staff severance terms are sufficiently generous to attract an adequate number of applications."
Does that mean that the Minister will investigate these problems? Will he carry out a thorough investigation to show the numbers employed on the staff side, what their work involves, how quickly the necessary reductions in manpower are made there and the terms offered? Will he do anything about these aspects in his efforts to make the Port of London viable, or will he simply ignore such problems? These problems are the sort that sour industrial relations in the PLA. There is resentment among dockers over the fact that there are too many chiefs and not enough Indians, as they put it. There is resentment about the delays caused, as they see it, by inadequate and inefficient clerical operations. These are matters that should be thoroughly investigated by the Minister. They are matters in which the unions representing the staff side should be involved as well. However, none of this is referred to in the Price Waterhouse report, which skated over the matter in the sentence or two that I quoted earlier. There are other pressures within the PLA that I want to examine in detail. The authority claims that its financial position has been made much worse by the loss of shipping lines to competitors. It appears that three lines have transferred operations from the PLA dock—APCL, EMEC and CAROL. The loss of trade involved is 40,000 containers, and the handling charges are £70 per container. Those containers left the multi-user berth of the northern depot of the PLA on about 15 March. The PLA claims that there was a loss to competitors. In fact, it was a loss to a special sort of competitor—a private employer within the port; and that creates special tensions and difficulties for the PLA and creates part of its financial problems. What are the implications of such a loss for the PLA? It was not a case of the customers being lost to another British port or to a Continental port; it was a loss within the port. The special problems are ignored by the Price Waterhouse report. They create special financial burdens for the PLA, which not only faces a strange sort of internal competition but has to pick up redundancies created by private employers in the docks. The PLA is seeking to reduce its work force, but that force can increase, because the PLA takes up dockers who have been made redundant by private employers. The Minister said nothing about the special problems. He proposes, in the long title of the Bill, a simple solution."the Minister may impose such conditions as he thinks fit".
When were the contracts lost? The Price Waterhouse report took account of events only up to the middle of last year. Is the hon. Lady saying that the total loss of revenue to the upper docks from those jobs is about £3 million a year?
I was merely quoting that case as an example of the sort of problem faced by the PLA. It appears that the losses occurred in March this year. They are not covered by the Price Waterhouse report; they are merely an example of the sort of difficulties faced by the PLA that are not adequately covered by the Price Waterhouse report or by the Bill, which seems to suggest that viability can be restored merely by reducing the number of employees in the docks.The Price Waterhouse conclusion is:
That begs the whole question. These other features of the authority's operations must be taken into account."We do not believe that a case for a capital reconstruction has yet been demonstrated, largely because it is not possible to determine the proper relationship between the PLA's liabilities and assets until more progress has been made in restructuring the PLA's business so as to achieve a profitable port operation, in particular through the elimination of uneconomic working practices and the severance of surplus manpower."
My hon. Friend is on a very important point. Can she confirm something that I believe to be true? She said that the contracts were lost by the PLA, I believe at Tilbury, as an employer of labour and as a handler of cargo, but am I right in thinking that whilst it may have lost that cash flow and that revenue it retained the revenue of harbour dues, and that if the berth to which my hon. Friend referred was inside Tilbury dock it retained the tonnage dues on the ship, and possibly cargo tonnage dues as dues to the dock company, in which capacity it was also involved?
I thank my hon. Friend for that intervention. He is right. There are two kinds of losses—the loss to the authority as an employer and the loss of the handling charges. But there are other revenues that the authority derives. Therefore, to say that it has lost three customers over recent months and that that is an additional cause of all its problems, and to suggest that that could well be because of the lack of progress towards improvement in working practices, as the authority often does, is to give an inadequate reason.In fact, it appears that the real reason for the loss of the customer was that the mechanical equipment was not available. At times there is only one straddler carrier available, and sometimes there are two. In other words, the loss was caused by lack of investment and lack of maintenance of the mechanical equipment necessary for carrying out the work. That is different from a need for improvement in working practices as a reason for loss of customers. Those are the kinds of complex issues that make the Price Waterhouse report's conclusion superficial. It does not look at other reasons for lack of viability, such as the lack of adequate mechanical equipment and lack of investment. It does not look at the peculiar problems created by the fact that the authority competes as an employer with private employers within the port. Therefore, the Price Waterhouse conclusion is inadequate and superficial. If the Minister is to intervene, as clause 1 gives him the power to do, he should do so only after a thorough investigation of the authority's special difficulties.
I should like to emphasise my hon. Friend's point. The reason why the Price Waterhouse report was published on this occasion, as distinct from the previous occasions, was that it contained nothing of value. Previous reports were not published, because of the confidentiality of their contents. Therefore, the present report is clearly inadequate for its purpose.
I thank my hon. Friend for supporting what I have said.The authority faces another special problem. I do not think that it is one for which it can be entirely excused. Reference is made to Tilbury as a container port. One of the most important sections of that port is the Northfleet-Hope container terminal, which was purpose-built, being designed mainly for Australian and New Zealand trade. Australia continues to import many British goods, which can leave the country through Tilbury. In 1978, Australia imported £856 million-worth of United Kingdom goods. However, a special problem will have to be faced by Tilbury with regard to EEC restrictions on the import of dairy products and sheepmeat from New Zealand, which will gravely affect trade. The Government could perhaps look to the EEC for reimbursement, since it is Community decisions that will affect trade in Tilbury in the very near future if severe restrictions are imposed. The Bill, although welcome and necessary, is in every way inadequate. Its underlying philosophy is misconceived. It is not sufficient to believe that by the continuing reduction of the work force the problems of the Port of London Authority will be solved. The Bill does not deal with the fact that the port faces subsidised competition from other countries, which is right because of the additional employment created in surrounding areas. In Committee we shall be pressing the Minister for essential information about the operation of the Port of London Authority. We shall seek to improve the Bill and ask the Minister to provide further help for the Port of London Authority to give it the opportunity to become viable in the future.
I apologise for missing the first part of the speech of the hon. Member for Thurrock (Dr. McDonald), especially as in the second part there were points with which I readily express agreement. I am glad that the hon. Lady took the opportunity to emphasise that the damage inflicted on our trade by membership of the EEC has significant consequences for our ports. I hope that her fears are groundless and that the Government will stand up strongly for the interests of our traditional suppliers in Australia and New Zealand and that their trade will continue to come into all British ports.I also agreed with the hon. Lady's general scepticism about the probable success of the strategy that the Bill is designed to support. I do not disagree with the need for the Bill or wish to see the strategy fail. However, I doubt whether the unions, management or customers involved in port reorganisation can see the immediate future as anything but a period of great trial and tribulation. It is a difficult operation, and success is by no means guaranteed. I am sceptical about the chances of maintaining the commercial viability of the upper docks. However, it is a period of experiment, and I hope that the message will not go out from this House, as every speech so far appears to have indicated, that the experiment is doomed to failure. That would be disheartening for everyone involved. I enjoyed the speech of the hon. Member for Newham, South (Mr. Spearing), which was helpful and constructive. Hon. Members representing dockland areas must be under tremendous strain. The hon. Gentleman and his colleagues representing neighbouring constituencies must feel at times that they bear the burden of the collapse of empire on their shoulders. I do not accept the hon. Gentleman's analysis on why trade has left not necessarily the London river but the upper docks. It is not the collapse of empire or the changing pattern of world trade. Much of that trade has moved to other United Kingdom ports such as Tilbury, Medway or Southampton. The hon. Gentleman and the hon. Member for Thurrock did the House a service in emphasising that the Port of London is not just the upper docks. They emphasised the vast tonnage which exists within the river itself. Even if both upper docks were to be closed—and that is not the proposition before the House—the total tonnage handled on the riverside wharves and at Tilbury would still leave the London river and the Port of London Authority as probably the largest port in the United Kingdom, leaving aside oil tonnage. It is a very considerable port indeed.
I am grateful to the hon. Gentleman for his remarks. We were not trying to be pessimistic but trying to say that, although the Government's intention may have been correct, we do not think that the remedy is yet adequate.I have been able to ascertain the answer to the question put to me earlier by the hon. Gentleman about tonnage. The 1978 annual report of the PLA shows that 43·7 million tonnes was handled in the river—that includes the PLA grain terminal, which is in the river—and 5·8 million tonnes in PLA dock premises inside the impounded docks.
I am grateful to the hon. Gentleman for that information. He further empasises the point that I was just making and that he also made in his speech.There is a future for the Port of London, but clearly it is undergoing a period of great and very painful change. I understood the hon. Gentleman's point that he felt that the Bill would not support the changes necessary to secure profitability and would not help to secure viability. I put it to the hon. Gentleman that there is no action that this Government or any Government could take, or could have taken, that would achieve that purpose, because the reasons for the decline of the upper docks are much more fundamental than anything that subsidies could correct. They are geographical; they are social. I do not believe that the upper docks can have a long-term future of this kind. I cannot see that the enclosed docks have a long-term future. I cannot see how the upper docks, with the long journey up river, can compete with the new and highly specialised facilities and the natural deep-water facilities that exist at so many other docks. I cannot believe that in a situation in which the customer is free to choose where to go, ships will come up river indefinitely. We are involved in competition, and my right hon. Friend the Minister made a point which is fundamental to the whole Bill and the whole debate—that ports must pass the test of competitiveness and commercial viability. It is not a matter of free enterprise versus State control, because the Port of London is competing against nationalised docks. It is competing against publicly owned docks of one form or another, just as it is competing against privately owned docks and against other British dock workers. In the last two decades, there has been the most remarkable revolution in shipping. The most fantastic changes have taken place with the container revolution. Literally billions of pounds have been invested in new ships and new handling techniques. It has happened on a scale that is almost comparable with the sort of investment that has gone into the exploration of the North Sea. This has involved such fundamental changes in a very short space of time that I can- not believe that docks such as the Royal or the India or Millwall could have kept pace with them. One can see these changes at Southampton, at Tilbury and in the Medway Port Authority in my constituency. There have been some problems now and then, but basically the changes have been achieved with the co-operation of the dock labour force in this country. It is not that somehow we are trying to force the pace of change upon unwilling people. It has been an industrial revolution, and I cannot believe that one can isolate London from all this, which was what the hon. Member for Newham, South was talking of doing. I do not wish to disparage the efforts to reduce the dock labour force in London. It has happened on a remarkable scale. Basically, the trends are too powerful to pretend that we can sustain the docks ad infinitum. If we do that, perhaps we shall damage certain areas and make it harder for them to adjust in the long term. I do not see that as an argument of despair.
It being Ten o'clock, the debate stood adjourned.
That, at this day's sitting, the Port of London (Finance Assistance) Bill may be proceeded with, though opposed, until Eleven o'clock or for four hours after it has been entered upon, whichever is the later.—[Mr. Le Marchant.]
Question again proposed, That the Bill be now read a Second time.
This is not the time to go into the arguments about urban development or enterprise zones. In the long term—and much pain can be suffered in the long term—there are immense opportunities for capital, new jobs, new construction and opportunities. We may do a disservice in the long term if we try to sterilise the opportunities.
I do not disagree with much of what the hon. Gentleman has said, but does he agree that the fact that a ship of 44 ft. draught could enter an enterprise zone in the middle of the Isle of Dogs would help?
I would rather leave the urban development corporation to decide that. It is not impossible. If it is decided to secure new berthing facilities for the benefit of existing and new users, so be it. However, I believe that that is a marginal question in relation to the whole strategy. I sympathise with the case made by the hon. Member for Newham, South. Nobody misunderstands the situation. Visiting dockland is like visiting a ghost city in the middle of an economic and social desert. The situation is tragic, and I pay tribute to the hon. Gentleman for his constructive approach to the problem.The right hon. Member for Barrow-in-Furness (Mr. Booth) criticised the Bill. He said that it had a limited purpose and was restricted to running down manpower. To be fair, he should have quoted the Price Waterhouse report, which stated:
The right hon. Gentleman might disagree with that, but the report was commissioned by the Labour Government. The Bill provides the means to change manning levels. It provides the main weapon through which the PLA can return to viability. That is not the Government's assessment; it is the PLA management's assessment of the strategy. On that basis, the Government introduce the legislation. The right hon. Member for Barrow-in-Furness also criticised the Government for changing their strategy. He said that the previous Government maintained the concentration option that involved the two docks. The Government have not changed the strategy; the Port of London Authority has changed it. It has concluded that it is no longer possible to retain both the upper docks. The authority listed the reasons for that and we understand them. It mentioned the deterioration of financial circumstances since it accepted the concentration option. The Government are backing the judgment of the PLA management."The nub of the PLA's present financial problem is a combination of the uneconomic use of manpower and its inability to divest itself of manpower which is already, surplus … The PLA will not return to viability until it has improved its working practices and shed its surplus manpower."
If the hon. Gentleman reads the five-year strategic plan of the PLA, he will see stated at least three times that it is the authority's view that there cannot be commercial viability as I and the authority define it without capital restructuring. Therefore, one cannot contend, as the hon. Gentleman does, that the PLA believes that the limited scope of the Bill is sufficient to restore the authority to viability.
I shall come to capital reconstruction in a moment. I am quoting from the PLA statement dated 3 March 1980. It is fair enough to take the PLA's statement as a basis for its views on the position.The reason for the further deterioration, which is why the PLA has abandoned the concentration options—it is clearly stated here—concerns the two weeks' strike over pay, which cost the PLA about £2 million. In addition, the authority has lost about £4 million so far this year. In spite of progress on manpower reductions, there has been insufficient movement towards implementing the changes in working practices identified as being essential to the improvement of the PLA's competitive position. I do not suppose that anyone enjoys having to make a major change of strategy like that. If, however, there has been this substantial deterioration in the financial position, one sympathises with the decision of the PLA to close one of the upper docks. The Government are backing the PLA management. That is their stated intention, and the Bill quite rightly embodies that approach. Capital reconstruction is directly linked to this whole case. The Government are absolutely right at this stage not to embark upon such a reconstruction. I say that even though I have frequently urged that public authorities and nationalised industries should not be asked indefinitely to carry unreasonable interest charges. That argument does not apply in this case, because I am not sure that we are placing the PLA on the sort of footing that will lead to viability. I expressed my sceptisism about the chances of success for this strategy, and it would be premature for a major financial reconstruction to be undertaken at this stage. If a major breakthrough was achieved and it was clear that there was a long-term commercially viable basis for the operation, there would be a case for looking at this situation, as with other industries. However, the PLA is not like other nationalised industries, It is in direct competition with other ports, and if the PLA is relieved of the obligation to service its capital the same must be done for Liverpool and all the other ports with which the PLA competes directly. That could not be done for one port without its being done for all the others. Therefore, the Government are right not to proceed to a capital reconstruction. This argument leads me to the question whether the PLA is a special case. I say that it should not be in terms of capital reconstruction, but there is justification for making it a special case in respect of other subsidies. My hon. Friends representing Merseyside constituencies have been saying that if this approach is good enough for London, it is good enough for their area and extra help should be given to other ports. However, this is a special case only because it involves an obligation inherited from the previous Government. We are honouring a commitment that was made. There is no case for extending subsidies to every other port simply because of the special circumstances of London and the sheer scale of change that has taken place there. It would be neither right nor sensible to spend taxpayers' money liberally throughout the other ports. That would make a bad situation worse. It is hard to concede one special case and then refuse others, but that is what has happened here. My hon. Friend the Member for Liverpool, Wavertree (Mr. Steen) argued that his area should get special grants on a regional basis because, as a service industry, port operations on Merseyside are excluded from the present facilities. I have a port in my constituency, and my immediate reaction is to ask why Merseyside should be a special case and receive a subsidy and why we in the South-East should not get the same when we are in direct competition with other ports. The answer is that we do not want to make any special cases but that if we have made one special case—and with a port subsidy of £70 million it is a very expensive special case, which the taxpayer has to bear—let us have no more. I turn now to what will be seen as a parochial point, although it is more than that. Part of the Medway Port Authority is located in my constituency, in the form of the port of Sheerness, which has been very successful. It is profitable. It has superb industrial relations. Its success has been achieved through good management, good industrial relations and a determined effort to go out and win business. It has succeeded. On a number of occasions the Port of London Authority has expressed a desire to have what it calls an estuarial authority—in other words, to take in the area of the Medway Port Authority and embody it in the general PLA operation. The hon. Member for Newham, South referred to Maplinitis. It is part of the same disease. The PLA must concentrate on sorting out its existing commercial activities and not seek ways out by expanding its empire. That is what it has been trying to do by talking about Maplin and Medway. We are in a period where small is beautiful. The smaller the management unit, the better. Therefore, the better it will be for ports if, for example, Tilbury and the Medway are seen by the PLA almost as self-contained units and we do not seek to have bigger authorities taking over more and more ports simply because of a superficial geographical argument about estuarial authorities. I repeat my doubts on the question whether the Bill, with the injection of money, will succeed. I do not believe that the Government have any choice in the matter. There is an absolute commitment to go ahead on this basis. I hope that there will be more success than that which I expect. We must resist any further subsidies going to any other ports. In the interests of the dock workers and the country as a whole, we must have a port industry that stands up to the test of competitiveness and commercial viability.
The hon. Member for Faversham (Mr. Moate) steered a slightly erratic course before he arrived at his destination. He asked a number of practical questions, quite rightly, and he raised a number of rhetorical questions, also quite rightly. He sorted out his differences with my hon. Friend the Member for Newham, South (Mr. Spearing) about the impression that the House is giving on the question whether the experiment is doomed to failure, as my hon. Friend the Member for Newham, South fears, or is an opportunity that deserves more support than the Government are able to offer at this time, which is the view of many hon. Members on both sides of the House.The basic question that the hon. Gentleman was asking was whether we are deciding that in the London area—whether it be the ports of London or the Port of London Authority—we are to provide a port dependent upon the amount of money that is available or whether we decide the sort of port facilities that should be available and then make the money available. Which is our priority? What can we do in London? Do we provide the money, or decide that there is only so much money available and that those responsible for the port should do the best that they can? That is the question that will have to be discussed in Committee, although I am not volunteering to take part in any Committee proceedings. I confess—and this is meant to be praise for those who have spoken before me, some eloquently, and some eloquently but almost endlessly, but that is another story—that this evening has been one of the few occasions when I have learnt something from listening to all the speeches on Second Reading. Too often, I have been tempted to say that we should have a vote at the beginning of a debate and then have the debate, followed by a second vote to see whether the debate has changed anybody's mind. Tonight I have learnt much. First, I have learnt from my hon. Friend the Member for Hackney, South and Shore-ditch (Mr. Brown), who has briefed me consistently for 15 years on all matters concerning London. We happen to share an office here, and that is part of the rent that I have to pay to him. I have learnt also from my hon. Friends the Members for Newham, South and for Thurrock (Dr. McDonald). They told me more about the Port of London Authority and the port of London than I had known before. I listened carefully to my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth), who is a ports Member. In the North-West we think that Barrow is mainly a shipbuilding area rather than a ports area, but he is a ports Member. Equally, I learnt much from the Minister. I hope that I learn as much from the Parliamentary Secretary. When the Minister had finished speaking I knew more about the Bill, although I was less enamoured of it. The phrase "The £70 million for the port" sounds marvellous. Yet the Minister is in trouble because most of it has been pre-empted and already spent. However, I learnt much from him. We are agreed that the money is to be available to the PLA and to those who are employed by that authority. At times tonight it must have been galling for Members from the London area to hear the debate almost become one about the ports of the Mersey. It must have been galling for them to listen to Second Reading speeches galore on something which was almost entirely out of order. However, I shall not go on about that in view of the present occupant of the Chair. He has been generous tonight. He knew exactly what was happening. The Bill has implications for every other port. Therefore, I make no apology, as has no other hon. Member, for intervening. I admit to the right hon. Member for Crosby (Sir. G. Page) that I was literally sea green with envy at the way in which he connived to make his speech on the Bill, I trust that I do not embarrass him by saying that we are not exactly allies on this, but at least we are working in parallel. That should be of some consolation. The Minister recognised that a Bill with this purpose was being prepared by the previous Labour Government and that such a Bill was one of the casualties of the general election. The Minister used the intriguing phrase that he was merely honouring inherited obligations. My local authority would say that this Government have inherited obligations on housing, not least on the sale of council housing, where apparently sales of council houses under the Labour Government were a great deal more than under the Conservative Government. They would say that the Government had inherited obligations about education. Teachers will come pouring into this place to tell the Government about the obligations which they inherited from the Labour Government. Social services workers and pensioners will do likewise. I do not complain that the Minister has accepted this limited obligation, but I find it strange that he has done it in this way. In any case, there are significant differences between the Bill as proposed by the Labour Government and this Bill. This is a residual Bill. It is only part of what my right hon. Friends and their colleagues were intending. According to clause 1(1),
Clause 1(3) states:"The Minister of Transport may, with the consent of the Treasury, give financial assistance to the Port of London Authority."
I presume that that is the Secretary of State for Industry—"The Secretary of State"—
The truest title for the Bill should not be Port of London (Financial Assistance) Bill but, rather, "The Treasury Veto on the Port of London (Financial Assistance) Bill". We know that no Minister, unless he is a particularly strong one—even stronger than the present Minister of Transport—can act virtually independently of Treasury advice, pressures and persuasion. But I can remember few Bills in which it is written that the Minister or the Secretary of State cannot act within their terms without the specific consent of the Treasury, especially as the Minister has now explained that at least 95 per cent. of the money has been pre-empted anyway. When we go into Committee, I think that that clause could reasonably be taken out without loss of face to the Treasury or to anyone else. It seems an unnecessary use of words. There are some questions that I should like to put to the Parliamentary Secretary. Within the terms of the long title, I would argue that the way in which the money can be spent is tightly drawn. If there is any hope of the money being spent in any other way, in order to reduce the need for redundancies, I hope that the Minister can cheer me up a little. But at the moment, under the terms of the Long Title, the only way in which the money can be spent is on redundancy payments of one kind or another. That is my interpretation, and I hope that I am wrong. If the money is to be spent on redundancy payments, severance payments or early retirement, what proportion of the money will the Department of Employment vote in order to carry on straightforward redundancy payments under national social services and social security legislation, thus leaving the severance and retirement payments to be carried by the Port of London Authority and the National Dock Labour Board? There are differences between redundancy payments, severance payments and early retirement payments. Will all those payments be included under the terms of the Bill, or will the redundancy payments be carried by the Department of Employment Vote? Now, at the risk of offending some good friends, in both the London and the Liverpool docks, the Bill will inevitably raise questions from those who are not employed in the docks industry about the differences in redundancy payments, severance payments and job loss payments within some sections of the public and private sectors. A worker employed by the Liverpool local authority who becomes redundant receives straightforward national redundancy payments. A person employed by Meccano who becomes redundant receives straightforward redundancy payments. A person employed by the General Electric Company or by British Rail would receive straightforward redundancy payments if he became redundant. Some private companies provide a little more. In the public sector, people who become redundant because of Government controls and restrictions on local authority expenditure receive straightforward redundancy payments. Why should their taxes and allowances go to help people in the broad docks industry, and perhaps in British Steel? People who are earning less than those employed in the docks or in the steel industry will be asking questions. Some people will say "Good luck to them". But for every person who wishes them good luck there will be 10 who complain that they could not receive such payments. This is a difficult question, but it is time that both the unions and the TUC examined the matter again, because the Bill will inevitably raise that sort of question. We need to find a more equitable way of dealing with the matter. Clause 1(1)(b) provides for financial assistance"may with the consent of the Treasury reimburse the National Dock Labour Board".
That is very broad. In one way it could be interpreted—I hope that the Minister will say that it will be so interpreted—as support for measures that will reduce the need for further redundancies. If this can be done in that way, I would support it. But this is a broad brush. The Minister gave some information, but we need to know more. We have been given some information about clause 1(5), dealing with"for the carrying on of their undertaking while such measures are being taken."
Even the right hon. Member for Crosby was confused on the question whether there are one or two loans for £25 million. Perhaps by means of a written answer or statement we could calculate how much of the £70 million has already been pre-empted, in what way, how far back the calculations went and what amount is left. What sums of money are we disposing of under the Bill that have not already been promised? The Bill has serious implications for the Mersey Docks and Harbour Company and its employees, for all those who use the ports of the Mersey, for all district and city councils in that area, and even for the not yet created urban development corporation. I do not wish to be parochial, so let me refer to the Manchester Ship Canal Company. I am not causing any waves or panic. Merseyside Members of Parliament are asked by the Mersey Docks and Harbour Company not to oppose the Bill, not to cause the Minister any difficulties, and not to cause any waves. We do not wish to cause any difficulties, but we wish to point out that what is done in London inevitably affects every other part of the country. I do not ask for a national plan for ports—I am suspicious about strategic plans or national plans—but investment of this sort is extremely expensive. We seem to be acting in an imprecise, inefficient and impractical way. We have a competition in deciding what the customer may or may not want and then we have a whole trail of redundancies and waste of capital. The main difficulty of the Mersey Docks and Harbour Board—as it was—for too many early years was that the managers were mainly committed to the shippers. The board and the docks were run for the shippers, not for the port and investment in the long term. We are concerned and interested and want to support the Bill, but we shall be asking for more aid for the Port of London Authority, so that the area may have the kind of port that it deserves, and we will be asking for equal relative aid and support for the Mersey Docks and Harbour Company."Any grant, loan, guarantee or payment made … before the passing of this Act."
A number of hon. Members have said that the debate has been interesting and valuable. I agree, and I do not use those words lightly. Hon. Members have contributed to a debate. They have reflected their experience over the years in their own constituencies. My experience as a seaman for 10 years and having worked as a docker for a short time means that I have a particular interest in the industry. Indeed, my maiden speech in 1970 was about the docks industry. To that extent, I have a close personal interest in the development of docks policy.The Minister made it clear that he was wedded to a belief in competition. That is not unique for him. He has expressed that view in other pieces of legislation that we have debated relating to transport. Even though his belief appears to be flying in the faces of a number of operators, he is wedded to that belief in competition. That is clearly an ideological belief. I do not criticise anyone for having such a commitment. Mine is the opposite. It reflects my Socialist way of looking at these problems, and particularly how I develop my own solutions to them. The Labour Party clearly reflects the interventionist view. This is a matter of record. Looking at the development of ports policy in the last two decades, we see a clear and distinct difference between the two major parties. The Minister is going much further with his policy than previous Conservative Governments have gone, particularly in regard to the abolition of the National Ports Council, which was a Conservative-created creature in the days when quangos were not condemned as such and were readily created by Governments of either major party. The Minister has shown that he understands some of the problems of decline. He mentioned traffic. I shall not refer again to the problems. It is clear that there has been a considerable decline in traffic not only for the Port of London Authority but for a number of established port authorities. I think that there is a connection between the established port authorities and the advantage of small being beautiful, as the hon. Member for Faversham (Mr. Moate) described it. There is an important lesson in that for port development which I want to draw out in my contribution. The Minister indicated that the main problem was a decline in traffic. He referred to technological changes, as did other hon. Members—the great bulk ships for grain, raw materials, oil and petrol and the change to containerisation. All these matters have had a considerable effect on port development and investment. At the same time, they have wreaked considerable havoc in the loss of jobs. I was glad that the Minister referred to the price that has been paid by labour due to the decline in traffic. Thousands of people have lost their jobs due to these changes. To that extent, a considerable price has been paid by those who work in this industry, particularly in the major ports. However, the Minister's conclusion seemed to be that there should be greater misery for the PLA because of his belief that as labour accounted for 70 per cent. of the operating costs of the port it was the major area for cost reduction. I am not arguing that there is not a case for a reduction in manpower. A number of authorities have said that this must take place. Indeed, it is inevitable when one considers how the collapse of private employers in this industry has led to the need for the remaining employers, through the dock labour schemes, to take on the surplus labour. That has created problems. Therefore, even if one were not reducing the traditional labour force of the PLA, one would still be left with the problem of having to carry a surplus labour force with declining traffic, and that has created real problems for the PLA. When referring to the Bill I found a little confusion. It seemed that on one occasion the Minister was saying that he felt that the way forward was to give this kind of finance to the PLA and to tell it that the Government would give it money at this stage, in the hope that the PLA would implement the manpower policy that the Government believe is essential to achieve viability. The Minister was attacked by his hon. Friend the Member for Liverpool, Waver-tree (Mr. Steen), who said "If the Government are giving this kind of money to London, why are they not giving it to Liverpool, which also has difficulty with labour costs?" Indeed, if one reads the statements of the Mersey Docks and Harbour Company over the past few weeks one finds that it is clear that the Liverpool docks have lost £7 million, £5 million of which is directly attributable to labour costs. To that extent, Liverpool has a case for asking for Government help. The Minister relied on his argument that the present Government inherited the Bill from the previous Administration. He said "It really is not our Bill." I was not sure whether the Minister was actually endorsing the fact that the PLA merited financial help because if it was not helped it would go bankrupt. That is the reality of the present state of the PLA; it would be bankrupt without the proposed loans. That was the reality in 1978 when the Labour Government said that they were prepared to make such loans available to the PLA. If the Minister inherited that commitment from the Labour Administration, he has not been prepared to inherit another commitment made by the Labour Government at that time, against the advice of the PLA. The chairman of the PLA at that time said that it was essential that the upper docks should be closed. My right hon. Friend the Member for Stockton (Mr. Rodgers) made clear that that was a price that he was not prepared to impose, because of the consequences that it would have for the community. He therefore made it a condition that this money should be given but that the upper docks should be retained as part of the plan. Hence the reason for the concentration strategy that is in the five-year plan of the PLA. The concentration strategy meant that the two upper docks, Millwall and India, would be retained as a service. It is clear that the PLA, with a new chairman and in new circumstances, feels that the dispute and other factors, such as continuing losses, have no longer left it the option to retain those two docks. My point is that it is not simply a matter of inheriting the financial guarantees given by the previous Administration, because the present Government have not given the same guarantees in terms of the effects on the community. The Government, and especially the Minister, are wedded to the philosophy of competition. That is the wont of this Government; it is evident from public statements made by the Minister. I have a copy of The Port for Wednesday 2 April, and the headline is "Fowler's message—Do it Yourself." He is reported as having said, at the annual luncheon of the National Port Employers Association,
The article continues:"What the Government does not want to do is interfere in the way you are running your businesses."
That is a clear and unequivocal statement against intervention in any form. It is interesting and raises the question of Liverpool. Nevertheless, it indicates that the Minister clearly felt that intervention was something in which he was not going to be involved. Tonight, however, he informed the House that he was using the NPC to look at the claim of Liverpool about its financial difficulties. The National Ports Council was originally designed to be a tool of Government intervention by an earlier Tory Government, who believed in a form of intervention. It stemmed from an Act of Parliament that was a direct response to the Rochdale report, which recommended a national ports authority. At that time the Conservative Government could not bring themselves to establish authorities; they much preferred the advisory role of the National Ports Council. It is clear that there is a distinct difference between the two sides of the House on intervention. Previous Conservative Governments did not go so far as the present one appear to go. They saw a certain role for Government intervention. In many instances intervention has ensued from reports commissioned by Tory Governments. A major inquiry into the ports was led by Lord Rochdale in 1961. That inquiry was established by a Tory Government, who were concerned about the obvious obsolescence and surplus capacity. I think that it will be generally agreed that the Rochdale report was one of the best reports on the ports. It recommended a national ports authority, reorganisation, a national plan for the development of the ports, and the end of the deplorable nineteenth century casual labour practices. The Tory Government's response was to establish the National Ports Council. The council does not have a great deal of teeth, but I regret that it is leaving the scene. What is to replace it, if anything? The Government say that they do not intend to intervene. However, the council has an appeals function. Only a week ago I brought to the Minister's attention the fact that the council had that function. It was intended to deal with monopoly powers. For example, Sir Humphrey Browne, of the British Transport Docks Board, rules more by his head than his heart."The previous decade had been marked by Government intervention in the industry. But the present Government intended to make the 1980s the decade in which 'this tide of intervention' receded."
A nationalised organisation.
Indeed. It has the greatest return of all the port authorities. I know why that is so. There are many who are redundant in the area that I represent, and those redundancies indicate clearly why Sir Humphrey's policies are so successful.When shippers want to appeal against the charges that may be imposed upon them by the ports, they appeal to the National Ports Council. What does the Minister propose to replace that appeal function? I read in one report that he was considering transferring the role to the British Ports Association. Surely that body cannot have an independent function. When the Parliamentary Secretary replies, he may indicate the Government's thinking on the appeal function. It seems that the Government will be identified as intervening in a form of price procedure. Labour's policy is evident in intervention. That is very much what the Rochdale report recommended. From 1964 to 1970, the then Labour Government embarked upon a massive investment programme. That is relevant to the programme of capital debt charges and the reconstruction of capital, the latter going very much to the heart of the PLA. The Rochdale report called for a massive investment programme, and that was implemented by the previous Labour Government, especially in the London area. There was massive development in the Tilbury area in containers. There was the programme of decasualisation. Unfortunately, the Labour Government were thrown out of office before they could enact the Bill that was designed to reorganise the industry. It was also a traumatic period for the port authority. It provides one of the first examples of a Government embarking upon competition yet failing to help when the Mersey Docks and Harbour Board collapsed. One of the first debates that I heard on docks policy shocked some Conservative Members. They argued that widows who had invested in the Mersey Docks and Harbour Board would have to pay the price of policies pursued by the various users of that port. Those users exploited the Mersey Docks and Harbour Board and refused to allow it to charge the proper amount for using its facilities. At the same time, a White Paper was published embodying the policy that there should be a great financial commitment and that there should be a commercial policy. Indeed, it was envisaged that there should be a 13 per cent. return on capital. Once again, the financial obligations on the port authority were wedded to competition. What happened? In the 1970s there was, as the Minister said, a decline in trade. There were great technological changes and container and bulk vessels provided the major form of traffic. When spelling out those developments, the Minister failed to understand the full consequences and effect on our British ports policy. Those developments did not affect all ports equally. Ports were affected in different ways. London and Humberside were affected by the developments in bulk grain. Huge ships were concentrated in Europe and grain began to be transhipped from Rotterdam, Antwerp, and so on, to our ports, thus creating a major problem in our port development. Why did they choose Europe? Touche Ross showed that costs in European ports were considerably lower than here. We force our ports to carry charges that are greater than those carried by our Continental competitors, such as Rotterdam and Antwerp. Other hon. Members have detailed the low interest rates, and so on. I have spent most of today in Dover, looking at the port and the problems of road construction. I spoke to the port authority and discovered that £6 million of its new £20 million investment will be spent on providing customs facilities. Those facilities are not paid in Europe. Port authorities in Europe raise their capital via the rents and leases of their users. High interest rates will have to be paid by the Dover authority. Touche Ross reported in 1972, and I have given the current example of Dover. We penalise our ports. As a result, our ports are disadvantaged. When looking through my files, I found a speech made by John Lunch, managing director of the Port of London Authority, in 1974. He warned then that
That is the subsidy argument. He continued to discuss British ports and said that if we allowed that practice to continue, transhipping would make Britain a feeder port rather than a major port. That is exactly what happened. It is interesting that Mr. Lunch made a point that I would also make about nationalised industries. He said that if we looked at our ports we would see that it was not the type of port that determined whether it was a successful example. Some nationalised ports made a profit. Some local authorities make a loss, some trust boards make a profit and some make a loss. The type of ownership does not determine that. Mr. Lunch said:"It is well known that Continental ports have many of their costs borne by local or central government and provide special inducements to industry in the form of cheap land, low interest rates etc., since the main objective is to attract basic industry to seed economic growth. In contrast the financial policies for Britain's ports are probably at the extreme of world practice. We require our ports to bear all the costs and to charge the customer accordingly. Hence British ports always appear to the user to be much more expensive than Continental ports."
Antwerp, Rotterdam and Dunkirk—"All the ports I have described"—
I add that it is not only ownership but the geographical situation that affects the development of a port. Trade has changed in a major way. Transhipment of trade had a major effect on our ports, because it meant that smaller ships were carrying cargoes to this country. Of course, they could be dealt with by smaller ports. We started to see the diversion of traffic. The ship owner has a mobile asset. We found that when London was blackmailed on the question whether meat boats should go to Southampton. All the port authorities vied with each other for the traffic. That was one of the grave problems in our port development. Competition has been a major factor. The Minister's mistake is to assume that all ports can compete equally. It is just not true, and it flies in the face of the evidence in all the reports that we have received since the Rochdale inquiry. The Minister does not have to take my word for it. Any port operator will confirm it. There has been a decline in traffic, but some ports benefited while others faced a major decline, for a number of reasons. In Humberside we lost 1 million tons of traffic in grain and timber, and so on, which bypassed Hull and went to the small wharves. The reason was that the price was considerably cheaper. Once again, the House does not have to take my word. The National Ports Council, under Lord Aldington, whom the Tory Government appointed, analysed the facts in 1972 and found that the major expansion was in the small scheme ports, the traffic in which expanded by about 80 per cent. between 1966 and 1971, compared with an expansion of only 23 per cent. in the large scheme ports. What happened in Hull was repeated in the Port of London. Traffic went to the small wharves, where we had the problem of registered, as against non-registered, labour. We can see how traffic diverted to the Medway and other parts of the South-East. There are cost difficulties for a port at that end of an estuary. The point is that the community spent millions of pounds to provide container cranes and big conventional ships. The traffic that was diverted represented much of the bread-and-butter earnings of the ports. The National Ports Council report in 1972 made clear why it was cheaper to go to the smaller ports—wages were considerably lower and benefits and holidays were considerably less. However, that was not the major factor. The main factor was the high capital charges that major ports had developed in the decade after Rochdale, when they were encouraged to make massive investments. The NPC report said that the proportion of debt to capital employed in the larger ports was 75 per cent. In the smaller scheme ports with which comparisons were made it was as low as 26 per cent. That made a big difference in getting the money back in charges at the dock. The major ports were at a great disadvantage. Apart from the trade and technological developments being against them, the capital debt structure that we had imposed on the port authorities was also of considerable consequence. This is exactly the argument of the Port of London Authority. All these problems came home with a vengeance to the port of London, which was at the end of an estuary. There are all the costs of estuarial development. The port may have had them as costs or it may have made a profit, but the reality is that the ship owner had to pay to come up the estuary before he went into the dock. Therefore, the port could not compete with Medway, Felixstowe and the others that have a cost advantage and can then ask for investment to be sanctioned by the National Ports Council and secure an agreement with overseas traders to come to their ports. What happens to the ports in which the community has invested hundreds if not thousands of millions of pounds of public money? Whatever the answer, the authority is left with a debt that is not totally of its making. In some cases it comes about because of circumstances outside its control. Sometimes there is an argument about labour practices, but it is not the sole problem. That is one of the grave weaknesses of the analysis that we have received tonight in connection with the Bill. The authority has lived with crisis for a decade. It has lived on its reserves of £53 million since 1953. As we found in 1978, it is in crisis, the crisis now being bankruptcy. Without that money, it would have been insolvent. That was the only reason for any Government intervention. Was the authority to be allowed to be insolvent because of the commercial market—the dictates of competition? That was the issue that the Labour Government faced, and they said that they would provide the money. The present Government also faced that issue, whether or not they inherited it. They could have backed away from it if they had wished. I accept that it was not an easy decision, but the Government inherited the responsibility to bring the Bill before the House. The crisis is considerable. It will not go away. We shall live with it for many years, as the five-year strategy report clearly shows. The previous Government made clear, despite the fact that the authority wanted to close the upper docks, that a condition of giving the money was that they must be retained. So it is not exactly the same kind of inherited commitment. The Minister indicated that, as we on the Opposition Benches believe and I think the authority believes, there must be a financial reconstruction for the authority. There is no argument about that if it is to return to viability. The Minister prayed in aid the Price Waterhouse report. Unfortunately, having been in Dover today I was not able to read all of it, but I have read parts. I was referred to the section on capital reconstruction. The Minister rightly pointed out that perhaps one should wait to determine the labour practices before any consideration of financial reconstruction. But implicit in that remark is the recognition that, to quote from the report,"are of course in national or municipal ownership. I mention this to avoid any political distraction in this paper. It is organisation of ports that matters—irrespective of ownership."
Price Waterhouse recognised that there would have to be a financial reconstruction. Does the Minister accept that possibility in principle? I hope that the Parliamentary Secretary will answer. If the Minister accepts that that is a possibility, given satisfaction on all the labour practices, which is what he said he wanted to achieve, he accepts that he will intervene in a financial reconstruction. It cannot be achieved without Government agreement and a Bill. In those circumstances, it will be another intervention on behalf of the authority. The Minister will have to decide whether that is to be a matter of policy or simply an intervention. The hon. Member for Wavertree and other hon. Members from Merseyside will again be asking what the difference is between the two ports. We say that the policy for all ports should be consistent. Ports policy should not be determined by intervention when an individual port goes bankrupt. It is crazy to believe in competition and non-intervention as a policy. It becomes increasingly evident from Government statements that that is their only policy. Doubtless the Parliamentary Secretary will reiterate that. Our major concern is that the Minister believes that the emphasis should be on further manpower reductions to solve the problem. If the closure of the upper docks is to be justified by manpower considerations, the same must apply to the Royal docks. On 8 May 1978, the right hon. Gentleman asked the then Secretary of State:"In due course, there may be a case for a limited reconstruction based partly on bringing liabilities and assets into balance and by reference to profitability and cash flow objectives."
Is that the right hon. Gentleman's view now? Does he believe that the Royal docks have to close and that the Port of London Authority should concentrate on Tilbury? I hope that the Parliamentary Secretary will make that clear. If the dockers are co-operating with the Government, it is in the belief that the Royal docks will be maintained. Does the right hon. Gentleman still believe, as he and Sir John Cuckney believed in May 1978, that the Royal docks have to close in order for the PLA to be viable? I do not believe that he will get co-operation from the industry for such a proposal, which will have a major effect on London development. We support the Bill but deplore the fact that there is no condition as we laid down regarding the upper docks. We warn the Government that it is a mistake to believe that more redundancies will achieve viability, which appears to be their policy. The five-year report and Price Waterhouse demonstrate that that is not so. Ideological belief in competition also will not solve the problems. The Government are in danger of returning to the bitter dock wars of the 1970s, which damaged all and did little for port development."Do the Government accept the view of the chairman of the PLA that over the coming months the Port of London will have to be slimmed down substantially, but that if that is done there is no reason why the port, based on Tilbury, should not prosper?"— [Official Report, 8 May 1978; Vol. 949, c. 772.]
I agree with the hon. Member for Kingston upon Hull, East (Mr. Prescott) and other hon. Members that it has been an extremely informative debate, which covered a wide area. Practically every hon. Member who has spoken has promised—I almost said threatened—to pursue his detailed points further in Committee.
I trust that we shall not have a replay, such as Arsenal and Liverpool will have to have after tonight.
It is appropriate that the Liverpool v. London conflict should take place on the football field tonight. There have been times when a Liverpool v. Arsenal match has practically been played on the Floor of this House. I am not sure whether the Government are referee or victim. I trust that we shall not replay this debate for too long.I shall have to reserve some matters for Committee, not least because I have less time now than several hon. Members took in the debate. The debate ranged widely. We covered the history of ports policy and the whole basis of regional policy in the North-West, and my hon. Friend the Member for Liverpool, Waver-tree (Mr. Steen) went on to deal with discrimination against Liverpool's ports, as he saw it. I shall confine myself to answering specific points about the Port of London Authority and explaining the basis of the Government's policy in the Bill towards that port. I shall also try to deal with the points made by hon. Members from the North-West about how the Government reconcile that policy with their treatment of Merseyside and other ports in the country. The fundamental purpose of the Bill is to seek to enable the Port of London Authority to continue to deal with the dramatic change that has been taking place in the ports industry in this country. My hon. Friend the Member for Faversham (Mr. Moate) was quite right and was not exaggerating in any way the extent of the change that has taken place in cargo handling generally throughout the docks industry in this country. The so-called container revolution has had a dramatic effect on dock practices, particularly in some of the larger traditional ports. London, as the largest of our traditional ports, has had to accept change on a massive scale. No one throughout the debate—including my right hon. Friend and myself—has underestimated the impact of these changes in cargo handling on the docks industry, and the consequent effects on employment for the communities themselves. We pay tribute to what has been achieved in both London and Liverpool by way of dramatic reductions in the total labour force which were inevitable in the face of technological change. A considerable degree of co-operation and resourcefulness has been shown in accommodating the change. Unfortunately, as we see from the difficulties which these ports and some others still face, we still have to accommodate change if we are to deal with these problems successfully. I was asked what aim was being set by the Government for the PLA and those involved with it, as indicated by the contents of the Bill. The aim set for the PLA is to cope with its major problems and to return to profitability by 1983. That is the target set for itself by the PLA in its strategic plan. It is the Government's opinion—I understand that it is also the authority's opinion—that that is a realistic target, although no one denies that it will be a very difficult target to achieve. But it is one that the management and work force of the PLA have to face, because that is the financial climate within which they have to operate and that is the target that they have to set themselves if they are to give long-term security to the port by putting it back on to a competitive and financially sound footing. The Bill sets out the tight financial limits within which the authority will operate and it offers assistance in reaching those limits in one specific area only —that is, in helping with the considerable costs of reductions in manpower that will be involved in getting to that target and in assisting the port to trade during the period that has to go by before it can get its manpower down to the necessary level. There has been a great deal of comment about the fact that the Bill is narrowly confined to the reductions in manpower and the severance costs. No one is pretending that that is the only problem facing the Port of London. There are other problems involved, not least its geographical situation, the closed docks in particular being a considerable way up the estuary. But there is a world decline in shipping trade, and several other problems have been touched on in the debate. Nevertheless, there is no getting away from the fact—even when we touch on the other factors—that the nub of the problem in the Port of London is that it continues to have excess capacity for any trade that it is likely to attract, and that in particular it has excess manpower and working practices which weaken its competitive position. There is no way in which we can avoid the fact that the nub of the issue is the continuing need for severance of manpower in order to get down to a labour force which is able to be gainfully and efficiently employed on the trade that will come into the port and to those parts of the port that can trade successfully. That factor is the one identified by this Government and by the previous Government as the one where the Port of London Authority needed financial assistance. Labour Members have tried, for understandable reasons—I can appreciate them, because most of them represent Port of London Authority areas or dock areas—to distinguish between our aims in the Bill, with the concentration on severance costs, and the aims of the previous Government. They have tried to claim that the inherited obligation, as my right hon. Friend described it, has been changed by this Government and that we have introduced as a new element the concentration on severance costs. I remind the House of the statement of the Secretary of State for Transport in the previous Labour Government, when he began this policy. In reply to a question by the then hon. Member for Hornchurch—Mr. Williams—he informed the House, as he had already informed the Port of London Authority, that the Government were
That was the basis of the financial assistance. The Secretary of State said:"prepared to provide financial assistance towards severance costs for registered dock workers and stair, on condition that the Authority sets in hand urgent measures, in cooperation with its trade unions, to secure the most rapid possible rundown of surplus manpower".
The underlying theme of the financial commitment by the previous Secretary of State was that he accepted that he had to intervene to achieve manpower reductions. He also mentioned the closure of the Royal docks on the understanding—not a condition—that no steps were taken towards their closure. That was not a permanent guarantee. Active measures were being proposed by the PLA to close the Royals. The then Secretary of State said:"Up to £35 million in grants will be made available towards severance costs as they arise, together with any necessary backing for further borrowing for the financing of the undertaking while manpower reductions are being achieved, up to £10 million. I have requested the Port of London Authority to produce a detailed costed plan as the basis for Government financial assistance, after further discussion with the trade unions, designed to establish the specific targets of manpower reductions. No grant assistance will be provided until this plan has been submitted."
"Both the Authority and the unions are being told that I will review the position at intervals and monitor improvements in performance to ensure that progress justifies continuing in this way. The provision of grant assistance will be contingent upon results."—[Official Report, 31 July 1978; Vol. 955, c. 169–70.]
I have no doubt that that grant was for manpower reductions. Whether the Royals should close was not an issue. Mr. Cuckney made clear that his strategy was that the Royals should close. Mr. Cuckney even considered resignation. He had to maintain the continued operation of the Royals. I thought that that was common knowledge.
That was not the underlying basis of the financial commitment, nor was there any guarantee. It was clearly said that although the proposed closure of the Royals was postponed, the matter would have to be reviewed according to progress. That happened just before an election. Since then the Royals have not closed. No one insists that they should. The present management has closed the India and Millwall docks because of unsatisfactory performance and because of the costs of a strike. The Royals remain open, but their future is tied up with the future of the PLA. It depends upon the performance of management and workers. We are dealing with financial provision for severance.The hon. Member for Liverpool, West Derby (Mr. Ogden) asked me to make clear to what extent we are continuing a previous commitment and how much of the previous Secretary of State's money had already gone. That was also mentioned by my right hon. Friend the Member for Crosby (Sir G. Page). The previous Government spent most of the money. They did so on the Estimates and on the authority of the Appropriation Act, having undertaken to Parliament, in a footnote that few noticed, that they would legislate in due course to give themselves full authority to spend money that they had already spent. That is a proper procedure, but much of the money has already been spent. I have been asked how much is committed. The right hon. Member for Barrow-in-Furness (Mr. Booth) asked how far the commitment to make grants for severance extended. He asked whether it was proposed to limit the commitment to the severance that would arise from the closure of West India and Millwall docks. It is not. The commitment in the Bill covers the whole period of reduction in labour force that is necessary to achieve the target of financial soundness by 1983. The total amount of money for reverence payments remains at £35 million, as envisaged by the previous Secretary of State, divided between severance payments for staff and repayments to the dock labour board for payments under the dock labour scheme. We have increased that sum by £5 million to allow for inflation. Of that £40 million total, £19 million has been paid—£11·4 million to registered dock workers and £7·6 million to staff. The Bill gives backing to two separate commercial loans, totalling £25 million, of which £23 million has been taken up by the PLA. The Government have offered backing for an overdraft facility, should the PLA require it, of £5 million. That has not yet been taken up. Therefore, £47 million of the £70 million has already been committed. It is a commitment that we have inherited. We envisage that the remainder, within the £70 million limit, should enable the management and the men of the PLA, as long as they successfully tackle the task that faces them, to return to profitability by 1983. The Bill commits the Government to a figure that, in our opinion—supported by the Price Waterhouse report and the other information before the House—is the minimum required by the PLA to tackle its problems and move towards profitability.
Does the Minister agree that the point that has been made from the Back Benches is that, irrespective of any difference between the Front Benches, money itself is not enough? The money will help and may be fundamental. That is what the Government can give. However, does not the hon. Gentleman accept that those of us from the area believe that there must be some further inquiry and consideration of the practices of both labour and management so that that money will be effective? That is the burden of at least some of our speeches. Will he say whether he agrees with that and what he will do to further that aim?
I shall deal with the Select Committee point in due course. I agree that money alone will not be enough. What is required is decisions by the management and the work force of the PLA to reorganise the business of the port to achieve financial viability. That involves decisions on the sort of traffic that it will attract, how to attract it, manning levels, working practices and the other problems that the PLA has to tackle. All that the Government are setting out are the financial climate within which it will have to operate and the Government's commitment to the cost of the severance payments, which we inherited as an obligation from our predecessors and which the PLA cannot finance out of its own resources.We are committed to severance costs only. I shall return later to the points raised by my hon. Friends from Merseyside. The Government are anxious to make it clear that we are concerned only with the cost of severance payments plus the necessary loans to keep the PLA trading during the period in which it must reduce its labour force. There can be no question of turning that commitment into a general operating subsidy for this port, or for any other, for the perfectly natural reason that as soon as one admits the policy of operating subsidies to a certain port there is no reason why competing ports should not come along and say "We have a case for an operating subsidy that is every bit as good as that of London." I wish to deal with the claim made by the PLA-based Members that it would be right to extend that commitment to what I would describe as a more general operating subsidy. They claimed that the PLA was entitled to a capital reconstruction. I refer hon. Members to what my right hon. Friend the Minister said when he opened the debate, to illustrate that the Government and Price Waterhouse have reached the conclusion that the case for capital reconstruction is not valid. When I talk of a port returning to profitability and a sound financial basis, I include in that the need for it to service its capital debt, just as any other business does. To move to a general proposition whereby one claims that when a business is in serious difficulties it is entitled to write off its accumulated capital debt by a so-called capital reconstruction is very near to saying that there is a case for a continuing subsidy for that port vis-a-vis its competitors, most of whom will not be relieved of the obligation to service their capital and will continue to carry their capital debt. I have been asked to deal with the question of the general subsidy that it is said is enjoyed by foreign ports, particularly those in Western Europe. That claim is then used to justify saying that there should be a continuing subsidy to London and, presumably, to other ports because, it is said, that is the Continental practice and our ports cannot compete with them. The Touche Ross report has been referred to a number of times as the basis for this argument. It was published in 1974 and compared four subsidised Continental ports with three unsubsidised United Kingdom ports. It certainly concluded then that the subsidy enabled the Continental ports to set their dues considerably below the levels that would prevail if they operated on a commercial basis. However, although Continental ports compete with each other, there is no real competition between them and United Kingdom ports. Hon. Members, particularly from the Labour side, have talked about the transhipment trade and have said that that is where the competition arises. However, a recent National Ports Council survey showed that transshipment amounted to only 7 per cent. of United Kingdom deep-sea imports in 1978 and about 5 per cent. of deep-sea exports. In any case, transhipped goods still have to enter or leave the United Kingdom through a port. That was the point that I tried to make in my letter to the hon. Member for Newham, South (Mr. Spearing). It sounds a trite remark to make, but it is significant. The basis upon which the Continental European ports are competing with each other is that they are trying to attract trade into Continental Europe through their respective countries. If by some form of subsidy one can get traffic to go in through, for example, Hamburg, one stops it going in through a Dutch port such as Rotterdam. French, German and Dutch ports seem to have a habit of trying to attract traffic by way of subsidy, leading to international competition of what I would regard as a fairly undesirable kind. However, all goods come into Britain by way of some port, for the elementary reason that we are an island. Competition in subsidy in this country will therefore be only between different British ports and will affect only the way in which the goods come in and the ports through which they enter. There is no basis for our going into some system whereby we encourage our ports to attract traffic to each other on the basis of subsidies that they can win from Government. The competition faced by the Port of London Authority comes from other United Kingdom ports, such as Felixstowe and the Medway ports, and it is Government policy that ports in this country should compete freely with each other on the basis of price and service without Government subsidy. The Touche Ross report was concerned with port dues and not with cargo handling charges, which are a much more significant part of port costs, so the kind of comparisons made by the hon. Member for Thurrock (Dr. McDonald) are a great simplification of the position. It is in cargo handling costs, on which there is no evidence that the Continental ports go in for any degree of subsidy, that the biggest differences arise between London and many of its competitors. It is in overmanning and working practices that London could do most to improve its competitive position vis-a-vis other ports with which it is undoubtedly in contention at the moment. That takes me on to the question how we relate this to the practice towards other ports. Merseyside has been concentrated on because it is the other large traditional port that has problems involving the seeking of manpower reductions, although its problems are not on the same scale as the problems of the PLA. I have already sought to emphasise that the assistance to the PLA is for a period to 1983. It is related only to the substantial problems of manpower severance that it faces. That commitment was inherited by us from the previous Labour Government, and most of the money involved had already been committed by them before today. We shall not seek a generalised subsidy for other ports, as my right hon. Friend made clear when he had to make the difficult decision about the port of Preston. We received an application for a further grant, but the point had to be made that we could not justify further grants to it. We have made clear that in the Government's opinion there is no case for a grant to the Mersey Docks and Harbour Company because, I am glad to say, we feel that that company is in a position in which it does not and should not need such a grant. By taking the necessary steps it can put its house in order, and it can put itself in a position in which it can finance the necessary severance costs from its revenue. I understand why my right hon. and hon. Friends feel strongly that Mersey is in some way being discriminated against. I have heard it said before that Merseyside is somehow being singled out for unfavourable treatment, but, with respect, I do not believe that my right right hon. and hon. Friends are able to support that contention. I know how strongly it is felt by some of their constituents. My right hon. Friend the Member for Crosby referred to competition with State-subsidised ports, and, among others, he cited Southampton. With great respect, the British Transport Docks Board is not subsidised in that way. It pays a fully commercial rate on its loans. It is in fact repaying debt early from revenue, because of the way in which it is managing its business. In any event, although it is at present a successful State-owned organisation, we are proposing to bring forward proposals that will introduce a substantial amount of private capital into that board. On all counts, there is no quesion of a State-subsidised competitor. There has been no general practice on Merseyside of the Government accepting a duty to compensate authorities for any sort of labour severance, although there have been occasions when, as a national measure, grants have been made to the National Dock Labour Board to support the severance of registered dock labourers. In 1972, £30·5 million was devoted for that purpose to a national severance scheme in which Mersey was a participant and from which it was a beneficiary. But Mersey, because of its particular unfortunate history, has also had other assistance. Following its bankruptcy in 1970, Mersey's capital debt was written down in 1972 by 60 per cent. We are in the perverse situation where Mersey has had capital reconstruction but is not being helped with severance, and where London has not obtained capital reconstruction but is being helped with severance. I am in no way critical of Members from Merseyside who ask for money for severance or of Members from London who ask for capital reconstruction. Many other ports in Britain actually pay the cost of their severance out of their earnings from revenue. We believe that the interest of the user is best served by an arrangement whereby the docks compete with each other by way of service and efficiency to get the traffic that they need in order to support themselves from their own revenues.
Nearly an hour ago, the point was made that the basic problem of Merseyside is that the Mersey Docks and Harbour Company is making a major trading loss and that £5 million of that loss is accounted for by severance pay over the last year. About 500 people in the dock have become unemployed in the first three months of this year. It seems to me and to other Merseyside Members that unless some assistance is given in an area where the unemployment is twice the national average, more dock workers will become unemployed. We cannot walk away from that. I understand from what the Minister said earlier that he might be prepared to consider an application from the Mersey Docks and Harbour Company if it asked for assistance, and yet he has just said that he is not prepared to do so.
With great respect, the hon. Gentleman was not here when my right hon. Friend opened the debate. My right hon. Friend dealt with the present position on Mersey, including the history of relationships between the Mersey Docks and Harbour Company and the Department of Transport over the last few months. I am glad to say that at the present time, with the assistance of the National Ports Council, the Mersey Docks and Harbour Company is reviewing its position and is searching for ways, which we believe can be found, of getting that port back to profitability and a financially more secure position. There is no basis, as has at present been established to us, for a grant for severance or for any other purpose.As someone said earlier, there is no reason for a background of complete defeatism and gloom about either of these ports. Indeed, it is necessary for us to guard against the constant temptation to find excuses for the present difficulties of these ports and to run away from the main problems, which are unfortunate but necessary, arising out of technological change, which has given rise to overmanning and excess capacity. It is also no use pretending that somehow these ports cannot be brought back to profitability and a sounder financial basis. There is every reason to believe that both can.
We are running out of time, and I have given way at least eight or nine times. I shall take up further points in Committee, but I suggest that it would not be right to have a Select Committee or any further inqury of the kind sought by the hon. Members for New-ham, South and for Thurrock.I do not think that the Port of London Authority needs many more inquiries and studies. It has had three Price Waterhouse reports. I do not think that at this stage it would help for an inquiry to take place which would seek deeply to involve this House or anyone else in management decisions, which must be taken by the responsible management of the PLA, or even to involve us in decisions which must be taken as a result of negotiations between the management and the trade unions with regard to manning levels, working practices and so on. In the end, it is the responsibility of those in the port to respond to the challenges which face them in order to get the port back to profitability by 1983. The kind of decisions which have recently been taken by the management, in the case of the West India and Millwall docks closure, and the response of the labour force to that, as evidenced by the encouraging decision of the labour force last week, shows that they are capable of responding to what is needed. As a result of the help given by the Bill, I believe that they could return to profitability. That is the target that the PLA must set itself. During the debate hon. Members asked what would happen if the Bill proved inadequate, if the financial limit was not enough or if the PLA failed to achieve its target. Let there be no doubt. The Government expect the management and everyone concerned with the PLA to take the necessary steps to keep within these financial limits. In our opinion, there is no good reason why they cannot do so, and the decisive steps that they have already taken are a good indication that they are capable of doing so. With regard to the docks industry as a whole, we shall not slip into a position of general subsidy for that industry or of preferential treatment of one port against another. That is the background of policy, and the Bill contains the financial limits within which the PLA must work. I am sure that it can be successful. I am sure that everyone hopes that it will be successful in its declared aim of winning a secure future for Tilbury, the two remaining upper docks and for those who work in the PLA, to the great benefit of the community in docklands. The Bill is an essential step in helping it towards that aim, and I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the whole House.—[ Mr. Newton.]