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Shipping: Light Dues

Volume 711: debated on Wednesday 10 June 2009

Statement

My honourable friend the Parliamentary Under-Secretary of State for Transport (Paul Clark) has made the following ministerial Statement.

I wish to announce today light dues rates for 2009-10 and for 2010-11. I will set out the reasons why we have concluded that it is necessary to increase rates.

The Government believe that transport providers and not the general taxpayer should pay for the essential safety services needed for safe and reliable operations. For shipping, this includes the aids to navigation—lighthouses, buoys and beacons—provided by the three general lighthouse authorities (GLAs) around the coasts of Great Britain and Ireland.

The GLAs have improved the cost-effectiveness of their services in recent years through fewer ships, light vessels and lighthouses, fewer staff, reduced use of helicopters and revised working practices. Overall their operating costs have been reduced by 25 per cent in the past 10 years, and light dues have not had to go up since 1993.

Despite these efficiency improvements and prudent management of the General Lighthouse Fund (GLF), we were facing a shortfall in funding this year of £21 million for these essential safety services. This had arisen because, since light dues were last reduced in 2006 (at the request of the light dues payers), the income from dues had not been enough to cover the spending by the GLAs. The GLF has relied on income from the investment of capital receipts generated by rationalisation to make up the difference, the credit crunch led to the returns on investment from the GLF drying up and the weak pound meant the costs of running Irish Lights (in euros) had increased.

Faced with a shortfall in funding this year, we took decisive action and consulted on proposed increases in light dues to meet the GLAs' essential operational requirements. We proposed that the rate of light dues would need to rise from 35p per net registered ton (nrt) to 41p from 1 July. We also proposed raising the tonnage cap from 35,000 to 50,000 nrt so that some of the very biggest vessels would pay more and increasing the number of chargeable voyages from seven to nine per year in order to spread the impact among different categories of shipping.

It was very clear from the responses to the consultation that the shipping industry has been suffering during the economic downturn and considered that this is the wrong time to be increasing costs. We therefore looked hard at whether we could avoid or defer GLA spending or find other ways of reducing the burden on light dues payers at this difficult time without compromising safety.

I am pleased to announce that the GLAs have identified 5.6 per cent further savings in 2009-10 and the position on GLF income is better than we had assumed at the start of the consultation. We believe that by a careful combination of revised budgets and management of the GLF, we can avoid some of the increase in dues and defer or reduce the changes which would have had the biggest impact.

We are therefore proposing a lesser increase in light dues from 35p to 39p per nrt from 1 July 2009 and putting off a further increase from 39 to 43p per nrt until 1 April 2010. Even after the second increase, the light dues rate of 43p per nrt will be no higher than it was at its peak 16 years ago, and in real terms 32 per cent lower. The two-stage changes should allow everyone to plan ahead with more certainty about next year.

We have looked again at how the burden is spread between different types of shipping. Our original proposal was to increase the tonnage cap (the maximum cargo capacity up to which the light dues rate applies) from 35,000 to 50,000 nrt so that the very biggest ships would pay more. This is fair given the continuing trend towards fewer, bigger vessels in the container and bulk sector. In recognition of the exceptionally difficult economic climate this sector is facing this year, we have however decided to reduce and defer that increase, so that the tonnage cap will rise to 40,000 nrt from 1 April 2010. We believe that the increase in the voyage cap to 9 per year from 1 July 2009 is still appropriate.

We believe these changes strike a fair balance between the interests of safety and the protection of commerce. We continue to require the GLAs to identify additional savings and efficiencies.

It is, however, clear from the consultation that feelings about the funding arrangements for Irish Lights are strong. We have taken the opportunity of this consultation period to consider the delivery and development of aids to navigation in the two countries. Although the present shortfall in funding was accentuated by the current exchange rate between the pound and euro, the cross-subsidy of Irish Lights from the GLF under arrangements agreed between the two Governments in 1985 was not the cause of the shortfall.

UK and Irish Transport Ministers have reconsidered the arrangements, which predate the foundation of the Irish state and constitute an example of long-standing British-Irish and north-south co-operation serving the mutual interests of the communities. On the basis of a recent study, we have agreed to alter the formula for apportioning Irish costs on a north-south basis. The existing 30/70 apportionment is to be replaced by 15/85 with effect from the current year (2009-10).

We also agreed on the need for an overall assessment of the provision of the integrated aids to navigation service to all regions in the UK and Ireland. An evaluation is to be undertaken which will consider all aspects of delivery, including options for continuing increases in efficiency, potential improvements in structure and the overall arrangements for financing.

We expressed our support for the valuable work carried out by the service in both countries but stressed that we are anxious that optimum cost-effective use should be made of the resources available in maintaining safe navigation in UK and Irish waters.

In conclusion, in order to ensure that the GLAs have sufficient funds to enable them to carry out their statutory duties in respect of maritime safety and to protect the commitments of the GLF, including the pension contributions of GLA staff, it is necessary to increase light dues. Having considered all the representations I believe that it is in the interests of all parties to implement a two-stage increase in light dues that will avoid some of the immediate impact on the shipping industry at a time when it is suffering from the economic recession and downturn in trade and allow it more time to plan for future expenditure. This approach will also help the GLAs to focus on the continuing need to keep their costs to an absolute minimum consistent with maintaining safety standards.