Merchant Shipping (Light Dues) (Amendment) Regulations 2009

My Lords, the noble Lord, Lord Geddes, is clearly so worried about what I am about to say that he wanted to jump in first. I was interested in the rather distorted and imaginative comments of the noble Lord, Lord Berkeley. I know that he has been chasing Ireland for a small amount of money for a very long time, but an integrated collection system for light dues is in place in which revenue collected from shipping goes to the central fund, irrespective of the country in which the vessel actually pays its light dues. That is an important issue. It is a user pays system and no Government are going to pay; so, no pay by the user, no lights. I should point out to my noble friend that no funding is provided by the British Exchequer but, importantly, the Irish Government do pay an agreed portion of the costs of Irish Lights within the country of Ireland. To get matters into perspective, the total costs this year for the General Lighthouse Fund is £90 million. The GLAs have achieved a 50 per cent reduction in light dues in the past 10 years. I wonder how many shipping companies can own up to that. I doubt if any. The latest cut was a 10 per cent reduction in 2006. This has been achieved through a mix of automation, redundancies, massive rationalisation, sale of surplus property and constant use of technology. However, only so many dynamic economies can be made without compromising safety standards. Three years ago, the GLAs warned the shipping Minister that by 2009 the DfT would need to sanction a rise in the levy as revenues could no longer match the necessary costs in providing navigation safety—and this is all about safety. In January, the DfT warned the shipping industry that light dues would need to rise in the region of 24 per cent to meet the real cost of navigation safety. There has been a predictable outcry from ship owners—we have heard it from the noble Lord, Lord Berkeley—who have threatened to alter their trading patterns to avoid the new charges, and from port operators, who would feel the effect of such a move. The GLAs dispute these claims as light dues are a minor element of costs—1 per cent to 15 per cent depending on size and frequency after this rise. In total costs, it represents one penny in every £100 of any goods imported into this country by sea. Gosh, it is a big, big deal, is it not? The role of the GLAs is to provide such aids to navigation as the volume of traffic justifies and the degree of risk requires and, in so doing, discharge the UK and Irish Governments’ obligation for aids to navigation provision under the SOLAS convention. The aids to navigation provided include lighthouses, light vessels, buoys and beacons including an AIS—automatic identification system—as an aid to navigation, together with an integrated differential GPS service. In total, the GLAs provide some 1,200 aids to navigation and inspect more than 12,000 of them. Some light due payers have called for the amalgamation of the GLAs, implying that bureaucratic overmanning and duplication are in place and that amalgamation would make significant savings. It would not. The major savings have largely already been realised, but it would generate considerable additional cost with a very long payback period. The GLAs cover 20,000 miles of coast, covering some of the most complex waters in the world. This demands local knowledge and experience. All GLA activities are focusing on one common goal: the maintenance of marine safety as cost-effectively as possible. Everything from ship management to stock purchase is co-ordinated between the three services to meet this goal. A report on inter-GLA co-operation efficiencies is reviewed and accepted by the ship owners annually. Where appropriate, functions are combined. There would be significant costs to setting up a single GLA or separate UK and Ireland GLAs, particularly in relation to pensions, redundancy, relocation, retraining and new infrastructure. Those costs are estimated to be between £25 million and £70 million, or 12.5p to 35p on light dues, which I am sure the ship owners would love but would have to bear. There would also be a significant risk to navigational safety and the environment in replacing the current cost-effective system with a new untested arrangement. I do not think we want that either. The GLAs co-operate closely to minimise overlap in the provision of aids to navigation and to ensure that there is a consistent level of service. The tried GLA model is based on giving the mariner a seamless and integrated safety service around the British Isles, ensuring that all the coastline dangers are covered. This integrated service brings significant cost and efficiency benefits. Light dues are raised at ports, thus Trinity House raises 87 per cent of all revenue because of the large ports in the UK area, but the revenue must go towards supporting NLB and CIL in protecting the less frequented areas of Scotland. Ship owners can choose, if they call into various ports, which port they wish to pay their dues in. A complaint by some elements within the shipping industry is that light dues raised in England support Ireland—we have heard this from the noble Lord, Lord Berkeley—to the amount of £16 million, out of a budget of £90 million. They say that this is a subsidy from their dues to a foreign country and that cutting that subsidy would solve the funding gap, as we have heard from the noble Lord, which is also rubbish. There is an international agreement between the UK and Irish Governments that the Irish Government make a direct exchequer contribution into the GLF amounting to a proportion of CIL costs incurred in the Republic. This contribution from the Republic of Ireland and the light dues collected at Irish ports comprises about 50 per cent of the costs in Ireland. The Government, together with the Irish Minister for Transport, have indicated their commitment to consider this further—I have been involved with this—and discussions are ongoing between the respective Ministers. Many vessels use the aids to navigation in Ireland but actually pay their light dues in the UK. This was always the case and it is a firm argument for an integrated system. The position of the GLAs is that the size of the Irish contribution is a matter for the UK and Irish Governments while the GLAs focus on their statutory duty to protect the safety of the mariner. In a recent announcement, the respective Ministers for Transport in the UK and Ireland have indicated that an overall assessment of the provision of the integrated aids-to-navigation service to all regions of the UK and Ireland will be carried out and it is understood that terms of reference for this review are being written. Light due charges are raised by a formula that includes tonnage, voyage frequency and a flat rate. The statutory instrument raises all three elements. The shipping industry has made misleading claims to defend its position. The DfT commissioned an independent report to review the claims which concluded that the impact of the light dues increase was negligible. Light dues were between 1 per cent and 11 per cent of total port charges, rising to between 1 per cent and 15 per cent after the light dues increases were taken into account. Generally, stevedoring and port and tug costs are 90 to 95 per cent of the costs of calling at a UK port. Trans-shipment costs far outweigh the light dues increase. Dropping UK calls is not a viable economic option for shipping companies. Light dues remain a very small proportion of shipping costs, so the increase in them will not affect shipping calls to the United Kingdom. This increase has to be seen in the context of consistent and significant reductions over 16 years. The General Lighthouse Fund is also a quasi-pension fund—pensions raise their head again—as payments to existing GLA pensioners, of whom there are some 2,000—are made directly from that source under a pay-as-you-go arrangement. They are therefore reliant solely on the General Lighthouse Fund for the payment of their ongoing pensions. Current GLF reserves include an amount of £44 million, which represents the value of pension contributions made by GLA employees—in other words, it belongs to them—as determined by the fund’s actuaries. It is therefore essential that the level of the reserve fund is not diminished to fund the GLAs’ day-to-day operations. The Department for Transport and the GLAs have legislation in place, which is awaiting parliamentary time, to change the arrangement to a fully funded scheme. The pension reserve is an important element in the requirement for increased income for the GLF. A General Lighthouse Fund minimum level has been agreed, and now is the time to increase light dues to ensure that it is not breached. The method of paying for navigational safety around the British Isles is based on a "user pays" system. Consequent to safe navigation is protection of the marine environment. The GLAs fully support the department’s proposal to change the charging regime to recover the cost of the provision of our services to the maritime community. The GLAs operate an integrated safety service that is vital to mariners around the coasts of the UK and Ireland. Sufficient funds and stable financial arrangements are required to ensure that it can be delivered to the required international standards. Before I sit down, I declare my interest—I thank my noble friend Lady Wilcox for reminding me—as having been an unpaid commissioner for the Irish Lighthouse Service for 22 years.