Merchant Shipping (Light Dues) (Amendment) Regulations 2009

My Lords, this has been a remarkable and interesting debate and I am grateful to my noble friend Lord Berkeley for initiating it. I suspect that he was not aware that he would draw into your Lordships’ Chamber such an extraordinary galaxy of talent as is arrayed on all Benches this afternoon—a collection of Elder Brothers, Younger Brothers, ship owners and people with astonishing experience in this field, many of whom, I am delighted to say, have been supporting the Government’s position and, I am afraid, opposing my noble friend’s Motion. I start by thanking those of your Lordships who were kind enough to welcome me to the Dispatch Box for my first substantive debate. I thank the noble Baroness, Lady Wilcox, the noble and learned Lord, Lord Mackay of Clashfern, and the noble Lord, Lord Higgins, in particular. It seems that three strands have run through the debate. The first is the efficiency of the general lighthouse authorities, or GLAs. I shall try to avoid unnecessary and confusing use of initials and the incomprehensible jargon to which the noble Lord, Lord Higgins, objected. The second subject is the impact of the increases in light dues and the third is the difficulties in finding a satisfactory way of funding the Irish Lights. I start with the General Lighthouse Fund. This was created by statute in 1898 to pay for the work of the GLAs in the United Kingdom and Ireland. The fund is maintained by a combination of light dues paid by ships that use ports in the UK and Ireland, the income from investments, a contribution from the Irish taxpayer and other funds generated by the use of the GLAs’ assets. I understand the concerns that exist about the costs of the lighthouse service but I cannot accept some of the more exaggerated claims that have been made about them. The GLAs have made substantial efficiencies over recent years, all without compromising the safety and navigational service that they provide. For example, Trinity House has closed half its depots and cut a third of its staff and a quarter of its fleet; the Northern Lighthouse Board has cut its waterfront bases from three to one, reduced its vessel crews and disposed of properties; and the Commissioners of Irish Lights have reduced staffing levels at sea and on land by around 30 per cent. Indeed, taken as a whole, the GLAs reduced their total headcount by more than 50 per cent between 1991 and 2007 without in any way compromising the safety of seafarers or the quality of the navigational service that they provide. The noble Earl, Lord Attlee, asked about manning numbers. The numbers employed are as follows: Trinity House, 321; the Northern Lighthouse Board, 261; and the Commissioners of Irish Lights, 272. I do not have a precise figure for the number employed at the corporate centre but it is less than 20 per cent. The noble Earl also raised a question about the merging of the three GLAs. That would be a very difficult undertaking. It might be possible to encourage what one could call the back-office functions to work more closely together to save costs. Certainly the Department for Transport will do what it can to persuade them to make savings where it is practical to do so. With regard to the front-end services, the GLAs operate in differing and complex coastlines where regional knowledge and experience are required. It is unlikely that further savings in terms of depots and so on can be rationalised but, where possible, the Department for Transport will press for further action. There is no evidence whatever of "bloated" administrations—a phrase that has been used more than once by a lobbyist on the other side of the argument, the chairman of the Independent Light Dues Forum, who, I believe, would support my noble friend’s Motion this afternoon. He had a letter published in Lloyd’s List last month, to which a former editor of Lloyd’s List, Michael Grey, replied: ""Mark Bookham of the Independent Light Dues Forum now writes … about the ‘bloated’ General Lighthouse Authorities, while ignoring the efforts made by these same authorities over several years to reduce their operating costs. He conveniently ignores the fact that they are an emergency service and must be staffed appropriately"." That is an entirely reasonable point of view, which is clearly shared by a number of noble Lords who have taken part in this debate. The GLAs have taken advantage of the efficiencies that new technologies can provide, such as the use of LEDs—I apologise; I should say "light emitting diodes"—and solar panels, which have been able to reduce the number of lighthouses and light vessels that they employ. They also use more efficient ships for buoy and maintenance work. Overall, their operating costs have been reduced by 25 per cent over the past 10 years and, until this year, it had not been necessary to increase light dues at all since 1993, a point well made by the noble Lord, Lord Glentoran. Indeed, the Government were able to pass on those savings to the shipping industry in 2006-07 by reducing light dues from 39p to 35p per tonne. In a Written Statement in the other place on 10 March 2006, the Minister of State in the Department for Transport, Dr Stephen Ladyman, was able to say: ""The Government remains committed to a cost recovery system, but is determined to minimise the cost burden on the shipping industry. The rate per tonne has fallen repeatedly since its 1993 peak of 43p. Reducing it now to 35p constitutes a further 10.2 per cent. fall. This is a remarkable achievement during a period of major capital investment by the General Lighthouse Authorities and against a background of general inflation. It is a credit to the commitment of the General Lighthouse Authorities—Trinity House Lighthouse Service, the Northern Lighthouse Board and the Commissioners of Irish Lights—to the delivery of an efficient and cost effective aids to navigation service. The strong performance of the underlying General Lighthouse Fund in the past year also makes a cut on this scale possible. The cut returns to the light dues payer the benefit of the growth in the Fund, for as long as this proves possible".—[Official Report, Commons, 10/3/06; col. 86WS.]" So, for more than 16 years, light dues have not been increased. In addition to 2006, there were three other years when they came down. Thus, there was a decrease of 40 per cent in real terms. However, it was made absolutely clear in 2006 that the new rate could not be sustained in the longer term and the Government obtained the assurance of the Lights Advisory Committee, which represents the shipping industry, ports and cargo interests, that it was prepared to support a rise in light dues should that become necessary at some future date. That, too, was mentioned in Dr Ladyman’s Written Statement of 10 March 2006. As foreseen, an increase in light dues is now essential. What was not foreseen three years ago was today’s global recession, one of the effects of which has been a reduction in trade so severe that shipping companies are laying up vessels, rationalising routes and concentrating on larger ships. That has led to a fall in found income but, as a number of your Lordships have said today, particularly the noble Lord, Lord Greenway, we cannot afford to let the GLAs take chances with their safety functions. We have asked them to make cuts, to put off non-essential expenditure and to search for further efficiencies. They have reduced costs by 5.6 per cent this year, but there is not such a close correlation between trade and spending in their case. Lighthouses must be lit, radio navigation signals broadcast, channels surveyed and buoys moved. We must maintain those safety-critical functions. Expenditure deferred now may well result in greater costs in a year or two. The noble Lord, Lord Glentoran, referred to the pension fund. In a debate in the other place on 2 June, Mr Jim Fitzpatrick, the Parliamentary Under-Secretary of State in the Department for Transport, made the point that the fund’s income contains £44 million of pension contributions from GLA employees that is sacrosanct. I hope that your Lordships will understand that the Government have had a difficult balancing act to perform. We received 47 responses to the consultation and my honourable friend Jim Fitzpatrick held four meetings with the representatives of those most affected. We do not underestimate the concerns that have been expressed by representatives of the shipping industry. We recognise that these are difficult times for them and that any increase is unwelcome. The noble Lord, Lord Higgins, asked for details of the deficit. At the time of the consultation, it was forecast to be £21 million. Since then, there have been slight improvements in investment returns, which have reduced the forecast deficit, but without the increase in light dues it is still likely to be around £15 million. The increases that took effect on 1 July should allow the General Lighthouse Fund to remain at around the minimum reserve level for the next year. Since the consultation, we have therefore looked carefully at our original proposals, which provided for a rise in the rate of light dues from 35p to 41p per net registered tonne from July this year. We also proposed raising the tonnage cap from 35,000 to 50,000 net registered tonnes, 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 response to the representations received, we decided to phase the increases over a two-year period, so that the rate would go up from 35p to 39p per net registered tonne, with a further increase from 39p to 43p from 1 April 2010. Even at 43p, the light dues rate will be no higher than it was 16 years ago; indeed, in real terms it is 32 per cent lower. The tonnage cap has also been reduced and deferred, so that it will rise to 40,000 net registered tonnes from 1 April next year. I am pleased that the noble Lord, Lord Greenway, refuted the argument that has been put forward by some that large modern ships do not need navigational aids. It is precisely for their benefit that deep water channels have to be surveyed and marked and obstructions monitored and dealt with. Neither do we believe that we should depart from the "user pays" principle and in some way hand over to the taxpayer the costs of these essential safety services. That would be particularly wrong bearing in mind the fact that the majority of commercial shipping services calling at British ports are owned by companies based outside the UK. However, I agree that a fundamental look at how we should provide a lighthouse service and the structural form it might take is needed. I can tell the House that the Department for Transport, with its Irish counterparts, is to conduct an overall assessment of lighthouse services as a whole with the aim of achieving further increases in efficiency and improvements in their structure and financing. Following today’s debate, I shall ask departmental officials, the GLAs and the Lights Advisory Committee to review the proposed expenditure for the coming financial year in addition to the scrutiny of the corporate plan that will take place in the autumn with an eye to keeping costs to a minimum. I turn finally to the Irish question—the funding of the Commissioners of Irish Lights—the issue that has so vexed my noble friend Lord Berkeley, yea these many years. Unfortunately, I do not have time this afternoon to delve into the history, but it seems to be a piece of unfinished business left over from the partition of Ireland and the formation of the Irish Free State in 1922. I found a Hansard report of a Question asked in the other place on 16 March 1925 on when negotiations with the Irish Free State were likely to be concluded. Mr Ormsby-Gore, who I believe later became Lord Harlech, replied that a similar question was put in the Dáil but that he had no means of ascertaining when the negotiations would be concluded. As the noble and learned Lord, Lord Mackay, pointed out, the funding of Irish Lights can be seen, much more importantly, as part of the long-established British-Irish and north-south co-operation that has been of such benefit to all the communities in the island of Ireland these past years. Of course it is not satisfactory that light dues collected in the United Kingdom are being used in part to pay for lights in the Irish Republic. In 1985, the Irish Government agreed to make an additional contribution towards the cost on the basis that 70 per cent of the costs of the Commissioners of Irish Lights were to be treated as incurred in the Irish Republic and 30 per cent in Northern Ireland. Of that 70 per cent, half would be funded from Irish sources and half from the General Lighthouse Fund—in other words, UK light dues payers. The GLF has provided an average of £7.25 million a year for the CIL over the past seven years, starting with £5.5 million in 2002-03 and rising to an estimated £11 million in 2008-09. That is not the figure of £15 million which my noble friend Lord Berkeley quoted and which would include the costs of lights in Northern Ireland, for which the UK would have to retain responsibility. The net financial saving of ending co-operation with Ireland is probably around £7 million, but we would lose the very large unquantifiable benefits of an integrated service if we cast Ireland adrift. A review that was set up in 2007 and published in 2008 suggested that a more accurate split of the CIL’s costs would be 85:15 rather than 70:30. This has been agreed by both Governments as the basis for the apportionment of funding for 2009-10. The two Governments also agreed to carry out an overall assessment of the provision of the integrated aids-to-navigation services to all regions in the UK and Ireland. All these matters were discussed in a meeting between Jim Fitzpatrick MP and the Irish Minister for Transport, Noel Dempsey, on 21 May. The Government are committed to renegotiating the current agreement to require the Republic of Ireland to meet the full costs of providing its aids to navigation. Simply walking away from the joint funding agreement and letting Ireland sink or swim on its own is not an option. We will have a responsibility to provide a lighthouse service to Northern Ireland. Let us be clear: the three General Lighthouse Authorities provide an efficient, co-ordinated service for the whole of the British Isles. That is undisputed. Indeed, many eloquent speakers have referred to that in the debate this afternoon. We must protect the GLAs’ vital safety function for the sake of people who sail in ships around our coasts and we must maintain them to ensure that the environmental risks from shipping are minimised. This has been an interesting and instructive debate. I hope that I have done justice to the vital safety work of the GLAs and have replied to the points made by noble Lords. If I have missed any, I will write to them. I trust, too, that I have given assurances that the Government are not complacent in managing the General Lighthouse Fund and overseeing the lighthouse service and that they are serious about achieving long-term and lasting reform of the financing arrangements for all parts of the British Isles. In the light of this, I hope that my noble friend will agree to withdraw his Motion.