Marine Navigation Aids Bill [HL]

My Lords, I declare an interest as a harbour commissioner at the port of Fowey in Cornwall and as president of the UK Maritime Pilots’ Association. Neither organisation is affected by the Bill. My interest in introducing the Bill is to support the competitiveness of shipping, our ports and the marine industry generally. Aids to navigation, lighthouses, buoys and beacons around the UK are funded by a levy, known as light dues, on merchant ships calling at British and Irish ports. This is a tonnage-based levy subject to a cap on the maximum chargeable tonnage and on the chargeable number of port calls in any one year. In nearly all other countries, the maintenance and renewal of navigation aids are funded by government, but I am not proposing that we go down that road now. Dues here are paid into a central fund—the General Lighthouse Fund—from which they are disbursed by the Department for Transport to the three general lighthouse authorities in England, Scotland and Ireland. Faced with a projected shortfall of £21 million, significant increases in light dues this year and next were announced by the Department for Transport in June last year. The increased light dues amounted to an initial 67 per cent, followed by an outrageous second increase of 26 per cent, making a total for the year as a whole of around 80 per cent at the worst possible economic time. A number of reasons for these increases were given by Ministers, including additional costs, dealing with the GLAs’ pension problems and a continuing contribution of £15 million to maintaining lights around the coast of the Republic of Ireland. It is therefore essential that a lasting solution is sought to restore industry confidence after a succession of clumsy mistakes, wasteful use of resources, poor consultation by the Government and these huge increases in the light dues. The Bill aims to address all these mistakes. These increases are, frankly, unaffordable in the current economic conditions and risk deterring some vessels from calling at UK ports, particularly direct calls by large container ships and discretionary visits by cruise ships. I start with what I shall call, to use shorthand, the Irish question. The subsidy to fund navigation aids in another member state is unique in Europe. Successive Ministers have argued that we have a common sea area with the UK and the Republic of Ireland, and that we need to make sure that the lights work for the benefit of ships coming into our ports. However, we do not fund the lights in France, Belgium, the Netherlands, Germany, Denmark or Norway, which are on a shipping lane that is much more heavily used than the one between the UK and Ireland, so why do we continue to help fund the lights in the Republic? I know that it is a relic of the time before the Republic gained independence, but that was more than 80 years ago. Again, Ministers have argued otherwise, but as was established through a Parliamentary Answer on 12 January last year, there are no legal or constitutional reasons why the Government could not withdraw immediately from the 1985 agreement and the funding of the Commissioners of the Irish Lights. Furthermore, in November 2004, which is more than five years ago, the then Secretary of State for Transport, Alistair Darling MP, in a response to the Transport Select Committee, committed HMG to cease the funding of Irish lights. There is a precedent for the changes to funding of matters Irish in health. The funding of the Irish lights from the General Lighthouse Fund could be stopped in the same manner as the Department of Health ceased funding for healthcare for Irish pensioners under an agreement made between the two Governments in 1971. This move, which happened last year, saved a much larger figure of around €600 million. It was done with minimal political bargaining and, most importantly, had scant regard for what Ministers have claimed as a problem of "diplomatic relations". Support for ending this payment to fund the lights in another member state has come also from Julian Brazier MP, the shadow Shipping Minister, who was quoted on the Daily Telegraph’s website on 24 March last year as saying, ""80 years since the Irish Free State received its independence, we are still subsidising their lighthouses and navigational aids"," effectively paying 65 per cent of the total costs. He continued: ""I would remind you that your Government has been promising to tackle this issue since January 2004 … the shipping industry has been particularly hard hit by the current economic turmoil"," which is very supportive. He went on: ""Any additional cost pressures at this time could lead to lines missing out stops at UK ports altogether. The City of London, as the global centre for shipping, could also ultimately be affected"." Ministers here have been rather more cautious, saying that the Irish Government are not keen to negotiate. I suggest that they wouldn’t be, would they? That is not a reason for not doing it. I therefore repeat what I have said a number of times in this House: we really are past the time for talking; it is time for the Government to act decisively. They should give the Irish Government a year’s notice and then switch off the £15 million subsidy. However, £15 million, I am afraid, is not enough of a saving. There must be much more that could be saved if the provision of navigational aids was rationalised and subject to independent regulation. At the moment, the three GLAs responsible submit their budgets to the department for some light-touch scrutiny. Then, once the process is completed, the charges are just passed on as light dues to the ship owners entering the UK. There is no independent regulation of the charges or the related costs. I am afraid that the department has shown itself to be rather a poor regulator. Even this year, when all the other DfT agencies, including the Maritime and Coastguard Agency and the Highways Agency, are being required to plan for at least a 5 per cent reduction in their budgets for 2010-11, some GLAs seem to think that they can continue to do what they like. In the first draft of its budget for 2010-11, Trinity House proposed an increase of 3.4 per cent. The Government appear incapable of taking an independent view of GLA costs or charges. They commissioned a study through Trinity House to justify two years’ worth of cost increases. It was carried out by Raven Trading, which subcontracted to a company whose partner is also a Commissioner of the Irish Lights, and consulted only one shipping line. The whole thing was shrouded in secrecy. Predictably, Raven Trading incorrectly concluded that the threat of ships reducing their calls to the UK was not real and that the GLAs needed more money to pay their board members and hopefully get some repeat orders for consultancy work. However, according to a Written Answer I received on 13 January, HL1160, the department sees "no conflict of interest" here. According to Stephen Bracewell, the chief executive of the Harwich Haven Port Authority, ships are already avoiding the UK. He has said that, ""in the last eight years of 2009 no less than four major container services have ceased calling at the Haven Ports, with cargo being consolidated not on feeders through north European ports but on other vessels continuing to call at the Haven. This action by four major carriers has already deprived the General Lighthouse Fund of £2.4M in annual light dues revenue, for which the GLF would need to find the equivalent cuts in expenditure to stay balance-sheet neutral … I regret that I and many other local Haven businesses cannot share the view of Raven Trading … that this action of ships no longer calling in the UK being an ‘empty threat’. The loss of those same services has also had an inevitable effect on local employment aimed at providing vessel rather than cargo-related services: towage; pilotage; conservancy; mooring; agency; taxis and chandlery"." This is quite important. This stark warning has been issued first hand to the department. I can only hope that it takes some notice of the industry at the front line. Now the Government have commissioned a more far-reaching study by Atkins, which is due to report next month. Again, it very helpfully has a steering group comprising the three GLAs. As Mark Bookham, chair of the Independent Light Dues Forum, said in October last year: ""It’s like turkeys voting for Christmas"." Effectively, the GLAs are on a steering group set up to determine the future of their own structures. We therefore have two studies where those organisations being investigated have representatives involved in the study. There is serious concern in the shipping industry that a small, independent regulator is needed, as I propose in the Bill. I am sure that forthcoming speakers will bombard me with figures about the set-up and the running costs but, in preparation for that, I point to Chris Bolt, the PPP arbiter for London Underground—I am sorry about the title, but it is not my doing—as a model that could work. As established in a Parliamentary Answer of 26 October, the General Lighthouse Fund already provides £98,000 for the activities of Department for Transport staff in the Lights, Navigation and Ports Safety Branch. That could be quite sufficient to fund a small regulator. Some noble Lords may wonder why I am bringing this Bill forward today rather than waiting for the outcome of the study, but there are many urgent issues in the Bill, and the outcome of the study will be useful input to it. The inability or unwillingness of the Government to grasp this issue is why I propose the amalgamation of the three GLAs and introduction of a small, independent regulator to oversee cost reductions while providing a safe service. I am encouraged that the Conservative Party supports the amalgamation of the three GLAs. Julian Brazier is quoted as saying on 24 March: ""'Many in the industry are wondering why it is that we require three separate lighthouse bodies, when they could be brought together and efficiency savings made"." In a debate last month in another place, he confirmed this position, asking whether, ""the Government considered whether any overhead savings could be achieved by amalgamating, for example, Trinity House and the Northern Lighthouse Board … I wonder whether there could be a further reduction in overheads".—[Official Report, Commons, Sixth Delegated Legislation Committee, 15/12/09; col. 6.]" The present GLAs argue that they are doing a great job and have made many savings, but are they or their "sponsoring" department really the best people to make that judgment? This Bill is therefore designed to create a structure to remedy the situation, to merge the GLAs into a Marine Navigational Aids Commission and introduce a regulator—the Office of Marine Navigation Aids Regulation. It would allow the MNAC to undertake more commercial functions and includes the pension clauses, taken verbatim from the Government’s Marine Navigation Bill, which underwent parliamentary scrutiny by the Transport Select Committee. It is important for me to acknowledge that the charitable work of Trinity House has been really good. It is not included in this Bill but needs to come under a separate debate. The Bill does not affect that element and should be kept distinct. Although I know that a number of noble Lords due to speak today are brethren, elder or younger, of Trinity House, and the charitable organisation does a lot of good works on many fronts, that is not a reason for preventing a restructure which would save a lot of money for ships coming into the UK. Independent regulation is the only way in which to restore confidence to those who pay light dues to ensure that their money is being spent wisely. In setting the light dues, the regulator would undertake its own studies into what costs of this super-GLA, as we might call it, were reasonable, as well as consulting interested stakeholders, governed by the overriding principle that safety is paramount. Independent regulation must be seen as a sensible and effective way in which to reduce costs and improve efficiencies in organisations that are effective monopolies. It works well in water, energy, telecom, air and the rail industry. In rail, independent regulation can claim most of the credit for Network Rail being required to reduce its costs by 50 per cent in 10 years while improving performance. This is in stark contrast to when the Department for Transport was the regulator of the High Speed 1 line and awarded a cost-plus contract to Network Rail to operate and maintain the line for 80 years. I do not think that Governments are good regulators. Self-regulated organisations will always claim that they are very efficient and that no further savings can be made but, following regulatory intervention, they generally manage to achieve substantial savings that they previously said were unachievable. They inevitably lobby Governments hard to control the regulator, but most of the time the regulator process works itself through, and results are generally positive, with better service and quality, lower costs and more money for investments. Much of the Bill involves changes to the Merchant Shipping Act 1995, but creating the MNAC or super-GLA would bring significant cost savings, by eliminating the triplication of functions. The three GLAs could share a handful of back-office functions. The Bill aims to correct the nonsense of triplication with rationalisation of the corporate centre into a prudent, logical and sensible organisation, as Julian Brazier suggested. On the cost of senior managers and board members, according to the GLF annual report and accounts for 2007-08, Trinity House has four board members paid more than £70,000 and one paid more than £100,000. On the Commissioners of the Irish Lights, one board member is paid more than £70,000 and four more are paid £100,000. In total, the three boards cost more than £1 million a year, and a lot of savings could be made instantly with one super-GLA, seven to nine board members and a lesser remuneration package. Some GLAs have argued that the regional knowledge will be lost, but the reform that I propose aims to tackle the back-office functions fully by completely rationalising the three corporate centres to make the savings. Regional stations should be in place under the proposed unified centre, but they would be ready for any further devolution of responsibilities to the Governments of Scotland, Northern Ireland or anywhere else, so I do not think that there is a real concern there. There is a need for stronger regulation, and a smaller, independent regulator would restore badly damaged industry confidence. The regulator would be cheap to run, as I have said before, and would have a small office of one or two nominated senior people with back-office support, when required, from organisations that could be the Office of Rail Regulation or the CAA, both of which I have talked to—or, more logically, the MCA. Having consulted the GLAs and the shipping industry, I amended Clause 2 from the draft Bill, which was on reducing the number of board members and their prescribed attributes. The Bill makes provision for charges to be levied on the MoD vessels as well as pleasure craft, although no details are contained in the Bill because it will be a matter for the regulator, which would consult widely. That is not, as the GLAs have said, to increase the revenue from shipping or other sources, but to reduce the costs of providing these services, which is what the Bill aims to achieve. I hope that the Atkins report will help that. In conclusion, it is time for decisive and bold action to restore the reputation of the UK as an attractive place to do maritime business. I acknowledge that the Bill may not make much further progress before Parliament dissolves, but I intend to keep up pressure on government to make these changes. I hope that a future Government would support this move to increased efficiency and reduced costs and could introduce the necessary legislation themselves—I hope while taking into account the contents of the Bill. Failing that, I shall bring it back at a suitable time in the next Session. The department followed the huge increase in light dues with a second increase on 1 April. I know that my Conservative colleagues are with me when I urgently call on the Government to withdraw that second, harsh increase. As Jesper Kjaedegaard, the chairman of Maritime UK, said this week, ""for those who think that light dues are an insignificant part of the total operating costs—let me just remind you that for a typical Panamax container ship, this tax amounts to £13,650 per call increasing to £17,200 per call … If this joke goes ahead, this won’t be an April Fool joke, but a significant misjudgment"."