Hansard

I am pleased to open the debate on the Harbours (Scotland) Bill. I thank those who submitted evidence, and the convener and members of the Infrastructure and Capital Investment Committee for their detailed scrutiny of the bill at stage 1. I welcome the committee’s support for the general principles of the bill and for its detailed report. The overwhelming support for the bill is evidenced by the written and oral evidence received, which is referred to in the committee’s report.

Before the bill was introduced, we held stakeholder consultations with the key stakeholder groups, including the British Ports Association, the United Kingdom Major Ports Group and the UK Chamber of Shipping. No issues were raised in relation to the primary purpose of the bill. Those bodies strongly support the bill, as does the trust port sector in Scotland.

We also consulted on two further proposals for the bill. The first was the introduction of a mediation step in section 31 of the Harbours Act 1964, which allows users to challenge harbour dues through appeal to ministers, but the consensus from stakeholders was that legislation was not required and that a mediation step could be achieved through non-statutory guidance. Transport Scotland is already progressing that work and will engage with the industry shortly on the details.

We also consulted on the proposal in the bill to remove the requirement for six copies of a draft harbour revision or empowerment order to be submitted along with the application for the order. In addition, the bill removes the requirement to submit six copies of a harbour reorganisation scheme. I am sure that we would all agree that that change is necessary. With modern technology, the submission of multiple paper copies is no longer necessary. Removing the requirement will conserve resources, reduce the impact on the environment and reduce the bureaucratic burden of the application process.

Scotland has a thriving port sector that makes a major contribution to Scotland’s national and local economies. Our ports continually invest in their infrastructure and services to meet the demands of current and future markets. A recently published Scotland-specific Oxford Economics study shows that the maritime sector in Scotland provides 35,600 direct jobs. Approximately one in every four people employed by the maritime services sector in the UK is based in Scotland, which means that nearly twice as many people are employed in Scotland than in any other individual part of the UK.

In 2013, the sector contributed £1.8 billion to the Scottish economy, accounting for an estimated 1.7 per cent of the country’s total economic benefit. It generated more than £630 million in tax revenue. Those are impressive figures, and our country would not be the country that it is today without the day-to-day traffic through our ports. More than 90 per cent of all goods that are imported to the UK still pass through the country’s ports.

In Scotland, we have three types of port, all of which work in that environment. We have the private ports, examples of which are Forth Ports and Clydeport; local authority ports, such as Sullom Voe in Shetland and Campbeltown; and trust ports.

The primary purpose of the bill relates to trust ports, which are independent, statutory bodies, governed by their own local legislation and run by independent boards that manage the assets of the trust for the benefit of stakeholders.

All ports are obliged to act in accordance with their local legislation and other relevant law, whether they are trust, private or local authority owned. Trust ports are generally creatures of statute and operate only within the powers and duties conferred on them by statute.

Trust ports operate in a commercial environment with no direct public funding, and they compete in the market with private and local authority ports as well as other trust ports. There are no shareholders or owners and profits are reinvested in the port. They make significant contributions to the local economy and in many cases to the national economy.

Trust ports in Scotland range in size from Aberdeen to the small, yet thriving, harbour of Whitehills. All the surpluses from harbour operations are reinvested for the benefit of the harbour as a whole, which allows the trust to reinvest in major projects, for example.

Existing legislation gives the Scottish ministers the power to compel trust ports over the relevant turnover threshold—currently around £9 million—to bring forward privatisation proposals. That is a power that we have not used since devolution and it is not a power that any Government would envisage using—probably even one of which Alex Johnstone would be a member. The existence of the power, however, is interpreted by the Office for National Statistics as giving a degree of public control. As such, when a trust port reaches the relevant turnover threshold, the ONS will reclassify it as a public corporation.

My predecessor, Keith Brown, wrote to the ONS in September 2013 to advise that the Scottish ministers had no intention of exercising the power and that we would consider the introduction of legislation to remove it if necessary to avoid reclassification of the affected ports. Following the ONS decision of 25 September 2013 to retain its approach to classification, Mr Brown made a commitment to take forward legislation to remove the power—and here I am today.

The ONS has indicated that the power to force privatisation is a key trigger for the reclassification, and it is our strong view that removing that power should address the issue. Although that was its decision in principle, the ONS advised that it would make a decision only once the bill process was clear. My officials are currently in discussions with the ONS and Her Majesty’s Treasury, and we expect the formal decision to be made by stage 2 of the bill.

Currently only one port in Scotland is classified as a public corporation—Aberdeen. However, two further ports have reached the threshold. The ONS has delayed classification of those ports pending the outcome of the bill.

There has not been an issue for Aberdeen Harbour as, since classification as a public corporation in 2000, it has been able to fund any infrastructure developments or improvements from its own reserves. Aberdeen is, however, taking forward proposals for a port extension in Nigg Bay—a proposal designated as a national development in national planning framework 3 and requiring an investment of around £300 million, which could involve a significant amount of borrowing.

Classification as a public corporation means that any borrowings by the affected harbours will score against Scottish Government budgets, despite the fact that we have no control over what is in reality a private financial transaction. Aberdeen’s borrowings of £300 million would mean a significant impact on the Scottish Government’s accounts. Although that is primarily a technical matter, it needs to be resolved so that it does not have an impact on the Government’s ability to borrow and spend.

The primary purpose of the bill will be to effect the repeal of section 10 of the Ports Act 1991 as it extends to Scotland. It will remove the power of ministers to compel trust ports over the relevant turnover threshold to bring forward privatisation proposals. Trust ports fully support the bill in that regard but, more fundamentally, the bill will remove a level of uncertainty for the ports affected and thus confirm ministers’ support for the trust port model as part of the diverse range of port ownership structures already operating in Scotland. Diversity in Scottish ports is considered one of their strengths. A range of developments are taking place across our ports. Aberdeen, Lerwick and Peterhead are a few prime examples of on-going investment in port infrastructure under the trust port model.

We considered alternatives to bringing forward legislation—the main one being to seek HM Treasury cover to allow the classification to be budget neutral from a Scottish Government perspective. The risks associated with that included HM Treasury failing to accept the Scottish Government’s case for any of the trust ports in any given financial year and variation of borrowing versus the Treasury budgetary cover—the trusts borrowing more than the established level of HM Treasury budget cover for whatever reason. Those risks were considered to be significant, so the suggestion was not pursued.

The Infrastructure and Capital Investment Committee recommended that the Parliament agrees to the general principles of the bill.

I move,

That the Parliament agrees to the general principles of the Harbours (Scotland) Bill.