Official Report: Minutes of Evidence

The Chairperson (Miss McIlveen): We now move on to the ministerial briefing on accelerated passage for the proposed harbours Bill. Hansard will report the meeting. I welcome Jackie Robinson, director of gateways and EU relations in the Department, to join the Minister. Thank you for joining us this morning.

Minister, are you going to make some short introductory remarks?

Ms Mallon (The Minister for Infrastructure): Yes. I will set out the parameters and make the case for why I am requesting accelerated passage, which is not something that I would normally be inclined to do.

As members may be aware from the briefing that I provided to the Chair earlier this month, the Executive agreed on 6 August to my officials engaging with the Office of the Legislative Counsel (OLC) to develop the harbours Bill, which is required to increase the seaports' loans and grants limit in the Department's harbour legislation, and to do so via the accelerated passage procedure. I am pleased to have the opportunity today to outline the need for accelerated passage and the consequences should it not be granted.

The departure from normal procedure and use of accelerated passage is not something to be sought routinely, and I did not take the decision to proceed on this basis lightly. My preference is always to take forward draft legislation with the full Committee procedure to enable clause-by-clause scrutiny, but in the case of this proposed legislation, which will be a very short and concise Bill, I have taken the view that there are compelling grounds for using accelerated passage.

The maritime sector aspires to thrive and strengthen post-EU exit. Unfortunately, the sector, like others, has faced financial challenges as a result of the current COVID-19 pandemic. It is important that our key gateway seaports have sufficient capacity to facilitate future economic growth and are connected to key destinations and markets. All of the region's ports are governed by my Department's harbours legislation for the provision of grants and loans. Although the trust ports at Belfast harbour, Coleraine harbour, Foyle port and Warrenpoint port, and the privately owned port of Larne, all fund their own capital investment and are expected to be commercially self-supporting, my Department can provide assistance for developments of a major nature. That assistance can be by way of loan or grant.

The overall limit to loans and grants contained in the Harbours Act (Northern Ireland) 1970 currently states:

The original limit of £6 million has been adjusted on four previous occasions, gradually rising to the current £35 million level. The most recent rise was made in 1989. The total amount of any loans and grants made by my Department to the ports over the years counts against that limit indefinitely. It does not decrease in line with depreciation or with loan repayments. The total currently stands at £34·3 million. If all the future loans identified by the ports were to materialise over the next five years, that would require a further £22·5 million, bringing it up to a total of £56·8 million. Those figures do not take into account any additional grants or loans that may need to be provided to the ports in response to COVID-19.

We worked with colleagues in the Department of Finance, and a new loans limit of £90 million has been agreed. That figure has been based on an inflationary increase and would enable my Department to react appropriately to the current and future challenges faced by the ports. That is particularly necessary at this time, because of the additional financial pressures being placed on the ports as a result of COVID-19.

In addition, as the region's ports continue to develop their port operations and diversify their business, they will continue to make loan applications to my Department over the next few years. If accelerated passage is not granted, my proposed legislation will not be in place in time to be able to continue to provide financial assistance to the ports, particularly in the current financial year. I am sure that you will agree that, as an island economy, it is critically important that our ports be able to meet existing and future challenges. The importance of the ports' role in the supply of goods into and out of Northern Ireland has never been more clearly illustrated than during the COVID-19 crisis. The region's main commercial ports have all agreed with the need for the increase to the loan and grant limit.

My officials are in the process of taking the steps required to finalise the draft harbours Bill, and, subject to your agreement today, I will then seek Executive agreement on the introduction of the Bill to the Assembly, with the aim of an operational date by late October/early November.

For all those reasons, I therefore invite the Committee to endorse my request to proceed with this legislation via the accelerated passage procedure. Thank you, Chair.

The Chairperson (Miss McIlveen): Thank you very much. Can you confirm that the sole purpose of the Bill is to raise the loan and grant limit and that there will not be any other consequences as a result of bringing forward the Bill?

Ms Mallon: My clear understanding is that the purpose of the Bill is to provide loans and grants to enable the ports to carry out resilience measures for future economic growth. If we look at what the grants have been used for in the past, we are talking about the renewable energy project at Foyle port; the expansion of ro-ro facilities; the construction of a deepwater quay at Warrenpoint harbour; the purchasing of new tugboats and cranes at Foyle port; the replacement of old infrastructure at Warrenpoint harbour; and the construction of new bulk storage silos at Warrenpoint harbour. It is my understanding that the grants and loans will be used for such purposes.

I know that some people have asked about sanitary and phytosanitary (SPS) checks. It is my understanding that the legislation will not be used for that purpose. That work is being led by DAERA, and there has been a funding commitment from the British Government.

The Chairperson (Miss McIlveen): Were any concerns raised by Executive colleagues when you tabled the Bill at the Executive?

Ms Mallon: One issue was raised. I had also proposed that we could increase the limits at a future date through secondary legislation. I know that Department of Finance colleagues had some issues with that, so we have taken that aspect out, and we are now working together to see whether we can find an agreed approach. No issue was raised by any Executive colleagues about increasing the loans and grants to the £90 million level. I think that they recognise the challenges facing our ports as a result of COVID.

The Chairperson (Miss McIlveen): OK. The paper states:

What were those other broader finance issues?

Ms Jackie Robinson (Department for Infrastructure): The broader finance issues were really about how, going forward, the legislation would be scrutinised. At the moment, as you know, primary legislation has to be used to increase the loan limit. We would have liked to do that through secondary legislation. The Department of Finance was concerned that there would have been a lack of scrutiny and that that would have been bound up in future policy work on governance. We were quite happy with that. We know that we intend to do that work on the governance of our ports, and we will take it on board when we look at the more holistic policy intervention.

The Chairperson (Miss McIlveen): OK. You said that the total amount of grants and loans to date stands at £34·3 million, so you are really close to the wire. Why was no increase proposed before this? I understand that there are issues with COVID and EU exit, but you were almost at the £35 million limit regardless of those two factors.

Ms Robinson: Yes, and I totally take the point. It is one of the things that we had planned to do. As you will remember, I was here about a year ago, and we discussed a grant application that we had put in for our ports. That increased the provision by £2·5 million, so £2·5 million was given to ports last year as a no-deal Brexit preparation measure. We had not anticipated that, so we thought that we would have had an extra couple of years to take through the Bill. The proposal at that stage was that we would complete the more holistic governance review and take it all through together.

Unfortunately, because of the £2·5 million, and because of other issues this year, where the resource within the Department has been stretched as a result of COVID, we now need to take the legislation forward as a more urgent piece of work.

The Chairperson (Miss McIlveen): You consulted with only the four main commercial ports. It is not a surprise that they were content with the proposal. In normal times, there would have been a much broader consultation. Are you content with the level of consultation undertaken?

Ms Robinson: We did not have to consult on the Bill. I am content with the level of consultation. I am sure that the Minister will have an opinion on that as well. We consulted with the people who were going to be impacted on by it.

Ms Mallon: There was no statutory requirement, but, for good practice, we want to consult as widely as possible. The combination of the urgency of ensuring that the legislation is in place and the financial pressures as a result of COVID meant that we had to take this course of action. As a rule of thumb, however, I believe that you should always try to consult widely on all issues as a matter of course.

Mr Muir: Your briefing paper states:

Will the officials or the Minister give us a bit more detail on that? It is concerning to read.

Ms Robinson: You will be aware of the impact that COVID-19 has had on our ports. It has meant, for example, that a lot of the ro-ro facilities encountered difficult procedures in the first half of this year, and that had an impact on the income of our ports. Warrenpoint port in particular had difficulties there. I am pleased to say that, even since we prepared the briefing, my latest information from Warrenpoint is that that position has stabilised. The financial position of all our ports is not as stable as it was at the beginning of this year, however, and nobody could have anticipated where we are at.

Ms Mallon: There is one harbour there that requires urgent quayside repairs, which are estimated at around £960,000. It is seeking the grant mechanism for that type of work as well.

Mr Muir: Is there ongoing engagement with Warrenpoint port on that? That is a concerning development, if the money is needed to ensure the future of the port.

Ms Mallon: Yes. I carried out engagement with the ports myself, as we were entering the COVID period, just to get a handle on things. I have subsequently had a round of engagement on Brexit. My officials are in extremely close contact with all the ports. I have to say that the feedback that I get from the ports is that they have a very constructive, productive and accessible relationship with officials, which is something that I am keen for us to continue to have.

Mr Muir: I have just one more question. Is there any forecast or anticipation of the additional borrowings that will be required to assist the ports as a result of EU exit?

Ms Robinson: I will take that. As a result of EU exit, we are not anticipating that. If your reference is to SPS checks, that, as the Minister has already said, is an issue for DAERA. We do not anticipate additional borrowings, not that it would it be proper for me to comment on that. It is for another Department. It may, however, be the case that some ports decide that, as a result of EU exit, to diversify their business, put in place other infrastructure or do other work, but it will not be to facilitate checking at the port. It will be to allow them to grow their business in a post-EU exit environment.

Mr Hilditch: You are very welcome, Jackie. If you were here last year talking about this, you would have been on your own, for we were not here.

Ms Mallon: Time is so long. [Laughter.]

It would have been earlier this year.

Ms Robinson: Sorry. It would have been earlier this year, yes.

Mr Hilditch: Earlier this year? [Inaudible.]

Mrs D Kelly: It is all right. I do not know what day of the week it is sometimes.

Mr Boylan: I knew that somebody would come in with that.

Mr Hilditch: Your briefing paper indicates the last time that there was a rise, but 1989 is 32 years ago. How long has the £34·3 million been accumulating?

Ms Robinson: Since the legislation was introduced in 1970.

Mr Hilditch: That is a total. It is not for just one specific period.

Ms Robinson: It is from the —.

Mr Hilditch: It is currently outstanding. Where does the money come from? Where do you find an extra £30 million?

Ms Robinson: That is a good question. We will bid for that through our capital. At the moment, we have a capital bid for our ports sitting in the Department. We have a facility for about £2·5 million, which is what we anticipate spending between now and the end of March.

Mr Beggs: Thanks for your presentation. Like Mr Hilditch, I am concerned that, after 31 or 32 years, this legislation has not been updated. I am curious about whether there is any other legislation that includes figures that needs to be updated and can be done in a timely way?

Ms Mallon: Do you mean right across the Department?

Mr Beggs: Yes, particularly if it is looking for funds so that you do not have to do this again as an emergency measure.

Ms Mallon: Since taking up post, this is the legislation that has been brought to my attention. Viewed from the outside, after such a long time, the question is: why was it not updated? The ports can also borrow commercially, but Treasury is very specific about the rules on what they can borrow against. It seemed strange to me that we had not looked at the issue and that it had not come up before. However, ports are keen to expand, which is why the issue came to our attention, but there is an issue with COVID and the financial pressures on ports. We have worked hard with Executive colleagues to bring the legislation forward so that we can increase the level and allow the ports to carry out the important work that they need to do on the issues that Jackie raised.

Mr Beggs: When the Chair asked you whether the figure was the only thing that was changing in the legislation, you said, "My ... understanding is"; it was not a definite yes or no. There is room for change there.

Ms Mallon: Do you mean on the £90 million?

Mr Beggs: Yes.

Ms Mallon: Sorry, no change. I thought that you were asking me whether I was aware of any other legislation across the Department that had not been updated during this time.

Mr Beggs: It is a separate question. The Chair asked whether only the figure was changing in the Bill, and you said, "My ... understanding is". I am conscious that the last time that accelerated passage went through, the legislation changed much more significantly than anyone had anticipated, with huge ramifications. I am seeking confirmation that it is only the figure that is changing and not something else that we have not had sight of.

Ms Mallon: This is a very short and concise Bill. As I said to the Chair, we looked at having another element to the Bill about changing the limit and how you might go about doing that, but it was pared back. This is about changing the limit.

Ms Robinson: In the draft that we are working with in OLC, there are three clauses. One clause is the commencement; another clause is the title; and the final clause is a single line to increase the port limit.

Mr Beggs: That provides some reassurance.

The Chairperson (Miss McIlveen): So there will be no unforeseen consequences.

Mr Boylan: As it is primary legislation, do the checks and balances on what the loan can be used for need to be in the Bill? Is it in the Bill?

Ms Robinson: The title will be the Harbours (Grants and Loans Limit) Act. That is all it intends to be. It will raise the total loan and grant limit from £35 million to £90 million. That will enable the Department to continue to be able to provide financial assistance to the region's ports by means of loans and grants. That is it.

Ms Anderson: None of us favours accelerated passage. We would prefer an opportunity to interrogate the legislation that comes before us. Given the stress and pressure that our ports will be under — ports representatives have been here in front of us — we are aware of what could be coming down the track.

In the context of resilience, the paper refers to expanding global trade links, and we want our ports to expand where they can. However, we want to do that in the context of EU law as it is applicable within the protocol. Are there any unintended consequences whereby we would be walking into the establishment of free ports outside of EU law applying to the ports with this financial injection?

Given your answers, I support the financial injection and its going to the free ports. Like Mr Beggs, I was a bit concerned when you said, "My ... understanding is". I thought that there could be unintended consequences. We looked at an SL1 this morning and saw that it is not just about the extrapolation of the reference to the EU. There could be other issues in the legislation or in the regulations, and we might say, "Let us try to interrogate that further". We have the time to do that when legislation comes before the Committee in that way, but, in this context, I want to be satisfied that we would not be walking into the establishment of tax havens, with all the concerns that have already been identified through an intensive investigation by the EU on the impact of free ports, particularly for those that operate outside of EU law, given that we do not know what will happen in 99 days' time. We know that Boris Johnson is very much on board in supporting such free ports outside of Brexit. I want to be satisfied that we will not walk into a situation that could cause trouble or difficulties for us in the time ahead.

Ms Mallon: In my response to Mr Beggs, I misinterpreted his question. I thought that he was asking about a wider issue across the entire Department. As Jackie very kindly set out, the terms of the Bill are concise and short, and the Committee will be able to see that.

Free ports are a separate issue, which is being made by the Department of Finance. This Bill is completely separate from that. As an Executive, we have set out the principles around free ports so that they do not cause displacement and are in line with the full implementation of the protocol and so forth. That is separate work, of which we as an Executive are very conscious.

The Chairperson (Miss McIlveen): Thank you. No one else has indicated that they wish to ask a question. I thank you both for attending today. We will see you in the very near future.

Ms Mallon: Thank you very much, Chair and Committee members.