Official Report: Minutes of Evidence

The Chairperson (Mr Martin): I welcome Sian Kerr, Adele Campbell and Royanne Kincaid, officials from the Department for Infrastructure.

In the first instance, I need the Committee's agreement that the session be recorded by Hansard.

The Chairperson (Mr Martin): I thank the officials for coming to the Committee. The Bill went through Second Stage yesterday, and there was helpful debate about some of the issues that we will grapple with.

I will hand over to Sian, who is most likely to lead on this, given that she is sitting in the middle, and the official who sits in the middle tends to lead.

Ms Sian Kerr (Department for Infrastructure): I will have to remember that for next time. [Laughter.]

The Chairperson (Mr Martin): You will know for next time. Start with Royanne, and we will see where that takes us, shall we?

Ms Kerr: We rarely change around.

The Chairperson (Mr Martin): Anyway, Sian, the floor is yours to make an opening statement, and you can then expect questions from members.

Ms Kerr: Absolutely: no problem at all. Good morning, Chair and members. Thank you for the invitation to brief the Committee on the Harbours Bill. The Bill was introduced on 15 June and, as you know, passed its Second Stage yesterday. I thank the Committee for its support for the Bill during the debate.

As you are aware, the Bill will amend existing legislation — the Harbours Act (Northern Ireland) 1970, the Ports (Northern Ireland) Order 1994 and the Harbours (Northern Ireland) Order 2002 — to modernise the legislative and governance framework for our trust ports and harbour authorities. As the Minister said yesterday, and as Members recognised, the Bill will enable trust ports to operate more efficiently and help strengthen their contribution to the regional economy.

A key objective of the Bill is to update governance arrangements in response to the current Office for National Statistics (ONS) classification of our trust ports as public non-financial corporations. While that classification has no legal impact on the statutory powers, functions or ownership of trust ports in Northern Ireland, it has significant practical implications. Borrowing by trust ports requires capital budget cover from the Department, placing port investment in direct competition for funding with departmental projects. The Bill seeks to address that issue by removing certain levers of government control to encourage the Office for National Statistics to review the classification of trust ports. A successful reclassification would break the link between port borrowing and departmental budgets to enable greater financial autonomy for the ports.

The Second Stage debate was just yesterday and you are familiar with the key policies and clauses, so I intend to cover them only briefly.

Clause 1 repeals the power of the Department to compel the sale of a trust port, which is an important step in protecting the trust port model.

Clause 2 repeals the Department's power to issue directions to trust ports in the exercise of their statutory functions. That step reinforces the principle that responsibility for strategic decision-making rests firmly with the ports. We recognise the points made yesterday in the Chamber about the need to balance that with appropriate safeguards. Those points will be addressed in the secondary legislation.

The remaining three clauses amend the Harbours Act (Northern Ireland) 1970 to better align our legislation with that of our counterparts in GB. The changes include a limited power to issue harbour directions in the interests of marine safety, allowing harbour authorities to delegate certain functions while safeguarding key powers, expanding the purposes for which harbour orders may be made and broadening the scope of commercial and investment harbour-related activities, including removing the requirement for ministerial approval.

The Bill will be supported in part by subordinate legislation, specifically four harbour orders covering the ports of Belfast, Coleraine, Foyle and Warrenpoint. The harbour orders will address the appointment of the board to the trust ports and provide the ports with further enhanced commercial powers, while ensuring that activities remain aligned with the port-related objectives and protect the long-term financial stability of each port.

I hope that was helpful. We are very happy to address any questions that the Committee may have.

The Chairperson (Mr Martin): Thank you very much for the briefing, Sian. I have a couple of questions, but I will pick up on something that you mentioned during your presentation. You used the phrase, "removing certain levers of government control", in the context of the ONS and capital cover. Are the levers concerned with financial control, governance, procedural or directorial issues? Could you clarify that, please?

Ms Kerr: There are two parts of the process to enable the reclassification: primary legislation and the secondary harbour orders. Clauses 1 and 2 remove the controls, and that is set out in the legislation in front of you. The Minister currently appoints the whole board, and we need those appointments to make up the minority of the board. That will be picked up in the secondary legislation. Those are the main points.

Mrs Adele Campbell (Department for Infrastructure): When ONS reclassified the trust ports in 2005, those are the controls that it raised regarding our ports and the reasons why they were classified as public.

The Chairperson (Mr Martin): That is interesting. My question had two aspects. First, yesterday, Members grappled with the level of individuality the legislation will give to the harbours to separate them from the Department. Your answer is that the driver is to provide the harbours with greater financial autonomy or the ability to borrow against assets. I think that everyone accepts that, possibly with the exception of one Member. When you step behind that, the ONS has said that three things need to happen for the harbours to gain the level of financial autonomy to borrow and develop. Are the three things you mentioned the key issues that need to be rectified for the ONS reclassification? Is that a summary argument?

Ms Kerr: That is not quite how the ONS put it. At the time, it explained why the reclassification took place, so we know why it happened. It has not now said, "This is what you need to do". We have the examples of where other ports have been reclassified, so we can see what changes they needed. It is important to say that there are other powers that will remain in place, as the Minister highlighted yesterday. We are just talking about these specific ones.

The Chairperson (Mr Martin): That is fine. Is the Department concerned about, or has it identified, the departmental powers that will be pulled back? Do you have any concerns about those? Are you putting any risk mitigations in place? Are you content that x, y and z need to be done and that this has to happen to enable progress?

Ms Kerr: If we are seeking to be able to remove the link between borrowing, then there are the things that we need to change. We are confident that there are safeguards, albeit mostly in secondary legislation. I think that it was Andrew who mentioned yesterday Dover port and its board, which has members who are there for community interest. We have that already: unlike a lot of the other trust ports, we have councillors who are members of our boards, for that reason. Back in 2002, the number of councillors on each of the boards was increased, because the Department recognised the importance of local accountability. That safeguard is in place.

It is important to point out that the Dover port is not one of the ports that were reclassified. It is still a public corporation, so I would not draw the analogy too solidly. However, we recognise the point about engagement; that is there. We are comfortable about the balance.

The Chairperson (Mr Martin): That is fine. That leads me to my final question. You mentioned the change in the board and how it was going to change. You said that it would change in that the Minister would appoint "the minority" of board members. What is the current composition of the board? How will that change, following the legislation?

Ms Kerr: Each port is different, and board composition is set out in specific legislation. Generally speaking, there is the chair and a number of non-executive members and councillor members. The numbers are different for each of the ports, and they are all appointed by the Minister. The intention is that the Minister will definitely appoint the chair and will likely appoint the councillor members, and the non-executive posts will be appointed by the port, but, again, that is detailed in secondary legislation, so we are still working our way through it. Importantly, the Minister would still appoint the chair and the local representation. That is an important lever, and we must make sure that it is there. That is the balance that we are likely to put in the secondary legislation, but, as I said, we are drafting it in parallel now.

The Chairperson (Mr Martin): You are not quite there yet. I have one more follow-up, and then I will stop asking questions. After the legislation is passed, the Minister will, if I understand this correctly, appoint the chair and the local representatives — you could call them community representatives, but they will likely be councillors. That will certainly be the case in Belfast. Sian, you said that the appointment of the non-executive board members would be for the ports. Would that be through a public appointments process or an internal recruitment process by the organisation?

Ms Kerr: I do not know yet. We have had to look at other examples for that.

Ms Royanne Kincaid (Department for Infrastructure): It would likely be the board, so the chair and —.

Ms Kerr: But it would not be through a public appointments process?

Ms Kincaid: No, because if it was through public appointment, we would be into ONS classification territory again.

The Chairperson (Mr Martin): It is likely to be a competition organised by the board.

Ms Kincaid: Yes. We envisage that the chair will sit on that board. There is usually an independent person as well.

The Chairperson (Mr Martin): Somebody from HR. That is fine; I understand.

Ms Kincaid: This is stuff that we can put in the guidance around the legislation.

Mr Stewart: Thank you, folks. Thanks for coming along. I hope that you enjoyed the debate yesterday.

Ms Kerr: Yes, we did.

Mr Stewart: I thought that it was really positive and worthwhile, which is nice to see on the Floor of the Assembly for a change. We are all in agreement for once, which is great.

Last year, when we were at Belfast harbour — I do not know whether you were there, Sian.

Ms Kerr: I was there.

Mr Stewart: Effectively, we discussed what we are discussing again today, although we had not seen the Bill. Thank you for bringing it forward.

The first thing that I want to get on the record, which I raised in my contributions yesterday, is that there is some speculative concern out there that the Bill is a back door to privatisation. It is important to say, for the record, why that is not the case from the Department's point of view, and why it will not lead to that, to prove that to those who are sceptical about it.

Ms Kerr: The Bill is purely about the accounting classification. The model itself is not changing. In fact, clause 1 actually works to protect the model. Therefore, there is no sense of that at all. It is absolutely not what the Bill is about. The Minister made that very clear yesterday.

Mr Stewart: Exactly; yes. It is good to have that on the record.

When it comes to engagement, there is not a great number of stakeholders. The public will be looking on, wondering, "What does this really mean?". However, for Northern Ireland plc, the Bill will hopefully have really good economic benefits.

Ms Kerr: Absolutely.

Mr Stewart: The stakeholders themselves — the ports — knew the intent and have now seen the legislation. Have they come back to you with any response so far to suggest anything that they would like to see added or tweaked, or are they content, effectively, with how it has been drafted?

Ms Kerr: They are effectively content. We had one query concerning Foyle port that relates to an old piece of legislation. We are working that through with the port. However, it is not a fundamental issue in terms of the legislation.

It is important to say that the ports themselves have been very engaged throughout the whole process. Inevitably, on what we need to do on the ONS classification, it is always a balance between what the ports may wish and what we have to do to protect the public interest. They are all broadly happy and have been thoroughly engaged.

You mentioned stakeholders. Certainly, there is also engagement, as you can see from the response to the actual review at the time, from the likes of port users and communities, as you would expect.

Mr Stewart: That leads me on nicely. I think that there were 60 responses to the consultation originally. Can you give us a brief summary of all 60 of them? [Laughter.]

I looked at them and, from memory, they were all fairly positive. Some responses were technical, and there were a few queries.

Mrs Campbell: Yes. They were all very positive. I think that, in around 25 responses, people had seen that as a place to raise their concerns about other issues at other ports. However, the responses that answered the questions that related to the consultation were all supportive of extending the powers, allowing the ONS reclassification to go ahead and allowing the ports to develop and make themselves larger and more for the economy and community.

Mr Stewart: That is good to know.

The Minister was clear yesterday, as were other Members, that, while we acknowledge that it would be remiss not to highlight the issues and community concerns around Warrenpoint, the Bill is probably not amendable to cover those concerns. You mentioned secondary legislation. Is there an aspect of the secondary legislation that could provide for the community engagement that we talked about in order to try to strike that balance? How would that look?

Ms Kerr: The main point that we would make on how to bring in the voice of the community is that it is through those councillor appointments. As I said earlier, that is not a usual trust port thing. It is something that is very specific to Northern Ireland, because, at the time, in 2002, the importance of that local voice was recognised. Certainly, when it comes to what the Minister said, we do not intend to change anything, but we can look to how we strengthen that competition, as such, to make sure that it is very clear about what the role of the councillor appointments is. That would be useful. The point was made earlier that it is not just Belfast that has councillor appointments: they all have councillor appointments on their boards. That is one way in which we can do it.

There is also the code of conduct.

Mrs Campbell: The code of practice.

Ms Kerr: There is the code of practice and there is the guidance around master planning, for example. You will have seen it with Belfast; the role of engaging with the community is highlighted as being incredibly important. The ports understand that. It is something that we would like to reiterate when it comes to our expectation. I hope that that answers the question.

Mr Stewart: It absolutely does. We will look forward to seeing that. We, as a Committee, will play our scrutiny role, as we always do, and try to make that as effective and efficient as possible. Hopefully, we will see the Bill progress and get Royal Assent before the end of the mandate. I do not see any reason why that would not happen.

Ms Kerr: Great. Please. [Laughter.]

Mr Stewart: On the back of that, the ports will be keen to know —. The Department then has the process of removing the individual harbour orders to unlock the reclassification. What is the time frame for that post Royal Assent, and does the secondary legislation come first, followed by that? Can you give us an idea of where that might take us?

Ms Kerr: It is really important that we get the primary legislation dealt with in this mandate, because we have a slot, and there is no guarantee that we will have a slot in the next mandate. This is why we have been unashamedly prioritising that work. In the background, we have been starting work on individual harbour orders, and we have been working with the ports on those. We need to get the primary legislation agreed first, and our hope is that the Final Stage will be around Christmas. Once that is solid as a drafting platform, we can finalise the secondary legislation. That goes through the affirmative process, so you will have the opportunity to scrutinise it, with the hope that, given a fair wind, that will all be done within the mandate. With the secondary legislation, we have a fallback of being able to pick it up in the next mandate. We do not have that luxury with the primary legislation.

Mr Stewart: Yes; exactly.

Ms Kerr: We are hopeful.

Mr Stewart: That is good. Thank you.

The Chairperson (Mr Martin): As I said on the Floor of the House yesterday, as this is Executive legislation, it will get primacy at this Committee. Even the Minister praised the Committee yesterday, saying that we take our responsibility seriously. We are also a Committee that is absolutely committed to seeing good legislation in Northern Ireland that benefits everybody.

Mr McHugh: Tá fáilte romhaibh uilig.

You will be glad to know that, I think, John asked nearly all the questions that I had intended to ask. [Laughter.]

You have confirmed that the ports will remain as trust ports as opposed to them being free ports. On your engagement with the different governing bodies on the ports, what appetite is there for change?

Ms Kerr: With other government Departments?

Mr McHugh: Yes.

Ms Kerr: The main one that we have engaged with has been DAERA on its role around the fisheries ports. It has been sighted on the Bill, and we have taken its views on board. We are working with DOF, which is our link to ONS. We cannot engage directly, so we have been making sure that the Department of Finance is aware of what we are doing so that, when the time is right, we can get that on the ONS work programme. Those are the Departments that our main engagement has been with. Obviously, we are engaged with DFE on general issues to do with ports on renewables, energy and all of that. That is our main engagement. Everybody sees the good work that the ports are doing, and they do not want government to constrain the greater role that they can play in the economy. I think that yesterday somebody in the Assembly mentioned ports being hamstrung. I think that there is general support.

Mr McHugh: Can you explain how this will bring the ports up to speed with all other ports in other jurisdictions? To what extent will that assist them in contributing to the all-island economy?

Ms Kerr: Where they are at now constrains their ability to borrow and to utilise that ability to borrow to do more. They are very restricted on that. I have said this before, and it is worth repeating that that includes not just borrowing from us but any borrowing linked to the accounts. Belfast harbour is the biggest port in Ireland and the second biggest cruise port in the UK. Our ports are incredibly beneficial, and this unlocks further what they can do and the development that they can make. It is a very positive move. Andrew spoke yesterday about the knock-on consequences of the investment in the trust ports and the way that that might link into other harbours.

Mr McHugh: We can all look forward to better days ahead.

Ms Kerr: Absolutely.

The Chairperson (Mr Martin): Andrew, who is, clearly, the favourite of the officials today, is next. There have been three references to one Committee member.

Mr McMurray: Don't scud me, Chair. That is terribly unfair. [Laughter.]

The Chairperson (Mr Martin): I am trying to throw him off balance. [Laughter.]

Ms Kerr: Sorry. We could not hear very well in the Assembly yesterday, so I had to go back and listen to it. That is why I am very familiar with the comments.

Mr McMurray: Duly noted.

As I tried to say yesterday, everybody sees the need to do that whole gamut of things and the benefit of that. I am happy to see the Bill progress and all that goes with it. However, it would be remiss of the Committee if we were not to scrutinise different aspects of it. I say that to put things in context.

Knowing how the ONS classifies things, is the Department convinced that making those changes will lead to the reclassification of the trust ports in the eyes of the ONS? I am not terribly sure how the ONS works, but will that lead to a reclassification and allow for the financial economic development of said ports? Can we be sure of that?

Ms Kerr: The ONS has its own autonomy, so I cannot say for definite, but we are doing all of the things. We have specifically addressed the points of why it reclassified them in the first place. We have looked at other examples of where it has reclassified. We have done all that we can when it comes to a reasonableness test. We have to trust that due process will follow and that that is what will happen. We do not have direct engagement with ONS, and it will not engage until the legislation is in place.

Mr McMurray: I presume that that is difficult.

Ms Kerr: It is not something that we are particularly concerned about.

Mr McMurray: OK.

Ms Kerr: We have seen the examples, and we are working on that basis. We do not see any reason why there would be a different outcome.

Mr McMurray: Catastrophising is a trait that I have sometimes, but that is my baggage; not yours. What is the worst-case scenario? If the ports were not reclassified, is there a contingency plan, or would we just continue as is?

Ms Kerr: We do not see that as a realistic risk at the minute. We are doing all that we can. The important thing is that we can further amend secondary legislation relatively easily, if that were an issue. That is not a realistic concern, given the things that we have seen happen with other ports. There is precedent in place where other ports have been reclassified.

Mr McMurray: You mentioned secondary and subordinate legislation. We have come through another process in which secondary and subordinate legislation has caused us, as a Committee, concern. At this stage, is there anything that is not in the Bill that should be, and can anything in that regard be done through subordinate or secondary legislation?

Ms Kerr: We work under advice from drafters, and we will see. We have been advised that, generally speaking, you want to keep the smallest amount in primary legislation because secondary legislation is easier to amend. We have very much taken the approach of trying to keep the primary legislation as short as possible and to put the main parts in secondary legislation. I appreciate that we are asking you to consider the primary legislation without your having seen the secondary legislation, but we have early drafts, and, if it were helpful, we are happy to find ways in which to reassure you about what is going to be in the secondary legislation. We want to be as helpful as we can be. Again, it will come to you in time as part of the process for you to consider.

Mr McMurray: We have touched on accountability and transparency. I do not want to flog a dead horse, but the more we address it, the more opportunity we will have to talk about it. How will the Bill directly express public accountability and transparency? How does reducing the councillor public appointments to a board and having the majority of its members appointed by the harbour sit with enhancing public accountability and transparency? Those questions will continue.

Ms Kerr: That is absolutely fine. I reiterate that there is no sense of changing the number of councillor appointments. The Minister will still make those. That is one of the things that we plan to keep. It is seen as local representation. The link with the councillor appointments is about providing direct engagement and representation of priorities in the area. All of that will stay. The port will appoint the other members of the board, if that makes sense.

Mr McMurray: Is the Minister required to appoint councillors from the direct area?

Ms Kerr: Yes, they are from —. Sorry.

Mr McMurray: I mean directly from the district electoral area, for example.

Ms Kerr: We can look at those things in the secondary legislation. At the minute, it is just from the council area.

Mr McMurray: The local council area.

Ms Kerr: There are a number of criteria. We are looking for people with specific interests, and local community representation is one of them. We can look at strengthening that, but that will all be in the secondary legislation. Importantly, there is no sense of us changing anything to do with the number of councillors or the fact that the Minister will still appoint them. We want to keep that, for the reasons that you mentioned.

Mr McMurray: I referred to the fact that we are an island economy. I get the fact that we have to ship stuff in. That is part and parcel of it. How will the Bill allow ports to become more competitive? Yes, we are an all-island economy, but, in the case of Warrenpoint, for example, if you look across Carlingford lough, you see another harbour. How will the Bill help our sector to grow as an economy? Is that envisaged?

Ms Kerr: I presume that the ports will come to the Committee as part of the scrutiny process. It will be better for them to speak to their individual plans. Examples that I can reasonably foresee include ports wishing to invest in their decarbonisation. That requires significant investment, and, at the minute, they cannot borrow because we cannot facilitate that. There is an opportunity for them to bring down the cost of satisfying requirements under legislation and even their own operating costs by decarbonising, but that involves more investment. That is just one example. The ports will be much better at explaining what they can do, but that is an example of a reasonable thing that they would want to invest in.

Mr McMurray: Thank you.

The Chairperson (Mr Martin): I have had no other indications from members. Obviously, this is where it all starts for the Committee. As I said to the Minister yesterday, we want to work with the Department —. Holy moly, there he is. The yellow hand goes up. Justin, I am glad that I did not miss you, there, brother. The floor is yours.

Mr McNulty: Thank God that you did not miss me. I am so happy about that.

Thank you very much for your evidence. Obviously, in principle, I am broadly supportive of the whole premise of the proposal. I am not sure to what degree this has been touched on, but I am concerned that the Minister and the Department may be allowed to relinquish the reins of proper scrutiny of our ports. Do you have any thoughts on or issues with that?

Ms Kerr: We probably addressed some of those points earlier. It is a balance. We still have a lot of the controls, such as the Minister's appointing the chair and the councillor members. The councillor members will still be appointed by the Department, and we understand the role that they play in providing local accountability and input. Only some of the powers are being taken away. Those relate to the ONS classification. We will retain a lot of the other powers, and we will look to strengthen things such as the code of practice by providing guidance on our expectations.

Mr McNulty: That seems a little bit aloof.

Ms Kerr: Not at all. The important thing, as I said, is that a lot of it is in secondary legislation so is not directly covered in the Bill. We are happy to share our initial thoughts on the secondary legislation to provide reassurance. We very much recognise all the points that you raised yesterday, but you do not necessarily see it in the primary legislation because it is all in the secondary legislation, specific to each port.

Mr McNulty: All right, folks. Thank you very much for your evidence.

The Chairperson (Mr Martin): As I said, the Committee wants to work with the Department and the Minister. It is a fairly technical Bill, a bit like the sustainable drainage systems (SuDS) one that we just finished. As Chair of the Committee, I made my views pretty clear yesterday that the quicker we get responses, the easier it is for us. We got an indication from the Minister on, I think, Friday regarding the SuDS Bill. I am making the procedural point that that was quite late. That was only one working day before we had to do the informal clause-by-clause scrutiny and two days before the formal clause-by-clause consideration. That is late in the day for a Committee to get to grips with that.

I made the point in the Chamber, and I will make the same point to you as officials, which is that back-and-forth engagement is how a Committee and Department work best. The Committee is up for it, and I hope that, over a period of months in the new term, we can progress the Bill. As I said, it will get priority from the Committee, and we will work hard on it.

Ms Kerr: For the record, we are keen to provide as much information as we can as proactively as possible. We are new to this as well, but we will do everything that we can to facilitate a speedy passage.

The Chairperson (Mr Martin): Brilliant. Thanks a lot Sian, Adele and Royanne.