Two tales from UK ports make interesting reading this month. In the West, Bristol Port Company (BPC) offered £10m to the local council to buy the freehold to the docks at Avonmouth and Portbury. The company bought the leasehold in 1991 under a 150-year lease.
It now wants to exercise an option to buy the freehold to “secure the port’s future”.
BPC has offered significantly more than the market value of the land, pegged at £3m-£4m by advisers to the port. It’s likely to be accepted by the Council which has publicly stated that a port on leasehold land could put off investors looking for long term security. In reality, what it is perhaps acknowledging is that the port did not blossom under its stewardship and now with a ‘safe pair of hands in place’ why not sell the freehold and put the port on the same footing as other major privatisations of major ports undertaken by the UK Government? It will, of course, also receive cash into the bargain.
On the opposite side of the country another leaseholder has also sought to improve its long term position. However, its bid has not been as successful as that of Bristol’s.
Great Yarmouth Port Company Limited (GYPC) has failed in its legal bid to become the harbour authority, a move it says is necessary to simplify a “complex” ownership structure which it believes is a barrier to trade.
GYPC signed a 99-year lease for the port in 2007 with the current Great Yarmouth Port Authority and since then has invested over £60m into the port - including bringing to fruition the long mooted construction of the new outer harbour in February 2010. It now operates under the title of EastPort UK, a step designed to mirror its wider appeal. The bid to take on the harbour authority’s role – first made back in 2010 - was thrown out by UK port regulator Marine Management Organisation (MMO), a ruling that was upheld on appeal.
Until 2007, when the new outer harbour became operational, Great Yarmouth port was run by commissioners as a trust, owned and managed in the public sector for the benefit of the town.
Does the decision make sense? There are inevitably those that see port authority functions such as safety of navigation, port security and estate management as best undertaken at arm’s length from the operating arm of the port.
On the other hand, there is plenty of evidence to suggest that these functions can be successfully integrated under the roof of one port body in the UK. Associated British Ports, a private company, is, for example, the Statutory and Competent Harbour Authority for 22 separate ports and harbours located around the UK. Many other ports privatised since the 1990s have also demonstrated strong competence in this regard and thus in certain respects it is possible to see that GYPC has grounds to be aggrieved at the recent ruling.
The MMO’s decision was reportedly influenced by protests from local groups but with the grounds for these contested by GYPC.
Both experiences demonstrate that privatisation is not a panacea in itself but that the process inevitably generates new challenges that require astute navigation and forethought.
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