MPs attack foreign takeover of UK ports

Foreign ownership of ports could create instability in a vital industry, exposing it to the "unregulated whims of international capital", according to an all-party group of senior MPs.

The Commons Transport Committee expressed particular concern about companies with no experience of owning and managing docks and about investment houses which might only be interested in selling off ports for other development.

A report by the committee published yesterday, The Ports Industry in England and Wales, says: "Ports companies with foreign interests may decide on balance that investment and development is best prioritised outside the UK; similarly investment companies may see more profit in selling off ports for land. The Government must recognise the risks and develop an action plan to mitigate them.

"Our ports are too valuable to be exposed to the unregulated whims of international capital. The Government must be clear about the circumstances in which the threat to our national interest would trigger intervention in the market. We hope that such a mechanism would never have to be used, but it must be there."

The document points out that the biggest operator, Associated British Ports, was taken over last August by the Admiral consortium, which included the Wall Street bank Goldman Sachs, GIC, the Singapore government investment company, and the Canadian pension fund Borealis. The other partner is the UK's Prudential.

Another ports operator, P&O, was bought in 2005 by Dubai Ports World (DP World), which is backed by the Dubai government. DP World, the world's seventh largest docks company, was forced to sell on P&O's American ports because of concerns over security.

PD Ports was bought in the same year by Babcock & Brown Infrastructure, an Australian investment fund, and the Simon Group was purchased last June by Montaban SA, a subsidiary of the Belgian-based CdMG group.

A report by the committee asserted that ports were "essential to the economic well-being" of the country, accounting for £330bn worth of international trade. The document pointed out that 95 per cent by volume and 75 per cent by value of foreign trade was carried by sea.

It called for a "flexible but coherent" national strategy that recognised the importance of the ports to the national economy and to regional development.

MPs welcomed the Government's current review of the industry, but warned that it had fundamental responsibility for the transport infrastructure and must ensure that freight could move "easily, quickly and sustainably". Ministers must develop an integrated freight plan "as a matter of urgency".

Without such a plan, it would make no difference where the market decided to develop ports, because goods would "remain stuck on congested roads, or blocked by dilapidated canals and railways".

Ministers should refuse to allow environmental concerns to "trump" economic considerations when planning decisions are made over ports, according to the MPs.

The Transport Committee commended the docks industry for signing up to international initiatives on the environment, but called for a cost-benefit analysis of their impact. The Government was warned that the planning system inhibited the development of ports because it was "slow and too expensive".