Lara Moore examines the key findings and recommendations from the Department for Transport’s trust port study.
The majority of operational ports and harbours in the UK are run by 'statutory' harbour authorities ("SHAs"). SHAs originally obtained their powers under statute and as such, must exercise their statutory harbour powers in accordance with their governing legislation. If they fail to do so, an SHA, as a 'quasi' public body may be subject to judicial review.
There are three main types of SHA in the UK:
1. Trust Ports: are independent statutory bodies. There are no shareholders or owners. Any surplus is ploughed back into the port for the benefit of the stakeholders of the trust port (they are not trusts in the legal sense).
2. Municipal Ports: are owned and managed by local authorities.
3. Private Ports: are owned and managed by companies (either created by statute or Companies Act companies, which have statutory powers and duties).
The Department for Transport's ("DFT") Trust Port Study began in Summer 2014. The aim of the study was to consider the overall effectiveness of the trust port model in England and Wales and to make any recommendations needed about how its effectiveness could be improved. Key drivers leading to the study were:
- The DfT as a key stakeholder, wanted to consider whether the Trust Port model is effective at meeting its key aims, such as accountability to stakeholders and ability to invest to drive economic growth and to help ensure the future of the port.
- The borrowings of the largest trust ports have an impact of the DfT's capital expenditure rules because they are classified as ‘public corporations’ by the Office of National Statistics. Generally this is because of the powers Ministers have in the Ports Act 1991 to require them to be privatised.
- The DfT wants to revise its good governance guidance for Trust Ports (Modernising Trust Ports 2 ("MTP2") published in 2009.
Key themes of the study were the accountability and governance of trust ports and their ability to invest. The study focused on the eight largest trust ports in England and Wales (Tyne, Dover, London, Milford Haven, Harwich Haven, Blyth, Shoreham and Poole).
On 26 May 2016, the Department for Transport released its key findings and recommendations. Overall the study found that the trust port model is broadly effective. However, it was considered that the trust port model may not necessarily be the correct one to deliver strategic objectives of ports where they involve major transformative investments.
The outcome of the Trust Port Study is of interest to the wider ports industry because it is the intention of the government to include a number of the recommendations, discussed below, in revised good governance guidance to replace current trust port guidance (Modernising Trust Ports 2). The intention is that the revised guidance will also include good practice guidance for local authority ports and potentially other ports.
Recommendations from the Trust Port Study
Main areas considered and recommendations given as part of the Trust Port Study include:
1. Secretary of State appointments to trust port boards:
- DfT should consider the case for Secretary of State appointments when a trust port passes the Ports Act threshold (currently £9.7m per annum (subject to RPI inflation)).
- In respect of Secretary of State appointments to the four largest Trust Port boards (excluding Dover), these should be reduced to appointing the Chair and being involved in the selection of the Deputy Chair. The DfT felt that this strikes a good balance between preserving accountability and Ministers' relationship with the Boards of these trust ports while reducing administrative burdens.
- The Secretary of State should be able to dismiss an underperforming Chair appointed by him or her.
2. Relationship of trust ports with the Department for Transport:
- There should be regular one-to-one meetings between the Chair of a nationally significant trust port and the Minister.
- A standard agenda should be created as a basis for the meetings between Chairs and the Minister.
- There should be an annual round-table meeting between the Minister and Chairs of the nationally significant trust ports.
- DfT officials should continue to attend annual stakeholder events of all Major Trust Ports.
3. Stakeholder Engagement
- As part of best practice in stakeholder management, the nature and extent of stakeholder and community engagement should form part of a port's ongoing self-assurance process.
4. Investment capability
- Trust ports should review their strategic vision and objectives at least every five years and consider if the trust port model is the best way of achieving them. This should include:
- a port's ability to attract the necessary funding for investment needed to deliver its vision and objectives.
- an assessment of the alternatives that would allow it to meet its vision and objectives if the conclusion that it was not possible to do so within the trust port model.
- The conclusions of the review should be discussed with DfT.
- Major Trust Ports that have not carried out a specific review of this nature may wish to consider doing so.
The DfT has stated that the recommendations listed above, arising from the Study will be taken forward over the course of 2016/2017. This will involve a number of the recommendations being included in revised good governance guidance to replace MTP2. The intention is that the revised guidance will also include good practice guidance for local authority ports and potentially other ports.
The full document: Trust Port Study: Key Findings and Recommendations can be accessed here.