Harwich cruise terminal bosses call for full repayment of Liverpool subsidy

THE owner of Harwich International Port has welcomed a Government move to force a rival in the cruise sector to repay more of a multi-million pound public subsidy.

But Hutchison Ports (UK), which also owns the Port of Felixstowe, insists that the as yet unspecified repayment should amount to the full sum of nearly �18million granted towards the �20m cruise ship facility at Liverpool when it was built four years ago.

Liverpool City Council has asked Ministers to lift a ban on the terminal, operated by Peel Ports, being used as a start and finish point for cruises.

The bar on “turnaround” business was imposed by the previous Labour government when the facility on the River Mersey opened in 2007. It was restricted to handling “transit” calls, by ships in mid-cruise, so that it did not compete unfairly against privately-funded cruise terminals at ports including Harwich and Southampton.

A request for the restriction to be lifted was rejected by the then government in 2009 but the city council has now made a fresh application, which the Department for Transport (DfT) said last year it was minded to approve.

In a consultation document, the DfT proposed to require grant money totalling �5.327m to be repaid in return for lifting the ban, but it allowed for the payments to be phased over 15 year which rival operators says would, on a discounted basis, effectively reduce the repayment to less than �3m.

In response to the consultation, Shipping Minister Mike Penning has now ruled that more of the subsidy should be repaid in return for the lifting of the turnaround ban, although the actual sum has yet to be decided.

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In a Parliamentary statement, Mr Penning said that, in the light of the consultation, he had decided there were “persuasive arguments” that the level of repayment originally proposed would be “insufficient to reflect the adverse impact on competition with other ports”

He said he would seek independent advice on “a more appropriate figure” but, in the meantime, turnaround cruise operations would continue to be permitted at the Liverpool facility.

Paul Davey, head of corporate affairs at Hutchison Ports (UK), said: “We are pleased that the Minister has decided that the proposed repayment of the subsidy was too low.

“It is important that Government sets the right conditions to encourage private sector investment in ports and this can only be done if all ports are treated equally. Anything less than the full repayment of the subsidy would lead to an unacceptable distortion of competition.”

Jimmy Chestnutt, chairman of the UK Cruise Port Alliance, an informal group representing cruise interests at other ports including Southampton, agreed that the subsidy should be repaid in full.

“Any subsidy is a subsidy too far,” he said. “We believe the industry should be run on a commercial basis and that there is no place for public subsidy of any kind, so we are concerned that this simple principle has still not been accepted.

“Full repayment of all the public money, including the �9m match funding from Europe, should be a mandatory condition if the Liverpool terminal wants to compete with private investment for the turnaround cruise business.”

Even when the Government announces a new repayment figure it may not be the final word on the issue. If the turnaround ban at Liverpool is lifted permanently without the subsidy being repaid in full, State Aid clearance would be required from the European Commission.