Making It Mutual: Community ownership of a valued British asset

9^th May 2013

Chairman of the Dover People’s Port Trust, Neil Wiggins, sets out a future vision for the Port of Dover

Three years ago Dover stood on the brink. The port was on the verge of breaking forever its historic links with the town and surrounding communities and passing into the hands of unknown private owners. Its focus on serving the best interests of all of its stakeholders, including central, local, district and regional government, the local community, customers and workforce, was at risk of switching to delivering shareholder profits, and being subsumed to the interests of remote private equity shareholders or sovereign wealth funds. Incredibly, this change was proposed by the very people at Dover Harbour Board charged with handing the port to the next generation in the same or better condition than when they began their stewardship, after being invited by the then Government to re-examine their ownership and governance structure. [1]

The Port of Dover has been a port and one of the UK’s major trade and travel facilitation nodes for at least 2000 years. Its existing ownership was established by Royal Charter in 1606, when the Dover Harbour Board was created, and its current Governance structure has come about through various Acts of Parliament.

Today, following a major local, regional and national campaign focussed on delivering ownership of the port in perpetuity to the communities of Dover and the surrounding area, the immediate threat of a private sale has been averted and the port’s status in the public sector as a Trust Port remains unchanged. However, the status quo has been shown not to offer protection from private sale, or necessarily the optimum form of corporate governance. The port will remain vulnerable to sale for as long as the current Trust Port status is maintained. Additionally, the significant and enduring benefit to, and influence for, the community over the future of the port, which the Secretary of State so clearly indicated as a key aim of the current government, remains apparently out of reach for as long as Trust Port status continues. [2] So, the campaign to deliver on the aspirations so emphatically expressed by the port’s stakeholders and local community continues. [3]

With half the job done, there can be no let up in the work that needs to be completed in order to ensure that the port is owned in perpetuity for the nation by the communities of Dover District and that the benefits of ownership pass to the communities most affected by the operation of a growing and successful port business. The port should and can be the engine of growth and regeneration in its locality. With the right ownership and governance structures and long-term financing arrangements, the Dover People’s Port Trust (DPPT) can forge a new co-operative relationship between the port’s users, management, workforce and local communities; one with the vision to be an economic strategist and the security of tenure to develop and deliver an holistic approach to operations and business development in full partnership with highways, rail, national and local government.

The ‘communitisation’ of the port

The ideas and concepts that led to the formation and incorporation of the Dover People’s Port Trust were born out of the first period of consultation that took place over the Dover Harbour Board’s privatisation plans in February and March 2010. It was clear at this time that the port, sooner or later, would require access to the private capital markets in order to raise the funds required to invest in the development that growing and changing cargo and passenger demands will eventually necessitate. It was equally apparent that the Dover Harbour Board’s answer to this conundrum was, at best, unsatisfactory to the port’s stakeholders. The thinking that went into answering the question of access to capital markets whilst satisfying the concerns expressed by the port’s stakeholders led to the birth of the Dover People’s Port Trust Ltd. as an Industrial Provident Society and Charity registered with HMRC.

The DPPT views its proposals for the future ownership and governance of the Port of Dover as a ‘communitisation’ of the port. Membership is open to everyone who lives or works in the Dover District or businesses that have registered offices in the District. Eligible persons can become members of the DPPT by purchasing a share for £10. This brings membership and an equal stake in the port within the reach of most local people. [4] The organisation maintains equality of membership and protects each member’s interests, preventing hijack by a wealthy special interest group by restricting the number of shares that each member can hold to one each. The long-term ownership of the port is guaranteed by ensuring that the bar to changing the ownership of or dissolving the DPPT is set extremely high. Members of the DPPT will be able to nominate and elect, from amongst their own number, four community directors who will sit on the board of the Trust and represent their interests. Other seats of the board of the Trust will be filled by ex officio nominees from the Dover Town Council, Dover District Council, Kent County Council, the sitting Member of Parliament and the Dover District Chamber of Commerce. There is also provision to allow for up to four additional co-opted directors should additional talent, knowledge and experience be deemed necessary for the effective governance of the DPPT.

Communitisation, as proposed by DPPT, empowers the port’s stakeholders in decisions to ensure that it is run in a sensitive and fully accountable, but commercial, manner. It embeds global best practice for port governance and ownership in its constitution and promises an end to the ‘silo’ thinking that has plagued the town of Dover with decline and increased deprivation, whilst freeing the port from the restrictions of public ownership.

Of course, £10 per person or corporate body will not raise sufficient funds to purchase the port at fair value (even if every single person and company in the Dover District bought a share, it would only raise a little over £1.4m). The money raised from membership shares has never been designed to fund the purchase of the port. In 2010, Rothschilds, the bank advising the Department for Transport and Dover Harbour Board on the then proposed privatisation, valued the port at between £230m and £280m in the prevailing market conditions. Those conditions are little changed today. DPPT has had talks with major banking institutions and the bond markets and, subject to due diligence, has put together an offer to purchase the port for £250m (including £50m to be used as seed funding for a regeneration vehicle). The funding package is based on raising an initial syndicated loan, to complete the purchase, as a bridge to bond with the long-term finance generated from the sale of infrastructure-type bonds in several tranches at low ticket rates. This will be underwritten by the port’s strong cash flow position and its natural geographical location as the closest point in the UK to mainland Europe, and thus its pre-eminence as a transport node for goods and people going to or coming from near continental Europe. By issuing bonds in tranches with different maturity dates, the DPPT thus ensures its ability to pre-finance major new developments at the port by ‘re-selling’ an early maturing tranche to the market on maturity.

Looking ahead: securing perpetual community ownership and revenue streams

Looking further ahead, DPPT has developed a regeneration strategy for Dover which begins at the waterfront and works its way back through into the town. The strategy is funded by the initial seed funding of £50m raised as part of our offer for the port and an ongoing revenue stream from delivered projects and a share in the profits from future port operations, as well as other sources of finance such as:

• The European Regional Development Fund (ERDF)
• Joint European Resources for Micro to Medium Enterprises (JEREMIE)
• Tax Incremental Financing (TIF)
• The Regional Growth Fund

The DPPT has been successful in gaining the backing and support of the local community, the port’s main users (the ferry companies), the port’s workers (through support from UNITE the union) and the Dover Town Council as well as a number of District and County Councillors and the MP for Dover and Deal, Charlie Elphicke. Our campaign has seen a change in Government policy and the rejection of the Dover Harbour Board privatisation plan. Of course, there is much work now to be done if DPPT are to achieve our objectives and the DPPT Board continue to make every effort to deliver on the aspirations so clearly expressed by its membership and the port’s stakeholders over the course of the last few years.

The next few months will see several changes at Board level for the Dover Harbour Board, as all bar one of the non-executive directors of that organisation see their terms of office coming to an end between now and May. This could possibly clear the way for a new atmosphere of co-operation in delivering the new model of ownership and governance that the port requires, but the community cannot bank on that being the case. They are therefore updating the offer that was made to Government in November 2010 so that it contains the latest traffic and revenue figures and forecasts for the port, as well as continuing evidence of the active support of the port’s other stakeholders and the financial sector. The renewed offer will demonstrate that the communities of Dover District are deadly serious in their desire to ensure that the port is owned in perpetuity on behalf of the nation by its community. The future of Dover with a mutual/ co-operative ownership and governance structure for the port could look so different and very much more positive than it does today, and DPPT is committed to delivering this unprecedented change in port’s sector ownership and governance in the UK.