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Battered economy in need of recovery
Planning – 13 February 2004

The Channel Tunnel put a huge hole in the Kent ports' ferry business and the local authorities are still struggling to revive their economic health, writes Mark Smulian.

When councils suddenly find that their local ports will have no ships and their coalfields no mines, it is time for them to think hard about regeneration. Both sets of problems have been familiar to mining and heavy industrial areas for 40 years.

Ten years ago they came to Kent in the prosperous South East. In 1994, the Channel Tunnel opened for business and rapidly wiped out much of the cross-channel ferry trade and associated port activity. By providing a faster link to the continent, the UK's largest infrastructure investment in decades boosted the freight industry and those whose products it carries.

Even though budget airlines have eaten into the predicted numbers of people using Channel Tunnel passenger services, the market has been large enough to spur construction of the high-speed link into London King's Cross, due to open in 2007. Everyone from truck drivers to booze cruisers likes the tunnel. But it has been a different story in the immediate area where the tunnel surfaces, at Cheriton near Folkestone.

Massive investment in tunnel infrastructure has seriously damaged the former ferry ports. Outside Dover, they have seen the loss of almost all their traffic. Since the tunnel opened, Sheerness, Ramsgate and Folkestone have lost their ferries entirely, apart from the occasional freight service. Dover has fewer but larger vessels sailing from its dock.

Stripped of the ferries and the accompanying passing trade, and in effect bypassed by the tunnel, the decade since its opening has been one of painful readjustment for east Kent as planners, economic development specialists and politicians have striven to mitigate the effects.

In absolute terms, east Kent is not badly off, with unemployment not far off the national average and substantially worse only in Thanet. But unemployment is well above the figure for the rest of Kent. The loss of ferry jobs also came hard on the heels of the final death throes of the Kent coalfield, a short distance inland.

Ferry ports' tourist business, already under pressure from the attractions of Mediterranean package holidays, was dealt a further blow by the loss of passing trade from cross-channel traffic. Travellers can now leave the UK from a drive-in terminal far from any town. With improved motorway connections, few people have any need to stay a night in the area, or even eat a meal in it, as part of their overseas journey.

Despite its image as part of the prosperous Home Counties, Kent has always had significant industrial activity and areas of deprivation. East Kent is the economic runner-up to the wealthy west of the county. Lying beyond reasonable commuting distance for most metropolitan workers, it has never been well sited to attract inward investment.

Now it faces two new threats, in the shape of the designated growth areas based in the Thames Gateway and Ashford. With public money being poured into these two areas, both of which are nearer to London and the M25, few businesses see east Kent as a very promising alternative for investment.

In the early 1990s Roy Vickerman, professor of economics at the University of Kent, led the team that produced the East Kent Impact Study, which made stark predictions about the effects of the tunnel on the locality.

"We were right," he says now. "We said there would be a winding down of the ferry companies as competition meant only a few were left, and that would have a major effect on the smaller ports."

People who worked on the ferries did not necessarily live locally, so the effect was not as severe as when the only factory in town closes.

Dover has survived due to its size, argues Vickerman: "There is some reduction of employment in Dover, but while the loss was not picked up by other industries it was not catastrophic."

Elsewhere, however, the port industries have disappeared. Vickerman points out that the economy of Thanet "was always pretty shaky", while Folkestone lost its trade overnight when the ferries went. Diversification has not shown much success, he adds, as new economic activities such as distribution tend to want to locate near the M25.

"There has been no significant shift to the knowledge economy, as that goes to west Kent. The problem is how to persuade firms that want to be close to the M25 to go further east, which is what is needed from a strategic planning viewpoint. It has been very difficult to attract investment to east Kent."

Ashford, with its international railway station, the M20 and its designation as a growth area, has "done slightly better but not dramatically so", according to Vickerman. Kent Thamesside, which is having public money poured in as part of the Thames Gateway initiative, is nearer to London and will be able to offer newly-assembled sites and infrastructure. Apart from Sheerness, which falls just inside the Thames Gateway, he fears that competition from the gateway "may further damage east Kent".

Vickerman's study was used as part of the successful argument mounted by the area's local authorities in the early 1990s to secure assisted area status for east Kent, helping to attract investment via grants. Kent County Council strategy manager Tim Martin says that while this aid was useful, "the full benefits from assisted area status did not come to fruition".

This was partly because it was expected that light manufacturing would be attracted by the export opportunities offered by the tunnel's proximity and the remaining ferries. But Martin notes that international competition has changed the shape of the economy even over the decade since the tunnel opened. "Things are simply made in China nowadays," he says.

He reports that there was initially some growth at Dover as the ferry industry rationalised its operations to protect what remained there. But he recognises that Thanet's location puts it at a disadvantage. "What matters with a ferry is trip time. On the short route you can get perhaps five return trips daily if you deploy at Dover. If you are at Ramsgate you might only get two trips a day."

Mike Ebbs, Dover District Council's forward planning manager, has conducted a study that suggests that the effect of the tunnel on jobs has been broadly neutral across Kent but has been spread so unevenly that any harm has been concentrated on the ports. "In Dover it was very bad news for us," he admits.

"The Channel Tunnel came on top of a series of bad things," Ebbs recalls.

"We had had the pit closures and then there were changes in the law on freight forwarding that cost 2,000 jobs here." He accepts that assisted area status has benefited his district more than others. Its flagship success is Pfizer Pharmaceuticals, which now employs 3,500 people locally.

But the job losses have not stopped. Further rounds of redundancies have been announced recently by ferry operator P&O and by Hoverspeed, which operates fast catamarans in the summer. "With Hoverspeed the job loses are seasonal, but with P&O they are permanent and they have not quantified them yet," says Ebbs.

The council is collaborating with the South East England Development Agency in bringing forward business sites at the former collieries. It is preparing to release a major site at Betteshanger, which could provide 25,000 sq m of business space, and has also had some success with its White Cliffs Business Park.

Ebbs points out that the tunnel is primarily capital-intensive, with relatively few people needed to maintain and operate it. "The construction phase of the tunnel was a creator of jobs, with some transfer of skills from mining to tunnelling," he says. "But the operational phase was bad news for us."

Although Dover is close to the high-speed link, it derives little benefit as the services do not stop anywhere nearer than Ashford. "We are very concerned about the Thames Gateway and the growth concentrated at Ashford, as it gets priority. We are less optimistic that that investment will radiate to us. The fear in east Kent is that Ashford will take up the growth for the whole area," says Ebbs.

Meanwhile the local rail infrastructure continues to creak, in common with much of the intensively used South East network. Most trains take at least 90 minutes to reach London from Dover, and even longer from Thanet.

Dover planners aim to ensure that some high-speed commuter services linking King's Cross, Ashford and the planned intermediate station at Ebbsfleet will continue on conventional track to Dover, but does not yet know whether train operators will be interested.

The issue of through trains on the high-speed line also concerns Swale Borough Council, which covers Sheerness and the Isle of Sheppey. Assisted area status has helped limit the damage, but the tunnel itself has produced few spin-offs for the district. Economic development manager Peter Jeffrey is "not aware of any industry setting up in Swale because of the proximity of the tunnel".

Jeffrey is concerned that the area's rail links to London will actually get worse once the high-speed line opens. "We have four expresses to London an hour now, but trains from Thanet will bypass us and run via Ashford and the North Kent Line will be downgraded," he says. "Passengers from this area may have to change at Ebbsfleet, in which case there is no time saving."

Sheerness lost its ferry, which mainly handled trucks, because drivers found the tunnel easier to use than the long sea crossing to the Netherlands.

It was thought that the port might find a new lease of life by handling cargo unloaded from world trade routes and broken into smaller loads for distribution across Europe through the tunnel. This idea was largely thwarted by poor rail links. "This may change with Ebbsfleet, but there is still an issue of whether you can get containers through local tunnels," says Jeffrey.

The Channel Tunnel has undoubtedly helped the tourist industry in London, and for that matter in Paris and Brussels. It has been a boon for the freight industry, which can now simply load its lorries onto the train for a rapid crossing. But the area where the tunnel emerges has been less of a beneficiary from this massive investment. With colossal sums earmarked for the Thames Gateway and Ashford, it fears it is about to lose out a second time.

District profiles
District Population Employed Unemployed House price*
Dover 104,566 59.4% 3.3% 92,720
Shepway 96,238 60% 3.4% 99,292
Swale 122,801 61.6% 3.5% 97,935
Thanet 126,702 54.9% 4.4% 89,357
*Price of average semi-detached house
Source: 2001 Census



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