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Transport Bill

3.31 p.m.

The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston): My Lords, I beg to move that the House do now resolve itself into Committee (on Recommitment) on this Bill.

Moved, That the House do now resolve itself into Committee (on Recommitment).--(Lord Macdonald of Tradeston.)

On Question, Motion agreed to.

House in Committee (on Recommitment) accordingly.


Clause 1 [Secretary of State's general duty]:

The Earl of Caithness moved Amendment No. A1:

The noble Earl said: I rise to move Amendment No. A1. I apologise to the Committee, the Minister and the Fifth Cavalry that supports him--a fine body of men and women I know well from the past--for the lateness of this amendment. There has been a total misunderstanding. It was always supposed to be an amendment but it is stated on the Marshalled List that I intend to oppose that Clause 1 stand part of the Bill. I shall not do so. I apologise to the Committee for any misunderstanding. In view of that and my desire that the Minister should understand the purport of my amendment, yesterday I telephoned his office to explain that my interest was the legal basis for the partial privatisation of NATS. That is a very different topic from the other amendments with which my amendment is now grouped. I am surprised that I was not consulted on the point by the Government Chief Whip so that the Committee's task would be easier rather than that a number of different amendments should be grouped with it.

The reason for tabling the amendment is that in 1993 when I was Minister of Aviation I looked at the possibility of introducing private finance into NATS. The advice that I received then was that it was not legally possible to bring private finance into NATS because by international conventions to which the United Kingdom was a party NATS had to be a

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non-profit-making organisation. Therefore, the introduction of any private finance meant that it would have to make a profit. The question that I put to the Minister is: what has changed, and why is he now allowed to do something that I wanted to do seven years ago? I beg to move.

The Chairman of Committees (Lord Boston of Faversham): Amendments Nos. 8 and 9 are grouped with this amendment. I must point out to the Committee that if Amendment No. 8 is agreed to I cannot call Amendment No. 9.

Lord Brabazon of Tara: Amendments Nos. 8 and 16 in my name have been grouped with this amendment. As my noble friend said, they deal with a completely different subject. Therefore, it may be better if at this stage the Minister responds to the amendment moved by my noble friend Lord Caithness. We can then speak to some of the other amendments in the group.

Lord Macdonald of Tradeston: The Committee will be aware that Clauses 1 and 2 set out the general duties of the Secretary of State and the Civil Aviation Authority respectively. They require the Secretary of State and the CAA to exercise their Chapter I functions in the manner that they think is best calculated to further their duties. Amendment No. A1 in the name of the noble Earl would add a proviso to the effect that the Secretary of State's discharge of his general duties should be subject to the UK's international agreements.

There is nothing in international law which would preclude the delivery of our air traffic services through a private sector company. We have taken care to make the International Civil Aviation Organisation (ICAO)--the "keepers" of the Chicago Convention--the European Commission and Eurocontrol aware of our plans.

The Committee will be aware that the noble Earl, Lord Caithness, was at one time the Minister of Aviation. I assume that at the centre of the noble Earl's concern is the Eurocontrol charging principles which govern how charges for en route air navigation services are calculated and collected. I understand that until the 1990s the charging principles were based on full cost recovery, and no more than that, which would certainly constrain the ability of a private sector provider to make a profit. The charging principles were subsequently amended to permit a provider to recover a return on capital employed; in other words, cost pass-through plus.

The principles have been further amended as recently as last year so that it is now permissible for a provider to be regulated by the RPI-X method, which is how we intend NATS to be regulated. I can assure the noble Earl that there is no incompatibility between our proposals and the UK's international obligations and that the Government will at all times act in a manner consistent with those obligations.

Lord Brabazon of Tara: Before my noble friend responds, perhaps I may speak briefly to the two

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amendments in this group in my name, Amendments Nos. 8 and 16. Both amendments deal with that part of the Bill which is concerned with the duties of the Secretary of State and the Civil Aviation Authority. The same point is made in both amendments but one is concerned with the Secretary of State and the other with the Civil Aviation Authority.

Clause 1(3) allows the Secretary of State to promote competition to further the interests of the air industry and the travelling public only where he thinks it appropriate. My amendments remove that qualification of appropriateness. We do not believe that there is need for it. The benefits of competition in securing cost-effective and high quality services are well established. Securing those benefits should not be left to the whim of the Secretary of State or the CAA. If the interests of the public and others are best secured by promoting competition, this is the route the Secretary of State and the CAA should be obliged to take. The public interest is well protected by the need to promote competition only where it furthers the interests set out in the clause.

Lord Macdonald of Tradeston: The noble Lord returns, in Amendments Nos. 8 and 16, to the question of the discretion of the Secretary of State and of the CAA. Clauses 1(1)(a) and 2(1)(a) require the Secretary of State and the CAA to further the interests of users. The ways in which this may be done explicitly include promoting competition where they think it appropriate.

The Government are in favour of competition and we want to see it promoted wherever appropriate. But the provision of en route air traffic services, which is our main concern here, has many of the characteristics of a natural monopoly, and the potential for competition is further constrained by existing technology. There is competition in some parts of the air traffic services market but, for good reasons of safety, we cannot have rival providers offering services in the same airspace at the same time. With current technology, the start-up costs of providing en route services mean that competition even for that particular market is not presently feasible.

Competition will be given due weight by the Secretary of State and the CAA but "furthering the interests of users" can take many forms and there is no "one size fits all" solution to every situation.

3.45 p.m.

The Earl of Caithness: I am grateful to the Minister for the way in which he answered my amendment; and to the Committee for helpfully and constructively enabling my noble friend Lord Brabazon to speak to his amendments after the noble Lord had answered my point.

I am grateful to the Minister for his full answer. All I can say is how pleased I am that the ideas and principles of the previous Conservative government continue to prove fruitful throughout the world. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Amendment No. 1 not moved.]

Lord Trefgarne moved Amendment No. 2:

    Page 1, line 12, after ("aircraft") insert (", whether or not operated for the purposes of hire and reward,").

The noble Lord said: In moving this amendment, I speak also to Amendment No. 13. My amendments are grouped with others. No doubt noble Lords responsible for tabling those amendments will wish to speak to them.

I declare an interest. I have been involved in general aviation and other categories of aviation for most of my working life. Today I speak about general aviation. It is my experience in that regard that I wish to represent to the Committee. I am an office bearer of the Popular Flying Association. I am the part-owner of a small aircraft involved in these regulations and rules and would not wish Members of the Committee to be unaware of those matters.

Ever since the prospect of some form of privatisation of NATS, there has been concern among the general aviation community that its interests would not be adequately represented. Until now, by and large general aviation has been able to co-exist with professional or transport aviation satisfactorily. Of course, around major aerodromes--for example, Heathrow and Gatwick--there are strict rules as to what small aeroplanes can do; and they have to comply with those rules if they are to approach those airports.

That is all well understood and accepted. Of course, there is discussion about the nature of the rules and the extent of the airspace so regulated. However, it is feared by the general aviation community, and by me, that if NATS becomes more concerned, and more required to take account of financial considerations, the first facilities to be squeezed will be those which provide for the smaller aircraft. I am sorry to say that there is some evidence that that is occurring already. I give the Committee some examples.

There are strict rules about aircraft movements around Heathrow and Gatwick. Those aerodromes are surrounded by class A airspace. Light aircraft may only approach, with permission, when the weather is suitable and in accordance with special VFR clearances. The controllers around Heathrow and Gatwick could not be more helpful to small aeroplanes--but, of course, within the constraints imposed on them by other aircraft.

By contrast, Stansted is quite different. The airspace around Stansted is class D which is more liberally regulated than the airspaces around Heathrow and Gatwick because Stansted is a less busy airport. But the application of the rules around Stansted is onerous. For reasons quite unknown to general aviation, clearances to enter that airspace are almost always refused. I speak from personal experience in the matter.

A year or so ago I was flying from, I think, Cambridge back to an aerodrome in the south of London. I am sorry that the noble and gallant Lord, Lord Bramall, is not in his place; he was my co-pilot. The controllers around Stansted refused even to

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entertain application for clearance on a gloriously sunny evening. They were not busy. To this day I do not know why they could not have been more accommodating.

My experience is not unique. I am told by those who have aeroplanes operating regularly in that area that the Stansted controllers are uniquely difficult when it comes to granting clearance for small aircraft to enter their loosely regulated airspace. They repeatedly say, "No, you may not enter. Go round". In my opinion there is absolutely no reason for saying that. There may well be some reason; I suspect that it is because the number of controllers and the facilities available to them have been reduced so that they simply do not have the capability. Why that should be so when the controllers around Heathrow and Gatwick are not faced with these difficulties, I cannot imagine.

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