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Lord McIntosh of Haringey: If ever I have heard an invitation for a long speech in response, that is it. I shall do my best to answer all the points raised by the noble Lord, but I shall do it as quickly as I can.

Amendments Nos. 38 to 45 address the process by which licences are modified. The modification process, and the checks and balances which underpin it, is long established in other utility legislation, although the Government are seeking to introduce some further safeguards. Amendments Nos. 38 and 40 would remove one of those safeguards: the Secretary of State's powers to veto modifications which have been agreed between the regulator and the licensee, and a reference to the Competition Commission.

The power of veto is no more than a backstop provision. It dates back to the dawn of utility legislation in the 1980s--Sections 12(5) and 13(5) of the Telecommunications Act 1984; Sections 11(4) and 12(5) of the Electricity Act 1989--and, as far as I am aware, it has never been used. But it is important because it protects against the possibility--albeit a remote one--of there being a sound public policy reason, which would almost certainly have to be stated and justified, why an agreed modification, or a reference to the commission--Amendment No. 40--should not go ahead. For example, the Secretary of State could use the power under Clause 11(4) if he thought that a modification agreed between the regulator and the licensee ran contrary to the interest of NATS' customers.

As far as concerns reference to the Competition Commission--Amendment No. 40--the situation might arise where the CAA was contemplating asking the Competition Commission to make a public interest finding in an area which also engaged the Secretary of State's wider public interest. As I say, that provision has appeared in utility legislation for most of the past 20 years and, as far as I am aware, the power has never been used. So we are not talking about the Secretary of State routinely thwarting the proper process of licence modification. But the Secretary of State's power of veto is a safety net, and the Government believe that it should stay in place.

Amendments Nos. 41 to 45 seek to introduce greater transparency into the licence modification process. But in fact the requirements they would introduce are already in place. The process is somewhat convoluted, but it is structured so as to ensure that at any point interested parties are made aware not only of what is going on, but why. For example, Clause 14 requires the CAA to suggest to the commission such modifications

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as it thinks are needed to remedy the adverse effects identified in the report. Before doing so, however, it must publish a notice setting out its proposals and its reasons for making them. Clause 15(5)(c) requires the commission to give its reasons for rejecting the CAA's proposals. Clause 16(5)(a) requires the commission to give reasons behind its own proposed modifications.

The common thread running through the whole modification process is that at each stage any person likely to be affected is kept informed by notice, is told what is being proposed, the effect of the proposals and why they are being made, and is able to make representations to the CAA or the commission, as the case may be. I believe that that answers the noble Lord's point. I think that would obviate the need to set out any differences, as that would be clear simply from comparing the notices.

I turn to Amendments Nos. 46 to 50. These all concern the enforcement process. Amendments Nos. 46 and 47 import the concept of reasonableness into the making of enforcement orders. I am certainly all in favour of reasonableness: administrative law is based on that very concept. When the CAA makes an enforcement order, Clause 20 requires that order to contain the provisions the CAA thinks are needed to secure the licence holder's compliance with the duty or condition which is being contravened. These orders are open to challenge by the licensee--which is right and proper--and if an order were challenged, then the court would consider the reasonableness not only of the order being made at all but also of its content. I believe that that is better than introducing reasonableness onto the face of the Bill as Amendments Nos. 46 and 47 seek to do.

The facts are these. The CAA will have to make a judgment as to what needs to go into an enforcement order. It will make that judgment in the knowledge that it may be challenged. If it were challenged, the court would determine whether it was reasonable. The effect of all this is to encourage, if not require, the CAA to come to a rational--or even reasonable--conclusion about the matter. It is not necessary to say on the face of the Bill that it must act reasonably, because the law assumes that anyone discharging a function under statute is under a duty to act reasonably. The courts will tolerate nothing less.

I do not believe that Amendment No. 49 is necessary. The duties laid on the CAA by Clause 2 are already explicitly applied to the exercise of all the CAA's functions in Chapter I of Part I of the Bill. Clause 2 opens with the very clear statement that:

    "The CAA must exercise its functions under this Chapter in the manner it thinks best calculated ... to",

and so on. Clause 21 and the enforcement provisions appear in Chapter I of Part I, and the Clause 2 duty therefore applies.

I believe that Amendment No. 50 over-eggs the pudding. The enforcement procedure must be fair, but Clause 22 requires the CAA to go through a number of hoops in order to satisfy itself that there has been a breach of a Clause 8 duty or a licence condition. The

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main purpose of these hoops--a very right and proper one--is to ensure that all interested parties are made properly aware of the enforcement process.

If the CAA proposes to modify an enforcement order, it must first seek the licensee's consent to its proposed modifications, whether or not those modifications are trivial. The noble Lord, Lord Brabazon, made a point about the word "trivial". So the licensee will in all cases be made aware of the modifications that the CAA is proposing to make. If the modifications are trivial, the CAA does not need the licensee's consent and need not give the licensee further opportunity to make representations. We need to keep a sense of proportion here.

The earlier discussions between the CAA and the licensee about the order might have shown that it contained a minor error of fact, or an incorrect date, or just typing errors, and the modification might be intended to do no more than correct them. If the licensee objects to some of the modifications and does not consider them to be trivial, he can say so to the CAA. He could challenge the validity of the order under Clause 23(1). The noble Lord, Lord Brabazon, said that the licensee needs protection. I do not think that the licensee is in a weak position here.

I know that hypothetical examples are dangerous, but let us suppose that the CAA considered that a service provided by NATS under the authority of its licence had become contestable and therefore wished to remove it from the licence. NATS--for understandable reasons--did not wish to relinquish that service and resisted the proposed modification. If that were to happen, the CAA would wish to refer the matter to the Competition Commission for a public interest judgment. In such a case, one might expect the commission to come up with a ruling broadly supportive of the CAA. But what if the service was one where effective integration with military air traffic control was crucial and the Secretary of State believed that that integration would be best preserved by leaving the service with NATS or with it continuing to be provided under the authority of a licence? In these circumstances, the Secretary of State might think it best to veto the reference at the outset, and the Committee might consider it reasonable on national security grounds for him to do so. Perhaps that example is far-fetched. That is why I said that these powers are unlikely to be used. But that combination of circumstances--or something similar--might just happen. That is why the safety net of Clause 12(5) needs to be left in place.

I believe that we can rely on the CAA to be even-handed and to engage in a rational dialogue with the licensee. It would be disproportionate to require the CAA to take representations from the licensee on trivial modifications to a proposed order. The licensee's rights under Clause 23 will ensure that the CAA does not abuse the position.

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I am sorry to have taken so long. I probably took just as long as the noble Lord, Lord Brabazon of Tara. I hope that I have answered the points raised by these amendments.

Lord Brabazon of Tara: I am most grateful to the Minister for that detailed reply. Somewhere in those remarks he said that the structure of this was somewhat convoluted. For that reason, I feel no shame in having tabled the amendments in order to probe a little more deeply into how the whole process is going to work.

I am also grateful to the noble Lord for explaining the history of the earlier utilities legislation and the fact that provisions were in place but in the event had never been used. It is helpful to know that. As the noble Lord said, in any case this could be subject to legal challenge if people do not think that they are being treated fairly.

I shall need to read carefully the noble Lord's detailed responses to individual amendments. However, we have had a most helpful debate on the subject and we now have a far clearer picture of how this might work. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 39 not moved.]

Clause 11 agreed to.

Clause 12 [References to Competition Commission]:

[Amendment No. 40 not moved.]

Clause 12 agreed to.

Clause 13 agreed to.

Clause 14 [Modification following report]:

[Amendments Nos. 41 to 43 not moved.]

Clause 14 agreed to.

Clause 15 [Commission's power to give direction]:

[Amendment No. 44 not moved.]

Clause 15 agreed to.

Clause 16 [Position where Commission gives direction]:

[Amendment No. 45 not moved.]

Clause 16 agreed to.

Clauses 17 to 19 agreed to.

Clause 20 [Orders for securing compliance]:

[Amendments Nos. 46 to 48 not moved.]

Clause 20 agreed to.

Clause 21 [Exceptions]:

[Amendment No. 49 not moved.]

Clause 21 agreed to.

Clause 22 [Procedural requirements]:

[Amendments Nos. 50 and 51 not moved.]

Clause 22 agreed to.

Clauses 23 to 26 agreed to.

Clause 27 [Duty to make order]:

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