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Lord Clinton-Davis: My Lords, I speak on behalf of the British Airline Pilots Association, of which I am the president. I have made full disclosure to the House. Any statement that I make in relation to other amendments are dependent on that.

At the very outset my noble friend Lord Brett said that he had visited Canada and seen for himself the operation of the scheme. He is right or wrong. It is incumbent on the Minister today to satisfy the House that the Canadian scheme has no application in this country. He has not done that so far. I am not sure about it.

My noble friend the Minister has a duty to provide rather more than that. He has to show that his officials, preferably himself, have been to Canada and repeated the experiment that my noble friend Lord Brett has undertaken. So far the Minister has not done that. He has that duty because this House is concerned about air traffic control. The noble Baroness, Lady Thomas of Walliswood, moved the amendment on the basis that many people are concerned about the issue. That is the case and I speak on behalf of them today. It is not simply the pilots, but a great many people who are concerned about safety.

Bearing in mind that the Minister has not been to Canada himself, he has a duty to inform the House why he is so opposed to the scheme. He may be right.

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He has to inform the House, not on the basis of what civil servants have advised him, but on what basis he has determined that the Canadian experiment has no relevance to what we are considering today. I do not think that he can.

5 p.m.

Lord Haskel: My Lords, I am somewhat cautious about copying schemes from other countries. After all, other countries have different cultures and circumstances. Those schemes can be adapted but, if we have schemes in this country with which we are familiar, they should take priority in our consideration.

I quite like public/private partnerships. We are operating them in other parts of the economy: in health, in hospitals; and in construction with housing. It is a formula which has been developed in this country. It gives us access to private sector finance in a way that is acceptable. We have also developed ways of regulating public/private partnerships.

I am a little concerned about not-for-profit companies. Over many years in business I have learnt that profit is a great incentive to efficiency, effectiveness and to meeting the needs of customers. I hope that the Minister will give some consideration to these matters. I am not entirely sold on the copying of the formula from Canada.

Lord Hoyle: My Lords, I rise to speak because if I had not done so my noble friend Lord Haskel would have forced me to my feet. I respect him as a business person but I was somewhat amazed at his remarks today. As regards air traffic control, there is concern about one issue--safety. For the life of me I cannot understand how safety is enhanced by profit determination: that there must be profits and safety must suffer because of that. I ask my noble friend to think again. We are talking in this instance about safety.

Lord Haskel: My Lords, does my noble friend agree that safety is not entirely the prerogative of the public sector? Safety is also very important, and is maintained, in the private sector.

Lord Hoyle: My Lords, it is indeed. But my noble friend will agree that there are many cowboy firms in the private sector. The public sector is at least accountable with regard to the standards which should be acceptable to all of us. It is ironic that these remarks are made at a time when we have seen the failure of privatisation on the railways. We have heard of the damaged track which has cost lives. Can my noble friend imagine what would happen if aircraft began to fall from the skies following our determination on this issue? Safety is uppermost in the minds of the public.

I ask the Minister to reflect on that point when he replies. We should at least think carefully before we go down the path advocated in particular with regard to the bidders. All are flawed. All have a conflict of

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interest. I refer, for instance, to the airlines. I am attracted more to the airlines bid than to the others--and the airlines bid is not conceived on the basis of profit. Safety of customers is paramount in the minds of the airlines. As regards efficiency, they are interested in reducing the costs charged to them. But in relation to the consortium, foreign airlines flying in might think that preference would be given--

Lord Hughes of Woodside: My Lords, if my noble friend will forgive me, perhaps I may intervene. I seem to be missing part of the argument. I thought that airlines were private companies.

Lord Hoyle: My Lords, we are referring to an airline consortium which includes a public sector in the Irish Government's control. I am saying that it is a no-profit trust model. I think that would be of concern to my noble friend Lord Hughes of Woodside. I shall be surprised if he does not believe that safety should be paramount and that profit should not be one of the major consideration in any trust set up. That is what I sought to say in relation to the airlines. But there is a public sector partner and it seems strange to me that we are going outside for public sector partners--to New Zealand, and with regard to the airlines to Ireland--and yet are taking our air traffic controls out of the public sector.

I cannot believe that Lockheed Martin is a serious consideration. Not only is there conflict of interest because it is a manufacturer; it is also responsible for the new air traffic centre at Swanwick being delayed for six years. What will it bring to the table?

The same consideration applies to Raytheon. There is a conflict of interest because it is a supplier of equipment. Even worse, if it came in what about Lockheed Martin's system which should have been operating at Swanwick? It is planned for Scotland. There would be obvious conflict of interest there. Lockheed Martin would not allow Raytheon to use its data and would not supply it. Raytheon would have to bring in its own system which would further delay the advances made.

Serco has a small amount of operational knowledge; it deals only with small airports. It has withdrawn from Liverpool airport. I should like to know why Serco is being considered.

Perhaps I may refer to what has been said. We all owe a debt of gratitude to my noble friend Lord Brett for going to Canada to see what was happening on the ground rather than accepting what the Civil Service told us. It is often better to see for one's self what is occurring. Before his departure it was said that the airlines bear full financial risk without being in a position to manage that risk. On examination, the airlines exert substantial influence in the NavCanada model. They have five directors on the board. They believe that improved safety and investment performance has resulted. The bondholders are taking the risk, not the airlines.

Lord Clinton-Davis: My Lords, perhaps I should have made this point myself. Perhaps my noble friend

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will explain why a former Labour government of approximately five years and three months did not take any action in this regard. Is it not a fact that that Labour government considered that NATS performed well? Is there any evidence that NATS has failed to perform up to standard in the 20 years since that Labour government ceased to be in office?

Lord Hoyle: My Lords, as my noble friend will understand, it is for the Minister to reply. Like my noble friend I am puzzled because I had thought that the safety standards set by NATS are second to none not only in this country but throughout the world.

It was also said that NavCanada is not responsible to anyone. Again that statement is not true because the Canadian Government have a great deal of control over it. There is a right to call it in; there is a right to check it. If one considers what has happened in relation to the NavCanada model, not only has safety improved but efficiency has improved and costs to the airlines reduced. New air traffic controllers have been recruited and are being trained.

A lot of that relevant information would not be before us if my noble friend Lord Brett had not undertaken his mission to Canada. My noble friend the Minister has said that safety should be uppermost. Why put the whole thing at risk by going forward with any of the four bidders, all of which are flawed in one way or another? Surely it is time to consider again setting up a trust model. I accept that it does not have to follow the Canadian model exactly, but it should be a non-profit-making trust. That would mean that safety was paramount. That is why I ask my noble friend to give the matter more thought.

Lord Roll of Ipsden: My Lords, I shall not detain the House by repeating the many excellent arguments that have already been made for the amendment. I simply remind the Government of a very good American saying, usually attributed to Harry Truman: "If it ain't broke, don't fix it".

Lord Smith of Clifton: My Lords, in speaking to Amendments Nos. 34 and 35 and the associated amendments, I return to an important point that I made in Committee, because I have not yet had an adequate answer from the Government. I refer to the relative costs of the proposed PPP scheme and the public trust scheme that we advocate.

The Secretary of State has estimated that NATS will require £1.3 billion of investment over the next 10 years. As I have previously pointed out, the cheapest way would be for the Chancellor to fund that. Since he has declined that option, the next best way is to form a public trust along the lines of NavCanada to raise the necessary funds on the money market. Given its guaranteed income flow, it would attract the highest security rating and could thus borrow at the cheapest rates. Lower interest rates would mean lower costs to the airlines and passengers alike, as NavCanada has achieved.

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That would be much cheaper than selling half the equity shares in a privatised NATS, as the Government intend. Why are the Government hell bent on pursuing such an expensive method? Why should the public be fleeced in that way?

Unprecedentedly, the National Audit Office has initiated a detailed examination of the Government's proposed PPP for the London Underground. The NAO is particularly examining its value for money relative to other options and its safety implications. If prior NAO scrutiny is deemed necessary for the Government's plans for part-privatisation of the London Underground, why are the Government not submitting similar plans for the part-privatisation of NATS? It would be just as appropriate and just as crucial on cost and safety grounds.

I hope that the Minister will be able to give a considered response to that important question. We believe on all counts that the public trust proposal for air traffic control remains the best option, as the noble Lord, Lord Brett, has demonstrated.

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