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Baroness Thomas of Walliswood: My Lords, I believe that everyone agrees with the Minister that this order is not of itself of any great debatable value, but simply implements the Bill. I do not propose to go back on all the arguments that we have had. Neither do I believe that it would be very profitable to try to seek a great deal of detailed information about each of the bids. Efforts were made in Standing Committee in the other place, but achieved very little result. I shall not follow that line.

However, I support and add my queries to the questions put by the noble Lord, Lord Brabazon of Tara. They are extremely relevant and pertinent questions. We all look forward to a full answer from the Minister.

As the noble Lord said, there have been suggestions in the press that one or other of the three bidders left is no longer a favoured bidder. However, reports vary as to who that might be. Can the Minister tell the House whether they are still three, two or only one bidder? In the final resort I do not expect the Minister to tell us who it is because he has already said that when matters reach that stage he will return to the House. If there are only two bidders left perhaps he will be able to tell us their names. That will also help to concentrate our minds.

There is the question of the timetable. There is the mythical or magical date of 31st March. At some point there will be a debate in this House, which the Minister has confirmed. At the same time we are expecting the announcement of a preferred bidder. So at what point in the subsequent process will we have the debate? Shall we have it between the announcement of the name of the preferred bidder and the final signing of the contract or shall we not be able to discuss the matter until the contract has been signed?

As the noble Lord, Lord Brabazon, said, there are legitimate concerns about the safety aspects of the bid. I am sure that I do not need to remind the Minister of the amendment to the Bill which gave priority to the Secretary of State's duty to maintain a high standard of safety and the identical provision relating to the CAA and everything that it does as regards NATS. I do not in the least doubt the Secretary of State's commitment, but I would like to be assured that the Treasury is also under the same limitation, or is there a conflict between the requirement on the Secretary of State to put safety first in everything that he does and the natural tendency of the Treasury in these circumstances to wish to allocate the contract to the lowest bidder?

I hope that we shall receive a little more clarification about employee shares. As I understand it, any current employee of NATS will have to sell back, give back or

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get rid of their allocation of shares on leaving the company. However, that 5 per cent was a percentage of the total shareholding. One can appreciate that if each new employee were given a shareholding its amount would increase. But what if the number of shares in the company is increased? Does that automatically result in an increase in the number of shares allocated to the employees? At that point which employees are we talking about; those who were engaged at the beginning of the company or those in current employment?

Finally, as regards the special share, in this House and in another place we have received frequent reassurances, almost in the same words, that the share is robust. I ask the Minister to tell the House on what evidence the assurance of robustness is based? Have the Government been to the Commission and actually discussed the validity and the sound legal basis for the share before coming to this House and to the other place to reassure Parliament about the robustness of the share?

Lord Macdonald of Tradeston: My Lords, once again, the NATS PPP has provided us with a topical and interesting debate. I am grateful for the contributions that have been made, which have ensured that these very important matters relating to the PPP have been aired once more. Following this debate, I am sure that your Lordships will be aware of the importance of the issues that this order raises. The Government continue to believe that it provides some essential protection that will contribute to the success of the PPP.

I now deal with some of the particular points that have been made. As regards the identity of the bidders, the Government have received and evaluated three bids for the NATS PPP, as scheduled. The Government's objective remains to implement the PPP in the spring. The Government have not selected one preferred bidder at this stage, but they are in continuing discussions with the Nimbus consortium and the Airline Group. The third bidder, Novares, has not been eliminated from the process, but is being held in reserve. We expect the preferred bidder to be selected within the next month. We shall try to ensure that we drive that timetable through on time and that the PPP will come into effect as soon as possible thereafter.

The noble Lord, Lord Brabazon of Tara, asked about the agenda that we are working to as regards the delay period when we promised to hold discussions with the trade unions, the users, pension trustees and other stakeholders about the process for establishing the PPP. We have been doing that. Recently, we had the latest in a series of constructive meeting with the unions. We met representatives of the users, including General Aviation interests, last month, and we are in continuing dialogue with the pension trustees. We have received written comments from a range of other interested parties. My honourable friend, the Parliamentary Secretary in another place, and his predecessor, have both been to see the NATS operation at the London Centre at West Drayton at

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first hand. He and I have been to Swanwick to see the new en-route centre. At both locations we took the opportunity to have discussions with staff as well as with managers. I believe, therefore, that the discussion process is constructive. It will help, as has been suggested by noble Lords opposite, to ensure a smooth transition to the PPP. As promised, I shall make a full report to the House in due course. Noble Lords may recall that I said that we will report back by the end of February or early March.

As regards other questions which were raised and the clawback arrangements, the noble Lord, Lord Brabazon inquired whether the Government would be introducing such arrangements and how they would be consistent with the partner's incentive to increase NATS business. The PPP is structured to protect the taxpayer against an early sale of the assets leading to excessive profits, first, by retaining a 49 per cent equity stake in NATS. The taxpayer will share in the potential upside benefits created through the introduction of a strategic partner. Secondly, the strategic partnership agreement does not allow the partner to exit until the new Scottish centre is complete. That is presently scheduled to be around the year 2007. That would prevent a quick and profitable sale.

One of the Government's primary objective for the PPP has been to select a partner who will be committed to NATS for the long term. The Government believe that the PPP's structure will provide the right incentives for the partner to grow and develop NATS business while providing the appropriate protection for the taxpayer against excessive profits and windfall gains.

Another question was raised about the status of the opinion supposedly expressed by safety experts. I understand that the safety experts cited in one newspaper article were acting in an advisory capacity to the chairman of NATS and were not formally connected with the Civil Aviation Authority. I am sure that any concerns will be fed into the bidding process through the office of the chairman of NATS.

I was also asked about the relative priorities of the Treasury and the Department of the Environment, Transport and the Regions. I assure noble Lords that those imperatives are in close alignment and there is no threat that different priorities might put safety at risk. As your Lordships ensured in your amendment to the Transport Bill in its final stages, safety is paramount. That now has the force of legislation.

We are still in discussions about the arrangements for the 5 per cent of equity that will go to employees. It will depend on the nature of the equity structures of the successful bidder, whoever that is. If other relevant details emerge, I shall write to the noble Baroness, Lady Thomas, and to the noble Lord, Lord Brabazon, as soon as possible.

We believe that the special share is robust. It is only one part of a comprehensive range of safeguards. We believe that we have taken appropriate advice and that the special share proposals are consistent with the UK's obligations under the Treaty of Rome. Should

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any different interpretation emerge--although none has in all our discussions--I shall tell the noble Baroness.

I hope that I have responded to the most important points made in the debate. The debate has not been about the principle of the PPP. Parliament has already given its blessing to the Government's proposals to create a PPP by approving the necessary powers in the Transport Act 2000. The real subject of the debate is the activation of the safeguards that Parliament wanted. I invite your Lordships to approve the order.

Lord Oakeshott of Seagrove Bay: My Lords, the Minister did not answer the point made by my noble friend Lady Thomas on what stage will be reached before he reports back to the House. Can we have a clear undertaking that he will report back to the House before entering into any binding commitment with a so-called preferred bidder--a commitment that could lay the taxpayer open to substantial damages? If he is not prepared to give that commitment, surely it makes a mockery of the reporting back process. Can we have a clear answer on that, please?

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