Examination of Witnesses (Questions 200-219)
MR DAVID JAMIESON, MR ROY GRIFFINS AND MR IAN MCBRAYNE
WEDNESDAY 1 MAY 2002
200. It would not be accepted but they can use it.
(Mr Jamieson) I dare say they can use it. That is a matter for them.
201. You can demonstrate some other enormous advance?
(Mr Jamieson) They are recruiting new air traffic controllers. The Swanwick centre is working very well and the system is operating very efficiently.
202. How do you know it is working well?
(Mr Jamieson) We have a role as a Department and as a shareholder in monitoring the activity. I have spoken to the Government directors who have fed back information to me about the operations of the company. We have some good people there as directors including, I might say, one person who was very sceptical originally about the operation of the PPP who has reported back very positive things to us. Of course, we look as well at the way the system is operating. The direct customers of course are the airlines and to my knowledge they, too, have not raised any complaints with us about the way in which NATS is operating.
203. A series of your predecessors as Ministers have made various promises that the computer system could do all sorts of things and that it had considerable scope for expansion and improvement. Are you satisfied that the computer system as delivered is going to be able to do everything that was in the original specifications?
(Mr Jamieson) That is my understanding. There have been some difficulties but the difficulties were with the old system at West Drayton. They were not with the new Swanwick computers. The glitch that happened was with the old system and the problem was very brief.
204. I am not talking about the present short-term problems, I am really more interested in whether false promises were made by the people who designed the system that it would be able to do all sorts of things in the future and whether all these promises are going to be fulfilled or whether the system is going to be working at considerably below the original promised capacity.
(Mr Jamieson) I understand that the systems that have been built in at Swanwick are capable of doing the things they said they were going to do in the first instance. I would be interested to know if any of the parties can bring to me evidence that it is otherwise. I certainly have not seen any evidence. I do not know if my officials have. If that has been presented to the Committee, of course we would be very interested.
205. I am asking you because you told us that you were very satisfied with what is going on. I would assume that you have had somebody looking at the original specification who has now checked that all the things that were in the original specification, all the capacity that was originally promised has been delivered with the system.
(Mr Jamieson) If that were not the case
206. Not "if that were not the case"; have you done it or not?
(Mr Griffins) It is no secret that Swanwick was late and well over budget. One of the planks of the rationale for the PPP was to bring in improved project management within NATS and bringing Swanwick through to completion successfully is a demonstration that at least that much has worked. I do not think I can expect the present management of NATS to answer for the full delivery of a project the specification of which they had no responsibility for.
Chairman: I see; no connection with the firm next door.
207. So everybody escapes. No one at all was responsible for the original specifications. When we are looking at all these areas into which the Government is going with these complicated computer systems, the start and the finish are never compared?
(Mr Griffins) The start and the finish of the Swanwick project has lasted through a considerable number of Governments.
208. I understand that, yes.
(Mr Griffins) However, it is up, it is working, and at the moment it appears to be successful. It is something that is pleasing.
209. It works now, but is it working as it was promised all those Governments ago?
(Mr Griffins) It is there, it is working, it is late, it is over budget but it appears to be delivering what NATS under current management expected it to deliver. If NATS under current management are disappointed they have not said so to us as the Government and the 49 per cent shareholder.
210. A few conditional tenses in there, even for you, Mr Griffins.
(Mr Griffins) I am sorry, I was striving to be truthful!
Andrew Bennett: Of course, not to avoid answering the question!
Chairman: We get the idea; there is no connection with the firm next door. Miss McIntosh?
211. When the CAA makes its proposal and it is acting as an independent regulator, the Government will accept that proposal in its entirety?
(Mr Jamieson) The answer to that is yes. The CAA have a procedure to go through, they have consultation to do, but we have no choice, we have no part in that decision.
212. Would you agree, Minister, as a proportion of the overall costs of running an airline business, that the charges charged by the CAA are quite a small cost as compared with staff costs, fuel costs and leasing costs?
(Mr McBrayne) Yes.
(Mr Jamieson) Yes.
(Mr Griffins) Yes.
Miss McIntosh: It is like University Challenge, is it not!
Chairman: We got a yes from all three witnesses. Let that be recorded.
Miss McIntosh: Bearing in mind that it has been a difficult yearand effectively NATS have reduced the charges that they might otherwise have charged as compared to the rest of Europe who put a whacking great 12 per cent on- and bearing in mind that it is a very difficult environment in which we find ourselves because there is a lot of uncertainty post 11 September, would you consider that a part of the air passenger tax which is levied on every passenger could be somehow ploughed back into the airline business?
Chairman: I am sure Miss McIntosh would want you to know that she has a lively interest in the airline industry.
213. This is the tourism sector, it is the BTA.
(Mr Jamieson) Chairman, I am in some difficulty here because this is ultimately a question, of course, for the Treasury.
Andrew Bennett: They do not like coming to talk to us.
Chairman: They do not like coming to this Committee.
214. As part of the annual spending review might you make a request to the Treasury?
(Mr Jamieson) We might but it would be a very small contributor to the difficulties. The amounts involved are really very small indeed. It is something that we could do. We have had some requests to look at it.
215. Do not say too much Mr Jamieson, you will frighten Mr Griffins.
(Mr Jamieson) We have had some requests but I have to say the pressure has not been very heavy and most of the airlines are saying the difference would be marginal.
216. One last questionand you may conferthe evidence we have taken during the course of the afternoon is that the CAA advice, when it saw the financial structure proposed for NATS, was very late in the day and that you did revise minimally the ratio of debt to the value of the business. Are you satisfied that post 11 September, bearing in mind there could be another impact like 11 September or the Gulf War from where we do not know, that the level of the debt to the value of the business is as it should be or do you keep this under review?
(Mr Griffins) May I respond to that?
217. Please, Mr Griffins. We are back to the 100 million again.
(Mr Griffins) We are. This relates to a previous point raised by Mrs McIntosh.
Miss McIntosh: It is Miss McIntosh, it is Mrs Harvey, who is married to the airline executive.
218. Be kind to him, he does not know that.
(Mr Griffins) I will just answer the question. It pertains to the slight downturn which was beginning to emerge. The PPP was announced at the end of March and it was finalised towards the end of July. During that period of time the downturn was starting to become clear. There were negotiations with the Airline Group at that moment taking account of that downturn, which also took account of the concerns mentioned in the letters from Sir Roy McNulty to me, the letters from Doug Andrew and indeed from Sir Malcolm Field of the CAA. The consequent reduction of 100 million and the strengthening of the financial structure at that time was to take into account that downturn. Then 11 September happened. I heard Sir Roy McNulty say to you that it was quite likely that the CAA in its response to the NATS' application with regard to the price cap would address the question of the financial structure and may even make suggestions, proposals, recommendations, fine. The CAA is one of the five parties whom the Minister indicated
Chairman: It is the regulator,
219. It is the independent regulator.
(Mr Griffins) It is the wholly independent regulator and I heard my Minister confirm that only five minutes ago. It is one of five parties working on this problem.