Lord Berkeley
Like the noble Lord, Lord Jenkin, I, too, was confused. I suppose there could be competition with baggage handling taxi services. The heart of an airport is, after all, the runways. Is it envisaged that there is competition between two runways? If it is, that is remarkably stupid. One never knows, and it will be interesting to hear what is subject to competition in this clause and what is definitely not, within a particular airport.
Earl Attlee
My Lords, I thank the noble Lord, Lord Rosser, for the explanation for the rationale behind this amendment. I am afraid that I must oppose it, for two reasons. The first is substantive and the second is technical.
The amendment would oblige the regulator to review its market power determinations at such intervals as it considers appropriate. Clause 7 provides that a market power determination is a determination by the CAA that an airport operator does or does not meet the market power test in relation to an airport area. Where it does, the operator is subject to economic regulation under the Bill. Where it does not, it is not subject to economic regulation.
Let me now turn to my reasons for opposing this probing amendment. The substantive reason is that the amendment is unnecessary. Clause 7(1) expressly empowers the CAA to make a market power determination,
“whenever it considers it appropriate to do so”.
I am mindful of the underlying purpose of Part 1 of the Bill which is broadly to further the interests of end users by regulating airport operators where necessary. I note also the CAA’s subordinate duty at Clause 1(4)(b) to have regard to the principle that,
“regulatory activities should be targeted only at cases in which action is needed”.
In answer to the question of the noble Lord, Lord Rosser, it is implicit that where changes in circumstances lead the CAA to believe that there are reasonable grounds to believe an operator presently subject to regulation should cease to be regulated, or vice versa, then it would investigate further. If appropriate, it would then conduct a full market power determination. I am reinforced in my view because Clause 7(2) obliges the CAA to make a market power determination in certain circumstances. Against this background, the noble Lord’s amendment adds little to the Bill
There is a further technical difficulty with the amendment, which I accept is a probing one. It is not wholly clear what is meant by a “review” of a market power determination. Presumably it is something short of conducting a full market power determination. Perhaps it may involve a consideration of whether the underlying circumstances have changed. However, no further provision is made to publish the results of the review or to take action in the light of its conclusions. In short, neither the purpose nor the effect of undertaking a review is made clear in the amendment.
My noble friend Lord Jenkin asked about competition between different facilities in an airport. The recommendation was made by the Competition Commission; we are implementing it.
Lord Jenkin of Roding
My noble friend must explain how it would work. I find it very difficult to see how it would if the facilities were under the same management.
Earl Attlee
My Lords, if they were under separate management there could be a competition situation. Under the current legislation, one simply cannot regulate because it does not provide for competition within one airport. Therefore, we are future-proofing the legislation.
The CAA’s functions under Chapter 1 comprise, broadly, deciding whether an airport operator should be subject to regulation—and if it should, regulating it accordingly. Clause 1(1) requires the CAA to carry out its functions under Chapter 1 in order to further the interests of passengers and freight owners in the provision of airport services. Under Clause 1(2) the CAA is required to promote competition when doing so, but only where it is appropriate to its carrying out its functions under Chapter 1. This is set out in Clause 1(2).
The concept of competition in provision captures competition in the provision of airport operational services between all airports, regulated and non-regulated, and competition in airport operational services within airports—for example, competition between terminals. However, the CAA must promote competition only where appropriate. It would not be appropriate to promote competition where the CAA was not carrying out its duty under Clause 1(1)—specifically, where promoting competition does not further the interests of users of air transport services in the range, availability, continuity, cost and quality of airport operational services.
Lord Berkeley
Perhaps I might seek confirmation of what the Minister said to the noble Lord, Lord Jenkin. Will he confirm that Clause 7(4) applies to airports where the number of passenger movements exceeds 5 million—I refer to a Written Answer of 20 June to the noble Lord, Lord Laird—and that therefore Heathrow, Gatwick, Stansted and Luton would all be covered by the clause?
Earl Attlee
My Lords, the large airport test certainly applies in Clause 7(2), which refers to areas located in large airports. It goes on to define a large airport. I suspect that the CAA can make a determination on any other airport at a later stage if it becomes apparent that it might be in need of regulation and meets the tests in the Bill. Therefore, I invite the noble Lord, Lord Rosser, to withdraw his amendment.
Lord Rosser
Perhaps I might ask the noble Earl one last question before I withdraw my probing amendment. The thrust of his response seemed to be that what I sought to achieve with the amendment was covered by other parts of Clause 7. Do other parts of Clause 7 allow the CAA to initiate a review of an earlier decision that it has made off its own bat, or only if it is asked to by a person listed in subsection (3)?
Earl Attlee
My Lords, my understanding is that as soon as the CAA realises that it is appropriate to initiate a review because circumstances have changed, it can do so.
Lord Berkeley
My Lords, I shall expand a little on the comments of my noble friend Lord Davies of Oldham. A question needs to be asked: who will benefit from these three clauses? Will the passengers benefit? In my experience, when I want to go from A to B by air, I go to a website and look at the different airlines on different routes. Let us consider Stansted, for a change; we keep on talking about Heathrow. We are told that Stansted has lots of capacity. It has one terminal and one or two satellites from where the lower-cost airlines operate, and they make you walk a hundred miles to compensate you, presumably for paying lower landing fees. I suppose that those satellites, with a little engineering work, could be converted into a separate terminal, but how will the passengers benefit? When you book with an airline, you do so by considering price, timing or convenience. If you are going to book with easyJet to go to Dublin, for example, you do not have a choice of which part of the terminal, or which terminal, the plane will arrive at after landing. You are told where it will be. The passengers do not, therefore, have any choice over which terminal they can go to. They choose the airline and the airline tells you where you are going to end up.
I still cannot see who is going to benefit from these clauses. The airlines will not benefit, I imagine. Some of them pay lower landing charges than others and, as a result, are told to use a particular terminal—either close by or far away from convenient public transport and other facilities. You do not book with an airline because there is a better class of McDonald’s or a restaurant in some terminals. Are the airport operators going to benefit? I cannot see how. It will cost more, as my noble friend said. The suppliers will not get as big a volume of trade as they would if they were supplying a whole terminal. You could argue that they or someone might benefit from competition. And the passengers? I would be pleased to hear from the Minister about how they would benefit from these clauses.
Earl Attlee
My Lords, I thank noble Lords for their contributions but I am afraid that I must oppose the amendment and support the Question that these important clauses stand part of the Bill.
Inter-terminal competition may be some time off and the Bill makes no provisions about timing. However, it is important that we future-proof the legislation. The noble Lord, Lord Davies of Oldham, talked about disruption and consternation. Clearly, this would not be in the interests of passengers, and the CAA would therefore not allow such competition because it would be in conflict with its primary duty to the passengers and owners of cargo.
The noble Lord said that different airlines have different needs. He is, of course, quite right. Some airlines want to run a premium service and others want to be no-frills. However, the CAA will have to strike the balance between those differing requirements as well as replicate the effect of competition.
The Bill does not, in general, require inter-terminal competition but does accommodate the possibility. Promoting competition between terminals under the Bill would not happen if the cost implications of doing so meant that it would not benefit the passengers, again under the CAA’s primary duty. In the circumstances postulated, there is no question that the CAA would seek to require inter-terminal competition. If, however, an airport chose, say, to lease a terminal to a third party, the Bill would remain in service, and I will come back to that in a moment.
Clause 10 empowers the CAA to determine, by applying the criteria set out in Clause 9, including in cases where one or more separate entities have some form of management control over that area. Clause 11 contains provisions for the publication of operator determinations made under Clause 10 by the CAA. Clause 12 empowers the CAA to make operator determination in advance, on the basis of circumstances that may not yet have arisen.
The amendments to Clause 12 seek to remove the CAA’s powers to carry out an advance operator determination. However, before I get on to why the amendments are not desirable, I wish to reassure your Lordships on why “standard” operator determinations under Clauses 9, 10 and 11 are a necessary part of the legislation. These clauses are important for regulatory certainty, enabling a person to know whether they are the operator of an airport area for the purposes of Part 1. Otherwise, in difficult cases it will be uncertain who the operator is and who is not, and therefore who is and who is not subject to economic regulation. This means that they cannot be clear as to their legal obligations, and neither they nor their financial backers can know with certainty whether they will be subject to economic regulation.
The clause is not focused solely on the possible future scenario where intra-airport competition can be introduced. For example, it could apply where a whole airport was leased and some management functions were split between lessor and lessee. However, noble Lords have rightly pointed out that these clauses are important for ensuring that the Bill allows for the regulatory regime to work in a scenario where there are multiple operators of different airport areas at one airport—in other words, where there is inter-terminal competition. Inter-terminal competition is more likely to lead to more complex ownership arrangements.
I have already mentioned that it was a recommendation of the Competition Commission in its BAA Airports Market Investigation report of 2008 to allow for the regulatory regime to function where inter-terminal competition is present. The present legislation, the Airports Act 1986, does not allow for this possibility. If we, the Government, had not made these provisions, no doubt noble Lords would suggest that we should have done so, praying in aid the Competition Commission’s recommendations. It is important to note that these clauses do not empower the CAA to introduce inter-terminal competition; they merely ensure that if inter-terminal competition becomes a reality, the regulatory regime can accommodate the scenario.
Clause 10 empowers the CAA to make binding operator determinations on the basis of the circumstances at the time the determination is made. However, this is considered insufficient where a person wants to know whether they will comprise the “operator” in the event that they take some control over an airport area. Against this background, to allow for greater regulatory and commercial certainty, Clause 12 empowers the CAA to make advance determinations—that is, determinations on the basis of circumstances that have not yet arisen. This would include a determination that, if a lease were executed with specified terms, the lessee would or would not comprise the operator.
The first amendment would deprive the CAA of the power to make an advance operator determination. The Government cannot agree to this because it would increase regulatory uncertainty and possibly stultify commercial transactions. I therefore urge noble Lords to withdraw their opposition to the clauses.
Lord Davies of Oldham
My Lords, the Minister made the best fist that he could of a fairly weak argument. Of course, I recognise the merits of the clauses, in that he made it clear that it is important to define the operator and to know whom we are talking about. Who could possibly gainsay that proposition?
In objecting to the clause, I am not objecting to the sense that lies behind the elements within the clause to which the Minister addressed some of his remarks. I indicated that in opposing the clause I recognised this to be a fairly blunderbuss approach and that we have not refined our opposition in amendments—something that we may do in due course, perhaps on Report. However, I say to the Minister that in this general debate anxieties have been expressed across the Committee, and he has not allayed those anxieties at all, apart from—
Lord Davies of Oldham
I am delighted that the noble Lord had his anxieties allayed. They are obviously not as acute as those on this side of the Committee. In particular, if the noble Lord is all in favour of inter-terminal competition, perhaps he will ask the Minister to identify just where this is a raging success that we would want to encourage. The only specific example that we have so far is subject to considerable criticism. As the noble Lord indicated, airport operators are accurately defined in the legislation; I will not gainsay the necessity of that. None of them speaks well of future-proofing what they regard as a disadvantageous element of the Bill, which will introduce the possibility of inter-terminal competition. In particular, by putting it in the Bill in the way that they have, the Government limit parliamentary debate to secondary legislation. We know the limitations of that.
However, I seek to identify that this concept is a significant departure from how any British airport is run at present, and from how any successful airport is run elsewhere. Unless the Minister produces some evidence of how competition works to the benefit of the passenger—which he signally failed to do in his earlier contribution—the Committee will recognise that, far from my anxieties being allayed, they are more pronounced. Of course, I recognise that objecting to a clause standing part—or three clauses in this case, which is the first time that I have engaged in such an extensive operation—is something from which I shall have to resile fairly promptly. However, I do so to air a significant aspect of this debate. I say to the Minister that we are so dissatisfied with the response at this stage that he must assume that we will take this issue further on Report.
Earl Attlee
I am curious about the noble Lord’s attitude to the Competition Commission’s recommendation that we should provide for inter-terminal competition. Does he support that view or not?
Lord Davies of Oldham
Of course, I recognise the role of the Competition Commission and we applaud a great deal of its work. However, when it makes recommendations, one must also consider the industry’s likely response to the proposal that is being put forward. All I say is that the noble Earl has not identified any aspect of British industry that considers this to be an intelligent and sensible development. Nor is he able to identify any example from elsewhere in the world where this form of competition has redounded to the benefit of the consumer.
Earl Attlee
Earl Attlee
My Lords, in moving government Amendment 20, I shall speak also to government Amendments 21, 22, 23, 30, 32, 33, 35 to 45 and 61 to 63. These 20 amendments are being taken together because they all relate to appeals to the Competition Commission and the Competition Appeal Tribunal. Some 13 of the amendments give effect to our position that the Competition Commission and the Competition Appeal Tribunal should decide appeals on the same grounds. The other seven amendments ensure that both the Competition Commission and the Competition Appeal Tribunal have regard to the duties imposed on the CAA as set out in Clause 1 when deciding an appeal. For brevity, I will refer to the Competition Commission as the CC and to the Competition Appeal Tribunal as the CAT.
It has come to the Government’s attention that the current drafting in the Bill gives rise to inconsistency between the grounds on which the CC and the CAT may allow an appeal. In the present drafting, although the legal grounds on which an appeal may be allowed are the same, the CAT is specifically required to decide the appeal by reference to these grounds and “on the merits”. There is no equivalent provision for the CC to decide the appeal “on the merits”.
The Government are concerned that this inconsistency creates unnecessary and undesirable legal uncertainty. We wish to correct this to shut out any risk that under the current wording it could be interpreted that different powers are being conferred on the CC and the CAT. In summary, these amendments propose changes to the provisions about appeals to the CAT to align them with provisions about appeals to the CC.
Amendment 30 is to one of the grounds on which the CC may allow an appeal under Clauses 24 or 25 which relate to appeals against conditions of new licences and modifications to the licence conditions. The amendment would change the ground on which the CC may allow an appeal from,
“that the decision was based on the wrong exercise of a discretion”,
as it is currently in the Bill, to,
“that an error was made in the exercise of a discretion”,
as per the amendment. This amendment is being made to clarify the current drafting.
The remaining amendments are specific to appeals brought before the CAT. Amendments 35, 36, 37, 40, 43 and 61 delete the subsections that contain the current grounds on which the CAT may allow an appeal in Schedules 1, 3, 4, 5 and 13. Amendment 20 deletes a provision stating that an appeal may be brought on only one of the current grounds. Amendments 21, 38, 41, 44 and 62 replace these grounds with the same grounds as provided for in Clause 26 concerning appeals to the CC from,
“that the determination is based on the wrong exercise of a discretion”,
to,
“that an error was made in the exercise of a discretion”.
In particular, Amendments 21, 38, 41, 44 and 62 ensure that the CAT’s consideration of appeals is consistent with the CC’s by, first, removing the phrase “on the merits” from the grounds on which the CAT must decide an appeal, as just discussed; secondly, introducing an overall requirement that the decision appealed against was wrong on specified grounds—error of fact, wrong in law, and error in the exercise of discretion; thirdly, restricting the grounds for determining the appeal in the same way as for the CC; and, fourthly, reflecting Amendment 20 which, as I have just mentioned, clarifies the grounds of wrong exercise of discretion.
The overall result of these 13 amendments is that both the CC and the CAT may allow an appeal only to the extent that they are satisfied that the decision appealed against was wrong on one or more of the following grounds: that the decision or determination was based on an error of fact; that the decision or determination was wrong in law; and that an error was made in the exercise of a discretion.
These amendments are important to deliver the Government’s policy intention that the grounds on which the CC and the CAT decide appeals should be the same. They are also in keeping with our wish to deliver an efficient and effective appeals regime. These amendments allow the CC and the CAT to take a decision that offers something more than judicial review but does not extend to a potentially lengthy full rehearing of the case. The remaining seven amendments again ensure consistency between the two bodies. Amendments 32 and 33 to Clause 30 specify that when the Competition Commission is carrying out its functions as specified under subsection (4) of Clause 30, it must have regard to the matters,
“in respect of which duties are imposed on the CAA by section 1”.
Amendments 22, 39, 42 and 45 import an express duty on the CAT to have regard to the CAA’s duties as set out in Section 1 when deciding an appeal under Schedules 1, 3, 4 and 5. Amendment 63 imports an express duty on the CAT to have regard to the CAA’s duties as set out in Section 4 of the Civil Aviation Act 1982 when deciding an appeal under Schedule 13. My officials have engaged extensively with the CAT and the CC on this matter and they are content with the amendments. I commend them to your Lordships.
Lord Rosser
My Lords, perhaps I may take one of the amendments in the group to make my point. Government Amendment 30 deletes paragraph (c) in Clause 26, which says that the Competition Commission may allow an appeal under Section 24 or 25 only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the following grounds, one of which is that the decision was based on the wrong exercise of a discretion. That wording has now been replaced in government Amendment 30 with the wording,
“that an error was made in the exercise of a discretion”.
I endeavoured to listen carefully to what the Minister had to say about this group of amendments and, if he did cover my point, I would be grateful if he could repeat his explanation. He seemed to say that this was all about clarifying the current drafting as opposed to explaining what the difference was between the wording in the Bill and what is being proposed, bearing in mind that it is not the same wording and therefore presumably does not mean exactly the same.
It would be helpful if the Minister could explain what this change in wording means. I refer to government Amendment 30 to paragraph (c) in Clause 26. Does the change from “wrong exercise” mean that although a decision was made incorrectly, the process was fine and the options to choose from were correct, the proposed wording,
“an error was made in the exercise of a discretion”,
is meant to imply that the exercise itself was flawed, had the wrong information to hand, was conducted incorrectly and options were considered that should not have been? It is important that we do not just get told, “We are seeking to clarify the current drafting”, but that we have a full explanation as to what the current wording in Clause 26 means—this relates to,
“that the decision was based on the wrong exercise of a discretion”,
and how that differs in meaning from the wording with which Amendment 21 replaces it,
“that an error was made in the exercise of a discretion”.
I hope that the Minister can clarify the position.
Lord Soley
There is a reason I am picking up on this, of course. I am a member of the Delegated Powers and Regulatory Reform Committee. We are getting increasingly worried about the quality of drafting of government Bills. It looks like a case where the drafting has changed for some reason. I do not want to be critical of the parliamentary draftsman concerned without knowing the facts but, if we flag it up as rather odd, there might be an explanation. I do not know what it is, and I would quite like to.
Earl Attlee
My Lords, the Committee will recognise that parliamentary draftsmen work in peculiar ways. It may be helpful if I read out what I said on this particular amendment again. Amendment 30 is to one of the grounds on which the CC may allow an appeal under Clause 24 or Clause 25, which relate to appeals against conditions of new licences and modifications of licence conditions. The amendment would change the grounds on which the CC may allow an appeal from,
“that the decision was based on the wrong exercise of a discretion”,
to,
“that an error was made in the exercise of a discretion”.
The view was taken that the drafting in Clause 26(c) could have been better expressed. There was no external request to change this wording, but the Committee will understand that officials go over the drafting again. It seems to me that it is better drafting. Originally, the grounds of appeal were based on statutory precedent, based on retrospective appeals to the CC and the CAT. The wording varied slightly. That is how the inconsistency first arose.
Lord Soley
Perhaps I may come back briefly. In a way the Minister has answered the question. The Delegated Powers Committee—not just the parliamentary draftsmen—worries about the quantity of legislation and the way in which it is often hastily drawn up. We end up making changes of this type which do not seem to come anywhere other than in Bills that are brought out by the Government in a state of incomplete readiness. We end up having an awful lot of amendments on the Floor of the House. This has happened under successive Governments and therefore successive parliamentary draftsmen. I suspect that the fault lies both in the way we manage government and in the expectations we place on parliamentary draftsmen. It is an indication of how things can go wrong. My guess—it is only a guess; I am not a lawyer—is that the interpretation by a court of the original wording in the Bill would have been different from the interpretation by a court of the amendment tabled by the Government. On that basis I understand it but I am glad that the Minister clarified it.
Lord Rosser
Perhaps I may ask the Minister to clarify what the wording means. When I made my contribution a few moments ago, I asked whether the current wording,
“wrong exercise of a discretion”,
meant that if a decision was made incorrectly, the process was fine and the options to choose from were still correct. I then asked if the new wording,
“error … made in the exercise of a discretion”,
was intended to imply that that the exercise itself was flawed, that it had the wrong information to hand or was conducted incorrectly, and that options had been considered that should not have been. Does the wording we now have mean one of those two options—and, if so, which one?
Earl Attlee
My Lords, it is probably best if I write to noble Lords; this is a very technical point.
Lord Jenkin of Roding
I have not heard an answer to my question. Why were there different rules for the Competition Commission and the Competition Appeal Tribunal? What was the original reason for having different rules? I entirely support the proposition that the rules should be the same; it makes a great deal of sense. However, I am puzzled by why somebody at some stage thought they should be different.
Earl Attlee
My Lords, as I said, originally the grounds of appeal were based on statutory precedent and retrospective appeals to the CC and the CAT. The wording varied slightly; that is how the inconsistency arose.
Earl Attlee
“( ) The Competition Appeal Tribunal may allow an appeal under paragraph 1 only to the extent that it is satisfied that the market power determination or operator determination appealed against was wrong on one or more of the following grounds—
(a) that the determination was based on an error of fact;(b) that the determination was wrong in law;(c) that an error was made in the exercise of a discretion.”
Lord Berkeley
My Lords, following the comment of my noble friend Lord Soley about immigration, by coincidence I have in the Crime and Courts Bill an amendment about the immigration service which may be discussed later tonight. The service is woefully inadequate, as my noble friend said. The delays are reflecting very badly on the country.
Passenger satisfaction should be measured in respect of immigration delays as well as many other things, because they are quite significant. My suggestion that I shall probably put tonight is that the immigration service should be given targets. I am not sure that this Government like targets but there might be a target for people with EU passports to wait for not more than 10 minutes, and for those from third countries to wait for not more than half an hour. We can debate what the targets should be. The crucial thing is that the immigration service should be required to pay some kind of compensation to the airlines if they exceed those targets, unless there is an emergency or something like that.
As several noble Lords have said, the key is to have this information. I would much rather see it come from the licence holder than from the immigration service, which might be tempted to massage the figures slightly. My noble friend Lord Davies can think about whether it should go in as a further amendment on Report, but we ought to measure this matter along with some of these other issues to get independent information on passenger satisfaction regarding everything they see when they arrive at or leave an airport.
Earl Attlee
My Lords, I am aware that similar amendments were tabled in the Committee and Report stages in the House of Commons. These amendments provide us with a welcome opportunity to return to some important issues for passengers.
The noble Lord, Lord Bradshaw, talked about comparisons with the bus and rail industry arrangements. There is no reason, however, why the CAA cannot look at those rules and regulations when devising licence conditions and learn from what happens in another industry. The noble Lord, Lord Soley, talked about first impressions. They do matter and I have been impressed with the work going on at Gatwick to improve the appearance of the airport and the way it works.
The noble Lord, Lord Empey, touched on the issue of a market survey and said that passenger satisfaction is at the core of what we are trying to do. It is, but it is the duty of the CAA to achieve the desirable outcomes by means of the licence conditions.
The noble Lord, Lord Berkeley, talked about immigration issues, as did other noble Lords. A few years ago, I declined to visit the United States, even at public expense, because, frankly, I thought that the immigration arrangements there were so awful that I did not want to do it. I just said, “No, I will stay here and be with your Lordships”.
Earl Attlee
We will see what happens in the next reshuffle.
My honourable friend the Immigration Minister is reviewing what additional data may be published by the Home Office and shared with port operators. Meanwhile, the border force has responded to recent problems in a number of ways. It is tackling short-term peaks with a pool of trained staff, working with airports and airlines to ensure that they provide more accurate passenger manifests and flight schedules so that the border force can flexibly deploy staff at the right times and places, creating a new central control room for the border force at Heathrow that uses mobile teams for rapid deployment, and implementing new rostering and shift patterns. The border force is also working with Gatwick and Heathrow airports to improve passenger flows, using more specific measures such as e-gates and other biometric checks.
There can be no doubt that passengers want efficient baggage-handling services when they travel by air. The experience of recent years has also demonstrated how vital it is that airports prepare effectively for potential disruption. It is clear that the aviation sector as a whole needs to have effective means of dealing with passenger welfare during disruption of services. While I can therefore understand and agree with the sentiment behind these amendments and what noble Lords have said, I cannot recommend accepting them into the Bill. The text of the Bill already provides the most effective means of protecting passenger interests in relation to the matters raised.
Clause 18 and the licensing regime as a whole will give the CAA the flexibility to tailor licence conditions to the specific circumstances facing individual airports with substantial market power. This flexibility is an important means of minimising the distortions associated with regulatory intervention and ensuring that action taken by the CAA is proportionate. However, we also believe that giving the independent expert regulator flexibility and discretion in deciding the content of the licence is the most effective way to protect the interests of present and future passengers. If Parliament chooses to use this legislation to hard-code certain points in licences, it would constrain the regulator’s freedom to decide what priority should be afforded to different passenger concerns and what costs should be allowed for the delivery of competing consumer priorities. As the Minister of State said in Committee in the House of Commons, amendments such as these would make the licence system unbalanced because passengers care about a whole range of different issues. Moreover, a prescriptive approach in the Bill is likely to make it more difficult for the regulator to adapt its approach to the changing concerns of passengers. In 2005, who would have thought that volcanic ash would have been a major problem later on?
If we were to adopt these amendments, they would oblige the CAA to give greater weight to these factors than other matters that might become equally or more important to passengers in the future. This danger was recognised by the noble Lord, Lord Soley. Your Lordships can be very confident that the CAA will already use the new licensing powers proposed in the Bill to focus on, for example, operational resilience and passenger welfare in the event of extreme disruption—not least because of the CAA’s Clause 1 duties, as the noble Lord, Lord Davies, recognised. And why it would it not do so?
As we have discussed in Committee, in response to a request for advice from the Secretary of State, the CAA published an indicative licence in January to assist Parliament in its scrutiny of the Bill, and a copy has been sent to the House of Commons Library. At the request of the Department for Transport, the draft licence includes provisions on operational resilience. The proposals in condition 7 would require the licence holder to operate the airport efficiently and use its best endeavours to minimise detriment to passengers arising from disruption. The noble Lord, Lord Davies, mentioned disruption due to winter. When I visited Gatwick Airport before the most recent winter and saw all the new equipment in place, I was absolutely confident that the winter would be very mild.
It would also require the airport to draw up, consult on and gain the CAA’s approval for an annual resilience plan setting out how it would secure compliance with its obligations under the condition. The licence holder will then be obliged to comply with the commitments it has made in its resilience plan. The CAA sought initial views from industry in drafting the indicative licence. However, since Parliament has not yet concluded its consideration of the Bill, the CAA has not yet started to consult on proposed licence conditions for each airport that will be subject to regulation.
If the system proposed in the Bill is implemented, the CAA will consider the extent to which it is necessary or expedient to include conditions in a licence for operational resilience and other matters such as passenger welfare. The CAA expects that activities that might be expected to be part of the new licence regime would include taking into account other obligations on service quality standards, and the success of codes of conduct and voluntary arrangements being adopted by industry. Against this background we believe that putting specific requirements in the Bill on issues such as baggage handling and operational resilience could prove to be a disproportionate response that would place an unnecessary restriction on the CAA’s flexibility to develop proportionate and effective ways to address passenger concerns—and might even lead it to address the wrong ones.
In summary, the Bill provides the CAA—the body with the relevant operational expertise—after appropriate consultation, with the flexibility to determine appropriate and effective licence conditions. The amendments in this group could undermine our goal of giving the specialist regulator a flexible toolkit to protect the passenger. Therefore, I hope that the noble Lord will withdraw his amendment.
Lord Davies of Oldham
My Lords, I am grateful to noble Lords who introduced significant points, to which the Minister paid due regard—about as much regard as he paid to the points that I made in my opening speech. If through the amendments in this group I had sought to introduce microscopic instructions to the CAA on what it ought to do that would limit its capacity to fulfil its duties, I would quite understand the thrust of the Minister’s response. However, the first of the three amendments to which I addressed my remarks requires publication of an annual survey. This is not desperately specific but merely indicates that it would be a very good idea if the licence holder—the airport authority—gave some account to the general public of the effectiveness of its operation.
The second amendment suggests that the licence holder should develop passenger welfare plans. That is not specific; it merely indicates that it should be incumbent on the licence holder to fulfil the obligation that apparently underpins the Bill, which is to provide a better service to passengers. The third amendment merely suggests that support is necessary and should be provided for stranded passengers at airports. There is no Member of this Committee—including the Minister—who does not agree that action must be taken in this area. The Minister went so far as to indicate that strenuous efforts had been made to ensure that the numbers of such stranded passengers would decrease. I am not sure that Gatwick has the equipment to affect the climate and make our winters milder, but I know exactly what he meant. It now has the equipment to keep aircraft manoeuvring and able to fly, whereas over the winter that caused so much distress the airports did not have that.
We are merely asking for provision to be made for stranded passengers—an objective that the Minister says he shares—and I cannot think that the actions of the Civil Aviation Authority are cabined, confined or constrained by including these amendments in the provision on how the licence is granted. However, at this stage, I accept that the Minister is not as warm about these amendments as he is about the forecast for future winters, and I beg leave to withdraw the amendment.
Lord Berkeley
Does my noble friend agree that the key to the amendment is the word, “buying”. There is nothing to stop the provision of different queues for first-class passengers or others at check-in or security. The question is: have they paid extra to go through that facility rather than for the facilities on the flight?
Earl Attlee
My Lords, I am aware that a similarly worded amendment was tabled in Committee in the House of Commons, but that related to Clause 83, on provision of:
“Information for the benefit of users of air transport services”.
The stated aim of that amendment was to close a perceived gap in the information that will be published under that clause on what passengers can expect to experience when departing or arriving at an airport, especially in relation to how long they should expect to wait to have their passport checked. The Government supported the broad intention of that amendment. Giving consumers more information on the quality of service provided by airports and airlines will help to maximise the benefits that markets deliver to passengers. However, the Minister of State ultimately resisted the amendment on the basis that the Bill already enables the CAA to require the collection and publication of information on check-in, baggage handling and security queues. He further explained that the UK border force, the authority responsible for border controls relating to arriving and departing passengers and goods, is responsible to Ministers and Parliament, and said that this is a more effective and appropriate means to hold the UK border force to account than giving the CAA power to oversee its activities.
The amendment today goes further than the previous one by seeking to prevent users from buying preferential access to check-in, security, immigration control and baggage reclaim processes. In considering the amendment, the Committee should note the distinction between check-in and baggage reclaim processes, and aviation security and border-control processes—the latter being subject to exacting standards enshrined in legislation. For example, airports are required, pursuant to international standards and EU and domestic regulatory requirements, to ensure that all passengers undergo security screening to specified levels. This is subject to monitoring and enforcement through security inspections and tests by the regulator. Legislation also requires full travel document checks to be conducted on all passengers, including all British citizens, arriving at the UK border. As the Minister of State made clear in the House of Commons, the security of our borders and the checks that need to be undertaken to protect us from those who would enter our country to do us harm are treated with paramount importance.
I am aware that the BAA runs a VIP suite scheme at Heathrow. The UK border force does not charge BAA or the VIPs any money for the provision of this service, nor does the BAA cover any border force costs. I will write to the noble Lord, Lord Davies of Oldham, with full details of the number of years that these arrangements have been in place. As long as standards of security and immigration are maintained at all times and in respect of all passengers, the Government do not wish to prevent the market offering access to these services, which are tailored to the needs of passengers. However, there is no question of reduced security, as suggested by the noble Lord, Lord Davies.
Your Lordships will no doubt be aware that a number of airlines offer faster check-in services to premium travellers who are willing to pay a premium for the service. The Government do not wish to prevent passengers benefiting from such products. If the concern is that the purchase of preferential access to check-in or baggage control processes would be an impediment to competition, the Bill already provides the CAA with the necessary powers to address that.
In summary, aviation security and immigration processes at UK airports must comply with exacting standards that are enshrined in legislation. There is no scope for passengers to pay to avoid these processes. The Government believe that the amendment goes too far in attempting to prevent the market offering access to these and other services that are tailored to the specific needs of users. I hope, therefore, that the noble Lord will consider withdrawing the amendment.
Lord Davies of Oldham
I am grateful to the Minister for his response, although I still believe that he is failing to recognise the context in which we find ourselves. That answer might have sufficed a decade ago, but as he knows only too well, we are operating a very stringent security regime at our airports. We all know the privations that occur from time to time. We know that people have to queue for hours on end because of the necessary requirements. The Government say that it is about security and the market has the right to provide preferential treatment for some. It seems to me that the concept of security is an obligation for every citizen. I do not see why there are favoured circumstances for a few, nor do I think it is conducive to the implementation of the security requirements if people believe that there is an inherent unfairness. The noble Earl made no reference whatever to that. Of course I recognise that no payment has been made by the airport to the Home Office with regard to this. However, if people are being transferred from heavily pressed desks to facilitate entry for those who have paid a premium, one should not be at all surprised that the difficulties occurring at airports are growing acutely. I beg leave to withdraw the amendment, but the Minister may come to rue the day.
Lord Berkeley
My Lords, I, too, support the noble Lord, Lord Jenkin, and others on this amendment. An appeal may be very unlikely but, as other noble Lords have said, the consequences would be bad. I cannot see how anyone appealing under Clauses 24 and 25 would find it relevant to question the financing of BAA—or any other operator, for that matter. That would seem to have nothing to do with any appeal but one occasionally gets vexatious appeals. Given the size of the sums and the disaster that would ensue if investments did not go ahead because the bankers became uncertain about an appeal, this would seem to be an extremely sensible set of amendments. I, too, shall be interested to hear what the Minister has to say in response.
Earl Attlee
My Lords, I have listened very carefully to the points that have been raised. As my noble friend Lord Jenkin pointed out, I have met BAA to discuss this issue in some detail, and since that meeting I have considered its concerns.
First, I assure the Committee that the Government remain of the opinion that there are good reasons to include derogations to financial resilience licence conditions where these would otherwise cut across existing financing arrangements. The CAA, which will be issuing the first airport licences, has also confirmed that it supports the broad principle that ring-fencing licence conditions, which does not cut across existing financial arrangements, could bring benefits to users.
The practical effect of the amendment would appear to shut out an airline’s right of appeal in respect of an entire licence condition, even if only a small part of it contained an exception relating to financial arrangements. Therefore, the scope of the amendment appears to be wider than the reason advanced for its inclusion. None the less, it is a perfectly good amendment for us to debate. The Government remain of the opinion—
Lord Soley
The point that the noble Earl makes is a fair one but it is perfectly possible, with the government draftsmen, to make a more refined and specific amendment, if necessary.
Earl Attlee
I absolutely agree with the noble Lord, Lord Soley. It is my duty to point out a drafting error in case my noble friend wants to run the amendment on Report. If I had not identified the problem in Committee and suddenly jumped up on Report and said, “Actually, the amendment is defective”, I think I would be a little unpopular.
The Government remain of the opinion that the broad rights of appeal provide an effective means of improving the accountability of key regulatory decisions. The process enables the interests of both airport operators and materially affected airlines to be taken into account. We therefore believe it is correct that this right of appeal should extend to licence conditions that relate to financial arrangements. An airline seeking to appeal a financial resilience condition, or the absence of such a condition in the first licence granted to an operator, will need to satisfy the Competition Commission that it is, in this context, a person whose interests are “materially affected” by the decision.
Any dispute over whether a derogation would cause a breach of existing financial arrangements would be most likely to arise from legal questions about the true construction of the loan agreement and/or the licence condition. These could ultimately be resolved through judicial review and, in the mean time, an airport operator could seek an injunction to preserve the status quo. Further comfort may be drawn from the fact that, subject to a government amendment that has been tabled being agreed, the Competition Commission, in deciding an appeal, will be obliged to have regard to the duties imposed on the CAA. Markets should therefore be reassured that the risk of existing creditor protection in an airport operator’s funding structure being unintentionally removed and triggering an event of default is extremely small.
We acknowledge that there is a possibility that the uncertainty created by an airline making an appeal to the Competition Commission on a licence condition relating to financial arrangements could affect an airport operator’s ability to access capital markets to raise finance while the appeal is being considered. However, as the timing of an application for leave to appeal is predictable, we consider that this is something an airport operator could successfully manage by pre-funding its financing requirements. We remain of the opinion that the right of appeal for airlines would not have significant negative consequences for an airport operator’s ability to raise debt in the capital markets.
Lord Trefgarne
Will the noble Earl say how long the appeals will take? He said that they would be of no consequence and could be temporarily ignored while the appeal process continued, but how long would that take?
Earl Attlee
My Lords, it may be helpful to the Committee if I outline the process. The initial consultation stage is a reasonable period set by the CAA. The period to bring an appeal, and the earliest date that licence modifications could come into force, is six weeks. For regulated representations the length of time is eight weeks. The appeal period is 24 weeks. Therefore it could be quite a long period. However, the appeal can be rejected because it is frivolous, vexatious or unlikely to succeed. The Competition Commission can make that determination quickly—but if it thought that there were good grounds for an appeal, the process would take longer. Frivolous or vexatious appeals, or those unlikely to succeed, could be determined quickly.
While the government position is clear and we have already communicated it to BAA, I have listened very carefully to noble Lords’ concerns and will communicate them to my right honourable friend the Minister of State for Aviation. I do not see that it would be in the airlines’ interests to attempt to overturn financial derogations determined by the CAA to be in passengers’ interests, where to do so would cause an event of default. The appeals regime has been designed to deter frivolous or vexatious appeals, as I mentioned. Furthermore, where the CAA proposes to grant a licence, including a condition furthering a financial derogation, or proposes to modify a condition containing a financial derogation, special conditions will apply.
Lord Soley
I am grateful but the Minister seems to be heading in the direction of neither moving on this nor looking at it again. He has described an appeal process that could take longer than six months. So it is a six-month possibility. He said earlier that the amendment put down by the noble Lord, Lord Jenkin, was too extensive. I understand that but I do not believe it is beyond the wit of the Government to come back with an amendment that is more specific. It should be possible and I do not see why it cannot be considered.
Earl Attlee
My Lords, noble Lords suggested that the appeal process would take six months. I am suggesting that the Competition Commission will very quickly be able to determine whether the appeal is frivolous, vexatious or unlikely to succeed. I do not believe the CAA would grant a derogation unless it was absolutely certain that it would pass scrutiny from the Competition Commission. There is also the point that the licence condition does not come into effect until the appeal is heard.
I reiterate that I am not taking this away and I am not reflecting on it. I will, however, discuss the matter in detail with my right honourable friend.
Lord Trefgarne
I am bound to tell the noble Lord that his answer has been wholly unconvincing on this matter. I hope he will undertake to reconsider and bring forward amendments if he thinks fit at the next stage.
Lord Rosser
My Lords, as we have just been discussing, Clauses 24 and 25 deal with appeals to the Competition Commission in respect of, first, the conditions of new licences and, secondly, modification of licence conditions. Under the Bill, persons who operate a dominant area at a dominant airport require a licence to levy charges. An appeal lies to the Competition Commission against a decision by the Civil Aviation Authority to include, or not to include, a condition in a licence when it is granted, and an appeal also lies to the Competition Commission against a decision by the Civil Aviation Authority to modify a licence condition.
An appeal can be brought only with the permission of the Competition Commission and the Bill states that the Competition Commission may refuse permission to appeal only on one of the following grounds: that the appeal is brought for reasons that are trivial or vexatious, or that the appeal does not have a reasonable prospect of success. Clearly, from the wording in the Bill there is a concern that trivial or vexatious appeals should be stopped. I am sure we would all agree with that objective, and my amendment seeks to add in a further ground on which permission to appeal can be refused—namely, that the appeal does not demonstrably show that it is in the interests of users of air transport services, in order to further minimise the potential for frivolous or vexatious appeals.
The primary duty of the Civil Aviation Authority, as set out in Clause 1, is that it must carry out its functions in a manner which it considers will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services. Surely, then, there must be an argument for saying that in any appeal to the Competition Commission against a decision by the Civil Aviation Authority to include, or not to include, a condition in a licence, or in any appeal against a decision by the CAA to modify a licence condition—both instances relating to persons who operate a dominant area at a dominant airport—it should also have to be shown quite clearly that the appeal is in the interests of users of air transport services, bearing in mind that that is the primary duty and responsibility placed on the Civil Aviation Authority, whose decision is being appealed.
Clause 30, on the procedure on appeals, states that subsections (1), (2) and (5) of Clause 1 apply to the carrying out by the Competition Commission of its function of deciding an application for permission to appeal under Clauses 24 and 25. Clause 30 refers to subsections (1) (2) and (5) of Clause 1, and subsection (1) refers to the Civil Aviation Authority having, where appropriate, to carry out its functions in a manner which it considers will promote competition in the provision of airport operation services. In a debate on an amendment when we were previously discussing the Bill in Committee, the Minister said that subsection (1) of Clause 1 would take priority over subsection (2) as far as the Civil Aviation Authority was concerned if promoting competition in the provision of airport operation services conflicted with its duty under subsection (1) to carry out its functions in a manner which the Civil Aviation Authority considers will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services.
However, it is not clear whether the giving of priority to subsection (1) over subsection (2) in Clause 1 where there is any sort of conflict applies also to the Competition Commission under Clause 30. Without it apparently being clear that it does, the Competition Commission, bearing in mind its name, might well give greater weight to promoting competition when deciding whether or not to refuse permission to appeal, rather than wanting to satisfy itself that the appeal is in the interests of users of air transport services, which is clearly stated in this amendment and is in accordance with the primary, overriding duty of the Civil Aviation Authority as laid down in Clause 1(1).
I hope that the Minister will either accept the amendment or be able to provide an assurance that giving priority to subsection (1) over subsection (2) in Clause 1 applies equally to the Competition Commission in Clause 30 as to the Civil Aviation Authority. I beg to move.
Earl Attlee
My Lords, I thank the noble Lord for explaining the concerns that his amendments seek to address. However, I believe that the Bill already takes those concerns into account. The proposed appeals process has been carefully designed to ensure that where an appeal is brought, ordinarily for it to succeed, the appeal body should consider whether it is in passengers’ interests in the provision of airport operation services. It is our aim to have in place an appeals process that facilitates transparency and a timely manner of resolution of appeals, and that permission to appeal should be granted only where appropriate. However, we do not wish to stop those whose interests are materially affected from appealing. In meetings with airlines and airport bodies, my officials have sought to assure parties of this.
Clauses 24(5)(b) and 25(5)(b) as currently drafted already ensure that permission to appeal a licence condition or licence modification would be refused if the appeal did not have a reasonable prospect of success. Where an appeal had a reasonable prospect of success, it would be unjust and wrong in principle to refuse permission. In answer to the important question put by the noble Lord, Lord Rosser, I refer the Committee to Clause 30, which contains provisions stating that the Competition Commission “must have regard” to the same duties as the CAA in the discharge of stated functions. Included in these is the determination for permission to appeal under Clauses 24 and 25.
The Bill as drafted empowers the Competition Commission to refuse to grant permission to appeal so as to avoid parties bringing an appeal as a “spoiling” tactic. Nor can appeals be used as a delaying tactic. The default position is that the CAA’s licence condition or modification comes into effect while the appeal is being heard. Therefore, I do not believe that the inclusion of a further subsection in Clauses 24 and 25, as suggested by the noble Lord, would add anything of further substance to the Bill.
In the light of those assurances, I hope that the noble Lord will be willing to withdraw his amendment.
Lord Rosser
Before I do so, while I think that the noble Earl has probably given me the assurances that I seek, perhaps I may ask him again directly whether he is saying clearly that, under the terms of Clause 30 where it states—as I indicated and the noble Earl has repeated—that subsections (1), (2) and (5) of Clause 1 apply to the carrying out by the Competition Commission of its functions, which include determining appeals brought under the two clauses that we are talking about, in carrying out those functions the Competition Commission is bound in the same way under Clause 1(1) and (2) as the Civil Aviation Authority is itself. Will it have the same general duty in respect of determining whether those appeals should be heard? In other words, it is to give priority—and see as its primary duty as the Competition Commission—to making the decision to furthering,
“the interests of the users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services”,
thus ensuring that that duty overrides the duty to promote competition in the provision of airport operation services. I think that that is what the Minister said to me, but I should be grateful if he could confirm that that is the case.
Earl Attlee
My Lords, the Competition Commission must have regard to the CAA’s general duty under Clause 30, as per the set of amendments accepted earlier today. We do not believe that it would be sustainable for the Competition Commission to promote competition where to do so would be inimical to the interests of users of air transport services, as described in Clause 1(1).
Lord Rosser
I do not seek to play with words; I am just anxious to be clear. The Minister said that the Competition Commission must “have regard”. Does that mean that its general duty in hearing these appeals is the same as the CAA’s general duty under Clause 1, which states that its primary and overriding responsibility in determining whether those appeals should be heard is to,
“further the interests of users of air transport services”,
rather than, where there is a conflict, to promote competition? I do not know whether we are playing with words over “have regard to”. In the Minister’s view, does that mean that the Competition Commission is bound in the same way as the CAA is in its general duty under Clause 1(1) and (2)?
Earl Attlee
My Lords, the short answer to the noble Lord’s question is yes.
Lord Rosser
In that case, since the Minister’s very specific answer makes it clear that the Competition Commission has the duty in the same way as the CAA has the duty under Clause 1(1) and (2), I beg leave to withdraw the amendment.
Earl Attlee
“(c) that an error was made in the exercise of a discretion.”
Lord Rosser
The amendment relates to Clause 29, which deals with appeals determined by the Competition Commission under Clauses 24 and 25, which we have just discussed. Clause 29 states:
“A determination made by the Competition Commission … must be contained in an order”.
Later, it states that the Civil Aviation Authority,
“must take such steps as it considers requisite for it to comply with the order”.
It then goes on to say:
“The steps must be taken … if a time is specified in the order or is to be determined in accordance with the order, within that time, and … otherwise, within a reasonable time”.
The effect of the amendment would be to remove “within a reasonable time” and insert,
“within the period of 24 weeks beginning with the day on which the Competition Commission published the relevant order”.
This is a probing amendment, which seeks to find out what the Government mean by “within a reasonable time” and how they believe those words should be interpreted. Do they mean more or less than 24 weeks and, if it could be more than 24 weeks, will the Minister give some examples of where it might be reasonable for the Civil Aviation Authority to take longer than 24 weeks to comply with an order made by the Competition Commission when no specific timescale is laid down by it? It would also be helpful if the Minister could say who will be responsible for deciding whether the Civil Aviation Authority has taken steps to comply with an order within a reasonable time. Will it be the Civil Aviation Authority itself, the Competition Commission, the Secretary of State, the courts or some other individual or body?
As I say, this is a probing amendment. I hope I have explained the motive for tabling it and the issue that we hope the noble Earl will address. I beg to move.
Earl Attlee
My Lords, the amendment seeks to amend subsection (7)(b) of Clause 29. The clause contains provisions relating to the publication of, and other matters connected to, the determination of appeals.
The current drafting provides that the CAA must take steps to comply with the appeal determination within any time period specified in the order. When none is specified, it must do so within a reasonable time. I am unable to support the amendment for two reasons. First, we do not think that it is necessary. Under subsection (7)(a) of the clause, the Competition Commission may specify a time limit in the order. We would expect it to do so if and whenever appropriate. Why would it not do so? Secondly, in circumstances where it is not appropriate to specify a period, it will be necessary to afford the CAA a reasonable time within which to comply with the order. What will comprise a reasonable time depends upon the context. There may be cases where action should be taken in fewer than 24 weeks and others where it is not reasonable to expect the CAA to take action within that period.
The noble Lord, Lord Rosser, asked me to give examples. I do not have any to hand but there may, I suggest, be a requirement to provide IT facilities or some capability that might require the CAA to procure something. It simply would not have time to take the necessary procurement action, although it might have every intention of doing so and perhaps give assurances that it would do so.
Against this background, to set an arbitrary time limit of 24 weeks is not appropriate and may cause injustice. Therefore, it is prudent to retain the flexibility that subsection (7)(b) provides the CAA. This flexibility is consistent with our wish for the CAA to be an efficient regulator but to allow it appropriate periods of time to comply with orders. I hope that in the light of my explanation the noble Lord will be willing to withdraw the amendment.
Lord Clinton-Davis
I have a certain amount of sympathy with what has been said but the trouble with this provision is that it lacks specificity. That is desirable in legislation. I have some doubts—perhaps the Minister can remove them—as to whether these sorts of provisions are capable of determination without difficulty. Perhaps I am wrong about that. The Minister ought to take another look at this matter. We are on the same wavelength on this. There is no doubt that we are in agreement about the provision that the Minister has in mind but I am doubtful about the wording.
Earl Attlee
My Lords, I am not a lawyer but I do not have any difficulty in understanding the provisions. I do not understand why the Competition Commission or the Competition Appeal Tribunal would not set a time limit if it were appropriate to do so. If it were inappropriate—the CAA might have said that it was already complying and had no intention of stopping complying—it would be totally unnecessary to impose a time limit. However, I would expect the Competition Commission to impose a time limit if it were desirable.
Lord Rosser
I thank the Minister for his reply. I also thank my noble friend Lord Clinton-Davis for the points he made. Obviously it is my intention to withdraw the amendment since it is probing in nature, but will the Minister respond to the other point I made about who will determine whether it has been done within a reasonable time? The clause provides that it should be done “within a reasonable time” if no time limit is set. Who makes the decision as to whether it has been done within a reasonable time?
Earl Attlee
My Lords, I do not know the answer to that question, but I imagine that if it was not done within a reasonable time, there would be a mechanism for the appellant to go back to the Competition Commission or the Competition Appeal Tribunal. However, if I have got that wrong, obviously I will write to the noble Lord.
Lord Clinton-Davis
I would have expected the Minister to say that the phrase “within a reasonable time” is used repeatedly in other legislation. Will he consider that?
Earl Attlee
My Lords, the terms “a reasonable time” and “a reasonable person” are frequently found in legislation. The noble Lord is absolutely right.
Lord Rosser
I am happy to leave this in the context that if the Minister finds that the response he has given to me on who will determine whether it has been done within a reasonable time is not the position, he will write to say that. As I say, it is a probing amendment to try to find out more about the Government’s intentions so far as the definition of “within a reasonable time” is concerned, and what kind of cases might come within that category rather than in subsection (7)(a), which provides that,
“if a time is specified in the order”.
I thank the noble Earl for his response and I beg leave to withdraw the amendment.
Earl Attlee
Earl Attlee
Earl Attlee
My Lords, this is a minor and technical amendment and as such I do not expect it to be controversial. It seeks to make the drafting in sub-paragraph (2)(a) of paragraph 22 of Schedule 2 consistent with the rest of that paragraph. It corrects the omission of the words “information or evidence” from the phrase “matter, information or evidence”. This phrase can be found elsewhere in paragraph 22. So this amendment makes sub-paragraph (2)(a) consistent with the other provisions in paragraph 22 of Schedule 2, which delineates the circumstances in which the Competition Commission may allow new matters, information or evidence to be adduced in appeals brought before it. Paragraph 22 of Schedule 2 generally prohibits the Competition Commission from considering any matter, information or evidence in an appeal that was not in the appeal before the Civil Aviation Authority.
However, in common with other appellate jurisdictions, there are limited circumstances where, in the interests of justice, this general rule needs to be capable of being displaced. It is necessary for the power to displace this rule so as to be co-extensive with the scope of the general prohibition. I beg to move.
Lord Davies of Oldham
My Lords, I agree with the Minister. Try as I might, I can find nothing controversial in his amendment.
Earl Attlee
Earl Attlee
Earl Attlee
Earl Attlee
My Lords, just in case the issue about the Competition Commission comes up again during our debate today, I would like to clarify what I said in response to the point made by the noble Lord, Lord Rosser, about the CC having regard to the CAA’s general duty. As an appeal body, the CC must have the flexibility to decide an appeal justly and according to law. A duty to “have regard to” is not the same as a case where the CC must apply exactly the same duty as the CAA, but the primary duty will have great weight in the CC’s decision. It seems very unlikely, having regard to the constrained grounds under which an appeal may be made—an error of law, fact and so forth—that the CC would allow an appeal that was inimical to passengers’ interests.
Flexibility arises from Clause 1(5). Where there is conflict between the interests of different classes of passengers, the CAA is generally free to choose whose interests it prefers. The CC would also have regard to this provision. I will write to noble Lords so that any interested parties can pick up this clarification.
I welcome this debate about the slots and thank the noble Lord, Lord Empey, for explaining his concerns. I also pay tribute to the work that the noble Lord has done not just in Westminster but in Brussels. It is an object lesson in how to achieve these objectives. The new clause is intended to allow the CAA to take actions to help protect the provision of regional air services to congested London airports, such as directing airports to ring-fence slots for regional services or structure their charges so as to favour regional services.
The Government take the matter of regional connectivity very seriously. The noble Lord, Lord Davies, mentioned the problems of regional airports, for example some of those in Scotland. As I said before, we recognise the vital contribution that regional airports make to local economies, and that high-quality regional connectivity is hugely important. For remoter areas of the UK, regional air services are not a luxury but a vital means of connectivity. As the Committee will be aware, and as I confirmed at the first Grand Committee sitting, European Union regulations govern the allocation, transfer and exchange of slots at Heathrow and other slot co-ordinated airports in the UK.
EU slot regulations follow the Worldwide Slot Guidelines determined by the International Air Transport Association, reflecting the fact that commercial aviation is a global business. Council Regulation (EEC) No 95/93 on common rules for the allocation of slots at community airports provides common rules throughout Europe for slot allocation. These are aimed at providing airlines with fair and equal access to airports across the EU through independent and transparent slot allocation procedures. Members are required to ensure that independent airport slot co-ordinators are appointed to manage slot allocation at airports where capacity problems occur.
EU law does not allow either the Government or the CAA to have any role in slot allocation apart from the limited exception provided by the public service obligation procedure. EC Regulation No 1008/2008 allows member states to impose public service obligations to protect air services to airports serving a peripheral or development region or on thin routes to any airport on its territory where such a route is considered vital for the economic and social development of the region.
It would be open to regional bodies—for example, local enterprise partnerships and the devolved Administrations—to apply to the Secretary of State for Transport to impose a PSO on an air route if they feel that a case can be made which satisfies the EC regulation. If approved, this would permit slots to be ring-fenced at a relevant London airport. However, one of the important principles of the PSOs is that they can be imposed only when it is necessary to ensure adequate services between two cities or regions, rather than for the purposes of linking individual airports—a point recognised by the noble Lord, Lord Empey. Importantly, that means that when judging whether a region has adequate services to London, it will be necessary to take into account the level and nature of services to all five of London’s main airports, as well as surface transport connections.
Unfortunately, I have to repeat what I said before: there is no other mechanism for the Government to intervene in the allocation of slots at Heathrow or other London airports. Under European law, the potential for the ring-fencing of slots at Heathrow to protect regional services is to be dealt with by the rules on PSOs only. Therefore, any proposals to override the strict criteria and processes by which European Governments can intervene in route operations would be incompatible with EU law. I think the noble Lord understands that but still seeks a solution.
Lord Berkeley
On the basis of the noble Earl’s argument, it would seem that there can be no grounds for having a third runway at Heathrow until all four of the other airports that he just mentioned are full.
Earl Attlee
My Lords, this is not a debate about the third runway. Whether we have a third runway at Heathrow is not relevant. If we got a situation in which we had a third runway and then ran out of capacity at Heathrow, we would still have the same problem.
In addition, the application of traffic distribution rules—the TDRs—is also governed by EU law, which prohibits the implementation of discriminatory rules, including on geographical grounds. As a result, the introduction of TDRs to protect particular regional air services is not an option as it would also be incompatible with EU law. If the amendment seeks to empower the CAA to give a direction to the airport to structure its charges so as to discount airport usage for regional services, I regret that this would not be possible for a number of reasons. If it is not in the interests of users of air transport services on the grounds of the range, availability, continuity, cost and quality of airport operation services, it would not be consistent with the primary duty for the CAA to give such a direction.
In addition, EU directive 2009/12/EC on airport charges introduced common principles on the levying of airport charges at community airports above a certain size to ensure transparency and consultation. That directive was transposed into UK law through the Airport Charges Regulations 2011. Airport charges must not discriminate between users but charges can vary in the interests of the public and in the general interest, provided the reasons are relevant, objective and transparent. The CAA has an enforcement role regarding the Airport Charges Regulations, so it would not be consistent for it to direct on the structure of airport charges. However, as your Lordships are aware from the opening remarks of the noble Lord, Lord Empey, the EU slot regulations are in the process of being reformed in Europe at present. The European Commission’s “Better Airports” package includes proposals to amend the EU slot regulations, which provides an opportunity for the UK to highlight this issue with the European Commission and to explore the inclusion of measures to help secure the ongoing provision of air services between UK regions and congested London airports.
I fully understand the concerns behind the noble Lord’s proposed new clause, but I am unable to support it for the reasons given. Nevertheless, I assure the Committee that the Government are committed to supporting regional airports and regional connectivity. We will also consult on a new aviation policy framework, which will include a focus on regional airports. We will also issue a call for evidence on maintaining the UK’s international connectivity. I would welcome the contribution of the noble Lords and their constituents to that debate and I hope that the noble Lord, Lord Empey, will consider withdrawing his amendment.
Lord Bradshaw
Before the noble Lord, Lord Empey, speaks, I have to say that that is one of the most convoluted answers that I have ever heard. We say in these debates that we will read Hansard, but we shall do so with a wet towel around our heads this time. I believe it is incumbent on the Government here in London to find a method by which the air services to Belfast, of which I was a regular customer, can be maintained. They are incredibly expensive now compared with similar flights elsewhere. The customer is being short-changed. I hope that the Minister and his colleagues will bear it in mind that this must be put right in any review of aviation legislation.
Earl Attlee
My Lords, I could paraphrase what I have just said by saying that we cannot do what the noble Lord wants because of EU regulations but the EU is working on it.
Lord Empey
I am grateful that I needed no wet towel for that answer. I thank the Minister for his response. It is a very convoluted issue with all these parallel processes taking place. However, at the end of the day, there is a problem that could exist in the future, although it does not exist right now, and we should not be in the position of being entirely at the mercy of a particular airline or of being involved in some kind of commercial tug of war that can isolate a region. This is deliberately not a Northern Ireland-only issue.
To sum up, I thank the Minister. I shall continue to work on this and I believe that there is an appetite to do something about it. I will take the advice of the noble Lord, Lord Bradshaw, and read Hansard, and I will keep open my option of returning to this matter on Report. However, in response to the Minister, I beg leave to withdraw the amendment.
Earl Attlee
My Lords, I am grateful to the noble Lord, Lord Rosser, for tabling the amendment. An amendment of this kind would address a recommendation of the Delegated Powers and Regulatory Reform Committee in its helpful report on the Bill, which was published four days before the start of Grand Committee. I have no complaint, but we will need a little more time to determine which way to go. However, I agree with the general aim of the amendment and have much sympathy with it.
The current drafting of the amendment is not technically correct. It would need alternative drafting to make a consequential amendment to the Airports Act 1986, where the provisions are to be inserted. I therefore wish to consider the matter further, with the intention of bringing forward a government amendment on Report. However, I do not anticipate having any difficulty with accepting the advice of the DPRRC. I hope that this reassures your Lordships that my intention is for a government amendment to be brought forward on this, in order to respond effectively to the DPRRC recommendation that if the purpose of the order provided for in sub-paragraph (11) of paragraph 2 of Schedule 8 is to ensure that the threshold can be increased for reasons other than inflation, the current negative procedure should be amended to an affirmative procedure to give Parliament greater scrutiny. With this assurance, I hope that the noble Lord will withdraw his amendment.
Lord Rosser
I thank the Minister for that very helpful reply. I fully accept that the amendment might not be worded in the appropriate manner. It appears from what he said that he intends to take the matter away with a view to producing an amendment that is in the right place in the Bill and says the right things to achieve the recommendation of the Delegated Powers and Regulatory Reform Committee. On that basis, I beg leave to withdraw the amendment.
Earl Attlee
“( ) Section 74 (restriction on disclosure of information) is amended as follows.
( ) In subsection (3)”
Earl Attlee
My Lords, the amendments in this group are minor and technical amendments to paragraph 3 of Schedule 9, which contains the consequential provisions for amendments to be made to other Acts. In particular these are amendments to the consequential provisions relating to Section 74 of the Airports Act 1986. Their purpose is to tidy up the consequential amendments in the Bill to Section 74(4) of the Act. The current Bill does not provide for amending Section 74(4) of the Airports Act 1986 and the amendments seek to correct this. Section 74(4) provides that the restriction on disclosure of information does not limit the disclosure of information in reports of the Competition Commission under Section 45 of the Act, and does not apply to information that has been made public as part of such a report.
Section 74(4)(a) will be redundant once Part 4 of the Airports Act 1986 is repealed. This is given effect to in Clause 76(1) of the Bill. However, paragraph (b) will continue to be relevant to information previously disclosed in Competition Commission reports under Part IV of the Airports Act 1986. If Section 74(4) were left as it is, it would not be technically incorrect. However, it is desirable to make this minor amendment to ensure that redundant references are removed, while ensuring transparency over the effects of past reports published by the Competition Commission. I beg to move.
Earl Attlee
“( ) In subsection (4)—
(a) leave out paragraph (a), and(b) in paragraph (b), for “such a report” substitute “a report of the Competition Commission under section 45”.”
Earl Attlee
Earl Attlee
My Lords, this is another minor and technical amendment to paragraph 7 of Schedule 10. The schedule contains the main transitional provisions for the regulation of operators of designated airports under the Airports Act 1986. Paragraph 7 provides the power to amend the schedule. The amendment is being made because sub-paragraph (1) of paragraph 7 is no longer required following the minor and technical amendment made to Clause 107 during the Commons Committee stage which contains a power with the same effect. The amendment deletes sub-paragraph (1) of paragraph 7 because it repeats what is set out in Clause 107. Doing so, however, requires sub-paragraph (2) to be amended to make reference to Clause 107. The amendment does not alter the effect of sub-paragraph (2) of paragraph 7 because we believe that it is important to maintain that certain provisions in Schedule 10 should not be able to be amended through paragraph 7, such as the interim period ending at 31 March 2014. This is the last day of the current regulatory settlement known as Q5, and we do not wish to disturb the current regulatory settlement period. I beg to move.
Earl Attlee