House of Lords
(11 years, 12 months ago)
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Armed Forces: Olympic and Paralympic Games 2012
(11 years, 12 months ago)
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Lord Empey
To ask Her Majesty’s Government what measures they propose to take to recognise the contribution made by the Armed Forces to the success of the 2012 Olympic and Paralympic Games.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever)
My Lords, I pay tribute to the efforts and the hard work of all those who so admirably made the Olympic and Paralympic Games such a success this summer. Your Lordships will no doubt be aware of the public thanks given by the Prime Minister, the Mayor of London and many public dignitaries. Members of the Armed Forces involved with the Games will receive a commemorative coin as a mark of appreciation for their outstanding contribution. This is an episode that the services can look back on with great pride.
Lord Empey
In the aftermath of the G4S debacle, our Armed Forces once again came to the rescue and saved our country from a massive humiliation in front of the whole world. They helped to provide a safe environment for the most successful Games ever and we owe them a great debt of gratitude. Will the Minister tell the House what financial contributions have so far been made by G4S to compensate the taxpayer as a result of that company’s failure to meet its contractual obligations?
Lord Astor of Hever
My Lords, I agree with the noble Lord that we owe the members of the Armed Forces a huge debt of gratitude for what they have done. Negotiations are ongoing between the London Organising Committee of the Olympic and Paralympic Games and G4S over the fee that the Government will pay as a result of its failure to meet the contractual agreement. I can tell the noble Lord that as a good will gesture, G4S made a donation of £2.5 million to service charities in recognition of the fine work done by our service personnel to fill the void in G4S’s delivery. This donation will be used to support Armed Forces sporting and welfare organisations, including through the purchase of additional sports equipment and support to service sports associations.
Lord Anderson of Swansea
My Lords, this could so easily have been a security and public relations disaster. Instead, following the failure of that private sector firm, the military stepped in and showed that it can always be relied on. Surely the public would want some form of recognition and it is for the Government to be creative to show the public that they appreciate the way in which our military saved what otherwise would have been a very difficult time.
Lord Astor of Hever
My Lords, as I said in my original Answer, we are giving a coin to members of the Armed Forces, and I have information here on it. All the feedback that I have had from members of the Armed Forces about this coin is that they are very grateful and hugely appreciate the offer.
Lord Addington
My Lords, does my noble friend agree that the Armed Forces did a remarkably good job and that we should congratulate those who had the back-up plan in place when the G4S thing went? Will he make sure that, if the Armed Forces want to offer a sort of volunteer service, using their authority and discipline in future events, they will be welcomed and embraced?
Lord Astor of Hever
My Lords, I entirely agree with my noble friend on his second point. It is a very good example of volunteering. As for my noble friend’s first point, the feedback from the public has been extremely positive. Many people have expressed their gratitude to the members of the Armed Forces who made the Games such a resounding success. Indeed, at the Ministry of Defence we have received many letters that praised the professionalism, effort and huge contribution from the Armed Forces.
Lord West of Spithead
My Lords, does the Minister not agree that this highlights the dangers of privatisation in certain areas that are fundamental to UK security? Does he not believe that the GOCO arrangements for the defence equipment and support areas might put us in a position where a failure by private enterprise actually puts service personnel and the security of the nation at risk?
Lord Astor of Hever
My Lords, I do not want to be tempted by the noble Lord to go down that route. We will be able to debate that when we get to that point.
Lord Selkirk of Douglas
My Lords, can the Minister say whether additional leave was allocated to the members of the regular armed services who were deployed? If so, was it not thoroughly deserved?
Lord Astor of Hever
My Lords, the chiefs of staff have authorised commanding officers to grant additional leave for eligible members of the Armed Forces in recognition of the traditional burdens placed on all personnel during the summer. As my noble friend said, it was very well deserved.
Lord Ramsbotham
My Lords, as it was only 24 July when the order was given for the additional military to be deployed in support of the Olympic Games, that suggests that something had gone badly wrong with the planning for the deployment of security arrangements. Can the Minister say whether lessons have been learnt about this and whether improvements will be made to make certain that, if this happens again, the Armed Forces will get longer warning of such requirements?
Lord Astor of Hever
My Lords, the noble Lord makes a very good point. We did monitor the situation very closely and we were aware early on of the fragility of the G4S business plan. So we were able to come forward with the extra numbers in good time. We were prepared for that.
Lord Flight
My Lords, could the Minister also touch on other groups and individuals to whom thanks are due for the success of the Olympics—and if it is not inappropriate, particularly Paul, now the noble Lord, Lord Deighton, introduced to this House last week, who has not put himself forward but who was the brain that organised the Olympics to be a great success and to whom this country has a debt of gratitude?
Lord Astor of Hever
My Lords, my noble friend makes a very good point. It was not just the Armed Forces but huge numbers of people, including my noble friends Lord Coe and Lord Deighton, and as my noble friend Lord Addington said, the huge numbers of volunteers, who helped to make it such a successful Olympic and Paralympic Games.
Lord Harris of Haringey
Could the Minister tell us how many government contracts for infrastructure support are going to G4S in future, and whether the armed services will be ready to step in if need be in the event of G4S again failing to win a gold for logistics?
Lord Astor of Hever
My Lords, I am very sorry to disappoint the noble Lord but I am unable to answer that question.
Lord Burnett
My Lords, living in London is expensive, but could my noble friend tell the House whether any additional allowances are paid or payable to members of the Armed Forces for their services at the Olympics, which was such a resounding success and in which they played such a wonderful part?
Lord Astor of Hever
My Lords, regular service personnel deployed as part of the security presence at the Olympic Games did so as part of their normal duties. Service personnel did not receive additional pay or bonuses for this deployment, but some personnel were entitled to claim additional allowances, such as the long separation allowance, dependent on where their home bases were.
Health: Cancer
(11 years, 12 months ago)
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Lord Hunt of Kings Heath
To ask Her Majesty’s Government what are their plans for the future funding and number of cancer networks.
Lord Hunt of Kings Heath
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and refer noble Lords to my interests in the register.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, £42 million has been allocated by the NHS Commissioning Board to support strategic clinical networks in 2013-14. Networks will cover a number of priority conditions and patient groups, including cancer. It is for local health communities and the board to determine the number and size of networks, based on patient flows and clinical relationships, and to deploy their resources appropriately.
Lord Hunt of Kings Heath
My Lords, does the noble Earl accept that cancer networks have done an outstanding job in improving the quality of service and outcomes? Does he agree that there is widespread expectation that the number of cancer networks will be reduced, the staff in many places will be made redundant and the new set-up will not be as effective as the current one? Will he respond to that?
Earl Howe
My Lords, I agree that clinical networks are a success story in the NHS. They have raised standards, supported easier and faster access to services and encouraged the spread of best practice. We very much want to see that continue. The final number of strategic clinical networks and the number of clinical staff who support them have not been finalised yet. Those numbers will be determined locally so it is too early to speak with any certainty about final staff numbers. We do not anticipate many compulsory redundancies at all. A number of staff have been deployed to other posts already. The aim of all this is to achieve not only a more effective series of networks but a more efficient system as well. We believe that that will be delivered.
Baroness Morgan of Drefelin
My Lords, I, too, declare an interest, as chief executive of the Breast Cancer Campaign. Does the Minister agree with the charities Cancer Research UK, Macmillan, and Cancer 52—which represents the rare cancer charities—that this is a real issue of concern? The uncertainty is causing a real haemorrhaging of expertise out of the networks that have been such a success in driving up standards in cancer services.
Earl Howe
My Lords, I accept that the uncertainty has been unfortunate and, in some cases, damaging. The noble Baroness is right in her broad observations. However, the intent to maintain networks was signalled very early on this summer by the Commissioning Board. The standard operating framework, which will apply to all clinical networks, will be published very shortly. I think that that will provide helpful additional clarity. However, I repeat to the noble Baroness that the aim here is to maintain networks and to ensure that the good work continues and that the expertise which we still have in networks is translated across into the new system.
Lord Clement-Jones
My Lords, the NHS strategy document The Way Forward stresses that, as regards cancer, the new networks will focus very tightly on what is called domain 1 of NHS outcomes, which is reducing mortality. But surely for all those who have experience of cancer, is not enhancing the quality of life absolutely crucial too, and should not the networks be concentrating on that as well?
Earl Howe
Yes, my Lords. While the document to which my noble friend refers does make explicit that the cancer strategic clinical network will be focused around domain 1, which is reducing mortality, nevertheless improvements to patient experience and patient safety underpin all NHS care and those matters will be similarly embedded in the work of all strategic clinical networks.
Lord Turnberg
Does the noble Earl agree that the cancer networks have been invaluable in supporting research into new treatments and that any reduction here would be regrettable?
Earl Howe
I absolutely accept that one of the benefits we have seen from the clinical networks is the spread of innovative best practice through the health service, particularly in local areas. That is very much what we wish to preserve. The networks will help local commissioners of NHS care to reduce unwarranted variation in services and encourage innovation. We are determined to see that continue.
Lord Patel
As the Minister responsible for quality outcomes in healthcare, will the noble Earl report to the House on whether he is monitoring the effects on cancer outcomes of the reduction in the staffing of cancer networks?
Earl Howe
We will certainly be monitoring the outcomes in the field of cancer, but I would just like to impress upon the noble Lord that the creation of the clinical support teams—the network support teams—will ensure that the whole service is more efficiently delivered. By having 12 support teams there to underpin all the networks, we will ensure that we have a more cost-effective system.
Baroness Masham of Ilton
My Lords, does the Minister agree that our cancer outcomes are not as good as those in some other countries in Europe? What is the reason for that? Does he agree that it would be a very retrograde step if the cancer networks lost expertise which we badly need?
Earl Howe
I agree with the noble Baroness, and it is part of the reason why we felt that the recent health service reforms to align clinical decision-making with financial decision-making were so important. The reason why this country lags behind has been clearly set out in a number of documents and, broadly speaking, it is because patients do not present early enough with their symptoms and doctors do not refer early enough to specialist consultants for treatment. There is a lot of work to do there, and I am sure that the noble Baroness will be reassured to know that there will be no let-up in that area.
Lord Colwyn
My Lords, we are five, six or seven minutes into this Question, but I am not sure I understand what a cancer network is.
Earl Howe
My Lords, the essence of a cancer network is the web of relationships between individual clinicians. Networks are a source of advice and support and they are there to drive quality improvements locally. The networks will be established to cover patient groups or conditions where improvements to services can be made through an integrated approach. I hope that I have emphasised sufficiently that networks are there to support commissioners in their work.
Electricity Generation
(11 years, 12 months ago)
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Lord Tombs
To ask Her Majesty’s Government what steps they are taking in response to the recent projection by Ofgem of a fall in the generating plant margin from 14% at present to 4% in the next four years.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, Ofgem’s capacity assessment emphasises the importance of action to ensure that we continue to enjoy electricity security in the medium and long term. That is why the Government are taking decisive steps to secure our supplies, including reforming the electricity market to drive the investment that we need and consulting later this year on options to reduce demand for electricity. Recent announcements on investment in a new gas power station at Carrington and from Hitachi on nuclear investment demonstrate that the Government’s approach to securing investment is having real impacts.
Lord Tombs
My Lords, as the Minister will expect, I found that Answer wholly unsatisfactory. We are in the early stages of a major crisis. At present, a lot of our supply comes from nuclear and coal stations, which provide about 40% of our national demand, with the rest coming from gas. Much of this plant is 40 years old and quite a lot of it is 50 years old—well beyond the date by which one would have expected it to have been retired. The task of replacing it is enormous and will take a long time. We ought not to feel complacent at all, because estimating the date of the necessary retirement of this plant is not easy. Can she assure me that the dates and programmes for the retirement of 40 or 50 year-old plant are clearly specified, together with plans for replacing it?
Baroness Verma
My Lords, I should like first to reassure the noble Lord that this Government are not being complacent. That is why we are taking action to ensure that the UK economy continues to enjoy high levels of security of electricity supply. Our comprehensive proposals for electricity market reform will drive investment, ensuring that we have a diverse mix of energy sources. This includes legislating for the capacity market, which I am sure the noble Lord will be pleased to hear. We have sufficient reliable capacity in the system for the long term, but we need to build a stronger framework, which we are doing. We are investing in renewables and maximising the recovery of oil and gas from the UK continental shelf. There is a lot to do—I agree with the noble Lord—and we are doing it.
Lord Jenkin of Roding
My Lords, is my noble friend completely satisfied that the Ofgem forecast is not being a bit cautious, particularly—to pick up the point made by the noble Lord, Lord Tombs—with regard to extending the lives of the AGR nuclear power stations? Is she aware that some of us heard a very compelling address to the Parliamentary and Scientific Committee by one of the research experts in this field saying that science now shows that extending those lives is distinctly feasible, perhaps up to the end of the decade and even beyond? If that happens, would that not significantly improve the figures that the noble Lord’s Question has quoted?
Baroness Verma
My Lords, I recognise and pay tribute to my noble friend’s expertise on this; having been in post for only eight weeks, I am sure that there is much that I can take away from him. However, I emphasise that the report has been prepared independently by Ofgem. It is important to acknowledge that the projections of future electricity capacity are dependent on a range of assumptions. I hear clearly what the noble Lord says about the nuclear power stations having extended life. All I can say to reassure him is that there are a lot of discussions going on and much of that will be relevant to what he has raised.
Lord Kennedy of Southwark
My Lords, could the Minister give the House some figures, please? What is the total installed generation capacity required to meet our peak demand and what is she going to do about it?
Lord Kennedy of Southwark
Could the Minister give the House some figures, please? What does she think is the total installed generation capacity needed to ensure that we meet our peak demand?
Baroness Verma
My Lords, I reassure the noble Lord and the House that we have enough capacity to ensure that the lights do not go out. We have been in this place before. As noble Lords will know, in the last decade we had a similar prediction that we would have a drop in supply, but of course the lights remained on. We are working with all our efforts to ensure that, through renewables, gas and coal, those lights stay on.
The Lord Bishop of Chester
My Lords, could the Minister tell the House to what extent we already depend on the interconnectors with France and the Netherlands? What potential is there to go cap in hand to our European friends for more supplies in the years to come?
Baroness Verma
The right reverend Prelate raises a point of which I am sure noble Lords are aware, which is that we have a very good relationship with our European friends, particularly with Norway. We are focused on ensuring that our renewable marketplace will assist us to be self-sufficient and have our own security of energy. We will do that through our energy Bill. However, these issues are of long standing. This Government have taken a very proactive, positive step to ensure that we address these issues.
Lord Teverson
My Lords, the Government’s national policy statement for energy says that there is currently 85 gigawatts of total generating capacity in the UK, while the average demand across the year is only half that, so there is a 50% margin. Will the Minister tell us how the Government intend to reduce the peaks in demand, which could save us billions of pounds on investment, and how this might be brought into new energy legislation to ensure that we reduce the demand side as well as put up the supply side?
Baroness Verma
My noble friend is absolutely right. Of course the Government recognise that we need to make sure that we are reducing demand. We are also making sure, through our energy Bill, that our capacity mechanism will be able to bring down prices, which is something that we all want to see.
Baroness Worthington
My Lords, a careful reading of the Ofgem report will show that, although we will reach low levels in 2015-16, capacity will pick up again in 2016-17. That is partly because of an increased contribution from renewables, chiefly biomass and wind. Given that, will the Minister reconsider the fact that the renewables obligation is set to close in 2017, because there might be a hiatus as a result?
Baroness Verma
My Lords, the noble Baroness raises an important point. She is absolutely right that the report is not all doom and gloom. Our work towards ensuring that renewables account for 30% of the electricity that we generate is part of a big mix. I am sure that, when we come to consider the energy Bill, the noble Baroness and I will have further discussions on how to improve our security of supply.
United States: Presidential Election
(11 years, 12 months ago)
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Lord Triesman
To ask Her Majesty’s Government, in the light of the United States presidential election, what plans the Prime Minister has to meet the successful candidate; and which areas of policy they regard as the priorities for United Kingdom-United States relations in the next four years.
Lord Wallace of Saltaire
I congratulate the noble Lord on the timeliness of his Question and hope that he got some sleep last night. The Prime Minister has congratulated Barack Obama on his successful re-election as President of the United States. We will continue to work closely with President Obama on the full spectrum of international issues that are essential to our mutual prosperity and security, including the global economy, the situation in the Middle East and progress in Afghanistan.
The Prime Minister said of Barack Obama:
“I have really enjoyed working with him over the last few years and I look forward to working with him again over the next four years … we need to kick start the world economy and I want to see an EU-US trade deal”.
The Prime Minister also emphasised the need to do more to solve the crisis in Syria.
Lord Triesman
My Lords, I am sure that the House will want to congratulate warmly President Obama on an outstanding victory.
Lord Triesman
What approach will the Prime Minister suggest to reinvigorate the peace process in the Middle East, given the authority that President Obama certainly will enjoy as a second-term victor? Will the Prime Minister support the President’s commitment to a growth stimulus programme to mitigate uncertainty and a flat-line lack of growth—a strategy we sorely miss in the United Kingdom?
Lord Wallace of Saltaire
My Lords, we are all conscious that the Middle East peace process will be a very delicate and urgent issue over the next few months. Indeed, the Palestinian Authority has suggested that it may take back the question of its status at the United Nations to that body next week. We will be in urgent discussions with our American and European partners on our approach to that extremely difficult conflict. The strategy for global growth is of course a matter that we are discussing within the G8, the G20 and the OECD.
Baroness Falkner of Margravine
My Lords, will my noble friend give the House the Government’s assessment of the nature of the relationship? Is it now increasingly bilateral, given our diminishing role in the European Union, or would the Americans prefer the United Kingdom to be a stronger player both bilaterally and multilaterally through the EU?
Lord Wallace of Saltaire
My Lords, Washington sees the United Kingdom as a valued friend in Europe—within the EU and other European institutions. The issue of the UK’s place in Europe is an important matter for the USA.
Lord Anderson of Swansea
My Lords, the conventional wisdom is that in a second term the President need not be constrained by the same sort of considerations as apply in a first term. In what areas does the Minister feel that the President is now less constrained, in spite of Congress and in spite of the facts in the Middle East being the same? For example, does he see that the President’s commitment to the crisis posed by climate change, as opposed to that which Governor Romney would have had, is a real window of opportunity for us?
Lord Wallace of Saltaire
My Lords, I think that most people here would welcome the extent to which President Obama has flagged up climate change in the wake of Hurricane Sandy. Indeed, he mentioned in his acceptance speech the importance of combating climate change. We look forward very much to a more positive American policy towards global co-operation in combating climate change.
Lord Stirrup
My Lords, can the Minister reassure the House that Her Majesty’s Government will work with the second Obama Administration to ensure that when the Afghan national security forces take on sole responsibility for security lead in their own country, they will be given all necessary support by NATO and will not be left wholly in the lurch, as seems to be the proposition at the moment?
Lord Wallace of Saltaire
My Lords, I am sure the noble Lord is well aware that the British are already in active discussions about providing training for officers in the Afghan national security forces and we are working with all other NATO forces within ISAF to ensure that there is a smooth handover.
Civil Aviation Bill
(11 years, 12 months ago)
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Earl Attlee
“(ca) the desirability of each holder of a licence under this Chapter being able to take reasonable measures to reduce, control or mitigate the adverse environmental effects of the airport to which the licence relates, facilities used or intended to be used in connection with that airport (“associated facilities”) and aircraft using that airport,”
Earl Attlee
My Lords, in moving Amendment 1, I shall speak also to Amendments 4, 7 and 9.
Aviation and the environment have been raised throughout the Bill’s proceedings both here and in another place, and rightly so. It is impossible to separate these important matters. Noble Lords who were present at the relevant Committee sitting may recall that I had some sympathy with several of the amendments regarding environmental matters and undertook to give detailed consideration to the points raised with a view to returning to them. That is why I am pleased to move these amendments today which, if accepted, will introduce an environmental supplementary duty to the CAA’s airport economic regulation functions in Chapter 1 of the Bill.
I am also aware that noble Lords opposite have tabled some amendments that look to address environmental issues. These include two amendments that seek to amend the amendments that I am going to speak to right now. I would like to take the opportunity to respond to those once I have heard noble Lords’ arguments rather than pre-empt them.
I now turn to the government amendments. Amendment 1 would add to the list of matters to which the CAA must have regard when performing its duties in Clause 1(1) and 1(2). However, I wish to make it clear that this supplementary duty does not override the CAA’s primary duty at Clauses 1(1) and 1(2). The primary duty for the CAA to carry out its functions in Chapter 1 in a manner that it considers will further the interests of passengers and cargo owners in the provision of airport operation services is central to the reforms set out in this Bill, and the Government have always wished to preserve this. It was also the policy intent of the previous Administration. This means that the CAA should carry out its functions in a manner that furthers those interests. In doing so, it must have regard to the desirability of licence holders being able to take steps to mitigate relevant adverse environmental effects.
Amendment 4 sets out a non-exhaustive list of environmental effects as referred to in Amendment 1, including, among other listed matters, substances, noise, vibration, emissions and the effects of works carried out at the airport. Amendment 7 would add an equivalent environmental supplementary duty to the list of matters to which the Secretary of State must have regard when discharging functions under Chapter 1 and under some provisions in Chapter 3. Amendment 9 ensures that the same non-exhaustive definition of “environmental effects” is applied under the Secretary of State’s duties as for under the CAA’s duties.
The intention of these amendments is to provide clarity that in exercising its functions under Chapter 1 of the Bill, in accordance with its Clause 1 duties, the CAA must have regard to the desirability of a regulated airport operator being able to take reasonable measures to reduce, control or mitigate adverse environmental effects that are generated by the activity of the airport and aircraft using the airport to which the licence relates. They also provide clarity that the reasonable costs of environmental measures taken by licence holders may continue to be taken into account in the regulatory settlement where the measures are in the interests of passengers and owners of cargo in the provision of airport operation services.
We have always been clear that airport operators, whether or not they are subject to economic regulation, should be able to invest in the appropriate environmental measures. For example, if a non-regulated airport undertook investment in environmental measures that benefit passengers, the CAA will be able to look to this and approve the reasonable similar investment in the regulatory settlement at a regulated airport.
The Government do not believe that the absence of an environmental supplementary duty would prevent the CAA from approving environmental investment where this is in the passengers’ and cargo owners’ interests. However, following detailed consideration of the matter, I believe that there is benefit in making this clear in the Bill. Certainly, the Bill should not be seen as placing a restriction on investment in environmental measures at licensed airports where these benefit passengers and freight owners in the provision of airport operation services.
I can also assure your Lordships that time has been taken to ensure that the drafting does not have the capacity to create distorting effects by putting greater obligations on regulated airports relative to non-regulated airports. For example, a regulated airport should not be required to spend on environmental measures where a competitive airport would not do so, because this could create market distortions by placing greater burdens on regulated airports than non-regulated airports.
I remind your Lordships that this environmental supplementary duty is not the only environmental provision within the Bill. Clause 84 provides that the CAA must publish or arrange for the publication of such environmental information as the CAA considers appropriate. Nor is the Bill the only vehicle through which the environmental effects of aviation are considered and addressed. The draft aviation policy framework, which the Government intend to finalise by March 2013, lays out the objective of ensuring that the aviation sector makes a significant and cost-effective contribution towards reducing global emissions. It describes the strategy for tackling aviation’s climate change impacts at an international, EU and national level.
Following extensive debate on environmental matters throughout the progress of the Bill, I hope that these amendments offer your Lordships the comfort desired. The Government take environmental matters seriously and wish to ensure that investment by airport operators at regulated airports to reduce, control or mitigate environmental effects where to do so is in the interests of passengers and cargo owners may continue to be included in the regulatory settlement.
I look forward to hearing the arguments put forward by noble Lords opposite regarding their own amendments. I beg to move.
Lord Davies of Oldham
Lord Davies of Oldham
My Lords, Amendment 2 seeks to amend the government amendment which the noble Earl, Lord Attlee, has commended to the House. I commend his work to the House, too, because he has responded to the pressure exerted in Committee about the failure of the Bill to address significantly the role of aviation and the regulated airports in relation to the environment. Environmental issues are high on the nation’s agenda and the contribution of aviation in this regard is of considerable concern. The Opposition have sought to work constructively to improve the Bill and I am grateful to the Minister for his attempts to do so.
I do not shy away from the fact that, were his amendments carried, they would represent an improvement to the Bill, but not significant enough an improvement for the issue concerned. After all, the Government constantly seek to bask in their green credentials, but in recent months, tensions have been exposed as they wrestle with the practicalities of the green agenda. The nation is conscious of the fact that a certain amount of backsliding has been going on. That showed itself in the support offered to home insulation and in the clash between Ministers in the Department of Energy and Climate Change when the Secretary of State was effectively forced to correct the position adopted by a junior Minister on the issue of wind farms.
Of course, on the issue of aviation, we are all too aware of dither and delay. We all know that the most significant issue of all facing the Government is the future of airports in the south-east and how they are meant to cope with the demand predictions of the future. This issue—I refer in particular to the graphic case of London Heathrow—has been kicked into the long grass of a post-election report. Sir Howard Davies is not to produce his analysis of what needs to be done until after the next general election.
The Bill had its origins under the previous Administration and under that Administration it was clearly indicated that there would be significant concern about aviation as regards the environment and that the Bill would set out to make provisions to meet the necessary responsibilities. We were to expect clarity in the Bill, yet we seem to have the same evasion in the Bill as we have seen with regard to other crucial areas of policy.
Lord Trefgarne
My Lords, my noble friend has moved Amendment 1 and the noble Lord, Lord Davies, has moved Amendment 2. Amendment 2 may have some merit to it but I am having some difficulty in connecting his speech to the amendment.
Lord Davies of Oldham
My Lords, I was coming to that. The noble Lord has anticipated my very next sentence. It was necessary to identify the context because that explains why, on a consensual Bill, on which we have sought to work with the Government to improve the Bill and on which we recognise the efforts of the Government represented in Amendment 1, there is still a crucial area of difference. The government amendment is expressed in terms of the desirability of each holder of a licence. Power does not seek to emphasise desirability; power seeks to define will: what the Government want to see happen, not what they would like to see happen, as if in some way they can rely on a general response of good will. Of course, in many areas they can, but this is an area of crucial aviation policy with regard to airports. Our amendment to the government amendment says that, in place of a fairly wishy-washy concept of desiring that things should happen, there should be an obligation.
That issue is clear enough, and important enough, for us to press this issue despite the good will of the Minister and the efforts to respond. The response is too mealy-mouthed to achieve the objectives that this Bill should achieve with regard to the protection and improvement of the environment. It will become clear during the proceedings today that on many aspects of the Bill we agree with a great deal of what the Government are doing. However, in this area, the government amendment does not stand the test. That is why I have tabled this amendment. I beg to move.
Earl Cathcart
My Lords, I am by and large happy with the government amendments in this group and will talk particularly to Amendments 1 and 7. The wording is not precisely what we asked for, but my noble friend Lord Attlee has clearly listened to the arguments expressed in Committee, on all sides, and has gone a long way to addressing these concerns.
I will say something on Amendments 2 and 8 in the name of the noble Lord, Lord Davies. I share his concern that “desirability” is rather limp—I think the noble Lord used the word “wishy-washy”. I would much rather have seen the word “duty” in there, as I feel we all have a duty to the environment in whatever we do and the aviation industry should be no exception. I would like to have seen the licence holder having a duty, using the words of the government amendment,
“to take reasonable measures to reduce, control or mitigate the adverse environmental effects of the airport”.
However, that is not where we are. The Government have used the word “desirability” in their amendment, for the reason given by my noble friend Lord Attlee, and I do not suppose that they are inclined to accept any amendment to that.
Is the Government’s amendment fit for the purpose that we argued for in Committee? I believe that it is. Although there is no mention that the licence holder should have a duty to have regard to the impact of airports on local communities, which is something that I argued for in Committee, I believe that these amendments will deal with the impact of airports on the environment. Importantly, these amendments will provide the CAA with the flexibility it needs to allow regulated airports to invest in sensible measures to reduce the environmental impact of their operations, without fear of legal challenge from an airline, whose main preoccupation, in this regard, is simply to minimise airport charges. That was the kernel of the argument in Committee, and my noble friend Lord Attlee has addressed it. I welcome these government amendments as they stand, and I thank the Minister and his team for listening and responding.
The Earl of Caithness
My Lords, I apologise to the House for not being able to take part in the Committee stage of this Bill, although I have read with interest what was said. I congratulate my noble friend on bringing forward these amendments. They have gone a very long way towards meeting the concerns raised.
The noble Lord, Lord Davies of Oldham, understands this House, and I am sure that he will make representations to his party that it is really against the good will of the House to put down nothing but starred amendments from the Opposition. He was a workhorse of the previous Government and I know that he appreciated, as did the House, that amendments put down in good time lead to a better debate than those put down at the last minute. I exonerate him totally in this matter—I do not think that it is his fault. I believe that he has been overruled on this and I am sure that if he had had his way, he would have put the amendments down at an earlier stage.
With regard to the arguments on Amendment 2, the noble Lord rather lost me, as he was not as succinct as usual in putting forward his case. From what I managed to understand, I believe that he does have a point—this was echoed by my noble friend Lord Cathcart—in that we need to make the wording a little stronger. Will my noble friend Lord Attlee look at that again?
The Countess of Mar
My Lords, I support the noble Lord, Lord Davies. I have never found “desirability” in legislation before and I have been here quite a long time. I find it rather strange. It does not fit with the beginnings of the three preceding paragraphs in this clause, which all talk about “the need to promote” or “the need to secure”, and I believe that we should keep the phraseology in line with what is already in the Bill. Therefore the noble Lord, Lord Davies, has my support.
Lord Rotherwick
My Lords, I support the Minister in his amendments. Although one might be seduced into agreeing with the amendments of the noble Lord, Lord Davies, there is a balance to be found here. It is interesting to note what has happened when past Governments have overregulated, or put in place harsher regulation than their competitors. One has only to look to the agricultural sector to see what happened to our pig industry and our veal industry: they went abroad. We are not doing our environment any favours. The carbon footprint will just move from our shores to our competitors.
Baroness McIntosh of Hudnall
My Lords, I add my gratitude to that expressed by various Members of this House for the movement that the noble Earl has made in respect of environmental regulation. But I want to pick up the point that was made by the noble Earl, Lord Cathcart, who focused on the word “duty”. My recollection of what the noble Earl said when moving his amendment was that he used the word “duty” in relation to what he anticipated would be the effect of the amendment. Can he either correct me in the impression that I have formed, or when he comes to sum up, explain how the desirability of these environmental matters can actually be enforced by the regulator? To those of us who do not have direct experience of how regulation actually operates, this feels like warm words with not quite enough behind them. I say that without wishing in any way to undervalue the contribution that the Minister has made in going as far as he has.
The Lord Bishop of Chester
My Lords, in this House I intermittently find that the words of St Augustine come to my mind: “Lord, make me chaste, but not yet”. This is such an occasion and the use of “desirability” raised my interest, as it did of the noble Baroness when she saw it. When the Minister responds to the debate, I would like him to give us one or two examples of what these words might mean. What are,
“reasonable measures to reduce, control or mitigate the adverse environmental effects”,
when aeroplanes have a major adverse effect simply by being aeroplanes? It would be helpful to know just what obligation is meant, whether it be desirability, a duty or whatever, because I am rather unclear what impact any of these statements will have.
Lord Trefgarne
My Lords, like most noble Lords I think that the amendment moved by my noble friend has gone a long way to meet the concerns that were expressed at the earlier stage of this Bill. However, when the noble Lord, Lord Davies, eventually got to the purport of his amendment it, too, had some merit and I hope that my noble friend will feel able to consider it. Taken together, the two amendments represent a measurable improvement to the Bill and I hope that they can be agreed to.
Lord Soley
I, too, recognise and understand that the Minister has tried to meet concerns. In a way, the noble Countess, Lady Mar, put her finger on the point here: throughout most of Clause 1(3), “need” is used, so to introduce “desirability”, as the right reverend Prelate also indicated, makes its meaning unclear. I have one simple question for the Minister. What impact in law does it have to put in a clause which uses “desirability”? I am not sure that in law it would have any meaning.
Earl Attlee
My Lords, I thank the noble Lord, Lord Davies of Oldham, for his measured and eloquent explanation of the purpose and effect of his amendments in this group. The noble Lord touched on London airports and I am grateful for his wise decision to adhere to the subject of the Bill in his various amendments and resist the temptation to table an amendment about Heathrow airport. However, I have some difficulty with his amendments.
I urge noble Lords to consider the merits of the amendments that the Government have tabled to address the specific concern of the impact of the airport economic regulatory regime on the environment. Amendments 2 and 8 seek to amend the Government’s amendments, which themselves add an environmental supplementary duty for the CAA and the Secretary of State in respect of their airport economic regulatory functions. The Government have broadly proposed a duty such that the CAA and the Secretary of State have regard to,
“the desirability of each holder of a licence … being able to take reasonable measures to reduce, control or mitigate the adverse environmental effects”.
In answer to the noble Lord, Lord Soley, if he reads my initial comments I think it will answer the question that he was posing. If it does not and there is more I can add, I will obviously write to noble Lords but I am confident in my position.
The amendments in the name of the noble Lord, Lord Davies of Oldham, seek to change the wording slightly so that the CAA and the Secretary of State must have regard to the “need to secure that” a licence holder is,
“able to take reasonable measures to reduce, control or mitigate the adverse environmental effects”.
I am grateful to the noble Lords for tabling these amendments as it provides the opportunity to acknowledge the importance of allowing appropriate investment at airports to mitigate their environmental impacts and those of activities associated with them, where to do so furthers the interests of passengers and freight owners in the provision of airport operation services.
It is crucial that airport operators, whether or not they are subject to economic regulation, should be able to invest in appropriate environmental measures. This is, without doubt, something this Government support. There was a concern frequently raised in the House of Commons, as well as in Grand Committee. However, it is crucial that obligations should not be put on some airports but not on others, depending on their economic regulatory status. Our position is that a licensed airport operator should not be unable to recover through the regulatory settlement costs arising from undertaking environmental investment where an unregulated competitive airport would choose to incur similar costs for similar purposes. After all, the overall aim of economic regulation is often cited as delivering the outcomes that would occur in a competitive market.
Therefore, it is my belief that environmental investment that is in passengers’ interests in the provision of airport operation services should be capable of being included in an airports regulatory settlement. In answer to the detailed question asked by the right reverend Prelate the Bishop of Chester, I would prefer to write to him, but I suspect that my answer will hinge on the point that this part of the Bill is concerned with the regulation of airports, not of airlines and aircraft. If noble Lords want to check up, they should carefully read my letter. In answer to the question asked by the noble Baroness, Lady McIntosh of Hudnall, we believe that the government amendments are clear. I hope that noble Lords will agree that Amendment 1 goes to the heart of their concerns and that these further changes are unnecessary. I therefore hope that the noble Lord, Lord Davies of Oldham, will be willing to withdraw his amendment.
Lord Davies of Oldham
My Lords, I apologise to the House if I was rather long-winded in the introduction, but as I was slow to start, I therefore hope to be succinct to finish. The debate has clarified, even if I did not succeed in doing so, exactly the issue at stake. Let me make it absolutely clear that we are not asking for the CAA, as an economic regulator, to have any other powers that other economic regulators, such as Ofwat or Ofgas, enjoy. We are merely pressing the Government to show proper concern for the environment. I praised the Minister for the extent to which he has moved down that path, but I am as dissatisfied as other Members of the House with the word desirability because, in legislative terms, that does not look like an expression of the will to get things done. There is no point in enjoining the CAA to do things, encouraging it to do so or hoping that it will; it is a serious body with serious functions to carry out, and it will do what is established in statute for it to do. We need to be precise about—
Earl Attlee
The noble Lord, Lord Davies of Oldham, is very insistent and persuasive. He is clearly convinced that his amendments will improve the Bill. My Bill team manager will probably kill me, but I can accept Amendment 2 and Amendment 8, which is consequential on Amendment 2. Both these amendments amend Amendment 1, but I would like to make it clear that only Amendment 8 is consequential.
Baroness Worthington
“( ) the need to work with NATS, the Secretary of State, the Committee on Climate Change and air transport service providers towards meeting the United Kingdom’s greenhouse gas emission reduction obligations as set out in the UK’s Carbon Budget, including the UK’s share of international aviation emissions,”
Baroness Worthington
My Lords, I praise the Government for listening and taking on board the very serious concerns we have about integrating environmental concerns into the work of the CAA. This part of the Bill relates to the regulated airports, but this amendment addresses a specific aspect of environmental legislation and regulation, which is working towards meeting legally binding carbon budgets. It inserts a new clause that requires the CAA to have regard to the need to work with air traffic control, the Secretary of State, the Committee on Climate Change and airport transport providers to help to meet the UK’s greenhouse gas reduction obligations.
We single out this issue of greenhouse gas reductions because, as noble Lords will be aware, aviation has an odd status within the Climate Change Act—domestic emissions are in, international emissions are not. We know that the Government are under some pressure to clarify the situation and that they have, under the terms of the Act, until the end of this year to make a decision on whether to put international aviation into the budgets.
A specific clause making reference to greenhouse gas targets is necessary to demonstrate that we do not see the addressing of climate change as simply an add-on—a desirable thing—but as something that is essential. It is fundamental to the future of this industry and sector. The amendment outlines how we would want the CAA to work in the future, under the regime of the carbon budgets, and who it should work with. We hope that this will be a useful additional part of the Bill, to clarify that greenhouse gases are a huge issue. The three regulated airports are significant sources of greenhouse gases as are the airlines and the transport service operators which operate out of them.
This is an important issue. Aviation currently occupies an odd, different place in our climate change legislation. I hope the Government grasp this opportunity to make it absolutely clear that this sector will play its full part in helping us reach our climate change targets. I beg to move.
Lord Clinton-Davis
I find it quite astonishing that, as far as I know, the Bill makes no mention of greenhouse gas emissions. It is vital that an industry which is often attacked for not having sufficient regard to environmental considerations should not be so exposed, and including the amendment would have that effect. The Minister has been very generous so far. Will he continue that generosity?
The Earl of Caithness
My Lords, I am not certain that I agree with the noble Baroness’s argument that the amendment should be in this part of the Bill. Although I understand exactly the valid point she is making, the amendment sits pretty awkwardly with the rest of this part of the Bill, in Chapter 1, which we are discussing. It does not make good law suddenly to put in a clause like this which is so out of place.
My other concern—and here I admit that, because of the short notice of these amendments, I have not done the amount of work that I would like to have done; that is one of the many disadvantages of the behaviour of tabling amendments late—is that the proposal restricts who the CAA has to talk to. It has to talk to NATS, the Secretary of State, the Committee on Climate Change and air transport service providers. I wonder whether there are others who the CAA should talk to. If it is written down in law that these are the people, it does not have to talk to the other groups.
Although I understand the noble Baroness’s point, this is the wrong place for an amendment of this type. However, the principle behind it is surely right. It might be better if one discussed this and looked at a way of getting it into the Bill in another format and another place.
Earl Attlee
My Lords, I am grateful to the noble Baroness for her explanation of this amendment, which we debated at length in Grand Committee and in the other place—although there is no reason why we should not look at it in detail again. The noble Lord, Lord Clinton-Davis, remarked that the Bill does not cover greenhouse gases, which, of course, is right. However, the reason is that that is not in the Long Title and that the main function of this part of the Bill is regulation of the airports. It does not deal directly with the problem of greenhouse gas emissions, but that does not devalue the importance of the issue.
I cannot accept this amendment for two reasons. Let me try to explain why. First, the amendment is unnecessary. Both the Government and the CAA already take environmental matters very seriously and the Government’s approach is to ensure that the aviation sector makes a significant and cost-effective contribution towards reducing global emissions. The emphasis therefore is on global action as the best means of securing this objective, with action at European level after this and action at national level where it is appropriate and justified in terms of benefits and costs.
The noble Baroness set out her view of the operation of the Climate Change Act, which requires the Government to set out the circumstances and extent to which emissions from international aviation should be included in domestic greenhouse gas emissions targets before the end of 2012, or explain to Parliament why they have not done so. In April this year, the Committee on Climate Change advised that aviation emissions should indeed be included. The Government are considering this advice, along with other available evidence, and will make a decision as soon as this process has been completed. In the aviation policy framework consultation document the Government recognised that if airport capacity is allowed to grow, the aviation industry must continue to tackle its noise impact. The Government consulted on an objective to limit and, where possible, reduce the number of people in the UK significantly affected by aircraft noise.
The consultation document sought views on a variety of proposals to incentivise noise reduction and mitigation, encourage better engagement between airports and local communities and ensure greater transparency to facilitate an informed debate. These included more realistic noise limits linked to penalties which incentivise noise reduction and reflect the severity of noise disturbance, complemented by more independent monitoring and enforcement; effective use of non-regulatory instruments, such as differential landing fees; the development of noise envelopes around airports to incentivise noise reduction and share the benefits of technological improvements; and further use of noise abatement operational procedures. The consultation closed on 31 October and the final aviation policy framework is due to be adopted by March 2013. It will be informed by this extensive consultation.
Not only is Amendment 3 unnecessary, I fear that it is also technically flawed. Although I appreciate the noble Baroness’s aim that the listed parties should work together with the CAA towards meeting the UK’s greenhouse gas emissions targets, Part 1 is not the right vehicle to address her underlying aim. As your Lordships will be aware—I think that the noble Baroness recognises this—Part 1 deals with the economic regulation of our major airports and the CAA has various functions under this part applicable to this objective. My noble friend Lord Caithness queried whether the noble Baroness has placed her amendment in the correct part of the Bill.
The CAA’s general duties in Clause 1 govern how the CAA should go about carrying out these functions. As noble Lords are doubtless well aware, these duties are focused on furthering passengers’ and cargo owners’ interests in the provision of airport operation services at the airport. Against that background, it does not seem clear to me how the CAA would usefully go about using these airport economic regulation functions to work with NATS and others to meet the UK’s greenhouse gas emissions targets.
If there was a need for such a duty—I hope that I have persuaded noble Lords that there is not—it would be neither sensible nor fair to apply it to the regulation of just these three airports, particularly as the majority of the aviation sector’s contribution to greenhouse gas emissions does not come directly from the activity of the airport operators but from the activity of airlines, which this part does not have a remit over.
I hope I have convinced the noble Baroness that this amendment is unnecessary; and if not, I hope she appreciates the flaws that I have highlighted. If that is the case, I hope she will be willing to withdraw her amendment.
Baroness Worthington
My Lords, I thank the Minister for his considered response. There is a great sense that there is something lacking in the Bill as a whole—that climate change and greenhouse gas in particular are largely absent. Given everything that we know about climate change and the urgency of the problem, that is a failing of the Bill as it stands. However, I have listened to the arguments that this is perhaps not the right place to make this amendment. I urge the Government to listen to my noble friend’s comments that perhaps there is still time for the Government to put climate change at the heart of policy-making and to bring forward another amendment to do that in the general duties part of the Bill.
Earl Attlee
Unfortunately, I can make no undertaking to come back on this at a later stage in the Bill.
Earl Attlee
“(5A) For the purposes of subsection (3)(ca) the environmental effects of the airport, associated facilities and aircraft include—
(a) substances, energy, noise, vibration or waste, including emissions, discharges and other releases into the environment,(b) visual or other disturbance to the public,(c) effects from works carried out at the airport or the associated facilities or to extend the airport or the associated facilities, and (d) effects from services provided at the airport or the associated facilities.”
Lord Stephen
“CAA’s economic duty
(1) The CAA, in carrying out its functions, must have regard to the economic and social impact of services, provided by airport operators and users of airport facilities, on the UK as a whole.
(2) In performing its functions under subsection (1) the CAA must evaluate any changes to regulations governing airport operators and prepare a report for the Secretary of State.”
Lord Stephen
This amendment is about the very important economic and social impact of air services. It is a very live and current issue. By way of background, I should explain that Nestrans, the North East of Scotland Transport Partnership, and Hitrans, the Highlands and Islands Transport Partnership, met at the end of September with the CAA to discuss these issues. They have been lobbying on this issue along with Northern Ireland. Part of the reason for their lobbying is that air links are absolutely vital to business and economic growth in these regions. It is worth mentioning that a rail journey from here to Inverness takes around eight hours and from Aberdeen to London it is more than seven hours. There are others better qualified than me to explain the journey time from Northern Ireland.
In the discussion at the end of September, these bodies requested that the CAA’s remit be extended from just reviewing consumer interest and the concept of “all passengers”, which gets mentioned a lot by the CAA—all passengers carrying equal value—to one of a more balanced approach that recognises a broader range of issues, including economic impact, social cohesion, and the EU policy of reducing peripherality. Separately—and this is not part of the amendment—they are also anxious to explore what the Department for Transport could do in terms of the use of PSOs and PSO protection for vital regional routes to the London hub, to prevent them being substituted by even more profitable long-haul services. This already happens extensively across Europe, but it is not something that the Department for Transport has gone with, despite its powers. When I was Transport Minister in Scotland, I was well aware of the extensive network of PSOs inside Scotland, but there are none from Scotland to London—and, indeed, introducing such a PSO would no doubt not be without controversy outside Scotland, in other parts of the UK.
That is the background. It is topical and live because, on the same day, the CAA released a letter to the chief executive of the Chamber of Commerce in Aberdeen & Grampian, Bob Collier. It says:
“In March 2011, Flybe complained to the CAA that Gatwick’s charging structure”—
this is not to do with slots; it is to do with the charging structure—
“unreasonably discriminated against operators of small aircraft at the airport in favour of larger aircraft on long-haul routes. We have now issued our provisional decision following our investigation. We have provisionally concluded that Gatwick airport’s objective of increasing the efficient use of its single runway justified the changes to its charging structure. We recognise that some passengers are likely to be harmed by Gatwick’s changes but our provisional conclusion was that any such adverse effects would be balanced by benefits to other passengers. We do not have legal powers to ensure that an airport’s charging structure supports wider goals such as regional policy, which was the main concern of your letter”.
As a consequence of that decision, just a few weeks ago Flybe withdrew the Aberdeen to London Gatwick route. That is on top of the loss of the Inverness to Heathrow route in 2008. These are real pressures with real consequences. The impact on regional economic growth is very important for us as a nation. For example, the oil and gas industry—the energy industry—that is centred on Aberdeen employs 40,000 people in Aberdeen and the north-east of Scotland directly, another 80,000 across Scotland and an estimated 400,000 across the UK, all focused on that energy industry that has its centre, heart and headquarters in Aberdeen. There is, therefore, a real multiplier effect if we can get regional growth happening. The oil and gas business has been one of the very few drivers of economic growth over the past couple of years. I am disappointed that more sectors have not delivered the same success and growth.
The CAA and its “all passengers” remit is the focus of this amendment. It seems to me, although I will be happy to be corrected by the Minister, that no distinction is made between a planeload of tourists going to Spain and a planeload with the same or a slightly smaller number of business people going overseas to win business. There is a reasonable argument that there could and should be such a distinction. An environmental remit is rightly being introduced in the Bill, so why should there not also be an economic and social dimension framed and shaped to reflect government policy? I believe that that remit could be included in the Bill. Let us give the CAA the legal powers to do more to support the UK economy. If that is what Ministers wish and if this amendment also stimulates discussion on the use of PSOs and a more proactive regional policy, perhaps in support of the approach suggested in the recently published report of the noble Lord, Lord Heseltine, then in my view so much the better because we have a problem right here, right now and action is needed on this issue now. I beg to move.
Lord Soley
I am very sympathetic to the comments of the noble Lord, Lord Stephen. Indeed, I have said on many occasions that the problem we have with the lack of expansion in the south-east is mainly the impact on the regions of the United Kingdom. The three cities most at risk from lack of expansion in the south-east are Belfast, Aberdeen and Inverness. They are the most squeezed. I am sure the Minister will say that this is not the place for an amendment of this nature. He is already nodding. I am not surprised as I think that that is a fair analysis of the structure of the Bill. However, the noble Lord, Lord Stephen, has given us an important opportunity, which we should not duck, to recognise that the regions of the United Kingdom need access to the global market and do not have sufficient access at the moment. I have named three of the cities, but I could go on to mention Bristol, Exeter or Cardiff in the west. A number of them are hit by this problem. He and probably a lot of the country will be relieved that I do not intend to wax lyrical about the need to expand Heathrow or an alternative but, believe me, we need that report from Howard Davies very rapidly. We are in serious trouble.
Lord Empey
My Lords, it will come as no surprise that I am sympathetic to the amendment in the name of the noble Lord, Lord Stephen, albeit that I accept that it may not be in the right place today, as the noble Lord, Lord Soley, said. However, it chimes with what I have been trying to do over the past 18 months. As I said earlier to the noble Earl and the noble Lord, Lord Davies of Oldham, we will have the pleasure, on the graveyard shift on Friday afternoon, of discussing my Private Member’s Bill, the Airports (Amendment) Bill, which is designed to deal with this issue, but in a different way.
Things in my region are fine right now—there are 10 or 11 flights a day to Heathrow—but the airline sector is very volatile. Already, Mr O’Leary of Ryanair is trying to buy out Aer Lingus, while Etihad has taken a small stake and is looking to increase it; they are not known for their interest in the regions. The point made by the noble Lord, Lord Soley, is that there is a key economic driver here. I have spent quite a lot of time over the years in politics and economic development. One thing is absolutely clear: if you cannot get businesspeople quickly to and from a region, the opportunities to develop economically are severely restricted. People will not go all round the countryside for hours, waiting to get flights. They need to come to a hub and get quickly to a region. Any other route is just a huge obstacle in their way. That is just common sense.
I have attempted to deal with this at two levels, both within the UK and at a European level, because there is a major European component to this. I know that I will have the opportunity to share this with the noble Earl on Friday, but a major piece of work has been undertaken in Europe; by sheer coincidence, it happens to be working in parallel on reviewing its whole slot activity and related matters. I am pleased that the European Parliament, because it accepts the Europe of the regions, understands and is sympathetic to a lot of these issues. We are gradually moving in a positive direction in Europe, to the extent that the Government will not ultimately be in the position of saying, “Well, we may be sympathetic to what you need, but we cannot do it because it is against European law, and we will have to get that law changed in parallel”.
As the noble Lord, Lord Soley, said, in quoting the letter from the Minister, the connectivity issue is at the core of regional development policy and has been for donkey’s years. That is why we have regional policy in the UK. For years, Europe has been putting large amounts of money into the regions, to improve their connectivity and their infrastructure. There is not much point in doing that if we cannot then fly from a region to a major hub; all the investment is wasted. At least in Scotland, and to some extent in the south-west, there are alternatives, albeit slow ones—that is, road or rail. In our part of the country, we do not have the luxury of that option. In practice, it is basically air or nothing. That is the dilemma that we are faced with. So while I have a lot of sympathy with what the noble Lord, Lord Stephen, is trying to do, I suspect that he will probably suffer a technical knockout this afternoon. Nevertheless, his heart and his aspirations are in the right place and I hope that the sentiments expressed in the Minister’s letter will be followed up positively.
Lord Rosser
My Lords, this amendment is fairly wide-ranging in calling for the CAA to,
“have regard to the economic and social impact of services, provided by airport operators and users of airport facilities, on the UK as a whole”.
In moving his amendment, the noble Lord, Lord Stephen, referred in particular to services between London and Aberdeen. That is presumably the issue that has primarily prompted this amendment. We are aware of the concerns about the present arrangements for determining slots and charges at airports and about the operation of routes in such a way that cities such as Aberdeen may lose out, which would not be to the economic advantage of the UK either, bearing in mind the importance of Aberdeen and north-east Scotland in the global oil and gas market.
Reference has already been made to the letter from the Minister in which he expressed some sympathy with the concerns that have been raised. However, he went on to say that he did not think that this Bill was the appropriate vehicle to address them. Interestingly, he also said that he did not believe that air services between London and Aberdeen were under threat since it was a commercially attractive route for airlines. I will not go through the other points made in the Minister’s recent letter. However, as he said that he had some sympathy with the concerns raised, I am sure that he will want to put on the public record through his response to this debate what action the Government feel should be taken by others and by them to address the issue that has been drawn to the attention of your Lordships’ House through the amendment.
Earl Attlee
My Lords, I thank my noble friend Lord Stephen for tabling the amendment, which provides us with an opportunity to discuss the deeply important issue of regional connectivity. I certainly have sympathy for the underlying issues, and I hope that I will not have to deal a “technical knockout” to my noble friend. He mentioned rail journey times. I hope that he will join me, the noble Lord, Lord Adonis, and, I suspect, most of the opposition Front Bench in supporting HS2 when we come to debate it.
The amendment would impose wide and unclear obligations on the CAA, as the noble Lord, Lord Rosser, observed. It could be construed as requiring the CAA, when performing any of its regulatory functions, to take into account the economic and social impact not only of the services provided by UK airports but of the people who use them on the entire UK. However, the duties in Clause 1 of the Bill relate only to the CAA’s economic regulation functions. While the intention of the amendment is not clear, I am aware of my noble friend Lord Stephen’s particular concern over connectivity between Aberdeen and Heathrow. The noble Lord, Lord Soley, suggested that this was not the place for this matter. Fortunately, in your Lordships’ House we have great flexibility to discuss whatever we want. I always find the noble Lord’s contributions very illuminating and I am very happy to debate the issue.
The issue of regional connectivity was raised previously in Grand Committee with specific reference to connectivity between Belfast and Heathrow airports. My noble friend referred to the economic activity around Aberdeen, with the oil and gas industry. When I was on holiday in the area, I was definitely aware of that activity. On the issue of connectivity, I will take the opportunity to commend the work of the noble Lord, Lord Empey, who has been extremely active and effective both in Westminster and Brussels on this issue. As the noble Lord observed, he will be promoting his Private Member’s Bill this Friday, and I am sure that he will succeed in breathing life into the Chamber on Friday afternoon.
Noble Lords will be aware that the primary objective of the Bill is to reform the framework for airport economic regulation. However, the amendment appears to apply to all the CAA’s functions, including safety and the enforcement of European consumer protection law. I am sure that that is not my noble friend’s exact intention. For many functions, such as safety, it is not appropriate for the CAA to have regard to economic and social impacts because the safety of an aircraft is of paramount importance. Furthermore, the CAA has well established duties set out in Section 4 of the Civil Aviation Act 1982. These duties are disapplied for some of the CAA’s functions, such as airport economic regulation, where the CAA has alternative duties as set out in Clause 1 of the Bill. It is unclear how the duty contained in the amendment would interact with existing duties. Which set of duties should the CAA prioritise?
Despite these concerns, the duty in the amendment appears to be most relevant to the CAA’s airport economic regulation functions. However, I fear that the amendment would not have the desired effect of improving regional connectivity. Airport economic regulation concerns the regulation of the services provided at an airport by the airport operator, as well as the regulation of the landing fees that the airport operator charges to airlines. The noble Lord made a point about landing fees and I will write to him about that. Airport economic regulation is not concerned with the allocation and regulation of landing slots, which are governed by EU law, and an airport operator does not have control over where airlines fly to. Consequently, this Bill is not the right vehicle to address my noble friend’s concerns. In the UK, airlines operate in a commercial market environment and thus it is for an airline to determine what services it operates between Aberdeen and Heathrow, doing so based on its own assessment of the commercial viability of the route. These are not matters for economic regulation. Therefore, seeking to impose a duty like the one in this amendment will not influence which routes airlines decide to operate.
Lord Soley
I understand that and the Minister is right, but I wonder if he could be absolutely clear. This problem would not be a problem if we had expansion at a hub airport in the south-east, wherever it was.
Earl Attlee
Yes, my Lords, I agree with the noble Lord’s analysis. Heathrow is one of the few airports running at 98% capacity, so we have a specific problem that is probably not copied around Europe in exactly the same way.
It would be for the applicant to seek their own legal advice on the compatibility of any PSO proposals with EU law. If approved, the PSO would permit the ring-fencing of slots at a relevant London airport. Another difficulty is that, by introducing the amendment, the Bill would run counter to the Government’s policy on economic regulation as set out in their Principles for Economic Regulation. These state that the role of economic regulators should be concentrated on protecting the interests of end users and not society as a whole.
Finally, in light of existing traffic levels, there is no reason to believe that the connectivity between Aberdeen and Heathrow is under threat. Additionally, BA CityFlyer operates three daily return flights to London City Airport, and easyJet operates services to Gatwick and Luton airports, although—before the noble Lord, Lord Soley, jumps up—I recognise that people want to go to Heathrow, because it is a hub airport. Recent reports also suggested that Virgin Atlantic was considering starting an Aberdeen-Heathrow service from next March. I hope that my response has given my noble friend the reassurance that he seeks and, if so, that he will consider withdrawing his amendment.
Lord Stephen
I thank the Minister for that detailed and technical explanation. I understand the points that he made. Of course, it is easy to talk about commercial decisions taken by the airlines, but these are taken in a heavily regulated environment, and both Heathrow and Gatwick, in particular, as hub airports, are heavily regulated. It is important to consider all the consequences of the regulatory framework. Some of those consequences are unintended or are worthy of further exploration of the kind that we have given today. We should try to encourage regional economic growth, which will consequently be very important for the future of the UK economy, and I welcome the Minister’s supportive comments.
Obviously, I think that this is a good proposal, which should be supported. However, the argument that the routes between Aberdeen and Heathrow are vibrant is a well made one. For example, 54% of passengers from Aberdeen to Heathrow are business passengers, which is double the percentage from Edinburgh and Glasgow airports; and 23% of Scottish traffic to Heathrow comes from Aberdeen airport despite only 9% or 10% of the Scottish population being served by that airport. So the driver for growth in the success of the energy industry is clear. However, despite that, we have lost a Flybe route to Gatwick. There are important issues here that need to be carefully monitored, with action taken when necessary.
If the Minister was willing to meet to move these issues forward—to explore and find ways of bringing forward a better solution—I would welcome that. Something has to be done and there may be another technical way in which we can achieve it. My simple plea would be, “Let’s do it”. Whether it is to be achieved through the Bill of the noble Lord, Lord Empey, through government exhortation, encouragement or direction of the CAA, or through primary or secondary legislation, let us find a way. This is a serious and important issue and we need to see change. On that note, I beg leave to withdraw the amendment.
Lord Rotherwick
Lord Rotherwick
My Lords, I shall speak also to Amendment 10 and to Amendment 11, which seeks to add a new clause after Clause 2. Together these three amendments cover the first point of principle that I wish to address at this stage of the Bill. I have given notice to the Government that I wish to decouple my Amendments 23, 26, 28 and 29, to which I intend to speak later.
First, I again declare my interest as an aircraft owner and pilot. Secondly, I declare an interest as a director of the Light Aircraft Association, the UK body which serves the interests of sports and recreational powered flying in the UK, and as vice-president of the General Aviation Alliance, a body that was formed to co-ordinate the regulatory interests of various UK aviation associations representing pilots, aircraft owners and operators in the general and business aviation—GBA—sector.
I am sorry that I have to return to this important subject at this stage of the Bill. I am grateful to my noble friend the Minister for his time and attention since the Bill was considered in Committee, but I have to say to the House that I am not fully persuaded that the Government have entirely grasped the point that I and the vast community of the GBA pilots, owners and operators are trying to make. I shall be moving three groups of amendments today, all of which address aspects of the Bill and its implications which are of vital concern to the GBA community.
Let me preface my more detailed points in respect of those amendments by saying that this Bill is not what we had hoped for. It is a missed opportunity and it is regrettable. The opportunity to reconsider by way of legislation the strategic and regulatory approach to civil aviation, and the GBA sector in particular, has not arisen for decades. The way has been prepared. There have been reviews and reports and the role and functions of the Secretary of State and the CAA have been examined in depth. All of that work seems destined to gather dust. Is that too harsh a criticism? The legislative opportunity will not arise again for many years, I suspect, and this Bill does not provide the scope for the changes that the GBA sector feels is necessary. The CAA initiatives that led to the strategic and regulatory reviews of 2006 demonstrate that the CAA and the Department of Transport have made progress in their relations with the GBA sector. Those reviews were very much a consultation exercise. But listening is one thing; acting is entirely another.
I shall not detain the House with a summary of those reviews and reports, many of which were touched on in Grand Committee. However, I would mention just one which has only recently been published, the European General Aviation Safety Strategy. That was prepared by a group appointed to consider a request from the European Aviation Safety Agency—EASA—management board in March 2012 to produce a summary of proposed principles and guidelines to inform the future regulation of general aviation—or general and business aviation as we term it—in Europe. In meeting its remit, that group encountered exactly the same problems that I have with the Bill; namely, its restricted scope. That group, however, took a bold step and widened its view.
I commend to my noble friend this broader and bolder approach and I commend to him and to the House the report and its contents and conclusions. The European General Aviation Safety Strategy identifies key rationales that make it necessary and possible to adopt a specific new approach for GBA. The report concludes that this new approach is an urgent necessity in order to ensure a sustainable development for GBA in Europe and avert a dramatic loss of activity as a result of overregulation. The report affirms that GBA is essential to European excellence in aeronautics and contributes to the current strength of major European airlines and aircraft manufacturers. Yet, in this country, the comprehensive new framework that we had hoped for to replace the outdated Civil Aviation Act 1982 has not been presented to us.
I remind my noble friend of the resolution of the European Union Parliament, EC2008/2134, which I commended to him when my previous attempts to construct a suitable legislative basis for the promotion of GBA were found wanting. This resolution calls upon member states to adopt policies promoting growth and sustainability in GBA. My noble friend assured me—at col. GC 143 of Hansard of 27 June 2012—that he would ask for briefing on the resolution. I look forward to him informing the House how it is that the Government intend to respond to that resolution. Has my noble friend been able to hold discussions with the new Minister of State which he gave an undertaking to do at the Committee stage?
My first point of principle is that GBA comprises 96% of UK aviation. My noble friend recognised in Committee the economic and wider importance of the sector. The European report confirms its importance, yet this Bill ignores GBA. It goes no further than the economic regulation of major airports and placing new duties on the CAA in respect of airline passengers and owners of air cargo. Who then is to promote and to protect the interests of GBA? Who will demonstrate to Europe that the UK is open for aviation business in all its forms?
Lord Davies of Oldham
My Lords, the noble Lord, Lord Rotherwick, is nothing if not persistent in his position with regard to GBA. We of course listened very carefully to what he had to say in Committee. I must say that it is an interesting situation where the Minister is not prepared to countenance amendments which would have given the responsibility to the CAA, but he will accept amendments that would take it a notch higher to the Secretary of State. I imagine that the Minister will have a rejoinder to that.
It would help the House if we were given a perspective on the dimensions of GBA and its impact on airports. The only figure that we have had quoted this afternoon in terms of capacity was when the Minister adumbrated that Heathrow is very close to 98% or 99% capacity, a figure that chills all of us when we think about the demands on the airport. I do not know what percentage of that is GBA and I would be grateful if the Minister, when he discusses this, would give us some perspective on this issue.
Earl Attlee
My Lords, I thank my noble friend Lord Rotherwick for tabling these amendments and I admire his dedication to general aviation. General and business aviation are both important parts of the broader aviation industry. My noble friend is entirely free to regroup his amendments, but I have to apologise to the House if I do not quite manage to match my remarks to his amendments, although I am confident that, taken together, my remarks will cover most of my noble friend’s points.
I understand that the intention of my noble friend is to provide for a general and business aviation champion at the Department for Transport. However, having carefully considered the impact of these amendments, I cannot accept them as I do not believe that they deliver this intention.
As your Lordships are aware, the clear focus of Chapter 1 is on the economic regulation of a few major airports, presently Heathrow, Gatwick and Stansted. At these large international airports there is very little general and business aviation activity. The noble Lord, Lord Davies of Oldham, asked me for some numbers so it may be helpful to illustrate this with data from the Civil Aviation Authority. In June of this year, general aviation represented less than 1% of total aircraft movements at Heathrow; at Gatwick, less than 2%; Stansted had more, at 8%. The overwhelming majority of flights from these three airports are commercial air transport. Furthermore, when we consider the relatively small number of people involved in a general aviation flight, as opposed to a commercial flight, the actual percentage in terms of people affected is far smaller.
That is not to say that general aviation should be ignored. I ask noble Lords to consider Clause 69, which defines “air transport service” as,
“a service for the carriage by air of passengers or cargo”.
Thus, business aviation, and indeed most flights with multiple occupants using a regulated airport, are already covered in the Bill. As such, there is no need to make a specific reference to general and business aviation.
Although I appreciate my noble friend’s desire to see the interests of general and business aviation represented, we must look at the broader picture. Heathrow is the busiest airport in Europe. Gatwick and Stansted together account for a third of aircraft movements in the whole of the London area. These are immensely busy airports. Realistically, we must prioritise the tens of thousands of commercial airliners landing at these airports every month. As your Lordships will appreciate, it has always been a clear policy aim of this Bill to put passengers and cargo owners first in the regulation of our major airports. The Bill delivers this through clear and concise duties, focused on passengers and owners of cargo, for both the Secretary of State and the CAA. The amendments proposed here would ultimately undermine this aim while, as I have demonstrated, delivering limited benefit to those it focuses on.
My noble friend Lord Rotherwick asked about EC resolution 2008/2134. The Government welcome the resolution and are broadly supportive. Moreover, in its present form the resolution represents a high-level direction of policy. We await concrete proposals from the Commission and are keen to see movement soon. At present the resolution is not legally binding and as a caveat I must add that many of its recommendations are not directly appropriate to the UK because the vast majority of our airfields are in private ownership, as I am sure my noble friend recognises. However, this is not the right vehicle to address these concerns.
My noble friend’s Amendment 6 concerns a change to the Secretary of State’s duties. I must point out that the Secretary of State has comparatively few functions in Part 1 of this Bill. As your Lordships are aware, this is very much a conscious decision of the Government to remove central government involvement from the regulatory process. The Secretary of State’s role is limited to just three distinct functions to which these duties apply: first, some of the Secretary of State’s regulation-making powers in Chapters 1 and 3 of the Bill; secondly, the issuing of guidance to the CAA which the CAA must have regard to; and finally, notifying the CAA of the international obligations of the United Kingdom.
I acknowledge the intent of Amendment 11 in obliging the preparation and publishing of a statement of policy, but the limited nature of the Secretary of State’s role means that requisite consultation before the exercise of certain powers should meet this point. A statutory requirement in this context would be disproportionate.
I am sure that if my noble friend had had more time he would have sought equivalent amendments to the CAA’s general duties. Clearly, amending the Secretary of State’s duties without making corresponding amendments to the CAA’s duties could create undesirable consequences; for example, there may be conflicts where the Secretary of State issues guidance to the CAA.
Regardless of whether or not the amendments achieve what my noble friend intends them to achieve, I reiterate the Government’s position that this is not the right vehicle to address my noble friend’s concerns. For all airports where demand is higher than capacity for finite take-off and landing slots, this is generally reflected in the landing fees charged. In a competitive market, an airport operator is likely to prefer to receive flights with large numbers of passengers over those with fewer passengers where this enhances its profits. This is a further policy reason not to pay special regard to general and business aviation.
However, the Government recognise the valuable contribution of the general and business aviation sector. The CAA’s Strategic Review of General Aviation in 2006 estimated its contribution to the UK economy at £1.4 billion per annum. I know that my noble friend is very concerned about the retention of small airfields. I recently fulfilled an undertaking to meet with my right honourable friend the Minister of State for Transport about this important issue, and I impressed upon him the need to ensure that at some point in the future we do not wake up and find that we have too few airfields and that they are difficult to replace.
The vast majority of general and business aviation activity takes place from small airfields across the country. Chapter 1 of this Bill will not regulate the activities of these aerodromes unless they become dominant, which we believe to be extremely unlikely. I value the intentions behind these amendments, but I believe that they are not the most appropriate method of expressing them. I therefore ask that my noble friend considers withdrawing his amendment.
Lord Rotherwick
My Lords, I thank my noble friend for fully addressing my amendments—obviously, nowhere near to my satisfaction. I also thank the noble Lord, Lord Davies, for his remarks and for recognising that I have taken this a “notch higher”—which would have been a better way for me to put it. I hope that my noble friend the Minister will consider addressing my concerns favourably in future legislation. Indeed, I shall remind him of this moment if we are so lucky as to see future legislation which will help us. I was interested that he acknowledged that general and business aviation is a user of dominant airports. It saddens me to think that there is nothing to protect GBA from being just the poor cousins.
Finally, I thank my noble friend for his sterling efforts in bringing my concerns to the attention of the Minister of State. I beg leave to withdraw the amendment.
Earl Attlee
“(ca) the desirability of each holder of a licence under this Chapter being able to take reasonable measures to reduce, control or mitigate the adverse environmental effects of the airport to which the licence relates, facilities used or intended to be used in connection with that airport (“associated facilities”) and aircraft using that airport,”
Lord Davies of Oldham
Earl Attlee
“( ) For the purposes of subsection (4)(ca) the environmental effects of the airport, associated facilities and aircraft include the effects mentioned in section 1(5A).”
Earl Attlee
Earl Attlee
My Lords, I shall speak also to Amendments 13 to 16, 20 to 22, 24 to 25, 27, 30 to 51, 59 and 65 to 66. I am grateful to the noble Lord, Lord Davies of Oldham, for agreeing to have one group of minor and technical amendments. I can assure your Lordships that all these amendments are all minor and technical. Their overarching purpose is to provide clarity to the existing drafting and to ensure that the drafting fully meets the policy intentions. The amendments are a result of detailed consideration of the Bill since we last met before the Summer Recess in Grand Committee.
The amendments cover various provisions in the Bill and I will cover each of the areas in turn. I apologise in advance for the length of the forthcoming speech, which will take at least 15 minutes. I assure your Lordships that I will be as brief as possible; however, it is important that I properly explain the need for the amendments and how they work.
To begin with, I shall address a series of minor and technical amendments which concern airport economic regulation. I begin with Amendments 12 to 16. Amendment 12 is to Clause 9(5) and makes it clearer that the reference to determinations in this subsection is only to operator determinations made by the CAA under Clause 10. This has always been its purpose and intended effect.
Amendment 13 to Clause 12 concerns advance market power determinations and is intended to clarify the effects of their publication on other existing determinations. As currently drafted, it is not entirely clear in the Bill whether the previous market power determination would cease to have effect in accordance with Clause 7(9) and (10) following an advance determination. This amendment therefore makes it clear that the previous market power determination will continue to have effect until those future specified circumstances set out in the advance determination have in fact occurred.
Your Lordships may be wondering how that amendment fits into Clause 12, as it appears to add a paragraph lettered (b) to subsection (7), where there is no existing paragraph lettered (a). The text following the word “arise” in Clause 12(5) will commence with a paragraph lettered (a) in the next version of the Bill. The Public Bill Office advises that this change can be made only by way of a silent amendment.
These three amendments are designed to ensure that if there is an appeal against a market power determination and that market power determination is suspended or set aside, there are clear arrangements to manage any consequences arising from the decisions made by the CAT—the Competition Appeals Tribunal—during the appeals process. These amendments establish a default position that, on a market power determination being suspended or set aside, the previous market power determination—if there is one—takes effect again or continues to have effect, unless the CAT orders otherwise. These five amendments concerning determinations seek to improve clarity in the Bill on the purpose and effect of these provisions.
Next, I turn to Amendments 20 and 21 to Clause 22 and Schedule 2, which concern financial arrangements licence conditions. To avoid confusion, I wish to make it clear that these amendments are entirely separate from amendments which were carefully considered in Committee, of which the practical effects would have been to shut out airlines’ right of repeal in respect of any licence condition containing an exception related to financial arrangements. I was very clear in the Committee on 2 July that the Government were, and remain,
“of the opinion that the broad rights of appeal”,
in the Bill,
“provide an effective means of improving the accountability of key regulatory decisions”
and enable,
“the interests of airport operators and materially affected airlines to be taken into account”—[Official Report, 2/7/12; col. GC269.]
in the licence process. The Government have taken the decision that amendment to the Bill in respect of airline rights of appeal is not needed and we will not be considering the matter further.
Turning to the effect of these amendments, Amendment 21 to Schedule 2 is a technical amendment to ensure that the drafting meets the policy intention that automatic suspension provisions will apply in all circumstances where the appeal of a “relevant financial arrangements condition” may otherwise prove nugatory by cutting across existing financial arrangements in place before the Bill comes into force. The current drafting at paragraphs 6 and 7 of Schedule 2 provides for the automatic suspension of relevant financial arrangements conditions when they are appealed under Clause 24, on the conditions of new licences, or Clause 25, on the modification of licence conditions. The amendment provides for a third set of circumstances when automatic suspension will apply.
I next wish to speak to Amendments 22, 24, 25 and 27, which are to Clauses 66, 67 and 68. These amendments seek to provide a partial description of what “servicing of aircraft” means when it is used in the definition of “airport”, “core area” and “airport operation services” at, respectively, Clauses 66, 5 and 68. This accords with the Government’s policy intent and puts beyond doubt whether certain structures comprise part of the airport on the face of legislation.
Amendments 35 to 51 seek to amend the transitional arrangements for airport economic regulation found at Part 1 of Schedule 10 to ensure that our policy intentions for these arrangements are more clearly expressed. First, Amendment 38 clarifies the circumstances in which the Secretary of State can revoke an order under the Airports Act 1986, designating an airport for price control during the interim period. The interim period is that between the commencement of the provisions on economic regulation under Part 1 of the Bill, including Schedule 10, and the expiry of current price controls on 31 March 2014. This amendment ensures that where an appeal is made against a market power determination during the interim period, the procedure for the Secretary of State to revoke an existing designation order is consistent with the appeals process under the Bill.
The remaining amendments, specifically Amendments 35 to 37 and Amendments 39 to 51, seek to clarify another transitional issue regarding the deeming provision set out at paragraph 2(2) of Schedule 10. The deeming provision is transitional and determines that the main operators of the three currently designated airports are deemed to have met the market power test and are thus subject to economic regulation when the Bill is commenced. The existing drafting of this deeming provision does not fully meet our policy aims because, on reflection, it is drawn too widely and captures more than just the main airport operator at each designated airport.
As currently drafted, the provisions would require every other operator, such as the fuel companies, at each designated airport to have a licence unless a negative market power determination is completed for each of those other operators at the designated airports. This would be an unnecessary and unduly onerous exercise. These amendments ensure the deeming provision applies solely to the main airport operators at the designated airports only and makes other necessary consequential changes. They are the operators which are subject to economic regulation under the current regime; namely, Heathrow Airport Limited, Gatwick Airport Limited and Stansted Airport Limited. I hope your Lordships are reassured that all these amendments regarding airport economic regulation are minor and technical in nature. I thank your Lordships for your patience with these important but minor and technical amendments.
I now move away from airport economic regulation, and I am pleased to speak to Amendments 30 to 34, which are tabled as a response to the recommendation in the Delegated Powers and Regulatory Reform Committee’s 4th Report of Session 2012–13. I am glad to say that the Civil Aviation Bill attracted only one suggested change from the committee. Because Part 4 of the Airports Act 1986 will be repealed as a consequence of this Bill, Schedule 8 makes amendments to preserve the current threshold for the purposes of continuing to determine which airports qualify for statutory undertaker status for planning law purposes. Subsection (11) of paragraph 2 of Schedule 8 would have enabled the Secretary of State to increase the £1 million threshold for statutory undertaker status in case it is needed for inflation or other, currently unforeseen, policy reasons. This would have been subject to the negative resolution procedure for secondary legislation. Your Lordships’ committee recommended that the Government clarify the circumstances in which this provision should be used to increase the threshold and the appropriate parliamentary procedure for making the necessary secondary legislation.
Your Lordships’ committee’s report was published on 21 June, five working days before Grand Committee began. There was, therefore, little time for the Government to consider the report and bring forward an amendment in time for consideration in Grand Committee. I am therefore very grateful that the noble Lord, Lord Rosser, was able to table an amendment that was intended as a response to the committee’s report. It ensured that we were able to debate the report and his amendment during Grand Committee. The noble Lord withdrew his amendment following my assurances that I intended to bring forward an amendment for Report. The amendments I have tabled are modelled on the solution that the noble Lord, Lord Rosser, offered. His idea was to have the Bill state that in the case that the increase was for inflation, the order should be subject to the negative procedure, and in the case that it was for any other reason, it should be subject to the affirmative procedure. In order to put this into effect, it has been necessary to table these five amendments.
I now turn to Amendment 59. This amendment will preserve the effect of the Tribunals, Courts and Enforcement Act 2007 (Consequential Amendments) Order 2012, which came into force on 1 October 2012 and which your Lordships debated in Grand Committee on 18 July. The order amended primary and secondary legislation which already provided for individuals to be disqualified or removed from office in the event of bankruptcy so as to extend the power to disqualify a person or remove them from office was extended to include a person in respect of whom a debt relief order has been made. The amendment to Clause 96(6) would preserve the effect of the 2007 order by adding to this paragraph the new ground for the Secretary of State to remove from office a non-executive member of the CAA who is subject to a debt relief order under Part 7 of the Insolvency Act 1986.
Finally, I will speak to Amendments 65 and 66. The only purpose of these amendments is to close a gap that has been identified in the provisions in Clause 109. Amendments 65 and 66, if accepted, would mean that both the power to make regulations and the restriction on that power will both come into force on Royal Assent.
I thank the House for its patience, and once again assure it that these amendments are all minor and technical in nature. I beg to move.
Lord Rosser
My Lords, the Minister said that he would be speaking for 15 minutes, but he has obviously gone rather faster than he thought since it says only 12 minutes on the clock. I can assure him that I shall be speaking for rather nearer 15 seconds than 15 minutes.
The Minister has spoken to a series of government amendments, the purpose of which he has explained. They are, in essence, tidying-up or technical amendments, clarifying amendments, or those which will include in the Bill wording that perhaps should have been included initially. There are also amendments which would implement, as the Minister said, the recommendations of the Delegated Powers and Regulatory Reform Committee which ensure that where the Secretary of State seeks to increase for inflation reasons the annual turnover threshold by which an airport becomes eligible for statutory undertaker status, the order will be subject to parliamentary control under the negative resolution procedure. In the case that the increase is for any other reason, the order will be subject to the affirmative resolution procedure. As the Minister has said, there is also a further government amendment which allows the Secretary of State to remove a non-executive member of the Civil Aviation Authority from office if he is satisfied that the member is a person in respect of whom a debt relief order has been made under Part 7 of the Insolvency Act 2000.
We have no objections to the amendments. Indeed, we welcome in particular the amendment which addresses the concerns raised by the Delegated Powers and Regulatory Reform Committee.
Earl Attlee
(b) a previous market power determination which would otherwise cease to have effect by virtue of section 7(9) or (10) continues to have effect until those circumstances arise.”
Earl Attlee
“Effect of suspending or setting aside market power determination3A (1) This paragraph applies where—
(a) the CAA publishes a notice of a market power determination (“determination A”) in respect of an airport area (“area Z”),(b) the CAA subsequently publishes a notice of another market power determination (“determination B”) in respect of all or part of area Z or in respect of an area that includes all or part of area Z,(c) determination A ceases to have effect in respect of all or part of area Z by virtue of section 7(9) or (10), and(d) there is subsequently an appeal under this Schedule against determination B.(2) If the effect of determination B is suspended under paragraph 1(3), determination A has effect again during the period of suspension, unless the Competition Appeal Tribunal orders otherwise.
(3) If all or part of determination B is set aside at the end of a period of suspension, determination A continues to have effect after the end of the period of suspension, unless the Competition Appeal Tribunal orders otherwise.
(4) If all or part of determination B is set aside otherwise than at the end of a period of suspension, determination A has effect again from the setting aside, unless the Competition Appeal Tribunal orders otherwise.
(5) If the suspension or setting aside of determination B only affects part of area Z, or an area that includes part of area Z, the references in sub-paragraphs (2) to (4) to determination A are to be treated as references to that determination so far as it relates to that part of area Z.
(6) Sub-paragraphs (2) to (4) do not apply if determination B is suspended or set aside only so far as it relates to an area that does not include any part of area Z.
(7) Nothing in sub-paragraphs (3) to (5) affects the operation of section 7(9) or (10) where notice is published of a further market power determination in respect of all or part of area Z or in respect of an area that includes all or part of area Z.
Appeals to Competition Appeal Tribunal: supplementary3B ”
Lord Davies of Oldham
“( ) A licence must include an obligation on licence holders to procure and publish annual surveys of passenger satisfaction, including but not limited to—
(a) baggage handling services, and(b) arrangements for delays to affected air passengers.”
Lord Davies of Oldham
My Lords, in moving Amendment 17 I shall also speak to the other three amendments in this group, which broadly encompasses the issues of passenger welfare. Amendment 17 would ensure that a licence includes an obligation on the licence holder to publish annual surveys on passenger satisfaction. This would be of considerable advantage to the industry: it would encourage improved performance at airports, and it would certainly give members of the travelling public some information on the relative performance of airports. It would therefore give a basis for what we all would want to see: improvement in passenger welfare at significant airports.
We have not the slightest doubt that there is considerable pressure from the public to improve welfare at airports. That is why the Select Committee on Transport in the other place emphasised that licences should be structured so as to address passenger satisfaction. One dimension of the issue which I am sure will occasion no surprise at all for regular air travellers is the issue of satisfaction with baggage handling. We all know the distress which is caused when baggage goes astray. I remember the time that I arrived in southern Africa and discovered that my baggage had been taken off the aircraft in Kenya, just a little way away. It contained everything that I intended to employ on the trip apart from my travelling clothes. The embarrassment was considerable. Of course, we know endless stories of the difficulties that passengers have had with baggage.
There needs to be a stimulus to improve performance. A requirement on the airport to indentify its efforts in these respects is important. It is not just a question of lost baggage—we all know the inordinate delay that can also occur. Experienced travellers always allow a certain amount of additional time for the retrieval of baggage. However, when one goes to a really efficient airport which delivers the baggage almost as soon as one can get to the retrieval hall, there is a distinct comparison with those airports that seem to have endless waits before the baggage appears.
I believe that improvement is going on in our major airports. On one occasion I came back from China via Paris because I could not get a direct flight to London. I arrived at London Stansted to find that my baggage was waiting virtually as I stepped off the aircraft and went into the hall. That is such a rare experience that I felt obliged to write to the authorities at Stansted to congratulate them on that achievement and to express the hope that it would be repeated on all future occasions—some luck.
These amendments are designed to improve what we all recognise needs to be improved with the handling of airports. The other dimension of which we are all too well aware is that airports have to take some responsibility for stranded passengers. We all recall—mercifully, the memory is ebbing away a little as each month goes by—almost two years ago when for a considerable time Heathrow had thousands of passengers stranded without any help or support of any kind and through no immediate fault of the airport in terms of the climatic conditions. However, it was subsequently identified that the problems lay with the treatment of the aircraft on the ground and the de-icing aspect. We know that there has been heavy investment to improve the situation following that event and that Heathrow should be congratulated on taking that action.
We need to keep up a standard of expectation that reduces the consequences of delay on passengers who otherwise, as has happened in the past, are left in the most unpleasant circumstances and bereft of any indication of what they are meant to do or how they should cope with their circumstances. Even if they could take action themselves, they have no information on which to work.
For all those reasons, passenger welfare is an important part of this Bill. Our amendments are designed to strengthen the Bill in respect of that important feature. I beg to move.
Earl Attlee
My Lords, I thank the noble Lord for his amusing and thorough explanation of the reasons behind his amendments. I absolutely agree with him that the issue of lost baggage is extremely important. He observed that some airports are better than others.
If your Lordships will bear with me, I should like, first, to speak to Amendments 17, 18 and 19 to Clause 18, on licence conditions, and, secondly, to Amendment 57 to Clause 83, on the provision of information for the benefit of passengers and cargo owners. I can appreciate why the noble Lord wishes to discuss these amendments in a group as they all concern the undoubtedly important matter of passenger welfare but I also believe that there is good reason for speaking to them individually so that particular aspects of the amendments may be considered in full.
I am aware that amendments similar to Amendments 17, 18 and 19 were debated in the other place and I am grateful to have the opportunity to return to them today. I do not think that it can be denied that this Bill already recognises the importance of passengers and their interests. Indeed, this is enshrined in the primary duty which states that the CAA must carry out its functions in a manner which it considers will further the interests of users of air transport services in the provision of airport operation services.
As users of air transport services, passengers will clearly be at the heart of the CAA’s considerations. There can be no doubt that passengers desire and deserve efficient baggage handling services when they travel by air or that, when faced with delays, they are not left without advice and help where appropriate.
The experience of recent years has also demonstrated how vital it is that all airports prepare effectively for potential disruption. The noble Lord, Lord Davies, talked about the disruption from snow a couple of years ago. When I visited Gatwick and saw the lines of gleaming snow-clearing machinery and they told me how quickly they could clear the runways, I was quite confident that the last winter would be a mild one—and that is what happened.
What is clear is that the aviation sector as a whole needs to have effective means to deal with passenger welfare during disruption of services. However, one key purpose of the Bill is to provide the CAA as an independent regulator with the discretion and flexibility to deliver targeted and proportionate licences, containing conditions which it considers requisite after undertaking appropriate consultation. So while I can very much understand and empathise with the sentiment behind noble Lords’ amendments, I am unable to recommend putting them into the Bill.
These three amendments seek to include a requirement in Clause 18 that the CAA should be required to include specified matters in licence conditions. Under the clause, the CAA is empowered to impose licence conditions consistent with its Clause 1 duties, which go beyond matters related to the abuse of substantial market power. Therefore, the CAA will have the power to include licence conditions addressing the matters raised in these amendments when to do so furthers the interests of passengers and freight owners in the provision of airport operation services. Obviously, losing baggage clearly comes into that. However, what should be included in a licence will always be fact specific and will change over time. Therefore, I do not believe that introducing provisions as to express conditions would be appropriate.
Clause 18 provides the CAA with flexibility regarding if and how licence conditions should be included. If we were to use this Bill to set in stone certain points in licences, this 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. I do not think it appropriate that government should determine what present and future passengers are most concerned about or what obligations should be included by the CAA in specific licences. Moreover, a prescriptive approach in the Bill is likely to make it more difficult for the regulator to adapt its approach to the changing needs and concerns of passengers. If we were to accept these amendments, this would oblige the CAA to give greater weight to these factors than other matters that might become equally or more important to passengers in future.
I would also seek to reassure noble Lords that they can be confident that the CAA would use the new licensing powers under the Bill to focus on matters such as operational resilience and passenger welfare in the event of extreme disruption. At the request of the Department for Transport, the CAA in January this year published an indicative licence which includes provisions on operational resilience. The proposals contained in condition 7 of this indicative licence would require the licence holder to operate the airport efficiently and to use its best endeavours to minimise detriment to passengers arising from disruption. 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 will secure compliance with its obligations under the condition. The licence holder is then obliged to comply with commitments it has made in its resilience plan. In drafting this indicative licence, the CAA sought initial views from industry. Once the Bill is enacted, the CAA will begin to consult on proposed licence conditions for each airport that will be subject to regulation. This process will involve consideration of the extent to which it is necessary or expedient to include conditions in the licence regarding operational resilience and other matters such as passenger welfare.
Lord Davies of Oldham
My Lords, I am grateful for that full answer. In fact, I did not actually raise the issue of border control, but the Minister is absolutely right to say that one of the anxieties of passengers is the difficulties that occur when there are hold-ups at immigration. Of course, we all subscribe to the position and understand entirely that border control has an important task to fulfil in safeguarding the people of this country, and we obviously wish it well in that role, nor should anything seek to inhibit the efficiency with which the border force carries it out.
However, I was concerned to identify the issue of delay simply because I feared that the Minister would do what he has done in his well informed manner—namely, talk in fairly general terms of what is to be done and what is going on. I am grateful to him for his indication of activity, particularly on the part of the CAA; however, I must say that there is a difference between what these amendments seek in terms of information for passengers and influence on their interests being taken seriously. That contrasts with what the CAA currently has—a consumer panel that does not look as if it addresses effectively the need for information flows that meet the kind of anxieties and difficulties that passengers face.
I hear what the Minister says about improvements, although it brought a slightly wry smile to this side of the House when he mentioned Gatwick’s ability to clear runways. The problems at Heathrow had been that aircraft could not be de-iced and taken out of their parking bays. The runways were not the issue there. None of us can anticipate the weather or the extent of the difficulties it may present. That indicates why it is necessary to be specific about passengers’ anxieties. These amendments set out to identify such areas against a background whereby passenger welfare needs to be emphasised in the responsibilities of the CAA.
However, the Minister could not have given a fuller and more considered reply and I therefore beg leave to withdraw the amendment.
Earl Attlee
Earl Attlee
“6A (1) Sub-paragraph (2) applies where—
(a) the CAA decides under section 22 to modify a licence by adding a relevant financial arrangements condition,(b) an application is made for permission to appeal under section 25 against the decision, and(c) the condition would have effect, but for this paragraph, before the end of the period of 10 weeks beginning with the day on which notice of the decision was published in accordance with section 22 (“the 10 week period”).(2) The relevant financial arrangements condition does not have effect during the 10 week period.
(3) Sub-paragraph (4) applies where—
(a) the CAA decides under section 22 to modify a licence by adding a relevant financial arrangements condition, and(b) the Competition Commission grants permission to appeal against the decision.(4) The relevant financial arrangements condition does not have effect until the appeal against the decision is determined or withdrawn (or, if there is more than one appeal against the decision, until all of the appeals are determined or withdrawn).
(5) In this paragraph, “relevant financial arrangements condition” has the same meaning as in paragraph 6.”
Earl Attlee
Lord Rotherwick
“( ) the arrival or departure of pilots and persons to be carried as passengers in general and business aviation aircraft, together with their baggage”.
Lord Rotherwick
My Lords, by decoupling my earlier amendments I appreciate that the Minister may have addressed, in part, some of the remarks I am about to make, through no fault of his own. This group of amendments addresses the second issue of principle and policy I wish to raise with the Minister; he will see that I made this point at an earlier stage in the Bill. It concerns the continued availability and improvement of services for GBA at UK airfields. The GBA community comprises civil aviation operations other than commercial air transport flights operating to a schedule. It represents a multi-billion pound industry in the UK, from executive business jets to flying training, air ambulances, private aircraft operators and pilots.
The Minister helpfully expanded on that generalisation by referring to important GBA services such as search and rescue, mail delivery, life-saving organ transport, law enforcement, aerial survey and environmental protection flights, and the training of future pilots. He also mentioned its growing economic importance for the European manufacturing industry, as stated in Hansard on 29 June 2012 at col. GC144. This recognition of the importance of the sector in the European context was recently enforced by the report to EASA to which I referred earlier.
A 2009 study by PricewaterhouseCoopers reported that only 4% of the 27,000 aircraft registered in the UK were commercial air transport aircraft. As I said before, therefore, we have a Bill before us which ignores 96% of UK registered aircraft and restricts itself to the regulation of those few airports which enjoy a dominant market position. It does not address the needs or interest of the GBA community, or make any attempt to regulate the activities of the majority of airports on which this important sector depends. Sadly, GBA users are increasingly neglected and, at worst, discriminated against, by operators of airports serving predominantly commercial aviation—the sort of airports this Bill is concerned with.
Other threats to the future of GBA arise from the growing pressures on infrastructure, the loss of airfields to development and a regulatory environment which fails to recognise the nature of GBA in formulating policy. If the regulation of airport facilities is framed for the benefit of the air transport user, as it is in this Bill, the inevitable consequences will be creeping marginalisation of other sectors of civil aviation—the GBA. This trend is already evident. I travel wildly as a private pilot—sorry, widely, not wildly; I am glad to say that my flying sometimes is up to scratch—and I find that the provision for GBA in many other countries put ours to shame. The key outstanding issue in respect of a network of airfields is at least considered in the draft aviation policy framework, although access to airfields is as yet unaddressed.
Although I detected an inclination to progress on the part of the Government and the CAA, I tabled amendments in an attempt to speed the process, to protect GBA and to ensure that this important sector can continue to use our major airports. I hope that in his response the Minister will not only acknowledge that there is a problem but set out how the Government intend to respond to it.
I am mindful that when I made a similar point in Grand Committee, the Minister felt that my amendments were deficient because they failed to provide a definition and description of what was meant by general and business aviation. This time I have adopted a different approach and defined GBA in Clauses 66 and 68 as users of airport operation services. I have also added a definition to Schedule 7.
I recognise that my amendments may yet again have been imperfectly formulated by my team to secure the changes for which I argue. That is in part because the Bill is so narrowly constructed as to exclude consideration of the wider issues that are of such concern across Europe. These deficiencies could be easily remedied if the Minister were to accept the principles behind the amendments and work with me and my advisers in GBA to construct something that would secure what we both wish to see—a wish he articulated in addressing my earlier amendments—namely, a vibrant, energetic and successful GBA sector, thriving with the support of the Government and making a full and growing contribution to the UK’s economy. I beg to move.
Earl Attlee
My Lords, I recognise that the amendments in this group propose to make further, explicit provisions for general and business aviation in Part 1 of the Bill. I certainly agree with my noble friend that we need a vibrant and successful GBA sector.
In debating my noble friend’s previous amendment, we discussed at length the reasons why it is not appropriate to amend Part 1 of the Bill—which covers the economic regulation of our major airports—to make explicit provisions for general and business aviation. I therefore propose that for the rest of the speech I will address just the specific effect of this group of amendments—although I will read Hansard carefully to digest fully the comments of my noble friend.
Amendments 23 and 26, in Clauses 66 and 68 respectively, look to expand the definition of “airport” and “airport operation services” to cover the arrival and departure of pilots and persons to be carried as passengers in general and business aviation aircraft. The two amendments are ultimately unnecessary. The clauses already cover persons to be carried as passengers—and, as I explained, they already extend to passengers carried by general and business aviation because of Clause 69. Finally, I believe the intention of Amendment 28 is to provide some clarity on what is meant by “user” in its new capacity of referring to users of airport operation services. My noble friend also touched on airfields. The House will recall that I covered that important issue when debating my noble friend’s previous amendment.
I return to the definition of “user”. This is understandably modelled on the definition of “user of air transport service” in Clause 67. However, regrettably, the amendment fails to provide the intended clarity. It clearly sets out the types of user in relation to airport operation services provided for general and business aviation, but does not do so for non-general and non-business aviation. It is unclear why this definition is necessary without the previous group of amendments, which were withdrawn or not moved earlier. If that group of amendments had been agreed, the failure to define “general and business aviation” would have created a risk that these amendments could have the effect of imposing some form of duty to further the interests of all commercial airlines. As noble Lords will recall, the Government are firmly of the view that the new framework should be focused on promoting the interests of passengers and cargo owners.
Noble Lords will be aware from experience that there are circumstances that can arise where airlines’ interests conflict with those of passengers. For example, it may not be in the interests of airlines for the airport to provide adequate refreshment facilities in the terminal building, because airlines can profit from food and drinks purchased on board the aircraft. Therefore, I cannot accept these amendments, which clearly conflict with our policy aim of putting passengers and cargo owners first. That is the policy that the Bill promotes.
As with the previous group of amendments tabled by my noble friend, these amendments are unlikely to deliver the desired benefits. They will confuse the purpose of the Bill and create several unintended consequences. I therefore ask my noble friend to withdraw Amendment 23.
Lord Rotherwick
I apologise again for wrong-footing the Minister by decoupling this amendment. It obviously caused some confusion in his answer to this rather technical amendment. I will read Hansard carefully and hope that he will be sympathetic if I come back to him for a meeting on this at a later date. In the mean time, I beg leave to withdraw the amendment.
Earl Attlee
“(8) For the purposes of sections 5(4) and 66(1) the servicing of aircraft between landing and take-off at the aerodrome includes—
(a) the supply of fuel, and(b) the repair, maintenance and overhaul of aircraft that land at the aerodrome.”
Earl Attlee
Earl Attlee
Earl Attlee
“2A (1) Section 79 (orders and regulations) is amended as follows.
(2) In subsection (2), at the end insert “, unless it is an instrument described in subsection (4A)”.
(3) After subsection (4) insert—
“(4A) A statutory instrument that contains (whether alone or with other provision) an order under section 57A(11) increasing the specified sum by more than is necessary to reflect changes in the value of money may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.””
“7A (1) Article 70 (regulations and orders) is amended as follows.
(2) In paragraph (2), after “Schedule 7” insert “and orders described in paragraph (2A)”.
(3) After paragraph (2) insert—
“(2A) An order under Article 2A(9) increasing the specified sum by more than is necessary to reflect changes in the value of money may not be made unless a draft of the order has been laid before, and approved by a resolution of, the Assembly.””
Earl Attlee
“(3A) During the interim period, such an order must not be revoked—
(a) during the period in which a person may appeal to the Competition Appeal Tribunal against the determination,(b) at a time when the effect of the determination is suspended or the Secretary of State or the Department of the Environment in Northern Ireland considers that it may be suspended, or(c) if all or part of the determination has been set aside or quashed.”
“(1A) In this paragraph “the main operator’s airport area” means the whole of the area at the 2012 Act airport in respect of which the operator (as defined in this Act) on the commencement day is the person who was the operator (as defined in the 1986 Act or the 1994 Order) of the predecessor airport immediately before the commencement day.”
“(6) In paragraph 5(3), the reference to a determination that the market power test is not met in relation to the designated airport includes a determination that it is not met in relation to an airport area that includes the whole of the predecessor airport.”
Lord Davies of Oldham
“( ) The CAA may also provide advice and assistance to such persons in connection with security checks performed on users of civil air services who have religious clothing requirements in order that their dignity be maintained without compromising the rigour of those security checks.”
Lord Davies of Oldham
My Lords, I can move this amendment with some brevity. We have discussed the issue before, and I think that I can anticipate that the Government will have a constructive response. The issue is well known. For Sikhs in this country, security at airports can prove a great embarrassment if there is a request for them to have their turbans examined or if interference occurs with their headwear. It is not just Sikhs who have this anxiety, but we are more conscious of the Sikh position because of their numbers in this country, and because we had some practice on the issue of how to adjust the law to the particular religious position of Sikhs when we debated the compulsory wearing of motorcycle helmets back in the 1960s. The issue is serious. It was particularly serious because it appeared that the European Community regulations insisted that airports should conduct the kind of search that was causing real difficulty. I understand that there may have been some advancement on that front with regard to technology in relation to the searching of headgear. I am merely presenting this amendment to give the Minister an opportunity to give some reassurance.
Earl Attlee
My Lords, I fully agree with the noble Lord that we all want to ensure that passengers are treated with respect and dignity at all points during their journey through the airport, irrespective of creed. I hope that I can reassure noble Lords by explaining that what this amendment is designed to achieve is already covered by the Bill.
Airports are required by European and domestic rules to undertake security checks on all passengers and it is the responsibility of airports to ensure that their customers are treated with respect and dignity. Clause 80 of the Bill inserts new Sections 21H and 21I into the Aviation Security Act 1982. New Section 21I requires the CAA to provide such aviation security advice and assistance to the persons listed in subsection (3) of that new section, including, for example, the,
“managers of aerodromes in the United Kingdom”,
as the CAA considers appropriate.
In giving such advice and assistance the CAA has to have regard to the purposes to which Part 2 of the Aviation Security Act 1982 applies—which, broadly, are the protection of civil aviation against acts of violence. Therefore, if the CAA considered it appropriate, having regard to the purposes to which Part 2 of the Aviation Security Act 1982 applies, it could provide advice and assistance about maintaining the dignity of passengers wearing religious clothing when subject to security checks. I know that some passengers may worry about security checks and feel uncomfortable at being subjected to security searches. That may be a problem more generally as well.
However, noble Lords will understand that such searches are essential if security is to be maintained in the face of a real and continuing threat from terrorist groups that seek to do us harm. In his opening comments the noble Lord recognised that problem.
Noble Lords will know, I am sure, that each passenger departing from a UK airport undergoes standard security processes irrespective of their age, gender or ethnic background. These checks ensure that they are not carrying articles prohibited from the security-restricted area or on to the aircraft.
Security staff are trained to recognise that some passengers may have particular concerns about being searched, particularly about searches of some religious clothing, for example those from the Sikh community who wear turbans. A problem emerged in April 2010 when new EU rules came into force on headgear searches which required a physical hand search to be carried out in relation to turbans. Physical contact with the turban causes hurt and offence to Sikhs. My right honourable friend the former Secretary of State for Transport acted swiftly and advised airports to continue with the method used prior to April 2010, which mainly involved hand-held metal detectors, while consideration was given to how best to resolve the concerns expressed by the Sikh community.
After intensive work, a pilot project was put together in a very short time and with the assistance of members of the Sikh community. At the 31 UK airports participating in the trial, through which approximately 93% of all passengers travel, security staff use explosive-trace detection equipment combined with hand-held metal detection equipment to screen the headgear of those passengers and staff that either activate the walk-through metal detector or are chosen at random for a security search.
The UK has submitted three reports on the trial to the European Commission and has made various presentations explaining our test methodology and trial results. This method of searching headgear will continue to be used at participating UK airports as a continuing EC-approved trial while the necessary changes to EC regulation are made.
Progress has been made, which I hope will reassure the noble Lord, and I expect that that progress will continue. Therefore, I hope that the noble Lord, after raising this very important issue, will feel able to withdraw his amendment.
Lord Davies of Oldham
My Lords, I am grateful to the Minister and beg leave to withdraw the amendment.
Lord Rosser
“(a) the individual employed in the civil service of the Crown, and(b) representatives of individuals employed as defined in paragraph (a).”
Lord Rosser
My Lords, we considered this amendment and Amendment 54 in Committee. There is concern that there could be a significant or damaging loss of staff with experience relevant to security issues when aviation security regulation functions are transferred from the Department for Transport to the Civil Aviation Authority. The amendments are designed to ensure, first, that the Secretary of State consults fully with all those directly affected before making a transfer scheme to the Civil Aviation Authority and, secondly, that the Secretary of State reviews the impact of such a transfer on the security functions of the Civil Aviation Authority before making such a scheme.
In the Minister's response in Committee, he confirmed that the real driver for the switch of aviation security functions from the Department for Transport to the Civil Aviation Authority was financial. He said that,
“this is about efficiency and that the principle is that the user pays”.—[Official Report, 4/7/12; col. GC 353.]
It has nothing to do with enhancing aviation security regulation since it is generally recognised that the current arrangements are highly successful and effective. The Government intend to change the current successful and effective arrangements for financial reasons and thus could be placing effective airport security regulation at risk. The onus is on the Government to provide convincing evidence that that will not be the case.
In Committee, the Minister said that his department had already begun to engage with staff and their trade union representatives on the proposed transfer of staff from the Department for Transport to the Civil Aviation Authority. He went on to say that his department would engage with staff and their trade union representatives as the transfer arrangements were developed over the coming months until the planned transfer in spring 2014, if memory serves me right. If the Minister’s contention is once again going to be that no problems are anticipated over the retention of the necessary experienced staff due to the change, will he substantiate that stance by telling us whether any significant outstanding issues have appeared that still have to be resolved with the staff and their trade union representatives over the transfer arrangements? Will the Minister also tell us how many staff it is now expected will be either transferred or seconded from the Department for Transport to the Civil Aviation Authority?
These are perfectly reasonable questions to raise in the light of the Minister's statement in Committee that the Government would not make the change if they thought they would lose a majority of experienced staff as a result and in the light of the concerns on this issue expressed by the Transport Select Committee in the other place. What hard evidence do the Government have that aviation security regulation functions will not be weakened by this transfer, or is it the case that when the Minister expresses such a view—namely; that they will not be weakened—that, frankly, is just a statement of hope?
The most important thing should not be the financial considerations that are clearly driving this change: the most important thing is the need to retain effective aviation security regulation arrangements. On that point, the Government have so far failed to prove their case. The amendments are designed to address the concerns that have been raised. I beg to move.
Earl Attlee
My Lords, the noble Lord raises an important point. It is vital that these issues are handled correctly and sensitively. The Department for Transport has already begun engaging with staff and their trade union representatives on the proposed transfer of staff from the DfT to the CAA. The noble Lord, Lord Rosser, talked about the risk of the loss of valuable staff and I agree that it is essential that this is avoided to the maximum possible extent. The department’s human resources unit is formally engaging with the Public and Commercial Services trade union and the Prospect trade union on matters relating to the proposed transfer of posts and post holders to the CAA. There have been regular briefing events for staff and visits to the CAA building in central London, where staff can see their new office space and meet existing CAA staff. I should also remind your Lordships that many of the staff in those posts due to transfer to the CAA are mobile and routinely work at airports across the country.
Staff are kept informed with regular written and oral updates and we shall continue to engage with staff and their trade union representatives as we develop the transfer arrangements over the coming months and up until the planned transfer in spring 2014. So there is no shortage of time. The department appreciates that engagement with staff is vital, not least because we want to ensure that as many as possible transfer to the CAA, taking their skills and experience with them. We are working with staff to provide as much visibility and clarity as possible about the transfer. The transfer will follow the principles of TUPE and we aim to set out to staff the terms and conditions in April 2013—that is one year before the planned transfer.
The noble Lord, Lord Rosser, talked about the risk of deterioration in security performance. I am satisfied that there is no reason why this should occur. Indeed, it may be better—we do not know—but I am satisfied that there is no reason why there should be a deterioration.
The noble Lord asked whether there are any outstanding issues. There will always be HR issues with these changes. What is important is that these issues are handled sensitively and effectively. I am sure that that will be the case.
The Government believe that there is no need to amend the Bill to achieve something that is already happening. I hope that, with that comfort, the noble Lord will feel able to withdraw his amendment.
Lord Rosser
The question I asked was not whether there were any outstanding issues still to be resolved but whether there were any “significant” outstanding issues to be resolved. I accept that there will always be some issues. I am not sure, therefore, that the Minister has answered my question as it was whether there are any significant outstanding issues.
Earl Attlee
My Lords, I do not know whether there are any significant outstanding issues. It depends on what you call “significant”. An individual staff member who is possibly being disadvantaged would regard it as very significant but at the strategic level it might not be regarded as significant. I do not know the answer but one would expect that there are issues to be managed. As I said before, it is important that these matters are handled sensitively.
Perhaps I may give the noble Lord a little more information about the need to ensure high levels of security. The Government believe that the industry will benefit from the efficiency that could be gained through having aviation security and safety regulation in one place. The CAA has potentially valuable experience of safety management systems designed to manage risk as effectively as possible. This move will also mean that the user-pays principle is applied to aviation security as it is currently applied to aviation safety.
Lord Rosser
A significant outstanding issue would be one which might lead to a damaging loss of staff with experience of relevant security issues. That would be a significant issue. Another would be one which could result in a weakening of the current aviation security regulation arrangements. In the context of the Bill and what the Government are trying to achieve, I would define those as significant outstanding issues.
The Minister said that he is not aware of any significant outstanding issues that would jeopardise the two quite crucial aspects to which I have just referred. He said in relation to the possible weakening of aviation security regulation functions that they might be strengthened—but he did not know whether that would be the case—and that there was no reason why there should be a weakening as a result of the transfer. The Minister saying simply that he can see no reason why there should be such a weakening is not quite the same as saying that he is absolutely satisfied that there will not be.
The only other point I wish to make—I intend to withdraw the amendment—relates to the Minister’s accurate comment that as the move does not take place until the spring of 2014 there is “no shortage of time”. The difficulty with that—I am sure it will not happen—is that sometimes a feeling that there is no shortage of time to get things resolved can lead to a degree of complacency and then you suddenly find yourself in a situation where there is a shortage of time. I beg leave to withdraw the amendment.
Lord Davies of Oldham
“Risk-based aviation security regime
(1) The Secretary of State may direct the operators of airport areas to implement an outcomes-focused, risk-based aviation security regime to govern the exercise of their functions in relation to aviation security.
(2) When making directions under this section, the Secretary of State must by order set out the framework for the introduction of the outcomes-focused, risk-based aviation security regime.
(3) An order under this section must be approved by a resolution of each House of Parliament.”
Lord Davies of Oldham
My Lords, I shall speak also to Amendment 67. I started off with the terrible prejudice that I express whenever some Orwellian concept swings into view with initials that I have never put together before and I am not quite sure that I will remember what they are, let alone succeed in remembering the concept to which they relate. That I now understand outcomes-focused, risk-based security is largely due to the fact that the Minister was kind enough to organise a meeting with officials who have responsibility for the scheme. We found both their presentation and the answers to our questions helpful and reassuring. It was an inspired move on the part of the Minister to do that in circumstances where otherwise a plethora of amendments would have been tabled to express our anxieties.
However, the main anxiety still remains. This is a significant change in the way in which the security of our airports is to be organised and, as security is of surpassing importance, it is right that we should be reassured in every respect with regard to it. Our amendments reflect our concern that the Secretary of State is directly involved in the implementation of this scheme. We want the order to be approved by resolution of each House of Parliament because Parliament needs full understanding and reassurance about the nature of the new security regime which will operate at airports.
We are particularly concerned that we have time to make an assessment of the effectiveness of the regime. We are concerned that there should be safeguards in regard to this initiative because we cannot think of a responsibility of the industry that is greater than security. This is a very significant change. My noble friend Lord Rosser has already pressed the Minister, with some success, on the expertise that is available in the Department of Transport. That expertise is now to be transferred. We have some assurances on that process but we need assurances about the introduction of the whole scheme. Parliament will clearly need to be involved. I should be grateful for the Minister’s response to my comments.
Earl Attlee
My Lords, I can assure the House that I have never detected any prejudice in the noble Lord, Lord Davies of Oldham.
Your Lordships will recall that during a debate in Grand Committee on 4 July I offered noble Lords a briefing on the Government’s plans in this area. That briefing took place on 11 October, and I hope that noble Lords found it informative. It is much better to be briefed by the experts in the subject rather than to be briefed by the Minister whose duty it is to articulate the policy behind the subject and, most importantly, to accept collective responsibility for that policy. The Government’s priority at all times is to ensure high levels of aviation security in the UK. The proposed new approach is intended to give operators greater flexibility and responsibility to design security processes that deliver specified security outcomes, with greater emphasis placed on the needs of the passengers. It is consistency of outcome that is important, not consistency of process.
A similar approach has been taken in aviation safety regulation. Modernisation would be achieved by introducing the use of security management systems—SeMS—by industry and a regulatory regime that is more outcome-focused and risk-based, the so-called OFRB. SeMS is a systematic approach to managing security aimed at embedding security in the day-to-day activities of the organisation. Therefore, in the summer we started a pilot at London City Airport in which the operator will develop the SeMS approach and in so doing create an enhanced internal security culture. Once this and further pilots have been concluded and we are satisfied that the SeMS framework is sufficiently robust we shall look to roll it out generally across the industry. This will provide a sound basis for the design and development of the OFRB regime.
The proposed reforms represent a significant change in the approach to the regulation of aviation security both for the industry and the regulator. We have therefore decided to take an incremental approach to reform to ensure that the UK’s high level of aviation security is ensured at all times. This incremental approach also aligns well with the Government’s intention to embed in industry a culture of continuous improvement of the UK’s aviation security regime, as has been the case for aviation safety. Industry has expressed strong support for moving away from the current highly centralised and prescriptive regime, but recognises that the proposed reforms will take some time to develop and implement.
On 26 June, the DfT published its response to a consultation on reforming the regulatory regime for aviation security. Responses to the consultation brought out that the move to a full OFRB regime needs to be undertaken gradually. Industry will need time to adjust to the new oversight approach rather than the current direct-and-inspect method of regulation. Many organisations have commented that the full benefits of OFRB, in particular flexibility for operators in the design of security processes, require changes to the highly prescriptive European legislation which specifies the common basic standards for aviation security. We will be using the SeMS pilots to build the evidence base necessary to engage with our European partners and to make the case for change.
Accordingly, the move to OFRB will not be a single big change but a continuing one. This is also necessary as there are some 1,000 industry entities in the UK that are directed to implement aviation security measures, and it would not be feasible, or sensible, for them all to move to OFRB at once. I agree with the noble Lord, Lord Davies, that Parliament needs to be clear about what is happening. I can assure your Lordships that the Government will continue to keep Parliament informed as we develop, pilot and implement the new regime over the coming years. I hope that the House will support the aims of this reform and be assured that the Government are taking an evolutionary approach in order to ensure that the high levels of aviation security are maintained at all times. I am sure that that is what the House would want. With that comfort, I hope that the noble Lord will be able to withdraw his amendment.
Lord Davies of Oldham
My Lords, I very much respect the Minister’s expression of caution on how the new scheme is to be rolled out. I quite understand that it will be done in a slow rollout, as the success of one section can be built on by the next. This matter is of great concern to Parliament, but I am not sure of the process by which Members will be able to appraise the issue. We all know the difficulties surrounding security matters—after all, security leads to some very significant institutions in the state, and we all appreciate that limited knowledge is made available. Parliament has to be reassured about this because the scheme is of such importance. Of course I shall withdraw the amendment but I warn the Minister that Ministers and the officials concerned will have their work cut out to present the issues in a way that enables parliamentarians to form an effective judgment on the success of the development. I beg leave to withdraw the amendment.
Lord Rosser
“( ) the full cost of travel for users of air transport services, including all relevant surcharges such users would be expected to pay.”
Lord Rosser
My Lords, the Civil Aviation Authority’s primary and overriding duty under this Bill is to carry out its functions in a manner that it considers will further the interests of users of air transport services, including in relation to the cost of current airport operation services.
This amendment adds an additional requirement on the Civil Aviation Authority to publish information and advice to assist users of air transport services to compare the full cost of travel for users of such services, including all relevant surcharges that they might be expected to pay. In Committee, we argued that it was surprising that the specific duty to make such information relating to cost available to users was not already in the Bill. Apparently it was left entirely to the discretion of the Civil Aviation Authority under the part of the Bill that says that the CAA should publish such information and advice as it considers appropriate.
We tabled this amendment because of concerns expressed about the extent of significant add-on charges, sometimes running into three figures and levied chiefly by budget airlines for such things as having a bag in the hold, changing the name on a ticket, having a bag even marginally over the weight limit, seat reservations and flight change fees. The purpose of this amendment is not to stop such charges but to ensure that they are transparent and readily known rather than, as appears to be the case at present, imposed with a degree of stealth on unsuspecting passengers, to whom it may well not have occurred that charges of such magnitude would be imposed for such relatively minor matters.
If the Civil Aviation Authority published the full, actual and potential costs of air travel, including all relevant surcharges, passengers would soon come to recognise that there was an independent source of information on charges that would enable them to make realistic judgments and comparisons on the full cost of travel, and potential full cost of travel, if surcharges were incurred. This would help reduce the likelihood of users getting caught out by a charge that they had not anticipated and of which they were unaware.
In his response in Committee the Minister referred to Clause 83, stating that the Bill already provided for the CAA to be able,
“to publish comparable information on air transport service pricing”,
and that the showing of,
“the full costs of travel and surcharges … is being addressed in other ways”.—[Official Report, 4/7/12; col. GC374.]
However, I do not think that the wording in Clause 83 is as precise as the Minister implied. It refers to,
“such information … as it considers appropriate for the purpose of assisting users of air transport services to compare … air transport services provided to or from a civil airport … services and facilities provided elsewhere in the United Kingdom and used, or likely to be used, in connection with the use of air transport services provided to or from a civil airport”.
Where in that wording—or any other wording in the Bill—does it refer to the Civil Aviation Authority being required to publish information on pricing, which, if it was as comprehensive as it should be, would have to include the full costs of travel for users of air transport services, including all relevant surcharges such users would be expected to pay, as called for in the amendment? The short answer is, surely, that it does not.
I will of course wait for the Minister to respond to the House and indicate, if he is going to do so, which words in Clause 83 do lay that requirement on the Civil Aviation Authority, in clear and unambiguous terms. The Minister also said in Committee:
“On the full cost of travel, consumers are already protected throughout the EU by Article 23 of EU Regulation 1008/2008, which … requires airlines to display at all times their prices”,
with prices for so-called optional extras being,
“displayed at the start of the booking process”.
The Minister then went on to say that the CAA considered that some airlines are,
“now compliant with Article 23 of the regulation”.—[Official Report, 4/7/12; col. GC374.]
However, that does not solve the problem. If the Minister considers that it does, why does he think that three Members of your Lordships’ House, from different parties, came in to support my amendment at Committee stage? I suggest they did so because they were aware that there continues to be a problem, as indeed is highlighted in surveys. My noble friend Lord Soley said in Committee:
“It is one thing to say that they”—
airlines—
“must publish information under Article 23”,
but it is another to say that they are completely up front with that information,
“so that a passenger knows”.—[Official Report, 4/7/12; col. GC375.]
If we are to address this matter then there needs to be a clear requirement on the Civil Aviation Authority to publish this information on comparative fares and charges, including surcharges, in order to assist passengers and show them that, as an authority, the interests of users are crucial to its role, as provided for in Clause 1. If the CAA does not provide this comparative information, in a transparent, impartial and objective manner, nobody else will—whatever Article 23 of EU regulation 1008/2008 may say and however much the Government or the CAA may feel that the problem of unanticipated additional charges and surcharges has already been addressed. I beg to move.
Lord Lucas
My Lords, I have a lot of sympathy for this amendment. However, most of us, as the noble Lord indicated, will tend not to look at the CAA website when we are booking a plane ticket and will instead look at the individual airline or—as I did foolishly, and have recorded in my blog—at a site called fly.co.uk, which invents all sorts of other hidden surcharges of its own. It is an area that is bedevilled by surprises that are intended to get you when you have already committed and just want to get on with the business of getting your ticket. I would certainly appreciate anything the Government can do to make this area less dangerous for the likes of me.
The Countess of Mar
My Lords, I note that in the preamble to subsection (1), it says that the CAA,
“must publish, or arrange for the publication”.
There is no reason why it should not arrange for the publication of these figures by the airlines themselves, as part of the contract that it has with the airlines. I do not fly myself as I have been banned from flying—not because I drink too much or anything like that but for medical reasons—but I am very conscious of the amount of publicity that is given and the number of complaints there are about the lack of clarity and transparency over airline fares. This is a very valuable amendment.
Earl Attlee
My Lords, I am grateful to the noble Lord, Lord Rosser, for the explanation of the problem. I fear that I will have to repeat my comments about Clause 83, which is widely drawn and gives the CAA a new and important statutory role in promoting better public information about the aviation industry’s performance. It imposes a duty on the CAA to either publish, or arrange for the aviation sector to publish, consumer information and advice that it considers appropriate to help people compare aviation prices and services.
The noble Countess, Lady Mar, picked up on the point about the CAA arranging for the aviation sector to publish. It may well be that it knows that information is being published or it can encourage someone to publish it and therefore it does not need to publish it itself; it may choose to put a link on its website. In answer to my noble friend Lord Lucas, I was not aware that the CAA was doing all this great work to help us compare ticket prices, both real and imaginary. One of the benefits of our debate is that some people will, I hope, become more aware of the excellent work that the CAA does. I hope this Bill will make it even easier for the travelling public to compare what they will actually have to pay.
The judgment of what is appropriate should be a matter for the regulator. We should not be tying the regulator’s hands, because in time we will get this particular problem, say of payment surcharges, licked and then there might be another problem. If we tie the hands of the regulator and say that it has to concentrate on payment surcharges, but in future the problem is something else, we will have made a mistake. We should leave the regulator with the flexibility. Unfortunately, the amendment of the noble Lord, Lord Rosser, seeks to remove that discretion from the regulator. He is right to test the policy but I do not think we should remove that discretion.
I want to address the specific mention of two aspects of the price of air transport services: the full costs of air travel, and the application of payment surcharges as they are already being addressed by the Government and the regulator. On the full costs of travel, as mentioned by the noble Lord, Lord Rosser, consumers are already protected throughout the EU by EU regulation 1008/2008—sometimes referred to as the “ticket transparency” regulation. This requires airlines to display prices inclusive of all unavoidable and foreseeable taxes, fees and charges at all times. It also requires any optional services, such as checked baggage or priority boarding, to be offered on an opt-in basis only, and for the prices for these optional extras to be clearly and unambiguously displayed at the start of the booking process. In addition to displaying fully inclusive prices, the regulation also requires a breakdown of the price into the fare and any taxes, charges, surcharges and fees where these are added to the fare. These services should also be clearly and unambiguously displayed at the start of the booking process. The purpose of these requirements is to ensure that consumers are able to compare the prices of flights across a number of airlines, and to ensure that they select only the optional extras that they want.
The CAA has been working with airlines to ensure compliance with this requirement and considers that the airlines it worked with are now compliant with Article 23 of the regulation and that consumers are able to compare the prices of flights effectively, ensuring that they are able to choose flights that best meet their needs.
The noble Lord, Lord Rosser, referred to the three noble Lords who contributed to the previous debate and support his amendment. I do not claim that we have the problem licked yet, but I do say that we are making progress and that with this Bill we will continue to make better progress.
The Countess of Mar
My Lord, are there any penalties for airlines that contravene the regulation?
Earl Attlee
My Lords, I suspect that there are sanctions but I would prefer to write to the noble Countess and other noble Lords to give the full details. I believe that we will all find the answer to the noble Countess’s question to be very interesting.
Secondly, on payment surcharges, I share consumers’ concerns about the high level of payments surcharges applied by some companies and the fact that often people are not aware of the level of these charges until they are almost at the end of the booking process. This makes it difficult to compare prices and to shop around for a good deal. Noble Lords will recall the debate initiated a while ago by the noble Lord, Lord Mitchell, on this point—a very useful debate, I thought.
It is not right that a business should try to hide the true costs of its services by implying that its prices are made up of elements beyond its control when they are not. Your Lordships will be aware that consumers are already protected against misleading pricing under the Consumer Protection from Unfair Trading Regulations 2008. The CAA has been able to enforce the principal obligations imposed by Article 23 through these regulations. In addition, the Government have publicly consulted on whether there should be early implementation of the payment surcharges provision of the new European consumer rights directive ahead of its deadline for introduction into the UK in 2014. This is important to aviation consumers because some businesses add a charge to the price of goods or services when the consumer chooses to pay by a particular method, for example by credit card or debit card. These additional charges are known as payment surcharges.
The BIS consultation set out the Government’s proposal for early implementation of a provision of the consumer rights directive. This will put in place legislation to ban businesses from imposing excessive payment surcharges on consumers. Businesses will remain able to add a charge only so far as it covers the actual costs of processing any particular form of payment. The consultation has sought views on the timing of the implementation of this legislation and how best to define the scope and application of the provision. Consultation on this early action closed on 15 October and BIS is now considering the next steps. The responses to the consultation will inform BIS guidance to businesses on how to set its fees in compliance with the directive.
I hope it is clear from what I have said that the intent of this amendment is already implicit in the primary duty of the CAA and that there are actions in hand and effective mechanisms already in place to secure the intended result. Given this, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Rosser
I thank the Minister for his response and I thank the noble Lord, Lord Lucas, and the noble Countess, Lady Mar, for their contributions to the debate.
We are back in an argument that we seem to have so often. We put forward an amendment that highlights a problem and seeks to address it and the Minister says to look elsewhere in the Bill or to refer to European Union regulations where the problem has already been solved, and therefore the proposed wording need not be put in the Bill. It is never very clear why the Minister makes that objection. The wording that we are seeking is very precise in the sense that it covers fares, charges, surcharges and matters like that, whereas much of the Bill is addressed in more general terms and does not actually give a guarantee that the Civil Aviation Authority will pursue this particular issue.
I asked the Minister if he could tell me where in Clause 83 it referred to fares and charges, but he did not respond. He has given a lengthy reply, but he has not actually responded to that quite key point, bearing in mind his assertion, as I understand it, that Clause 83 covers this issue. I believe that it covers this issue only if the Civil Aviation Authority chooses to interpret this general wording as covering this issue. It does not in fact put a requirement on it to do so.
As to seeking to tie the hands of the Civil Aviation Authority, Clause 83 sets out a number of things where it could be argued it is tying the hands of the CAA, in the sense of telling the CAA that there are certain things it has to do. Is it really tying the hands of the CAA to tell it to provide information to the travelling public on something as important as fares, charges and surcharges? The Minister makes it sound like a minor issue.
Earl Attlee
My Lords, it is an important issue and therefore I expect that the CAA will cover it. Why would it not?
Lord Rosser
I will tell the Minister why it would not: because it has not been put explicitly in the Bill. This amendment does so, and the Minister is backing off from it. He keeps saying that it is covered in the Bill, but when I ask where it is in the Bill, once again I do not get an answer. I realise that we are banging our heads against a brick wall—it is quite clear that the Minister is not going to move. I think that this is a matter of real regret because the amendment is designed to assist the travelling public and to make sure that they can be aware of charges and not face the kind of scenario described to us by the noble Lord, Lord Lucas.
We have had the argument again from the Government, as we had in Committee, that people do not know about the CAA website. Frankly, if this kind of comparative information were published and publicised, the public would very soon get the message that the website is the place to go to find out what the charges are. If it is not being published, or if it is to some degree but no one really publicises that fact, then of course people will say that the CAA website is not where they would normally go to look for that kind of information.
I am very disappointed with the Minister’s response. I do not quite know why he wants to dig in in this way on an issue that even he accepts is a problem—a problem that this amendment is one way of addressing. As far as I am concerned, the Minister is not prepared to accept an amendment which is in the interests of the public who use air services. The Minister accepts that there is a problem but, in my view, is not prepared to address it by accepting this amendment. We express our strong regrets at the Minister’s stance, but nevertheless I beg leave to withdraw the amendment.
Lord Rosser
“Access for disabled and reduced mobility air passengers
The CAA will produce an annual report on disabled and reduced mobility air transport passenger experiences of airport operation services and air transport services which must include evidence on the extent to which airport operations and air transport services are compliant with relevant legislation, regulations and codes of practice for the time being in force.”
Lord Rosser
We discussed this amendment at some length in Committee. I do not intend to go through all the points that were made then, which related to a possible conflict concerning the duties of the Civil Aviation Authority. As the Minister will know, this amendment seeks to ensure the production of,
“an annual report on disabled and reduced mobility air transport passenger experiences of airport operation services and air transport services”.
In Committee, the Minister said that one of the reasons he could not support the amendment—I do not wish to suggest that there was the only one—was that it was drafted in such a way as to put the obligation to produce an annual report jointly on the Secretary of State and the Civil Aviation Authority, and he had a significant doubt about linking together the regulator and the Secretary of State in that way. We hope that we have addressed that issue since we have removed the reference to the Secretary of State, leaving just the Civil Aviation Authority to produce the annual report.
In Committee, the Minister also said that,
“the CAA already publishes an annual report and corporate plan and makes a considerable amount of consumer information available on its website”—
a matter that we were discussing in the previous amendment. He went on to say:
“An extra annual report on a specific area of legislation, on top of those more wide-ranging reports, would be disproportionate”.—[Official Report, 4/7/12; col. GC 384.]
I do not see that even with this amendment there necessarily needs to be a separate report from the existing annual report, which I think goes a little way towards addressing that particular concern raised by the Minister in Committee.
The reality is that the Civil Aviation Authority will have a more influential role under this Bill, which gives it additional responsibilities and lays on it a general duty to carry out its functions in a way that,
“will further the interests of users of air transport services”.
The CAA’s enhanced role in furthering those interests of users of air transport services justifies this amendment, which calls for an annual report on the extent to which,
“relevant legislation, regulations and codes”
are being complied with in the experience of disabled and reduced-mobility air transport passengers.
Our main concern is not that there has to be a separate document but that the issue is actually addressed. If the Minister is not prepared to accept the amendment—I imagine that I am not being unrealistic in supposing that that will be the case—can he give assurances that in the annual report from the Civil Aviation Authority there will be a relevant section addressing the issue referred to in this amendment in order to ensure that the interests of disabled and reduced-mobility air passengers are properly furthered and protected by the Civil Aviation Authority, which should stand out as a beacon to be followed in this field? I beg to move.
Earl Attlee
My Lords, I hope that I can do a bit better to meet the needs of the House and the noble Lord, Lord Rosser, on this amendment.
A similar amendment was debated in Grand Committee and during the Commons Committee stage of this Bill. As the noble Lord, Lord Rosser, observed, the key difference with this amendment is one of form rather than substance as the requirement to produce an annual report is placed only on the CAA, not jointly with the Secretary of State, as previously tabled.
I am afraid that I must oppose this amendment again and I will try to explain why. Of course, the Government agree that it is very important that airlines and airports are sensitive to the needs of disabled people and those of reduced mobility and that they fully comply with the European regulation that has been enacted to give access to air travel for people with disabilities.
There are, however, a number of reasons why the Government do not support this amendment. First, there are effective mechanisms already in place to secure the result intended. The CAA already publishes an annual report and corporate plan and makes a considerable amount of consumer information available on its website. The noble Lord, Lord Rosser, asked me to commit the CAA to including a section on this issue in its annual report. I have already made my Bill team manager very cross and I do not intend to risk doing it again. The noble Lord will understand that I would be making a serious mistake if I agreed to commit the CAA to include anything in its report that was not actually required by statute. An extra annual report on a specific area of legislation, on top of these more wide-ranging reports, seems disproportionate.
The CAA is already committed to the principles of Better Regulation and aims to be as transparent as possible in all its work, including in relation to compliance and enforcement with consumer protection legislation. It is also worth pointing out that disabled consumers benefit from the whole suite of EU consumer protection legislation for aviation, not just regulation 1107/2006 on specific rights for disabled persons and persons with reduced mobility when travelling by air, but regulation on cancellation and delays and on ticket price transparency. Therefore, it makes more sense for consumer issues to be considered in the round when these matters are reported on.
Secondly, such an obligation could result in an extra administrative and resource burden on the CAA, whose costs would have to be passed on to the industry. Thirdly, and most importantly, there is a new and better mechanism that I believe should be utilised instead. The CAA has set up a new consumer advisory panel to act as a critical friend to the regulator on behalf of all consumers as it moves forward in putting the consumer at the heart of its regulatory effort.
In April, the CAA announced that Keith Richards would chair the new consumer panel. Mr Richards has considerable experience of the disabled air passenger experience, having been chair of the aviation working group at DPTAC for many years, as well as being a former head of consumer affairs at ABTA. Since then, the CAA has completed the process of recruiting nine panel members to complete its complement, and the new body has had its first meeting. I hope that the noble Lord, Lord Rosser, is not going to suggest that Mr Richards is not a good appointment for this task. I am sure that he will do an excellent job.
Clearly, the CAA and the new panel will need time to develop their relationship, but it would not be unreasonable to suppose that the passenger experience of disabled people at airports and on planes would be of considerable interest to the panel. I suggest that it would be better to allow the panel to have the space to develop how it will go about its work and how best to support and inform passengers rather than to have an obligation imposed on the CAA in this way. In view of this, I hope that the noble Lord will agree to withdraw this amendment.
Lord Rosser
Before I do that, I am aware of the panel, not least because the Minister referred to it in Committee. As I recall, it is an advisory panel—it is not any the worse for being that but it does not have executive powers. Is the Minister able to say whether this panel will produce a report that will be in the public domain?
Earl Attlee
My Lords, I would expect it to produce reports that would be published. If I am wrong on that, of course I will write to the noble Lord.
Lord Rosser
I would be grateful to know from the Minister what the position is on that. Clearly, if this panel were to produce reports that would be made public, one would be able to see that the panel was giving appropriate attention to issues affecting disabled and reduced-mobility air transport passengers. More importantly—since I am sure that it would seek to do that—one would be able to see what action the Civil Aviation Authority had taken in the light of any recommendations, complaints or problems the panel had drawn attention to. I would certainly be interested if the Minister could let me know if it will be producing reports that all of us will be able to see. In the light of that, I withdraw the amendment.
Earl Attlee
“( ) is a person in respect of whom a debt relief order has been made under Part 7A of the Insolvency Act 1986,”
Baroness Worthington
“General environmental duty
In carrying out its functions, the CAA must, where possible and appropriate, have regard for the effect on the environment and on local communities of activities connected with the provision of airport operation services and air transport services.”
Baroness Worthington
My Lords, I must apologise. I have just come back from a foreign trip and picked up a rather bad cold; I am sorry about that. I wish to speak to Amendment 60 because we had an excellent discussion in Committee about environmental issues in the Bill. This evening, at the start of our debate, we touched on the importance of environmental issues. We acknowledge again how grateful we are for the Government accepting our earlier amendments because we think that it is important that we get this one right.
Amendment 60 would place a general environmental duty on the CAA requiring it, in the process of carrying out its functions,
“where possible and appropriate, have regard for the effect on the environment and on local communities of activities connected with the provision of airport operation services and air transport services”.
We covered the subject in some detail in Committee, and I was delighted that we received considerable support for Amendment 69, as it was numbered then. I am sad that the noble Earl, Lord Cathcart, is not here this evening to contribute to this debate, because he made such an excellent contribution to our Committee discussions. He pointed out, and I repeat, that in 2007, when Sir Joseph Pilling conducted a strategic review of the CAA, he noted that it would be a “notable gap” if there were not a general environmental duty placed on the CAA, that,
“the CAA’s responsibility is to safeguard the general public interest, which is broader than the aviation community”,
and that,
“a general statutory duty in relation to the environment”,
would be a good idea. That is what we sought to achieve in Committee and seek again to do here with Amendment 60: introduce a general environmental duty.
It has been said before, but I will say it again: there are precedents for such regulation. Our other economic regulators have such duties. The Office of Rail Regulation’s duties include,
“to have regard to the effect on the environment of activities connected with the provision of railway services”
and,
“to contribute to the achievement of sustainable development”.
Ofgem’s duties include to,
“have regard to the effect on the environment”,
of activities connected with, the generation and supply of electricity. There is something similar in the duties of Ofgas and Ofwat. Pretty much all the economic regulators which govern sectors with an environmental impact have that duty. Why should we not have such a duty in the Bill? There is widespread support for it and I think it is essential.
In its response to the Committee, the Minister said that he did not see the need for an environmental duty because it would apply to only three airports in the country. That may be true of the clauses that we discussed earlier, but in this case, when we are talking about general duties on the CAA, it would apply to the whole sector. That is very important. I wait to hear the noble Earl’s response to the amendment.
I finish by reiterating what I said earlier. Aviation is an important sector. It has a unique position in its environmental impact. Some of its activities are included in our carbon budgets, some are not. We look forward to the Government deciding whether they will move to include all aviation emissions in the carbon budgets. At the moment, not to include a general environmental duty in the Bill would seem weird compared to the duties that exist for other regulators. We had widespread support for this proposal in Committee, and the Minister said that he would come back and that he hoped that we would not be disappointed before the end of our proceedings. We are reaching the final stages; currently, we are still disappointed, although we recognise the concessions made this evening. We hope that a general environmental duty will be included; that is the strongest signal that we can send that we take these issues seriously and place a great deal of importance on them. I beg to move.
Lord Deben
My Lords, I declare an interest in various environmental organisations, as in my declaration of interests. I underline the importance of the amendment in this sense. It is precisely because we have put such a requirement in so many other areas that it is important not to leave it out here. I know that it is a tendency of government to say, “This is otiose. It is perfectly possible to deal with these matters without a specific reference”, but I speak with the sore memory of having to deal, as Secretary of State, with the gas regulator at the time, who claimed that because she did not have a specific requirement in this area, she could not take into account the issues with which we are concerned.
I have no doubt that the Minister has been encouraged by his civil servants not to take the amendment on board. The phrase “better not” will probably have been evinced. I hope that, at the very least, he will agree to go away to think about it again. It is all too easy for regulators to say, “If the rail regulator has it and we do not, it must have been because Parliament did not see us in the same way”. I fear that that is an increasing tendency and it is something about which we must be very careful.
As chairman of the Committee on Climate Change, I am extremely careful not to have mission creep, so I am not in any sense making comments about the way in which we run our airports, but it seems to me, as an environmentalist, that it can do no harm to repeat the Government’s commitment to the environment, to its desire to become the greenest Government ever and to the general understanding that aviation plays a particular part in the difficulties with which we are faced in dealing with not only climate change but local environment pollution and the considerations which come around any airport.
I come to my last point. I doubt that the Minister will have had a chance to read the main article in Bloomberg News, but I hope that he will take the opportunity of doing so. If he does not have it immediately at hand, I will send him a copy, because it reminds us how immediate are the environmental demands which face us. I very much hope that he will find it possible to accept what seems to me to be an innocuous—in other words, in no way a damaging—amendment and something on which we on both sides of the House could agree.
Earl Attlee
My Lords, I thank the noble Baroness for expressing once again the reasoning behind her amendment. I also recognise the contribution from my noble friend Lord Deben. However, I fear that I cannot accept the amendment. I urge noble Lords to consider the positive work that this Government have already set in train to address the underlying general environmental concerns. Indeed, earlier this afternoon, on an environmental supplementary duty in respect of the CAA’s airport economic regulation functions, I referred to some examples of the action taken by this Government to ensure that the sector makes a significant and cost-effective contribution to mitigate the adverse environmental effects of civil aviation in the UK. I also urge your Lordships to consider the merits of the amendments we have already agreed to address the specific concern of the impact of the airport economic regulatory regime on the environment.
Let me now address this amendment, which seeks to provide the CAA with a general environmental duty. The previous Government consulted on giving the CAA a general environmental objective, alongside proposed safety and consumer objectives, in December 2009. The responses were mixed, with airport operators in favour but airlines opposed. The majority of airline respondents felt that it was for the Government to set the direction of environmental policy but for the CAA to regulate, and that giving the CAA an environmental objective would blur the boundary between policy and regulation and could create additional costs on the industry. They felt that it was not appropriate for the CAA to have to make environmental judgments on noise or emission levels at airports but instead that it was more appropriate for it to regulate the impacts in line with government environmental policy. We talked earlier about the difficult policy issue of Heathrow Airport, the background to which is of course an environmental issue regarding what the environment can tolerate. However, these issues are a matter for central Government.
Since the consultation, the CAA has included an objective in its Strategic Plan: 2011 to 2016:
“To improve environmental performance through more efficient use of airspace and make an efficient contribution to reducing the aviation industry's environmental impacts”.
I will come back to that in a little more detail in a moment. Additionally, the information, guidance and advice duties and powers in the Bill are now stronger than those that were consulted on. The CAA has a duty to secure publication of appropriate environmental information. Environmental impacts have been defined very broadly in Clause 84 to include noise, vibration, emissions and visual disturbance from aircraft as well as the “effects from services” and facilities “provided at civil airports”.
The knock-on consequences for human health are also covered by the information provisions in Clause 84. This is a very important issue for some communities and one where additional information could provide a valuable contribution to an informed debate. Noble Lords should be in no doubt that there are real benefits to be gained through the collection of good quality environmental information that can be presented in a consistent way to help passengers and freight owners judge the environmental impact of their travel choices. In addition, the CAA will be able to publish guidance and advice with a view to the sector limiting or controlling the adverse environmental effects of civil aviation in the UK. I suspect that the environmental effect that most concerns the noble Baroness is that of CO2 emissions.
The CAA is also already undertaking and supporting a number of actions to deliver positive environmental outcomes. Two examples of that include, first, the CAA’s work on implementing the Single European Sky initiative to enhance the design, management and regulation of airspace across the EU by moving from airspace divided by national airspace boundaries to functional airspace blocks. It is estimated that since 2008, the UK-Ireland functional airspace block has provided approximately £35 million of savings, including around 150,000 tonnes of CO2. Under the EU’s Single European Sky legislation, the environment is considered to be as important as safety and efficiency and there are EU-wide performance targets on the environment. The CAA has reflected this additional emphasis on the environment in its regulatory approach to the provision of air traffic management services.
Secondly, the CAA is also continuing to develop and take forward the future airspace strategy to modernise the UK airspace system. Again, I have organised a presentation for your Lordships to understand the work that is going on. This includes a clear driver to implement air traffic management improvements that reduce emissions from aircraft and contribute to minimising aviation’s environmental impact. These include enabling more direct routes and optimal vertical profiles, continuous climb and descent procedures and reduced reliance on stack holding, which all reduce greenhouse gas emissions. Both these developments will be positive for CO2 emissions; indeed, that is one of the drivers for them. I hope that the House will agree that we have struck a good balance on the environment, since we have already agreed some useful amendments today, and that the CAA will be better placed than ever before to take environmental matters very seriously, as we would expect it to do. I hope that in due course the noble Baroness will withdraw her amendment.
Baroness Worthington
My Lords, I thank the Minister for his comments but I am disappointed. It is fine to list all the wonderful things that the CAA, the aviation industry and the Government are doing but the fact of the matter is that environmental issues are absolutely crucial. We must always remember that everything else, such as the economy, is a subset of the environment. If we wanted a reminder of that, we need look no further back than two weeks ago when Hurricane Sandy blew into New York and its stock exchange closed for two days because some things are even more important than our economy.
It is very regrettable if the wisdom of putting a duty into this Bill about the environment cannot be seen. Clearly, this is a sector with a large environmental impact. The measures that the Minister has listed arise because of the significance of its impact. I cannot see why this sector should have a regulator that does not have an environmental duty when all other sectors appear to have one. I do not think that the Minister provided a clear rationale for why this should be the case and aviation should be singled out. If anything, his list of the measures being undertaken makes me consider that there ought to be a broad environmental duty to give the CAA cover for undertaking all these activities. How can it be that we have introduced all these environmental aspects but not given the broad framework from which they may hang? I am afraid that I am not persuaded.
Lord Deben
Does the noble Baroness agree that the fact that the airlines are unhappy about this should not necessarily be the closing remark and that, in most cases, those who are to be regulated would prefer not to be so? We have to be a little careful about taking that as a final sum.
Baroness Worthington
Absolutely. I was going to comment on that very fact, because the Minister began by commenting that responses were mixed. Of course they were mixed. It actually pleases me that the airport operators were in favour. We are really just listening to turkeys when we want to talk about Christmas, which is never a good way to start thinking about making comprehensive and sensible legislation and regulations. As I hope your Lordships can tell, we are very disappointed on this side. This is not a partisan issue; there has been cross-party support on this question all the way through the process. The House will not be satisfied by the arguments put forward, I think, and we will come back to this. However, at this stage, with regret, I beg leave to withdraw the amendment.
Lord Rosser
“Accounts and audits
(1) Section 15 of the Civil Aviation Act 1982 (accounts and audit) is amended as follows—
(a) in subsection (1), for paragraph (c) substitute—“(c) to send copies of the statement of accounts to the Secretary of State and the Comptroller and Auditor General before the end of the November following the accounting year to which the statement relates;”(b) in subsection (2), for paragraph (a) substitute—“(a) the National Audit Office shall examine, certify and report on each statement of accounts received under subsection (1) and shall lay copies of the statement of accounts and of its report thereon before each House of Parliament.”(2) In Part 1 of Schedule 4 to the National Audit Act 1983, (nationalised industries and other public authorities), leave out “Civil Aviation Authority”.”
Lord Rosser
My Lords, this amendment provides for a new clause which would give the National Audit Office oversight of the Civil Aviation Authority’s accounts. Other regulatory bodies including economic regulators which are also industry funded, such as Ofgem, Ofwat and Ofcom, are subject to National Audit Office oversight. The Office of Rail Regulation is also subject to National Audit Office oversight and is likewise funded from within the industry.
As we know, the Civil Aviation Authority is funded from the aviation industry and also receives a limited amount of money from the taxpayer, but it is not subject to National Audit Office oversight. In its report, the House of Commons Transport Select Committee called on the Government to explain why the Civil Aviation Authority is apparently unique among industry regulators in being outside the remit of the National Audit Office. So, clearly, it did not think that a strong case had been made for that situation to continue.
In Committee, the Minister said:
“I remain unconvinced that there are compelling reasons to believe that NAO scrutiny of the CAA would deliver a different result from the current and new mechanisms by which the CAA's functions are already audited and scrutinised”.—[Official Report, 9/7/12; col. GC 464.]
He accepted that other industry-funded regulators come under the scrutiny of the National Audit Office. In our view, the onus lies on the Minister to show why the arrangements for the Civil Aviation Authority should be different from those for other regulators, rather than, as he put it in Committee, saying that we have to make the case. It is the Minister who has failed to make the case for not having NAO involvement, and for that reason we have brought this amendment back on Report. We hope that the Minister may have had a change of heart on this point. I beg to move.
Earl Attlee
My Lords, I fully agree with your Lordships on the need for the CAA to be efficient in carrying out its functions, and I welcome the points made in the debate to provide for auditing of the CAA. However, I am still not able to support the amendment or its principle.
Noble Lords will recall that very similar amendments to Amendment 61 were tabled in the other place both in Committee and on Report and also in this place in Grand Committee. As I explained in Grand Committee, the Government would look to those proposing to reinstate the role of the Comptroller and Auditor-General to provide compelling reasons why NAO scrutiny of the CAA would deliver a different result from its current mechanisms. In the absence of such a justification, and having considered this issue further myself, I remain unconvinced that there are compelling reasons to believe that NAO scrutiny of the CAA would deliver a different and better result than the Government’s current and proposed mechanisms for the audit and scrutiny of the CAA.
The CAA is already under a duty to keep proper accounts and records in relation to the accounts and to make an annual report to the Secretary of State on the performance of its functions in that year. Copies of the accounts, the annual report and any report made by auditors are laid in each House of Parliament by the Secretary of State. Section 15 of the Civil Aviation Act 1982 already provides that the Secretary of State will appoint the auditors. The Government have tabled an amendment to the Bill that will provide for better transparency of the CAA’s efficiency measures and for better accountability for those measures, and we will debate this shortly as Amendment 62.
That amendment will provide for increased transparency of the CAA’s action to improve its efficiency by, first, requiring that the CAA includes in its annual report a statement about efficiency in the performance of its functions; secondly, providing a specific power for the Secretary of State to give directions about matters that must be covered in that efficiency statement; thirdly, requiring that the auditors, appointed by the Secretary of State pursuant to Section 15 of the Civil Aviation Act 1982, produce an assessment of the efficiency statement; and, fourthly, providing that the CAA’s annual report includes the auditors’ assessment of the CAA’s efficiency statement in respect of that accounting year. These are sufficient to give the CAA a strong incentive to secure value for money and to be as efficient as possible in performing its functions. I take it that the noble Lord is worried about the CAA’s efficiency and proper performance of its functions rather than that it properly accounts for expenditure.
Furthermore, it is not appropriate for the CAA to be audited by the NAO. First, NAO audits are usually of bodies whose income is largely from public sources, whereas only 4% of the CAA’s income comes from those sources. Secondly, one consequence of an NAO audit role would be that the CAA’s auditors would no longer be appointed following a competitive tendering process. This would remove efficiencies made possible by the tendering process that would precede any appointment of auditors for the CAA by the Secretary of State. Thirdly, the independent review of the CAA by Sir Joseph Pilling, published in 2008, considered the need for an NAO role and rejected it. The recommendation was subsequently accepted by Ministers under the previous Government, and I have yet to see convincing reasons why they were wrong.
Representatives of airlines have suggested to us that the benefit of an NAO role lies more in the value-for-money audits that the NAO would be able to carry out than in the audit of the CAA’s accounts. In that respect, I remind your Lordships that such NAO reviews typically occur on a cycle of five or so years. However, the efficiency statement and report that are now under consideration would be annual.
In conclusion, while the Comptroller and Auditor-General and his staff at the NAO do a highly effective job, I am not persuaded that it is necessary to bring the CAA within their remit. I therefore see no reasons at the current time why the NAO should audit the CAA. I ask that the amendment be withdrawn, and we should look forward to debating my Amendment 62.
Lord Rosser
I thank the Minister for his response. He is obviously very keen to get on to Amendment 62 on the efficiency aspect. I shall withdraw the amendment since the Minister has clearly not changed his view on this, but the reality is that the CAA appears to be largely unique among industry regulators in being outside the remit of the National Audit Office. I was not entirely clear about the significance of the Minister’s point about loss of competitive tendering, if I understood him correctly, since I do not know whether that is meant to suggest that the role of the National Audit Office in relation to other industry regulators is being reduced or eliminated—if that is the Government’s argument for not doing it here. I beg leave to withdraw the amendment.
Earl Attlee
“CAA efficiency
(1) Section 21 of the Civil Aviation Act 1982 (annual report) is amended as follows.
(2) In subsection (2), after paragraph (d) insert—
“(e) shall contain a statement by the CAA about efficiency in the performance of its functions (an “efficiency statement”);(f) shall contain the auditors’ assessment mentioned in subsection (2B).”(3) After subsection (2) insert—
“(2A) The Secretary of State may from time to time give directions about matters that must be covered in an efficiency statement, including matters relating to the plans or the past or present activities of the CAA.
(2B) The auditors appointed under section 15(2) in respect of an accounting year must produce an assessment of the efficiency statement for that year.””
Earl Attlee
Your Lordships may recall that, during Grand Committee consideration of the Civil Aviation Bill, we debated amendments relating to the efficiency of the CAA. In responding to the Committee, I undertook to continue to reflect on the matter and to consider what further reassurances could be given on Report. That thorough consideration has led to Amendment 62. We have concluded from our discussions with the aviation industry, and from the debates here and in the other place, that the key concerns that had to be addressed were the need for transparency of the CAA’s efficiency measures and for further accountability for them. That was what I teased the noble Lord, Lord Rosser, about on the previous amendment.
In responding to Amendment 61, I described the four elements of Amendment 62. The Secretary of State is already required under Section 21(3) of the Civil Aviation Act 1982 to lay before each House of Parliament a copy of every report made to him in pursuance of that section. If Amendment 62 is accepted, in future the annual report laid in each House will include an efficiency statement made by the CAA and the auditor’s assessment of that efficiency statement. Taken together, these provisions provide for better transparency of the CAA’s efficiency measures and better accountability for those efficiency measures, which is an end I am sure most noble Lords would desire. I therefore urge your Lordships to accept Amendment 62. I beg to move.
The Countess of Mar
My Lords, I am pleased to see the amendment because it gives me a chance to ask the Minister about my airline pilots. He will now be aware that a great many airline pilots believe that they are ill because of fumes in the cockpit. I am pleased to see that his department is now going to answer letters from airline pilots slightly more kindly than they did in the summer.
One of the duties and functions of the Civil Aviation Authority is the enforcement of the Health and Safety at Work etc. Act 1974 through the working time regulations. I have ascertained—not from his department but from the Department for Work and Pensions through the Health and Safety Executive—that no measures have been taken by the Civil Aviation Authority to enforce any health and safety at work contraventions in the time that it has had this power. I find that almost unbelievable because we know of several cases where airline pilots have come off their aeroplane and had to be taken to hospital.
Will the Minister confirm that the Civil Aviation Authority has the duty to enforce the Health and Safety at Work etc. Act 1974 for people on board an aeroplane, whether it is on the ground in the airport or in flight? Will the CAA make a statement about the imposition of its functions in this requirement under the Health and Safety at Work etc. Act 1974?
Lord Wigley
My Lords, I strongly support the remarks of my noble friend Lady Mar. I admire the campaign that she has been running and will no doubt continue to run until it achieves success. In giving that support, I have questions for the Minister. In Committee, the Minister suggested that very little evidence had been brought to his eyes supporting the contentions that have been made in this matter. Will he tell the House how many representations that he has had since Committee stage? Will he accept that significant representations have been made and that those should be considered?
Lord Davies of Oldham
My Lords, we began our deliberations today with the Minister making a response which greatly cheered the Opposition. I was going to return that sentiment by indicating how much I appreciated this government amendment. However, the Minister’s life, of course, never runs smooth. Questions have been addressed to him about the role of the CAA in an important area and he must address his mind to them.
Having accepted that he must tackle those issues in his reply, the Opposition very much welcome the government amendment. We had substantive discussions in Committee about these issues. The Minister said that he would take the issues away and come back with some proposal. This is an excellent proposal, which will guarantee that the efficiency of the CAA will be subject to scrutiny and—more than scrutiny—to prompting, whether it be from the Secretary of State, or the Secretary of State after prompting from Members of the Cross Benches in this House.
Earl Attlee
My Lords, it may be helpful to the House if I respond to the noble Countess’s point about cabin air quality. First, I have full confidence in the advice that officials have given me, and everything that they have done has been in accordance with my intent. However, I agree that it was unfortunate that official letters from officials were not personally addressed to the addressees. I accept that point.
The noble Countess and the noble Lord, Lord Wigley, will recognise that they have raised issues slightly wide of the amendment. However, I will write to them. I have already answered Questions for Written Answer on the health and safety issue, but I will gladly repeat that information in a letter to the noble Countess.
The Countess of Mar
Before the noble Earl sits down, can he confirm that it is a function of the Civil Aviation Authority to enforce the terms of the Health and Safety at Work etc. Act?
Earl Attlee
My Lords, I refer the noble Countess to the Questions for Written Answer that I have answered.
Lord Rotherwick
Lord Rotherwick
My Lords, Amendments 63 and 64 address the third and final point of principle I wish to pursue with my noble friend the Minister.
I regret the need to return to the House with concerns over Clause 102. My noble friend the Minister helpfully invited me and my advisers to the meeting he chaired with CAA and Department for Transport officials. We were able to voice the very deep concerns in the GBA community over the nature and scope of the change that this clause would bring about and our concerns over the way in which this new activity would be administered.
The further information I was expecting by Report stage, with regard to making claims for prosecution costs in respect of civil penalties and what would happen to any such amounts, has not been forthcoming, nor has any further information emerged about the process by which the range of offences to be dealt with under the new powers are to be selected. This does nothing to lessen my concerns and I hope that my noble friend will be able to provide that information in his response.
Clause 102 of the Bill amends Schedules 5 and 7 to the Regulatory Enforcement and Sanctions Act 2008. It adds the CAA to the list of 27 “designated regulators” that may be empowered by order to issue fixed penalty tickets. It adds to the existing list of 45 regulatory provisions contained therein a 46th, which includes Section 61 of the Civil Aviation Act 1982. The effect of this is to bring Section 61 of the Civil Aviation Act within the scope of the powers of the Secretary of State under Section 36 of the Regulatory Enforcement and Sanctions Act 2008 and allow him to make an order empowering the CAA to issue fixed-penalty notices in the same way that the police do for alleged Road Traffic Act offences.
Section 61 of the Civil Aviation Act is the enabling provision covering the Air Navigation Order. The ANO is a complex document of some 500 pages, detailing thousands of legal requirements for technical and operational matters, such as record-keeping, pilot and aircraft licensing, the rules of the air, aircraft airworthiness and the equipment to be carried on an aircraft.
So we know what Clause 102 will do, but we do not know why. We remain unenlightened as to the justification for this change or the benefits or costs associated with it. We can only infer that the change is proposed because existing sanctions are inadequate and these new sanctions will achieve an improvement in compliance that cannot be secured through existing powers.
In the interests of good government, one would assume that the public good to flow from the exercise of these new powers will bring a benefit to the UK that will exceed the cost of introducing and exercising them. But neither the Department for Transport nor the CAA has made any attempt to quantify the costs or benefits. We are told that they will not do so until after the Bill has passed, the powers have been granted and they have prepared the order implementing the scheme. So perhaps the monetised costs and benefits are outweighed by the public good that will result. The Government’s own published papers say that the main non-monetised benefit,
“is the potential for increased compliance with certain areas of aviation regulation and therefore better protection of passengers and a more level playing field for businesses”.
However, there is no information on the extent of the potential increase in compliance or an identification of the certain areas of regulation.
It is no good for the justification for these powers to be obscured in this way. If there is a reason, it should be made clear so that the House may consider the powers. What compelling reason is there? What improvement in compliance is expected to be achieved? What areas of aviation regulation are failing at present? If we are not persuaded, I may urge noble Lords to support the amendment.
At present, UK aviation, especially GBA, operates in what is described as an open reporting safety culture. The vast majority of pilots, aircraft operators and engineers take their legal responsibilities for flight safety and airworthiness very seriously. There are successful and well supported systems for the voluntary reporting of near misses and general safety occurrences. That takes place in the light of the existing range of prosecution powers, which are used by the CAA where it has evidence to support its case. I understand that in the four years to March 2008 the CAA prosecuted 119 cases of breaches against aviation legislation. This hardly suggests a compliance deficit, given the enormous range of activities. The CAA policy on prosecuting correctly takes account of the fact that the present collaborative approach, where individuals and organisations are free to share information and concerns with the regulator, is more beneficial to safety for the vast majority of people. That valuable safety culture may be undone if the CAA were able automatically to issue fixed penalties. I say that in respect of alleged offences. This may change the relationship between pilots, operators and service providers. If a “no blame” open reporting culture were replaced with prosecution as an administrative commonplace, all the good work built up over decades would be squandered.
The introduction of fixed penalty procedures would also shift the burden of proof. The recipient of a penalty notice would be faced with the alternative of paying up or challenging the ticket in the courts. I am deeply concerned about the financial aspects of this. The penalties imposed under this system will flow to the Treasury. Clause 102 allows the Secretary of State to empower the CAA to recover the costs associated with the fixed penalty ticket system. Therefore, the CAA will be able to launch a new regulatory operation to recover the costs from those it penalises. What incentive does this provide for the CAA to exercise this new function correctly? I was expecting further information on this and it is yet to appear.
We run the risk that our open reporting culture will be fatally damaged, which will work against the interests of increased flight safety. The CAA has adequate penalties and powers of prosecution at its disposal, which it uses wisely and sparingly. No case has been made to the GBA community and no consultation undertaken to back this change. The Bill was consulted on, but inadequately so in respect of the detailed implications and impact that this clause would have on the aviation community. At the very least I would expect my noble friend the Minister, when he winds up on this group of amendments, to provide an assurance that the GBA community will be consulted in detail on the proposed scope and operation of any civil penalty scheme.
I say to my noble friend the Minister that the present arrangements in respect of enforcement of the ANO are working well and with the active consent and participation of the aviation community. We should continue to develop that spirit of co-operation which has achieved so much over the years. My amendment to strike out Section 61 from Clause 102(3) will achieve that. I beg to move.
Earl Attlee
My Lords, while I fully appreciate my noble friend’s concerns in respect of the general and business aviation sector, and the effect on that sector of allowing the CAA to make use of alternative civil sanctions in enforcing offences under an air navigation order, I oppose this amendment because it dilutes the intention of Clause 102.
Noble Lords may recall that my noble friend tabled, and this House debated, an identical amendment in Grand Committee before it was withdrawn, and there is more or less only one way for my noble friend to achieve his objectives. Before turning to the detail of the points made by my noble friend on this amendment, it is important to emphasise the purpose and importance of the clause this amendment seeks to alter.
Clause 102 amends Part 3 of the Regulatory Enforcement and Sanctions Act 2008 to enable the Secretary of State to make an order conferring on the CAA the power to make use of civil sanctions where it currently relies almost exclusively on criminal prosecutions. We believe that criminal sanctions are disproportionate in relation to some offences, such as minor breaches or offences of an administrative nature, especially when it comes to a normally diligent and conscientious person.
For example, the CAA has an enforcement function in respect of a number of offences using criminal sanctions which entail liability to a summary conviction and a fine. These include failing to return a certificate of registration to the CAA; failing to preserve a log book; failing to keep a personal flying log book; or failing to carry when in flight documents such as the licences of the flight crew of an aircraft or the certificate of registration in force for the aircraft. Another example is where an organisation does not hold an air travel organisers licence when it is required to do so—in other words when it is trading without the necessary licence. Should a person fail to comply with such a requirement, a civil sanction might well be considered to be a more appropriate enforcement action than criminal prosecution.
Providing the CAA with powers to address non-compliance using civil sanctions would help to reduce the risk of a compliance deficit where such offences might on occasion not be prosecuted at all because on the facts a criminal prosecution was considered disproportionate to the breach, excessively time consuming or expensive. However, my noble friend should be aware that the criminal standard of proof still applies. It needs to be more than just an alleged offence.
The purpose of providing the CAA with a range of additional enforcement tools as an alternative to a criminal prosecution is to allow more graduated and flexible enforcement. For example, some of the civil sanctions available under RESA are variable monetary penalties of an amount to be determined by the regulator; compliance notices containing a requirement to take specified steps to ensure an offence does not continue or happen again; and enforcement undertakings where a person may volunteer a resolution by giving an undertaking to take one or more corrective actions.
Clause 102 enables the Secretary of State to confer civil sanctioning powers on the CAA in respect of offences under primary legislation and extends certain powers of the Secretary of State in the Civil Aviation Act 1982 to make criminal offences by secondary legislation. These include the power of the Secretary of State in Section 61 to create criminal offences under an air navigation order. Such orders set the rules, which the CAA largely enforces, that regulate air navigation in the UK. Conferring RESA civil sanctioning powers on the CAA in respect of offences under an air navigation order would require secondary legislation to be laid before Parliament.
Moreover, the instrument would be subject to full consultation and impact assessment, providing an opportunity for all interested parties to make their views known. We fully intend to write to stakeholders, including those in general aviation, informing them of the consultations in ample time to brief their members to involve themselves. We will involve as many individuals and groups as general aviation stakeholders bring to our attention.
The amendment would deprive the CAA of the use of civil sanctions in respect of offences in an air navigation order. This would significantly dilute the intended purpose of Clause 102 to allow the CAA to make use of alternative civil sanctions. My noble friend referred to the complexity of the ANO, but regretfully there are several regulations that are very complicated. I am interested in the ones on road vehicles, and the construction and use regulations are extremely complicated—and, in addition, refer to other European regulations and directives as well.
The inclusion of Section 61 of the 1982 Act is of central importance, as it will enable the Civil Aviation Authority to use civil sanctions in respect of offences in the air navigation order, which is the most significant instrument for the regulation of air navigation in the UK. Concerns have been expressed during the passage of the Bill as to CAA’s use of civil sanctioning powers. RESA contains a number of safeguards to this effect. For example, before making any order, the Minister must be satisfied that the regulator will carry out its activities in a way that is transparent, accountable, proportionate, consistent and targeted only at cases where action is needed. Prior to exercising any civil sanctioning powers, the CAA is required to consult on and publish detailed guidance on its use of civil sanctions and enforcement of particular offences. For these reasons, I hope that my noble friend will consider withdrawing his amendment.
Lord Rotherwick
My Lords, I thank my noble friend for his words and reiterate that I tabled these amendments owing to the uncertainty and concerns about Section 61 in Clause 102(3) that were caused in the GBA community. The Minister’s remarks are helpful and I thank him for them and look forward to reading them in Hansard tomorrow. I beg leave to withdraw the amendment.
Earl Attlee
(a) paragraphs 1 and 7 of Schedule 10 and section 76(5) so far as it relates to those paragraphs, and(b) this Part.”
Wales: Economy
(11 years, 12 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord German
To ask Her Majesty’s Government what actions they are taking regarding the challenges faced by the Welsh economy, and how they are ensuring that the Welsh and United Kingdom Governments work closely together in the interests of the Welsh people.
Baroness Northover
My Lords, because the Question for short debate of the noble Lord, Lord German, will now be taken as last business, the time limit becomes 90 minutes rather than 60 minutes. Speeches should therefore be limited to 10 minutes; the speech of the noble Lord, Lord German, remains as 10 minutes and the Minister’s as 12 minutes.
Lord German
My Lords, I begin my speech today by paying tribute to my noble friend the Minister and welcoming her to her new position as well as her first appearance at the Dispatch Box. I hope that nothing that I might say, or that other noble Lords might say, gives her any difficulty in responding to questions about Wales that we pose in this debate.
The economic health of Wales is the most important issue of all facing our country. Jobs, prosperity and the well-being of our people depend upon it, but there are some worrying underlying trends which are holding Wales back. I want to examine those issues today and to look at some potential solutions.
Despite 13 years of a Welsh Assembly, economic performance in the country still languishes at the bottom of the league. There is an overdependence on the public sector, and lower private sector development than is needed to pull Wales up by its bootstraps. In 1989, GVA per head in Wales was 84% of the UK average; in 2009—these are the latest figures available—it was 74%. GDP in Wales in 2010 was 80% of the European average, compared to 111% in the UK as a whole, and in west Wales and the valleys that fell to 68%. In the last quarter, public sector employment in Wales represented nearly 26% of the total workforce, higher than in any other part of Great Britain.
Wales went through its last industrial revolution in the mid and later 20th century, with the virtual ending of coal and heavy, smokestack industries. The replacement was with inward investment companies from around the globe, producing goods for the UK and European markets. That was a difficult transition, but it was a transition. Unfortunately, some of that has remained, but much has moved on to areas of cheaper labour cost. Once again, Wales needs to look for a different pattern of economic development, which is why the UK and Welsh Governments need to work together.
The levers that affect economic change are split between the Welsh Government and the UK Government. Working in different directions would at worst be pointless and could also result in overlapping or duplication of support and effort. By way of example of the split of those levers, we can take employment issues. The Work Programme remains with the UK Government but the Welsh Government provide apprenticeships. Financial support between SMEs is split between some of the banking provision and work that the UK Government do and the small, support grant aid that the Welsh Government provide. On exporting activities, the Welsh Government lead trade delegations, and so do the UK Government; sometimes they work hand in hand, but sometimes they do not. Essentially, the microeconomic and macroeconomic measures that Governments can take are split between two Governments.
We await the report of the Silk commission, which will undoubtedly propose changes to the ability of the Welsh Government to use financial levers. These are crucial, because the Welsh Government will benefit from financial incentives to boost the Welsh economy. I am therefore somewhat surprised that Labour seems to have rejected income tax powers. It is not about the variation of income tax—whether it is 1p up or 2p down, or whatever—but about raising the tax base overall in Wales, which will give the Welsh Government a better income. The more successful that the Welsh Government are in raising the tax base of Wales, the more money they will have to spend on public goods. And it is important that the Welsh Government should have financial incentives to do better; it goes alongside borrowing powers. You cannot use one without the other.
The other issue is the use of European funding. Wales will in all likelihood have a third round of the highest level of European support, subject to a budget which I understand some in the other place are striving to reduce. But there is a need to refocus the use of that European money and concentrate on private sector development—small company growth, new business formations, supply chain support, new financial support mechanisms, exporting, and redoubling the effort that we put into skills development and training. Convergence funding is very likely to continue, because GVA in west Wales and the valleys in 2010 was 68% of the European average, well below the current 75% qualification threshold for the highest level of funding. To measure that against the figure for the UK as a whole, it was 111% of the European average.
The recently published Heseltine report suggested bringing together many structural funds to try to create an armoury of financial weapons, with the ESF, ERDF, the marine and fisheries fund and the European agricultural fund for rural development, so that there could be an organised direction for European funding, particularly to aid the goals of small and medium-sized enterprise growth, skills and training. I would like to know the Minister’s attitude towards the proposed Atlantic strategy, which of course is now in its formation and which would serve the purpose of doing just that for Wales.
Where are the opportunities for the future? Manufacturing is a key Welsh advantage, and always has been in recent decades. In 2010, manufacturing made up 18% of the Welsh economy, compared to 12% of the UK as a whole. The automotive sector, pharmaceuticals and steel production are key areas for development but there is now a need to look at new and emerging sectors where there is an added value and an export advantage. For example, we need to encourage joint ventures between companies from outside Wales and companies with know-how within Wales. There is a need to bring the know-how and the finance together to create wider markets.
As regards research and development, Welsh higher education can and should do more to grab the available funding for innovation. We have really good examples of progress in this area. Some of our universities are to be congratulated on what they have done but we need to replicate that and expand it. Research and development expenditure in Wales represents only 2% of the UK spend in this area and the split in Wales is 46% investment from the private sector and 54% from the public sector. However, the figure is too small in terms of encouraging the innovation and development which companies in Wales need.
Small companies make up 99% of businesses in Wales and represent 43% of all company turnover. Many of them urgently seek credit to enable them to expand, so getting the cash to these companies must be a priority. However, noble Lords will know that small business formation in Wales has gone down each year since 2004. In 2004, some 11,525 VATable threshold companies were created, but only 7,500 were created in 2010. They decreased in number through each of the good years as well as the lean years. Therefore, renewed emphasis on supporting the small business birthrate is needed.
The M4 syndrome whereby people believe that they are doing different things and achieving different purposes must end. There must be a common purpose between the Welsh Government and the UK Government, so perhaps now is the time for a joint task force: not a review or a policy document but a group which can recommend action, support both Governments, suggest new approaches and enable better working together. This could draw on the best brains and build on best practice in all these areas. I believe that a new arena for co-operation is needed. Wales is in need of an injection of new thinking to drive its economy upwards and off the bottom rung. There is more need than ever to work together because not working together will damage the prospects of the very growth which is so needed in our country.
Lord Roberts of Conwy
My Lords, I, too, welcome the noble Baroness to the Front Bench. I have already congratulated her on her appointment to the Wales Office.
I support the thrust of this Question expressed so well by my noble friend Lord German, especially the second half. It reflects the concern that lay behind a similar Oral Question that I asked about the Government’s industrial strategy on Wednesday 17 October, which drew the following reply from my noble friend Lord Gardiner of Kimble:
“Although some measures will be UK-wide, economic development, including financial assistance to industry, is a devolved matter. Her Majesty's Government lead regular discussions with the devolved Administrations to ensure that the strategy reflects this. This involves consulting … on key policies as well as sharing information and good practice”.—[Official Report, 17/10/12; col. 1491.]
We have more than a hint there of the nub of the problem which was rightly identified by the noble Lord who has just spoken: namely, the division of responsibility between the devolved Administrations and the UK Government. We also have the nub of the answer as far as Wales is concerned, which lies in close, constructive and effective co-operation between the two Governments. On the Welsh Government’s side, I congratulate them at the outset on their contribution to the fact that there has been an increase of 67,000 in total employment in Wales since 2010. This compares very favourably with an increase of 54,000 in Scotland over the same period, bearing in mind that Scotland has almost twice our population.
I also venture to praise the present Welsh Minister, Edwina Hart, for her genuine efforts to enlarge the vision of her department and the scope of its consultations, which now extend to Welsh Members of your Lordships’ House. Some of us have a great deal of experience relevant to her work and are certainly ready to impart any knowledge we may have that will further the interests of Wales. Having said that, I would not wish anyone to think that I am unaware of past failings on the part of the Welsh Assembly Government. The abolition of the Welsh Development Agency and the international brand that it promoted for Wales had a devastating effect on our inward investment efforts. The failure to collaborate with the Welsh Affairs Committee in its inquiry into inward investment was also regrettable. There must be a more co-operative relationship between the National Assembly and this Parliament, and that should be reflected by their respective Governments.
The United Kingdom Government’s assertion that they are profoundly aware of the UK’s full geographical economic dimension, including the economic interests of the citizens served by the devolved Administrations, is borne out by their UK-wide support for ultrafast broadband, for example. The Hitachi acquisition of Horizon Nuclear Power, which will benefit Anglesey and north Wales, was also a UK Government project. I understand that the prospects for a new nuclear power station at Wylfa on Anglesey are very bright.
I was glad to read in the Government’s response to the Welsh Affairs Committee’s report on inward investment of the close relationship established by the UK Trade and Investment section of the Department for Business with the Welsh Government, even to the extent of seconding two of its officials to the Welsh Government team. I also welcome the fact that the Minister for Trade, my noble friend Lord Green, and, indeed, the Secretary of State for Wales have offered to join Welsh Government trade and investment missions. That offer is not to be spurned and should be valued. Such co-operation is essential to successful future development. Isolation would be fatal to Welsh economic aspirations. This is something we must guard against constantly. There is always a tendency for England to go it alone now that the nations have their own Administrations, and a tendency for those Administrations to assert their separateness, but this divisive approach is not the best way to proceed. It is not in the best economic interests of Wales, nor is it in the best economic interests of the United Kingdom as a whole.
Lord Jones
My Lords, I thank the noble Lord, Lord German, for obtaining this debate. I congratulate the noble Baroness, Lady Randerson, on her appointment to the Front Bench. It was deserved and her tenure in the Welsh Assembly Government was successful and much respected.
The Welsh Assembly has come of age; it has much to be proud of and, with hindsight, the handover from Westminster to Cardiff was seamless—truly an exceptional achievement in the history of governance in Britain. The First Minister is proving to be a safe and shrewd pair of hands—indeed, quite a statesman. The Education Minister is a genuine reformist. He certainly wants better things for schoolchildren, university students and students at FE colleges. Mrs Hart, with a challenging economic brief, has the gift of decisiveness, and we know that she is in charge. The Secretary of State for Wales knows Wales like the back of his hand. He has a good pedigree, coming as he does from Rhosllanerchrugog in the north-east, and I can imagine him discussing matters in Cardiff Bay with the First Minister in their first tongue, Welsh. These two parliamentarians can collaborate for better things for Wales. Certainly, their hands are on the levers of power, and together they can deliver for Wales.
Scotland will gain more devolved powers, if not independence. I would expect the Welsh Assembly to gain more devolved powers on the back of those Scottish gains, but probably not on the Scottish scale. Whatever, the consequence of Scottish gains means that better relations between Westminster and Cardiff are going to be an absolute priority. Wales and Westminster will need to work ever more closely together to deliver better things for the people of Wales.
To enhance the Welsh Assembly and for better working there, I would prescribe more Assembly Members. They would create a bigger Assembly gene pool and perhaps more competition for places in Cabinet. They would enhance self-esteem in the Assembly and make for a better working relationship with London. More Members in Cardiff Bay would guarantee more dissent and, arguably, more difficulties for Cabinet Ministers, but dissent and competition make for a more mature parliamentary Assembly, wherever that Assembly may be. I should like to see more questioning, more dissent, more competition and more Assembly Members for the good of the Assembly and for the good of Wales.
Perhaps I may turn to economic issues. We must keep what remains of our steel industry. I have in mind particularly the once iconic Shotton steel plant. Shotton was once an industrial town of 14,000 steelworkers—now, arguably, just 400. However, I pay tribute to the great achievements in productivity at Port Talbot. Our aerospace industry is the world’s best, and much of it is in Wales. I have in mind Airbus at Broughton. Its 7,000-strong workforce is based on high-tech skills and it pumps more than £7 million weekly into the north-east Wales and Cheshire economies. Where aerospace in Wales is concerned, what workshare we have, we must keep. When BAE bailed out of Airbus and cashed its chips for its £4 billion and invested in north America, that was a wrong call. It left the British side of Airbus without a champion at the highest table. We are now effectively contractors, not partners. That was the consequence when BAE left. What workshare we have, we must keep.
It is good to have plans to invest in Wales’s railways. I want the Wrexham-Birkenhead line to be electrified. It would enhance economic activity along a Wirral-Deeside-Wrexham axis. I agree that there must be huge investment in south Wales in the railway system, but there must be investment in the north. The electrification of the Birkenhead to Wrexham line is long overdue and would provide a huge injection to economic activity in the north-east of Wales.
To face the economic challenges of the future, I want even more skills training and retraining in Wales. We should aim for even more quality apprenticeships. I hope that we can aim for more engineering jobs, particularly engineers, but we also need to give priority to those aspects of manufacturing that are described as high end.
Let us give a fair wind to enterprise zones. We made a great start in north-east Wales. We have a fine chairman, Askar Sheibani, who is making good progress. However, I should like to see that progress made throughout Wales. The enterprise zones can be a huge opportunity. Let our banks give more assistance to small and medium enterprises, and to entrepreneurs. Let them encourage and generously assist where they might. It is time that our banks helped SMEs. We need to give emphasis to a living wage; we do not have a good record in Wales for wage rates. A living wage should be a great priority. Advanced manufacturing centres should be established in our sub-regions. In the enterprise zone in Deeside, the chairman, Mr Sheibani, wants an advanced manufacturing centre with links to world-class universities. Such centres would benefit Wales greatly in the immensely competitive global situation in which we find ourselves. We should acknowledge and encourage our established blue-chip companies, and should not take them for granted. I would like to think that they might expand and that they will always be able to encourage and mentor industries alongside them.
If only we could have our Welsh Development Agency back. It was a great success and won manufacturing work for the people of Wales. When we put it down and dismembered it, we let able, experienced and successful managers to go to regions in England and elsewhere, and be competitors for the work that we never got after we put the agency down. I might be forgiven for some bias, because I legislated the agency into being. I pay tribute to the huge endeavours of the noble Lord, Lord Roberts of Conwy, for the people of Wales, but I remember that in debates in Grand Committee and elsewhere on the agency’s likely birth, he was at fault. He will allow me to tell him that.
North-east Wales is a case in point. We now have an enterprise zone. The FE colleges of Yale and Deeside will merge to form a 22,000-student force with a £64 million budget. We have the new university of Glyndwr and the mature university of Bangor available to us. I think that HE and further education can combine the expertise available from the centres of learning to mentor and nurture our small and medium enterprises. Lastly, the great industrial parks of Deeside and Wrexham can only benefit from their proximity to our universities.
Lord Thomas of Gresford
My Lords, I am delighted to follow the noble Lord, Lord Jones. Perhaps your Lordships will forgive me if, in the course of my remarks, I put in a plug for north-east Wales as well.
First, I congratulate my noble friend Lady Randerson on her new position. I am delighted that she is working with a Secretary of State for Wales from Rhosllanerchrugog, which perhaps may pull the whole balance of Wales a little further to the north. Rhosllanerchrugog is very dear to my heart. I recall fighting the 1974 election and hearing that there was a young Liberal branch in Rhosllanerchrugog. So I set out to find it; it was within the constituency I was fighting. And there it was; it had been formed in 1905 and had not been added to since. However, the ladies concerned were delighted to sit in the rooms that we acquired in the village and dispense tea to all their friends. Rhosllanerchrugog was the home of politicians, musicians and educationalists. It was once said that every primary school headmaster in Denbighshire came from Rhosllanerchrugog. It was worse than the masons. However, that was the nature of the village. It was in an industrial setting. There were 11 collieries in the area when I was a boy. There was a steelworks at Brymbo which produced far better quality steel than the huge sprawl of Shotton steelworks down in Deeside, to which the noble Lord referred. It was a centre of industry and of culture and I hope that it will become so again.
I would like to draw attention to the final report of the city regions task and finish group that was set up by the Welsh Assembly Government under Dr Elizabeth Haywood and which reported last July. The group felt that a city region approach in Wales could deliver larger and more efficient labour markets, larger potential markets for goods and services because of the concentration of activity and transport costs savings, and a greater exchange of knowledge, ideas and innovation. Recommendations were therefore made in that report for the establishment of two city regions in south Wales. The main factors considered were critical mass; traffic flows; community identification; and existing structures of governance. It was recognised in the report that Welsh cities contribute less to the economy than cities elsewhere in the United Kingdom. I am disappointed that the group was unable to recommend a city region encompassing Chester, Wrexham and Deeside. I concede that community identification would be an issue if one put Wrexham and Chester together. However, they are only 12 miles apart.
Economic flows often overlap existing local authorities and create a sub-region or city region. Such a region should reflect economic reality and not political or administrative boundaries, including the boundary between England and Wales. The two communities of Wrexham and Deeside alone, despite the advocacy for Deeside from the noble Lord, Lord Jones, and for Wrexham from me, would not have the critical mass. But the sub-region which was rejected, including Chester, is very closely linked. It would give rise to a population of nearly 500,000. One has to wonder whether the existence of the Wales/England border was a factor in the group’s conclusion. After all—perish the thought—such a region would require input not just from Cardiff and the Assembly Government, but from Westminster itself.
In north-east Wales there are strong cross-border commuting inflows to Airbus, to which the noble Lord, Lord Jones, referred, and to the Flintshire and Wrexham industrial estates. There are outflows to major employers on the English side—Vauxhall at Ellesmere Port and to all the small businesses which depend upon it. Wrexham is a major retail centre. It also has large companies in its industrial estate and many SME businesses, which have thrived. When the collieries and the steelworks closed, the leatherworks departed and the brewery shut down, one felt that there would be nothing left. However, the investment into the area has been very constructive and positive. Deeside, with its enterprise zone, to which the noble Lord, Lord Jones, referred, is a very significant centre for manufacturing. Chester is important for services, tourism and retail. There are two excellent universities at Glyndwr and Chester. The former, Glyndwr, focuses on servicing the industries in the area: for example, precision optical glass at St Asaph. I am pleased to hear that the college at which I lectured on Deeside will be combined and form a greater group in that area as well.
Transport links are good. I agree that the electrification of the railways serving the Wrexham area—the Birkenhead to Wrexham line—should be carried out as soon as possible to connect with the electrified railway system in Liverpool. It is a recognised priority. If there is a need for building up investment in large projects, that is one that would bring a great deal of benefit to the area. The automotive industry creates 9,000 jobs at Vauxhall at Ellesmere Port and at Toyota on Deeside. It is another area of expertise which the two universities of Chester and Glyndwr do and should address.
We also have the problem with the border. The group recommended that the Welsh Government—and, I suggest, my noble friend—should look at the cross-border relationships that have developed and work between Danish Copenhagen on one side and the Swedish city of Malmo on the other. The two countries combine to produce an economic entity that is very effective. Aachen, Maastricht and Liège also co-operate in economic development. Three countries are involved there: Germany, the Netherlands and Belgium. We have a similarly great opportunity to bring regions together. The chief executive of Cheshire West told the group that a “sharper focus on the art of the possible” was needed because of the border between England and Wales. That put it very well. We should not regard the border as something that prevents constructive economic development of the region. In north-east Wales and in Chester we face competition from the city regions that are being developed both in Manchester and Liverpool. Something needs to be done—and done soon—involving both the United Kingdom and Welsh Assembly Governments.
Lord Aberdare
My Lords, I put my name down to speak in this debate—on the securing of which I add my congratulations to the noble Lord, Lord German—with some trepidation, as I would not lay claim to any particular expertise in economic matters. However, I was encouraged to do so by the second part of the Question, about ensuring that the Welsh and UK Governments work closely together in the interests of the Welsh—and presumably UK—people; and by the fact that I recently met the Vice-Chancellor of Swansea University, Professor Richard Davies, who told me about a project at the university that in my view provides a test case for such co-operation. I shall focus on this project in my remarks.
Other noble Lords described the challenges facing the Welsh economy better than I could. They include a paucity of large global businesses and of business investment into Wales. Partly as a result, there is no infrastructure of dynamic, innovative smaller companies to provide the supply chains for those larger businesses, sometimes by forming high-tech clusters around large research universities. Evidence shows that links with world-class research and teaching are a major factor driving investment by large knowledge-driven companies. The UK Government have introduced technology innovation centres—sometimes described as “catapult centres”—to bridge the gap between universities and industry; but there do not appear to be plans for such centres to be based at any of the Welsh universities.
The Welsh economy still has a greater emphasis on arts and media, as well as on the public sector, than on science and technology. It is not clear to me that Wales attracts as large a proportion of UK research funding as one might hope. These are major challenges, and both the Welsh and UK Governments need to be engaged in a co-operative way to provide a favourable and supportive environment in which they can be met.
Swansea’s planned science and innovation campus seems to me exactly the right kind of project to address the goals of both Governments. Swansea already has a strong reputation for research excellence, and a track record of collaborating with businesses large and small, local and international. It has recognised strengths in engineering education—mentioned as an important area by the noble Lord, Lord Jones—and has developed an innovative and well established co-location model that intermingles academia, students, industry and research on the same site, and even in the same buildings, so that the university acts as a live research arm for industry.
The new campus will extend this model, capitalising on the university’s interactions with major international knowledge-economy companies, including Airbus UK, Alliance Boots, BAE Systems, BP, Huawei Technologies—I hope I pronounced that appropriately— IBM, Rolls-Royce and Tata Steel. As well as student facilities and residences, it will include an innovation hub, the laboratory space and facilities of which will be available to local SMEs. The hub will act as a centre for partnership activities involving direct undergraduate and postgraduate interaction with industry, for example in a project with Rolls-Royce to test materials for the aerospace and aero-engine industries.
The university already has a number of such projects, including one with Tata Steel to develop new coatings on steel and glass that are capable of generating, storing and releasing energy, with the result that the buildings could in effect become power stations. Another example is Wales’s premier purpose-built medical research facility, in partnership with the Welsh Government, Abertawe Bro Morgannwg University Health Board, IBM and others.
The new campus will combine an outstanding experience for students, a high-quality skills pipeline for industry and shared resources and facilities for research and innovation. The development will take place on a 25-hectare site in Swansea Bay that was formerly owned by BP. The value of the first phase of the project amounts to some £250 million. Much of the funding is already in place, including a £60 million loan from the European Investment Bank, £30 million from the Welsh Government—£15 million of which comes from European funds—and substantial support from industrial and private partners, as well as almost £12 million from BIS to build an energy safety research institute on the new campus.
Over a 10-year period, all development is expected to bring an economic impact of more than £3 billion and the creation of some 4,000 direct jobs plus an even larger number of indirect jobs. The construction process itself will generate more than £400 million of economic activity, the great majority of it within Wales. This is likely to become the largest knowledge economy project in the UK and one of the top five in Europe. The CBI in Wales has described the project as,
“an exemplar of how universities should work with industry, to enable the development and commercialisation of world-leading research”.
Of course, it is also fully consistent with the model suggested by the noble Lord, Lord German, for promoting the involvement of Welsh universities in research and development partnerships.
I agree with the CBI assessment. This is an outstanding example of the right kind of project to tackle the challenges facing the Welsh economy. It will be a transformational project for Wales, helping to address the deficiency in science and technology research in Wales and to drive economic regeneration and create employment opportunities as well as the skills to fill them, not least for engineers. But it is also an extremely important project for the UK as a whole in terms of attracting global business and investment, developing technology and innovation skills and enhancing our competitiveness in the knowledge economy.
My concluding question is exactly that posed by the title of the debate: how are the Welsh and UK Governments working together to maximise the benefits of this project and others like it that have been mentioned by other noble Lords? Is the project getting the support that it needs from the UK research councils and the UK Technology Strategy Board? Should there be one or more Catapult centres in Wales to foster projects linking universities and business? Is the project known to and being promoted by UK Trade and Investment and by the UK's diplomatic missions abroad? Is it recognised and supported as a significant contribution to the Government's growth agenda?
It would be good to see Her Majesty's Government and the Welsh Government closely aligned and ensuring that this exciting project realises its full potential in both countries. I look forward to hearing what the Minister has to say in what I understand will be her first response to a debate such as this from the Front Bench.
Lord Carlile of Berriew
My Lords, it is a great pleasure to follow the noble Lord, Lord Aberdare. I agree with everything he said. He focused on Welsh universities, and I would like particularly to mention the work done by the University of Glamorgan. It is doing a remarkable job in converting the old skills of mature students into new skills for new industries. However, we are not seeing those new skills being put to work to best effect. I also congratulate my noble friend Lord German on obtaining this debate and on his lucid opening speech. I, too, look forward to the reply to the debate from my noble friend Lady Randerson, whose presence on the Front Bench and expertise about Wales adds to your Lordships' House. In both my noble friends Lord German and Lady Randerson we have two experts on Wales with great experience from the Welsh Assembly Government.
In your Lordships' House and, indeed, in the other place there is much knowledge and wisdom on the Welsh economy. I am not sure that it is always used to best effect in the formation of government policy. This includes my noble friend Lord Roberts of Conwy, who served as a Minister for many years and knows the interstices of Wales inside out. It includes the noble Lord, Lord Rowe-Beddoe, who was chairman of the Welsh Development Agency for a number of years, and it also includes the current Member of Parliament for my old constituency of Montgomeryshire, Glyn Davies, who served as chairman of the Development Board for Rural Wales for several years. It also includes the noble Lord, Lord Jones. I twice tried to unseat the noble Lord in what was then called East Flintshire. Even when my noble friend Lord Thomas of Gresford, as he now is, and I supported the suggestion that the Olympic Games should be brought to Wrexham, we failed dismally in our attempt to unseat the noble Lord, Lord Jones. It was a good idea for the day, while it lasted.
Lord Carlile of Berriew
I am grateful to the noble Lord.
We have heard in this debate so far about south Wales and north Wales and we are going to hear a little from me about mid-Wales, which should never be forgotten. I wish to remind your Lordships that industry, business and commerce in Wales are not merely about the M4 and A55 corridors. There is an enormous amount of Wales and a fine population in between.
Certainly in my time as Member of Parliament for Montgomeryshire, the Welsh Development Agency and the Development Board for Rural Wales provided much assistance to investment in Wales—especially the DBRW in rural Wales. Advanced factories were built and occupied. Perhaps they have had their time but they were a very good idea. Unfortunately, many of the businesses that occupied those factories and many of the businesses that took assistance from the WDA and the DBRW turned into small permanent businesses, not sizeable permanent businesses. As I see it, that is the failure of economic policy in Wales over the years. It has all been too small, too sporadic and too impermanent.
One major gap in Wales was eventually identified by John Redwood when he was Secretary of State for Wales. It is, I am sure, the only thing that I agree with him about or have ever agreed with him about—apart, possibly, from the idea that it was probably better if he did not try to sing the Welsh national anthem in Welsh. John Redwood identified—and my noble friend Lord Roberts of Conwy was a Minister at the time—the absence of a venture capital industry in Wales, and there remains no venture capital industry in Wales. Those of us who have had any dealings with sovereign wealth funds abroad or larger investment schemes know that Wales rarely features in the conversation because there is nothing specific about Wales as a place where venture capital can develop and be invested advantageously.
The banks in Wales are showing as much lack of imagination today as they showed five, 10, 15 or 20 years ago. They are fee-driven and risk-averse. I do not believe that the banks in Wales show the same attitude to new industry, particularly small and medium-sized enterprises, as they show in many parts of England. They are rarely proactive in presenting the availability of their funds to new industry in Wales. They should be following government policy and doing so but, unfortunately, they are not.
The venture capital industry has a great opportunity in Wales. Its biggest contribution would be the establishment of large new businesses, but in order for that to be achieved the Government need to introduce or establish something like venture capital champions who would be able to go out to the world outside and hunt down investment funds which are available both in the United Kingdom and abroad, thereby strengthening Wales as an investment point and making it one of the first places where companies should look if they have funds to invest.
For well over 10 years now I have been a non-executive director of one of the very few listed public companies in Wales, Wynnstay Group plc, which has operated successfully and steadily in a sector which remains unfashionable—the agriculture industry. We should not forget that there is a large agriculture industry in Wales. For every Rachel’s Organics there are potentially another 10 companies of a similar kind. In rural mid-Wales there are entrepreneurial farmers but, to be frank, there are not many of them, and few of those would claim to be entrepreneurial. However, given the encouragement of venture capitalists with imagination, we could build up a large dairy sector so that Wynnstay Group plc would be one of the smaller companies, not the biggest, in its sector in Wales.
I remind those who care to read this debate—it is very welcome to have a debate on Wales in your Lordships’ House without the inhibition of embarrassing the Assembly or embarrassing ourselves by trespassing on the Assembly—that there are many advantages to investment in Wales. It has a reliable workforce. In Wynnstay, the company to which I referred, the churn of employees, in statistical terms, is almost nil. Once a company is established in Wales, it becomes a family too. The noble Lord, Lord Jones, referred to the Shotton steelworks. I have friends in Wales whose families were in the Shotton steelworks for three generations, including the noble Lord, Lord Jones, and there may be families with a longer connection. We have a very reliable workforce with very little churn.
I think it is fair to say, without a cliche and without sounding sentimental, that people who go to work in Wales go there to work and, therefore, the productivity of Welsh industry is high and the workforce loyal. The typology of a Welsh company is stability. I cannot think of an investor who, when he or she decides to invest in building a new factory somewhere, is not looking first for stability, which we offer. That is not said often enough on our behalf. I support the Question in this debate, which urges the Welsh Assembly Government and the United Kingdom Government to go out and look for work in Wales on the basis of its undoubted virtues.
Lord Wigley
My Lords, I am very grateful to speak for a couple of minutes in the gap. I welcome this debate and I underlined a very dire need to get the Welsh economy moving. I welcome the fact that so many noble Lords who have spoken have referred to the importance of the manufacturing industry. Speaking as one who has spent his life in the manufacturing industry before entering this Chamber, I can say that what has happened to manufacturing, not only in Wales, but throughout these islands, is a tragedy. That needs to be reversed if our economy is to come right.
When I started working in politics in the 1960s, Professor Edward Nevin had shown, in his seminal work, that the GDP per capita in Wales was at that time 92% of the UK average. As has been said, it is now down to under 74%. Most of that drop occurred in the 1980s and 1990s. We now desperately need a capital investment programme to trigger economic regeneration. That cannot be done by the Welsh Government alone because they do not have either the powers or an adequate capital budget, having suffered a 40% cutback as a result of the Westminster cutbacks. It may well be that the Silk commission will bring forward proposals for stronger financial powers for the National Assembly when it reports in two weeks’ time. I hope that the UK Government will respond positively to any proposals that emanate from Silk and will flesh out last week's limited announcement on the borrowing powers of the Assembly once the Silk report has been published.
Wales needs a Government that is much more geared to achieving economic success and we need a system whereby the Government of Wales benefit from the economic success that they achieve by their own actions. I hope that the UK Government will also give wholehearted support for capital projects, such as the Severn barrage scheme, which will bring private sector investment into a project that could be of tremendous help to the Welsh economy. Likewise, I hope that early progress can be made with the Wylfa B scheme now that a commercial investor is showing some interest in it.
Finally, I welcome the recent statement by the Secretary of State for Wales, Mr David Jones, on the possible electrification of the railway line from Holyhead to Crewe. That would be very beneficial and would tie in with the electrification that has been mentioned by noble Lords in the debate. I congratulate the noble Baroness, Lady Randerson, on her appointment to the Wales Office. In response to the debate, I hope that she will be able to confirm that the Wales Office will be working very closely indeed with Transport Ministers get this important project off the ground.
Baroness Gale
My Lords, I add my congratulations to the noble Baroness, Lady Randerson, on her promotion to the Wales Office and on becoming a Wales Office Minister. I share in the warm welcome that has been extended to her tonight. I know that her experience as a Minister in the Welsh Assembly will stand her in good stead in her work in the Wales Office. I look forward to working with her. I also congratulate the noble Lord, Lord German, on securing this debate tonight and thank all noble Lords who have contributed. I detected a note of optimism in all the speeches about where Wales can go if we are all determined to work together.
This is a timely debate with the Silk commission due to report on part one of its remit very shortly. Ahead of this, as noble Lords will know, the UK and Welsh Governments have reached a significant agreement on funding reform. The agreement acknowledges that convergence has led to Wales being underfunded in the past and has the potential to do so again in the future. We welcome this admission from the Treasury and will be holding it to account on this point. We also welcome the Treasury’s support for extending borrowing powers in Wales—rightly dependent on an income stream—as a way to shape the Welsh economy, which they have the ability to do.
The debate is timely too because of the better-than-expected employment and growth figures over the last quarter. We welcome those figures but they are still nowhere good enough yet. On the number one challenge facing the Welsh economy—how to secure jobs and growth—the two Governments are not working well together. That is because the policies of the United Kingdom Government are falling short on the real needs for the Welsh economy. The Welsh Government are doing all they can with the levers at their disposal but what Wales really needs to tackle the challenges facing its economy is for the Government at Westminster to change course from their so-called plan A.
That is the message that I hope the Minister will be able to take back with her from this debate, because the Government’s austerity programme is not working for Wales. A 1% injection of growth over the past three months, which was boosted by the Olympics, does not change the fact that the Government’s economic policies have greatly underachieved. Two years ago, the Chancellor said his plan would assume growth at 4.6% by this time. In reality, the UK economy has grown by just 0.6% and we are only now emerging from the deepest double-dip recession in over half a century.
On getting jobs and growth into the economy, we need the United Kingdom Government to implement a plan that works for Wales and follow the example set by Welsh Labour Ministers in Cardiff. Despite the real terms cut of 42% to their capital grant, the Welsh Government have put forward a budget for jobs and growth. On tackling youth unemployment, for example, the Welsh Government introduced jobs growth Wales in April this year, which will create 12,000 job opportunities over the next three years. In contrast, of course, one of the first things the UK Government did when they came into office was to scrap the future jobs fund. That was a risible and completely counterproductive decision, especially with long-term youth unemployment in Wales having quadrupled over the last year.
Another way the Welsh Government are doing what they can to boost jobs and growth is by reaching out to business through city regions, through growth funds, and by investing in Wales’ infrastructure with a £15 billion investment plan over the next decade. As far as we are concerned, the Welsh Government are doing their fair share, but unfortunately Wales is being let down by the coalition Government in Westminster pursuing counterproductive policies.
I will put three questions to the Minister. First, on the scale of public sector cuts, what assurance can the Minister give that forecasted 700,000 public sector job losses in the UK will not fall disproportionately on Wales? Secondly, the Government’s regional pay proposals would be disastrous for Wales. Does the Minister share the views of the Liberal Democrat leader in Wales, Kirsty Williams, who said recently that regional pay would exacerbate a “brain drain” in Wales and create the impression that to “get on”, you first had to “get out” of Wales? Thirdly, does she agree that the increase in VAT—which, before the election, the Deputy Prime Minister Nick Clegg estimated would cost people £389 a year—has hindered the Welsh economy?
Public sector job losses, regional pay and VAT are three policies that will hit Wales hard and are indicative, we believe, of the Government’s divide-and-rule approach to politics. Labour has put forward an alternative “One Nation” plan to get growth into our economy. We are calling for a jobs plan to boost the economy, including using funds from the 4G mobile spectrum auction to build 100,000 affordable homes in the UK. We believe that the Prime Minister and the Chancellor need to change course and follow Labour’s alternative plan as well as the example set by the Welsh Labour Ministers in Cardiff Bay. We believe that that will be the best way for the two Governments to work together to tackle the real challenges facing the Welsh economy, and the best way to get jobs and growth into the Welsh economy, which we all know is what is needed. I look forward to the Minister’s reply.
The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson)
My Lords, I first thank the noble Lord, Lord German, for securing this debate to discuss the economy of Wales. It is a hugely important subject and clearly close to the hearts of many noble Lords here today. It is an honour for me to be standing here for the first time as the Wales Office Minister answering this debate.
We have had a large number of really good ideas put forward today and some very valuable contributions from noble Lords. Although we might not always agree on the solutions, I hope that we all share a common objective: to revitalise the Welsh economy. Clearly this is not just a job for the Welsh Government. The Welsh Government need to work hand in hand with the UK Government. We also need to work closely with the private sector and with all stakeholders in delivering our vision for the Welsh economy. The noble Lord, Lord German, illustrated the sometimes confusing split of powers and economic levers. We have to work with them and ensure that they work effectively.
However, our hopes and aspirations need to be founded in reality, and the noble Lord, Lord German, outlined the challenges that Wales faces. We must recognise that the UK economy as a whole is dealing with some very deep-rooted problems. The global financial crisis in 2008 exposed an unstable and unbalanced economic growth model, based on increasing levels of public and private sector debt: an unbalanced model, overreliant on the financial sector and on the economy of the south-east of England. Since then, the UK economy has of course been hit by a series of further shocks, including the eurozone crisis. Returning the UK to strong, sustainable, balanced growth is the top priority for the UK Government.
We had welcome news last week of course, with confirmation that the UK economy is officially out of recession. We had particularly welcome news in Wales. The noble Lord, Lord Roberts, drew attention to the recent statistics on the state of the economy in Wales. Employment statistics tell a great story for Wales in the last quarter: 40,000 more people in work, 7,000 fewer people unemployed and 32,000 fewer people economically inactive. I disagree with the noble Baroness when she says that the Government’s economic policies are not working for Wales.
I am pleased to be able to say that the increase in the employment rate in Wales over the past quarter was the largest of all the devolved countries and English regions and well above the increase seen across the UK as a whole. The figures may have been stimulated by the Olympics; I can assure noble Lords that Wales did not benefit disproportionately from the Olympics but still did very well indeed in these figures. However, there is no room for complacency, and no one is more alive than I to the challenges that we continue to face in Wales.
The Government are investing in Wales, illustrated by our commitment to electrify the south Wales main and valleys lines, which several noble Lords referred to. Wales is expected to benefit directly and indirectly from almost £2 billion from the programme to modernise the rail network. I can assure the noble Lord, Lord Jones, that we have repeatedly indicated our desire to look at infrastructure improvements in north Wales and we are committed to working with the Welsh Government and the local community in considering the business case for electrifying the north Wales line. The noble Lord, Lord Thomas of Gresford, drew attention to the number of regular commuters in this area and hence the need for this improvement.
We have made considerable investment in broadband infrastructure. The Government have provided the Welsh Government with almost £57 million to help bring broadband to everyone and super-fast speeds to 90% of homes and businesses in Wales. In July, the Welsh Government announced that they had matched our investment and had awarded the contract, which is worth £425 million and also includes European structural funds.
Several noble Lords referred to the importance of enterprise zones, and we wish to see these flourish in Wales. By granting enhanced capital allowances to the Deeside enterprise zone, we have demonstrated that we can work very closely with the Welsh Government to ensure that that zone is a success. But we need to find ways to further accelerate major infrastructure investment, and I hope that we will see Welsh projects benefit from the £50 billion UK guarantees scheme that we have introduced. The noble Lord, Lord Carlile, drew attention to the need for venture capital funding, which will also need to be stimulated in some cases by those government guarantees.
I welcome the recent agreement reached in principle that the Welsh Government should have access to capital borrowing powers, which was also welcomed by the noble Baroness, Lady Gale. Those borrowing powers are necessary in order to finance infrastructure, and there are ongoing discussions with the Welsh Government on infrastructure improvements along the M4 in Wales. We look forward to considering the report from the Silk commission, due to be launched on 19 November, which has assessed the case for borrowing and taxation powers. I agree with the noble Lord, Lord German, that increased fiscal responsibility is important for the development of devolution.
I recently had a very productive meeting with Edwina Hart, the Welsh Government’s Minister for Business, Enterprise, Technology and Science, in which we discussed how the two Governments can work together to ensure that enterprise zones work properly for Wales, and I welcome the news that the Welsh Government will soon be announcing proposals for more enterprise zone sites, which could benefit from enhanced capital allowances. The noble Lord, Lord Thomas, gave us international examples of economic co-operation. If it can be done on an international basis, it can be done within the UK.
Edwina Hart and I also discussed how our two Governments can work together in response to the report on city regions by Dr Elizabeth Haywood, which highlighted the need for the Welsh and UK Governments to work together to strengthen the Mersey Dee Alliance to deliver growth and jobs for north-east Wales. That report was referred to in detail by the noble Lord, Lord Thomas. There are important cross-border opportunities that we are committed to take forward with the Welsh Government.
In addition to the challenges that we face to improve infrastructure, it is vital that we do all that we can to enhance the skills of the workforce in Wales. Improving skills will not only support indigenous business but help Wales to attract more inward investment. It is excellent, as the noble Lord, Lord Jones, said, that Airbus and Tata Steel, for example, continue to operate effectively in Wales and to run apprenticeship schemes that are examples of best practice. I know that the Welsh Government have a number of such schemes running to support young people into work across Wales.
Of course, many aspects of skills policy are devolved to the Welsh Government, but that does not mean that there are not opportunities for the Governments to work together in this important area. Wales’s higher education institutions have a world-class track record. I am very pleased that the noble Lord, Lord Aberdare, chose to highlight the importance of the higher education research contract recently won by Swansea University. We can celebrate that it will team up with BP to create an Energy Safety Research Institute which is worth £38 million in partnership.
There is clearly still more to do if we are to improve the economy in Wales, and tonight’s debate has raised some interesting and important points. In my last couple of minutes, I will try to answer some of the points that noble Lords have raised. The noble Lord, Lord German, emphasised the need for new thinking to spread prosperity across Wales. Within the Wales Office, we will need to give careful consideration to his proposals for joint working; he had some very interesting ideas. The noble Lords, Lord Roberts of Conwy and Lord Jones, referred to the abolition of the WDA, which has undoubtedly had an adverse impact. Sadly, the figures say it all on that. However, both the Wales Office and the Welsh Government are working hard with UKTI to market Wales abroad. The two organisations are having success and we hope to continue that and redouble our efforts.
The noble Lord, Lord Jones, referred to the Secretary of State and the First Minister being in close contact. I am aware that they are, but I cannot answer the question about which language they speak in their meetings. I am very grateful for the intervention of the noble Lord, Lord Wigley, who brings a different perspective to our debate.
Finally, the noble Lord, Lord Carlile of Berriew, talked about the lack of venture capital in Wales. I am pleased to be able to tell noble Lords that Welsh businesses are benefiting from the enterprise finance guarantee. So far, 784 loans have been offered in Wales with a total value of nearly £72 million. I also welcome the announcement that Finance Wales recently made its first investment from the new £40 million Wales SME investment fund.
I hope that noble Lords will bear with me. When I read Hansard tomorrow, I will write to anyone whose questions I have not had time to answer here today.