Heathrow

(Limited Text - Ministerial Extracts only)

Thursday 7th June 2018 Commons Chamber

[Justine Greening (Putney) (Con)]

(Urgent Question): To ask the Secretary of State for Transport if he will make a statement on the potential taxpayer liabilities that the Government have entered into in their statement of principles agreement with Heathrow Airport Ltd.

[The Parliamentary Under-Secretary of State for Transport (Jesse Norman)]

Let me thank my right hon. Friend the Member for Putney (Justine Greening) for raising this issue. She has been absolutely indefatigable on it, and I salute her.

As the Secretary of State set out in his oral statement on Tuesday, we recognise the very strong feelings on this matter of some Members across the House and their constituents. I am aware of the various representations that have been made in the Chamber that Government would be liable for Heathrow’s costs should they decide to withdraw support from the scheme. These representations appears to stem from a clause in a non-legally binding agreement between Heathrow and the Department for Transport that has, I am afraid, been taken out of context.

The question was addressed by the Secretary of State for Transport on Tuesday and by the Prime Minister yesterday. Let me repeat in the clearest possible fashion that there is no liability here. The Government have not entered into any agreement that gives Heathrow the right to recover its losses in the event of the scheme not proceeding, and nor would they accept any liability for any of the costs that Heathrow Airport Ltd has incurred or will incur in the future.

For the avoidance of any doubt, I will quote directly from the document in question, which says that

“this Statement of Principles does not give either HAL or the Secretary of State any right to a claim for damages, losses, liabilities, costs and/or expenses or other relief howsoever arising if, for whatever reason, HAL’s Scheme does not proceed”.

We are absolutely clear that we would have a responsibility to Parliament when a liability or, indeed, a contingent liability were incurred.

Yesterday, the Government laid before Parliament a written ministerial statement and departmental minute that set out what was a contingent liability for statutory blight, which will start if the proposed airports national policy statement is designated. The liability is contingent because the Government have rightly protected the taxpayer by entering into a binding agreement with Heathrow Airport Ltd whereby the airport assumes the financial liability for successful blight claims, if the scheme proceeds.

With regard to wider scheme costs, the answer is simple: we have not notified Parliament of any liability because there is none.

[Justine Greening]

I am very grateful to the Minister, for whom I have a lot of respect, for coming to the House today. He mentioned one part of the statement of principles, but he will also know that the immediate clause after that says “notwithstanding…2.1.5”—that is, the paragraph he just read out. In other words, it says that in spite of that, Heathrow Airport Ltd

“reserves its rights (including but not limited to its rights to pursue any and all legal and equitable remedies (including cost recovery) available to it”,

and I set out that yesterday. It has clearly been written by a lawyer. If it does not matter legally, why did Heathrow Airport Ltd include it in the statement of principles? It paves the way for Heathrow to recover costs from the taxpayer when things go wrong. As the Secretary of State himself said on Tuesday, there are circumstances in which the runway could be built but then not used.

My questions are as follows. Why was this term agreed to in the first place? Heathrow is a private company, and should therefore accept the risks. Why was it agreed to exclusively for Heathrow Airport Ltd? Were the Secretary of State and the Department for Transport clearcut with Parliament about the existence of the clause, and if not, why not? Why was it never flagged up in the national policy statement documents that have been seen by the public? What assessment have Ministers made of the existing outstanding liability under the clause, given that it has already been triggered, and will the Minister confirm that my own assessment is correct?

Was the Cabinet Sub-Committee that made the decision to proceed with Heathrow Airport Ltd’s proposal made aware of the clause? For transparency purposes, will the Minister publish the papers that the Sub-Committee did look at, so that we can establish the level of detail that was available to it when it reached its conclusion? Why should the Minister have any faith in the prospect that if the Heathrow expansion goes wrong—as I suspect it will—and the company pursues the Government and taxpayers for potentially billions of pounds in costs, it will then honour any public service obligation in relation to routes to regional airports, and why does he think that the Scottish Government should have any confidence that it will ever stick to the memorandum of understanding?

[Jesse Norman]

My right hon. Friend has asked a vast number of questions. If I do not cover all the points that she raised, I shall be happy to write to her. She mentioned the Cabinet Sub-Committee; I am not a member of the Sub-Committee and have not seen the papers that were presented to it, so I cannot comment on that.

My right hon. Friend asked whether any liabilities had been created, and directed my attention to a specific clause. It is of course a very narrow legal point, but I entirely accept that it is important to focus on it. The Government’s position is that no liabilities have been created, and therefore none need to be disclosed; and no contingent liabilities have been created. The statement of principles is a standard document on which the Government took advice both from distinguished leading counsel and from a top-tier firm of solicitors. It simply allows Heathrow Airport Ltd to reserve rights that it would normally have under commercial law, while making clear that the Department has no liabilities in respect of the issues already described.

We, as a Department, are clear about the fact that the statement of principles is not legally binding. It does not create any legitimate expectation. It does not fetter the discretion of the Secretary of State. It does not give Heathrow Airport Ltd the right to claim

“damages, losses, liabilities, costs and/or expenses or other relief”.

Heathrow does, of course, retain some rights of its own, and that is entirely proper.

There might be circumstances in the future under some future Government, possibly of a different political persuasion, that did create a contingent liability, and the Government would then be under an obligation to present that to Parliament in the normal way. Heathrow Airport Ltd might, in the exercise of its legal rights, have the ability to sue them in some respect, but that is not touched on by this question.

The statement of principles with which we are dealing is not, in fact, the only document of its kind. There were two other such documents. In October 2016, the Government entered into an agreement on a statement of principles with Heathrow Airport Ltd, as we have discussed, but versions of the same document were also agreed with the promoters of the other shortlisted schemes, Gatwick Airport Ltd and Heathrow Hub Ltd. Those, of course, fell away when the Government recommended the Heathrow north-west runway as the preferred scheme. This is not a one-off deal or any kind of special arrangement with Heathrow itself.

[Karl Turner (Kingston upon Hull East) (Lab)]

I congratulate the right hon. Member for Putney (Justine Greening) on securing the urgent question. This appears to be a devastating revelation, and it is beyond belief that when such a bombshell has landed, the Secretary of State is not here to respond.

Yesterday, the Prime Minister said:

“The statement of principles… does not give Heathrow Airport Ltd the right to claim any costs or losses from the Government should its scheme not proceed.”—[Official Report, 6 June 2018; Vol. 642, c. 304.]

That does not seem to be accurate.

Can the Minister explain why a statement of principles was entered into between the Department and Heathrow Airport Ltd that clearly states, at paragraph 2.1.6, that

“HAL reserves its rights (including but not limited to its rights to pursue any and all legal and equitable remedies (including cost recovery) available to it under law) in the event of…an alternative scheme being preferred by the Secretary of State or…the withdrawal of the Government’s support for aviation expansion for Heathrow Airport”?

Does he not see that this is a massive revelation of the utmost importance? Given all the opportunities the Government have had to bring it to the attention of the House and come clean, why has this statement of principles, which effectively indemnifies HAL, been unearthed only at this critical stage? Did they think that no one would spot it?

Why was the statement of principles not included in the national policy statement or the consultation on the NPS? Why was it not disclosed to the Transport Select Committee? Has the Secretary of State secured an unequivocal guarantee from HAL that, in the event of the north-west runway not going ahead, the Government will not indemnify HAL for costs expended in pursuit of the project? Is it not the case that the Government have boxed themselves into a corner by committing HAL to a risk-free investment, while exposing themselves to either massive cost recovery on the part of HAL or crushing litigation before the decision has even been taken?

[Jesse Norman]

Far from this being a bombshell, I am afraid it is the dampest of damp squibs. No indemnification has been given or was ever in question. The Opposition’s position is not a legal position; it is an expression of some other kind. The hon. Gentleman does not seem able to quote any legal authority. I invite him to quote any legal authority for his position. We have the legal authority of leading counsel and a top firm of solicitors supporting our position. The statement was entered into for a very simple reason: to make it absolutely clear, while reserving HAL’s normal rights, that the Secretary of State has an almost unfettered discretion in this area, and rightly so. I would expect the hon. Gentleman, being a taxpayer, to support that position.

[Dame Cheryl Gillan (Chesham and Amersham) (Con)]

We have dithered over airport expansion for far too long, and it really has had a damaging effect on our economy. Unlike HS2, which delivers no benefits to my constituency and is an open-ended commitment from the taxpayer of billions and billions of pounds—a subject on which the Labour Front-Bench team is always so quiet—we are here making something out of nothing. Heathrow expansion will deliver benefits to my constituents and yours, Mr Speaker, secure jobs now and provide tens of thousands of jobs and opportunities in the future. May I urge my hon. Friend to get on with it and not be distracted by people trying to block it?

[Jesse Norman]

I thank my right hon. Friend for her question. We have seen many brilliant examples of crowbarring local and national issues into debates, and I salute her ingenuity in so doing. She rightly makes the point that this proposition has been left unexecuted for far too long, although it has greatly improved as a result. It will bring an almost £75 billion boost to the UK economy, provide better connections to growing world markets and allow better support for regional airports and the regions of the country. She is right that we need to press ahead.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I am rather naive. When the Secretary of State for Transport came to the Dispatch Box to present the decision on Heathrow expansion, I thought he was moving on from the rail shambles and on to firm ground—a subject he had a firm grip on—but clearly that is not quite the case. We are hearing mixed messages about liabilities and a rather flippant, “We don’t need to worry. It is a normal commercial recovery mechanism that Heathrow has put in.” The Government have to be clear about this if they are to carry the vote of the House and take this forward, and time is limited.

The Secretary of State said that the Government had acted on 24 out of the 25 recommendations of the Transport Committee’s report on the NPS, but that claim seems to be unravelling as we go through the Government’s response. Again, it seems the Government are not on top of this. There has been much debate about the cost of surface access and who pays for that. The Government are going to have to be very clear, because they keep saying there are no liabilities there and it will all be private-funded. They need to start to understand the mechanisms for the payment of surface access upgrades; will that be a private finance initiative through fare recovery? What will it be, and what are the associated contingent liabilities? Quite often, the Government end up giving infrastructure guarantees, so will they be in place for surface access upgrades?

In terms of the 15% of new slots—

--- Later in debate ---

[Alan Brown]

I will need to understand the protection of the 15% of new slots for the new domestic routes before the vote takes place; that is important.

[Jesse Norman]

The latter point is so far outside the scope of this UQ that I hope the hon. Gentleman will not mind if I address it in the Committee session this afternoon.

On the issues the hon. Gentleman raises that are germane to the question, let me start by thanking the Scottish National party for its support for this project, which it rightly concludes will be of great value to Scotland—and that is agreed across all parties. There are no mixed messages here and there is nothing fluffy about the legal position on which the Government have—as it appears, uniquely—taken advice. I remind the hon. Gentleman that the statement of principles was published in 2016 and has been available for almost two years, so if there is fluffiness it is not on the Government side of this House.

We have taken very seriously the 24 out of 25 Select Committee recommendations that the hon. Gentleman raised. We are grateful to the Select Committee for its detailed and painstaking work and have acted on many of its recommendations; we have left one to be a point of further discussion, and dispute potentially, but we have been overwhelmingly positive in many ways towards the Select Committee response. That should be reflected on the record, and we are grateful for the support it has given to this project.

[Several hon. Members rose—]

[Crispin Blunt (Reigate) (Con)]

Is my hon. Friend the Minister as astonished as I am that as distinguished a lawyer as the Opposition spokesman, the hon. Member for Kingston upon Hull East (Karl Turner), could advance an argument that is so utterly threadbare in respect of the rather limited defence this agreement gives to Heathrow airport and its private investor supporters if the Government change their policy?

[Jesse Norman]

I could say that I could not possibly comment. But it is right to acknowledge that a future Government might create a liability or contingent liability. That is not ruled out, and there might theoretically be some recourse for HAL as a result of that. One should just be—[Interruption.] That has always been the case, and it is not changed by this proper recognition of the law.

[Karl Turner]

Shocking.

--- Later in debate ---

[Sir Vince Cable (Twickenham) (LD)]

Transport for London has estimated that there are liabilities of something in the order of £10 billion for public transport provision, which the Government say they do not recognise. Is that because they do not think the public transport improvements are necessary, or because a private party will carry the cost?

[Jesse Norman]

The answer to that question is, because it is a number that we do not recognise, but if there were a better justification for it, it might be that we would. But of course it is perfectly clear that we do expect transport improvements to be made, and we expect the private sector to bear a substantial proportion of the cost.

[Adam Afriyie (Windsor) (Con)]

This private company is running rings around the Department for Transport and the Secretary of State, and there is a history of a litany of broken promises, whether to Scotland, regional airports or the Government or on the number of jobs it would create. Why is this clause here specifically for Heathrow when it is clearly indicating that it wants those liabilities paid for should they arise: why specifically for Heathrow?

[Jesse Norman]

Of course these statements were not purely in relation to Heathrow; there were several of them, as discussed, but two have fallen away. All this does is recap a perfectly well-established set of rights it has in law, and nothing has changed from that point of view. The point of the detailed and careful way in which this has been taken forward is to make absolutely clear that, when HAL makes a commitment, it can be held properly publicly accountable for it by due process of law and by agreement with the Government.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

This was recommended in the 2003 aviation White Paper and confirmed by the consultation in 2008, so will the Minister confirm that, notwithstanding the question asked by the right hon. Member for Putney (Justine Greening), the Government will not be deflected from bringing forward an early vote, because it is quite clear that there is support across the House for this proposal?

[Jesse Norman]

I thank the hon. Gentleman for his very constructive and positive comment, and of course we will not be deflected. That is why we have laid this national policy statement, and we will be inviting Parliament to vote on it in due course.

[Jeremy Quin (Horsham) (Con)]

Will the Minister simply confirm that it is anticipated that private investment will fund the expansion of Heathrow, and will he also confirm that the economic benefits he expects will flow to the entire United Kingdom as a result of that private investment?

[Jesse Norman]

I know you place a premium on brevity, Mr Speaker, so I will say, yes, and £74 billion to £75 billion of expected boost to the economy.

[Andy Slaughter (Hammersmith) (Lab)]

The whole process of forcing through the third runway has been the opposite of transparent—from overstating economic benefits to understating the cost to public funds, including the £10 billion to £15 billion on surface access. Will the Minister say that he will define the costs and the risks to the public purse in total, and will he give an absolute assurance that this private company will bear the full costs?

[Jesse Norman]

I think that it is perfectly clear that the NPS, a national policy statement, sets the guidelines within which this is to be elaborated. We expect Heathrow Airport Ltd—and other private entities, as may be required—to bear the full cost of the expansion, as has been indicated, and we have been perfectly clear about that all the way through.

[Douglas Ross (Moray) (Con)]

Can the Minister confirm that my Moray constituents, and indeed regions across the country, will benefit from greater connectivity with the third runway at Heathrow?

[Jesse Norman]

Yes, I can. I have visited Heathrow and discussed this issue with the chief executive, and Heathrow is absolutely clear that a central part of the proposal is to enable better domestic connectivity as part of a wider international and national strategy.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Following on from the question from the right hon. Member for Twickenham (Sir Vince Cable), the third runway will, as I understand it, double the passenger capacity of Heathrow, so on what grounds does the Department for Transport believe that the public investment figures suggested by Transport for London for the connection between London and Heathrow are incorrect?

[Jesse Norman]

As the hon. Gentleman will be aware, Heathrow’s connectivity will be very heavily supported. It is already the beneficiary of an upgraded Piccadilly line from the east and of Crossrail, too. A lot of work is being done on western and south-western access, to say nothing of potential access from the Chilterns, which will be a matter of great interest to you, Mr Speaker. It will be well connected on the ground, as well as in the air.

[Several hon. Members rose—]

[Bob Blackman (Harrow East) (Con)]

Will my hon. Friend confirm that the offers made to both other competing bids were exactly the same as is now on the table for Heathrow, that there have been no changes to the offer and that Heathrow has not been advantaged as a result?

[Jesse Norman]

I am not familiar with any changes of the kind my hon. Friend describes. It is true that the statements of principles were in substantially the same form for all three projects, and that is what we are presently addressing.

[Tom Brake (Carshalton and Wallington) (LD)]

Will the Minister confirm that the Government will not incur any liabilities in relation to an anticipated decline in regional airports, any environmental or health liabilities associated with Heathrow not meeting its environmental targets or any transport cost liability associated with the western rail link? Given all these cumulative liabilities, would it not be safer for the Conservative party to give its Members of Parliament a free vote to reduce the political liability?

[Jesse Norman]

Mr Speaker, we are some way outside the terms of the urgent question, but let me respond to the right hon. Gentleman. We are clear that this instrument creates no liabilities for the Government, which is the point at issue. As I have said, it may at some point be a future matter whether changes would encumber a future Government with contingent liabilities. That Government would then be under an obligation to notify Parliament in the usual way.

[Jim Shannon (Strangford) (DUP)]

In papers this week, it has been indicated that airport users could pay up to £20 extra per journey. Can the Minister confirm that the Government will put a ceiling on any extra charges for airport users?

[Jesse Norman]

Again, we are way off piste, but let me just say that charges are a matter for the Civil Aviation Authority, and we would expect the CAA, as the regulator, to exercise proper concern. We have made it clear that we do not want charges to rise materially from their current levels in real terms.

[Mr Speaker]

I am extremely grateful to the Minister for his answers, his patience and his characteristic courtesy.