British Transport Police

Earl Attlee Excerpts

Monday 3rd December 2012 Lords Chamber

[Earl Attlee]

My Lords, the Government recognise the need to amend the Firearms Act 1968 to address the anomalous position of the BTP in relation to firearms licensing. We are continuing to seek a suitable legislative vehicle to make the necessary amendment to the Firearms Act 1968. We hope that it will be possible to do so during the third Session Bill programme.

[Lord Faulkner of Worcester]

My Lords, there is widespread admiration in your Lordships’ House and elsewhere for the work that the British Transport Police do, particularly in tackling metal theft, as we heard in the debate on Friday. In May last year, the Secretary of State for Transport announced that the British Transport Police could arm its officers. However, for the reason the Minister mentioned—because the definition of “police” in the Police Act 1996 does not include the BTP—its officers are not regarded as Crown servants under the Firearms Act 1968. Is he aware that, as a result, BTP officers do not enjoy the legal protection afforded to other police officers and that they have to apply for firearms certificates individually as if they were members of the public? The Minister referred to legislative opportunities—

[Lord Faulkner of Worcester]

I will finish very quickly. The Minister referred to legislative opportunities. Will he look at a late amendment to the Crime and Courts Bill or the introduction of a statutory instrument under the Railways and Transport Safety Act?

[Earl Attlee]

My Lords, the noble Lord is absolutely right in his analysis of the problem. Unfortunately, we cannot make any suitable amendment to current legislation going through your Lordships’ House. I am advised that other routes, such as a regulatory reform order, are not suitable, so we will have to wait for a suitable slot in the primary legislation. However, the noble Lord’s point about legal uncertainties is extremely important.

[Lord Berkeley]

My Lords, how many BTP officers carry firearms? As my noble friend said, it seems odd that they do not have the same legal position as other police officers around the country who are able to carry firearms. What is the legal position of BTP officers who carry firearms? Are they at risk on a personal level in a way that the other police officers are not?

[Earl Attlee]

My Lords, in answer to the noble Lord’s first question, we are talking about only 53 police officers, so the bureaucracy load is manageable, although extremely inconvenient. The weakness in the legislation on the protection of officers who are involved in an incident, alluded to by the noble Lord, Lord Faulkner of Worcester, is an extremely important point.

[Lord West of Spithead]

My Lords, does the Minister agree that although metal theft is a heinous crime and has caused damage to war memorials and danger to hospitals and railway lines, shooting those involved might be a little over the top?

--- Later in debate ---

[Earl Attlee]

My Lords, in the case of a war memorial, I am sure that the noble Lord and I would have some doubt over whether that would be over the top. Police officers have a range of options. It is important to note that British Transport Police armed officers have not only a firearm but a Taser and other weapons, such as pepper sprays, so they do not need to resort to the firearm immediately.

Disabled Persons’ Parking Badges Bill

Earl Attlee Excerpts

Friday 30th November 2012 Lords Chamber

[Earl Attlee]

My Lords, today’s Second Reading marks an important step in the reform of the blue badge disabled parking scheme and I thank my noble friend Lady Thomas for the excellent way in which she introduced her Bill. It has the full support of the Government.

As the noble Lord, Lord Macdonald of Tradeston, observed, Governments have long understood the need to reform the blue badge scheme. Until last year, very few changes had been made to the scheme since its establishment in the 1970s. I had an office near to that of Lord Morris of Manchester and I much enjoyed his company and wise counsel. Since coming to power, this Government have continued to work with disabled people’s groups and local authorities to develop improvements. The changes we have introduced are neatly complemented by the contents of my noble friend’s Bill, which in essence completes the reform package which has obviously been in gestation for many years. The noble Lord, Lord Touhig, suggested that cars involved in abuse should be crushed. That might be a bit draconian for this Government but if we did go down that route, I think the power should be invested in a Minister in the Government Whips Office.

Last year, the Government announced plans for reforming the scheme. Those plans were two-fold: first, to tackle rising levels of fraud and abuse; secondly, to ensure that badges are issued more fairly and consistently across the country. This would thereby ensure the scheme remains sustainable in the long term for those who rely upon it most. Given my background as a Territorial Army officer, I am delighted to see the provision in my noble friend’s Bill enabling the Armed Forces on UK bases overseas to apply for a badge, as this is about fairness and complements the Government’s aims.

The Government have made great strides in delivering reforms. Last year we amended regulations so that a badge can be withdrawn by a local authority following a relevant conviction for misuse. Previously, a local authority was obliged to obtain three relevant convictions before a badge could be withdrawn. That was unduly cumbersome. We have reduced that to one conviction to support local authorities in their attempts to stamp out abuse. In this context, the provision in my noble friend’s Bill to clarify existing offences relating to the wrongful use of parking badges is extremely important. Local authorities need to be clear about what constitutes an offence and what behaviour may be prosecuted.

More recently, on 1 January this year the Government introduced the Blue Badge Improvement Service. This is a major initiative aimed at tackling rising levels of fraud and abuse, while helping to ensure that disabled people receive improved customer service. I am delighted to say that every local authority in England has signed up to use it. It is a service that provides for online applications and, since it went live, over 800,000 badges have been issued. The local authorities use a central, secure print facility to supply and distribute badges and are able to make administrative savings by sharing services.

I am grateful for the kind words of the noble Lord, Lord Macdonald of Tradeston, when he described the system, which provides local authorities in England, Scotland and Wales with a single, national database of all blue badge holders and their key details, therefore preventing multiple and fraudulent applications. This new tool is a major step forwards in tackling fraud and the powers being proposed in this Bill—specifically, allowing inspections by officers in plain clothes and enabling on-street recovery of badges that are fake, cancelled or being misused—will enhance its value. Enforcement officers can run quick validity checks of badges on the street via their handheld devices and if a badge is forged, stolen, expired or being misused they will be able to take it off the offender to prevent further abuse.

The noble Lord, Lord Touhig, touched on the possibility of photocopying a badge. I assure him that the new badge is completely resistant to this type of fraud. Furthermore, since the new system went live the Government have built on the functionality available in the online form and members of the public can now report lost and stolen badges and any changes of circumstances online. This function will be enhanced by the new power proposed in the Bill enabling local authorities to cancel badges that are no longer in the holder’s possession, which means that on-street enforcement officers will have access to the most up-to-date information when interrogating the database.

To help counteract fraud, the Government have also introduced a new badge design that is harder to copy, forge or alter. The old-style cardboard badge has been replaced by a superb new badge made from a hard plastic material, which contains a number of overt and covert security features as used in banknotes and driving licences. As my noble friend Lady Thomas explained, the Bill has an important role here too by removing the need to prescribe the badge details in regulations. Already, people are attempting to make copies of the new badge and I am pleased to say that they are bad copies. However, we do not want to help those criminals by publishing the badge security details.

The noble Lord, Lord Dubs, talked about misuse of the blue badge. It is important to understand that there is a limitation on how much we can do. If we have too many badges in use, too many parking spaces will be used and we will devalue the badge itself. Of course, the same arguments apply to abuse. He also talked about the need to collect badges in person within six weeks. There is no requirement for this practice. It is for local authorities to decide their own arrangements. Some ask people to collect them to help ensure that they are delivered to the right people; some also take payment at that time. The noble Lord referred to signs and parking on yellow lines; my noble friend Lady Brinton also touched on this. Local authorities are required to put signs up explaining who can park there. All badge holders receive a rights and responsibilities leaflet, explaining about yellow lines. I am afraid that they may have to check the rules in their local area because local authorities have to manage their own traffic situation.

The noble Lord, Lord Dubs, also talked about towing and clamping. A vehicle displaying a blue badge must not be clamped but if the vehicle avoids clamping in circumstances where the badge was being misused, an offence is committed and the badge user could be prosecuted. The department advises local authorities that vehicles displaying blue badges should be removed only for emergency, security or ceremonial reasons, where the vehicle is a serious safety hazard or obstruction. However, local authorities may remove a vehicle displaying a blue badge if it is in contravention of a parking prohibition and a penalty charge notice has been appropriately issued. Depending upon the terms of the parking orders, contraventions could include circumstances where a blue badge is not valid or is being misused by a third party.

The noble Lord, Lord Dubs, also talked about parking bays. Broadly speaking, there are two types of on-street disabled persons’ parking bay. The first type is installed by local authorities who have powers under the Road Traffic Regulation Act 1984 to designate by order a parking place reserved for a disabled badge holder. If a disabled persons’ parking bay has been designated, it would be an offence for a non-disabled person to use the space. Contraventions can be enforced with penalty charges; the offender may also be prosecuted and be liable for a fine of up to £1,000. Disabled bays that are backed by an order take longer to implement, as their provision requires public consultation and objections need to be considered before they can be implemented. It can therefore take some considerable time for such bays to be installed, unlike advisory bays which can be given quick consideration. Their use, however, cannot be enforced by parking authorities. Such bays are marked out on the road surface and are often installed by local authorities in residential areas, where it is expected that neighbours will respect them.

Many noble Lords talked about off-street parking. There are no plans to apply the scheme to off-street parking or private land. The Government do not believe that they should impose a prescriptive regulatory scheme on car parks, which are very often privately owned. Where car parks are on private land and owned, for example, by a supermarket it is entirely a matter for the landowner to determine the terms and conditions by which that land may be used and how parking spaces may be allocated. However, I am sure that supermarkets would pay attention to the presence of a blue badge. The Equality Act already places a broad duty on providers of services, including car parks, to take reasonable steps to ensure that disabled people are not substantially disadvantaged compared to nondisabled people when accessing a service. This has implications for car park owners, who may have to demonstrate that as well as marking out disabled persons’ parking spaces they have taken reasonable steps to ensure that they are made available to disabled people. My noble friend Mr Norman Baker, the Transport Minister, wrote to the main supermarkets in March and September last year to encourage them to actively monitor and enforce their disabled bays.

The noble Lord, Lord Macdonald of Tradeston, asked about local publicity campaigns. The Government issue guidelines to local authorities recommending that they enforce a scheme and publicise activity locally, but it is of course a matter for local authorities as to how they do that.

The noble Lord, Lord Touhig, suggested that there is no incentive to hand back a badge if no longer needed. This is required in the legislation; local authorities can take action to recover a badge and the Bill would make it an offence to use a badge that should have been returned. Of course, the badge will have limited utility because if an enforcement officer uses his scanner, he will straightaway be able to see that the badge is no longer in effect.

The noble Lord, Lord Davies of Oldham, touched on public expenditure. The Bill is expected to have no impact on public service manpower and will impose no significant additional public expenditure. Use of the new powers by local authorities will be voluntary and badges could be recovered in the course of current routine enforcement patrols. Local authorities choosing to use the new powers could benefit from a reduction in lost parking revenue through better enforcement—and with the security features in the new badge, it will be much more efficient for local authorities to police it. There may be a minimal cost to the Government in issuing badges to eligible members of the Armed Forces resident overseas, but this could be offset by charging applicants the £10 fee payable by other badge holders.

The noble Lord, Lord Davies, touched on the problem of when a badge holder’s badge becomes out of date. The Blue Badge Improvement Service automatically notifies badge holders when their badge is due for renewal. The noble Lord also talked about parking tickets for expired badges. It is the responsibility of the holder not to display an expired badge. I have already touched on the benefits of the Blue Badge Improvement Service.

The noble Lord asked about appeals, and this is quite an important point. There is no formal appeal route to the Secretary of State when a local authority determines that an applicant is not eligible for a badge. However, local authorities may have their own appeal procedures. In addition, if the applicant believes that the regulations have not been applied properly, he may ask the Local Government Ombudsman to review his complaint. The Bill, as my noble friend explained when she introduced it, removes in England the limited right of appeal to the Secretary of State in cases where, for example, an authority requires the return of a badge or for reasons relating to the misuse of badges. Only one or two such appeals are made each year. It is an anomaly that, while local authorities administer the blue badge scheme, the Secretary of State for Transport is required to consider these appeals. The department is not best placed to consider these. In future the Local Government Ombudsman will review these complaints under existing powers. The ombudsman has the expertise of dealing with over 10,000 complaints per year.

During Questions last month I was asked by the noble Lord, Lord Wigley, about an appeal process for people who might lose their right to a badge following the introduction of the personal independence payment. If someone did not qualify for a badge via the PIP, they would be free to make a separate application to the local authority for a blue badge. If the authority assessed that the individual met the eligibility requirements set down in the regulations, they would still qualify for a badge. If the individual did not meet the eligibility criteria, it would be correct for the local authority to refuse to issue a badge. There is no formal right of appeal against a decision not to issue a badge but, if an individual feels that he has been treated unfairly or that the local authority has not properly applied the regulations, he may ask the local authority to reconsider and/or take his complaint to the Local Government Ombudsman.

If I have missed any important points, I will of course write in the usual way, as I am sure will my noble friend Lady Thomas. To conclude, the Department for Transport undertook a full consultation on the reform measures introduced by the Government and those in my noble friend’s Bill. The consultation showed widespread support for the changes, which are long overdue. I hope that the House will recognise the considerable benefits that the Bill will bring to disabled people who rely upon the blue badge scheme and to local authorities in their efforts to reduce fraud against public sector. To that end, I join my noble friend Lady Thomas in commending it to the House.

Roads: Roadworks

Earl Attlee Excerpts

Wednesday 28th November 2012 Lords Chamber

[Lord Sheldon]

To ask Her Majesty’s Government whether they intend to introduce legislation to give local authorities control over the digging up of streets so as to minimise disruption to both residents and traffic.

[Earl Attlee]

My Lords, the New Roads and Street Works Act 1991 places a duty on local authorities to co-ordinate works and on utility companies to co-operate. In addition, the Traffic Management Act 2004 allows authorities to introduce permit schemes, which better enable authorities to manage works for the benefit of all road users. The Government support permit schemes, which are currently in place in around a third of English authorities.

[Lord Sheldon]

My Lords, I will answer the Question that has been put: except in an emergency, all programmes must be approved by the council before they are undertaken and the council must ensure that congestion on the roads is kept to a minimum.

[Earl Attlee]

The noble Lord is quite right. At the lowest level, there are notification schemes where the contractor has to notify the local authority. Where necessary, rules are put in place. If a local authority has a permit scheme, the contractor has to have a permit before he can start work, and if he overruns he is liable for penalty charges.

[Baroness Gardner of Parkes]

My Lords, does the Minister remember Lord Peyton and the very effective campaigns that he ran over many years on this exact issue of work going on in the streets? Is it not a fact that over the years councils have developed many more rights; for example, charging if local people are going to be held up by these schemes?

[Earl Attlee]

My noble friend is quite right. The main tool for local authorities is the permit system which, as I say, has been taken up by about a third of local authorities. Some local authorities do not need to use a permit scheme because they do not have congestion problems; others are developing their schemes. In addition, we are looking at lane rental, which has been piloted in London, and at one or two other lane rental schemes as well.

[Lord Lea of Crondall]

My Lords, would the noble Lord like to express his condolences to Hampshire County Council for every time that it has done a major job—

--- Later in debate ---

[Lord Barnett]

Is the noble Earl aware that the disruption outside this House over the past couple of days has caused great difficulty for Members who have to come and go by car or taxi? I declare an interest as one of those. That disruption is as nothing compared with what Black Rod has done to Members of this House with the system that is now in place. Will the Minister ask the Leader of the House to have a word with Black Rod to revert to the previous position where Members could come and go rather more easily?

[Earl Attlee]

My Lords, I am sure that my noble friend the Leader of the House heard exactly what the noble Lord said. Fortunately, I am responsible for Her Majesty’s Government, not for Black Rod.

[Lord Bradshaw]

The matter that causes most trouble on the roads is the fact that utility companies do not seal up the work that they do, so there is an ingress of moisture that in turn bursts the road surface. Will the Minister ask his right honourable friend in another place to see whether the agreements with the utility companies can be tightened up to ensure that they reinstate the roads properly after they do their work?

[Earl Attlee]

My noble friend makes an important point: reinstatement is an important issue. There are guidelines and local authorities should normally check that the whole reinstatement process is being done correctly.

[Lord Lea of Crondall]

My Lords, will the Minister express his condolences to Hampshire County Council, because every time it does a wonderful job in resurfacing a major road, either gas, electricity, water or telephone companies dig it up again? Are there any statistics that suggest that the Government have any reason to be complacent that we are making improvements in co-ordination rather than going backwards?

[Earl Attlee]

My Lords, I am sure that we are making improvements. The previous Government introduced a permit system that allows local authorities to co-ordinate roadworks as much as possible to ensure that they do not interfere with each other and that we do not have more works than are necessary. However, noble Lords have to understand that that is quite difficult when you have got telecoms going alongside water pipes and gas pipes.

[Lord Wills]

In pursuit of the earlier question about reinstatement, does the Minister accept that one problem is that the utility companies that do the work often do not notify the local authorities when they have finished and therefore it can take weeks for the local authorities to put right the damage that some of these utility companies have done? Can the Minister offer any reassurance about the process of notification of when works are completed?

[Earl Attlee]

My Lords, I am not convinced that there is the problem that the noble Lord describes. With the permit system, the contractor has to tell the local authority when the work should be completed. If it is not completed on time, the local authority can impose overrun charges. However, I will take this up with my officials and make sure that there is not an unresolved problem.

[Lord Davies of Oldham]

My Lords, something is wrong in the state of Denmark and on the roads of Britain, too. The noble Earl has identified the virtues of the legislation passed in 1999 and 2004. Utilities are meant to notify, and to be subject to penalties, if they do not complete the work in time. However, statistics show that road congestion due to roadworks is costing £2 billion a year. What on earth is going wrong with enforcement in this area?

--- Later in debate ---

[Earl Attlee]

My Lords, unfortunately, my brief says that congestion costs the economy an estimated £4.2 billion a year, so we are fully aware of the problems. The permit schemes have not been adopted by all local authorities that would want to. We need to understand that we have got conflicting priorities: on the one hand we want to reduce congestion on the roads; on the other hand we want to introduce super-fast broadband—and that will require works on the roads. So we have got a problem to deal with.

Arrangement of Business

Earl Attlee Excerpts

Thursday 22nd November 2012 Lords Chamber

Announcement

[Earl Attlee]

My Lords, I point out that the timings for the QSD are very tight. Noble Lords are usually exceptionally good at adhering to the allocated time, but I am available to help if necessary. Finally, when the timer shows four, the noble Lord speaking is doing so in his fifth minute.

Airports (Amendment) Bill [HL]

Earl Attlee Excerpts

Friday 9th November 2012 Lords Chamber

[Earl Attlee]

My Lords, first, I offer sincere congratulations to the noble Lord, Lord Empey, on securing a Second Reading for his Airports (Amendment) Bill, even though I am experiencing a little sense of déjà vu.

The Bill’s aims are commendable in seeking to introduce powers that would allow the Secretary of State for Transport to ring-fence take-off and landing slots at congested London airports to ensure the future protection of regional air services—in particular, to Northern Ireland and Scotland. I fully understand the noble Lord’s point about the special case of Northern Ireland, where there are not alternative means of businesses easily getting to a hub airport. In the case of Scotland we will, in future, look forward to better rail connectivity, which will make a huge difference.

We recognise that airports in Northern Ireland, Scotland, Wales and the English regions make a vital contribution to local economies and that regional connectivity is very important. I also acknowledge the noble Lord’s concern, expressed so well at Second Reading, that the provision of commercial air services is subject to market forces. Ultimately, airlines operate in a competitive, commercial environment and it is for them to determine the routes that they operate. I will say a little more on that later.

It remains possible, therefore, that airlines currently operating services from Northern Ireland and Scotland to Heathrow could, in future, decide to reduce or withdraw them and use the relevant Heathrow slots for alternative services. It has been suggested that some form of intervention is necessary to protect these essential services from commercial market pressures. The noble Lord, Lord Empey, was careful to use the words “in the event of” problems. He did not say that we necessarily have problems now but he is, as I understand it, worried about the future and future-proofing our processes.

At the moment, Northern Ireland and Scotland remain well connected to London by air. In 2011, there were more than 18,000 flights between the two Belfast airports and the five main London airports, around a third of these being between Belfast and Heathrow. I fully understand the importance of hub connectivity. These routes are well used, with nearly 2 million passenger journeys in 2011 between Belfast and London, of which more than 700,000 were between Belfast and Heathrow. Scotland is also well connected with more than 65,000 flights in 2011 between Scottish airports and the five main London airports, carrying over 6 million passengers. Of these, 26,000, which is 39%, were to or from Heathrow, carrying 2.7 million passengers. Many noble Lords will recall our debate on the amendment of the noble Lord, Lord Stephen, to the Civil Aviation Bill, to which the noble Lord, Lord Empey, contributed.

In the light of these high traffic levels, we do not believe that connectivity between London and airports in Northern Ireland and Scotland is under threat. The existing air services to Northern Ireland and Scotland act as important hub feeder services, which are necessary to support long-haul services from Heathrow. As the noble Lord, Lord Empey, correctly states, world slot guidelines are determined by the International Air Transport Association and are reflected in the European regulations which govern the allocation, transfer and exchange of slots at Heathrow and other slot-co-ordinated airports in the UK. In the UK these are managed by Airport Coordination Ltd. The noble Lord, Lord Davies of Oldham, touched on the issue of ownership of slots. As I understand it, the allocation of slots is based largely on historical and continuing usage.

My noble friend Lord Caithness touched on PSOs. If air services to Northern Ireland and Scotland were to become economically unviable, EU law already provides some scope to protect regional air services by allowing member states to establish a public service obligation—a PSO—to protect their services to airports serving a peripheral or development region or on low traffic routes considered vital for a region’s economic and social development. It would be open to the devolved Administrations in Northern Ireland and Scotland to apply to the Secretary of State for Transport to establish a PSO on an air route should they feel that a business and legal case could be made that satisfied the EU regulation. If approved, this would permit ring-fencing of slots at a relevant London airport. There is no other mechanism for the Government to intervene in the allocation of slots at UK airports.

The noble Lord, Lord Berkeley, touched on the Isles of Scilly and Scotland. The same principle of public service obligations, and the restrictions on them, applies to maritime services as for air services.

Noble Lords will therefore appreciate that under European law the potential for ring-fencing slots at Heathrow to protect regional services is to be dealt with by reference to the PSO rules alone, and creating a parallel, more wide-ranging set of rules would be incompatible with EU law. The principal effect of the Bill is therefore contrary to EU regulation because it would override the strict criteria and process by which European Governments could intervene in route operations.

As indicated in the Explanatory Memorandum submitted to Parliament on the European Commission’s Better Airports package, in the context of the proposed recast of the EU slot regulations, the UK Government have highlighted the issue of regional connectivity with the European Commission and the ongoing provision of air services between congested London airports and Scotland and Northern Ireland. However, it has proved challenging to devise a mechanism to protect well trafficked, commercially viable air routes without distorting the aviation market and competition across Europe.

I am aware that the European Parliament’s Transport and Tourism Committee has been considering amendments to the recast EU slot regulation that are aimed at protecting the access of regional air services to congested EU hub airports. However, we would be concerned about any amendments that were too general in nature and which had the potential to seriously impair and distort the slot allocation system, and the secondary trading of slots, to the detriment of consumers. In particular, in the UK, the secondary trading of slots helps to ensure that they are generally put to the use which is most effective from the consumer perspective—in other words, the problem of interfering with normal commercial processes, as identified by the noble Lord, Lord Empey. We will give careful consideration to the conclusions reached and the amendments proposed by the Transport and Tourism Committee following the publication of its formal report on the slot-regulation process. I repeat my praise for the effective efforts of the noble Lord, Lord Empey, not just in this House but in the way that he conducts his operations in Brussels. He certainly shows the way ahead.

I am pleased to say that there has been some progress on this issue. Noble Lords will recall that the sale of BMI to International Airlines Group earlier this year prompted concerns about the future of the air services operated by BMI from London to Northern Ireland, and about competition issues on routes to Scotland, where BMI operated in competition with BA. Competition issues arising from the sale were subject to investigation by the European Commission competition authority, which has jurisdiction to consider whether airline acquisitions and mergers may lead to a substantial impediment to effective competition in a substantial part of the EU. That authority concluded its investigations and granted regulatory approval on 30 March for International Airlines Group’s purchase of BMI from Lufthansa. The authority’s approval was conditional upon IAG releasing 14 daily slot pairs at London Heathrow, of which at least seven pairs must be used by other airlines for services to Edinburgh and/or Aberdeen. The European Commission is in the process of considering the bids that it has received for these slots. IAG completed the acquisition of BMI in April 2012, since which time BA has begun the process of integrating BMI schedules into its own.

In terms of BMI’s regional air services to Northern Ireland and Scotland, BA has continued to operate BMI’s existing services to Belfast, and the slots released for use on services to Aberdeen and Edinburgh will serve to maintain competition with BA on those routes. This provides reassurance that the air services to Northern Ireland and Scotland are both commercially viable and commercially attractive to airlines, and it reinforces our view that connectivity between Northern Ireland and Scotland and London airports is not under threat.

The noble Lord, Lord Davies, talked about wider aviation policy issues—I would have done exactly the same thing. More generally, perhaps I may remind the House that a key part of the Government’s approach to aviation is to seek to create the right conditions for UK airports to flourish, including those in Scotland and Northern Ireland. We have committed to producing a sustainable framework for UK aviation which supports economic growth and addresses aviation’s environmental impacts. We consulted over the summer on a new aviation policy framework which will set out our overall aviation strategy. The consultation closed at the end of October and around 500 responses were received. We intend to publish our policy framework next March.

We believe that maintaining the UK’s status as a leading global aviation hub is fundamental to our long-term international competitiveness. However, we are also mindful of the need to take full account of the social, environmental and other impacts of any expansions in airport capacity. We have therefore decided to establish an independent airports commission to gather evidence and provide analysis of the options. We are delighted that Sir Howard Davies has agreed to chair the commission. He brings a wealth of business and financial expertise that will be of great value to the commission’s work. The noble Lord, Lord Davies, asked me about the timing. The commission needs to be able to take time to give appropriate consideration to all the options for maintaining UK connectivity; a rushed decision which cuts corners and does not consider all the relevant factors will not achieve the desired end state. The airports commission will provide an interim report to the Government no later than the end of 2013 and will then publish a final report by the summer of 2015 for consideration by the Government and opposition parties. Details of the commission’s membership and its terms of reference were announced on 2 November.

My noble friend Lord Caithness slightly chided the noble Lord, Lord Empey, for running this debate yet again. I am at the disposal of your Lordships and I am happy to debate whatever noble Lords would like. My noble friend talked about the possibility of access from regional airports to continental hubs. That is a very important point and I shall come to it in a minute.

My noble friend also touched on the definition of an “adequate service”. He talked about the dangers of interfering in what are properly commercial matters for airlines. I agree with my noble friend. He also pointed out that there has been a decline in domestic air travel since 2007. As a result of the economic downturn there has indeed been a reduction in air traffic and services across the board. Ultimately, it is a matter for airlines to determine the services that they operate and from which airport, based on their own assessment of air routes viability.

My noble friend asked about airport charges. He will know that the CAA does not have legal powers to ensure that an airport’s charging structure supports wider goals such as regional policy. The CAA currently sets price caps at regulated airports and sets the maximum price per passenger that an airport operator can charge. Moreover, the structure of an airport’s charges within the regulated cap is a matter for the airport operator and its stakeholders.

My noble friend suggested the possibility of excess profits. The danger for an airport such as Gatwick is in airlines flying from a regional airport direct to a continental hub, as my noble friend pointed out earlier. However, since Gatwick was taken over, I have been very impressed with the way that that airport has operated, and I suspect that many other noble Lords share the same experience.

My noble friend touched on APD and the impact assessment, and it is probably better if I write to him about that. He also asked whether charges for commercial aircraft should be based on the numbers of passengers carried or the aircraft weight. The CAA currently sets price caps at regulated airports and sets a maximum price per passenger that airport operators can charge. As I said before, the charges within that are a matter for the airport.

My noble friend asked whether there were any other mechanisms to protect access. Any mechanisms to protect regional air services at congested hub airports would have to comply with the overarching European legislation. Also, we do not believe that traffic distribution rules are of assistance, because in practice they may be used to restrict only certain forms of traffic. They cannot be used to compel airlines to operate particular services.

If I have missed any other important points or have anything significant to add, I will of course write in the usual way. While I understand the laudable motivation of the noble Lord, Lord Empey, in proposing his Bill, I must conclude that, on the basis that the Bill would ultimately be incompatible with current EU law, the Government will not be able to support the Bill into legislation.

Civil Aviation Bill

Earl Attlee Excerpts

Wednesday 7th November 2012 Lords Chamber

Moved by

[Earl Attlee]

1: Clause 1, page 2, line 13, at end insert—
“(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.

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[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.

[Lord Davies of Oldham]

My Lords, I am astonishingly grateful.

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[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.

[Baroness Worthington]

I beg leave to withdraw the amendment.

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Moved by

[Earl Attlee]

4: Clause 1, page 2, line 30, at end insert—
“(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.”

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[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

Moved by

[Earl Attlee]

7: Clause 2, page 3, line 10, after “relates,” insert—
“(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,”

--- Later in debate ---

Moved by

[Earl Attlee]

9: Clause 2, page 3, line 24, at end insert—
“( ) 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).”

--- Later in debate ---

Moved by

[Earl Attlee]

12: Clause 9, page 8, line 19, after “to” insert “operator”

[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.

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Moved by

[Earl Attlee]

13: Clause 12, page 10, line 7, at end insert “, and
(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.”

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Moved by

[Earl Attlee]

14: Schedule 1, page 67, line 36, at end insert—
“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 ”

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[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.

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Moved by

[Earl Attlee]

20: Clause 22, page 16, line 25, after “paragraphs” insert “6A,”

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Moved by

[Earl Attlee]

21: Schedule 2, page 72, line 36, at end insert—
“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.”

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Moved by

[Earl Attlee]

22: Clause 66, page 40, line 12, leave out “, including the supply of fuel”

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[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.

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Moved by

[Earl Attlee]

24: Clause 67, page 41, line 27, at end insert—
“(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.”

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Moved by

[Earl Attlee]

25: Clause 68, page 41, line 32, leave out “, including the supply of fuel”

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Moved by

[Earl Attlee]

27: Clause 68, page 41, line 39, leave out “and (7)” and insert “to (8)”

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Moved by

[Earl Attlee]

30: Schedule 8, page 97, line 13, leave out “Part 5 of”

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Moved by

[Earl Attlee]

35: Schedule 10, page 105, line 26, after “determination” insert “on that day”

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[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.

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[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.

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[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.

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[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.

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[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.

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[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.

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Moved by

[Earl Attlee]

59: Clause 96, page 59, line 38, at end insert—
“( ) is a person in respect of whom a debt relief order has been made under Part 7A of the Insolvency Act 1986,”

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[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.

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[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.

--- Later in debate ---

Moved by

[Earl Attlee]

62: After Clause 101, insert the following new Clause—
“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.””

--- Later in debate ---

[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 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.

Amendment 62 agreed.

--- Later in debate ---

[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.

--- Later in debate ---

Moved by

[Earl Attlee]

65: Clause 109, page 64, line 38, leave out “This Part comes” and insert “The following provisions come”

Police Service: New Governance Structure

Earl Attlee Excerpts

Thursday 1st November 2012 Lords Chamber

[Lord Prescott]

My Lords, I offer my congratulations to the noble Baroness, Lady Henig. She a said a great deal with which I agreed. They were the arguments that I used when I voted against this legislation, but, of course, the Government persevered with it, very much at the pressing of the noble Lord, Lord Wasserman—I shall come to that in a few minutes—resulting in the policy that we have today. However, I have to admit my interest as I will be fighting in this election in two weeks’ time to become a commissioner and I admit to being a white male candidate—probably old as well—but I hope that I shall be able to put the case.

My case is about whether the new police governance structure which the Motion before us today is about, and the policy that the noble Baroness, Lady Henig, was critical of, are satisfactory for us. It cannot possibly be that there was a failure in the policy that the Government inherited. In fact, that was not the case; if anything, as the noble Baroness pointed out, it was a very successful policy. It is 20 years ago that Tony Blair announced that he would be tough on crime and tough on the causes of crime. His emphasis on the causes of crime was quite important, but it was laughed at at the time. But if we look at the analysis 10 years on, we find that the rate of criminal offences that have taken place has reduced dramatically. It is not just in my own area of Humberside, where it has gone down by 40%; in every area of England and Wales, crime fell by around 40%. Whatever the judgment in this House is and whether it is a democratic one or not, I assume that it is really about reducing the incidence of crime. Then there is also the participation of the social mechanisms involved in it; the criminal side and the police and social causes are two sides of the same coin in any successful policy—and that clearly came about.

So it cannot be that the policy is failing. I think that it is because the Government think—and there are a number of reasons given for it—that it is costing a lot more than it should. That is a fair point to make; the Government have an argument. Policing in austerity, as Her Majesty’s Inspector of Constabulary said, will have an effect. That is probably true, but is the choice then to cut about 20% in resources and get rid of 15,000 police? If anyone believes for a moment that that will improve the situation or help the decline in crime to continue, they are living in another world. Indeed, it is obvious that, whatever crime statistics you take, if you take away the resources and reduce the scale of policing, there will be an increase in crime. So you have to make the judgment whether the priority is to save the resources or to keep the community safe with an active police and social policy in this area. That is a judgment that we can all make. Certainly, this new policy of reducing on such a scale will have that effect. So I need to look at other reasons.

I can understand the argument on austerity, although I am bound to say that Her Majesty’s Inspector of Constabulary made it clear that these cuts were at twice the rate that they needed to be. In my area that makes quite a difference—and I think that that is so in every area. So while not rejecting the idea of austerity, we must ask whether it has to be so deep and quick as it is at the moment. I as a commissioner would be expected to produce a five-year plan within five weeks. I do not know what the extent of the cuts will be, and we still have the public expenditure review to come. We will have £23 million in cuts and I do not think that that is the end of it. They have already cut £500,000 from the community safety management programme, so we have not stopped the cuts. Presumably, whatever the circumstances, these cuts will continue.

You have to ask yourself why this is happening, in those circumstances. To a certain extent, the public expenditure cuts are one reason—then there is decentralisation. This Government talk about decentralising and taking policing away from the Home Office, but if you look at the proposals that have just come out the very opposite is happening. The policy concentrates more and more power in the hands of the Home Secretary. The proposals are to abolish ACPO; there will now be another council of chief constables, which will presumably report to the Home Office. The proposals are to replace the Inspector of Constabulary with Mr Winsor, and the report basically threatens the confidence of the police. The National Crime Agency is a body that can overrule the chief constable and it is related to who? To the Home Secretary. That concentrates power not in the local area but in the Home Office.

Then there is the abolition of police authorities, which is supposed to give greater democratic accountability. The noble Lord, Lord Wasserman, is a great force in democracy. Looking at his background, I do not think that he ever took part in an election. He is a great civil servant, great scientist and a great adviser on both sides of the Atlantic, but absolutely useless in understanding the democratic process. Of course, he is entitled to speak as an individual—but do not give us the quote of experience, because he has got none of it. The noble Lord, Lord Wasserman, has been one of the biggest gurus in the development—is he going to get up?

[Earl Attlee]

My Lords, I hope not.

[Lord Prescott]

I presume that was to stop me in my flow. I hope that that will be taken into account when it comes to the eight minutes.

On the democratic accountability and the election of the PCCs, November is the worst time to hold an election—everybody agrees on that—with a voting system that does not necessarily mean that you need 50%. You can have a very low proportion of the vote and still be a commissioner. No doubt there will be a question about the legitimacy of someone being a commissioner on such a low vote. No money is being given for the election candidates, or information about the candidates. Do we really accept that this Government are interested in democratic accountability? It is a load of nonsense—they never have been. To that extent, we will get a low turnout.

The PCCs have been given the opportunity to provide a plan. They have to do that in five weeks—it is already ready and agreed with the Home Office. It just gets handed to us. I will not do that; I will not accept that kind of analysis. It is not fair. It is certainly not politically accountable because it is the Home Office telling us what we do with the plan when we should be asking the people in our area what should be the priorities in the plan. We are not doing anything about that and the chance to do so is denied to us because of resources. In all these areas we are finding a loss. In Humberside it is £23 million. We have the difficulty of cutting too fast and face a basically bleak future, with crime increased.

Why did we pursue this policy? I will finish on this point. The noble Lord, Lord Wasserman, is one of the gurus—I have read more about him: this guru has been over to America and come back here, and he is an adviser to the Home Office and to the Prime Minister. God help him, he does not seem to be getting many answers right but let us leave that aside. He has given that advice and yet he refuses to appear before the Select Committee in the House of Commons to answer what this new IT company will be doing. I understand that he will be chairman of this new IT company, which recommends £500,000 be paid to the chairman—three times the amount given to a Prime Minister. Is the noble Lord going to be chairman? I hoped he would speak after me but I notice that the organisation shoved him in front so I cannot ask him that. But I will tell you what this IT company will do: it will privatise the intelligence and technology. All this is about creating space in the police force for privatisation.

We saw that the Home Office is still trying to advocate privatisation, though Surrey and Midlands have rejected that so far. In my area, Lincolnshire already has G4S in. God help them. We saw what happened at the Olympics but G4S is already in on contract. This is about privatisation.

[Earl Attlee]

My Lords—

[Lord Prescott]

The noble Earl must be fair: he got up before. I say to the noble Lord, Lord Wasserman: you are advocating democracy. You are adding more accountability. I read in one of his speeches that Lords should encourage people to vote. Why did he then sign an article saying that I should not be the commissioner in Humberside? Quite frankly, who the heck is he to say that and appeal to my electorate not to vote for me? I say to him: come up to my area, debate with the people as to who has the right to make that decision—advisers like him who will not speak openly, or politicians, who are accountable. I am a politician. I am accountable. Come up and debate with us instead of hiding behind your position.

Railways: London Midland Rail Franchise

Earl Attlee Excerpts

Wednesday 31st October 2012 Lords Chamber

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what action they will take regarding the London Midland rail franchise, following recent disruption of its services.

[Earl Attlee]

My Lords, London Midland has not yet breached its contractual cancellations benchmark, which is calculated as a rolling annual average. However, if the situation continues and cancellations increase, the department has a range of actions available, which will certainly require robust plans to improve performance and, potentially, further punitive measures. My honourable friend the Transport Minister Norman Baker discussed the matter with London Midland’s managing director last week to apprise him of the department’s concerns.

[Lord Hunt of Kings Heath]

My Lords, I am not sure that that will be much compensation to the thousands of travellers, particularly in the West Midlands, who have suffered from the cancellation of hundreds of trains in the past few weeks. Can I take the noble Earl to the general obligation contained in the franchise agreement, which is that the operator should undertake its job with a,

“degree of skill, diligence, prudence and foresight”?

The problem with the London Midland service is a shortage of drivers. I would have thought that that is ample evidence for an intervention into the franchise agreement. This company is not fit to run the franchise.

[Earl Attlee]

My Lords, I share the noble Lord’s concerns regarding passenger experience. He is right that the problem relates to a shortage of drivers and the ability of London Midland to retain the drivers it has and attract new drivers. It is a competitive market. There is also a considerable lead time for taking on and training new drivers. This is a matter for London Midland. However, there are strong incentives for it to put the situation right.

[Lord Snape]

My Lords, is the Minister aware that since being granted a franchise London Midland has never recruited enough drivers or train crew generally, including conductors? Through the period of the franchise it has relied on its staff working rest days, Sundays and voluntary overtime in order to maintain the service. Without knowing the actual benchmarks to which the Minister referred, can he explain why on one day this year it cancelled no fewer than 100 services because of a lack of train crew? Is it not about time we did something to change this franchisee before all of us in the West Midlands take to our motor cars permanently?

[Earl Attlee]

My Lords, it would be premature to terminate the franchise at this point. There are severe penalties for breach of franchise. The noble Lord’s analysis of the problem may be right. However, it is important to understand that all train operating companies rely on rest-day working but only to the extent of about 3% or thereabouts, whereas this operator is now in the region of 6%. A shortage of drivers causes a serious problem for that operator but it is the train operating company’s problem.

[Lord Hughes of Woodside]

Can the Minister tell us what the benchmark is?

[Earl Attlee]

My Lords, the short answer is no; the longer answer is that it is a moving annual average. The train operating company has the benefit of earlier good performance. However, if it carries on with the current trajectory, it will be in serious difficulties.

[Lord Bradshaw]

My Lords, it takes at least a year to train a driver. If we try to cut it down, we face the horrors we saw at Ladbroke Grove some years ago when an undertrained driver caused 30 deaths. London Midland has a full number of drivers in training and will bring forward a new timetable in December covering most of its services. Instead of talking about punishments and retribution, could we prevail upon the train company to put all its efforts into using all available media methods to apprise customers of any cancellations as far in advance as it can?

[Earl Attlee]

I entirely agree with everything my noble friend says, particularly his point about customers making sure they check with National Rail Enquiries shortly before their journey to give themselves the highest chance of not arriving at the station to find the trains are not running.

[Lord Morris of Handsworth]

My Lords, is it not a fact that this Government and trains do not go together? First of all we had the fiasco over the west coast main line and Virgin. Ministers keep their jobs and some get promoted but, of course, civil servants get suspended. Some 3 million people are unemployed but London Midland still cannot get any drivers. To top it all we have the Chancellor—the Chancellor!—buying a second-class ticket and trying to travel first class. Is it not about time that we sent for Thomas the Tank Engine?

[Earl Attlee]

My Lords, first of all, there is no shortage of potential recruits to be train drivers, although a potential train driver needs to have certain attributes. The problem with the west coast line is one of franchising and procurement, but here the problem for the train operating company is in retaining and recruiting sufficient drivers to meet its obligations.

[Baroness Sharples]

Does not the present problem arise because the drivers were required to work during the Olympics, and now they need leave?

[Earl Attlee]

My Lords, my noble friend is more or less right. The problem is that the chickens are coming home to roost because leave was restricted during the Olympics period, so the drivers want to have their leave now. In addition, we are experiencing the problems of the half term, when drivers naturally want to be at home with their families.

[Lord Tomlinson]

Will the noble Earl explain to the rail company involved that recruiting drivers for training is one thing, and getting them through the training is another, yet if the company does not retain them we have the fiasco that we have today? Will he emphasise to the company that part of the process of retaining their drivers is to pay them a comparative salary to those of rail drivers in other organisations?

[Earl Attlee]

The noble Lord is basically right. Full driver terms and conditions, including salaries, are confidential to the drivers concerned; however, a glance at the London Midland website states that the company is advertising for qualified drivers at a salary of £42,620, while Chiltern Railways, by comparison, is advertising for qualified drivers and offering £46,344.

[Lord West of Spithead]

My Lords, I have considerable sympathy for the Chancellor. Last weekend, I found myself totally confused by first class, second class, the price of tickets, which line to be on and everything else. When I showed my rail card with an old photograph of me, the ticket inspector said, “Gosh, you look like George Osborne”, which was a bit of a shock. Does not the noble Earl feel that we should try to simplify this plethora of ticket types and rules? It is totally confusing.

[Earl Attlee]

My Lords, I agree with the noble Lord that the ticket system is very complicated and no one has fully grasped the nettle, as yet, to put in place a better system.

[Lord Harris of Haringey]

My Lords, the noble Earl has repeatedly talked about the moving annual average. Does this mean that the rail company concerned is able to claim that it is always an average year in terms of its performance, in that it is worse than last year and better than next year?

[Earl Attlee]

My Lords, first, it is important to understand that the TOC has a target of continuously improving performance. Secondly, we need to understand that the penalties for breaching the contractual obligations are actually quite serious; so under the system of measuring performance it is possible for the TOC to have a few bad weeks and not be in breach of contract, but if it continues in that way, it will, under the terms of the franchise, eventually end up in breach of contract and be vulnerable to serious consequences.

[The Countess of Mar]

My Lords, does the noble Earl agree that it is not just the salary that matters with a job; job satisfaction involves all sorts of other factors such as being respected by your employer, being given decent working hours, being able to expect to work on certain days and not others, and always having something to anticipate that is good? This, I am afraid, is where London Midland has fallen down, and is why it is not retaining its drivers. Can anything be done to encourage it to be good to its workforce?

[Earl Attlee]

My Lords, the noble Countess is absolutely right. What actually encourages London Midland to sort this problem out are the provisions of the franchise that contain the necessary penalties.

[Lord Grocott]

My Lords, does the noble Earl share the pleasure and delight that I certainly do in the knowledge that his grandfather presided over a wonderful Labour Government, who in 1948 nationalised the railways? Does he agree that in terms of managing the railways, that Labour Government were a huge improvement on this Conservative Government?

--- Later in debate ---

[Earl Attlee]

I am sure that the whole House will not be surprised to hear that I am very pleased at my grandfather’s achievements. However, there is a difficulty in having one nationalised industry: it is very difficult to determine the appropriate salary for a train driver when you have only one employer. We have several employers of train drivers and our experience is that train drivers are finding out who is the best employer, either in terms of salary or, as pointed out by the noble Countess, in relation to other terms and conditions.

[Lord Berkeley]

My Lords, do the Government have enough staff in the Department for Transport to micromanage all these franchises, to ensure that each driver is paid the right amount and that there are enough drivers, and then to impose the penalties if they fail? After the west coast main line franchise, possibly it should be recruiting another 50% of its civil servants.

[Earl Attlee]

My Lords, I assure the House that my department does not have enough staff to micromanage the franchise. We have no intention of doing that. We receive reports on the cancellations but we do not need to micromanage.

[Lord Hamilton of Epsom]

Is my noble friend not concerned that the noble Lord, Lord Grocott, may be suffering from a failing memory if he thinks that the days of nationalised British Rail were better than what we have today?

[Earl Attlee]

My noble friend is quite right. As all noble Lords know, since the railways were privatised, we have seen a huge increase in passenger use and freight use.

Arrangement of Business

Earl Attlee Excerpts

Tuesday 30th October 2012 Lords Chamber

[Earl Attlee]

My Lords, because the Question for Short Debate, tabled by the noble Lord, Lord McConnell, will now be taken as last business, the time limit for the debate becomes 90 minutes, rather than 60. Speeches should therefore be limited to nine minutes, except for the speech of the noble Lord, Lord McConnell, and that of the Minister, which remain limited to 10 minutes and 12 minutes respectively.

West Coast Main Line

Earl Attlee Excerpts

Monday 29th October 2012 Lords Chamber

[Earl Attlee]

My Lords, with the leave of the House, I would like to repeat the Statement made by my right honourable friend the Secretary of State for Transport in another place. The Statement is as follows:

“Mr Speaker, with permission I would like to make a Statement on the progress we are making to put right arrangements for the west coast main line and rail franchising.

First, I will update the House on the Laidlaw inquiry. Secondly, I will explain how we will ensure not only continuity of service on the west coast line after 9 December but an enhanced service.

On 3 October I announced the cancellation of the competition to run the intercity west coast franchise because of the discovery of unacceptable flaws in the procurement process run by the Department for Transport. I made it clear at the time, and do so again today, that this was a very regrettable decision prompted by mistakes that should never have happened. I also launched two independent inquiries, one of which has reported its interim findings to me and which I am today delivering to the House.

I asked the first inquiry, led by Centrica chief executive Sam Laidlaw, to look into what happened and why with the aim of establishing the lessons to be learnt. I also asked the second review, led by Eurostar chairman Richard Brown, to focus on any lessons to be learnt for the future rail franchising programme. I promised that both would conduct their investigations thoroughly, independently and urgently.

Given the public interest in this matter, the Laidlaw inquiry was asked to deliver an interim report to me by 26 October, and a final report by the end of November. I am grateful to the inquiry for meeting this first deadline, and working tirelessly to meet the second. I stress that today’s findings are precisely that—an interim report. There is more work to do. These findings are clearly a first stage. As Mr Laidlaw explains, they set out what went wrong, and from that basis he will now carry out further investigations into why this happened. From the start, my aim in dealing with this situation has been to be open and come forward with information for the House at the earliest opportunity. It is in that spirit that I make this Statement today. In the interests of complete transparency, I am publishing this interim report, with its provisional findings, and placing copies of it in the Libraries of both Houses.

To be blunt, these initial findings make uncomfortable reading, but they provide a necessary and welcome further step in sorting this out. The Government will need to see the full and finished report before they can comment in detail on any conclusions. This is crucial because of the independent nature of the Laidlaw inquiry and the need for the Government not to prejudge its eventual findings. But it is clear that the inquiry has identified a number of issues which confirm that my decision to cancel the franchise competition was necessary. These include a lack of transparency in the bidding process; the fact that published guidance was not complied with when bids were being processed; inconsistencies in the treatment of bidders; and confirmation of technical flaws in the model used to calculate the amount of risk capital that bidders were asked to provide to guard against the risk of default.

The Laidlaw inquiry also mentions factors,

‘that appear to have caused or contributed to the issues raised’.

We will look at these with interest and care, although once again we will need to see the final report before we can comment further.

Secondly, I would like to update the House on the progress we are making to ensure continuity of service on the west coast main line once the current franchise expires on 9 December. As I have said previously, we will ensure that passengers continue to be served by the same trains, with the same front-line staff, the same services, using the same tickets and, I am pleased to say, enhanced future timetables.

The department is making good in its discussions with Virgin on how it will operate the line for a short period of up to 14 months while a competition is run for an interim agreement. We are discussing its proposals for improved services over this period and an enhanced compensation scheme for delayed passengers. In dealing with this my department has been frank and open about its mistakes and is absolutely determined to find out exactly what happened. In the mean time, we will keep delivering for passengers and continue with the unprecedented levels of investment in trains, stations and railway lines. Combined with our decision to limit train fare rises to an average of inflation plus 1%, instead of RPI plus 3%, for the next three years, this demonstrates this Government’s total commitment to Britain’s railways”.

I commend this Statement to the House.

--- Later in debate ---

[Earl Attlee]

My Lords, I am grateful to the noble Lord for his response—

[Noble Lords]

Oh!

[Earl Attlee]

—although it was, not surprisingly, a little bit aggressive. However, I would have done much the same if our positions had been reversed. I agree that it is not enjoyable to have to report such serious problems to the House. However, when answering questions on this issue I have aligned myself closely with my department and I have expressed confidence in all the officials who have briefed me. I still have confidence in all the department’s officials who brief me.

The noble Lord asked about the issue of pressing on with the franchising process when there was a possibility of something being wrong. We know that serious errors were made, and this interim report spells these out. The reasons why this happened and why the department pressed on regardless will be addressed in the full reports. However, in August, officials had assured the then Ministers that the department’s process had been robust.

The noble Lord, Lord Davies, also asked me about the roles of Ministers. Before 12 September, my right honourable friend was advised by officials that potential concerns about two aspects of the franchise process had been discovered, but at that stage it was not clear that these would have made any difference to the outcome of the competition. He was advised that the right course was to continue to prepare the defence to the legal challenge. He asked that further investigations be conducted. In the later stages, from 24 September, this work was assisted by PricewaterhouseCoopers. On Tuesday 2 October, he was advised that the flaws were so significant that the competition would have to be cancelled, and he announced this on that very night.

The noble Lord also talked about delay to the whole franchising process. We will have to wait until we receive the Brown report to see what it means for franchising as a whole—and of course we will get that at the end of the year. He asked about liability as regards the various bidders in the franchising process. He would not expect me to comment on any claims for compensation.

The noble Lord’s initial point was that Brown and Laidlaw are compromised by being non-executive members of the departmental board. Sam Laidlaw has outstanding credentials to lead this review. He is a very senior business leader with a deep understanding of how big organisations work. He is the lead non-executive director across government on procurement and is familiar with the issues surrounding public procurement. As lead non-executive board member for the DfT, he has a thorough knowledge of how the department works, while remaining independent of it. The Department for Transport board was not responsible for approving the award of the intercity west coast franchise competition, and the department’s governance procedures for major contract awards did not require the board to be consulted. I refer noble Lords to paragraph 2.2 of the interim report, which adds a little more.

[Lord Bradshaw]

My Lords, I am not going to join the chorus of criticism. That is water under the bridge, the situation is going to cost a lot of money, and it may take a long time to resolve.

I have some experience of models, how complex they are, and how very few people actually understand what is inside them. You virtually have to have a degree in econometrics to understand them, and to some extent it is in the interests of the consultants that it should be so, because it keeps them in work. The whole issue of subordinated loans, which is connected with long franchises, means that you are asking the banks to put up a lot of money into the very distant future. We know that the banks are risk-averse and a new method must be found of covering this liability, or else it will bring all long franchises down.

I would like an assurance from the Minister that all the stalled franchises will continue good housekeeping, small investment schemes, support for community rail trusts, and all those things in the time before a new franchise procedure is launched. I warn him that it is going to take a long time, possibly two or three years, to get a viable scheme going.

Is it not better, rather than having very long franchises, to build into the franchise process a reward for delivery of excellent service, whereby each year you get something off the next bid? If you have five good years and then rebid, you may get a 5% advantage over any other bidders. That would underwrite continuity, which is appreciated by the staff and the customers.

I have one final question: will the noble Earl give attention to the large-scale orders that are imminent from rolling-stock companies? I am talking about big money. These will not go ahead unless the department gives some reassurance to the rolling-stock companies that the franchises they let are going to use the rolling stock. That is extremely important, particularly for lots of jobs in Derby and Preston.

[Earl Attlee]

My noble friend Lord Bradshaw made some important points but, of course, for answers to many of them we will have to wait to see what the Brown report says. However, I agree that we need to be careful to keep what is good about the current franchising system. At this stage, in advance of the report, I would not want to comment on how long it will take to get the franchising system running again. Rolling stock is of course a separate issue from the franchising problems, but he makes an important point and I will draw it to the attention of my right honourable friend the Minister of State.

[Lord Martin of Springburn]

My Lords, I have stated to the noble Earl previously that every week when I come down here I travel on the Virgin Pendolino and travel home the same way. I hope that the officials in his department will take into consideration that the dedicated staff who work for the company feel insecure about what is happening. They had some relief when they were told that they had extra time—14 months—but that is not all that long when you are dependent on a livelihood. To illustrate to the noble Earl how dedicated these men and women are, perhaps he remembers the flooding in Cumbria that caused subsidence. At very short notice, these good people were able to get every passenger off at Preston and bus them beyond Carlisle to make sure that they continued their journey north. That is the kind of dedicated people the staff are. We often talk in this House about people raising families and working, particularly women. Many of those who work for Virgin are young women raising families. They arrange childcare so that they can get up early in the morning to carry out their work and ensure that their families are looked after. I ask that all concerned bear in mind that there is a dedicated workforce who are entitled to consideration.

[Earl Attlee]

The noble Lord makes an important point about the human element of this problem. I take this opportunity to make it quite clear that the front-line staff will not be adversely affected. It will be the same staff running the trains and the same rolling stock. In the short term, passengers will not notice any difference. As I said in the Statement, we may even be able to enhance the service. However, it is important to remember that there is a human element to this problem.

[Lord Snape]

My Lords, will the Minister accept some sympathy from me for having to deliver that preprepared Statement? It referred to the Government having been “frank and open” about this shambles, as my noble friend on the Front Bench rightly called it. Does the Minister accept that the Government have behaved in no such way and that, up to hours before the revelations emerged as a result of the proposals for judicial review, the previous Secretary of State and her successor were assuring us all that the contract was robust and that no problems were foreseen?

I wish to press the noble Earl on the question of cost, to which my noble friend on the Front Bench referred. None of us for a moment believes that the costs will be confined to the £40 million of the existing franchise. Has the department, for example, received any communication from FirstGroup, which was previously awarded this franchise and whose share price has declined by 20% since the emergence of the fact that the system was flawed? How much does the Minister estimate this whole thing is going to cost the British taxpayer? I repeat the noble Lord’s plea that in future the front-line staff who have to operate the west coast main line be kept fully informed about what is happening.

[Earl Attlee]

My Lords, as for the noble Lord’s last point, the staff on the west coast main line are of course the responsibility of Virgin. I assure the House that I have repeated many political Statements, and I have done so this time again without the opportunity of editing it because I am just repeating a Statement made by my right honourable friend in another place. As to the noble Lord’s substantive point about when my right honourable friend knew that there was a problem, as soon as he was told that the problem could have affected the outcome he cancelled the award of the contract immediately.

[Lord Trefgarne]

My Lords, I endorse what the Minister has just said. I have no detailed knowledge of these matters, and of course I share the dismay about the very serious difficulties that have emerged. However, I ask the noble Lord, Lord Davies, for example, speaking from the opposition Front Bench as he has just done, to take a little care. What would the reaction of the then Government have been if all this had happened, say, three years ago, when they were still in office? I dare say we would have had a whole lot of dissembling, lack of transparency and flannel and not the forthright and straightforward replies which Ministers have given on this occasion and for which I believe they are to be commended. Of course it is a deeply unfortunate situation but I think that Ministers have acted as best as they can and that they are to be commended for their transparency and forthrightness on this occasion.

[Earl Attlee]

My Lords, I suspect that the noble Lord, Lord Davies of Oldham, is thinking: there but for the grace of God go I. In defence of the noble Lord, he had to come to this House and explain the problems at HMRC, which, frankly, I think he did.

[Lord Low of Dalston]

My Lords, like the noble Lord, Lord Bradshaw, who spoke earlier, I do not wish to join in any hue and cry, but does the noble Earl not agree that what has happened calls into question the wisdom of the Government’s approach to downsizing the Civil Service as a response to the economic problems that the country faces? Does he not agree that this situation might suggest that they have been going too far and too fast in this? Is it not the case that what has happened here strikes a body blow at the credibility of government processes? When next we get a statement from any department that says that it has employed the most robust processes it is possible to conceive of, who is going to believe that?

[Earl Attlee]

My Lords, as Sam Laidlaw has stated, these are initial views about potential contributory factors that he will continue to investigate in advance of his final report. Laidlaw has chosen not to criticise any particular individual or groups of people. Tackling the deficit and getting the public finances in order require the Government to tighten their belt like any other organisation. In doing its bit, my department made careful and well considered reductions in its headcount that were designed to save the public money while continuing to deliver on all its priorities, including rail franchises.

[Lord Clark of Windermere]

My Lords, I raise my point this evening in the spirit of making sure that we learn the lessons of this very serious exercise. Today, the Minister has very clearly laid out the position. He described the situation from the report as very serious. He talked about things such as technical flaws in the bids and the lack of transparency. However, these revelations contrast markedly with what we were told merely a few months ago. My question to the Minister is simply this: why were Ministers not alert to these very serious flaws in the bid, and can Sam Laidlaw, in his investigation, look at this specific aspect and report on the person who chairs the board at the Department for Transport?

[Earl Attlee]

My Lords, the noble Lord talked about lessons learnt. As I said, the next stage of the Laidlaw report will look at why the errors occurred and at the lessons to be learnt. The interim report is not very long and should be available in the Library. I urge noble Lords to read all of it. I read it just this afternoon, so it is not a long report. The noble Lord asked me a point-blank question. Perhaps the answer is that officials did not realise that the flaw existed or how serious it was.

[Lord Stoddart of Swindon]

My Lords, I have no inhibitions at all about making strong criticism of what happened over this franchise. I think it has been a complete and utter disgrace and a fiasco. Indeed, when we consider the humiliating spectacle of the Government having to go cap in hand to the very franchisee who was rejected to ask it to continue running the railway, it is clear that we have got into a very serious situation indeed. Quite frankly, I believe that this Statement smacks of complacency about the whole matter. Let us just have a look at what the interim inquiry says about it. Sam Laidlaw refers to a lack of transparency in the bidding process and the fact that published guidance was not complied with when bids were being processed. Why not? Finally, he talks of inconsistencies in the treatment of bidders, and that is the most serious of all because it smacks of corruption somewhere in the department. I am sorry to have to say it but it has to be said in the light of that particular sentence. I ask the noble Earl whether the department is now shown to be not fit for purpose. Is there going to be a root-and-branch reorganisation of the department to see that this sort of thing never happens again in relation to railways or, indeed, any other franchises in which the department might be involved?

[Earl Attlee]

My Lords, the noble Lord, Lord Stoddart of Swindon, talked about strong criticism and of course it is justified. Ministers are not denying that the problem is serious. The Virgin bid was not rejected; it fell victim to a better bid from FirstGroup. The noble Lord talked about inconsistency in the treatment of bids. There is no evidence of bad faith on the part of officials. As we understand it, it was purely an error. Finally, he talked about reorganisation of the department. We will have to wait to see what Sam Laidlaw says about the reasons and the lessons learnt. I will not promise that we will reorganise the department but I assure the House that we will make sure that this problem does not arise again.

[Lord Stoddart of Swindon]

The noble Earl said that there was nothing wrong with the process, but it was shown that everything was wrong with the process. In fact, Virgin went to the High Court because it believed that the process was wrong. Quite frankly, I believe that the noble Earl, whom I respect and like very much, is being rather complacent.

[Earl Attlee]

My Lords, I am certainly not being complacent; I am talking about a very serious problem.