Blackpool Airport: Public Service Obligation Funding

Debate between James Gray and Jesse Norman

Tuesday 6th December 2022 Westminster Hall

[Jesse Norman]

That clarification is very helpful. There is a way of thinking with open PSOs that is not just tied to APD, but I will come back to the question of PSOs in general.

We have some support for administered connectivity through domestic APD. We are continuing to explore alternative routes and are seeing whether there are other ways to address this. In the context of PSOs, I will lay a slightly different emphasis from my hon. Friend the Member for Fylde. It is important to recognise that the PSO policy as it presently is set up is designed to support not new flight—that is the question being raised by my hon. Friend the Member for Witney—but routes that have previously been operated commercially or are now at risk of being lost.

The question of new routes is somewhat different. The routes that are funded at the moment, at least across the UK, are modest. There are three public service obligations: from Londonderry/Derry to Stansted, Newquay to London Gatwick, and Dundee to London City. An additional 17 PSOs connect the highlands and islands of Scotland, which are wholly within the borders of Scotland. The administration and funding of those, by agreement with the Department for Transport, is the responsibility of the Scottish Government.

We operate within a context of existing policy. To the point about the stance of the local authority, as raised by colleagues, it is important to say that my officials have so far received no requests from the local authority to discuss the need for any PSO routes from Blackpool airport—I will leave local colleagues to decide how they want to interpret that. Of course, if there was going to be PSO support, it would have to be initiated and agreed with the local authority, and the fact that we have heard nothing from them is not helpful to the cause being promoted.

As I say, PSOs are considered in the context of commercial services that either are at risk of being lost or have recently—generally speaking, within the past two years—been lost. The loss referenced by my hon. Friend the Member for Fylde goes outside that remit and therefore does not fit within the existing policy. If and when it did apply, which would undoubtedly be part of the same process as the consideration of any new routes in the future, which I will come on to shortly, it would be through a business case, warmly and widely agreed locally, in which the local authority would play a leading role. That is very important. Hon. Friends will be aware that levelling up works effectively only when everyone is lined up in the same way. When business, the local authority, local Members of Parliament and other key stakeholders are so lined up, it can be enormously effective and successful.

As a reminder to all, eligible routes should be ones in which there are historically no viable alternative modes of travel and where it is deemed and demonstrated to be vital to the social and economic development of the region.

It is important to say that if and when a PSO is granted under the current policy, there must then be a procurement exercise to find an airline, which, in turn, needs to be a full and open tender for selection. The subsidy provided is based on the airline’s operating losses on that route, which it must submit as part of a tender bid. It is a very context-dependent decision. Of course, those things would be independently assessed, as any new approach would have to decide how, where there had not been a prior existing commercial flight, a non-distortive method of subsidy and support could be provided.

Let me pick up a couple of points relating to the Union connectivity review that were rightly raised by colleagues. As hon. Members will recall, in November 2021, Sir Peter Hendy published an independent review designed to explore how improvements to transport connectivity between Scotland, Wales, Northern Ireland and England could boost not just economic growth but access to opportunities, everyday connection and social integration. The review identified the key importance of airports and air connectivity by providing connectivity both into London and in and between peripheral regions, which gets to the points raised by colleagues today.

As hon. Members might imagine, the Government are considering our response to the Union connectivity review, and my colleague Baroness Vere leads on the issue of aviation. Our response will be Department-wide, because it is a multimodal strategic review in nature. As part of that, we are exploring further opportunities to utilise PSOs in order to support regional connectivity and the levelling-up agenda.

My officials have already been actively considering how airport slots are allocated in the UK. Now that the UK has left the EU, there is an opportunity for the Government to legislate to improve the slots system to ensure it provides the connectivity that UK passengers need. That can be expected to have knock-on effects on economic growth around the country.

Regional airports play an important role in levelling up. It is important to recognise that that is not just about the foundation of the wider UK aviation sector; it is also about the business opportunities that can be directly generated as a result of the supply chains and other enterprise engagement. Members will recall that the Government published a strategy on the future of aviation, “Flightpath to the future”, which sets out a vision for the sector over the next 10 years. It includes not just connectivity, which we have discussed, but workforce, skills, innovation and decarbonisation.

We expect a naturally low-carbon approach to the regeneration of any new airports for all the reasons my hon. Friend the Member for Fylde set out. That is a potential source of advantage if it is properly handled. It is our goal that UK domestic flights should be net zero by 2040, and airport operations, which are an important potential ancillary contributor to carbon emissions, should be zero emission by 2040. We are providing significant support for that, not just for sustainable aviation fuels but for the commercialisation of those plants and other research and development co-investment —in particular, through the Aerospace Technology Institute. Alongside that, the levelling-up agenda, jet zero and net zero provide the context within which there can be diversification, a deepening and broadening, and a very significant boost to the activity conducted in and around airports.

I want to give my hon. Friend a moment to respond—

[James Gray (in the Chair)]

No, you don’t. Not in a half-hour debate.

[Jesse Norman]

In any case, I will not abuse the privilege by speaking further. I thank my hon. Friend the Member for Fylde very much for his comments, and I thank my hon. Friends the Members for Witney and for Blackpool South for their interventions and the interest they have shown in this issue.

Question put and agreed to.

North of England: Infrastructure Spending

Debate between James Gray and Jesse Norman

Wednesday 25th November 2020 Westminster Hall

[The Financial Secretary to the Treasury (Jesse Norman)]

What a delight it is to serve under your chairmanship, Mr Gray. I congratulate you, if I may, on the extremely elegant and deft way in which you have managed the Back-Bench contributions to this debate, with a lightness of touch that has brought great joy to everyone. It has been a good-natured debate, and I thank everyone for the comments, questions and arguments that they have put.

I would particularly like to single out, on behalf of colleagues, my hon. Friend the Member for Southport (Damien Moore) for hosting and calling this debate and for the fact that, in doing so, he has brilliantly selected a day on which the Chancellor himself will be stepping forward with some answers to the specific questions that he is putting. I must say that, as an example of influence in the Chamber, I do not think that is to be bettered; I am very impressed indeed that someone of such tender years in the Chamber and in this Parliament should be able to bring about such a state of affairs, so I congratulate him on that very much indeed.

I also congratulate colleagues across the House on the astonishing fiscal rectitude that they have shown, by and large. At this point, we are normally into the tens of billions in requests from my thrifty Conservative colleagues, as well as from those in other parties, so I am very grateful that they have managed to restrain their appetite—possibly because they are looking forward so intently to the festivities this afternoon.

As my hon. Friends and colleagues across the House will know, I am responding because I am the Minister responsible for the national infrastructure strategy, the National Infrastructure Commission and the Infrastructure Projects Authority. If I may, I will come to many of the comments that were raised and talk a little bit about not just the what, but the how of infrastructure, because that has been well flagged in today’s debate.

I do not think that it needs to be stated too often, and it should not be forgotten, that the desire to invest for the long term and to level up this country is the driving force of this Administration. It is an absolutely central part of what the Prime Minister, the Cabinet and colleagues across the Government stand for. The advent of this pandemic virus has only strengthened and increased the appetite to push forward, and the urgency of that mission. To that, the quality of our infrastructure and the speed of its delivery are absolutely essential.

If I may, I will just rewind a little bit. Colleagues will recall that in the March Budget we announced historic increases in capital spending, setting out plans for more than half a trillion pounds of investment over the next few years. It is important to remember that that investment is not just public investment; it is also private investment. It is very easy to forget the central importance of private investment. This country—through the quality of its regulation, its rule of law, its openness, its ability to set up a business, its accessibility, its language and its culture—remains extremely attractive to international investment, as a place to put hard-earned cash, and rightly so.

In June, the Government explained how they plan to accelerate the delivery of infrastructure schemes. In July, they said they would be bringing forward £8.6 billion of capital spending, focusing on shovel-ready projects, and this afternoon we have not just the spending review statement, but the publication of the national infrastructure strategy and some ancillary documents around that. That will set out the plans for the ambitious acceleration of investment in our country’s infrastructure and, of course, its relation to the levelling-up agenda. If it does not perfectly address all the questions that my hon. Friend the Member for Southport raised his speech, then that is only because if he had given us a couple more days we would have been able to reshape the thing even more precisely.

Let me also talk a little bit about what has been achieved so far. The hon. Member for Erith and Thamesmead (Abena Oppong-Asare), whom I again welcome to her place on the Opposition Front Bench, talked about what has been achieved so far. It is important to flag up what has been achieved, and then we can talk about where we want to go. The first thing I would say is that there is an enormous amount of investment already going into the ground, particularly in the north of England. In his summer economic update, the Chancellor unveiled the great get Britain building fund. Already Mayors and local enterprise partnerships across the north have received some £319 million from the fund, to deliver jobs, skills and infrastructure. That money is pushing forward a range of projects, from the roll-out of electric vehicle charging points in South Yorkshire to a new garden village in Liverpool.

Colleagues will be aware of the towns fund, which is already under way and which, if I may say so, is a great example of collaborative cross-party local engagement, designed to liberate energies, bring forward projects that were not necessarily on local councils’ radar screens and bring them into a coherent, long-term relationship with each other and as part of a single plan for particular towns.

That fund is paying for infrastructure schemes that will unleash the economic potential of smaller communities across the country. It has been rightly said by colleagues that we should not be purely focused on cities. This is a very important aspect of that, and I commend it to them. I am delighted that the constituency of my hon. Friend the Member for Southport is among the places that are benefiting. We have also accelerated the issuance of some £96 million from the fund, to pay for the roll-out of even more projects that will fuel economic recovery after the coronavirus.

Of course, it is hard to think about infrastructure without thinking about transport. That will continue to be crucial to unlocking the productivity of this country, in particular in the north. That is why we are investing very substantially—indeed, record sums—into improving it. The transforming cities fund has provided city regions across the north, including Greater Manchester, Liverpool and Tees Valley, with over £800 million to make their transport networks even better and greener. At the last Budget, we also announced a £4.2 billion investment across eight city regions, including Greater Manchester, Sheffield and the Tees Valley, for five-year consolidated transport settlements, starting in 2022. In addition, we are spending billions of pounds on upgrading the north’s major strategic road network.

As colleagues will be aware, I negotiated the road investment strategy 2 with the Treasury when I was on the other side of the fence at the Department of Transport, with my hon. Friend—my beloved friend—the hon. Member for Blackpool North and Cleveleys (Paul Maynard). In RIS2, we were able to negotiate a substantial investment in roadbuilding on a strategic basis across the country, including a lot of schemes in the north.

That is not just about new roads, but about making our existing road network more effective and ready for electric vehicles and, in due course, autonomous vehicles. That is an important part of the development of our overall infrastructure. Those schemes include dualling the A66 across the Pennines and of the A1 from Morpeth to Ellingham in the north-east, and upgrading the A63 and Castle Street in Hull and the Simister island junction in Greater Manchester.

The same is true for investment in the north’s railways. As colleagues will be aware, we are going to publish an integrated rail plan that looks at the scope, form and phasing of rail investment in the north and the midlands. We will also seek to reverse some of the Beeching cuts of the 1960s, so that we can get more community connections in place.

I spoke earlier about the importance when we invest not just of the what, but of the how, and colleagues were absolutely right to raise that question. I single out the comments made by my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis), who was right to focus on that. Through the national infrastructure strategy, which we are publishing this afternoon, and through the work that goes on around it, with the National Infrastructure Commission that we set up and the Infrastructure and Projects Authority, we are thinking harder about how to choose, integrate and deliver schemes as best we can and better than any other Government for a long time.

I will give a little example that is close to my heart: the ministerial training programme that I set up for colleagues, who will be pleased to know that it is now in its second phase. We have taken the view that Ministers can benefit, as can senior civil servants and anyone who aspires to be in the senior civil service, from becoming better clients of major projects and better able to ask searching questions about timing, schedule and budget of delivery. That important programme is something that we have put in place. As colleagues will know, we plan to set up a new economic campus in the north of England, with a substantial number of civil servants and people from across the economic parts of Government, to give not just a local presence, but a change of mindset that responds to colleagues’ concerns.

If I may pick up on a couple of other points about the “how?”, colleagues will know that we recently established the northern transport acceleration council, which is designed to get those projects up and running more quickly. We are pressing harder on the devolution agenda—colleagues have rightly flagged that—and have just agreed a devolution deal with West Yorkshire for £1 billion of investment and a directly elected Metro Mayor from May next year. We fully implemented the Sheffield City Region deal, including £900 million of new funding, along with substantial devolved powers over transport, skills and planning. We intend to go further still through the forthcoming devolution and local recovery White Paper.

I am lucky that, thanks to your genius, Mr Gray—

[James Gray (in the Chair)]

Don’t overdo it.

[Jesse Norman]

—I have a bit of time left to spend talking about the specific comments that have been made, which have been extremely helpful and interesting. My hon. Friend the Member for Southport was absolutely right to encourage us to look at rural areas as well as cities. He painted an almost garden of Eden-like picture of life in Southport, where people stroll airily from flower shows to comedy festivals to air shows, while striking a mean four iron on Royal Birkdale. I thought that an exquisite moment in his speech. He rightly highlighted the importance of railway, the stronger towns fund and the freeports, which he will know we have announced, and from which the north could benefit hugely in this competition.

The hon. Member for Weaver Vale (Mike Amesbury) is no longer in his place but I thought that he was right to focus on devolution, which I touched on in earlier remarks. The point about the capillaries and arteries of infrastructure was well made by my right hon. Friend the Member for Tatton (Esther McVey). My right hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) was absolutely right to focus on the short, medium and long term. As he will know, one of the great unsung heroes of transport policy over the last few years has been Sir Rod Eddington. His report was very much about managing smaller schemes—often enormously important and not to be forgotten—that move people, particularly in suburbs and areas of large volumes of traffic, by rail, road or other means, and it was absolutely right.

My right hon. Friend’s call for a new Rhine system of navigation in the north was optimistic, but I respect the intent and energy behind it. My hon. Friend the Member for Leigh (James Grundy) was right to pick up on light rail. When I was in the Department for Transport, we did a consultation on light rail, which has such great potential. It is extremely inexpensive compared with some of the heavier rail alternatives, and it could be a beautiful new industry for the UK to develop. We have a tremendous amount of relevant skills in the supply chain, and I very much look forward to hearing more about that from colleagues.