Civil Aviation Bill
Lord Berkeley Excerpts(12 years, 4 months ago)
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Lord Berkeley
Like the noble Lord, Lord Jenkin, I, too, was confused. I suppose there could be competition with baggage handling taxi services. The heart of an airport is, after all, the runways. Is it envisaged that there is competition between two runways? If it is, that is remarkably stupid. One never knows, and it will be interesting to hear what is subject to competition in this clause and what is definitely not, within a particular airport.
Earl Attlee
My Lords, I thank the noble Lord, Lord Rosser, for the explanation for the rationale behind this amendment. I am afraid that I must oppose it, for two reasons. The first is substantive and the second is technical.
The amendment would oblige the regulator to review its market power determinations at such intervals as it considers appropriate. Clause 7 provides that a market power determination is a determination by the CAA that an airport operator does or does not meet the market power test in relation to an airport area. Where it does, the operator is subject to economic regulation under the Bill. Where it does not, it is not subject to economic regulation.
Let me now turn to my reasons for opposing this probing amendment. The substantive reason is that the amendment is unnecessary. Clause 7(1) expressly empowers the CAA to make a market power determination,
“whenever it considers it appropriate to do so”.
I am mindful of the underlying purpose of Part 1 of the Bill which is broadly to further the interests of end users by regulating airport operators where necessary. I note also the CAA’s subordinate duty at Clause 1(4)(b) to have regard to the principle that,
“regulatory activities should be targeted only at cases in which action is needed”.
In answer to the question of the noble Lord, Lord Rosser, it is implicit that where changes in circumstances lead the CAA to believe that there are reasonable grounds to believe an operator presently subject to regulation should cease to be regulated, or vice versa, then it would investigate further. If appropriate, it would then conduct a full market power determination. I am reinforced in my view because Clause 7(2) obliges the CAA to make a market power determination in certain circumstances. Against this background, the noble Lord’s amendment adds little to the Bill
There is a further technical difficulty with the amendment, which I accept is a probing one. It is not wholly clear what is meant by a “review” of a market power determination. Presumably it is something short of conducting a full market power determination. Perhaps it may involve a consideration of whether the underlying circumstances have changed. However, no further provision is made to publish the results of the review or to take action in the light of its conclusions. In short, neither the purpose nor the effect of undertaking a review is made clear in the amendment.
My noble friend Lord Jenkin asked about competition between different facilities in an airport. The recommendation was made by the Competition Commission; we are implementing it.
Earl Attlee
My Lords, if they were under separate management there could be a competition situation. Under the current legislation, one simply cannot regulate because it does not provide for competition within one airport. Therefore, we are future-proofing the legislation.
The CAA’s functions under Chapter 1 comprise, broadly, deciding whether an airport operator should be subject to regulation—and if it should, regulating it accordingly. Clause 1(1) requires the CAA to carry out its functions under Chapter 1 in order to further the interests of passengers and freight owners in the provision of airport services. Under Clause 1(2) the CAA is required to promote competition when doing so, but only where it is appropriate to its carrying out its functions under Chapter 1. This is set out in Clause 1(2).
The concept of competition in provision captures competition in the provision of airport operational services between all airports, regulated and non-regulated, and competition in airport operational services within airports—for example, competition between terminals. However, the CAA must promote competition only where appropriate. It would not be appropriate to promote competition where the CAA was not carrying out its duty under Clause 1(1)—specifically, where promoting competition does not further the interests of users of air transport services in the range, availability, continuity, cost and quality of airport operational services.
Lord Berkeley
Perhaps I might seek confirmation of what the Minister said to the noble Lord, Lord Jenkin. Will he confirm that Clause 7(4) applies to airports where the number of passenger movements exceeds 5 million—I refer to a Written Answer of 20 June to the noble Lord, Lord Laird—and that therefore Heathrow, Gatwick, Stansted and Luton would all be covered by the clause?
Earl Attlee
My Lords, the large airport test certainly applies in Clause 7(2), which refers to areas located in large airports. It goes on to define a large airport. I suspect that the CAA can make a determination on any other airport at a later stage if it becomes apparent that it might be in need of regulation and meets the tests in the Bill. Therefore, I invite the noble Lord, Lord Rosser, to withdraw his amendment.
Lord Berkeley
My Lords, I shall expand a little on the comments of my noble friend Lord Davies of Oldham. A question needs to be asked: who will benefit from these three clauses? Will the passengers benefit? In my experience, when I want to go from A to B by air, I go to a website and look at the different airlines on different routes. Let us consider Stansted, for a change; we keep on talking about Heathrow. We are told that Stansted has lots of capacity. It has one terminal and one or two satellites from where the lower-cost airlines operate, and they make you walk a hundred miles to compensate you, presumably for paying lower landing fees. I suppose that those satellites, with a little engineering work, could be converted into a separate terminal, but how will the passengers benefit? When you book with an airline, you do so by considering price, timing or convenience. If you are going to book with easyJet to go to Dublin, for example, you do not have a choice of which part of the terminal, or which terminal, the plane will arrive at after landing. You are told where it will be. The passengers do not, therefore, have any choice over which terminal they can go to. They choose the airline and the airline tells you where you are going to end up.
I still cannot see who is going to benefit from these clauses. The airlines will not benefit, I imagine. Some of them pay lower landing charges than others and, as a result, are told to use a particular terminal—either close by or far away from convenient public transport and other facilities. You do not book with an airline because there is a better class of McDonald’s or a restaurant in some terminals. Are the airport operators going to benefit? I cannot see how. It will cost more, as my noble friend said. The suppliers will not get as big a volume of trade as they would if they were supplying a whole terminal. You could argue that they or someone might benefit from competition. And the passengers? I would be pleased to hear from the Minister about how they would benefit from these clauses.
Earl Attlee
My Lords, I thank noble Lords for their contributions but I am afraid that I must oppose the amendment and support the Question that these important clauses stand part of the Bill.
Inter-terminal competition may be some time off and the Bill makes no provisions about timing. However, it is important that we future-proof the legislation. The noble Lord, Lord Davies of Oldham, talked about disruption and consternation. Clearly, this would not be in the interests of passengers, and the CAA would therefore not allow such competition because it would be in conflict with its primary duty to the passengers and owners of cargo.
The noble Lord said that different airlines have different needs. He is, of course, quite right. Some airlines want to run a premium service and others want to be no-frills. However, the CAA will have to strike the balance between those differing requirements as well as replicate the effect of competition.
The Bill does not, in general, require inter-terminal competition but does accommodate the possibility. Promoting competition between terminals under the Bill would not happen if the cost implications of doing so meant that it would not benefit the passengers, again under the CAA’s primary duty. In the circumstances postulated, there is no question that the CAA would seek to require inter-terminal competition. If, however, an airport chose, say, to lease a terminal to a third party, the Bill would remain in service, and I will come back to that in a moment.
Clause 10 empowers the CAA to determine, by applying the criteria set out in Clause 9, including in cases where one or more separate entities have some form of management control over that area. Clause 11 contains provisions for the publication of operator determinations made under Clause 10 by the CAA. Clause 12 empowers the CAA to make operator determination in advance, on the basis of circumstances that may not yet have arisen.
The amendments to Clause 12 seek to remove the CAA’s powers to carry out an advance operator determination. However, before I get on to why the amendments are not desirable, I wish to reassure your Lordships on why “standard” operator determinations under Clauses 9, 10 and 11 are a necessary part of the legislation. These clauses are important for regulatory certainty, enabling a person to know whether they are the operator of an airport area for the purposes of Part 1. Otherwise, in difficult cases it will be uncertain who the operator is and who is not, and therefore who is and who is not subject to economic regulation. This means that they cannot be clear as to their legal obligations, and neither they nor their financial backers can know with certainty whether they will be subject to economic regulation.
The clause is not focused solely on the possible future scenario where intra-airport competition can be introduced. For example, it could apply where a whole airport was leased and some management functions were split between lessor and lessee. However, noble Lords have rightly pointed out that these clauses are important for ensuring that the Bill allows for the regulatory regime to work in a scenario where there are multiple operators of different airport areas at one airport—in other words, where there is inter-terminal competition. Inter-terminal competition is more likely to lead to more complex ownership arrangements.
I have already mentioned that it was a recommendation of the Competition Commission in its BAA Airports Market Investigation report of 2008 to allow for the regulatory regime to function where inter-terminal competition is present. The present legislation, the Airports Act 1986, does not allow for this possibility. If we, the Government, had not made these provisions, no doubt noble Lords would suggest that we should have done so, praying in aid the Competition Commission’s recommendations. It is important to note that these clauses do not empower the CAA to introduce inter-terminal competition; they merely ensure that if inter-terminal competition becomes a reality, the regulatory regime can accommodate the scenario.
Clause 10 empowers the CAA to make binding operator determinations on the basis of the circumstances at the time the determination is made. However, this is considered insufficient where a person wants to know whether they will comprise the “operator” in the event that they take some control over an airport area. Against this background, to allow for greater regulatory and commercial certainty, Clause 12 empowers the CAA to make advance determinations—that is, determinations on the basis of circumstances that have not yet arisen. This would include a determination that, if a lease were executed with specified terms, the lessee would or would not comprise the operator.
The first amendment would deprive the CAA of the power to make an advance operator determination. The Government cannot agree to this because it would increase regulatory uncertainty and possibly stultify commercial transactions. I therefore urge noble Lords to withdraw their opposition to the clauses.
Lord Empey
My Lords, I am sure that most of us travelling through airports have been approached at one time or another by the person with the dreaded clipboard. No doubt all noble Lords here were free and giving of their time and answers to help these people establish their true feelings.
Whether the particular methodology contained in these amendments is right, I am not sure. No one wants to add to the difficulties of getting a licence or to the bureaucracy involved. Nevertheless, underneath all that, the noble Lord, Lord Davies, is making a fundamental point that we all share. There have been a number of cases in recent years where the whole image of this country and the welfare of many thousands of passengers have undoubtedly been put to the test. Unfortunately, on some occasions, the relevant airports have failed that test. One constantly hears that there is an absence of information being fed back to the passenger.
Of course, these emergencies obviously come out of the blue in many cases. Sometimes the airports are not properly prepared, they do not have enough staff or facilities and one understands that this is not easy to cure. Nevertheless, it should be at the core of what we are trying to do. We are trying to make aviation more efficient but, in parallel with that, we have to make it a more pleasurable experience.
In so many walks of life—we are talking mostly about finance—consumer welfare and consumer benefits are put at the core of many of the things that we do in this country. That is right and there is therefore some merit in these amendments. Whether this methodology is the right one is not necessarily the issue today. The point is that there is a fundamental issue, and I hope that the Minister will refer to it in his reply. Should there be a broadly understood standard that would apply to all airport operators in the event that an emergency will arise, as it inevitably will; and how are people to be treated? Are we to continue to see our television screens covered with images of passengers complaining about their treatment, delays and lack of information?
In order to raise standards, which is our general objective, there should surely be some methodology. I have an open mind as to whether or not it should be this precise mechanism but I hope the Minister will at least acknowledge that this must be at the core of what we do.
Lord Berkeley
My Lords, following the comment of my noble friend Lord Soley about immigration, by coincidence I have in the Crime and Courts Bill an amendment about the immigration service which may be discussed later tonight. The service is woefully inadequate, as my noble friend said. The delays are reflecting very badly on the country.
Passenger satisfaction should be measured in respect of immigration delays as well as many other things, because they are quite significant. My suggestion that I shall probably put tonight is that the immigration service should be given targets. I am not sure that this Government like targets but there might be a target for people with EU passports to wait for not more than 10 minutes, and for those from third countries to wait for not more than half an hour. We can debate what the targets should be. The crucial thing is that the immigration service should be required to pay some kind of compensation to the airlines if they exceed those targets, unless there is an emergency or something like that.
As several noble Lords have said, the key is to have this information. I would much rather see it come from the licence holder than from the immigration service, which might be tempted to massage the figures slightly. My noble friend Lord Davies can think about whether it should go in as a further amendment on Report, but we ought to measure this matter along with some of these other issues to get independent information on passenger satisfaction regarding everything they see when they arrive at or leave an airport.
Earl Attlee
My Lords, I am aware that similar amendments were tabled in the Committee and Report stages in the House of Commons. These amendments provide us with a welcome opportunity to return to some important issues for passengers.
The noble Lord, Lord Bradshaw, talked about comparisons with the bus and rail industry arrangements. There is no reason, however, why the CAA cannot look at those rules and regulations when devising licence conditions and learn from what happens in another industry. The noble Lord, Lord Soley, talked about first impressions. They do matter and I have been impressed with the work going on at Gatwick to improve the appearance of the airport and the way it works.
The noble Lord, Lord Empey, touched on the issue of a market survey and said that passenger satisfaction is at the core of what we are trying to do. It is, but it is the duty of the CAA to achieve the desirable outcomes by means of the licence conditions.
The noble Lord, Lord Berkeley, talked about immigration issues, as did other noble Lords. A few years ago, I declined to visit the United States, even at public expense, because, frankly, I thought that the immigration arrangements there were so awful that I did not want to do it. I just said, “No, I will stay here and be with your Lordships”.
Earl Attlee
We will see what happens in the next reshuffle.
My honourable friend the Immigration Minister is reviewing what additional data may be published by the Home Office and shared with port operators. Meanwhile, the border force has responded to recent problems in a number of ways. It is tackling short-term peaks with a pool of trained staff, working with airports and airlines to ensure that they provide more accurate passenger manifests and flight schedules so that the border force can flexibly deploy staff at the right times and places, creating a new central control room for the border force at Heathrow that uses mobile teams for rapid deployment, and implementing new rostering and shift patterns. The border force is also working with Gatwick and Heathrow airports to improve passenger flows, using more specific measures such as e-gates and other biometric checks.
There can be no doubt that passengers want efficient baggage-handling services when they travel by air. The experience of recent years has also demonstrated how vital it is that airports prepare effectively for potential disruption. It is clear that the aviation sector as a whole needs to have effective means of dealing with passenger welfare during disruption of services. While I can therefore understand and agree with the sentiment behind these amendments and what noble Lords have said, I cannot recommend accepting them into the Bill. The text of the Bill already provides the most effective means of protecting passenger interests in relation to the matters raised.
Clause 18 and the licensing regime as a whole will give the CAA the flexibility to tailor licence conditions to the specific circumstances facing individual airports with substantial market power. This flexibility is an important means of minimising the distortions associated with regulatory intervention and ensuring that action taken by the CAA is proportionate. However, we also believe that giving the independent expert regulator flexibility and discretion in deciding the content of the licence is the most effective way to protect the interests of present and future passengers. If Parliament chooses to use this legislation to hard-code certain points in licences, it would constrain the regulator’s freedom to decide what priority should be afforded to different passenger concerns and what costs should be allowed for the delivery of competing consumer priorities. As the Minister of State said in Committee in the House of Commons, amendments such as these would make the licence system unbalanced because passengers care about a whole range of different issues. Moreover, a prescriptive approach in the Bill is likely to make it more difficult for the regulator to adapt its approach to the changing concerns of passengers. In 2005, who would have thought that volcanic ash would have been a major problem later on?
If we were to adopt these amendments, they would oblige the CAA to give greater weight to these factors than other matters that might become equally or more important to passengers in the future. This danger was recognised by the noble Lord, Lord Soley. Your Lordships can be very confident that the CAA will already use the new licensing powers proposed in the Bill to focus on, for example, operational resilience and passenger welfare in the event of extreme disruption—not least because of the CAA’s Clause 1 duties, as the noble Lord, Lord Davies, recognised. And why it would it not do so?
As we have discussed in Committee, in response to a request for advice from the Secretary of State, the CAA published an indicative licence in January to assist Parliament in its scrutiny of the Bill, and a copy has been sent to the House of Commons Library. At the request of the Department for Transport, the draft licence includes provisions on operational resilience. The proposals in condition 7 would require the licence holder to operate the airport efficiently and use its best endeavours to minimise detriment to passengers arising from disruption. The noble Lord, Lord Davies, mentioned disruption due to winter. When I visited Gatwick Airport before the most recent winter and saw all the new equipment in place, I was absolutely confident that the winter would be very mild.
It would also require the airport to draw up, consult on and gain the CAA’s approval for an annual resilience plan setting out how it would secure compliance with its obligations under the condition. The licence holder will then be obliged to comply with the commitments it has made in its resilience plan. The CAA sought initial views from industry in drafting the indicative licence. However, since Parliament has not yet concluded its consideration of the Bill, the CAA has not yet started to consult on proposed licence conditions for each airport that will be subject to regulation.
If the system proposed in the Bill is implemented, the CAA will consider the extent to which it is necessary or expedient to include conditions in a licence for operational resilience and other matters such as passenger welfare. The CAA expects that activities that might be expected to be part of the new licence regime would include taking into account other obligations on service quality standards, and the success of codes of conduct and voluntary arrangements being adopted by industry. Against this background we believe that putting specific requirements in the Bill on issues such as baggage handling and operational resilience could prove to be a disproportionate response that would place an unnecessary restriction on the CAA’s flexibility to develop proportionate and effective ways to address passenger concerns—and might even lead it to address the wrong ones.
In summary, the Bill provides the CAA—the body with the relevant operational expertise—after appropriate consultation, with the flexibility to determine appropriate and effective licence conditions. The amendments in this group could undermine our goal of giving the specialist regulator a flexible toolkit to protect the passenger. Therefore, I hope that the noble Lord will withdraw his amendment.
Lord Davies of Oldham
My Lords, I do not think that the issue of payment is likely to arise with members of the Royal Family or diplomatic staff because the arrangements for how they should be treated are agreed with the airport authorities. That is very different from saying that you can enhance the value of your ticket with extra money to get through the queue quickly. That is the practice to which I object. I am not saying that the Royal Family fit into that category. I imagine that it is also not the case for diplomats. We also have control over the process of entry to the country for air crews, but we do not expect them to take their turn in the queue because we recognise that special arrangements should be made for them. I do not want to exclude some special arrangements; I object to a scheme that enables those who are wealthy enough to purchase privilege.
Lord Berkeley
I suppose my noble friend is thinking in particular about those bankers who are now all over the press for possibly having committed criminal acts to fiddle the LIBOR. They are probably the only people who could afford to spend an extra £2,000 or so to save five or 10 minutes—or maybe several hours—coming into the country. There is just one thing that I would add to this. There is some benefit in having famous people who are prepared to speak out going through the same process as everyone else. Occasionally, they get so fed up that they go to the media and complain about it. I suspect that part of the reason why things are getting better at immigration in airports is that one or two people have had the guts to speak out and say, “This is iniquitous”. If these people were tempted to jump the queue by paying £1,000 or £2,000, we would lose that. My noble friend has made a very strong argument for having this in legislation on the basis that people should not pay extra for special treatment.
Lord Jenkin of Roding
I should like to be reassured that the noble Lord, Lord Davies of Oldham, does not seek to insist that everyone must stand in the same queue for check-in. If you buy a first-class ticket, many airlines have special check-in counters for such travellers. That seems entirely appropriate and entirely different from going through immigration, either outwards or inwards. The amendment specifically mentions check-in. However, it seems entirely appropriate that if you buy a first-class ticket you can go to a first-class check-in desk and not wait as long as you would if you had bought a standard fare.
Lord Davies of Oldham
On the latter category, we are shortly to debate the arrangements for the disabled, and I hope to provide reassurance. I accept what the noble Lord is saying; of course there are special arrangements for the disabled. We all know why it is necessary for the law to be strengthened in that area, and I shall be proposing an amendment to deal with that matter.
The situation that I have identified is not concerned with people going through different routes according to their ticket, but the question of how one goes through the state’s immigration controls. The contention that you are less of a security risk because you are wealthy is dubious. After all, I seem to remember Bin Laden did not come from a totally impecunious family. It is not the case that those who have a great deal of money are better security risks. Why on earth should everyone else, for the necessary security of the nation, be obliged to suffer some of the privations that occur from time to time? I fail to understand how one can market a package that guarantees that one is whisked through security.
Lord Berkeley
Does my noble friend agree that the key to the amendment is the word, “buying”. There is nothing to stop the provision of different queues for first-class passengers or others at check-in or security. The question is: have they paid extra to go through that facility rather than for the facilities on the flight?
Earl Attlee
My Lords, I am aware that a similarly worded amendment was tabled in Committee in the House of Commons, but that related to Clause 83, on provision of:
“Information for the benefit of users of air transport services”.
The stated aim of that amendment was to close a perceived gap in the information that will be published under that clause on what passengers can expect to experience when departing or arriving at an airport, especially in relation to how long they should expect to wait to have their passport checked. The Government supported the broad intention of that amendment. Giving consumers more information on the quality of service provided by airports and airlines will help to maximise the benefits that markets deliver to passengers. However, the Minister of State ultimately resisted the amendment on the basis that the Bill already enables the CAA to require the collection and publication of information on check-in, baggage handling and security queues. He further explained that the UK border force, the authority responsible for border controls relating to arriving and departing passengers and goods, is responsible to Ministers and Parliament, and said that this is a more effective and appropriate means to hold the UK border force to account than giving the CAA power to oversee its activities.
The amendment today goes further than the previous one by seeking to prevent users from buying preferential access to check-in, security, immigration control and baggage reclaim processes. In considering the amendment, the Committee should note the distinction between check-in and baggage reclaim processes, and aviation security and border-control processes—the latter being subject to exacting standards enshrined in legislation. For example, airports are required, pursuant to international standards and EU and domestic regulatory requirements, to ensure that all passengers undergo security screening to specified levels. This is subject to monitoring and enforcement through security inspections and tests by the regulator. Legislation also requires full travel document checks to be conducted on all passengers, including all British citizens, arriving at the UK border. As the Minister of State made clear in the House of Commons, the security of our borders and the checks that need to be undertaken to protect us from those who would enter our country to do us harm are treated with paramount importance.
I am aware that the BAA runs a VIP suite scheme at Heathrow. The UK border force does not charge BAA or the VIPs any money for the provision of this service, nor does the BAA cover any border force costs. I will write to the noble Lord, Lord Davies of Oldham, with full details of the number of years that these arrangements have been in place. As long as standards of security and immigration are maintained at all times and in respect of all passengers, the Government do not wish to prevent the market offering access to these services, which are tailored to the needs of passengers. However, there is no question of reduced security, as suggested by the noble Lord, Lord Davies.
Your Lordships will no doubt be aware that a number of airlines offer faster check-in services to premium travellers who are willing to pay a premium for the service. The Government do not wish to prevent passengers benefiting from such products. If the concern is that the purchase of preferential access to check-in or baggage control processes would be an impediment to competition, the Bill already provides the CAA with the necessary powers to address that.
In summary, aviation security and immigration processes at UK airports must comply with exacting standards that are enshrined in legislation. There is no scope for passengers to pay to avoid these processes. The Government believe that the amendment goes too far in attempting to prevent the market offering access to these and other services that are tailored to the specific needs of users. I hope, therefore, that the noble Lord will consider withdrawing the amendment.
Lord Soley
I shall be similarly brief and just wish to add to what the noble Lord, Lord Jenkin, said. The figure involved for investment at Heathrow alone is £100 million a month. Putting that into context, you raise that on the bond market and you secure it against the airport in just the same way as someone buying a house secures a mortgage against the house. If there were appeals of the type indicated by the noble Lord, Lord Jenkin, they could have a very disruptive effect on the financial markets. I think that there is a question about whether the bankers entirely agree with BAA about the risk involved but the point is that, if the risk is there and we can deal with it fairly easily, then frankly we should. If there were an appeal, it would be a severe and difficult embarrassment, particularly if the fight became bitter. The risk of a challenge to £100 million a month investment at our major airport is not funny. I suspect that the CAA would not allow an appeal but, again, this is a case of being sure that we have the safeguards in place, as the noble Lord, Lord Jenkin, indicated, and I certainly support his amendment.
Lord Berkeley
My Lords, I, too, support the noble Lord, Lord Jenkin, and others on this amendment. An appeal may be very unlikely but, as other noble Lords have said, the consequences would be bad. I cannot see how anyone appealing under Clauses 24 and 25 would find it relevant to question the financing of BAA—or any other operator, for that matter. That would seem to have nothing to do with any appeal but one occasionally gets vexatious appeals. Given the size of the sums and the disaster that would ensue if investments did not go ahead because the bankers became uncertain about an appeal, this would seem to be an extremely sensible set of amendments. I, too, shall be interested to hear what the Minister has to say in response.
Earl Attlee
My Lords, I have listened very carefully to the points that have been raised. As my noble friend Lord Jenkin pointed out, I have met BAA to discuss this issue in some detail, and since that meeting I have considered its concerns.
First, I assure the Committee that the Government remain of the opinion that there are good reasons to include derogations to financial resilience licence conditions where these would otherwise cut across existing financing arrangements. The CAA, which will be issuing the first airport licences, has also confirmed that it supports the broad principle that ring-fencing licence conditions, which does not cut across existing financial arrangements, could bring benefits to users.
The practical effect of the amendment would appear to shut out an airline’s right of appeal in respect of an entire licence condition, even if only a small part of it contained an exception relating to financial arrangements. Therefore, the scope of the amendment appears to be wider than the reason advanced for its inclusion. None the less, it is a perfectly good amendment for us to debate. The Government remain of the opinion—
Earl Attlee
My Lords, just in case the issue about the Competition Commission comes up again during our debate today, I would like to clarify what I said in response to the point made by the noble Lord, Lord Rosser, about the CC having regard to the CAA’s general duty. As an appeal body, the CC must have the flexibility to decide an appeal justly and according to law. A duty to “have regard to” is not the same as a case where the CC must apply exactly the same duty as the CAA, but the primary duty will have great weight in the CC’s decision. It seems very unlikely, having regard to the constrained grounds under which an appeal may be made—an error of law, fact and so forth—that the CC would allow an appeal that was inimical to passengers’ interests.
Flexibility arises from Clause 1(5). Where there is conflict between the interests of different classes of passengers, the CAA is generally free to choose whose interests it prefers. The CC would also have regard to this provision. I will write to noble Lords so that any interested parties can pick up this clarification.
I welcome this debate about the slots and thank the noble Lord, Lord Empey, for explaining his concerns. I also pay tribute to the work that the noble Lord has done not just in Westminster but in Brussels. It is an object lesson in how to achieve these objectives. The new clause is intended to allow the CAA to take actions to help protect the provision of regional air services to congested London airports, such as directing airports to ring-fence slots for regional services or structure their charges so as to favour regional services.
The Government take the matter of regional connectivity very seriously. The noble Lord, Lord Davies, mentioned the problems of regional airports, for example some of those in Scotland. As I said before, we recognise the vital contribution that regional airports make to local economies, and that high-quality regional connectivity is hugely important. For remoter areas of the UK, regional air services are not a luxury but a vital means of connectivity. As the Committee will be aware, and as I confirmed at the first Grand Committee sitting, European Union regulations govern the allocation, transfer and exchange of slots at Heathrow and other slot co-ordinated airports in the UK.
EU slot regulations follow the Worldwide Slot Guidelines determined by the International Air Transport Association, reflecting the fact that commercial aviation is a global business. Council Regulation (EEC) No 95/93 on common rules for the allocation of slots at community airports provides common rules throughout Europe for slot allocation. These are aimed at providing airlines with fair and equal access to airports across the EU through independent and transparent slot allocation procedures. Members are required to ensure that independent airport slot co-ordinators are appointed to manage slot allocation at airports where capacity problems occur.
EU law does not allow either the Government or the CAA to have any role in slot allocation apart from the limited exception provided by the public service obligation procedure. EC Regulation No 1008/2008 allows member states to impose public service obligations to protect air services to airports serving a peripheral or development region or on thin routes to any airport on its territory where such a route is considered vital for the economic and social development of the region.
It would be open to regional bodies—for example, local enterprise partnerships and the devolved Administrations—to apply to the Secretary of State for Transport to impose a PSO on an air route if they feel that a case can be made which satisfies the EC regulation. If approved, this would permit slots to be ring-fenced at a relevant London airport. However, one of the important principles of the PSOs is that they can be imposed only when it is necessary to ensure adequate services between two cities or regions, rather than for the purposes of linking individual airports—a point recognised by the noble Lord, Lord Empey. Importantly, that means that when judging whether a region has adequate services to London, it will be necessary to take into account the level and nature of services to all five of London’s main airports, as well as surface transport connections.
Unfortunately, I have to repeat what I said before: there is no other mechanism for the Government to intervene in the allocation of slots at Heathrow or other London airports. Under European law, the potential for the ring-fencing of slots at Heathrow to protect regional services is to be dealt with by the rules on PSOs only. Therefore, any proposals to override the strict criteria and processes by which European Governments can intervene in route operations would be incompatible with EU law. I think the noble Lord understands that but still seeks a solution.
Lord Berkeley
On the basis of the noble Earl’s argument, it would seem that there can be no grounds for having a third runway at Heathrow until all four of the other airports that he just mentioned are full.
Earl Attlee
My Lords, this is not a debate about the third runway. Whether we have a third runway at Heathrow is not relevant. If we got a situation in which we had a third runway and then ran out of capacity at Heathrow, we would still have the same problem.
In addition, the application of traffic distribution rules—the TDRs—is also governed by EU law, which prohibits the implementation of discriminatory rules, including on geographical grounds. As a result, the introduction of TDRs to protect particular regional air services is not an option as it would also be incompatible with EU law. If the amendment seeks to empower the CAA to give a direction to the airport to structure its charges so as to discount airport usage for regional services, I regret that this would not be possible for a number of reasons. If it is not in the interests of users of air transport services on the grounds of the range, availability, continuity, cost and quality of airport operation services, it would not be consistent with the primary duty for the CAA to give such a direction.
In addition, EU directive 2009/12/EC on airport charges introduced common principles on the levying of airport charges at community airports above a certain size to ensure transparency and consultation. That directive was transposed into UK law through the Airport Charges Regulations 2011. Airport charges must not discriminate between users but charges can vary in the interests of the public and in the general interest, provided the reasons are relevant, objective and transparent. The CAA has an enforcement role regarding the Airport Charges Regulations, so it would not be consistent for it to direct on the structure of airport charges. However, as your Lordships are aware from the opening remarks of the noble Lord, Lord Empey, the EU slot regulations are in the process of being reformed in Europe at present. The European Commission’s “Better Airports” package includes proposals to amend the EU slot regulations, which provides an opportunity for the UK to highlight this issue with the European Commission and to explore the inclusion of measures to help secure the ongoing provision of air services between UK regions and congested London airports.
I fully understand the concerns behind the noble Lord’s proposed new clause, but I am unable to support it for the reasons given. Nevertheless, I assure the Committee that the Government are committed to supporting regional airports and regional connectivity. We will also consult on a new aviation policy framework, which will include a focus on regional airports. We will also issue a call for evidence on maintaining the UK’s international connectivity. I would welcome the contribution of the noble Lords and their constituents to that debate and I hope that the noble Lord, Lord Empey, will consider withdrawing his amendment.
Civil Aviation Bill
Lord Berkeley Excerpts(12 years, 4 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Soley
The noble Lord might be surprised that I am not entirely unsympathetic to what he is trying to achieve but I do not think that he is trying to achieve it in the best way. I will not focus on his comments about Gatwick managing to be a hub or otherwise, although I think that if you told the people around Gatwick that we were to move Heathrow’s operation there, they might be a little less enthusiastic than the airport owners.
I think the noble Lord is right that there is a problem about surface access to airports generally. However, it is not my view that the CAA is the best organisation to do this—the Minister will tell us what he thinks. This flags up the problem which a number of us have referred to over many years: we lack an effective regional government structure in Britain that could provide the surface transport necessary around airports, as well as some of the other regional infrastructure that we need. The noble Lord is right that we end up doing things in a hit-and-miss way, with a bit here and a bit there, and then join it up afterwards. Heathrow Express came in but was that really the best idea when we had Crossrail coming? There are a lot of oddities in there. In my judgment, and I will be interested to hear what the Minister says on this, if we asked the CAA to suddenly become the organisation that has to comment on and recommend surface infrastructure we, will need a much larger organisation than the current CAA.
Lord Berkeley
We have heard two interesting speeches. I have a lot of sympathy with the amendment but what concerns me is starting off on the basis that this would add to the regulatory duties in Clause 1. Regulatory duties are terribly important issues for a regulator to take into account. I have had certain experiences with the Office of Rail Regulation over the years. Reminding it of its duties can be a good way of making sure that it remembers and acts on them.
Of course, Clause 1(2) says that the CAA must carry out its functions,
“in a manner which it considers will promote competition in the provision of airport operation services”.
I am not clear on what we are talking about when it comes to competition. This is something that will recur in later amendments. Is it competition between those airports included in the scheme in the south-east, or all airports, or competition for the provision of services within an airport? If it is the latter, this seems a big sledgehammer to crack a nut. When the Minister replies, maybe he can put me right on that.
There is also the issue that my noble friend Lord Soley raised on surface access and whether the CAA is the best organisation to do this. He might be right or wrong but there is a similar concern with ports and airports: who pays for the infrastructure and who decides? I thought that the general policy of successive Governments was that the private-sector operator of an airport or port invested within the boundary of the facility and then expected the state, local or regional authorities, or someone, to contribute to the cost of access, except when there was a Section 106-type agreement. We certainly got into a knot in the ports sector. Sometimes there was state aid available for some things and sometimes there was not.
We got into a right old knot with Heathrow over the years. BAA contributed to the cost of building the Heathrow Express line and operating the trains. It did not seem to want the Heathrow Express trains to go down the Crossrail tunnel, which most people would have thought would have made a very good piece of public transport planning, so it will not go down it. I was told by some people from BAA yesterday that the reason for that—they confirmed this—was that the most important customers who use the Heathrow Express, particularly in first class, do not like going into tunnels because their BlackBerry does not work. They would rather go from Paddington to Canary Wharf in a taxi, where they can still play with their BlackBerry. Frankly, that is a farcical argument. It was suggested that if there was a first-class carriage in Crossrail and it went straight to Heathrow, people might use it. This attitude will adversely affect the future public transport and surface access into Heathrow. I hope it will change its attitude; it has certainly said that it will look at the situation.
Lord Jenkin of Roding
I think the local authorities would have some difficulty planning together an orbital railway joining up the HS2 to HS1, with a branch to a potential Thames Estuary airport. It is a very imaginative scheme.
Having lived with the concept of a Thames Estuary airport for about 20 years, the first proposal put forward for it envisaged an orbital rail link around the north of London. In which case, therefore, you do not have a situation where people have to come right into London and cross from one station to another in order to get out to their airport. There is a substantial issue here; however, as I said a moment ago, I cannot see that this could be a function of the Civil Aviation Authority. It has issues that go much wider than what falls within their level of responsibility. One would suspect also the competence of the advice that they have—it must be from my honourable friends in the Department for Transport.
Perhaps I could ask one question. I have asked my noble friend if he would meet some of the people who are proposing to put forward the case for the extension of the HS1—HS2 to go around the north of London—and he has undertaken to consider whether that would be appropriate. I hope I do not misrepresent him. I wonder whether he is yet able to give me an answer: can he meet those who have done a great deal of work on this subject and would be able to offer very valuable advice that may well not be available within the Department for Transport itself?
It cannot be right for Ministers to keep at arm’s length, as it were, outside expert evidence that could greatly improve the quality of their decision-making. It arises only peripherally from this amendment, but we are talking about surface access, and therefore it is highly relevant.
While I am in some sympathy with my noble friend’s amendment, I am not able to support it for the reasons that I and others have mentioned, that it cannot possibly be the responsibility of the CAA to have to make provision for surface access in the way that the amendment suggests.
Lord Berkeley
Before the noble Lord sits down, perhaps I may press him a little further on what he said with respect to the proposed airport in the Thames Estuary—that it could apply anywhere. As the Government want, and as is suggested in this Bill, the airports are effectively in competition with each other. If they then want to expand, they will have to apply for planning permission in some way or another, then demonstrate what transport plans they have, and who will pay for them. That will then go back to the Government, who will decide which development happens where according to whether they are prepared to pay for the transport links. Is that the way the noble Lord thinks it should happen?
Lord Jenkin of Roding
Certainly, the question of paying for it would have to be considered in some detail. The great advantage of the Foster + Partners proposal as put forward is that they recognise that this would be financed not by the taxpayer but by investment which they would attract perhaps from around the world. There should be a great deal of investment interest in a project of this kind. The noble Lord, Lord Berkeley, is absolutely right, of course, that when this goes to the IPC or its successor, this is precisely the sort of thing that would need to be demonstrated, along with all the other things that the planning system requires. If, however, the Department for Transport is unable to meet the proponents of such a scheme, it will start with not one but two hands behind its back. That is why I have pressed my noble friend to say that in the context of the HS2 consultation he will meet the people concerned, and I very much hope that his officials will feel that it is appropriate for him to do so.
Earl Attlee
My noble friend makes very good points, and they are the ones put to the Permanent Secretary at the department. However, I have to accept the advice that I am given.
Lord Berkeley
How can the department consult with outside bodies if it does not meet any outside bodies?
Lord Berkeley
My Lords, I do not know what the scope of general and business aviation covers but what about the increasing number of hot air balloons that go around the country? Some are quite high; some are propelled, some are not; some make noise—I do not think it is as serious a problem as surface noise, to which the noble Lord, Lord Bradshaw, referred earlier—but they should not go anywhere near airports. What regulation is there for them if they get near airports and in the air generally? It is probably a problem for air traffic control.
Lord Hunt of Chesterton
My Lords, I support the amendment as part of my philosophy of more than 20 years of noting that public servants in Britain who work in agencies—I used to run the Met Office in civil aviation—do not have as part of their job description a requirement to help British commerce and industry. The leader of the Conservatives today said that growth in this country will only come about from businessmen and entrepreneurs. He is wrong. It will also come about from civil servants working with industry to create environments in which these things happen.
It is quite extraordinary that in no case is the job description of any civil servant such that he is judged at the end of the year on how he has done in his service and also promoted industry. This is a good example. The role of the CAA is enormously important for industry. Surely part of the role of the Secretary of State will be to define the terms of reference of the director of the CAA in that direction. The amendment takes us in that direction.
Lord Jenkin of Roding
I will be very interested to hear my noble friend’s response as to why the obligation contained in earlier legislation has not been repeated in the present Bill. I do not want to repeat what others have said. I, too, feel that Amendment 69 is likely to be the more acceptable of those in the group. One consequence if such an obligation were imposed is that it would go a long way to answer the question that I put to my noble friend at Second Reading on what Clause 84 is about. Clause 84 obliges the CAA to give all sorts of information. When I asked my noble friend at Second Reading what that meant, he said the Bill was,
“designed to require the CAA to publish such … information as it considers appropriate to draw passengers and freight owners into the Government’s wider efforts to address the environmental impact of aviation”.—[Official Report, 13/6/12; col. 1378.]
If the CAA does not have any sort of duty, I find that a very difficult paragraph to understand. Of course, as my noble friend Lord Cathcart said with eloquence, and as has been moved by the Opposition Front Bench, if the CAA had that duty then that would fall into place. It would be quite right, if it had that duty, that it should publish that information. The information by itself, without a duty, seems a pretty off way of drafting the legislation.
My noble friend the Minister was extremely good at answering several of the points that I raised at Second Reading but he did not quite have time to answer them all and he did not answer my question about what that paragraph in the Explanatory Note meant. I merely mention this as a consequence of the amendments to restore a duty to have regard to the environmental consequences of aviation and of the airlines.
Lord Berkeley
My Lords, as my noble friend Lady Worthington said in her opening remarks, it is useful to reflect on some of the industries which are regulated in this respect and to reflect that these industries have, for their own rights and reasons and in order to comply with the regulator’s duty, made big improvements in the areas of emissions, noise, water, energy and construction. The rail industry has been required to reduce its diesel emissions, as has the road sector. I am not sure that it will be quite as easy to persuade some ship owners to change their fuel but the European Commission is intent on doing so. I am sure that it will happen one day and that it will be either voluntary or forced upon them. As my noble friend Lord Clinton-Davis said, the air industry has made significant improvements.
It would be odd if the Bill did not contain a requirement or duty on the CAA to take into account environmental matters. That does not mean that the air industry is particularly bad at doing so but there is evidence from other industries that, because of these regulatory duties, they probably try a little harder and in a way that they would not do otherwise.
I am inclined to support Amendment 69 but it is very important that we include something here so that there is commonality with some of the other regulators’ duties to consider environmental issues, and to encourage airports and the airline industry to go that little bit further.
Many noble Lords will recall the debates when the third runway was last on the agenda about the emissions from Heathrow and whether they were over the limit. Were they caused by emissions from the M4 running past on the north side or from the M25? There were many debates—I do not want to go into who was right and who was wrong—and one solution was to put the M4 in a tunnel. I cannot see the point of that because emissions will still take place in a tunnel and will have to come out somewhere. They might come out further away but, to me, that would be cheating. Again, this concerns the idea of the noble Lord, Lord Bradshaw, of including surface access, which I am sure will come up again.
However, matters have improved since then in the quality of emissions from the air and road industries. It is essential that something along the lines of the amendments is included in the Bill.
Earl Attlee
My Lords, the issue of aviation and the environment was raised by several noble Lords during Second Reading. I am pleased to return to the matter again and to give further consideration to this important subject. I have not tabled a government amendment because I am reluctant to pre-empt the Committee’s consideration of this topic. However, I hope that when we have finished the Bill the noble Baroness, Lady Worthington, will not be disappointed.
The noble Baroness almost fell into the trap of being political. She will know that we take environmental issues very seriously indeed and that that is why the coalition Government will not agree to a third runway at Heathrow. It is clearly for environmental reasons, particularly noise. This was referred to by the noble Baroness, Lady McIntosh. Perhaps the noble Baroness, Lady Worthington, will state what her party’s policy is with regard to the third runway at Heathrow. Does she or does she not support it? I can assure your Lordships that I have listened to the points raised today and that I shall carefully read Hansard.
The point was raised about the drafting of the amendment. Yes, Amendment 13A was substituted for Amendment 12 on the Marshalled List.
Many noble Lords asked why other economic regulators have an environmental duty but not the CAA. Other economic regulators apply economic regulation across most or all of their respective industries, but the CAA regulates only the three London airports, as observed by my noble friend Lord Cathcart. Why should Manchester not be subject to environmental regulation while Gatwick is? If the CAA had an environmental duty, no noble Lord has explained to me, by way of example, what it would do with it that is not already done by some other means.
My noble friend Lord Jenkin asked about the publication requirements in Clause 84. We are not quite there yet but I will write to my noble friend and, if necessary, he can table an amendment to Clause 84.
Earl Attlee
My Lords, I assure the Committee that I have a very well thought-out speech. I believe that the upcoming aviation policy framework, due to be adopted by March 2013, represents a more proportionate and effective way for the Government to address the environmental impacts across the aviation sector as a whole. As I have said, this Government take seriously the environmental impacts of all airports. With regard to the other amendments, several of these have been extensively debated in the other place, and the Government’s position on these remains unchanged.
First, I turn to Amendment 4. As your Lordships will be aware, the previous Government decided to include a similar duty to that contained in Amendment 10. However, in practice the supplementary duty would have no substance, so the Secretary of State decided in July 2010 to omit it. This is because the duty as drafted would appear to require the CAA, in discharging its primary duty, to take account of the licence holder’s obligation to comply with planning obligations. It is not for the CAA, as an economic regulator, to enforce planning law through licence conditions. In so far as a licence condition purported to require the licence holder to breach planning law or otherwise act in breach of planning law, it would appear to be unlawful. Regardless of whether the CAA had this explicit duty or not, the CAA will need to have proper regard to the airport’s obligation to comply with all applicable legal obligations, including planning law.
Amendment 6, in the name of the noble Baroness, Lady Worthington, covers climate change. While important, this is also unnecessary because other policies seek to achieve it. Separately, the Government have committed to producing a sustainable framework for UK aviation that supports economic growth and addresses aviation’s environmental impacts. In addition, there are other policies, such as the European Union Emissions Trading System, which was mentioned by the noble Baroness when she touched on efficiency issues. Furthermore, this amendment would appear to go beyond airport economic regulation and it is unclear how the CAA would go about fulfilling this duty—a point I made earlier.
However, the Government have some sympathy with the thinking behind the remaining amendments—that is, Amendments 5, 7 and 13A. In particular, this debate allows us to acknowledge the importance of allowing appropriate investment at airports to mitigate their environmental impacts and those of activities associated with them. Without a doubt, this Government support the idea that airport operators—whether or not they are subject to economic regulation—should be able to invest in appropriate environmental measures. This concern was frequently raised in the House of Commons. However, obligations should not be put on some airports but not others depending on their economic regulatory status.
Our position is that a licensed airport operator should not be unable to recover, through the regulatory settlements, costs arising from undertaking environmental investment where an unregulated competitive airport would choose to incur similar costs for similar purposes and be able to recover those costs. After all, the overall aim of economic regulation is often cited as delivering the outcomes that would otherwise occur in a competitive market. Therefore, it is my belief that environmental investment that is in the passengers’ interests in the provision of airport operation services should be included in an airport’s regulatory settlement. This is a point on which more clarity could be provided in the Bill.
However, I am hesitant to accept these amendments today because I believe that it would be desirable to specify some or all of the environmental effects to which the CAA must have regard. Furthermore, we need 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. With the assurance that I will consider these matters in detail ahead of Report, I hope noble Lords will be willing to withdraw Amendment 4, and not press Amendments 6 and 69. However, I am willing to consider Amendments 5, 7 and 13A—
Lord Berkeley
The Minister gave a very interesting speech and I congratulate him. He mentioned some or all environmental issues, but is that not moving into a rather dangerous area of lists and what goes into a list? Are you going to include bats but not tadpoles, or noise and things like that? I hope that he will take into account that it is very dangerous to produce lists of these things because you might leave things out or add things in that you subsequently do not want.
Earl Attlee
The noble Lord makes a very good point, and I am sure that my officials will not let me go too far. However, I am willing to consider Amendments 5, 7 and 13A in greater detail, with a view to returning to the matter on Report. I would find further meetings with noble Lords extremely valuable.
While I appreciate the spirit in which noble Lords have proposed these amendments today, as I have said, there are a few reasons why I am hesitant to accept them now. Interested parties have made it clear that the CAA should not be the environmental regulator. If such duties were to be imposed, I also believe it would be desirable to specify some or all of the environmental effects to which the CAA must have regard. With the assurance that I will consider this matter in detail ahead of Report, I hope that the noble Baroness and other noble Lords will be able to withdraw and not to press their amendments.
Lord Berkeley
My Lords, this is an important pair of amendments because surely the regulator is independent and should therefore be able to make its own decisions about whether it carries out an investigation and, if so, what action it takes following the transparent, accountable, proportionate and consistent rules. If both paragraphs (b) mentioned in these amendments are included, I can see some companies being regulated starting legal challenges to suggest that they do not need to be regulated and that it is going to be very expensive for them and asking why should they answer this question. I understand that the Government have a deregulation agenda and are trying to get rid of unnecessary regulations, quangos and everything else, but this indicates that the company being regulated will be able to put pressure on the regulator in an unsatisfactory way. It is quite clear from paragraph (a) that,
“transparent, accountable, proportionate and consistent”,
set out how it would do it. Paragraph (b) is rather dangerous. It will be difficult for the CAA not to get involved in it, and I am not sure why it needs to be there. Perhaps the Minister can explain.
Lord Clinton-Davis
On the face of it, paragraph (b) is otiose. I have dealt with several cases in the sub-committee investigating legislation, of which I am a member. It is incumbent upon the Minister to say why this provision is included.
Lord Berkeley
Perhaps I may press the Minister a little more on the text in paragraph (b). On what basis does the CAA or the Secretary of State decide that action is needed? Surely they have to investigate before they can come to a conclusion. It seems a circular process.
Earl Attlee
Yes. However, we are talking about the principle of regulation that you do not do things that are unnecessary: you target your effort at a problem. If there is not a problem, you leave it alone.
The noble Lord, Lord Empey, asked whether the subsections could leave the CAA open to JR. These are secondary, subordinate obligations to which the CAA must have regard. Provided the CAA turns its mind to these matters and considers them, it will, prima facie, have complied with the obligation.
Lord Berkeley
This is by nature a probing question. I apologise to the Committee for not having been here at Second Reading. I am confused and I am sure that the Minister can help my confusion. We are talking here about an economic regulation of possibly three airports around London. Clearly there are issues of competition for businesses within specific airports, and from the way I read it that is clearly in the Bill. I am slightly surprised that there is nothing in it—that I can see—about competition between airports. If Stansted is sold, you will have three different owners of the three major operators, as well as Luton. We are talking about economic regulation and I would have thought that the Bill must include, in addition to the things that are there, regulation of slots and charges and consideration of dominant position. I know that we will come on to that last issue later.
What is the market in which the dominant position is supposed to be considered? The noble Lord, Lord Bradshaw, in his remarks on Amendment 1, listed a number of airports within the London or south-east area. I think that he forgot Southend International, which is now marketing itself as an international airport, and Manston and other similar airports. It is a question of how these would be considered. What is within the scope of the CAA on these issues given that we have dominant areas and dominant airports? As I read it, there are the three main airports around London that we have just mentioned, but Luton is pretty big and there are others. It seems odd to put this into the legislation without some explanation. An explanation would help me, but I apologise if this has already been explained at Second Reading.
Earl Attlee
The noble Lord mentioned slots. These are regulated by the world slot guidelines and, in Europe, by the EU slot regulations. They are implemented by Airport Coordination Limited in the UK. The Government do not and cannot have a role in slot allocation.
Lord Berkeley
If there appears to be a dominant position in slots, does that come under the CAA or the Government? Is there any competition authority, or is it completely outside?
Earl Attlee
My Lords, that is clearly a competition issue. I am not certain about it but I will write to the noble Lord.
Clause 5 defines what comprises a “dominant airport area” and a “dominant airport”. Under subsection (3), “airport area” means an area that consists of or forms part of an airport, including land and buildings. This provision is included to allow for the possibility of there being more than one operator at an individual airport. This could be the case if, for example, an airline acquired or leased a terminal building. As there can be more than one airport area at an airport, it follows that there can be more than one operator of an airport area at an airport.
Subsection (1) states that an airport area is dominant if the CAA has made a determination that the market power test is met in relation to the area and publishes a notice to that effect. Subsection (2) provides that an airport is dominant if all or part of its core area is a dominant area or part of a dominant area. Subsection (4) describes what comprises a core area. Broadly speaking, the core area includes runways and associated facilities, passenger terminals and cargo processing areas. It follows from that that non-core airport areas include car parks with pedestrian access to the terminal building, or the forecourt of a passage in the terminal, including pick-up and drop-off points. Therefore, if the only dominant airport area at airport X comprised the pick-up and drop-off points, airport X would not be a dominant airport because no part of the core area would comprise or be included in a dominant area. We should remember that the core area is the runways, associated facilities, passenger terminals and so on.
In such circumstances, no part of the airport could be subject to regulation. The underlying thinking is to ensure that no part of an airport should be subject to regulation unless some part of the core area is dominant. This construction is required to prevent unnecessary regulation where there is a problem only with peripheral areas. This distinction between core and non-core airport areas is necessary to ensure that the CAA regulates ancillary airport operation services only where some or all of the core area of the airport is dominant; it is unable to exercise regulatory control over core areas where only non-core areas are dominant.
Allowing for more than one operator at an airport differs from the approach used in the Airports Act 1986, which refers to an airport operator as,
“the person for the time being having the management of an airport, or, in relation to a particular airport, the management of that airport”.
That Act does not include provision about cases in which there is more than one operator of an airport. I make clear to the Committee that there are no powers in this clause to introduce intra-airport competition. Rather, the clause allows for the possibility that competition may be introduced within our airports—for example, inter-terminal competition. These provisions are included to keep open the option of competition within airports in future.
The Competition Commission has previously expressed interest in this concept and suggested that the,
“legislation … should allow for terminals to be developed or redeveloped and to be operated separately from runway facilities, where appropriate”.
While the Competition Commission has no present intention to impose such intra-airport competition, it is supportive of keeping the option open for the future. We therefore need to ensure that the regulatory framework is capable of operating in the event that inter-terminal competition becomes a feature of the UK airport sector. By including it in the Bill, we avoid the need for a future Government to have to return to Parliament for fresh primary legislation.
Lord Berkeley
I am grateful to the Minister for that very clear, if somewhat complex, explanation. If I have it right, a core area has to include the landing and take-off runways. I cannot see how more than one landing and take-off runway can be owned in one airport. If Heathrow separated the ownership of the north and south runways, then you would have some competition. However, if the core area has to include the landing and take-off, surely it would be impossible to have competition within any of the airports in the south-east. Have I misunderstood this? I would be grateful if the Minister could explain further.
Earl Attlee
I do not know whether or not the noble Lord has misunderstood. I suspect that he will have to read what I have said very carefully in order to understand it.
Earl Attlee
My Lords, I shall speak also to Amendments 16 and 23. These three amendments are being taken together. Collectively, they will ensure that the CAA must have regard to the extensive guidance and advice published by the EU and UK competition authorities, for example the Office of Fair Trading.
We have been reflecting on comments made in the other place regarding the definition of “substantial market power” in the Bill. In particular, during debates in Committee in the other place, points were made that there could be some uncertainty regarding how the CAA might assess “substantial market power”. Although we believe that the definitions and specific meanings of the terms relating to market power that are used in the Bill are clear, we see merit in providing more clarity that the CAA must have regard to relevant competition guidance when carrying out the market power test.
Clause 6(1) states that market power test is met in relation to the airport area only if the CAA is satisfied that tests A, B and C are all met by the operator of that airport area. These tests are designed to ensure that operators of airport areas are subject to economic regulation only if under test A,
“the … operator has, or is likely to acquire, substantial market power in a market, either alone or taken with … other persons”,
under test B, general,
“competition law does not provide sufficient protection against the risk that the … operator may engage in conduct that amounts to an abuse of substantial market power”,
and under test C,
“the benefits of regulating the … operator … are likely to outweigh”
the costs.
On a previous amendment, I was asked what the market is. A market for airport operation services could be as narrow as the baggage handling services at Heathrow Terminal 5, or as wide as airport operation services at airports in London and the south-east. Other examples of airport operation services include the provision of airport facilities for car parking, facilities for shops and ground handling services.
The term “substantial market power” in test A is the term used in the current criteria that the Secretary of State applies when making designation decisions on whether an airport should be subject to price control. It is well understood and accepted in this context. The previous Government consulted on the wording of this limb and the other limbs of the test for whether an airport should be subject to economic regulation. In light of that consultation, we see no reason to change the wording. In carrying out test A, the CAA expects to follow the guidelines published by UK competition authorities—for example the Office of Fair Trading and the European Commission—for the assessment of market power. This amendment will put that beyond doubt. These are generic guidelines for use in any industry and provide a useful starting point for assessing the degree of competition faced by an airport. I beg to move.
Lord Berkeley
I am grateful to the noble Earl for that explanation. I have a couple of very simple and quick questions. I assume that when he says there is an issue about being subject to price control, he is talking about baggage handling, car parking and things like that rather than the price of slots, which I think he said is outside everything. I would be grateful for his confirmation of that.
Lord Davies of Oldham
The Minister will, no doubt, give an answer to that in just a moment. I am grateful to him for these amendments. As he said, there was considerable anxiety in the other place when discussing the concept of the dominant market. I am still trying to get my head round the position in respect of baggage at Heathrow being a dominant market, but will take the Minister’s word for that. I certainly accept the other extreme he put forward: all the airports in the south-east. We appreciate that, with these amendments, the Minister has helped to reassure us over the anxieties that were expressed in the other place. We all appreciate that it is not easy to get to this definition and that considerable efforts have been made. At first, I thought the cross-reference to the European Commission looked a bit like overkill, but the Minister is making sure he has belt and braces with regard to this, in response to the challenges that were made in the other place. I am quite sure my colleagues there will join me in thanking him for these amendments and accepting that they go a considerable way to allaying past anxieties and help the Bill.
Transport: Isles of Scilly Ferry Link
Lord Berkeley Excerpts(12 years, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Berkeley
To ask Her Majesty’s Government what action they are taking to create a lifeline passenger ferry link to the Isles of Scilly in line with the Scottish Government’s ferries policy.
Earl Attlee
My Lords, I am aware that passenger transport services to and from the mainland are regarded by residents of the Isles of Scilly as a lifeline. Ferry services, unlike most of those to the Scottish Islands, are able to operate commercially without subsidy and have done so for many years.
Lord Berkeley
I am grateful to the Minister for that Answer. Perhaps he is not aware that Cornwall has the lowest GDP in the UK and has been awarded continuing convergence funding, and that it also has the fourth lowest average wage in the UK as well as very expensive housing.
His Answer is correct but the ferry only runs for seven months every year and the return fare is £90. This compares with Islay in Scotland where there are several ferries a day all the year round and the return fare is £12.50. Will he not take forward the report from the Council of the Isles of Scilly proposing an affordable lifeline service every day of the year and as a start allow the Council of the Isles of Scilly to use some of the ERDF money that is still outstanding for some key extensions before the deadline runs out?
Earl Attlee
My Lords, I am aware of the economic difficulties in Cornwall. As regards the comparison with the Scottish situation, it is difficult to make valid direct comparisons when the circumstances vary and the service is rather more complicated.
It is important to remember that transport links to the Scilly Isles are provided on a commercial basis, whether by sea or by air. Cornwall Council rules itself out of leading the smaller-scale infrastructure schemes so development work has been undertaken by the Council of the Isles of Scilly and Penzance town council. These involve improving provision for freight handling, extending the quay at St Mary’s and dredging at Penzance to accommodate a deeper-hulled vessel. The noble Lord is quite right that the ERDF funds are time-limited.
European Rail Market: EUC Report
Lord Berkeley Excerpts(12 years, 4 months ago)
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Lord Berkeley
My Lords, first, I declare an interest as chairman of the Rail Freight Group and a board member of the European Rail Freight Association. I spent 15 years in my comparative youth building the Channel Tunnel, and I recall having many debates with the noble Lord, Lord Freeman, who was one of the best Transport Ministers I can remember. We dealt with a lot of local problems and, sometimes, national problems. It was a pleasure to work with him and is great to see him in his place today, because he started many of the things that we have today.
I am sorry that I was not involved with the forecasting, which many noble Lords have criticised, or negotiating the contracts, which I am about to criticise, but there we are. We have had one of the best informed debates I can remember. There is remarkable expertise in this House and remarkable unanimity of view, which we can probably sum up as saying: it is time that the Government got moving on this to make the changes that this excellent report has recommended. I support everything that is in it. Of course, I gave evidence as well.
I have just one issue on capacity before I get into structure, which is my main subject. The noble Lord, Lord Freeman, will remember lots of debate about capacity through the tunnel, but capacity in a line such as this depends on all the trains going at the same speed. The original capacity design was 24 paths an hour in each direction which, if the signalling was upgraded, could be increased to 30. You could not run 30 trains, but you could run with a few spaces. The noble Lord will probably remember that Eurotunnel announced a few weeks ago that it will speed up the shuttle trains to keep up to the same speed as the Eurostar to get more trains through the tunnel during the Olympics. There is plenty of capacity there and I agree with the noble Baroness, Lady O'Cathain, that very little of it is being used for the through services.
Another issue is immigration. I shall not speak about that for very long, because I said quite a lot about that during the Second Reading debate on the Crime and Courts Bill, and the noble Lord, Lord Henley, has agreed to meet me before Committee on Part 3. I sense that other noble Lords may wish to participate in such a meeting, and I shall be in touch, because I agree that the current situation is absolute chaos and, frankly, an insult to visitors coming to this country.
The report rightly states that the Channel Tunnel should be seen as part of the European rail infrastructure. As many noble Lords have said, it is good for economic and cost reasons that the tunnel should not be seen as a barrier to traffic and trade. There is a long way to go before that is achieved both in the tunnel and across Europe. The noble Baroness, Lady O'Cathain, rightly talked about fragmentation.
I shall speak primarily about the structure, which I think is blocking change at the moment. The first railway package, completed in 2001, set a structure and regulatory changes to make the European railways more competitive, cost-effective and interoperable. Thirteen member states are currently being infracted against by the Commission for non-compliance with legislation that they agreed to in 2001, which is incredible. They include the big ones: Germany, France—my noble friend Lord Faulkner referred to the problems in France; he is absolutely right—and Italy.
I was interested in the evidence to the committee from the Italian railways, who said with one breath that the freight in Italy has been liberalised and everything is fine and that the next thing will be international passenger transport, but in fact—this is happening in France as well—they are complaining bitterly about what is happening in other countries but making very sure that no competition can happen in theirs. As just one example, the Italian Government and the incumbent railway, FS, are trying to prevent other operators getting access to tracks and terminals. It is encouraging its Government to introduce rules saying that all operators must provide mobile rescue cranes every 500 miles—not one set of cranes around the country but each operator having to have his own set of cranes. This is of course because the incumbent has a lot of old cranes and nobody else has. Every train will have to have two drivers, because the FS ones have two, but nobody else needs them—the passenger ones do not— while no leased wagons may be used. They introduced this legislation at zero notice, so in theory if the independent operators were running a train on the main line with leased wagons, they would have had to put the brakes on, stop and block everything. This has been going on for the past two years, while the Italian authorities and the chairman of Italian railways go around Europe saying, “We are fully liberalised”. They are not.
Where does the Channel Tunnel come into all this and does it comply with the first railway package? The committee thought not but the government response said that it does. In paragraph 135 of the response to the report, the Government say:
“The UK complies with the First Railway Package in full”—
in full—
“both in respect of the domestic network and the Channel Tunnel”.
Well, they do on the domestic network but the Commission does not think that they are on the Channel Tunnel, because it started infraction proceedings against the UK and France in February 2011. It is odd that the government response did not mention this. When the Commission is infracting a member state, surely it is relevant to the Government’s response to a report. I have all the papers; I could have had a few more, except that they rejected my freedom of information requests, but I have quite a few. The first concerns the subjects of the infraction. I shall summarise them because they are rather long but they are important.
The first concern is on the “independence of essential functions”, which means that the infrastructure manager is not owned by the same company as the train operator because that operator otherwise gets preferential treatment, as happened in Italy. The second is that there should be separate accounts for infrastructure managers and operations and that has not happened, according to the Commission. The third is on rail access charges, which a number of noble Lords have mentioned and to which I shall come back because they are very high. The fourth is on an independent regulatory body. Until about now, it has not been independent because the regulator has been part of the Department for Transport, which owns parts of Eurostar. Our Government need to be congratulated because they are now moving the whole of the UK side of the intergovernmental commission to the Office of Rail Regulation—but of course the French Government have not done that yet. Finally, there is the issue of “capacity allocation”, which is again not independent. The Commission’s paper is called an EU pilot and it is digging very hard into the detail. I would be very interested to know from the Minister whether the Government are resisting any requests for information from the Commission or are being proactive in response. Similarly, do the Government accept that the first railway package applies in full to the Channel Tunnel?
Turning to the access charges which other noble Lords have mentioned, article 8 of directive 2001/14 is the relevant one. I was a little disappointed with the committee’s response. It seemed to think that because Eurotunnel is in the private sector it should be able to,
“set access charges at a market rate subject to their obligations under EU law”.
That is right; it should be able to set its charges under those obligations, which I will come to, but I would submit that its being in the private sector is not particularly relevant. In their response on Eurotunnel, however, the Government say in paragraph 140:
“EU legal requirements have been fully implemented”.
I would challenge that.
Other noble Lords have spoken about the charges, but there is more to it than that. If we look at the five issues the Commission has put in the pilot, Eurotunnel has not demonstrated that its infrastructure management is sufficiently separate from its freight operation, its passenger operation or from the freight and passenger shuttles. The shuttles are exempt from the legislation, but they have to be looked at separately. There is no separation of accounts. There is some progress in the network statement, but not enough. I have mentioned the regulatory body and that the access charges are too high, so basically the UK gets one out of five and France gets nought out of five, which is a pretty poor record 11 years after the first railway package came into effect.
I do not accept the committee’s view that access charges should come down in the medium term. There is much more to it than that. Several noble Lords quoted the charges. I shall quote some in a slightly different way. The charge per train kilometre for a Eurostar is £36 on HS1, £13 on the high-speed line in France and £225 on the Channel Tunnel. In the tunnel, it averages about 10 times the charge on the other side. For freight, the evidence that MDS Transmodal submitted to the committee was that the charge is about £3,000 a train—it varies quite a lot. It argued that it should be £1,000 to attract significantly more traffic, bearing in mind that there are about five freight trains a day going through at the moment. If you stand on the M20 at Ashford and count the number of trucks, you could fill 200 trains a day. I suggest that there is something wrong there.
How is the charge arrived at? This is the problem. There is a rail usage contract that dates back 1985. The noble Lord, Lord Freeman, may even remember it. It was designed to give a government guarantee to Eurotunnel from the two railways: British Rail and SNCF. The charges were based on full cost recovery—fine—fixed costs and variable costs plus a mark up. The problem is that the two companies that signed, which are now DB Schenker and Eurostar, pay the charges on the basis of the rail usage contract, which has now been turned into a network statement. If anybody else comes along, like Deutsche Bahn, it will be paying the same amount, but will also be paying a charge that reflects the fixed costs of the tunnel. Something in me says that Eurotunnel is going to get the fixed costs paid twice. That does not seem right. The whole thing is a complete mess and it needs completely restructuring on the lines of Article 8 of Directive 2001/14. There is a marginal cost, a fixed cost and an allowance for financing with a calculation of how much the market can bear, all supervised by the regulator, which is a joint regulator independent of government. I can go on about fixed costs and fire suppression, but I think that, in interests of time, I had better not.
What we have here is a wasted asset for passengers and freight that is, after all, the mode of transport supported by the Commission, the UK Government and, no doubt, the French Government. The committee recommended root and branch restructuring of the Channel Tunnel. The noble Baroness, Lady O’Cathain, referred to that. The noble Baroness, Lady Scott, talked about competition. She is absolutely right. We all believe in fair and transparent competition. This is what Sir Roy McNulty is saying about the UK, and it is no different. If you want growth, you need competition, but any competition to make it work must be fair and transparent. I hope that the Government will set an example to all the other member states that are failing and take this forward, take on the recommendations of the committee and let us see some urgent change.
Lord Walpole
Oh dear. All I can say is: how do I follow that? That is the expert. I will try. My family were Members of Parliament for Kings Lynn on and off since about 1350 until the end of the 19th century. I wondered what they felt about the possibility of a Channel tunnel, and indeed I know perfectly well what they thought: they preferred to use the Hanseatic League and did not want somewhere for the French to be able to march over to Dover.
The report and the Government’s response to it are an invaluable record of the position on 8 December 2011. That is my birthday. It is also the day of the Immaculate Conception. I do not know whether noble Lords ought to draw a line between the two. The noble Lord, Lord Berkeley, did not mention immaculate conception, did he? No.
Lord Walpole
Over certain distances, there is no doubt that the train should be better than the air. It should be cheaper, should be better for the environment, should be better for time and should be more comfortable, though whether or not that is true, I do not know. The report in front of your Lordships contains, in box 2, the treaty of Canterbury. Whatever anyone has said so far, after 25 years that treaty is out of date and should be looked at very carefully. I think that someone has already drawn attention to the fact that on page 28 there are unimpressive figures for passengers and freight; certainly those for freight are totally unimpressive.
On page 35 there is the core network map of what the railway is going to look like in 2030. Once again, there is no route to East Anglia or the West Country, nor any route to Scotland north of Edinburgh. Has anyone heard of Swindon, Bristol, Truro, Harwich or Felixstowe? None of those will be on decent railway lines. The present capacity, shown in paragraph 74 on page 29, of less than 50% of the amount of passengers that could be taken and less than 10% of the freight, is quite extraordinary. Perhaps it is too expensive per train per kilometre.
In our village at home, there is a gentleman, now retired, who owns his own articulated lorry and spent his life going all over Europe picking up trailers and bringing them back. He said that without doubt he would rather go on the ferry than through the tunnel. Why? Because it was easier to get on the ferry—not that there is any difficulty getting on to the train, but you then go and sit in some nasty little carriage up at the front, and a few moments later you arrive in France. If you go on a ferry you can have a nice little relax, you can fill your—you know what I mean.
Lord Walpole
Yes. You can get everything right. I like railways and I like the tunnel, but if you go from Norwich to Liverpool Street, you go to a place called Stratford. You cannot change at Stratford on to anything else; you have to get a train either to Ebbsfleet or to St Pancras. That is extraordinary. I should think that I have used the tunnel about four to five times a year—in other words, eight to 10 journeys a year—ever since it started, both by car and by Eurostar, and I must say that I have always enjoyed it because one has got the hang of how to enjoy it.
Through ticketing simply must be introduced. When my ancestor was 200 and I was 60 in the same year on the same day, we decided that we would go to The Hague. How many tickets did we need for that? Well, you work it out. We started on Eurostar and ended up on some Dutch train, which was superb—but, yes, we will not go into that.
Now, finally, I say thank you very much to the noble Baroness, Lady O’Cathain, for being a very good chairman, bullying us all, making us speak, and helping us very much indeed. I also say thanks to our clerk and to Elaine Morgan, who were 100% behind the committee. We could not have acted without them.
Lord Brooke of Alverthorpe
My Lords, I commence by thanking the noble Baroness, Lady O’Cathain, for keeping us on the rails all the way through this exercise, and keeping us pointed in the right direction in a non-bullying way. I thank, too, our clerks, who gave us such great assistance during the course of the committee, and I particularly thank colleagues who have left the committee since we concluded the report, as well as the new ones who have joined us. I also express my gratitude to all the people who provided evidence to us, both orally and in writing, which was very useful indeed.
It is some months, of course, since we concluded the exercise, the report appeared and we got the Government’s response. It is quite interesting to see what has happened in the mean time. I have gone back and reread our report and the Government’s response, and I have also picked up on one or two things on the internet that have happened. I see, first, that there has been quite a major breakdown—a health and safety issue in April in the tunnel. Secondly, immigration, a topic which we touched on, has moved up the agenda significantly since we addressed the issue last year. I think we found that, in retrospect, the Minister’s response at that time was somewhat complacent. She said that we will have sorted it out by the time that we get round to Deutsche Bahn extending the run through to Amsterdam and into Cologne; whereas the reality is that, as has now been indentified, many people have been using the existing train system under current arrangements to come into the country illegally. This needs to be addressed with urgency from a variety of standpoints, as we have already heard.
Lord Berkeley
Is the noble Lord aware that Deutsche Bahn has said that it is not going to go ahead with its service until the immigration situation is sorted out?
Lord Brooke of Alverthorpe
I was not aware of that, my Lords, but it is a very important and significant point indeed. This will presumably be quite an obstacle to making progress and introducing the new extended lines for which many noble Lords have been calling.
More recently, and thirdly, we have seen the announcement—the noble Baroness, Lady Scott, mentioned it, and I think that my noble friend Lord Berkley may have said more on it—about allowing Eurotunnel to take over SeaFrance’s cross-channel vessels. This takeover occurred within a matter of days and raises, as the Financial Times says, significant implications for competition and, in turn, charges, which I will come back to in a moment. My major point is about the charges.
Fourthly—and this is good news—I see that the number of foot passengers travelling through the tunnel over the past few weeks has increased significantly, largely because of people wanting to come and participate in the Jubilee celebrations. All those of us who want this to be a successful venture will hope that that will continue into the Olympics and beyond. Those are the changes that have occurred since we concluded our report.
In two years, a major celebration will take place. In 2014 we will celebrate 20 years since the Channel Tunnel first opened and all the worthy work that my noble friend Lord Berkeley did on its construction. It was a truly amazing event when the tunnel opened. It was a great venture, a great vision and the fulfilment of the marvellous technical expertise that went into it. However, regrettably, as others have said, as yet we have failed completely to deliver the fulfilment of that vision. This came from the evidence of the people who came before the committee. They were almost unanimous in saying that the tunnel has not delivered all that was hoped of it and that there is still a long way to go, even though it is such an amazing piece of infrastructure that is capable of delivering such public good, not just for the UK and France but over a much wider front throughout Europe.
The witnesses—even those from Eurotunnel, with their projections—were also unanimous in saying that we still do not have enough foot passengers travelling on the train and we are well short of how much rail freight there should be. The figures are very low indeed in comparison with the original projections. Indeed, as my noble friend Lord Haskel pointed out, they have been falling off in recent years, which is of great concern. Interestingly, our witnesses all felt that this was not good enough. They all felt that we should be trying harder and going for growth. I was very pleased that the noble Baroness, Lady O’Cathain, introduced the debate by pointing to the importance of growth in this context, both for this country and for Europe.
Our report endeavours to be constructive, to identify the areas in which performance has been falling down and to suggest a significant number of solutions to the problems. I regret that the Government’s response was not as positive as it might have been. I rather sensed that our chairman felt the same. Their response did not have the enthusiasm and energy that the committee showed in addressing the topic. This came through both in the public performance of Ministers and their supporters when they came before us and in the written document. No doubt the noble Earl, Lord Attlee, may put me right on that when he responds in his usual way.
I found it quite surprising that, when we took evidence from the Minister, she encouraged us by saying that our report would provide a push in the right direction. That hardly indicates a strong commitment. I hope that we will get some movement on this over the next two years, so that when we get to 2014 we will have seen some substantial changes.
In fairness to the Government, perhaps in retrospect we should have invited the Mayor of London to give evidence. He would have talked about growth, London and the importance of getting jobs for London. We would have pointed out to him that the Channel Tunnel has an important part to play in such growth. Had we persuaded him that it was an issue on which he should campaign, we might have made more progress with the Government, given the unusual way in which he can bring pressure to bear on them. Maybe that is something for us to bear in mind in future.
I come back to the importance of the report. The Government have made some progress in addressing the governance of the IGC. This has been slow but at least the introduction of representatives from the Office of Rail Regulation, and the enhanced role that is envisaged for them in future, is a step in the right direction and very positive. I was certainly very impressed by the evidence that we heard from those representatives who are now on the IGC. They identified areas in which questions were raised about the performance of Eurotunnel. Mr Kogan, in particular, asked whether Eurotunnel’s charges were justifiably high or inexcusably high. I believe that that is at the heart of the whole issue of whether we move forward with the tunnel. He also raised questions about the absence of a performance regime for Eurotunnel. In the UK, any company of that size that did not have a performance regime in place would be severely criticised. Again, this is an area where Eurotunnel needs to move forward and ensure that it is open and clean about where it is going. Mr Kogan told us that the IGC had been working on some of these issues for two years. As he appeared before the committee last October, now it is close to three years.
I have looked at the latest reports on the internet. The last report that the IGC produced related only to 2010 and did not appear until September 2011. We are still waiting for the report on 2011. In particular, I will leave the Minister with a question which he might not be able to answer today. The Government’s response to paragraph 141 states:
“The IGC is currently investigating the level and appropriateness of Eurotunnel's charges and its Joint Economic Committee published a report on the first phase of its work in October 2011. Further work is underway but will take some time because of the complexity of Eurotunnel’s accounting structures and financial flows. Until those investigations are concluded, and on the basis of the evidence currently available, we would recommend caution in assessing whether the level of the charges is appropriate”.
I have looked at the website but can find nothing about what is happening on that front. I have done some research elsewhere to find out what is happening. It is now close to three years since this work was first put in place. If the Minister cannot reply today, will he please reply to the committee in writing and tell us when we can expect that research to be concluded so that we can see it? On that basis, I believe that we will have a foundation on which we can move forward profitably.
Earl Attlee
My Lords, I start by congratulating the committee, which was so ably chaired by my noble friend Lady O’Cathain. The Government welcome the sub-committee’s thorough report on the European rail market and the role of the Channel Tunnel and have provided a full response. As ever, I am on a strict timetable.
We believe that a truly open, fair and liberalised market would increase competition in international passenger services across the EU. We support the Commission’s overall aim of clarifying and strengthening the regulatory framework for rail access through the first railway package recast. In particular, we endorse the need to ensure that there are adequately resourced and properly independent regulatory bodies in order to facilitate market entry and competition.
The Government recognise that the Channel Tunnel is a unique piece of international transport infrastructure and that it is in the country’s interests that it remains in operation. By virtue of the 1986 treaty of Canterbury and the ensuing concession agreement, the Government are directly concerned with the Channel Tunnel.
The UK strongly supports the growth of cross-Channel rail services. The provision of international services and their service patterns is a commercial matter for operators. In order for a train to transit the Channel Tunnel, the operator needs to comply with the relevant European, national and Channel Tunnel-specific requirements.
My noble friend Lady O’Cathain and other noble Lords talked about the proposed Deutsche Bahn service. DB applied to the intergovernmental commission in October 2011 to amend its Part B safety certificate, which covers management of safety issues, to include operation of passenger services through the tunnel. Since the intergovernmental commission has been unable to reach a decision, the application has now been referred to the British and French Governments for consideration. That process is ongoing. Deutsche Bahn will also need to obtain an interoperability authorisation to place its new trains into service in the tunnel. Although IGC officials from the UK and France have been working positively with Deutsche Bahn and Siemens to help them prepare the necessary dossier, as yet no formal submission for authorisation of new rolling stock has been made to the IGC by either Deutsche Bahn or Siemens.
The noble Lord, Lord Brooke of Alverthorpe, and, I think, another noble Lord asked me about the purchase of SeaFrance Ferries. It is a matter for the competition authorities, either DG Competition at the EU or the Office of Fair Trading, to determine whether any change in market dominance raises competition issues. The noble Lord, Lord Brooke, also asked about the 2011 report of the IGC. I do not expect inspiration to arrive and therefore I will have to write to the noble Lord.
My noble friend Lady Scott of Needham Market talked about modal shift for passenger and freight. We recognise that modal shift from air and road to rail can generate important environmental and congestion benefits. However, rather than trying to force people away from car or air travel, we are working to support sustainable travel choices. A number of barriers can prevent behaviour change, including powerful ones such as habit.
Studies have indeed indicated that the Channel Tunnel has spare capacity to accommodate growth. Although there have been indications that the rail freight share of the cross-Channel market would be higher if rates were lower, pricing judgments are inevitably subjective and it is always difficult to make accurate volume and revenue forecasts. However, in partial answer to the question from my noble friend Lord Freeman, there is spare capacity for growth, as about 50% of capacity is being used at the moment.
The noble Lord, Lord Faulkner of Worcester, suggested that access charges for Eurotunnel are too high, and other noble Lords said as much. We have no clear evidence that Eurotunnel’s charges are inappropriate. However, the IGC is currently investigating the level and appropriateness of Eurotunnel’s charges, and its joint economic committee published a report on the first phase of its work in October 2011. Further work is under way but will take some time. Until those investigations are concluded, and on the basis of the evidence currently available, we would recommend caution in assessing whether the level of charges is appropriate.
In answer to another question from the noble Lord, Lord Faulkner of Worcester, the Government support long-distance high-speed rail. At present, services on HS1 and the Channel Tunnel are relatively inaccessible for those outside London and the south-east. By providing direct access to the wider European network for services from Manchester, Birmingham and other cities, a link between a national high-speed rail network and the current HS1 could address this. In January this year, the Government announced that phase 1 of the HS2 network will include a direct link to the continent via the HS1 line to the Channel Tunnel. The Government’s view is that the strategic case for a direct link between the proposed high-speed rail network and the HS1 line to the Channel Tunnel is strong.
My noble friend Lord Freeman asked about the Waterloo International terminal. I had been briefed on this but, sadly, some time ago. My noble friend will recall that the connection to HS1 was slow, and there are also technical issues regarding bringing the platforms into domestic service.
I should like to say a few words about the role of the Channel Tunnel Intergovernmental Commission and the IGC legal framework and governance. The governance structure for the Channel Tunnel has been sufficiently flexible to accommodate subsequent developments in European, UK and French law and regulation, and it is expected to continue to be so. The Channel Tunnel Intergovernmental Commission and the Channel Tunnel Safety Authority are currently seen as providing an effective structure for regulating the Channel Tunnel in line with the European framework. If a need is identified to improve the effectiveness of the IGC or to adjust the powers available to it as regulator, the Government will promote any necessary legislative changes.
The speed of IGC decision-making is conditioned in part by EU regulatory processes and requirements and by the processes and responses of the concessionaires and other stakeholders. The IGC process with regard to the authorisation of proposed new services through the tunnel cannot start until the relevant documents have been submitted.
I think that I will have to part company with my noble friend Lady O’Cathain and the rest of the committee at Canterbury. The Channel Tunnel is a binational infrastructure and therefore needs some form of binational governance. This is necessary regardless of which authorities have, in law, the regulatory functions. Even when the IGC is exercising legal powers in its own name, its decisions are, in practice, informed by discussions between the French and British national authorities. In this connection, we are working with our French colleagues to conclude as soon as possible transposition of the revised railway safety and recast railway interoperability directives for the Channel Tunnel. We see no need to renegotiate the treaty, and I suspect that the French have no appetite to do so either, as observed by my noble friend Lady O’Cathain. The noble Lord, Lord Davies of Oldham, referred to the treaty and to direct governance of the tunnel but I do not think I heard him say what the policy of Her Majesty’s Opposition is.
I turn to the tunnel-specific safety rules for passengers and freight. The IGC has made significant progress in reviewing its rules to check that all the safety requirements currently in place continue to be justifiable on safety grounds and to remove those which are not. The IGC will continue to hold this view unless the evidence demonstrates otherwise.
The tunnel authorities and Eurotunnel are working together to address the consequences for the tunnel’s rules of the opening of the European rail market. This includes a programme of work to address the European Rail Agency technical opinion, which has already led to a number of requirements being removed. The UK Government accept the principle that the IGC must justify, by robust risk analysis, any requirements that are additional to the European harmonised technical specifications for interoperability.
The safety concerns that underpin the tunnel’s safety requirements reflect the difficulties of getting firefighters in and other people out of a 54-kilometre undersea tunnel in the event of a fire. My noble friend Lady O’Cathain asked when the work on the TSIs will be completed and whether the TSI requirements will be rescinded. The Safety in Railway Tunnels TSI is expected to be revised in mid-2013. Some specific requirements in the Channel Tunnel rules have been removed—for example, the 30-minute running time for freight locomotives. Other remaining tunnel rules are expected to finish in September 2012.
I turn to economic regulation of the Channel Tunnel. The UK considers that the Channel Tunnel’s regulator’s independence from any railway undertaking is properly preserved as regards the UK. No one in the UK IGC delegation or working at the Office of Rail Regulation in support of the IGC has any responsibility for Eurostar. Within the Department for Transport, policy responsibility for Eurostar is vested in a separate command that has no locus in or responsibility for the IGC.
My noble friend Lady O’Cathain, the noble Lord, Lord Davies, and many other noble Lords talked about border and immigration controls. Rail liberalisation presents a number of border control challenges which the Home Office and the border force are seeking to resolve with colleagues from across government, the police, rail operators and the Governments of other European countries. It is occurring against a background of rapid changes in border control technology, which will help to meet some of those challenges. But these challenges will only become more significant with the increase in international services. That is recognised in respect of HS2.
Lord Berkeley
Will the noble Lord explain what border controls are planned for HS2? That seems a bit odd as I thought it was within the UK.
Earl Attlee
My Lords, I think the hope is that passengers will get on HS2 on an international journey further up the country, maybe from Birmingham.
The noble Lord, Lord Faulkner, asked about Schengen. The position of the UK outside Schengen means that exit checks also need to be completed for all passengers leaving the zone prior to immigration arrival controls in the UK. The noble Lord, Lord Berkeley, raised the UK’s possible infraction for non-compliance with the first railway package in respect of the Channel Tunnel. I am unable to discuss the infraction procedures with respect to the first railway package and the Channel Tunnel but we consider that the railway usage contract does not breach the requirements of directive 2001/14—the first railway package—for the duration of a framework contract, and complies with Articles 17.5 and 17.5a in that it relates to a uniquely large-scale and long-term investment which is covered by contractual commitments. The noble Lord, Lord Haskel, also asked about the Commission taking further action against member states for non-compliance of the first railway package. The European Commission is currently taking infraction action against those member states that have not correctly implemented the first railway package.
I am grateful for your Lordships’ comments and, where appropriate, I will certainly draw them to the attention of my right honourable friend the Rail Minister, Theresa Villiers.
Olympic Games 2012: Disruption to Businesses
Lord Berkeley Excerpts(12 years, 7 months ago)
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Lord Berkeley
My Lords, will the Minister expand a little on his response to my noble friend Lord Davies of Oldham? We read in the press of the arrival of hundreds if not thousands of members of the Olympic family—which I think probably means the International Olympic Committee and all the hangers-on. No doubt each participating member state will send a senior Minister and their entourage, and that is before we get to our own Ministers. Will all these people be able to use these special lanes in addition to the athletes—who are the ones we want to get there on time—or will they be confined just to the athletes? If the lanes are extended to all these other people who think that they have a role to play then, as my noble friend said, the public will get very angry indeed.
Earl Attlee
My Lords, the noble Lord will understand that the provision of the Olympic route network was a key component of our bid to host the Olympics. If we had simply said to the International Olympic Committee, “Oh yes, we will have a great transport system”, we simply would not have secured the bid. We had to tell the International Olympic Committee specifically how we would provide the transport, including the Olympic route network.
Railways: Great Western Franchise
Lord Berkeley Excerpts(12 years, 8 months ago)
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Lord Berkeley
To ask Her Majesty’s Government whether the new Great Western rail franchise specification for trains between Bath, Bristol, Newport and Cardiff, and intermediate stations, will take into account recent increases in population and demand.
Earl Attlee
My Lords, recent increases in population and demand will indeed be taken into account. In drawing up the objectives for the new Great Western franchise, emphasis has been placed on the need to provide appropriate capacity for passengers, within the constraints of affordability and available infrastructure. We are looking closely at recent growth trends and forecast demand as part of the specification process.
Lord Berkeley
I am grateful to the Minister for that Answer. Presumably he will have read—because I sent it to him—a report of the West of England Partnership’s Joint Transport Executive Committee, which the committee will in fact discuss tomorrow, proposing a greater Bristol-area metro network with much more frequent regional trains and some extra new stations. Will he ensure that that kind of specification is included in the tender specification for the new franchise?
Earl Attlee
My Lords, the noble Lord raises an extremely important point. The Government’s objective is to strike an equitable balance of stakeholder interests: the fare payer, the taxpayer, the long-distance business traveller and the commuter. These stakeholders are obviously in conflict. Because of this, we urge our friends in the west and south-west of England to reach a consensus on their priorities so that we can use our resources to progress them to best effect.
Roads: Traffic Lights
Lord Berkeley Excerpts(12 years, 8 months ago)
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Lord Berkeley
My Lords, does the noble Earl agree that the main difference between the United States and here is that being a pedestrian is thoroughly discouraged in the US? You are supposed to drive around 50 yards if you have to and I do not think that there are any bicycles at all. Given that we have lots of pedestrians and a growing number of cyclists, does he agree that, if anyone is going to turn left on a red light, it would be much better if they were cyclists, if it is to be done carefully?
Earl Attlee
My Lords, noble Lords behind me are saying, “No way”, and I think they are right. There are already ways of giving cyclists priority over other traffic and improving their safety at junctions—for example, by introducing advance stop lines and cycle bypasses, and providing dedicated traffic signals for cyclists if required.
Cyclists: Accidents
Lord Berkeley Excerpts(12 years, 9 months ago)
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Earl Attlee
My Lords, the noble Baroness asked me about the male/female ratio. We are aware of the hypothesis. The figures for accidents are mercifully low but, unfortunately, increasing. It is difficult to extract measurable data to formulate policy or make effective regulations. The noble Baroness also talked about “Trixie” mirrors; these mirrors are placed on traffic signal posts and help HGV drivers to see cyclists on their near side in the blind spot at signalised junctions. The department provided approval to TfL to extend the use of these mirrors across the cycle superhighway network, and it will consider further requests for “Trixie” mirrors by other authorities. Unfortunately, I was not aware of the situation in Paris.
Lord Berkeley
My Lords, is the noble Earl aware that in the present mayor’s time in office accidents have actually increased? It is thought that he has increased the free-flowing of cars and lorries through the junctions, and reduced the time for pedestrians and cyclists to go across. He has also reduced the amount of space on the road for cycle lanes, and things like that—in spite of bringing in the new “Boris bikes”, which of course we all welcome. Could that be looked at? Do the Government think that the idea of a £200 million fund from the Campaign for Better Transport in London to help cycling facilities would help to reduce deaths?
Earl Attlee
My Lords, it is true that, in 2011, 12 out of the 16 cyclist fatalities in London involved a goods vehicle, with seven involving construction vehicles, but it is too early to see whether there are any undesirable trends. Both Transport for London and my department will study these matters very carefully indeed.
Rail: Great Western Passenger Franchise
Lord Berkeley Excerpts(12 years, 9 months ago)
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Lord Berkeley
To ask Her Majesty’s Government whether they will ensure that the new Great Western passenger franchise provides the capacity and service quality to meet the expected growth in passenger numbers.
Earl Attlee
My Lords, on 22 December, the Department for Transport launched a consultation on the new Great Western franchise. The consultation document contains the Government’s objectives for the new franchise. These include: providing appropriate capacity for passenger services that is both affordable and delivers value for money for the taxpayer within defined infrastructure and rolling stock constraints on the Great Western network; and ensuring that the overall passenger experience improves throughout the life of the franchise.
Lord Berkeley
I am grateful to the noble Earl for that Answer. I have read the document to which he referred and good things are certainly said about the problem of overcrowding. However, he will be aware that according to government statistics eight of the 10 most crowded trains are on First Great Western, and there have been serious overcrowding problems at Bristol and in Cornwall. Given that there will be a long franchise and that the number of passengers may greatly increase, how will the Government incentivise the successful franchisee to run more coaches or trains so that it does not have to go to the Treasury begging for more money?
Earl Attlee
My Lords, I entirely agree with the noble Lord on his analysis of the overcrowding problems on the current franchise. He will be aware that the difficulty with the current franchise is that it does not incentivise the operator to increase capacity. However, there will be significant capacity increases, especially with the introduction of the IEP train.
Railways: Train Design
Lord Berkeley Excerpts(12 years, 9 months ago)
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Earl Attlee
My Lords, noble Lords will know that this Government have made considerable investment in the rail industry and will continue to do so. Noble Lords should also be aware that there is considerable refurbishment work available on the existing rolling stock in order to make it compliant with new accessibility requirements.
Lord Berkeley
My Lords, is the Minister aware that his first Answer to the noble Lord, Lord Bradshaw, demonstrates the inconsistency or lack of policy not only on who procures rolling stock but on who operates it and how many coaches there are? The OJEU notice on the First Great Western new franchise says in one paragraph that,
“the franchise operator will be expected to take responsibility for the provision of rolling stock”,
yet immediately follows that by saying that it will supply the IEP—the intercity train programme. How can any manufacturer or operator plan on such an inconsistent policy?
Earl Attlee
My Lords, the noble Lord will be aware that the IEP is in principle a bi-mode—electric and diesel—rolling stock project and is designed to run across several franchises. Central government therefore has to have an involvement. In general, it is a matter for the rail industry to procure rolling stock. However, central government has to ensure that the rolling stock contract is sustainable in case, as the operator of last resort, it has to step in and run the franchise.