Airports (Amendment) Bill [HL]

Lord Empey Excerpts

Friday 9th November 2012 Lords Chamber

Moved by

[Lord Empey]

That the Bill be read a second time.

[Lord Empey]

My Lords, as noble Lords will recall, I raised this issue last March, in the previous Session, and we then discussed the issues surrounding regional access to hub airports. Since then, we have had the introduction of the Civil Aviation Bill, and there were further discussions when that Bill was before the House. Indeed, this week, the noble Lord, Lord Stephen, proposed an amendment to that Bill which sought to do something similar to what I am trying to do with my Bill.

The purpose is basically to ensure that the Government have power to intervene if necessary in the event that there was a failure to connect the regions of the United Kingdom to our principal hub airport at Heathrow. I do not believe in over-involvement of government in regulation or intervention if it is at all possible to steer away from it, but the reality is that there is an economic imperative for regions to have connectivity to the centre. It is a basic principle of regionalism which has operated in this country for many decades. It is a principle that is widely recognised in the European Union—we often talk of a Europe of the regions—and European regional development policy and UK regional development policy have all directed funds specifically to regions. That is to ensure meaningful economic activity in those areas.

People may say, “At present, most regions of the United Kingdom are fairly well connected”. That may or may not be true. For people in the south-west or other areas—we heard from the noble Lord, Lord Stephen, this week, that some air services from the north-east of Scotland had been cut back—it is constantly in our minds. The airline sector is one of the most volatile sectors before us today. Changes are taking place almost as we speak. In my region of Northern Ireland, we currently have good connections not only to Heathrow but the wider world. Generally speaking, we are currently content.

However, the connections are only as good as the airlines that provide them. It is perfectly obvious that there can be substantial swings from profits to loss, and then there can be takeovers. One of the providers of air services to Heathrow from Belfast is Aer Lingus. A few months ago, Etihad Airways bought 3% of it. It is now trying to buy the Irish Government’s 25% stake in that airline, and Mr O’Leary, of Ryanair fame, is trying to buy the airline as well. Does that send the message that there is a meaningful commitment to maintaining regional links to the hub airport at Heathrow, or do the airlines see greater profit in having access to the landing slots at Heathrow, which are where the money is? Frequently, the money is not in regional air traffic. The amount of regional air traffic, the number of passengers involved, is diminishing in the United Kingdom—largely because there is a move to rail. Rail is becoming ever more competitive and, in some areas, even Birmingham, the railways have effectively eliminated the airlines from the race.

Of course, in Northern Ireland, those options are not open to us. You cannot drive or take a train; the only meaningful connection is air. My principal objective is to protect our access to Heathrow.

The Government have frequently pointed out to me that this is not a matter for the UK alone; I fully understand that. They have pointed out that there is a significant European dimension; and I fully understand that. By coincidence, the European Union currently has a substantial document before the European Parliament. It is a regulation by the European Parliament and the Council on common rules for the allocation of slots at European Union airports and related matters. It is pure coincidence that this Bill and the activity in Europe are taking place at the same time.

However, that provides an opportunity. I have been to Brussels on a number of occasions this year and through a colleague in the European Parliament—Jim Nicholson MEP, formerly of the other place—a number of amendments were put down in the European Parliament’s transport committee. Those amendments were voted on earlier this week and the committee accepted a number of them. Those amendments will now go before the European Parliament next month. Perhaps I may give your Lordships an example of what those amendments included. One states:

“In addition it is important that access to hub airports from regional airports should be maintained where such routes are essential to the economy of that region”.

That is precisely the point that I want to make with this Bill. As the European Parliament’s transport committee has accepted the point, a legislative report will, in response, go before the European Parliament in December. If that report is accepted it will form the co-decision position of the European Parliament—as both the Commission and the Parliament will have to agree. It will then go to negotiation at the Council of Ministers. However, if the European Parliament as a whole accepts this amendment then the core point that I have been trying to make will be adopted.

On Tuesday a second amendment was also accepted which referred to the co-ordinator of airports, who we may be familiar with. This amendment added:

“This procedure shall be without prejudice to regional airports connectivity to hub airports. If such connectivity is undermined Member States shall be permitted to intervene”.

It is precisely because the UK Government have no power to intervene, as they would be in contradiction of European Union regulations, that we have been pursuing this matter in the European Parliament.

A second report—an own opinion report—came before the European Parliament earlier this year. The difference between a legislative report and an own opinion report is that the latter is a bit like a take-note debate in Parliament—it has no legislative edge to it, whereas the legislative report that will be going to the Parliament next month does. Nevertheless, it gives some flavour of the opinion that is there. The report was prepared by Philip Bradbourn MEP, who represents the Birmingham area. It was drawn up in April this year and, I believe, was passed by the European Parliament in May. The report,

“considers it essential for regional airports to have access to hubs”.

Again, that is exactly the point that I have been trying to make.

The Minister has correctly pointed out to me on a number of occasions that the only way to overcome the conflict between European law and what I am trying to do in this Bill is to bring the two sets of legislation together. By coincidence, the European Parliament and the European Commission are doing precisely that at the moment. I have been there a number of times and talked to members of the committee and to the cabinet of the relevant commissioner. They all understand the regional issues because many of them represent remote regions of the European Union and know what it is like to be isolated.

I also understand that there is a risk of conflict because if you intervene in the marketplace you can distort competition. At the end of the day, however, there are certain essential facts. One fact is that the state cannot be isolated or left powerless when an emergency arises. I hope that that will never happen but it is of fundamental importance for the state to ensure that its regions have adequate connectivity to the hub. It is a relatively simple point. I understand, of course, that the Minister cannot say that he supports this proposal, because the law has not changed. The question, however, is whether the Government will be prepared to support and argue for appropriate changes in Brussels when the proposals come to negotiation at the Council of Ministers, and whether they will accept that they currently do not have the powers but would like changes to take place. I would be interested to know if the Minister is able to say that to us.

The Irish Government will be holding the presidency of the European Council from January of next year and I expect that that is the point at which the negotiations will take place. I have made it my business to be in touch with them. I have spoken to a number of their MEPs and, I have to say, I have met with universal acceptance of the ideas that we are putting forward. They know what it is like to be in a remote region as they have remote regions in their own state. All that I am asking the Government to do at this stage is to indicate that they would support proposals for change in Brussels, provided that these would not lead to over-upsetting the normal commercial processes. It cannot be that you cannot upset them. Quite rightly, states and Governments throughout Europe reserve powers to interfere in the normal marketplace.

Regional policy is itself a distortion of the market. If you say that each region can be left to swing by its own tail and we will not intervene, businesses and industries might move from one region to another—and they do. But this country has maintained a regional policy since the Second World War. It has put a lot of resources into this policy, as has the European Union. I hope that Her Majesty’s Government will at least indicate that, in the forthcoming negotiations in Brussels, they will undertake to encourage the European Union to make the changes that would allow them to have powers to intervene should the necessity arise. I beg to move.

--- Later in debate ---

[Lord Empey]

I am grateful to the noble Earl and to other noble Lords who contributed to the debate. His final remark is of no surprise to me, but of course my principal point is that I am trying to remove those obstacles. I welcome the fact that he said that he would look carefully at the activities in the European Parliament. I cannot expect him to do more at this stage.

The noble Earl pointed out the wishes and interests of consumers. Consumers are important. I have here a document from the Consumer Council for Northern Ireland, which urges support for my colleague Mr Nicholson's amendments in the European Parliament. Indeed, it circulated a list supporting those amendments, which were subsequently accepted. The Consumer Council has been a stalwart in support of our proposals throughout this entire process. Indeed, the Minister in Northern Ireland, the regional development committee in Stormont, the CBI, IOD and other organisations have all given their support.

As the Minister said, it is not because there is any immediate threat. I do not detect an immediate threat. But that is not always the point of legislation. The point is to anticipate something that may or may not happen. Because of the coincidence with the activities in the European Parliament, the logical time to make changes seemed to be now, when the issues are running in parallel. If we let this opportunity pass and in a year or two something happens in the airline sector that we have not anticipated—and in view of the volatile nature of that sector who can tell what is around the corner—we would be left completely flat-footed in this country, with no power to intervene.

The noble Earl, Lord Caithness, made a point about the PSO obligation existing in law. That is correct. It is Regulation 95/93, which allows a Government to consider an application for a PSO. If there is inadequate connectivity or connections between regions, a PSO could be funded. That is not the point. The Bradbourn report calls for Regulation 95/93 to be amended because, under that regulation, an airport cannot be specified, only a region.

Despite what the noble Lord, Lord Berkeley, said, the reality is that there is one major hub airport in the United Kingdom, whether we like it or not. Other airports are aspiring to be hubs and to improve their international connections, and that is entirely understandable, but in reality, looking at it from a business point of view, trying to sell the advantages of a region around the world, business people are simply not going to go round in circles when they get to a country. As things stand in this country, Heathrow is the only significant hub airport, but it is full. As the noble Lord, Lord Davies, said, the whole driver of the current argument about air capacity in the south-east is that Heathrow is full. Many of our European partners do not suffer from that problem. They have an easy solution; they can add a slot or two, use up some spare capacity and overcome the regional disconnect in that way. We are not so lucky in this country. So, while things may change in the future, it is currently a one-horse town as far as connectivity is concerned.

I hope that this will progress. I thank my noble friend Lord Lexden for his unswerving and stalwart support, particularly of Northern Ireland’s interests in this House. I very much appreciate it, but this is not a regional, Northern Ireland Bill, it is a national Bill aimed at all regions. I ask the Minister, we talked about flights to Glasgow, Edinburgh, Inverness and Aberdeen; what would happen if they became international flights attracting grossly inflated APD levies? I wonder whether some of those advocating independence have thought that through. International flights, of course, attract a huge increase in duty; those who are advocating independence need to think very carefully about what they are suggesting, because that is the implication on air services if one travels on an international flight. A lot of these questions have not been thought through by those who seek independence.

The noble Lord, Lord Davies, tried in vain to winkle out of the Minister some response on the broader aviation issues. I am sure he will keep trying; whether he succeeds or not is entirely another matter. Stonewall Jackson would have been proud of the noble Earl’s performance today. I thank noble Lords for remaining at this late stage on a Friday. I beg to move that the Bill be read a second time.

Bill read a second time and committed to a Committee of the Whole House.