Lord Empey
Main Page: Lord Empey (Ulster Unionist Party - Life peer)
Lord Empey (UUP)
My Lords, regional policies are designed to prevent, or at least reduce, economic decline in those areas of the country that have seen their economic strength eroded as traditional industries have contracted. These regional policies have also been augmented by the European Union through numerous measures, including the ERDF and the ESF to name but two. Therefore, it is no surprise that those of us who represent regions look at government policy from time to time through the prism of regionalism to see whether our interests are being protected.
I have tabled previous QSDs and introduced an Airports (Amendment) Bill in 2012-13 that covered transport links between the regions and the London hub airport at Heathrow. A number of noble Lords drew attention to the problems faced in different areas of the UK because of poor rail or road infrastructure. Aviation issues were also mentioned.
One of the principal requirements of regional policy is to improve the competitiveness of a region. In order to do so, access to these regions is critical. This requires investment in infrastructure and it means having good communications by road, rail, air, sea and, in today’s world, broadband. In this context, I commend the report by the National Connectivity Task Force, ably chaired by the noble Lord, Lord Shipley, who is not in his place today. This report, published in March 2015, sets out starkly the unique issues facing the UK and Crown dependencies. It demonstrates that our geography and pattern of development, combined with an absence of spare capacity at our major hub airport at Heathrow, creates a barrier to competitiveness unique among our European partners.
The recently proposed acquisition of Aer Lingus by BA has undoubtedly provoked interest in the matters we are about to debate. This has raised a wider question about the absence of any government powers to intervene in the trading of landing slots at Heathrow Airport. This is a critical issue because, unlike other European countries, the UK has only one major hub airport.
Even with the addition of a third runway at Heathrow, the implication is that, even with the expected easing of current capacity constraints once a new runway is built, there are no grounds or mechanisms the Government can use to ensure that some of that new capacity is reserved to help restore some of the air connectivity that many parts of the UK have lost, or to maintain the current vital connectivity to our regions.
An article in the Independent on 8 June 2015 reported:
“Heathrow is likely to ditch its domestic routes to Aberdeen, Glasgow, Leeds Bradford, Belfast and Newcastle if the Airports Commission does not approve its expansion”.
I am well aware that this is a likely view to come from the pro-expansion lobby at Heathrow at this time, but it highlights that nobody can predict events and that air travel to our regions is at the mercy of those who have no commercial interest in maintaining those vital hub transport links. The fact remains that if a difficulty were to arise, the Government are powerless to act.
As is the case in many policy areas, there is a major European Union dimension to our deliberations. Aviation is a matter where we have ceded a competence to Brussels that is highly relevant to this Bill. Currently, EU Council Regulation EEC95/93, as amended by Regulation EC793/2004, provides a policy umbrella for the conduct of air connections between major hub airports and regions within member states. The preamble to the regulation states:
“Whereas it is necessary to make special provisions, under limited circumstances, for the maintenance of adequate domestic air services to regions of the Member State concerned”.
In practice, this means that if a national Government believe that one region is becoming isolated from another, they may apply to provide a public service obligation so that a subsidy can be paid to an airline to provide a connection between regions. Two PSOs currently operate in the UK, one, I believe, between Newquay and Gatwick and another between Dundee and Heathrow. However, this provision does not allow for a PSO or other measure to be applied to a connection between two specific cities or between a region and a specific airport.
In the previous European Parliament, Brussels addressed a number of aviation issues. In 2011, the Commission produced a report, Airport Package—COM (2011) 827 final—which deals with a number of policy areas, including landing and take-off slots. On 19 December 2011, the European Parliament’s Committee on Transport and Tourism produced its own draft report on the future of regional airports and air services in the EU written by the rapporteur, the late Philip Bradbourn MEP. Paragraph 8 of that report states that the committee,
“considers it essential for regional airports to have access to hubs”.
That quotation is the core rationale for this Bill.
In February 2012, I travelled to Brussels for a series of meetings with members of the Transport Committee of the European Parliament. I met with Philip Bradbourn, other members of the committee, UKRep and, lastly, the then chairman of the committee, Brian Simpson MEP. In all my meetings there was great understanding of the UK’s specific issue and considerable support for the proposals in my current Bill. However, even with this support from our European colleagues, the task force report indicated:
“It seems unlikely ... that planned EU reforms will translate into a formal legislative presumption allowing the ring-fencing of slots for connecting domestic services given the level of industry opposition it would generate”.
The UK has a unique problem: we have only one major hub airport and that is operating at 98% to 99% capacity. In other EU member states where there is a connectivity problem with a hub airport, most of our continental partners have the opportunity to use spare capacity to add slots to accommodate connectivity between regions and hub airports. That option is not open to the UK because of the lack of capacity at Heathrow. For example, our colleagues at Charles de Gaulle Airport in Paris have four runways, so, if there are connectivity problems within France, they have extra capacity to put in the necessary slots. The slots at Heathrow are owned by individual airlines. If airlines decide to sell their slots or use them for more profitable international routes, that is presently entirely a matter for them. In 1990 there were 18 UK regional cities connected to Heathrow, but this has been reduced to seven as more lucrative international destinations have emerged. Of those seven, only the Leeds Bradford flight has more than two rotations a day.
The implications of this for UK regions could be profound. Our regions depend heavily on connectivity as a selling point and as an incentive for inward investment and tourism. Adequate access to the national hub airport is essential. What an airline may say today about its intentions is irrelevant to this legislation, but even if an airline says that it will keep a particular route open, it has the opportunity to reduce cycles and maintain that it has kept its word.
The task force report also recommends:
“The Government should recognise the importance of London airports and Heathrow in particular as a gateway to the world for air cargo from the UK regions, nations and Crown Dependencies”.
It calls for:
“A clear declaration of intent that the Government will require the promoter of a new runway to commit to ensuring that between 5-10% of new capacity (equating to 70-110 additional slot pairs) is ring-fenced for use in enhancing the connectivity from the UK’s regions, nations and Crown Dependencies in the period 2025-40”.
During the debate on transport earlier this week, the noble Lord, Lord Shipley, referred many times to the issues that the task force report had dealt with, but I want to get across the point that there is a unique issue that separates us from everybody else. The European Union allows Governments to intervene to connect one region to another: in other words, they could pay for a PSO to protect a region of Scotland’s links with London. However, there are many airports in the London area—Southampton, Stansted, Luton, Heathrow, Gatwick, London City and so on—but there is only one hub airport that gives international connectivity. Many regions are trying hard to attract international businesses to locate there; but if business people find that after getting from somewhere in America to London, they first have to embark on a huge journey of two to two-and-a-half hours to get to a peripheral airport, and then get to a region, they are simply not going to do it. That will be a huge disincentive. So long as this country has only one hub airport, it is essential that protection is in place for regions to get access to that hub for as long as possible; otherwise it will be a huge disincentive, and negate a lot of regional policies and the purposes for which they were introduced.
To work effectively and protect the regions’ access to Heathrow, the Bill gives the Secretary of State power to direct airport operators, as well as requiring the Civil Aviation Authority to take these connectivity issues into account when exercising its functions. This may be deemed a power to ring-fence slots at Heathrow, which would have a knock-on effect on their value. However, given that Heathrow is operating at full capacity, there is simply no other way in the UK of guaranteeing adequate access from the regions to the hub.
I believe our European partners will see the logic of this argument. It is, after all, consistent with the thrust of what has been EU policy for many years: to protect and promote the regions. The report of the task force chaired by the noble Lord, Lord Shipley, demonstrates that many European countries support this point and, as a former member of the EU Committee of the Regions, I know this to be a fact. Mr Giommaria Uggias, a former member of the EU Transport and Tourism Committee, drafted a legislative report specifically on the slots issue, which was brought forward in 2011.
This Bill is not region-specific: it applies to the whole of the UK. While I come from Northern Ireland, where the effects of inadequate air links to Heathrow would be felt most acutely, I am very aware that other regions would also be badly affected. I have corresponded and spoken with a number of interested groups in Northern Ireland, and I know that the Minister in the Northern Ireland Executive with responsibility for airports, Mr Danny Kennedy MLA, supports ensuring adequate access. I have a letter from him to that effect, received this week. I believe he has written to the Secretary of State for Transport in support and that the relevant Assembly committee in Belfast takes a similar view. But the point remains that communications are the key to growth in the regions and leaving the Government as spectators, unable to intervene if things go wrong with landing slots at Heathrow, is unacceptable.
This Bill amends the Airports Act 1986 to confer on the Secretary of State the power to direct airport operators in the interests of ensuring sufficient national air infrastructure between hub and regional airports. Further, it would ensure that the Civil Aviation Authority had to take into account the need to ensure adequate services between hub and regional airports when exercising its functions. I believe that these proposals are entirely consistent with current and previous government policies and with the intention of the European Union’s policy, albeit that such policy would have to be modified to avoid a legal conflict with Brussels.
I thank the noble Lord, Lord Ahmad, and the noble Viscount, Lord Younger, and their officials for meeting me last week to discuss this important issue. We share the view that connectivity between the regions and our hub airport is a critical part of national infrastructure and consistent with the Government’s desire to encourage regional economic growth. I ask your Lordships to consider how they would develop and sustain a northern powerhouse if it was proved to be difficult, if not impossible, to get from the northern powerhouse to the national hub airport. What impact on the success and credibility of such a policy would not having that fundamental piece of connectivity have? While I fully understand the position that the Government are in vis-à-vis the situation in Brussels, I urge the Minister to recall that if we approach our European partners with a coherent and logical case that is entirely consistent with the general thrust of European policies, I can see no reason why the logic of the argument that we put forward should find difficulty or opposition. While I understand the Minister will be limited in what support he can offer the Bill, if the Government are prepared to support and argue the case with our European partners I can see no reason whatever why this power cannot effectively be vested in the Secretary of State. Given these facts, I believe there is a unique opportunity to deal with this issue in the immediate future, and I trust that the noble Viscount, Lord Younger, will give these proposals a fair hearing and a fair wind.
Lord Empey
I am most grateful to noble Lords who have participated in this debate. Indeed, with people intervening in the gap, one or two issues have arisen which I think have caught us all by surprise.
The noble Lord, Lord Berkeley, has a reputation in this House which is second to none. Every time you see a train or go into a railway station, you automatically connect that with the noble Lord. He raised the question of Heathrow. I am very happy at all times to take on difficult issues, but he implied that I was adopting a Heathrow-backing tactic. Actually, I was not; I was merely making the point that at this point in time, whatever the owners of other airports may think, Heathrow is the national hub. That may change with time and is another matter, but that is where the action is and therefore that is the issue.
The noble Lord, Lord Reid of Cardowan, introduced a very interesting point—one which, to be honest, I had not considered in this context. The Bill is not Northern Ireland-specific—deliberately so because I believe that connectivity is equally important in all parts of the United Kingdom. It is true that there is a widespread feeling—no more so than in the noble Lord’s home country—that this is a sort of metropolitan issue, with people feeling isolated and pushed further and further away. That is a very serious political issue which, to some extent, is paralleled here. I very much appreciated his point about UK-wide cohesion. That is vital and something to which both Houses will have to give really serious consideration during this Parliament. It has to be said that our constitutional Rake’s Progress in recent years has not exactly been working, and we have to look closely at that.
I hope that the noble Earl, Lord Caithness—I emphasise “Caithness”—does not get what he wishes for. I am not looking at this matter from the point of view of public money going to subsidise airports. It is not the PSO issue that bothers me. There is good, strong market demand for air services at present, as the noble Viscount pointed out, so it is not a matter of trying to seek access to the London area alone; it is a very much narrower issue than that, and it is not a PSO issue.
In many respects, the noble Viscount made my case for me. There is a specific issue that I am addressing with this legislation. To take the Belfast example, when I had ministerial responsibility in that area, I created an air route development fund, which laid the ground for the link between Belfast and Europe. Subsequently, because that link was so important, the Northern Ireland Executive negotiated with the Treasury and got control of the air passenger duty rate on that route. Part of the Northern Ireland block grant effectively goes to subsidise that air passenger duty, so that it is at a much lower level than it would otherwise be.
The Minister went on to point out that Northern Ireland has attracted very high levels of inward investment in specific areas. What we are trying to protect with that one route I want to try to protect with this legislation. The Minister has conceded that the Government have no power to intervene. We have a unique problem in the UK, with one hub airport which is full. All our European partners can solve their problem by having extra slots because they have lots of runways. We do not. We have a long, stringy island that goes from north to south and there is only one show in town at this point in time.
We need to achieve and maintain inward investment. I am pleased to say that we have significant amounts of new start-ups and job creation in Northern Ireland and we are continuously trying to get foreign direct investment. However, can we really expect the people who provide the know-how, the money and the ability to set up such companies to come from another part of the world, land at Heathrow, catch a bus out of Heathrow and drive to another, obscure airport around the London area to catch a flight to Belfast—and perhaps not even get to the airport in Northern Ireland that they want to go to in the first place? This would add hours to their journey. We are simply spectating in this. Currently there is no problem—there is good service and high demand.
The Minister made the point that BA is trying to buy Aer Lingus. The last time I introduced a similar Bill, BA was trying to buy British Midland. Perhaps the next time I introduce a Bill into the House, Emirates will be trying to buy BA. In those circumstances, do we really expect that such a big international airline, which faces in the other direction on the other side of the world, will be the slightest bit interested in flying to regional airports in the UK? Not at all.
Therefore, because I am aiming at a particular niche and because this is a unique issue in this country and in Europe, I do not believe that our European partners, if the case is put to them, will be found wanting. However, we have to want to put it to them with enthusiasm and logic. This is not about subsidies but about building, where there is high demand, a fundamental piece of national infrastructure—just as the noble Lord, Lord Berkeley, would argue that HS2 and HS3 are fundamental pieces of national infrastructure. Sadly, no one has yet invented a means whereby those in Belfast can get on a train to go to London—but I have no doubt that the noble Lord, Lord Berkeley, will pay attention to that and come up with an idea in due course which will allow us to do so.
Perhaps the Minister and his colleagues in the Government will say to our representatives in Brussels—to UKREP and so on—that if this poor soul comes knocking at the door in Brussels, yet again, at least you will not stand in the way but give him a fair wind. That is all I am asking. I understand and appreciate the legal position and also the purpose of legislation. The Minister has conceded that that they do not have the power to intervene and I have to ask the question: why not? It concerns our airports, our infrastructure and it is vital. I believe that because it is a unique situation our European partners will be sympathetic. Bearing in mind that our Prime Minister is travelling around the capitals of Europe at the moment explaining the unique problems that we have, I see no reason why we cannot extend that to include this issue. In those circumstances, I ask the House to give this Bill a Second Reading.