Aviation: UK Civil Aviation

Lord Lea of Crondall Excerpts

Monday 23rd January 2012 Lords Chamber

[Lord Lea of Crondall]

My Lords, I, too, congratulate my noble friend Lady Gibson of Market Rasen, on initiating this debate at this opportune moment. The decision to look at expansion, including the “Boris Island” project, and to exclude a third runway at Heathrow, is the most disgraceful piece of misgovernance that I can remember in transport economics in my lifetime, and I did postgraduate work in transport economics after doing economics at Cambridge and have worked for the World Bank in this field.

With no cost-benefit or origin and destination analysis, this is banana republic demotics. Suddenly you have a so-called review of hub airports without being able to expand Heathrow. This is a disgraceful way to conduct business, and I ask the Minister how he can possibly justify it. Will he take note of some of the things that have been said in this debate that make it clear—if I can mix my metaphors—that this is no way to run a railway?

I have no axe to grind for the British Airports Authority, but Mr Colin Matthews, its chief executive, hit the nail on the head the other day when he said that London cannot have two hubs. How, other than by closing down Heathrow, can you say that Boris’s island is going to be the hub? It is absurd, ridiculous—I do not know how many more adjectives one needs to use to get the absurdity of this understood.

This is not a question of transport and economics versus the environment. I am going to be personal: I have always been involved both in transport economics and in the environment—I started a sustainable environment project—and for many years I have tried to see how the two can be reconciled. I think it was my noble friend Lord Soley who made the point that many people make these “green” remarks about terrible things going on with planes in the sky, but it is exactly like the car—when you ask people, “How many miles did you drive last year when middle-class people were opposing a bypass?”, the answer is normally 10,000 miles. That is how things are; there is a lot of middle-class versus working-class nimbyism regarding Heathrow and Richmond going on here.

My final remark is about how a proper inquiry should be carried out. The costs that have been mentioned in the press would mean that if the Government are going to claim—as a Conservative Government believing in the market economy—that we should have regard to commercial principles, how is it that they are not having regard to commercial principles about how to make a profit rather than trying to subsidise the outcome, if you are going to have a Thames estuary site with a cost as high as £70 billion, without any clue why these so-called sovereign wealth fund investments are more than just wishful thinking? Will the Government reconsider the basic fallacy of having two hubs or closing down Heathrow, and will they, even at this stage, put Heathrow and the expansion of its third runway—Schiphol and so on, as my noble friend Lord Monks and others have said—back into the mix?

--- Later in debate ---

[Earl Attlee]

My Lords, I start by congratulating the noble Baroness, Lady Gibson, on securing this evening’s debate, in which we have heard articulated wildly opposing views. As all noble Lords know, aviation makes a huge contribution to our economy and our society as a trading nation, as pointed out by the noble Baroness. It generates economic output of up to £9 billion a year. The noble Lord, Lord Rosser, suggested that it was £11 billion; I do not know which of us is right. It supports thousands of jobs, drives our tourism sector and gives British businesses a vital gateway to the global marketplace. If this country is to grow and prosper in the future, aviation must be able to grow and prosper. I think all noble Lords are agreed on that.

Aviation provides regular connections not only to today’s major world economies but to the emerging economies. However, we recognise that there is a price to pay for every flight—a price that is measured in noise, local air pollution and carbon. To continue enjoying the benefits of a growing aviation sector, we need to make sure that growth is sustainable. That is exactly why the Government are developing a new sustainable aviation strategy. However, in answer to the noble Lord, Lord Rosser, we cannot do this overnight. From the very start, the Government made clear that unsustainable aviation growth was unacceptable. We have maxed out on what the people surrounding Heathrow Airport can tolerate.

Instead, we have been working hard to make our airports more effective. We have a range of initiatives under way to deliver that ambition. For example, last week the Civil Aviation Bill was introduced to Parliament. This will give the CAA more flexible powers to respond to passenger issues and better target issues such as airport resilience. Our South East Airports Task Force, which was set up to improve operations at major airports, has explored measures for improving punctuality, tackling delay and strengthening resilience at Heathrow, which are being trialled. It has also endorsed plans to improve the current aviation security regime, on which we have consulted and are developing. We are also looking at how we can tackle delays and reduce the need for aircraft stacking through the CAA’s Future Airspace Strategy and the Single European Sky.

As well as these initiatives, we still need to address the bigger question over future demand and future connectivity. The National Infrastructure Plan we published last year was clear that we must maintain the status of the UK as an international hub for aviation. We recognise that it is vital to maintain the UK’s connectivity to improve our links to the emerging economies and promote inward investment and inbound tourism. That is why we are planning to launch a call for evidence on options for maintaining the UK’s hub status alongside our draft framework. Through this we aim to reach an evidence-based conclusion on how to meet the UK’s long-term connectivity needs. The noble Baroness called for rapid and firm decisions. However, the Government will consider these matters very carefully and make the right decisions, not necessarily rapid ones.

In the shorter term, we welcome the recent launch of new routes from Gatwick to Ho Chi Minh City and Hanoi, and the announcement that Air China will launch a Gatwick-Beijing route. These are the sort of global connections that British businesses need, and not just from London. We know how crucial our regional airports are in helping to balance growth across the country and to relieve crowding, where possible, at our south-east airports. We also recognise the importance of connecting the regions to London by air and rail to maximise the benefits.

To make this growth sustainable, we need to find new ways to decarbonise aviation. We will work with the industry to boost investment in and research into low-carbon technologies and fuels. For example, we welcome the research that countries such as the US have done in the use of algae-based sustainable fuels. Developing innovative fuel sources will be the key to enabling aviation to grow in a sustainable and successful way. We want to see Britain at the forefront of delivering greener air travel. The inclusion of aviation in the European emissions trading system from 1 January was an important step. Now we need to push for international agreement in ICAO on aviation emissions to get the level playing field that will ensure that aviation is able to grow globally in a balanced and fair way.

The noble Baroness, Lady Gibson, urged the Government to reconsider the issue of aviation taxation. The Government accept that the current economic climate is very challenging both for consumers and the aviation sector. However, if the Government are to meet their overall fiscal projections, we must balance the risk of growing competition from abroad with the Government’s need to raise revenues from the sector. The rise in APD rates announced in the Autumn Statement does no more than keep pace with inflation and will give certainty to the industry for the two-year period to 2013. It is also worth remembering that it is important to look at the country’s taxation as a whole. Unlike other countries in the EU, the UK charges no VAT on flights. My noble friend Lady Kramer talked about the favourable taxation status of the aviation industry.

We continue to believe that tackling climate change is one of the most important challenges we face and that all sectors, including aviation, should contribute globally to the 2 degrees Celsius goal. The Government continue to support emissions trading as one of the key instruments for reducing CO₂ emissions from aviation.

Many noble Lords talked about the proposal for a Thames estuary airport. We are interested in innovative proposals for maintaining the UK’s aviation hub status and we will consider all proposals submitted that meet the criteria set out in our call for evidence. A new airport in the Thames estuary is one idea that has been put forward in response to our recent scoping exercise, but we need a much more detailed level of evidence, in particular on costs, funding and wider impacts, before we are in a position to develop which approach the Government should support. That is why we need the call for evidence.

[Lord Lea of Crondall]

I am most grateful to the Minister for giving way, but I take it that he is not going to leave this point before answering the question: how can he possibly justify a review of the hub in Britain while excluding Heathrow? Is that not rather like, as someone said, reviewing the expansion of supermarkets without including Tesco?

[Lord Shutt of Greetland]

My Lords, the noble Lord has made his question clear.

[Lord Lea of Crondall]

I have and I am sitting down.

[Earl Attlee]

My Lords, first, I have explained that we have already maxed out on what the local people around Heathrow can tolerate.

[Lord Lea of Crondall]

That is not true.

[Earl Attlee]

Secondly, this Government have an open mind, which is the right way to go into a consultation. The noble Baroness, Lady McIntosh of Hudnall, effectively asked whether we are going to do a U-turn on Stansted. The commitment in the coalition agreement still stands.