Space Industry Bill [HL]

Debate between Lord Rosser and Lord Callanan

Committee: 3rd sitting (Hansard): House of Lords
Monday 23rd October 2017 Lords Chamber

[Lord Rosser (Lab)]

We have Amendment 42 in this group, but I will also speak to Amendments 40 and 41 since that will save me having to go through the points all over again when we come to my Amendment 45.

As has been said, the Bill gives extensive delegated powers to the Secretary of State, and thus the Government, without the policy details and parameters of those delegated powers being spelled out in the Bill. The Delegated Powers and Regulatory Reform Committee has described it as a “skeletal Bill”. Consequently, it is difficult to scrutinise it meaningfully. The Government have not published any draft regulations because such regulations are little more than a twinkle in the Government’s eye at present. Formal consultation will not even start on those draft regulations for at least another year. Even then, the Government do not expect the regulations to be laid until the summer after next—nearly two years at the earliest.

Why, then, the necessity for the Bill now? The Government maintain in a letter the Minister sent to me on 6 September that it is needed to give a, “concrete indication to investors that the UK is serious about promoting growth in the space sector and delivering on spaceflight”. So serious and committed, though, are the Government to promoting that growth that the statutory instruments will be laid in nearly two years’ time at the earliest,

“subject to Government priorities and Parliamentary time”,

according to page 5 of the Government’s policy scoping notes. It does not seem to indicate that this is a government priority when there is apparently still some doubt as to whether those statutory instruments will be laid in nearly two years’ time.

The reality is that, with the crucial regulations, a Bill of 71 clauses and approximately 100 delegated powers not being laid at the earliest for another two years and then only subject to Government priorities and parliamentary time, this proposed legislation would not yet see the light of day if the Government still had a legislative programme to enact at present. Since, because of Brexit, they do not, this skeletal Bill, which seeks to avoid proper parliamentary scrutiny on future key details through excessive use of delegated powers, is being brought forward now to try to fill up some of the gaping holes in parliamentary business arising from the Government’s programme of non-legislation in the current Session.

The Government appear to have very little idea what the surfeit of regulations will say, whose interests they will impact on or what existing legislation or even legislation still being enacted or to be enacted in the present Session will be cut across by those regulations. As a result, the Government want Henry VIII powers, giving them the right effectively to bypass Parliament by being able by regulations to make provision that is consequential on any provision made by this Act, with the power being used to,

“amend, repeal or revoke any enactment passed or made before this Act or in the same Session”.

The Government have produced policy scoping notes, which tell us that, “The purpose”, of Clause 66,

“is to give effect to the minor and consequential amendments contained in Schedule 12”.

If that is the case, why have the Government not put that in the Bill? The reason is simple: the purpose of Clause 66, despite the wording of the scoping notes, is not intended by the Government to give effect to the minor and consequential amendments contained in Schedule 12. Instead, it is merely one of the purposes of Clause 66. As even the scoping notes subsequently say,

“it is possible that other changes may be required and clause 66(2) and (3) confer a power for the Secretary of State to make such changes through secondary legislation”.

The notes then go on to say:

“This power is needed to make any further minor and consequential amendments to other enactments passed before the Act or during the same Session that become apparent during the development of detailed secondary legislation”.


What is the definition of “minor and consequential amendment”, wording used in the Bill as the heading for Clause 66? Perhaps there is not one; perhaps it is whatever the Secretary of State deems minor and consequential. The Government do not use the words, if my memory serves me right, but they use the words “minor and consequential amendments” in respect of the powers in subsections (2) to (4). Why is that?

The policy scoping notes, outlining the content of subsections (2) and (3), state:

“Spaceflight is a complex activity and whilst related areas of law have been scrutinised it is impossible to rule out the possibility that some other rule of law might be engaged in the future. Equally, spaceflight or associated activities might need to be brought in scope of other laws, as the possibility of spaceflight activities from the UK would not have been contemplated when they were drafted. Therefore the content of the regulations in relation to subsections (2) and (3) will only become known as the secondary legislation develops and further regulations may also be made in the future as and when they are required”.


Precisely—so how can the Government now say that any amendments relating to other enactments, including repeal or revocation, will be minor and consequential and go no further than that? Would the provisions of Clause 66 enable the Government to amend, repeal or revoke any part of the Space Industry Bill by regulations, once it becomes an Act?

The wording of the scoping notes and, indeed, Clause 66 makes it clear that the power to “amend, repeal or revoke” is permanent and apparently not time-limited. The Government have not proposed a time limit on the use of those powers; not even up to October 2019, when presumably the main regulations, covered by six statutory instruments, will have been made and dealt with by Parliament. We surely cannot have such largely unrestricted powers on the statute book in respect of effective parliamentary scrutiny of the powers under Clause 66(2) and 66(3) for ever and a day, on the basis of a Government statement in their policy scoping notes that because spaceflight is a “complex activity”,

“further regulations may also be made in the future as and when required”,

when these are regulations that may,

“amend, repeal or revoke any enactment passed or made before this Bill or in the same Session”.

In that context, we already know that the amendments in Schedule 12 alone already cover 20 Acts of Parliament, including two terrorism Acts and the recent Modern Slavery Act. Neither does the argument hold that there will be insufficient parliamentary time to deal with matters under Clause 66 by primary legislation where the regulations involved are amending such legislation, and that is leaving aside the argument that the convenience of government and the Executive should not take priority over the role of the legislature in examining, challenging, amending and passing proposed legislation.

The Government propose in 2019 to lay the tranche of regulations enabling them to exercise the 100 or so delegated powers in the Bill, apparently through just six statutory instruments. That suggests there would hardly be a blizzard of Bills for Parliament to consider if the Henry VIII powers in Clause 66, in respect of Acts of Parliament, were not there.

I share the views that have already been expressed that the Government need to have another long, hard look at Clause 66 and what it actually means, as opposed to what they say it means.

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Callanan) (Con)]

My Lords, I thank all those who have contributed to the debate so far. I have carefully noted all views.

I know there is considerable concern about the granting of Henry VIII powers—I would be worried if noble Lords did not express such concerns—because of the wide scope of such powers to amend primary legislation that underwent parliamentary scrutiny and debate. However, I assure the Committee that we have given very careful consideration to the need to include such a power. The noble Lord, Lord Moynihan, acknowledged that we have already acted on many of the concerns expressed, and we have modified the Bill considerably as a result of many of the points put to us by committees in this House and the other place.

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[Lord Callanan]

I will ensure that all noble Lords who participated in these discussions are made aware of the consultations. I will even try to make sure that they reach some parts of Scotland—in which my noble friend seems to have an interest at the moment. With those assurances, I hope that the noble Lord will agree to withdraw the amendment.

[Lord Rosser]

I thank the Minister for his response and thank the noble Lord, Lord McNally, for his contribution to this short debate. I am sure that the Minister did not anticipate that I would stand here expressing great enthusiasm—

[Lord Callanan]

May I correct something I said earlier? I am told that, apparently, it is possible to amend an SI.

[Lord Rosser]

If the Minister has been told that, perhaps he could write to me and to other noble Lords who have spoken to set out clearly the circumstances in which an SI can be amended. Some of us may be slightly surprised by that blanket answer, which apparently covers all SIs—and which, presumably, means that any SI can be amended. I think that that has caught one or two of us slightly on the hop. So we will look forward to the letter from the Minister setting out how a statutory instrument can be amended.

Before the Minister’s interesting intervention just now, I was saying that I am sure that he will not be surprised to hear me say that I am not overenthusiastic about the response he gave. It is clear that the part of the super-affirmative procedure which causes—or appears to cause—the Government the most problem is the bit which gives a committee scrutinising the order the power to kill it by recommending that,

“no further proceedings be taken”,

with that recommendation able to be overturned only by a vote of the whole House. I suppose that that is a good example of how the Government put their own convenience and that of the Executive ahead of proper parliamentary scrutiny.

The Bill denies us proper parliamentary scrutiny. It is a skeletal Bill; the Minister has never sought to deny that. The consultation on the regulations does not even start until towards the end of next year, and they will not be laid at the earliest until the summer of 2019—and then, interestingly enough, only if they fit in with government priorities, despite the fact that the Minister and the Government have gone to great lengths to tell us that we need to pass the Bill now to provide certainty to the industry. Yet now the industry is told that the regulations may not appear in the summer of 2019 if by then the Government have decided that it is no longer a priority or that there is no parliamentary time to do it.

The reason we are in this difficulty over lack of parliamentary scrutiny is, as I say, because the Government have decided to bring the Bill forward so far in advance of the quite crucial regulations. We all know why: it is because they have a very bare legislative programme and had to think of something to fill the gap. They chose the Bill and were quite happy to see a skeletal Bill, and then to expect all of us to accept that there would be no proper parliamentary scrutiny because it is a skeletal Bill of that sort.

I am not entirely surprised by the Minister’s response. He was not overenthusiastic about the concerns raised about the Henry VIII powers. Clearly, as far as the Government are concerned, anything that will either provide proper parliamentary scrutiny of the Bill or take away some of the draconian powers contained in it are things that at this stage—I hope that the words “at this stage” have some significance—the Government are not prepared to countenance. We have Report to come and I know that the Minister is prepared to have discussions with us and, I am sure, with the Liberal Democrats and other parties. I hope that he will reflect on the very strong feelings expressed today about the powers in the Bill and that he will come forward with at least some proposals to mitigate and address the concerns that have been expressed. In the meantime, I beg leave to withdraw my amendment.

Space Industry Bill [HL]

Debate between Lord Rosser and Lord Callanan

Committee: 1st sitting (Hansard): House of Lords
Monday 16th October 2017 Lords Chamber

[Lord Rosser]

I thank the Minister for his response. Obviously, the issue of the significance or otherwise of someone who is exempt from the licence will come up later in a separate debate, but presumably, if someone is exempt from the licence, the regulator cannot apply conditions that have to be abided by on a licence because the operator will not need one.

[Lord Callanan]

That is true, but it does not exempt operators from the relevant planning provisions.

[Lord Rosser]

But it would exempt the person from some of the duties in Clause 2, which would be covered by the licence. That includes the things the Minister has prayed in aid in rejecting the amendment. Presumably, it does not include the requirement regarding,

“the interests of any other persons in relation to the use of land, sea and airspace”,

or,

“any environmental objectives set by the Secretary of State”.

The regulator could not take those into account when issuing the licence because no licence would be required by the person who was exempt.

I thank the Minister for his response, but if the Government really are determined to make sure that environmental considerations are covered and mentioned fair and square on the face of the Bill, I put it to him that they would not have used the phrase,

“the interests of any other persons in relation to the use of land, sea and airspace”.

I think they would have been a little more specific, because it begs the question as to how one interprets,

“the interests of any other persons”,

which does not say anything specific about the environment or anything else. It would presumably be left open to the regulator, who could be the Secretary of State, to define what they thought that phrase covered. I ask the Minister to think hard about that on the Government’s behalf, because if, as he said, we are all as one in wanting to make sure that environmental considerations are taken fully and properly into account, why not make that a lot clearer in the Bill?

The Minister referred to Clause 2(2)(e):

“any environmental objectives set by the Secretary of State”.

“Objectives” implies something fairly wide-ranging, not something that has to be abided by or adhered to. I have already made the point—which I do not make in relation to the current Secretary of State—that an awful lot will depend on the attitude to environmental objectives of the Secretary of State of the day and the extent to which they are taken into account. Different Secretaries of State may have very different views on that point, so, frankly, I do not regard the Bill as it stands as satisfactory—particularly since the Government seem to accept that we are all as one in wanting to ensure that environmental considerations are properly taken into account.

There are a large number of regulations still to come in the Bill. I know the Minister will say that those affect only minor issues and none of substance, but regulations have a habit of being extended somewhat. I posed the question as to whether regulations could be drawn up that weaken or take away any of the current planning and environmental protections. I also referred to the Henry VIII powers in Clause 66, which by definition enable the Government to alter legislation. I again put it to the Minister that, given the Bill’s current wording, environmental considerations could very much take second place.

I will withdraw the amendment, but I refer to what the Minister said—perhaps I misunderstood him—on Second Reading:

“We do not believe that the Bill engages obligations to produce an environmental impact assessment”.


He also said:

“Environmental impacts are heavily correlated with the type, frequency and location of spaceflight activities. At this stage, it is very difficult to ascertain specific environmental issues. For example, the sensitivities of a site cannot be known until we know the location of the spaceport”.—[Official Report, 12/7/17; col. 1268.]


I would have thought it extremely difficult to argue, as one could interpret the Minister was arguing on Second Reading, that there could be a spaceport site for which no environmental consideration at all needed to be taken into account, and that there was therefore no immediate need for an environmental impact assessment. That part of the Bill could be strengthened.

I hope the Minister will think long and hard about what has been said today, and hopefully he can be more positive during the Bill’s later stages. However, I beg leave to withdraw the amendment.

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[Lord Rosser]

I do not want to prevent an answer to the noble Lord’s question but if the Minister is going to reply to the noble Lord, Lord Lucas, I want to come in afterwards.

[Lord Callanan]

I thought I had responded to it but I will reflect on the point that he has made.

[Lord Rosser]

The noble Lord, Lord Moynihan, moved an amendment to Clause 3 and the Minister went on to talk about Clause 4, perhaps because they are grouped together on the list in front of us. If the Committee is willing to bear with me, I have a stand part resolution down in relation to Clause 4. If I could just make one or two points about that, I would be grateful.

Clause 4(1) refers only to not requiring,

“an operator licence to carry out spaceflight activities”.

It does not refer to operating a spaceport. Can the Minister say whether the provisions of Clause 4 apply only to spaceflight activities—that is, the flight itself—or do they also apply in any way to the operation of a spaceport? Clause 4(1) refers also to international obligations, which the Minister has referred to already. I will read Hansard carefully to see exactly what international obligations he referred to in giving an example of the kind of situation in which an exemption would be given.

What role or powers will the regulator have in relation to a person who does not require an operator licence under the provisions of Clause 4? We partially dealt with that in the discussion on the previous amendment, and I think the Minister referred to later amendments and suggested that he would deal with the matter then since it is not immediately clear what powers the regulator has in relation to a person who is exempted from having a licence or what difference that exemption makes in terms of the regulator.

Clause 4(2) states:

“Regulations may make provision for other activities or persons to be exempted, either by the regulations themselves or by the regulator”.


What other activities or persons could we be talking about—which in relation to activities or who in relation to persons—that would be exempted from an operator licence or does the reference to activities go beyond activities for which an operator licence is required? Although I listened to what the Minister said, I am not quite sure exactly what he said about the need for the provisions in Clause 4(2) as opposed to the provision in respect of Clause 4(1).

Clause 4(4) states:

“Regulations may … make provision about the revocation or renewal of an exemption”.


Why is “may” there? In what circumstances would an exemption from an operator licence be granted which did not contain a provision for that exemption to be revoked?

[Lord Callanan]

I shall first address the noble Lord’s question. It is considered that the activity of operating a spaceport will not qualify for an exemption as the activities that will take place from the spaceport will have safety implications, for example, the storage of hazardous materials, the launching of spacecraft et cetera.

I shall give the noble Lord a few more details on the kind of exemptions that we are considering under these clauses. These exemptions are based on similar exemptions contained in Section 3(2) of the Outer Space Act 1986. The first exemption in Clause 4(1) is for situations under the UN space treaties where the UK and another state are jointly liable for a space activity. This provision allows the UK and the other state to allocate responsibility for regulation, supervision and monitoring activities between themselves. This exemption would be made by way of an Order in Council. The second exemption provides that activities or persons can be exempt from the requirement to hold an operator licence if the activity does not give rise to safety concerns or invoke the international obligations of the UK. There is also an exemption in Clause 7(4) that regulations may exempt persons or services from the requirement to hold a range control licence if the activity does not give rise to safety concerns or invoke the international obligations of the UK.

The terms “operating a space object” and “operating a spacecraft” in the Bill are drafted to be intentionally wide. Although this is useful and necessary to capture all activities for which a UK liability might arise under the UN liability convention, certain activities could be captured where there are no safety or security implications and the state liability is already indemnified by someone else. In such a case, a licence might not be necessary and could be overburdensome on industry. Clause 4 therefore provides for exemptions in these circumstances.

I shall give some examples of activities that could be exempted from licence requirements. The Bill provides that persons engaging spaceflight activities and range control services can qualify to be exempt from the requirement to hold a licence. Some aspects of manned suborbital activities could qualify for an exemption. However, the exemption under Clauses 4(2) and 7(4) will apply only in cases where the activity does not give rise to concerns for public safety or the safety of those involved in the activity. If there were any concerns that the activity would put people’s safety at risk, then it would not qualify for an exemption. To qualify for an exemption under Clause 4(1), another country would be required to take on all the international obligations of the UK. I hope that my response satisfies the noble Lord’s concerns.

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[Lord Fox]

My Lords, I will be very brief. We welcome this probing amendment because this issue is very important. It is analogous in one sense to the potential for flagging out a particular enterprise. If the regulator is minded to allow a transfer of licence, what legal basis would there be for any enforcement of those licence agreements once they cease to be within the domain of this country? The second point is on the role of takeovers and acquisitions, where companies that own a licence and are within the remit of the United Kingdom are acquired and move beyond these shores for regulatory purposes. Perhaps the Minister can include those points in his answer as well.

[Lord Callanan]

My Lords, Clause 14 enables a licensee to transfer their licence to another party, provided that the regulator has given written consent. This provision enables a new body or company to take over the licence without starting a licence application afresh. In addition, the Bill requires that a licence holder has the necessary financial and technical resources, and that they are fit and proper persons, to do the things authorised by the licence.

Amendment 22 would ensure that the regulator would need to be satisfied that the new licensee met the requirements under Clause 8(3) before consenting to a transfer. I can confirm that it is our intention that the regulator will need to do this. Where the regulator is appointed under Clause 15, Clause 14(5)(c) requires them to consult the Secretary of State before consenting to a transfer. Thus the Secretary of State can ensure that they are satisfied that the new licensee meets the requirements under Clause 8(3).

The noble Lord, Lord Rosser, asked why the power to transfer a licence is necessary. The power avoids the need for wasteful bureaucracy that could affect businesses and local communities. For example, where a spaceport licence has been issued, it should not be necessary to demonstrate the suitability of the site again just because of a change of operator. However, the regulator would need to be content that the new operator met the eligibility criteria under Clause 8. Both the regulator and the Secretary of State would need to be satisfied that the transfer of a licence was appropriate, ensuring that there were the proper checks and balances in the system if that occurred.

I am confident that the amendment is not necessary but I will reflect on whether it is appropriate to make our intentions explicit in the Bill. On those grounds, I hope the noble Lord will feel able to withdraw his amendment.

[Lord Rosser]

I thank the Minister for his reply and the noble Lord, Lord Fox, for his valuable contribution to this debate. The Minister has indicated—at least I think this is a fair reflection of what he said—that he will reflect further on this issue. I would certainly have thought that if the transfer under Clause 8(3) will apply, it would be helpful if it said so. One would assume that the provisions of Clause 8(2) would also apply—that is, the parts about not impairing national security, being consistent with international obligations and not being contrary to the national interest. I take it from what the Minister said that he will indicate to us before Report whether the Government intend to make any amendments in the light of the amendment that I have moved.

I have a question on one point that I asked about at the end, which I appreciate is mainly a point of detail. For the granting of a licence, the consent of the Secretary of State is also required under Clause 8(4). If the regulator granting the licence is not the Secretary of State, is the intention that that would also apply in relation to a licence being transferred or is the Minister likely to come back on that when he has reflected further on the issues raised during this debate?

[Lord Callanan]

I will reflect on that and come back to the noble Lord on it.

[Lord Rosser]

I beg leave to withdraw the amendment.

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[Lord Callanan]

I thank noble Lords for their consideration of the significant powers in this clause, which we recognise are significant. I hope noble Lords will allow me to take this opportunity to provide assurance that this important power, which will be used only when immediate action is necessary, is both proportionate and subject to sufficient safeguards.

Clause 32 confers on the Secretary of State the power to grant an enforcement authorisation in the most urgent cases, where there is a serious risk to national security, compliance with our international obligations or health and safety. In such emergency situations there may not be sufficient time to obtain authorisation from a justice of the peace under Clause 31. I assure the House that there are adequate safeguards in place. Such an authorisation can be granted only to a named person who the Secretary of State is satisfied is suitably qualified to carry out the necessary action. Each time this power is used the authorisation must be in writing, must specify the action required and will remain in force for only 48 hours from the time it is granted. As an additional safeguard, improper use of this power by the appointed person could be challenged by judicial review. It is worth noting that this power is more conservative and requires more stringent authorisation than other comparable powers of entry: for example, those for nuclear inspectors or health and safety inspectors who are provided with a standing authorisation and may act at their discretion. It is anticipated that this power would be used only in the most serious and urgent of cases where there can be no delay in taking action.

I turn to the amendments specifically. The need to find a justice of the peace to review an enforcement authorisation during the period of validity would impose unhelpful bureaucracy on the person authorised at a time when they are trying to take urgent action to protect people from serious risks. A review of an enforcement authorisation by a justice of the peace after the authorisation had expired would not serve any purpose since the power granted would have already been exercised. In addition, a review by a justice of the peace, whether while in force or afterwards, would place an unnecessary and disproportionate burden and cost on the judicial system, given the other safeguards in place. Moreover, appeal by the Secretary of State, which Amendment 33 provides for, may not realistically take place in time to enable the emergency action needed to address the serious risk in question.

I assure noble Lords that the Government are listening. We have taken on board comments from the House of Commons Science and Technology Committee and have reduced the time for which an enforcement authorisation remains in order from one month to 48 hours. The noble Lord, Lord Fox, asked why we have used the wording “to do anything necessary”. It would not be possible or appropriate to list possible actions that may be taken under an enforcement authorisation as this would restrict the scope of the authorisation. The action must, however, be necessary to protect the national security of the UK, secure compliance with the international obligations of the UK or protect the health or safety of persons. An enforcement authorisation will not be issued unless the Secretary of State is satisfied that the risk will be eliminated or mitigated as a consequence. Improper use of this power by the appointed person could be challenged by judicial review.

I understand the concerns of many noble Lords that this power is excessive. However, it is more restricted than other comparable powers of entry: for example, as I said, those for inspectors in the Energy Act 2013 or the Health and Safety at Work etc Act 1974. It is similar to those powers approved by Parliament in that there is no independent judicial authorisation before or after exercise of the power. The power in Clause 32 requires authorisation for each and every use, is in place only for a 48-hour window and cannot be used routinely at the discretion of the person who is authorised to enter. I am confident that our approach is proportionate and contains sufficient safeguards to address the concerns raised while retaining the flexibility necessary to deal with the very serious risks that this clause is designed to address. With the assurances that I have provided, I hope that the noble Lord feels able to withdraw Amendment 32.

[Lord Rosser]

I thank the Minister for his reply and thank the noble Lord, Lord Fox, for speaking to his amendment.

The Minister has produced various arguments but not surprisingly, because he probably cannot get into the mind of the Constitution Committee, he has not said why it was not moved by the kind of considerations that he has put forward. Clearly, that committee regarded this issue as something which could lead in extreme circumstances—at least, one hopes that it would be in extreme circumstances—to an abuse of power if there was no check after the event on whether the power under Clause 32 had been used appropriately and proportionately. My amendment sought to cover that, as did the view expressed by the Constitution Committee. Having a check that this power is not misused, which is what my amendment would provide, is a point that the Minister did not address in his reply. He referred to the difficulties of finding a magistrate or justice of the peace to do this within 48 hours, or at least I think he did. I think he will find that justices of the peace can be produced fairly quickly for a range of rather more minor warrants and issues, and well within the 48-hour period. Unless there is an issue over a Sunday, you can find justices of the peace at a magistrates’ court any day. If some sort of emergency measure needed to be undertaken—as it would in such a case—I imagine that the court would be prepared to co-operate.

The Minister mentioned costs. Frankly, if the Government are throwing at us concerns over costs as a reason for not having a check on whether a draconian power—the wording used by the Constitution Committee—is being used correctly or is being abused, we have reached a fairly sorry state of affairs. The Government must do a bit better than try to argue that this is unacceptable on grounds of cost, which I think was one of the points made by the Minister.

I will, of course, read Hansard and reflect on what the Minister has said but I come back to the point that this view has been expressed pretty strongly by the Constitution Committee, having seen the Government’s response to the House of Commons Science and Technology Committee. These are fairly draconian powers and it is desirable to ensure that those who exercise them know that there will subsequently be a check on whether they have been used appropriately or proportionately. That would help to ensure that they are not abused. However, in the meantime, I beg leave to withdraw the amendment.

Air Travel Organisers’ Licensing Bill

Debate between Lord Rosser and Lord Callanan

Committee: 1st sitting (Hansard): House of Lords
Wednesday 11th October 2017 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Callanan) (Con)]

First, I thank the noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson, for their co-operation on this matter. I will address the amendments first and then come on to their specific questions about Monarch and other issues.

I recognise the purpose of Amendments 1 and 2 and we have looked very closely at the legal implications of both of them. I understand and recognise the intention to ensure that ATOL protection covers flight-only bookings and linked travel arrangements. Amendment 1 would remove subsection (3) from Clause 1. I will explain why this has been included in the Bill. It is quite complicated so I will go through it. It clarifies the extent of the Secretary of State’s powers to exempt businesses from holding an ATOL when they are selling flight-only tickets. It is not changing the status quo; it is merely adding clarity about exemption from the ATOL scheme.

I think there is a small amount of confusion here. Airlines selling airline tickets are already exempted from ATOL in primary legislation—the Civil Aviation Act. What we are referring to here is ATOL holders—for instance, travel agents—selling an airline ticket. The ATOL protection applies from the moment the travel agent takes your money off you—you might choose to pay for it in instalments—until the airline actually issues the ticket, when you become a customer of the airline and part of the EU 261 compensation arrangements. Your money is protected while it is with the ATOL holder—the travel agent—until it is converted into an airline ticket, when you become the responsibility of separate regulations. Under the Civil Aviation Act, airlines are exempt from ATOL provisions.

Noble Lords may be aware that Section 71(1B) of the Civil Aviation Act already provides a specific exemption for airlines selling flight-only tickets on their own aircraft. This exemption recognises that airline operators are already subject to separate licensing requirements, set out in EU law. Member states do not have discretion to impose additional requirements.

Separately, the Civil Aviation Act also includes a wide power under Section 71(1A)(b) to make further exemptions in the ATOL regulations. This power is not expressly limited in any way in the Civil Aviation Act. However, arguably the presence in the primary legislation of the specific exemption for airlines selling flight-only tickets could be misinterpreted as narrowing this wider power. That is why we have introduced Clause 1(3) to clarify the relationship between these existing exemption powers, and remove any scope for misinterpretation. We believe there is a benefit in having this clarity in law and, as I say, the presence of the airline exemption already exists in primary legislation. If the noble Lord’s concern is that the Government intend to remove flight-only sales from the ATOL scheme, I can provide an assurance that the Government have no such plans. If the noble Lord’s aim was to bring airlines within the ATOL scheme, this amendment would unfortunately not achieve that. We would need to amend the Civil Aviation Act in order to do that.

The noble Lord’s second amendment would add linked travel arrangements and flight-only to regulation 17(1) of the ATOL regulations, which sets out the types of travel arrangements that require an ATOL certificate. I should make it clear that flight-only arrangements are already covered in regulation 17(1)(a), and we do not have any plans to change that. To accept this amendment would therefore duplicate what is already in place.

With regard to the proposal to add linked travel arrangements to regulation 17(1), once this legislation is in place we will introduce regulations to make provision for insolvency protection and the provision of information for linked travel arrangements, as required by the package travel directive. Indeed, work is already under way to draft the package travel regulations and the ATOL regulations to effect this change. The ATOL regulations will be published in draft for consultation. I am sure noble Lords would agree that it would not be appropriate to pre-empt that process by making a change now to the regulations without such consultation, as proposed by this amendment. In summary, if the noble Lord’s concern is that the Government intend to remove flight-only sales from the ATOL scheme, I am happy to provide an assurance that the Government have no such plans. If the noble Lord’s aim was to bring airlines within the ATOL scheme, this amendment would not achieve that aim. I hope therefore that he will withdraw Amendment 1.

I turn to the questions that the noble Lord, Lord Rosser, posed. He asked what percentage of the ATOL scheme would be taken up by linked travel arrangements. It is hard to say definitively but our estimate at the moment is a very small percentage. Part of the reason why we want to consult with industry before we introduce the regulations is that it is not entirely clear what a linked travel arrangement actually is. The directive expands the scope of the package travel arrangements, and the extension of the ATOL scheme will of course take effect for that regulation.

The noble Lord asked why linked travel arrangements are not included in the Bill and which clause deals with them. The Bill extends the ATOL powers but they are used to apply these arrangements throughout the European Economic Area. As such, all clauses apply to linked travel arrangements, and we will implement them in secondary legislation later on in the year when we have consulted with industry.

The noble Lord asked if we will be establishing a new trust for linked travel arrangements. The Government, together with the CAA, are still assessing the best way to implement linked travel arrangements that include a flight. We will consult on more detailed proposals later in the year. BEIS recently completed a consultation on the implementation of the package travel directive, and the responses to the consultation are currently being analysed. The consultation closed on 25 September.

The noble Lord asked about extending ATOL to flight-only. The ATOL scheme does not apply to airlines, as I said earlier, when they are acting as a flight-only provider, which are specifically exempted from it under primary legislation. Such airlines are subject to separate EU regulation and licensing arrangements, which include financial fitness requirements. We are not proposing to make any changes to the arrangements at this stage.

The noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson, asked about Monarch. As I said in repeating the Statement yesterday, we believe the circumstances are unique. Monarch was quite a large airline—the UK’s fifth largest—and the circumstances were unique in that, even if we had not agreed to the repatriation package for non-ATOL holders, there was insufficient capacity available in the market so that people who had insurance cover, credit card insurance et cetera would not have been able to purchase alternative flights to bring them home. Because of the scale of the collapse and the time of the year when this occurred, there was insufficient capacity available and therefore there was a very real danger of British citizens being stranded. In those circumstances we thought it was right to step in and fund the repatriation effort, although we are currently in negotiations with ABTA and the credit and debit card companies to try to recoup some of the costs. We hope that the particular set of circumstances that applied in the Monarch situation will never be repeated.

With the answers that I gave to the noble Lord, Lord Rosser, I would be grateful if he will agree to withdraw Amendment 1 and, on the basis that Amendment 2 duplicates what is already in place in respect of flight-only and pre-empts what we will shortly consult on with respect to the relevant regulations, I hope he will agree not to press it.

[Lord Rosser]

I am sure it will come as no surprise to the Minister to know that since we are in Grand Committee I will withdraw the amendment, but I would like to raise one or two questions in the light of the response.

I gather from what he said that nobody quite knows what linked travel arrangements are. I only mentioned them in the amendment because the Minister used the phrase at Second Reading when he said the Bill:

“will also extend the scope of protection to a new concept of linked travel arrangements”.—[Official Report, 5/9/17; col. 1840.]

I had assumed that as the Minister referred to linked travel arrangements the Government would know what they were talking about. I now understand that people are still trying to find out what linked travel arrangements are. If I understood him correctly—and I have not heard any other argument why there should not be a reference to them in the Bill—the Government’s reluctance to put them in the Bill is because they would not know exactly what they were putting in because they do not know what linked travel arrangements are and therefore what they might be committing themselves to. Perhaps the Minister could say whether that is a fair analysis or synopsis of the reply he gave on that point.

Since the Government have expressed a lack of enthusiasm for it, I also asked what would be the cost of extending compensation arrangements or ATOL protection arrangements to flight-only passengers. I did not get a response. It may be that the Government do not have a figure. Clearly, it might impose additional costs. My only comment is that when additional costs are imposed on public sector services, the argument is usually that they will have to be found from within the budget and from efficiency savings. Presumably the same argument might be used elsewhere if the Government chose to do so. I would like the Minister to clarify his response. I got a bit confused, I readily admit, not because the Minister expressed it badly but probably because my powers of taking things on board are not as great as they might be. As I understood him, he did not say that the Government could not introduce compensation arrangements in relation to flight-only passengers, whether ATOL protection or something else, because of EU regulations but that the Government do not wish to do so. Perhaps the Minister can confirm that if the Government wanted to do it, they could, but if they do not want do it as opposed to being unable to do it because of EU regulations, that makes their estimate of the cost even more significant.

The Minister has indicated a lack of enthusiasm on behalf of the Government for going down the road of protection for flight-only passengers. Where does that sit with what was said in the Monarch Airlines Statement? We were told that,

“our effort will turn to working through any reforms necessary to ensure that passengers do not find themselves in this position again. We need to look at all the options—not just ATOL”.—[Official Report, 9/10/17; col. 46.]

Surely one of the options must be a similar kind of protection package for flight-only passengers, bearing in mind that the great bulk of Monarch passengers were in that category. Is the Minister saying, only two days after Monday’s Statement, that one of the options has already been shut down?

[Lord Callanan]

Let me try to clarify the issues. The fundamental reason we are extending the ATOL scheme to cover linked travel arrangements is that the concept of linked travel arrangements is introduced by the EU directive. We had slight difficulty in defining exactly what that is in our discussions yesterday with the noble Baroness, Lady Randerson.

Let us assume that the Rosser family are going on their annual holiday and so book airlines tickets. Within the website used to book the airline tickets, they may be offered a hotel or car hire at the same time. They might be offered those at the behest and specific recommendation of the low-cost airline or through a Google advert placed on the website but with no direct connection to the airline. In the first instance, if you follow up purchasing an airline ticket with booking a car and a hotel, and you do it within 48 hours, it might be a linked travel arrangement. In the second instance, if you respond to an advert placed on the same webpage, it may not be a linked travel arrangement.

The answer to the noble Lord’s question is: we are attempting to define what a linked travel arrangement is through consultation with the industry. The concept itself was introduced in the EU directive. As someone who has taken part in many late-night trialogue sessions at the end of the process of EU legislation, I can see why sometimes the drafting of EU directives is not as good or forthright as it should be.

The package travel regulations extend the definition and scope of what a “package” comprises. From informal discussions that we have had so far with the package holiday companies, we think that the vast majority of products they sell would be covered under either the old or new definition of a package holiday. On their current business models, a very small percentage would potentially be linked travel arrangements. As part of the directive, the information provisions would have to make clear to a customer that if they were signing up to a linked travel arrangement, there may be a lesser standard of protection than that provided by the package holiday directive for those who have purchased a package holiday, which would be guaranteed under the ATOL scheme. I hope I am explaining it well—it is rather complicated, and the noble Lord can come back to me if he wants further clarification.

The noble Lord asked whether we are prevented by EU regulations from extending the ATOL scheme to airlines. My understanding is that we could extend it to airlines—no doubt I can write to him if I have the wrong impression—but to do that we would have to change primary legislation, because the Civil Aviation Act states that airlines are exempt.

Turning to ATOL-protected flight-only booking providers, which we are talking about in this Bill, they are concerns such as high street travel agents. As well as being able to sell package holidays, they can also sell flight-only products. Obviously, before the airline actually issues the ticket, the customer would have ATOL protection in case the travel agent or the high street provider goes bankrupt in the meantime. Once the ticket has been issued, the customer becomes subject to the separate provisions of the EU 261 compensation regulations.

With regard to the Monarch situation, we still have a few days left in which to finish the rescue operation, and I am pleased to say that so far it is going well. On the face of it there are no easy answers to this situation. Of course we could extend ATOL protection to every airline ticket that is sold in the UK, but no doubt the noble Lord will have received the same representations as I have from airlines and others complaining about the impact of air passenger duty and how it makes the UK travel and airline market uncompetitive in many respects, although there are other issues around what might happen in Scotland or Northern Ireland. If we were to extend the insurance scheme to every airline, in effect that would just increase air passenger duty because we would be adding an amount to every airline ticket. That would apply to every airline operating from the UK or anyone transiting through this country, including Emirates, American Airlines and every other operator that travels through the UK. Many are in very robust financial health and people would already have an element of protection through the EU 261 directive.

There are no easy answers to the Monarch situation. The other area that we could look at, but which is outside the scope of the ATOL Bill before us today, would be the insolvency regulations. We can ask whether it is possible to arrange the orderly wind-down of an airline so that it can continue to operate. Again, however, that has some potential problems, not the least of which is creditor action. As soon as an aircraft is abroad in a foreign airport, if creditors know that an airline is in financial difficulties and they want payment for services upfront, they typically impound airplanes and refuse to allow them to return to their home country. It is a potential avenue that we could look at and we are not ruling anything out. We will examine all the possible ways of protecting the taxpayer in the future, but there are no obvious solutions to prevent this happening. However, I should say that we are not aware of any other airlines that might cause us anxiety at the moment.

[Lord Rosser]

I am not surprised that the Minister has not been able to give us an estimate of what the cost would be of extending the ATOL provision to all flights, obviously including the Monarch situation. I assume from that that the Government do not have a figure. I take it from what the Minister has said that the reference in the Statement to all options being looked at still stands, including the options in one form or another that we have been discussing in this debate. On the basis that I have not misunderstood the Minister and that all options are genuinely being looked at, I beg leave to withdraw the amendment.

[Lord Callanan]

Perhaps I may provide some clarification. EU law actually prevents us from adding additional licensing provisions that go beyond EU law in the case of the licensing provisions of airlines.

--- Later in debate ---

[Lord Rosser]

This amendment would enable the Secretary of State to require the—now well-known from our previous debate—Air Travel Insolvency Protection Advisory Committee, within two years of the Act coming into force, to,

“review the impact on UK consumers of booking a holiday through an EU-based company rather than a UK-based company”,

and require the Secretary of State to lay such a report before both Houses of Parliament.

As we know, the Bill updates the Air Travel Organiser’s Licence so that it is harmonised with the 2015 EU package travel directive. In so doing, the Bill extends ATOL to cover a wider range of holidays and protect more consumers. The expectation is that UK travel companies will be able to sell more easily across Europe, since in future they will need to comply with protections based not in the country of sale but in the country in which they are established. The purpose of the amendment is to provide a degree of certainty that there will be a review, in this case via the Air Travel Insolvency Protection Advisory Committee, of the impact of the ATOL revisions to help ensure that there are no adverse impacts on UK consumers using EU-based companies, since the intention and objective of the Bill is to improve the range and extent of the protections available.

There is a possibility that with the change to EU-based companies having to comply with ATOL-equivalent insolvency protections applicable in the member state where a business is based, rather than in the country of sale, such companies selling holidays to UK consumers may not offer the same ease and lack of expense of processing a claim which are afforded by the ATOL provisions that would apply to a UK company. It appears that some half a million passengers could be affected.

The review referred to in the amendment would enable hard facts to be obtained on the impact of this legislation on UK consumers booking holidays through EU-based companies, and the extent to which the protections offered, the processes and timescales for securing recompense and the costs involved differ from our ATOL arrangements. With that information available, the Government would be in a position to make informed decisions on what further action, if any, could be taken or pursued to help ensure that UK consumers using EU-based companies were either not disadvantaged or at least made aware beforehand that they were liable to find themselves in a less favourable position.

A broadly similar amendment was pursued on Report in the Commons. The Minister there appears to have taken some 40 minutes over his reply, taking interventions like there was no tomorrow, some 15 of which were from his own Back-Benchers. One, as the debate reached its pinnacle, was as follows:

“May I say to my right hon. Friend, with the seriousness and candour that the moment demands, that he is a bright flame on a dull and grey afternoon to which the moths of Parliament are being drawn?”.—[Official Report, Commons, 11/7/17; col. 234.]


The Minister’s response was to wonder whether anyone else wanted to intervene in a similar vein. One could take the view that in the Commons the Government were regarding the whole debate on the amendment as a joke. Alternatively, one could take the view that, since a vote was coming at the end of the debate, the Government were playing for time because they were not sure whether sufficient of their troops had yet returned to be confident of their winning the vote. Since there will not be a vote on this amendment as we are in Grand Committee, I hope to have a more adult debate than the Government promoted in the Commons.

When the Government Minister commented in the Commons on a broadly similar amendment to the one we are discussing now, he said:

“It will be for protection schemes in other member states to provide the protections for UK consumers to which the amendment refers. Because that is not our responsibility—we do not have the power that the amendment suggests that we should have—I am not sure that the amendment works on a technical level”.—[Official Report, Commons, 11/7/17; col. 226.]


I am not sure what power suggested in that amendment the Commons Minister was referring to, but his comment was not exactly encouraging. However, despite having said that the issue referred to in the amendment in the Commons was not our responsibility, the Government Minister in the Commons went on to say that the Air Travel Insolvency Protection Advisory Committee, which provides advice to the Civil Aviation Authority, the Air Travel Trust and the Secretary of State on the protection of consumers, would receive a letter from him asking it to review the implementation of the changes provided for in the Bill. They presumably include the impact on UK consumers of booking a holiday through an EU-based rather than UK-based company.

However, the promise of a letter to the ATIPAC from a Minister who had already declared that the matter is not our responsibility is frankly not sufficient. This is a serious issue with potentially serious consequences for passengers, as recent events relating to Monarch Airlines have shown. We need something on the face of the Bill which, while not compelling the Government to require the review from the ATIPAC, makes it much more difficult for the Government not to proceed down this road, and certainly would in a situation where complaints were coming in from passengers booking a holiday through an EU-based rather than UK-based company, over arrangements and procedures on insolvency protection. I beg to move.

[Lord Callanan]

My Lords, please forgive me if I repeat a number of the points that I made on the previous answer, as this covers the same ground. We are proud that we have always been a leader when it comes to providing protection for holidaymakers. We set up the ATOL scheme in UK legislation several years before the original package travel directive was agreed in Europe. That is the significant point. It means that the ATOL legislation is not dependent on European legislation. The Bill will harmonise ATOL with the package travel directive in the immediate term. However, the ATOL legislation and protection will still exist and remain in place as we leave the EU.

I fully understand why this amendment has been proposed, in order that we consider the ongoing impacts on consumer protection as we leave the EU. As I said earlier, this is already catered for in the legal and policy framework in place. As referred to by the noble Lord, Lord Rosser, during the Commons passage of the Bill, my colleague the Minister of State for Transport, the right honourable John Hayes, wrote to the Chair, John Cox, to consider this precise point in ATIPAC’s 2017-18 annual report. I am sure that they are already minded to keep a close eye on consumer protection both before and after we leave the EU. In fact, these reports will be submitted to the Secretary of State within four months of the end of each financial year and will be published on the ATIPAC website.

The noble Lord, Lord Rosser, also asked about HMG’s problem of our UK passengers purchasing from EU businesses. If a travel business is established in Europe, it will be able to sell holidays to consumers in the UK without ATOL protection. However, it would still be obliged to have in place insolvency protection that meets the strict requirements of the new directive. This protection will be broadly similar to ATOL and will need to cover both online and traditional package holidays.

In light of the explanation that I have given and the scrutiny and the annual review already in place, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Rosser]

I am disappointed but not surprised by the answer that I have received. One issue will relate to EU-based companies that are selling holidays here but which are required to conform to requirements in their own nation. What will the process be for obtaining that compensation and protection? What expenditure may have to be incurred by a UK resident who has purchased a holiday through an EU-based company? Those processes and procedures, and the cost of going through them, may well be rather more extensive than might apply in relation to a UK company under our own ATOL arrangements. That aspect of it has been rather ignored in the answer given. We come back to a situation where the Government seem willing to write letters to people and to stand up and say in one of the Houses of Parliament, “Yes, we intend to do this”, but when it comes to being asked to put their words on the face of the Bill so that everybody can see their commitment, making Ministers much more accountable, and being required in this case to place the report before both Houses of Parliament, the Government resile from such a suggestion without giving a proper justification as to why it would be inappropriate or unworkable. I am disappointed with the reply, since I think that the Government could have gone further, but I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Callanan]

My apologies for the delay: when you walk through the Lobby, you get trapped by Members wanting to talk to you about various issues. I return to the two amendments. In light of the responses to our consultation last year, the Government are proposing to take the power to establish additional trusts to give them the flexibility to make separate provision for different types of risk, or different business models. The impact of failure can be significant, as we have just witnessed in the failure of Monarch Group, to which Members have referred. This makes the need for regulatory flexibility vital for market efficiency and consumer certainty.

This change has the potential to make the scheme’s operation easier for industry to apply and more robust for the consumer. The new looser types of package arrangement called linked travel arrangements are the most obvious example. Currently, we do not know how the industry will react to this innovation and whether riskier products will appear that might require us to separate the trust arrangements. Richard Moriarty from the CAA said in the evidence session when this clause was part of the Vehicle Technology and Aviation Bill that,

“it would be prudent and sensible for Government to have the flexibility to respond to that”.—[Official Report, Commons, Vehicle Technology and Aviation Public Bill Committee, 14/3/17; col. 65.]

There is already a legal duty in Section 71B of the Civil Aviation Act which places a requirement on the Government and the Civil Aviation Authority to consult if we introduce regulations under Section 71A. Like my right honourable friend John Hayes, Minister of State for Transport in the other place, I am happy to give the noble Baroness a commitment today that there will be a thorough impact assessment and consultation before we use these powers.

Throughout the ATOL review process we have consulted on the basis of impact assessment. In 2012 we changed the Civil Aviation Act to better reflect current market practice. In 2013 we launched a call for evidence on our long-term review of the ATOL scheme. Last year we consulted on the very changes to the Civil Aviation Act that we are discussing today, and shortly we will launch a series of consultations on the detailed regulations that will follow the Bill. As noble Lords can see, each stage of this work has been the subject of extensive impact assessments and consultations every step of the way. Indeed, both the Civil Aviation Authority and the industry’s leading trade body—ABTA—have commended the Government’s approach to reform. We will be working closely with them and consulting with industry as and when we develop plans to implement this clause. Given that the Government are already obliged by Section 71B to consult on the use of these powers, it is not necessary to introduce a further requirement in the manner described, particularly when we are midway through an extensive process of consultation and engagement, which has been commended by those involved.

The noble Lord, Lord Rosser, asked whether the requirement to consult is for all ATOL powers. The regulations under Section 71A of the Civil Aviation Act include a requirement to consult for all the powers. The noble Baroness, Lady Randerson, asked whether the Government’s action to repatriate passengers under the Monarch scheme undermined the ATOL scheme. I think she has an arguable case. I hope she is not suggesting that we could segregate people in overseas airports and say, “You are protected by ATOL and you are not”. As I have explained, the Monarch situation was an exceptional collapse. There was insufficient capacity on alternative airlines. Had it happened at a less busy time of the year, it may not have been necessary for the Government to step in and get people home. We looked at the particular circumstances of that airline, the sheer number of passengers involved and the lack of available capacity on alternative airlines to get people home.

However, it is important to say that the ATOL scheme is an important part of the rescue operation. It will help refund the repatriation costs for the ATOL-protected passengers and they will also be covered for additional accommodation and subsistence costs if they are delayed beyond their original date. ATOL protection will also ensure that any protected passengers who are yet to travel with Monarch will receive a full refund. As I mentioned earlier, the Government will be seeking the recovery of costs from card providers—both credit cards and debit cards—and the travel industry has also been asked to contribute towards the costs of the operation. I understand the concentration on the Monarch collapse but those were exceptional circumstances and, as I said in my Statement yesterday as well as earlier today, we would not want to be hamstrung by that in future.

[Lord Rosser]

I will not say that the Minister has dismissed this—that was not the way he did it—but he referred to the Monarch Airlines scheme as being exceptional, somehow in the hope that it will not happen again, and I am sure that hope would be endorsed, but the Monarch Statement given on Monday said that the Government’s,

“efforts will turn to working through any reforms necessary to ensure that passengers do not find themselves in this position again ”.—[Official Report, 9/10/17; col. 46.]

So the Government have to produce measures and proposals that will ensure that if there is another circumstance like Monarch Airlines, passengers do not find themselves potentially stranded without any protection and the Government do not have to pay the cost of getting them home. That is the commitment the Government have given, is it not? The Government can say that Monarch is exceptional, but they have committed themselves to making sure that there are measures that prevent passengers being stranded not knowing whether the cost of bringing them home will be paid for. The Government are committing themselves to measures to ensure that that cannot happen and that there will be certainty for passengers that the cost of getting them home will be met.

[Lord Callanan]

As we said in the Statement, we will be looking at the feasibility of extending the ATOL scheme. I referred earlier to some of the difficulties involved in that. We have also said that we will look at the insolvency regime, but that does not necessarily provide an easy answer. We are looking at the circumstances. We are still in the middle of the repatriation operation, but we will look at the circumstances and see whether there is anything we can do that would obviate the need for government to step in in future.

I have given reasons why these amendments are unnecessary, along with assurances, particularly with regard to full consultation and providing impact assessments. The Government have a good record in this area, which I have already outlined. We have consulted on these and all previous changes and have produced impact assessments, so I hope that the noble Baroness will withdraw her amendment and the noble Lord, Lord Rosser, will not move his amendment.

Roads: Congestion

Debate between Lord Rosser and Lord Callanan

Tuesday 5th September 2017 Lords Chamber

[Lord Callanan]

The noble Baroness makes an important point. Again, we are investing enormously in expanding the bus network. Many local authorities are dedicating sections of the highway to bus-only networks, funded by grants from the Department for Transport. The bus network is improving massively in many of our great cities and rural areas, and we should be proud of that.

[Lord Rosser (Lab)]

My Lords, the Minister has set out how much money is being spent, but in the light of this Question, clearly, it is not having much of an impact. The 2010-15 Government set up a fund for sorting out pinch-points in the road network, and this Question would suggest that it was not particularly successful. Can the Minister say how much money from that fund was spent, how many projects it covered and how many were put forward which were not supported? Has the fund continued, or was it only for a limited time-span? If the latter, why was it brought to an end, rather than continuing with it?

Air Travel Organisers’ Licensing Bill

Debate between Lord Rosser and Lord Callanan

2nd reading (Hansard): House of Lords
Tuesday 5th September 2017 Lords Chamber

[Lord Callanan]

I thank the small number of noble Lords who contributed to the debate this afternoon. I hope, like the noble Lord, Lord Rosser, that it is because of the quality of the Front-Bench contributions that other noble Lords decided not to contribute, but I suspect it probably has more to do with being the first day back after the Recess. Nevertheless, it is about the quality rather than the quantity of the contributions. It has been a good, brief debate.

The travel market has moved on significantly in the past decade, with changes to the way holidays are offered and sold. The market has diversified with the growth of the internet and smart technologies, as many Members have pointed out. Consumers now have a great many options at their fingertips to buy holidays and to put together their own packages. As the methods for selling holidays modernise, we must also update and modernise the schemes and laws that protect them. As I said in my opening remarks, this Bill is a vehicle by which the UK will implement the EU package travel directive. It will ensure that informally booked holidays will have protection similar to that for traditional package holidays, regardless of whether they are booked on the high street or online. This Bill complements the steps we took to update the ATOL scheme in 2012 and is required to ensure that consumer protection can keep pace with the changing travel market.

While it is fair to say that the Bill may not be the largest in terms of clauses, not many Bills can bring peace of mind to so many people. The scheme protects more than 20 million people each year by regulating entry into the market and acting as a fund to compensate consumers who might be caught up in a failure. It has provided robust consumer protection for more than 40 years and is held in high esteem by the travel industry and consumers alike. It has been able to do so by evolving over time and adapting to changes in the travel market. The Bill will help to align our regulatory framework with the changes coming in across the EU in 2018. The combined effect of the clauses will help to cut red tape, allowing UK-established companies to sell holidays more easily throughout Europe. They will be able to protect more holidays through the ATOL scheme, removing the need to comply with different schemes in each member state.

I shall move on to some of the question that have been asked. The noble Lord, Lord Rosser, raised the point about the future of consumer protection once the UK leaves the EU. The UK has always led the way in protecting holidaymakers. We remain committed to consumer protection and will continue to do so after Brexit. For example, we established the ATOL scheme two decades before the original package travel directive was agreed across Europe. ATOL is of course enshrined in UK legislation and will remain on the statute book until such time as these Houses decide otherwise, regardless of what happens with Brexit. We also made improvements to the scheme in 2012 which are now being echoed in the new package travel directive that was passed by the EU in 2015. So I think that I can claim some authority here when I say that we have a track record over many years of being at the forefront of consumer protection in this field and that we hope to remain so.

The Bill will extend the Civil Aviation Authority’s information powers so that it is more able to regulate the scheme and cross-border activity. It will update the ATOL powers so that they align with the scope of the directive and will provide more flexibility to set up new trust arrangements and so on to respond more effectively to an increasingly diverse pool of risks. The scheme now needs to manage a greater variety of risks and business models, and the update the Bill will make to ATOL will mean that consumer protection can extend to a broader range of holidays. This will mean that protection is provided for traditional and online package holidays as well as for the looser combinations of travel which had previously been out of scope. Of course, we must be mindful that the regulatory landscape will need to be able to adapt to future changes in our relationship with the EU, but we will also retain flexibility in the ATOL regulations to adapt to future changes in our relationship, thus ensuring that we continue to have strong consumer protections in place as we leave the European Union. These measures will ensure that the scheme remains fit for today’s world, a world in which digital technologies are offering increasing opportunities for consumers to select the way they purchase a holiday.

Moving on to some of the other questions that were asked, my noble friend Lord Flight reflected on his Burma experience. I hope that he has now recovered from his back operation and his problems with insurance. It is important to say that the ATOL scheme is not designed to replace holiday insurance and we do not want to give consumers the impression that it should or might do so. People should still take out holiday insurance, ideally before they book their holiday, which for its relatively modest cost provides the considerable protections they will need above and beyond the ATOL scheme. Arrangements for flight-only and for airlines are regulated separately, and I am sorry that my noble friend was not able to take advantage of them with his Burma experiences. I am not sure that there are any package holidays to Burma that would be covered by the ATOL regulations.

In response to the point made by the noble Baroness, Lady Randerson, no distraction is intended from any other worthy causes. She got her points in about Brexit anyway, so maybe she could cut and paste them and repeat them in the Brexit debate later this afternoon and save everyone the trouble of listening to them again, worthy though they were. She also asked about drones and lasers, a point also raised by the noble Lord, Lord Rosser. I announced just before the start of the summer vacation the measures we intend to take on drones. We are currently working on further measures to deal with the scourge of laser pens. I cannot be more specific on a timescale at the moment, but I assure the noble Lord that as soon as we can we can provide precise timings I will do so, but we recognise the threat and have published measures on what we intend to do on drones. We will act as soon as is possible.

The noble Baroness, Lady Randerson, also said she thought there was a degree of irrelevancy about the Bill. I am afraid I do not agree. We need to have protection measures in place. As I said, it will exist long after we leave the EU. We were 20 years in advance of the EU package travel directive and our protections will remain in place afterwards.

The noble Baroness raised so-called regulatory shopping. This is a concern, but we have seen no evidence of it so far. Indeed, the package travel directive in many respects implements what we already have in the UK, so it will make it less likely that companies can move to a lower-regulation environment in the rest of the EU. It will raise guarantee standards in countries such as Spain effectively to what we already have in the United Kingdom, so it will prevent the problems associated with Lowcost Holidays that I mentioned earlier.

The noble Lord, Lord Rosser, and the noble Baroness, Lady Randerson, mentioned the new trust arrangements. They are right to do so. I hope I will be able to reassure them. We have no plans to establish any other trust schemes beyond what we already have. Indeed, in response to the noble Baroness’s question, we have £175 million in the ATOL scheme, but there have been periods when it has been in deficit. I think I am right in saying that up until 2011 the scheme was in deficit and the Government needed to provide a guarantee for a loan to be taken out to refund failures at that time. Since then, we have had proportionately fewer failures and proportionately more people paying in, so the fund is now in considerable surplus.

We have no plans to change the contribution, but we propose to give ourselves the power to respond innovatively to changes in the market. As I said, we have no plans to do so but it is possible and we would not want to exclude the ability to establish new trust fund arrangements if new and innovative models were to be produced. If we did, we would consult extensively with the scheme providers in the CAA, and with package tour operators, various internet firms, et cetera. Of course, such arrangements would be subject to affirmative resolutions in both Houses.

[Lord Rosser]

To pursue the point on the purpose of Clause 2, the Minister has said the Government have no plans at present, but then goes on to refer to possible changes in the future. Will he give some examples of the changes that might take place that would necessitate using the powers under Clause 2?

[Lord Callanan]

I suppose the short answer to that question is no. If I knew what innovative solutions and changes might come up, we would allow for them now. For example, if a particularly new and what we would consider riskier form of package could be developed, we would maybe want to set up a larger contribution protection than the £2.50 that applies to other schemes. As I said, we will consult extensively with all providers and with the CAA, and the arrangements will be subject to the affirmative resolutions of this House. As I said, these models have not been developed yet, so we do not know what they might be, but we think it prudent to allow for the possibility that they may be developed in the future, even though we have no plans to do so at the moment.

I believe I have responded to all the questions I was asked—somebody will no doubt shout if I have not.

[Lord Rosser]

The Minister may feel he has answered this already, in which case he will obviously say so, but I asked about the secondary legislation, what consultations have already taken place and with whom, and what consultations are currently taking place. I also asked about the production of an impact assessment, because the concern is that there may not be proper consultation or an impact assessment, and we shall have just an affirmative resolution for what are, or could be, quite extensive powers and changes.

[Lord Callanan]

As I said, we can give an undertaking to consult extensively if we propose to do this in the future. I will write to the noble Lord with details of any consultations that have already been carried out; I hope he will consider that an adequate response. I think I have responded to the points that others put to me and I ask the House to give the Bill a Second Reading.

Transport: Remote Island Communities in England

Debate between Lord Rosser and Lord Callanan

Thursday 20th July 2017 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Transport (Lord Callanan) (Con)]

My Lords, first, I pay tribute to the noble Lord, Lord Berkeley, for securing this debate on the transport needs of remote island communities in England. I know that he has for many years taken a keen interest in the future of island connectivity—in particular, to his beloved Isles of Scilly. In the presence of so many other admirers of the Isles of Scilly, at this point I should say in confession, in front of the right reverend Prelate the Bishop of Newcastle, that I have never been to the Isles of Scilly but I have been many times to Lindisfarne, the holy island in the north-east but, given the glowing descriptions from many noble Lords, I look forward to the opportunity to visit the Scilly Islands.

Most of the speakers in the debate have concentrated on the Isles of Scilly, except for the right reverend Prelate, who waxed lyrical about the wonderful Holy Island, in Northumberland, which, as I said, I have visited many times. There is indeed a road connection for part of the year, and it is a source of amazement to me—as it will be to other Members from the north-east—that every year there are tales of people’s cars floating off the causeway. I assure your Lordships that it is not possible for the council to put any bigger signs indicating the required crossing times and the consequences if you do not adhere to them. The most amazing thing is that normally, they are not people who speak a foreign language and do not understand English, but people from the local area or other communities in the United Kingdom, who just wilfully ignore the signs and see their car floating away in the distance as the tide comes in. They normally take to the rescue shelter halfway across. There is no legislation against stupidity, I fear.

I take note of the right reverend Prelate’s suggestion of a park-and-ride scheme. I am sure that she will understand that is a matter for the local authorities to determine. I am sure that under its new leadership, Northumberland County Council will look closely at her suggestion. She is fortunate to represent what is in my biased opinion one of the nicest dioceses in the country.

As an island nation, the movement of goods and people by air and sea is vital to the economic well-being of this country—95% of our trade by volume either arrives or departs by sea—but it is equally vital on a smaller scale for internal traffic within our smaller island communities. Indeed, that is the subject at hand. With three operators and around 9 million passenger crossings each year, as the noble Lord, Lord Berkeley, observed, I am not so sure that the Isle of Wight falls into this category. I read with interest the briefing produced by the House Library, which concentrated to a remarkable extent on the Isle of Wight, which no one could argue is a remote island community. However, it shares with other islands the basic fact that it costs more—consumes more resources—per passenger mile to move people by ferry or by air than by road.

The Isles of Scilly are of course by far the most obvious example of our subject for debate today, and most Members have concentrated on them. Perhaps it will help the House if I briefly recap the background to the Isles of Scilly’s services by sea and by air, to build on the excellent introduction provided by the noble Lord, Lord Berkeley.

Passenger and freight ferry services from the mainland to the Isles of Scilly have always been provided commercially without operating subsidy—under Conservative and Labour Governments, as the noble Lord, Lord Rosser, will be aware.

The noble Lord, Lord Greenway, referred to the passenger ship RMV “Scillonian”, as did several noble Lords. It is now 40 years old, although it underwent a substantial refit in 2012. I have heard the various criticisms, but it is also fair to say that it is duly certificated, registered as seaworthy and entirely fit and appropriate for the services which it provides. If it was not, it would not be allowed to provide them.

In recent years the local partners—led by Cornwall Council—known as the Route Partnership put together a funding bid for a new purpose-built passenger and freight vessel to replace the two current vessels, and for significant harbour improvements at Penzance and St Mary’s. The new vessel was to be owned by Cornwall Council and chartered to an operator by competitive tender. The rationale for that proposed arrangement was that the Isles of Scilly Steamship Company could not afford to replace the current passenger vessel when it reached the end of its useful life, and neither could any other operator provide a financially viable service.

The Department for Transport then invited bids for smaller-scale harbour improvements, but declared that as long as passenger services remained in commercial operation, it did not believe that there was a case for an ongoing subsidy. I am sorry to say that that, in essence, remains the Government’s position now.

In the meantime, the Isles of Scilly Steamship Company has also undertaken to replace its year-round cargo ferry, the “Gry Maritha”, having acquired a significantly larger vessel, currently named “Mali Rose”, which could also carry up to six passengers in the winter months, at the master’s discretion. This vessel, I understand, requires substantial refurbishment before it can replace the “Gry Maritha”.

The Isles of Scilly Steamship Company has said that it intends to replace the current passenger vessel, the RMV “Scillonian III”, probably with a new build vessel, but that it believes that the ship can continue operating beyond 2020 if necessary. We await developments on that front, but the vessel appears capable of meeting demand during its months of operation.

Although the Government do not believe that there is a case for an ongoing subsidy, we remain committed to ensuring that services to remote island communities continue. The noble Lord, Lord Cameron, referred to subsidies for freight services. The Government have invested over £6 million towards the £11 million project to improve the quays at St Mary’s, dredge Penzance Harbour and undertake land access improvements to improve the vital sea connection between the Isles of Scilly and the mainland for passengers and freight by opening up both harbours to a wider range of vessels in future. Building on the development work initially undertaken by the Council of the Isles of Scilly and Penzance Town Council, Cornwall Council undertook to act as the lead delivery authority and the works were completed in June 2016.

Scheduled commercial flights to the Isles of Scilly commenced as long ago as 1937. Today, regular flights operate to St Mary’s Airport from Land’s End and Newquay airports, and, seasonally, Exeter Airport. The runway at St Mary’s has recently been resurfaced and Land’s End Airport now has its first tarmac runway. Flights are operated commercially—again by the Isles of Scilly Steamship Company under the Skybus brand—and, like ferry services, have continued to operate free from subsidy. The Isles of Scilly Steamship Company has also invested in additional aircraft and expanded its service following the discontinuation in October 2012 of the British International Helicopters’ Penzance to St Mary’s helicopter service. According to the steamship company, passenger traffic by sea has increased in recent years, from just under 105,000 in 2014 to just under 116,000 in 2016. Air passengers have also increased from just under 91,000 to 95,000 in the same period, although this remains below the 155,000 passengers that were transported in 2011, which was the last full year of the helicopter service.

Transport to remote island communities is a free market and other operators are able to enter that market if they wish. In fact, I am aware of the current proposals—as noble Lords have mentioned—to recommence helicopter services to both St Mary’s and Tresco through the construction of a replacement heliport at Penzance. I understand that planning consent was approved by Cornwall Council in March 2017. However, noble Lords will understand that, because the proceedings are subject to judicial review, I am unable to comment further on that service.

The noble Lords, Lord Berkeley, Lord Cameron and Lord Rosser, and the noble Baroness, Lady Randerson, referred to the issue potentially being referred to the Competition and Markets Authority—I think the noble Lord, Lord Teverson, also mentioned this. Let me set out the position. The relevant legislation is Chapter 2 of the Competition Act 1998, on abuse of a dominant position, and Chapter 3, which covers investigation and enforcement. The CMA has wide discretion to construe a relevant market, which could include more than one transport mode and could extend to a market as modest in scale as the Scilly service—much smaller indeed than the Isle of Wight market, which was previously examined by the CMA’s predecessor, the OFT, and the Competition Commission. However, the CMA also operates formal prioritisation principles, which include the size of the market and the impact of the case. Depending on other workload, it may decide that the complaint about the Scilly services does not have sufficient priority to justify the resources required to investigate a case of this sort. It is a matter for the CMA.

A number of Members raised the issue of the Scottish islands and made comparisons with the services there. The Scottish Government, through Transport Scotland, provide financial assistance to reduce the cost of ferry travel on routes that are considered lifelines for remote island communities, and support a number of air routes to the islands through public service obligations. The Scottish Government are, of course, answerable to Scottish taxpayers for their own funding priorities, but I highlight that it is very difficult to compare the needs and services of groups of islands around the UK, and that the situation in Scotland is very different because the services mostly cannot be operated on a commercial basis. While there is no specific legal impediment in relation to public service obligations for remote island communities in England, at the moment the services to the Isles of Scilly are operated on a commercial basis. If the situation changes in this respect, then of course the matter could be reviewed.

The noble Lords, Lord Berkeley and Lord Rosser, also raised the issue of the abuse of a monopoly—the same company providing both air and sea connections. We do not believe that this, in itself, is sufficient evidence to show abuse; despite the modest capacity of the terminals, it remains open to other providers to provide ferry and/or air services to the Scillies. I would be delighted if the market came to support more than one operator; however, that is not yet happening from either Penzance or elsewhere. The fact that it is not suggests that there is not some huge super-profit being exploited, into which a competitor could easily make inroads. The growth in passenger traffic at least suggests that fares are not prohibitive.

I will answer some of the other questions that noble Lords have raised. The noble Lord, Lord Berkeley—I think—asked about the quality and reliability of the air service. I totally appreciate the annoyance and distress caused to passengers when such events occur, but this is a matter for the interested parties, including the relevant local councils and users, to take up with the operator of the commercial services. Of course, it is for the pilot in command to decide whether to operate a flight in adverse weather conditions. The noble Lord also asked why cheaper air or ferry services cannot be offered for permanent residents. I understand that discounts are already available for permanent residents; further discounts would, again, be a matter for the interested parties to consider, including the operators, users and local councils. So long as EU treaty rules apply, in the first instance it would be for them to produce a draft notification justifying the preferential terms as aid of a social character in a remote region.

The noble Lord, Lord Cameron, raised the issue of the Scottish islands—I think I have responded already to that question—and asked about an air discount scheme. The air discount scheme for flights within Scotland is of course a matter for the Scottish Government. The scheme is not applicable to air routes in Scotland supported by public service obligations. Any exemption applied for in respect of air routes to the Isles of Scilly would have to be eligible for this type of aid under European Union state aid guidelines.

The noble Lord, Lord Bradshaw, raised the issue of the current train franchise and sleeper service from London. The current Great Western franchise is due to be replaced by April 2020 and officials have begun engaging with interested parties to identify potential priorities for the route franchise. I will ensure that the noble Lord’s points about the sleeper service are considered as part of the franchise replacement process. In addition, train services to Penzance are being substantially upgraded. A new £360 million fleet of bi-mode intercity express trains will replace the older high-speed trains on the London route, bringing journey time savings. Local services to Plymouth are being upgraded to two trains an hour, enabled by Network Rail’s re-signalling work. We particularly welcome the substantial contributions being made by Cornwall Council and the Cornwall and Isles of Scilly local enterprise partnership to the modernisation of the Night Riviera sleeper trains and improvements to stations in Cornwall and London for sleeper passengers.

The noble Baroness, Lady Randerson, made a very good point about the provision of emergency medical evacuations. Where commercial transport is not suitable or available, there are arrangements in place to evacuate patients who require emergency treatment using either Cornwall Air Ambulance or search and rescue services, both of which are based at Cornwall Airport Newquay.

The term “lifeline” is often used to describe vital transport connections between mainland and island communities. Although this term carries no formal or legal status, the Government recognise the importance of passenger and freight services to remote island communities in England, and that is why we remain committed to ensuring that these continue. My officials have met delegations on a number of occasions to discuss transportation to and from island communities such as the Isles of Scilly, and I assure noble Lords who have spoken in the debate that they remain available to do so in the future.

[Lord Rosser]

My Lords, is it the Government’s view that the present air and sea services to the Isles of Scilly, including the current fares and charges, are having a dampening effect on the economy of the Isles of Scilly?

[Lord Callanan]

As I said earlier, passenger traffic is increasing. The services continue to be operated on a commercial basis. I accept the points noble Lords have made about the desirability of increased connections—of course, everybody would like increased connections and better services to their communities—but there is no evidence of a detrimental effect on the community.

Electric Car Ownership

Debate between Lord Rosser and Lord Callanan

Wednesday 12th July 2017 Lords Chamber

[Lord Callanan]

We have the largest investment programme for electric vehicles in Europe and we are the largest market for electric vehicles in Europe. One in five electric vehicles sold in Europe is manufactured in the UK. We have an extremely ambitious programme. Indeed, it was started under the coalition Government, and I would have thought that the Liberal Democrats would be quite proud of that.

[Lord Rosser (Lab)]

My Lords, I presume that encouraging electric car ownership is a cross-departmental government policy, and the noble Lord is of course answering on behalf of the Government as a whole. What is the Government’s estimate of the impact of the increase in electric car ownership over the next five years and the next 10 years on the tax take from the sale of petrol and diesel fuel, and how will the Government compensate for or make up any reduction in such tax revenues resulting from increasing electric car ownership?

[Lord Callanan]

Noble Lords will probably realise that it is very dangerous for me to speculate on what the Chancellor might do in future Budgets with regard to tax levels.

Space Industry Bill [HL]

Debate between Lord Rosser and Lord Callanan

2nd reading (Hansard): House of Lords
Wednesday 12th July 2017 Lords Chamber

[Lord Callanan]

My Lords, I thank all noble Lords who have taken part in today’s Second Reading for their, as ever, very informed questions, which they were quite right to ask. The challenge and the debate are welcomed by the Government and will help us strengthen the Bill. I appreciate the broad support that has been shown for the Bill’s ambition. I reiterate the point that I have made to a number of noble Lords, both publicly and privately, that we are looking to co-operate on all sides of the House on this matter with Members from all parties and none. I am always available to discuss aspects of it and I have written to a number of Members to make that point. I thank my right honourable friend the Minister of State at the Department for Transport, who was sitting on the steps of the Throne earlier. I was delighted to see him paying such close attention to our proceedings.

I will try to address many of the points that have been made. I thank the noble Baroness, Lady Bloomfield, for her astute analysis of the UK space industry and her support for the Bill. On the issue that she raised concerning the comparable provisions to those in Section 1 of the Civil Aviation Act 1982 to promote the development of the space industry in the UK, I agree that the Government should recognise the need to promote growth in this sector. The Deregulation Act 2015 provides for a growth study to apply to functions specified by order. Statutory Instrument 2017/267 already lists functions under the Outer Space Act 1986, and we propose to amend this SI to also list functions under the Bill. My noble friend also shares the concerns of a number of other noble Lords—my noble friend Lord Moynihan also mentioned this—about over- regulation of this emerging market. This is a concern we are very alive to, and the Bill establishes a proportionate framework to support growth in this emerging sector while adequately balancing government and operator rights, the safety provisions and other factors dedicated to it. In exercising the powers in the Bill, the Government will ensure proportionality, and we intend to consult fully on all the secondary legislation required to implement these measures.

Engaging with agencies such as ICAO was raised by the noble Lord, Lord Hunt. Through the DfT and the Civil Aviation Authority, the UK has been working as part of a joint ICAO/UNOOSA space learning group better to understand how commercial spaceflight fits in with the global air navigation structure and how regulation will need to adapt to the new industry. ICAO has not yet developed detailed rules on spaceflight.

The noble Lord, Lord Hunt, also raised the issue of the carriage of nuclear materials. We do not intend to permit the carriage of any nuclear materials. Paragraph 3 of Schedule 3 allows for prohibitions and restrictions on this. There may be exceptions regarding everyday appliances such as smoke detectors, which routinely use small quantities of technically radioactive material.

We do not believe that the Bill engages obligations to produce an environmental impact assessment. Environmental impacts are heavily correlated with the type, frequency and location of spaceflight activities. At this stage, it is very difficult to ascertain specific environmental issues. For example, the sensitivities of a site cannot be known until we know the location of the spaceport.

My noble friend Lord Moynihan and the noble Lord, Lord Hunt, raised international agreements, and they were right to do so. We have put in place a number of agreements to enable commercial spaceflight in the UK. The type and nature of these agreements depends largely on the technology used, how and where it is operated and what it is used for. The UK complies with all existing space treaty obligations, and we are working to secure the agreements necessary to enable commercial spaceflight to take place from the UK.

On a point made by the noble Lord, Lord Hunt, I should say that the UK Space Agency’s international partnership programme uses UK R&D to support international development. This supports developing countries to use satellite solutions for problems such as deforestation and disaster relief. My noble friend Lord Moynihan asked about the Government’s support for the development of this emerging market in the UK, and a number of other Members raised a similar point. The UK Space Agency published details of the grant process in February, including our processes for assessing proposals and the criteria we would apply. We have engaged extensively with the parties who submitted funding proposals, to ensure that our process is transparent. The proposals were naturally submitted to the Government in commercial confidence and noble Lords will understand that I cannot disclose details now. However, I can confirm that in line with the process set out in February, the UK Space Agency is currently considering these proposals with independent expert advice, and I expect it will announce the outcome of the process later in the year.

A number of noble Lords, including the noble Lord, Lord McNally, raised questions around the European Space Agency. The Government’s policy to exit the EU does not affect the UK’s membership of the European Space Agency. The UK has a strong and healthy space economy with an international outlook. We have a long history of collaboration and participation in European space programmes and missions through the European Space Agency. The Government will continue to take an active role in European space programmes, supporting UK industry in its bids to win contracts overseas and developing our national capability to keep the UK competitive in the global market.

The issue of affirmative regulations was also raised by my noble friend Lord Moynihan. We need a proportionate approach for aviation. Section 60 of the Civil Aviation Act enables all aviation safety rules to be made by negative procedure. These safety rules are likely to be amended frequently. We aim to lay statutory instruments in summer 2019, and licences can be issued once these are in force.

The noble Lord, Lord Hunt, raised the issue of range ownership. Our intention is for these to be privately owned. Foreign ownership is not prohibited. A licence cannot be granted of course unless the applicant is a fit and proper person.

My noble friend Lord Dunlop asked me about the number of spaceports. The Bill does not restrict the number of licences that could be issued for spaceports. However, the decisions on licensing would be based on eligibility, alternative criteria requirements and safety standards. I noted his strong advocacy of Scotland, along with that of my noble friend Lord Moynihan—we have a lot of interest from Scotland, particularly given the rural nature of many of its locations. We are working closely with the devolved Administrations, but I hope that my noble friends would not expect an Englishman with Irish roots to adjudicate on this process. My noble friend Lord Dunlop also asked me about ITAR and knowledge transfer. The Bill includes provisions for entering into agreements with other countries, including the provision for knowledge transfer and to ensure that we can meet the ITAR constraints that may be imposed on us by the United States.

The issue of liabilities was raised by a number of noble Lords. We have taken the power in the Bill to cap liabilities. However, we can assure industry of our intention to cap liabilities only in circumstances for which analysis has already been carried out to determine the current liability cap policy under the Outer Space Act 1986, as amended by the Deregulation Act 2015. For other circumstances, we hope to carry out the analysis as quickly as possible to further promulgate our policy decision.

My noble friend Lord Balfe and the noble Lord, Lord Rosser, raised the issue of drones. Your Lordships will be aware that the department completed a consultation on the safe use of drones in the UK in March. We are considering the responses received and developing outcomes on this, and I hope the Government’s position will be released very soon.

My noble friend Lord Suri asked me about consultation. We will discuss the proposed structure of the statutory instruments and how this fits with industry views. We intend to publish a database containing more detail on regulatory functions including spaceflights, on existing international best practice under each of those functions, and on initial assessments of risks associated with each of these functions before and after regulatory activity has taken place. We expect that this will start the conversation on the licensing framework and can inform discussions with insurers about the level of residual risk, and therefore start to gauge the potential appetite for insurers to enter the market.

The noble Lord, Lord Fox, asked me about timetables for launch. I am slightly hesitant on this, but we intend to lay statutory instruments in summer 2019. Once these have entered into force, regulators will be in a position to accept licence applications, which we expect will be processed in roughly 12 to 18 months. Please take that with a slight pinch of salt—these things can change and there are lots of considerations still to go through—but it might help as a rough timetable.

I take the point made by the noble Lord, Lord Rosser, about the policy scoping notes. Please accept my apologies that they came out late, but I wanted to get them issued before we sat down today. I appreciate it is very difficult to read a 94-page document in advance of this debate, but the policy scoping notes are not provided for discussion: they are our initial statement of intention with regard to the use of delegated powers and the need to consult on the use of powers given their importance and impact and the need to carry out analysis and assessment of criteria for determining safe levels of risk, for example. I confirm that it is not currently our intention to take Committee immediately after the holiday break in September. It will be a few weeks after that, subject to the vagaries of the Whips, and not immediately we return after recess.

[Lord Rosser]

I thank the Minister for that comment. It had certainly been my understanding that it was not going to be in September anyway. What is of concern—given the extent of devolved powers, with further information still to come—is if on the first or second day back in October, the Committee stage of the Bill is scheduled. What I meant by breathing space was a breathing space in October before we start Committee.

[Lord Callanan]

I am not in a position to confirm that yet. As soon as I get further information from those who deal with these matters, I will let the noble Lord know. I intend to work as closely as possible with all noble Lords on this; when I have further information, I will share it with him.

On the question of licensing and insurance for mega constellations, space activities are risky in nature and the Government may be required to pay compensation for damage caused as a result of spaceflight and related activities carried out by UK entities or launched from the UK. The insurance requirement is one of the provisions in the Bill to protect the Government and the public by ensuring that there is a resource to meet such claims. We do not believe that small satellites pose the same risks to the space environment. Further work will be undertaken on the insurance requirement for the different activities licensed.

The UK has played a major part in developing the main EU space programmes—Galileo and Copernicus—and space surveillance and tracking, which have supported the rapid growth of the UK space sector and contributed directly to our prosperity and security. It is a global success story, leveraging our best talent to deliver highly innovative products and services every year, and we want that to continue if at all possible.

The noble Lords, Lord Fox and Lord Rosser, asked me about delegated powers. The Bill contains 71 clauses, 12 schedules and 100 delegated powers. This large number of delegated powers—I accept that it is a lot—is required because the commercial spaceflight environment is innovative, highly technical and fast changing. It is important that we have the flexibility given by secondary legislation to adapt to keep pace with this emerging market, as both UK regulators and the space industry develop expertise in this area. The Bill sets out the regulatory framework for a novel, dynamic and diverse industry, accommodating a wide range of different technologies. It aims to provide sufficient certainty and assurance to Parliament, regulators, industry and the general public while simultaneously having the flexibility to allow industry to grow. Early feedback so far from industry is that this flexibility is seen as vital. A rigid approach that offered limited opportunity to keep pace with either the development of spaceflight or the enhanced experience of the regulators would be restrictive for the sector.

The noble Lord, Lord Rosser, asked me about horizontal and vertical launch. He is correct: currently, we expect existing aerodromes to be most interested in conducting horizontal launch activities. I would expect vertical launch activities to be from a mixture of existing aerodromes and new facilities, subject to the strict licensing conditions that we have put in place. The noble Lord, Lord Hunt, asked me about flags of convenience. Responsible operators may be attracted to launch from the UK, but our vigorous approach to safety should deter less responsible persons.

[Lord Callanan]

I can confirm that we are in extensive consultation with industry players. My honourable friend was visiting Surrey Satellites this morning for discussion on various aspects of the Bill and its commercial operations.

I think it was the noble Lord, Lord Rosser, who asked me about international environmental obligations under the Bill. They are covered by duties of the regulator in Clause 2 and under numerous other clauses, including Clause 8. We would not grant a licence if it were inconsistent with our international obligations. We have reviewed the relevant international, environmental treaties and obligations and the national requirements that may apply to spaceflight activities, and have concluded that we do not need any specific new provisions in the Space Industry Bill, but spaceflight activities and spaceports will, of course, have to fully comply with all existing planning and environmental requirements.

In relation to cyber interference, for conventional aviation we keep transport security under constant review, and we will do the same for spaceflight activities. We already work closely with partners across government and industry on restrictions between horizontal and vertical spaceports. I hope that I have responded to most points put by noble Lords, but if not there will perhaps be an opportunity to explore these issues further.

We have covered lots of vital areas and extremely important issues in this debate. Noble Lords were right to focus on issues of safety, environment and growth of the industry. I am sure that we will return to many of these issues in Committee. Once again, I thank all noble Lords for their general warm welcome for the Bill, notwithstanding some of the concerns expressed. As I said earlier, I look forward to working with noble Lords both in and outside the Chamber to ensure that we strengthen the Bill’s provisions as it makes its passage through the House

[Lord Rosser]

Before the noble Lord sits down—I thank him for the responses to the questions raised—if he finds that he has been unable for very good reasons to respond to all the questions raised, and I will not confine this to my questions, can we take it that he will write in response to those questions he has not dealt with?

[Lord Callanan]

Of course. We have a meeting planned for next week anyway, when we can perhaps discuss these issues further. I will be very happy to clarify and give more detail on any of the points we have spoken about. With that, I conclude by asking the House to give the Bill a Second Reading.

Southern Rail: Gibb Report

Debate between Lord Rosser and Lord Callanan

Tuesday 27th June 2017 Lords Chamber

[Lord Callanan]

There have certainly been no attempts to run the service on the cheap and I do not agree with the noble Baroness that performance over the past six months has been poor. In fact, since strike action has been reduced, Southern Rail’s performance has significantly improved in the past six months. Its public performance measure, which measures performance across train operators, is up by 23 percentage points—from 62% in early December to 85% now. We want and expect that figure to improve further but, as Chris Gibb’s report makes clear, that can happen only if industrial action by the trade unions stops.

[Lord Rosser (Lab)]

In his report, Mr Gibb recommended that the Government should “urgently consider” transferring the East Croydon to Milton Keynes and Great Northern metro services from the problem-ridden GTR franchise to Transport for London in 2018. Mr Gibb also indicated that similar consideration might be given to transferring the inner-London Southern metro services in time for franchise renewal in 2021. The current Secretary of State for Transport previously made it clear that he would not transfer any further rail services to TfL, as that would mean giving control over more routes to a Labour mayor. The Government have now had six months to consider Mr Gibb’s recommendations on transferring more routes to TfL. What is the Government’s response to those recommendations—particularly those relating to 2018—and what are the reasons for the conclusions that the Government have reached on transferring more rail routes to TfL in the light of Mr Gibb’s recommendations?

[Lord Callanan]

Chris Gibb’s report sets out several reasons why Southern Rail faced problems last year, including disruption from infrastructure works, the process of introducing new trains and insufficient numbers of drivers at the start of the franchise. The Secretary of State has now ordered the operator to reduce reliance on overtime, which means that it has started to increase the number of drivers, although that has an 18-month lead time. We decided to proceed with 34 of Chris Gibb’s 38 recommendations, but the transfer of additional lines to TfL was not one that we proceeded with.

Aviation

Debate between Lord Rosser and Lord Callanan

Monday 26th June 2017 Lords Chamber

[Lord Callanan]

As the noble Baroness is aware, air quality is a national issue, and we take it extremely seriously. The final plan on air quality is due to be published on 31 July. If the Heathrow Airport decision proceeds, the impact on air quality will be taken fully into account. Moreover, Heathrow Airport has committed to moving passengers from their cars and on to public transport and has recently committed to no overall increase in car movements to and from Heathrow in the event of a third runway proceeding.

[Lord Rosser (Lab)]

I add my welcome to the Minister in his new position and I express my best wishes to his predecessor, the noble Lord, Lord Ahmad of Wimbledon, in his new role. I suspect that he will find himself spending more time inside an aircraft as a Foreign Office Minister than he did as Aviation Minister.

We have had a statement this morning about the financial support the UK Government are prepared to make available to Northern Ireland following discussions between the Conservative Party and the Democratic Unionist Party. It says:

“A detailed consultative report will be commissioned into the impact of VAT and APD—


air passenger duty—

“on tourism in Northern Ireland to recommend how best to build upon the growing success of that sector”.

Are similar consultative reports being commissioned into the impact of air passenger duty on tourism in other parts of the United Kingdom? If not, why not?

[Lord Callanan]

As someone who uses regional airports regularly, the issue of air passenger duty is, of course, high on my agenda. I am sure the noble Lord will understand that, as a Minister only a couple of weeks into his appointment, were I to start rewriting the Chancellor’s Budget proposals at this stage I would not last very long.