Civil Aviation Bill

Debate between Lord Soley and Lord Berkeley

Monday 2nd July 2012 Grand Committee

[Lord Soley]

I shall be similarly brief and just wish to add to what the noble Lord, Lord Jenkin, said. The figure involved for investment at Heathrow alone is £100 million a month. Putting that into context, you raise that on the bond market and you secure it against the airport in just the same way as someone buying a house secures a mortgage against the house. If there were appeals of the type indicated by the noble Lord, Lord Jenkin, they could have a very disruptive effect on the financial markets. I think that there is a question about whether the bankers entirely agree with BAA about the risk involved but the point is that, if the risk is there and we can deal with it fairly easily, then frankly we should. If there were an appeal, it would be a severe and difficult embarrassment, particularly if the fight became bitter. The risk of a challenge to £100 million a month investment at our major airport is not funny. I suspect that the CAA would not allow an appeal but, again, this is a case of being sure that we have the safeguards in place, as the noble Lord, Lord Jenkin, indicated, and I certainly support his amendment.

[Lord Berkeley]

My Lords, I, too, support the noble Lord, Lord Jenkin, and others on this amendment. An appeal may be very unlikely but, as other noble Lords have said, the consequences would be bad. I cannot see how anyone appealing under Clauses 24 and 25 would find it relevant to question the financing of BAA—or any other operator, for that matter. That would seem to have nothing to do with any appeal but one occasionally gets vexatious appeals. Given the size of the sums and the disaster that would ensue if investments did not go ahead because the bankers became uncertain about an appeal, this would seem to be an extremely sensible set of amendments. I, too, shall be interested to hear what the Minister has to say in response.

[Earl Attlee]

My Lords, I have listened very carefully to the points that have been raised. As my noble friend Lord Jenkin pointed out, I have met BAA to discuss this issue in some detail, and since that meeting I have considered its concerns.

First, I assure the Committee that the Government remain of the opinion that there are good reasons to include derogations to financial resilience licence conditions where these would otherwise cut across existing financing arrangements. The CAA, which will be issuing the first airport licences, has also confirmed that it supports the broad principle that ring-fencing licence conditions, which does not cut across existing financial arrangements, could bring benefits to users.

The practical effect of the amendment would appear to shut out an airline’s right of appeal in respect of an entire licence condition, even if only a small part of it contained an exception relating to financial arrangements. Therefore, the scope of the amendment appears to be wider than the reason advanced for its inclusion. None the less, it is a perfectly good amendment for us to debate. The Government remain of the opinion—

Civil Aviation Bill

Debate between Lord Soley and Lord Berkeley

Wednesday 27th June 2012 Grand Committee

[Lord Soley]

The noble Lord might be surprised that I am not entirely unsympathetic to what he is trying to achieve but I do not think that he is trying to achieve it in the best way. I will not focus on his comments about Gatwick managing to be a hub or otherwise, although I think that if you told the people around Gatwick that we were to move Heathrow’s operation there, they might be a little less enthusiastic than the airport owners.

I think the noble Lord is right that there is a problem about surface access to airports generally. However, it is not my view that the CAA is the best organisation to do this—the Minister will tell us what he thinks. This flags up the problem which a number of us have referred to over many years: we lack an effective regional government structure in Britain that could provide the surface transport necessary around airports, as well as some of the other regional infrastructure that we need. The noble Lord is right that we end up doing things in a hit-and-miss way, with a bit here and a bit there, and then join it up afterwards. Heathrow Express came in but was that really the best idea when we had Crossrail coming? There are a lot of oddities in there. In my judgment, and I will be interested to hear what the Minister says on this, if we asked the CAA to suddenly become the organisation that has to comment on and recommend surface infrastructure we, will need a much larger organisation than the current CAA.

[Lord Berkeley]

We have heard two interesting speeches. I have a lot of sympathy with the amendment but what concerns me is starting off on the basis that this would add to the regulatory duties in Clause 1. Regulatory duties are terribly important issues for a regulator to take into account. I have had certain experiences with the Office of Rail Regulation over the years. Reminding it of its duties can be a good way of making sure that it remembers and acts on them.

Of course, Clause 1(2) says that the CAA must carry out its functions,

“in a manner which it considers will promote competition in the provision of airport operation services”.

I am not clear on what we are talking about when it comes to competition. This is something that will recur in later amendments. Is it competition between those airports included in the scheme in the south-east, or all airports, or competition for the provision of services within an airport? If it is the latter, this seems a big sledgehammer to crack a nut. When the Minister replies, maybe he can put me right on that.

There is also the issue that my noble friend Lord Soley raised on surface access and whether the CAA is the best organisation to do this. He might be right or wrong but there is a similar concern with ports and airports: who pays for the infrastructure and who decides? I thought that the general policy of successive Governments was that the private-sector operator of an airport or port invested within the boundary of the facility and then expected the state, local or regional authorities, or someone, to contribute to the cost of access, except when there was a Section 106-type agreement. We certainly got into a knot in the ports sector. Sometimes there was state aid available for some things and sometimes there was not.

We got into a right old knot with Heathrow over the years. BAA contributed to the cost of building the Heathrow Express line and operating the trains. It did not seem to want the Heathrow Express trains to go down the Crossrail tunnel, which most people would have thought would have made a very good piece of public transport planning, so it will not go down it. I was told by some people from BAA yesterday that the reason for that—they confirmed this—was that the most important customers who use the Heathrow Express, particularly in first class, do not like going into tunnels because their BlackBerry does not work. They would rather go from Paddington to Canary Wharf in a taxi, where they can still play with their BlackBerry. Frankly, that is a farcical argument. It was suggested that if there was a first-class carriage in Crossrail and it went straight to Heathrow, people might use it. This attitude will adversely affect the future public transport and surface access into Heathrow. I hope it will change its attitude; it has certainly said that it will look at the situation.