Air Traffic Management and Unmanned Aircraft Bill [HL]

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage & Committee: 1st sitting (Hansard): House of Lords & Committee: 1st sitting (Hansard)
Monday 10th February 2020 Lords Chamber

[Lord Tunnicliffe]

My Lords, our four amendments in this group say more or less the same thing: the master plan may involve a need for compensation.

The Bill asks the philosophical question of who owns the airspace. There is almost a reasonable argument for you owning the airspace above what you own; that does not work so we must have some other ownership of the airspace. Clearly, the only such ownership that makes sense is that it is a national asset. It must therefore be managed for the general good.

That is a complex exercise because you must try to achieve two things: efficiency and equity. There is a problem with efficiency. Take a situation where individual entities have been working largely on their own and making optimal use of, in this case, airspace: if you recognise that it is becoming a scarce resource and therefore seek to manage it for maximum efficiency, there will be winners and losers. The problem is that, if that is so, the losers will look on it as inequitable. There are probably only three solutions to that lack of equity. One is to say, “Tough. Life is like that.” The second is the situation we have now: a suboptimal situation where you are not using the airspace to its maximum efficiency. The third is that you recognise the special position of the losers and pay compensation.

This is a difficult philosophical point. However, the problem is that United Kingdom airspace is no longer a philosophical point but a practical one. Therefore, as I said, we have tabled amendments that are similar to the Liberal Democrat ones to tease out the Government’s thinking on this dilemma and how we may take the debate forward.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank noble Lords for tabling amendments and speaking so thoughtfully on such an important subject.

I assure noble Lords that we have considered, and will continue to consider, the potential impact of the Secretary of State directing a smaller airport to progress an ACP—airspace change proposal—when it may not have sufficient funds. At this stage, I want to assure the noble and gallant Lord, Lord Craig of Radley, that to support Ministry of Defence force development, the MoD will continue to require flexible and timely access to UK airspace. Also, the master plan will consider and include detail of the military’s future airspace requirements.

In general terms, it is a long-standing policy that air passengers should fund the cost of their travel, including the cost of changes to airspace structure, rather than this being subsidised by the taxpayer. However, the Government recognise that there may be occasions when a small airport requires financial assistance to carry out some aspects of an airspace change proposal. We expect the CAA’s oversight team to work with the airport operator or other person involved in airspace change before recommending that the Secretary of State uses the powers of direction relating to airspace change proposals.

[Lord Tunnicliffe]

Does the Minister recognise that airline passengers pay quite considerable amounts of tax? It is not unreasonable for them to look to the state to provide operational efficiency in regard to that tax.

[Baroness Bloomfield of Hinton Waldrist]

I acknowledge the noble Lord’s point. This argument is not all about efficiency. I will finish my points.

At this early stage, if the airport operator expressed concerns that it did not have sufficient funding to proceed with a particular ACP, we would expect the oversight team to work with the operator to suggest alternative solutions. We expect that this could include an alternative sponsor paying for the changes. The CAA oversight team could help identify and seek support from another ACP sponsor—most likely to its benefit—whose own ACP plans depend on the change in question. An example of this is Heathrow Airport, which currently provides assistance to various smaller airports to bring forward their ACPs in order to ensure that its own ACP can be developed, due to the interdependence of their airspace.

As for alternative funding support, the CAA has created from its determined costs an airspace modernisation support fund of £10 million for the 2020-25 regulatory period. The airspace modernisation support fund, ASF, is intended to be utilised to address projects that are important to the success of the airspace modernisation strategy where there are no other appropriate mechanisms for the recovery of these costs. It should support AMS deployment, including activity critical to the implementation of the airspace master plan that ACOG has been commissioned to deliver under the AMS. There is therefore the potential to apply for funding support, which would need to be considered alongside other funding bids.

As a last resort the Government could consider, on a case-by-case basis only, whether grant funding under Section 34(1)(b) of the Civil Aviation Act could be provided to an airport directed to bring forward an ACP that resulted in adverse financial impacts. This funding would be subject to Treasury approval and offered only if it proved absolutely necessary. We consider that offering government funding on a wider basis would go against the “user pays” principle.

I assure noble Lords that, due to the steps I have outlined, we do not expect a situation to arise in which an airport operator would be put in financial difficulty by being directed to progress an ACP where there is no positive business case for one. In extremis, if this were to happen, under Section 34(1)(b) of the Civil Aviation Act 1982 the Government would be able to provide compensation to an airport for the losses it has incurred, but this would still be considered on a case-by-case basis.

[Lord Berkeley]

I was interested when the Minister gave the example of Heathrow Airport being prepared to provide the funding necessary for a small airport to propose changes. Heathrow Airport does it not exactly on a charitable basis but for its own benefit. It is a commercial outfit. It tried to do this in the last year with the flight I spoke about earlier from Newquay to Heathrow. The county council said: “We don’t want that. We’d rather stay at Heathrow than be transferred to Gatwick.”

The Minister is looking a bit bemused. My point is that Heathrow offering somebody else the funding to help make these changes is not exactly independent. It will be in its commercial interests, so it should probably be ignored.

[Baroness Bloomfield of Hinton Waldrist]

I thank the noble Lord, Lord Berkeley, for his intervention. I think he was talking about aircraft slots in that instance, which is not the subject of this debate. Also, Newquay is not subject to the ACP in the same way as other airports; it is outside the master plan.

I hope I have been able to reassure noble Lords that this amendment is unnecessary. We do not anticipate that a situation of loss will arise. Based on these points, I therefore hope that the noble Baroness feels able to withdraw the amendment.

[Baroness Randerson]

My Lords, the responses from the noble Baroness and noble Lords who have taken part emphasise that this is a very tricky issue. I certainly would not disagree that aviation and its passengers have to pay their way, and we would not normally expect aviation to be subsidised by government—although of course, the public service obligation does allow for that.

A key point from the Government’s perspective was raised by my noble friend Lord Bradshaw, who talked about detriment versus benefit. We have been looking at big airports versus little ones. But take two airports —for example, Luton and Stansted—which are close to each other and reasonably similar in size. If an arrangement has to be made on their airspace modernisation that does not please both of them equally, how will that problem be solved financially? I am slightly surprised that the Government have got this far on this issue without having a clear answer to that. Fortunately, this debate has given us the opportunity to think about it in some detail.

I welcome further developments from the Government and am happy to withdraw the amendment.