Civil Aviation Bill

Debate between Chris Heaton-Harris and Jim Fitzpatrick

Wednesday 25th April 2012 Commons Chamber

[Jim Fitzpatrick]

I do not expect to detain the House for very long on the new clauses, as they are primarily probing, but we are interested in Government amendment 19, which deals with clause 77. The apostrophe and full stop in the amendment look very curious indeed, and we look forward to receiving an explanation of their significance.

In Committee, the Minister teased us about our change of position on the Pilling report and on our support for National Audit Office oversight of the CAA. We said, in justification, that the world had moved on, and that evidence was coming forward, particularly from the British Air Transport Association at that time, in respect of the Government’s explanation of the CAA’s audit arrangements. BATA stated that it in fact involved a normal company audit to ensure that there was no fraud, whereas we were proposing an NAO audit examination of efficiency and value for money.

Only this week, Members will have seen the correspondence from Virgin Atlantic citing the example of the Financial Services Authority. The CAA will be run along similar lines to the FSA. Although the NAO is tasked with keeping track of taxpayers’ money, it has oversight of the FSA, which receives no income from the taxpayer. The CAA will be in the same position. There are clear parallels between the two organisations, so why will the NAO not have oversight of the CAA as well? Other industry-funded regulators are subject to NAO oversight, including Ofgem, which is funded by the energy companies, Ofwat, which is funded by the water companies, and Ofcom, which is funded by broadcasters, the media and communications providers. We are trying to address that anomaly in new clause 4.

Moving on to new clause 5, the Minister stated in Committee that she had written to the leadership of the CAA to say that she expected it to

“lead the Authority in such a way that it: is run efficiently and effectively, thereby minimising the cost on the aviation sector, and providing value for money”.––[Official Report, Civil Aviation Public Bill Committee, 13 March 2012; c. 344.]

We received evidence at the time, however, from British Airways, which stated that

“the CAA has scope to make significant improvements in efficiency”.––[Official Report, Civil Aviation Public Bill Committee, 13 March 2012; c. 342.]

That statement was referring to the CAA before it got its new powers and responsibilities, which placed even greater pressure on it. My hon. Friends the Members for Liverpool, Riverside (Mrs Ellman) and for Blackley and Broughton (Graham Stringer) raised this matter in Committee several times, and they might well try to catch your eye again today, Madam Deputy Speaker, in order to reinforce the point.

In Committee, the Minister pointed out the technical flaws in our original amendment, so we have tidied it up. We have taken her advice and ensured that the new clauses are more appropriately worded. She also said that she would reflect on the matters that we had raised in Committee, and we would be grateful if she would share her conclusions with the House today.

[Chris Heaton-Harris]

Before I start, may I say in passing how much I admire the rulings of the Chairman of Ways and Means? He is a great gentleman and I apologise for having been told off by him earlier.

The Minister will know that in Committee I raised one point about regulation. As she will recall, I raised the concerns of a very big business and a large industry in my constituency—DHL and the industry trade body, the Association of International Courier & Express Services—about the information provisions. I thanked the Minister then and I thank her now for the positive comments she made about the express services sector. As she acknowledged, DHL is a very significant employer in my constituency, and obviously a key player in the wider UK exports market.

As the Minister knows, the express sector as a whole is broadly supportive of the Bill and wants to work with the Government and the Civil Aviation Authority to ensure that the security aspects are implemented effectively and in consultation with all stakeholders. However, AICES members are concerned that express services have been incorporated into the information on services provisions, which they feel are not appropriate to the sector.

First, express services operate in a different and a very competitive marketplace, and failure to provide the necessary information to their customers would simply result in those customers moving their account. It is a very fluid market indeed. As the Minister acknowledged in Committee, this is mainly a business-to-business sector rather than a business-to-consumer sector, which makes it very different from passenger traffic on airlines. In consequence, the level of regulation required is also very different. I know that the Minister has acknowledged this key difference in the sectors being regulated—between air passenger traffic and express—and it would be helpful to know whether she believes that the CAA shares her views.

Secondly, as I said in Committee, Ofcom already has the relevant powers on the provision of information on express services under the enabling provisions of the Postal Services Act 2011. I was concerned about a possible duplication here. The enabling provisions under section 51 of the 2011 Act could further extend to cover under subsection (3)(d)

“the information that is to be made available by postal operators to users of their services about service standards and about the rights of those users”,

and under subsection (3)(e)

“anything else appearing to OFCOM to be necessary to secure effective protection for those users.”

That is effectively duplicated in information terms in the Bill. Under this particular section, express services constitute postal operators.

Ofcom has judged that there has been no market failure in the provision of information and that the powers in the Act are not required to be used at present. They are still there, however, so conferring the CAA with the same powers will lead to regulatory duplication. Existing legislation already provides for the required “future-proofing” that we talked about so much in Committee.

Finally, but crucially, the express sector is different from air passenger traffic because the mode of transport is not relevant to the consumer. The key factor is the time required to get a package from A to B. How it gets there is completely irrelevant. Most of the time it will be done by air in this particular sector, but sometimes it will be done by truck—and sometimes, perhaps, on public transport. Obviously, the same cannot be said for air passengers unless they are unfortunate enough to land on the wrong runway at Heathrow and want to get to terminal 4. That fact means that the consumer would expect Ofcom, not the CAA, to be the relevant regulator. Making the CAA the regulator for the provision of information services in the express sector would be confusing, and unlikely to bring any benefits to consumers.

I hope that the Minister will comment, will look again at the issue, and will perhaps even consider meeting me, along with representatives of the Association of International Courier & Express Services, to discuss the association’s legitimate concerns.