Local Government Finance Bill

Earl Attlee Excerpts

Monday 16th July 2012 Grand Committee

[Lord Tope]

I do not want this to turn into too much of a dialogue, but I said that I welcomed the amendments because it is important that we have this debate. Personally, I do not support them. They will not come to a vote today, but in the unlikely event that they come to a vote in October, which will be a bit late, I will not support them. I am not urging people to press them or not press them. As I said, I actually welcomed the amendments so that we could have the debate. I expressed a view on it, as we all do.

[Earl Attlee]

My Lords, we have had an interesting discussion on the timing of the implementation of these reforms. As the Committee knows, this reform is about delivering real decentralisation and contributing to deficit reduction—a contribution that must start from 2013.

The funding for the scheme is also a key component of the new business rates retention system. We are not reinventing a whole new system but providing flexibility and not necessarily complexity for councils to deliver a saving and to tailor schemes to their own circumstances with minimal prescription.

In answer to many Members of the Committee, we are building on our statement of intent and we are today publishing two key sets of regulations, particularly about prescribed requirements. Those regulations are coming out today in draft, which will allow councils to press ahead with the implementation without looking over their shoulders to central government prescription. That is why I am confident in saying that councils will be ready to implement these reforms for April 2013.

We need to do everything that we can to allay any concerns. It is interesting to note that experts in local government on this side of the Committee seem to believe that these changes can be implemented, including with the necessary consultation. The noble Baroness, Lady Hollis, told the Committee that district councils cannot meet the timescale because they need to consult twice.

[Baroness Hollis of Heigham]

I am sure that other councils may have had their software packages back in May, but from the county about which I have a little knowledge, I understand that the majority of councils use the same software supplier and it did not come through until nearly the end of June. That means that the proper consultation could not be gone through until councils had already decided on the scheme. That is the dilemma. Both factors were operating: the late supply of software through no fault of their own, and the fact that as a billing authority and not a unitary authority they in effect have two rounds of consultation. Again, that is perfectly proper, but you have a pincer movement on the timetable.

[Earl Attlee]

My Lords, I will carry on for a moment.

Just to be clear, all billing authorities required to bring forward a scheme must consult with their precepting authorities and with the public. That is as much the case for London boroughs or unitary councils as for district councils. Taken together, Amendments 72, 78, 79, 85 and 88A would delay the start for localised council tax reduction schemes by a year, pushing back introduction from 2013 to 2014. I am sure that noble Lords only intended to test the Government’s policy and, like my noble friend Lord Tope, welcome the debate.

Let us be absolutely clear. The saving scored in the spending review has to be found, as pointed out by my noble friends Lord Jenkin of Roding and Lord Tope. This is a key element of our deficit reduction plan that we must meet. Delaying the implementation of localised council tax reduction schemes would come with a cost.

The noble Lord, Lord McKenzie, skilfully queried what we would use these cost savings for. He talked about refuse bins. However, he will be aware that my right honourable friend the Secretary of State for Transport has announced a major programme of investment in our railway system. We can either spend money on council tax benefit or take a little cut on that and a little cut elsewhere, then put it all together in order to spend money on developing our infrastructure and promoting growth in the United Kingdom.

[Lord Beecham]

Will the noble Earl remind me of how much is being devoted to deferring the increase in fuel duty?

[Earl Attlee]

My Lords, that is always the danger of straying from local government affairs. My point is that the 10% cut in council tax benefit is painful, and I do not deny it, but we have very good projects to spend the money on.

Localising support for council tax is an important localist reform that gives local authorities a greater stake in the economic future of their local area and stronger incentives to get people back into work. It helps to make local authorities fully accountable for decisions over council tax levels and strengthens the incentives to drive down fraud and error. Localisation also has the advantage of giving local authorities real control over how a reduction in funding is managed. It will enable local authorities to offer council tax reductions that match local circumstances and local funding while supporting local policies. Local authorities will take different approaches to managing the reduction, but that is localism in action. Local authorities know their services, their taxpayers and their vulnerable groups, and are best placed to take decisions that affect them.

Delaying localisation does not mean that there will be no saving. There will still be more than £400 million savings to find in 2013-14. Funding for council tax support makes up a significant amount of the local share in the retained business rates system. Not giving local authorities control over this funding from the outset will significantly reduce the funding in the local share and so reduce the incentive that retained business rates are intended to deliver. I know that many noble Lords are supportive of the proposals to enable local authorities to keep a share of the proceeds of growth and would be keen to see local authorities benefit even more from growth. Not localising council tax support would have the opposite effect.

Concerns have been expressed about local authorities’ readiness to implement the schemes. I should like to remind the Committee of the number of significant steps taken by the Government to ensure that local authorities are well placed to press ahead with the development of their local schemes. We have paid £30 million of initial funding to help meet the costs of planning and analysing draft schemes for both billing and precepting authorities. We have provided a free online calculator to help local authorities analyse the potential impacts of their proposed schemes. We have published statements of intent, setting out the details of what will be covered in secondary legislation. We have issued a consultation setting out provisional funding allocations for all authorities. We have published guidance to ensure that local authorities understand their existing responsibilities in relation to vulnerable groups, which I know was a very important point for many noble Lords. We have published guidance setting out the general principles of supporting work incentives to help local authorities design support.

The Government have been clear that local authorities must ensure that they are on the front foot in preparing for this reform. There are things that councils should be doing to help in their preparations: understanding the circumstances of those in their area who currently claim support; ensuring that elected members are aware of the decisions they will need to take; engaging with precepting authorities, such as police and fire authorities; and preparing for consultation.

My noble friends Lord Jenkin and Lord Tope, the noble Lord, Lord McKenzie, and the noble Baroness, Lady Hollis, talked about IT issues. Noble Lords are right to suggest that local authorities and IT suppliers are already getting to grips with the problem. However, there is no need to go for a new and complex system in year one. I would add that if I was an IT supplier, I would point out initially how difficult and expensive it will be because it would be a sensible thing to do in order to try to encourage delay, but noble Lords know that we cannot delay.

The Bill was amended on Report in the other place to make clear that local authorities are able to consult precepting authorities, produce a draft scheme and consult more widely—all before the Bill receives Royal Assent. This was intended to support local authorities in their preparations. I am pleased to note that some local authorities, including that of my noble friend Lord Tope, have already embarked on a public consultation on their schemes.

The noble Lord, Lord McKenzie, talked about the complex matters that LAs will have to take into consideration. However, it seems that LAs are already getting stuck into their work and that it is not an insurmountable obstacle. Local authorities are best placed to take decisions about who should receive support with their council tax. Councils should have the flexibility to manage the reductions in central funding that are crucial to our plans for reducing the deficit. Local authorities should also have a strong incentive to grow their economy by bringing as much funding as possible into the retained business rates system as early as possible and giving them every reason to go for growth.

The noble Lord, Lord McKenzie, asked whether the universal credit details will be available. He is right to suggest that they will be available in the autumn. He also touched on the default scheme. LAs could opt to use the default scheme, but perhaps with some amendment to secure some easy savings. Local authorities could choose to develop a more sophisticated scheme later, but that is a choice that they will have to make.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his response and all noble Lords who have spoken in this debate, particularly my noble friends who spoke in support of the proposition. The noble Lord, Lord Jenkin, and the noble Earl, Lord Lytton, passed on their concerns about the apprehensions that still exist out there over the readiness of all local authorities to deliver.

I shall comment first on the contribution of my noble friend Lady Lister, who made a crucial point. Designing systems of benefit can be complex. People’s lives are complex. How does the Minister deal with the point that my noble friend raised about the lack of child poverty strategies? The Government themselves have issued literature that says that councils should have regard to their obligations under the Child Poverty Act. However, here we are, knowing that there is a big gap in the system but the Government want local authorities to press ahead irrespective of that. That issue alone opens up the prospect of judicial review in a whole raft of cases.

No one is arguing—I certainly am not—that local councils are simply sitting back and ignoring all this. I accept that local councils have a strong track record of delivering in very difficult circumstances. However, in something such as this, surely the key point concerns the time capacity of all councils to be able to deliver. The consequence of councils not being able to deliver, particularly those that are less well resourced, is that they are more likely to have to fall back on the default system or to have it imposed on them. That is a double whammy for them: not only do they not have sufficient opportunity to look at local needs but they must pick up the 10% funding tab. That seems particularly iniquitous.

My noble friend Lord Beecham made the point that we are not dealing here with a national scheme. Local authorities that are dealing with the process will perhaps want to weigh one scheme against an adjoining scheme. My noble friend Lady Hollis talked about the issues of timing in two-tier authorities. My understanding is that in that first round of engagement, even though there does not have to be formal agreement between an upper tier and a district or authority, there is meant to be a meeting of minds and a process by which it can take place. That has to be a real process and it takes time. That is a different process from reaching a conclusion and then consulting widely among a range of people on its outcome. I suggest that that requires something much more substantial.

We recognise that deferral would mean that the so-called localisation of council tax could not deliver the saving that the Government are looking for in that way for 2013-14. I simply reiterate the point that the Government have been adept in other ways in finding funding for this or that project. Looking across the whole of government, I find it difficult to believe that something of an equivalent scale could not be delivered in this case.

I object to the characterisation of what is happening as a little cut here and a little cut there. We are talking about reductions in support for some of the poorest people in our communities. I would not characterise that as a little cut here and there.

The Minister said that nobody was required to reinvent a whole new system, but the reality is that we have a whole new system coming down the track called universal credit. We are not arguing here that council tax should be part of that, although the more one goes into the detail the more blindingly obvious becomes that argument. But that is not what this amendment is about—it is trying to probe the interaction and relationship between universal credit and any revised council tax benefit system. There are lots of points where it ought to interact, if we want to have issues around work incentives properly structured.

The IFS booklet—and what on earth would we do without the IFS?—has a complex chapter on this. But if the details of universal credit are not going to be known until the autumn, which the Minister has confirmed, how can local authorities properly take the detail into account in devising their schemes and consulting on their schemes? It is a practical impossibility. Quite apart from the time needed to understand and test what those interactions with that system should be, it seems entirely wrong to say that it is irrelevant to the timing when it is fundamental.

The Minister did not answer the point about what components of universal credit were at the moment incorporated in the default scheme that the Government are going to impose. We know one aspect of it—that universal credit will take account of income—but that is just one of the possible interactions. What are the consequential changes to the allowances, the housing component and a range of other things? Presumably, the Government have taken a view at least in respect of the default scheme. It would be helpful to know the detail.

The noble Lord, Lord Palmer, said that we should not put off until tomorrow what we could do today. I do not disagree with that, but we are not asking for time for local authorities to sit back and do nothing. We are asking for some local authorities that will struggle the most to get a meaningful system in place to have a bit more time to get it right. So we do not judge this by the well resourced and bigger councils that do not need to worry about the cost of it because they have plenty of second properties on their patch and can generate extra revenue from that. The smaller and more challenged resource-constrained are the ones that we particularly speak for in this amendment.

I see that we will not have a meeting of minds on this across the Room this afternoon—

[Earl Attlee]

My Lords, I am grateful for the opportunity to contribute again. The noble Baroness, Lady Lister, talked about the complexities of the scheme. Yes, I understand that it is a very complex area and there are lots of factors to be taken into consideration. However, if a local authority wants to have a complex scheme, it can have one in later years, and it can go for a simple scheme perhaps based on the default scheme in year one.

The noble Baroness raised a very interesting point about the child poverty strategy. We are merely stating that there are existing strategies that councils need to consider in developing schemes. However, she raised a very interesting point about absent child poverty strategies. I will look into the issue and come back to her.

[Baroness Lister of Burtersett]

I thank the Minister for that. I was talking about the absence of a needs assessment in particular, because if you do not have a needs assessment you cannot assess the needs of the people whom your scheme is supposed to help. I should add that there is no such thing as a simple means-tested scheme.

[Earl Attlee]

I was just about to say that the absence of these schemes is no reason not to go forward with the scheme.

The noble Lord, Lord McKenzie, was concerned about universal credit details not being available until the autumn, but I am confident that local authorities will have all the information that they need from the statement of intent that we have already made and the regulations that are coming out in draft today.

[Lord Smith of Leigh]

My Lords, I have received an e-mail that tells me that a factory employing 100 people on my patch is going to be closed, so that will give me more problems with the council tax benefit. Local authorities have got into trouble over reductions in expenditure in local authorities through legal challenges. Usually, consultations have not taken account of the equal rights of all groups of people, and that is really important. We need to make sure that we do not fall into this trap and create a minefield. Could the Minister give us a timescale for when the department intends to produce the default scheme? I think that might be helpful.

[Earl Attlee]

We have published the default scheme now.

[Baroness Hollis of Heigham]

Today?

[Earl Attlee]

Today, yes. I remind noble Lords that, in respect of the difficulties of devising schemes, we have provided £30 million for local authorities.

[Lord McKenzie of Luton]

I pick up on the point about complexity. I do not think that local authorities are anxious to devise complex schemes; they are trying to devise relevant schemes, particularly those that are focused on poorer members of their communities. It is good news that the default scheme details have been issued today, but I struggle to see how they might be comprehensive if some key aspects of the universal credit are not going to be available until October. Surely how those two things sit together is pretty important for the development of schemes.

The Minister said that the regulations issued today would cover issues about the protected arrangements. Perhaps he could answer a specific question. How does the protection given for pensioners apply to households with two people entitled to state pension credit if one person has reached that age and the other is below that age?

[Earl Attlee]

On the point about universal credit, we are aware that the approach in the regulations needs further refinement, and we will continue to work with the DWP on the detailed approach to be able to set this out for LAs in the autumn. However, we believe that that provides a clear general indication of how we intend income to be taken into account in the default scheme, which is intended as a legal back-stop and not a model scheme. While LAs will be free to adopt or build on the approach taken in the default scheme regulations, they will not be compelled to do so if they bring forward their own scheme. I hope that that helps the noble Lord.

[Lord McKenzie of Luton]

I understand the point. If the details of the universal credit that we know can be taken account of only generally in relation to the default scheme, which may or may not help the authorities that want to rely on that, surely it is equally the case for any other tailored scheme that a local authority may wish to devise. How can it consult on something that inevitably is incomplete? We are trying to get an answer to that point. I am not sure that we shall succeed this afternoon. We have given this matter a good airing. I believe that the noble Lord, Lord Tope, said that we should make the best we can of this. Frankly, that is not good enough when we are devising detailed benefit schemes. We ought to have a higher standard than that. I think that is being denied to some local authorities by this timetable. For the time being, I beg leave to withdraw the amendment.

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[Lord Beecham]

My Lords, I suppose there are two aspects of effectiveness that councils will need to address. The first is the sheer practicability of the scheme and how it can be delivered. We have heard some of the problems that councils face, but assuming that the software goes all right and the mechanical side of the process is, as it were, addressed, there is another issue on which I would have thought it would be very desirable for local authorities to engage with their staff, and that is the assessment of the impact of different proposals within the schemes. The Government are rightly saying in the context of this Bill that councils will need to address the equalities issues and we have heard some of those raised this afternoon, but they will also need to weigh the interests of one group in the community against another group.

That is not a matter for officers in the finance department, with all due respect to them. It should involve the relevant officers and, of course, the elected members dealing with the different groups in the community. It might be social workers looking at the needs of the disabled or children’s services, or welfare rights officers or other officers dealing with different groups in the community—the Armed Forces covenant might apply, for example, to which the Government draw attention. There needs to be collaboration on the policy side rather than on the purely administrative side, as was implicit in my noble friend’s amendment.

Bearing that in mind, I wonder whether the Government have actually had any discussions beyond the consultation process in general with relevant bodies in the professions about the way in which these changes might impact on particular client groups and particularly on the equality duties to which they are at pains to draw the attention of local authorities. Both at the individual local authority level and at the national level where people are professionally engaged with these issues, I would have thought that a proper consultation is needed in order to assess the impact of the various possibilities that will be canvassed and allow the best possible informed decisions to be made at local level, given that the cost of any concession will be borne by other groups within the pool of people eligible for council tax relief. This is a transfer of a burden from the taxpayer as a whole to other council tax payers in the community, particularly those receiving the benefit. These are very complex matters that have to be taken into account, and they should be informed, as I said, on the basis of the experience and knowledge of those working with the groups particularly in that vulnerable category to which the Government draw attention.

[Earl Attlee]

My Lords, I thank the noble Baroness, Lady Donaghy, for her explanation of her amendment. I strongly agree with her sentiment but I cannot agree with the amendment, which would require local authorities to consult staff on the effectiveness of the scheme. Front-line staff involved in the administration of council tax and council tax benefit will have important insights into the delivery of these services and awareness of the people affected by them—a point made by the noble Lord, Lord Beecham. I would hope that all managers, as a matter of routine, would seek the views of staff when taking decisions about services. This is important for ensuring quality services and it is important for staff morale. This is as true for local authorities as it is for any other organisation. From my experience, if you do not consult effectively, you will not lead effectively and therefore you will not have desirable outcomes.

The noble Lord, Lord Beecham, asked whether the Government have consulted professional bodies. I am sure that there is a wide network of contacts between my department and the relevant professional bodies.

However, I do not think it appropriate to make this consultation a requirement on local authorities in relation to council tax reduction schemes. We have to move away from hand-holding and we have to trust that local authorities have the insight to consult their staff, as I am confident that they have. To impose this requirement would add another administrative burden on local authorities that would be nothing other than unnecessary red tape. I therefore hope that the noble Baroness will feel free to withdraw her amendment at the appropriate point.

[Baroness Donaghy]

I thank the Minister for his reply. Naturally I am disappointed that he is not willing to put the proposed amendment into the Bill. However, I welcome his very positive statement about consulting staff and I think that that will be seen as some reassurance. In that spirit, I agree to withdraw my amendment.

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[Baroness Donaghy]

It bears repeating that council tax benefits are in-work benefits. Nearly 750,000 people are non-passported recipients of council tax benefit and in work. It is the most comprehensively claimed benefit, despite the fact that a large number of eligible older people do not claim. People who do claim are in low-paid and often part-time work.

It is government policy to rationalise work incentives, which is why universal credit is being introduced. I realise that there is a genuine debate to be had about whether council tax support should be an integrated part of universal credit or whether it should be localised, as the Government are proposing, but it must be accepted that allowing council tax support to vary throughout the country and introducing it before universal credit undermines any simplification and will make it impossible to judge how well work will pay.

The DCLG advice to councils is:

“The system”—

that is council tax support—

“should not be too complex as to create a disincentive to work”.

The noble Earl said earlier that the Government had given the councils minimum prescription, but that is one of them: work incentives should not be undermined. That statement is the only reference to work incentives. Like TIF 1 and TIF 2, which we discussed the other day, this important topic is not on the face of the Bill. The purpose of my amendment is to ensure that it is central to any council tax support system, so that one government department does not undermine the intentions of the whole Government.

Bearing in mind what the noble Lord, Lord Tope, said about not making Second Reading speeches, I believe that there are at least seven disincentives to work contained in the many council options papers that I have seen. Working people need more transparency and more certainty and I believe that by pointing out these seven work disincentives I am offering an opportunity for the Government to avoid them.

The first is the 10% cut, which noble Lords have already spent considerable time on, so I will be brief. Let us take for example Rossendale, with 44% of pensioners and 56% of adults of working age. A 10% cut will lead to a 20% cut in council tax benefit. Once vulnerable groups are defined and exempted, the cut will be “in excess of 20%”.

Being presented with a council tax bill or an unexpected increase in that bill could be the pivotal point for some working families in deciding that work does not pay. Where are the greatest numbers of working people who will be affected? In County Durham, there are 5,810 working recipients of council tax benefit, more than 8,000 in Manchester, more than 6,000 in Liverpool and 3,500 in Wigan and Salford each. Those are some of the poorest areas in the country. Yet South Bucks has only 420 and the City of London 40. That is a redistribution of wealth which is shameful and which will have consequences for employment and the administration of justice when we see the courts being clogged up chasing large numbers of puny arrears.

The second disincentive to work is an interesting illustration of the mixed messages that we get from the Government. I do not know if it is muddled thinking, doing insufficient homework, the left hand not knowing what the right is doing, speaking before brain engagement, plain doublespeak or a combination of some of the above. Frankly, I do not care, but let us take the option being considered of non-dependant deductions being further exploited. In the June 2010 Budget, the Government decided to upgrade non-dependant deduction rates in three stages. They had been frozen since 2001-02. The intention was to reduce fiscal deficit and, according to the impact assessment by the DWP, to,

“provide an expectation that adults make a reasonable contribution towards their housing costs”.

One objector said:

“If a family living on benefits wants their adult child to stay living at home they are actually penalised—as soon as that child does the right thing and goes out to work. You get what’s called a non-dependant deduction, removing up to £74 off your housing benefit each week. I had a heartrending letter from a lady in my constituency”—

there is a hint there—

“a few weeks ago who said that when her son leaves college next month, her housing benefit will drop significantly, meaning her family may have to split up. This doesn’t seem right”.

The objector was the Prime Minister in a speech only two weeks ago, but councils are considering making this worse as one of their options.

The third disincentive would be by increasing tapers, let us say to 30%. I know that we have had some discussion of this already. Anyone on housing benefit and council tax support will have a marginal tax rate of 95%—65% taper on housing benefits plus a 30% taper on council tax support. In other words, they would keep 5p of every extra £1 pound that they earned. That is not very encouraging, is it?

The fourth disincentive being considered is to remove working tax credit income disregards by varying amounts. One local authority has said:

“Government wants us to incentivise work so this would be against their policy intentions. However, the Working Tax Credit income disregards in UC are sufficiently generous as to allow for a reduction in the earned income disregards applied to local CTS”.

That particular authority estimated that working people could lose between £2.21 and £4.43 per week.

The fifth disincentive is to make workers with income greater than needs contribute more through increasing the rate of withdrawal from 20% to, say, 25%, 27.5%, or 30%. All working people in this category would lose between £0.64 and £1.12 per week.

The sixth disincentive is capping support at the level for band D, E or F. That would have the greatest impact on the older worker and those with children. The asset-rich older person of working age may have to downsize to make ends meet. The difference could be a reduction of £3.72 to £4.10 a week.

The last disincentive, the Committee will be pleased to note, is that everyone pays something, usually 20% to 25%, which is a return to the poll tax but without anything included within income support, jobseeker’s allowance or ESA to cover it. That would hit the poorest hardest and add to local authority billing costs as they clog up the courts with chasing bad debts.

No one is claiming that dealing with poverty-trap issues is easy. Neither is it easy to be clinging on to the job market by your fingernails, trying to raise a family and provide a roof over your head. When I arrived in Westminster two years ago, I was shocked by the ease with which this world swallows its own propaganda. In my world, I have close family members whose job prospects are grim and friends who rely on Mr Beeston’s payday loans, where one unexpected event tips the balance between managing and not managing. The Government have to show that they are serious about keeping low-paid working people afloat and I hope that the Minister will accept my amendment in the spirit in which it is intended. I beg to move.

[Earl Attlee]

My Lords, I thank the noble Baroness for explaining her amendment, which she has done with some useful detail. I have plenty to say, but perhaps I will have to write to her on some of the detail after consulting my officials.

Amendment 74 would require local authorities to have regard to the impact of their scheme on the work incentives for those in work or actively seeking work. The noble Baroness is right to point to the importance of local schemes supporting incentives to work. It is of the utmost importance that people get more overall income in work than out of work and that people should get more overall income from working more and earning more. It will not be in the interests of local authorities to design schemes that discourage work, locking their residents into low aspiration and poverty. Making local authorities financially responsible for the provision of support gives them a real stake in getting people back into work.

To aid local authorities in designing schemes that support positive work incentives and the objectives of universal credit, we have already published guidance setting out the key design features that could support work incentives and which local authorities will want to consider in designing their schemes. The guidance considers the main design features of local schemes that can be used to support work incentives, including how income from universal credit is treated, how other income is treated and the point at which support is withdrawn. It also considers other factors that can influence decisions about work, including how the scheme is administered and communicated to applicants.

Data sharing related to universal credit between the Department for Work and Pensions and local authorities will be an important way in which local authorities can ensure that their schemes work with the grain of universal credit. The Department for Communities and Local Government and the Department for Work and Pensions are working together to ensure that the necessary data-sharing arrangements can be put in place. We want to ensure that, where possible, local authorities continue to have access to the same data on claimants of existing benefits and will be provided with a breakdown of the full universal credit award before the application of any tapers or sanctions, together with the final amount that the claimant receives.

Furthermore, the Government are doing everything in their power to reduce the risk of potentially unhelpful interaction between local schemes and national universal credit. Indeed, changes have already been made to the proposed design of universal credit to increase some income disregards. These changes will help to reduce the risk of “dual tapering”, where council tax support and universal credit are withdrawn simultaneously, leading to higher marginal deduction rates—the rate at which the gains from increased earnings through work are reduced by the withdrawal of benefits and increased tax—and will help to ensure that the incentives to enter work remain strong.

Finally, as I have already mentioned, we are today publishing draft regulations that set out how we propose to treat universal credit income under the default scheme. We will continue to work with the DWP on the detail of the approach, but we believe that it provides a clear general indication of how we intend to take UC income into account in the default scheme. Local authorities will be able to consider whether to take this or a similar approach. With those explanations, I hope that the noble Baroness will feel able to withdraw her amendment.

[Lord McKenzie of Luton]

The noble Earl referred to data sharing, in particular to help in the transfer of people who otherwise would be in receipt of 100% benefit under the existing system. I think that all the documentation we have seen talks about the Government working on these matters. Can the noble Earl say when that process is going to be completed? Will the arrangements for data sharing definitely be in place by 1 April 2013? I think that he also said that the Government are doing “everything in their power” to ensure a sensible outcome so far as universal credit is concerned. One would dispute that because the phrase “everything in their power” could include putting council tax benefit where it belongs as part of that. But the noble Earl said specifically that they have addressed the issue of income and how that is to be dealt with—I think we understand that, because we touched on it in an earlier session. What other adjustments so far as universal credit and its interrelation with other schemes are concerned are currently being contemplated? Will the Government be publishing any thoughts, analysis or guidance?

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[Baroness Hollis of Heigham]

Is the Minister saying that, in the default scheme, UC will be counted as income? He has had the advantage of seeing the regulations. We have not seen them so I just wanted some information. Is he assuming that UC will be included?

[Earl Attlee]

My Lords, the answer to that question is, I understand, yes. My answer to the noble Lord, Lord McKenzie of Luton, is that clearly the arrangements for data sharing will have to be in place by 1 April, otherwise it will not work. We are working to ensure that the data-sharing arrangements are in place at the appropriate moment. Universal credit will come in next October.

[Lord McKenzie of Luton]

Is the Minister saying that the appropriate moment by which the arrangements have to be in place is October?

[Earl Attlee]

My Lords, I think that this revises my initial comments. Universal credit will come in next October.

[Lord McKenzie of Luton]

Perhaps I may press the Minister on that point because it was originally understood that in October next year all new claimants would be claimants for universal credit. There seems to have been some change to that and this issue is obviously important because local authorities have to assess the volume of claims that they will deal with. Can the Minister confirm that the arrangement is that all new claimants coming through from October 2013 will go straight into universal credit and not into JSA, ESA or income support?

[Baroness Hollis of Heigham]

The legacy cases will spend two, three or perhaps four years coming across.

[Earl Attlee]

The noble Lord asked some complex questions. The noble Baroness mentioned legacy claims. It will be best if I write in detail on all those points, including the noble Baroness’s point about legacy claims.

[Baroness Donaghy]

I thank noble Lords who have contributed to the debate and the Minister for his reply. It was beginning to feel a bit like Google Earth, whereby you home in on one house that will be in receipt of universal credit next October. It will be interesting to see exactly how many are in receipt of it by next October. I am disappointed of course that the Minister is not willing to put these provisions in the Bill. I think that I understand why, because it is a contradiction in terms to call this scheme a work incentive scheme. All the points that I have raised exposed that. Nevertheless, I realise that we are not going to have a meeting of minds on this and I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Beecham]

In all events, it is fairly modest, but that will also disappear unless it is retained. If it is retained we come back in a vicious circle to the fact that it will be retained essentially at the expense of the working poor, whom, I say with due respect to the noble Baroness, Lady Hanham, we constantly hear that this whole scheme is designed to incentivise. That mantra is wearing a little thin. It is absurd to imagine that the whole burden can simply be borne by those people. It may have to be, if the Government require councils to do it or if councillors feel obliged to do it, because it is unlikely that they would be able to fund any move towards meeting the needs of this or any other group.

However, it is clear that authorities should consider the impact of the scheme on disabled people in their areas. I would like to know whether the Government have conducted any kind of analysis and tried any kind of modelling, with or without the assistance of individual local authorities on how this might work in practice. If they have not, frankly, that would be disgraceful. They may have and, in that case, I commend them. But there is no evidence in the impact analysis that anything like that has happened. In a matter of this significance, for this group in particular but not only for this group, that is simply not good enough.

At all events, these amendments at least focus some attention on the issues. They have the disadvantage of not supplying the answer in terms of the financial resources to meet those needs—and again one would have to go back to the Government. When it suits the Government, money can be found. As I implied in the question to the Minister, who is not departmentally responsible for these matters although he is something of a transport buff, money has been found to fund the deferment of the increase in fuel duty. There may or may not be good reasons for doing that—perhaps there are, but it was found. Apparently, the somewhat hapless Treasury Secretary believes that there was significant under-spending across government from which that money was drawn. Perhaps some of that money might have been used to moderate the impact of these provisions. Again, there was the other obsession of the Secretary of State about weekly bin collections, for which £250 million was offered. I gather that not much of it has been accepted, so there may be a saving there. As my noble friend pointed out earlier this afternoon, that money might be used either for the purposes of delay, which does not seem to be likely to commend itself to Ministers, or at least to help meet the needs of the very groups which they will apparently be advising local government to protect as far as possible.

The Government need to be honest about this. If they are not going to provide resources, they should acknowledge that local authorities will find it extremely difficult to do so. They should not be raising expectations that it will be done easily, if at all. That would be a shabby way in which to proceed, and I know that the noble Earl, Lord Attlee, and the noble Baroness, Lady Hanham, are not politicians of that stamp—absolutely not. But those with greater responsibility than, unfortunately, lies within their powers, need to demonstrate that that is not a course that they wish to pursue.

[Earl Attlee]

My Lords, I thank the noble Baroness, Lady Sherlock, for the explanation of her amendments. Noble Lords have asked a number of questions about specific groups and local authorities’ responsibilities in relation to those groups. I want to be clear that the legal requirements that established those duties, which your Lordships have already considered as part of legislation, will remain. As accountable public bodies, local authorities will need to continue to take account of all relevant duties. I am grateful to noble Lords for bringing some of those duties to the attention of the Committee.

The noble Lord, Lord Deben, asked me some interesting questions about the organisation of the machinery of government. I am confident that I know how to exercise that machinery but it is rather above my pay grade to try to change it by addressing the issues that he raises. The noble Lord used the term “above my pay grade” after I had drafted my speaking notes on his contribution.

The noble Lord, Lord Beecham, talked largely about financial issues. It is important to remember that, across local government spending, this is only a 0.4% reduction in the budget.

[Baroness Hollis of Heigham]

Is that on top of 30% cuts already?

[Earl Attlee]

The 0.4% refers to these specific reductions.

The noble Lord, Lord Beecham, tested us on the overall government policy. I am fully signed up to all government policy, as the noble Lord will know.

Amendment 76 would require local authorities to have regard to the impact of their scheme on disabled people in their area. This is an important consideration and local authorities already have responsibilities in relation to disabled people. These include their responsibilities under the public sector equality duty in Section 149 of the Equality Act 2010 which requires authorities, in the exercise of their functions, to have due regard to equality between people who share a relevant protected characteristic and people who do not share it. Equality legislation explicitly recognises that disabled people’s needs may be different from those of non-disabled people. Therefore, public bodies should take account of disabled people’s disabilities when making decisions about policies or services. This might mean making reasonable adjustments, or in some cases treating disabled people more favourably than non-disabled people to meet their needs.

The Department for Communities and Local Government has already published guidance reminding local authorities of the statutory framework in which they operate and their existing responsibilities to people in vulnerable situations, including responsibilities under the equality duty. Therefore, I do not believe that an additional duty to have regard to the needs of disabled people is needed, especially when local authorities have an already established and understood framework of responsibilities.

Amendment 76A would require local authorities to have regard to the impact of its scheme on carers in the area. I was asked several questions about carers, including whether we would change existing relief for them. There are no plans to make any changes to the existing relief. I was also asked how the default scheme takes carers into account. The default scheme preserves the current CTB regime as far as possible. CTB makes provision for carers through a specific income disregard.

[Baroness Sherlock]

Before the Minister leaves that point, I want to be sure that I understand what he has just said. I specifically asked how carers’ allowance would be treated in the default scheme. Could he tell me how carers’ allowance is to be treated? Is he saying that there will be no changes from the current treatment under the default scheme?

[Earl Attlee]

My Lords, I expect I shall get some inspiration on that point in a moment.

My noble friend Lady Browning asked how local authorities should have regard to the Autism Act. She raised local authorities’ other responsibilities, particularly in relation to the Act. That is precisely why we have not proposed a new and potentially cost-cutting definition. Local authorities have a range of duties that they will want to consider. My noble friend is right to point to the Autism Act as one of the key matters that needs to be considered.

The noble Baroness, Lady Lister, claimed that there was no reference to carers in the guidance. The guidance is not exhaustive. It highlights some key legal duties.

[Baroness Lister of Burtersett]

Surely the Minister will accept that if it does not highlight carers, the chances are that carers’ needs will not be taken into account.

[Earl Attlee]

My Lords, they are already taken into account. We are not saying that carers should not be taken into account. A competent local authority will take the needs of carers into account. Why would a local authority not? That is part of its duties.

I was asked whether pensioners and other vulnerable groups are protected. Low-income working families in an area will face a cut in support. Local authorities will have choices about how they manage the reduction in funding. They will be able to choose whether to pass the reduction on to council tax payers, using their flexibility over council tax, or to manage the reduction within their budgets. I know that noble Lords do not like hearing it, but that is the fact.

[Lord Beecham]

Can the Minister explain what flexibility councils have, given the capping regime?

[Earl Attlee]

My Lords, council tax support is part of the total rate retention support. Local authorities can make arrangements for their scheme. They do not have to rely just on the funds relating to council tax benefits.

[Lord McKenzie of Luton]

I wonder whether the Minister could help me on one further point. He talked about pensioners being protected. Can he deal with the point about the circumstances in which one member of a couple may have reached state pension age but the other has not? Is that household protected under the Government’s proposition?

[Earl Attlee]

My Lords, it is clear that I am going to have to write to noble Lords on a lot of these points.

[Baroness Hollis of Heigham]

I understand that the Minister will have to write. Could he pick up the point about one of the problems being that different presumptions and rules are associated with the range of benefits that we currently have when couples straddle the pension age, and will he say what is proposed for universal credit? As I am sure the Minister will know, if one of you is below pension age, both of you will be treated as though you are below pension age. That is not the situation now. There are in effect two sets of schemes, according to whether you are a newcomer into UC or a legacy claimant, and cutting across that will be a CTB discount scheme, which is supposed to embrace both. Perhaps the Minister can take on the issue of this complexity when he writes.

[Earl Attlee]

It may help the Committee if I explain why I am experiencing such difficulties. The proposed amendment talks about disability in very general terms. If noble Lords table an amendment that deals specifically with their concern, I can address that concern specifically, but I am struggling to answer these very technical questions, which are too detailed for me to answer at the Dispatch Box. If I had a more detailed amendment, I could do so.

I would like to say a few more words about carers. Carers provide a vital role in society, and I expect that local authorities will want to consider what provision to make for this important group. Currently council tax benefit makes provision for people who are carers through a specific income disregard and a premium towards their applicable amount. Local authorities will be free to do so under localised council tax support.

The Department for Communities and Local Government is working with the Department for Work and Pensions to ensure that local authorities will continue to receive data on current benefits and universal credit. This could include data that would help local authorities to identify carers so that they are able to provide support in the future if they choose to do so under the terms of their schemes.

[Baroness Sherlock]

My Lords, I thank all noble Lords who have contributed to making this a very interesting and useful debate. I have learnt much from it.

I am slightly smarting from the Minister’s criticism that my amendment is too general. By referring to disabled people in general, I was seeking to avoid detaining the Committee by tabling a whole succession of amendments dealing with a full range of disabilities, which I might reasonably have done; but I have learnt my lesson for the future. I shall look forward to visiting the Public Bill Office with more regularity in future.

I asked the Minister at least eight questions, and I do not think that I got answers to any of them, since “inspiration” did not arrive in time. I was not trying to ask technical questions; I was trying to draw out, so that the Committee could understand, what the implications of these changes are for some of the most vulnerable groups in our country in order that we might understand whether we needed on Report to seek to take any specific steps to protect those groups. Given that, I would be very grateful if the noble Earl, when his team has had the opportunity to reflect and to give him all the appropriate advice, would agree to pick up specifically the range of questions that I mentioned when he comes to write. I would add that, even though it might have sounded general, the point about the possible unintended consequences of having neighbouring authorities with different regimes and what that might do to drive both differential costs between authorities was particularly important. Although it might sound like a debating point, it was intended to try to find out to what extent the Government had modelled for that.

I urge the Government to reflect very carefully on the points raised by all noble Lords in this debate, but, this being Grand Committee, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, this is a brief and, I hope, straightforward amendment that I trust the Minister will accept in principle, if not in its detailed wording.

Schedule 4, as we are all now well aware, introduces a new schedule to the Local Government Finance Act 1992 and hence the framework for the council tax reduction schemes. However, regulations under paragraph 2 of the schedule can cover a range of matters, including stating who must or must not be included in a scheme, maximum and minimum reductions, and what might be included to mirror existing arrangements. Paragraph 4 covers regulations for a default scheme. The Delegated Powers and Regulatory Reform Committee, in its fourth report of the Session, reviewed the powers of the Bill and concluded:

“The change from national rules to local schemes is not an insignificant one in an area of law that the government acknowledges must secure appropriate support for vulnerable individuals, and the constraints and requirements imposed by regulations under paragraph 2 will form an important feature of the local schemes. It seems likely that some authorities may model their own schemes on the ‘default scheme’ established by regulations under paragraph 4. In the light of that, we recommend that the Bill should require the affirmative procedure for regulations under paragraphs 2 and 4 of new Schedule 1A”.

This is what the amendment seeks to achieve. I beg to move.

[Earl Attlee]

My Lords, the effect of the amendment would be to make regulations prescribing the requirements for a local scheme and prescribing a default scheme subject to the affirmative procedure. I fully recognise that these regulations will be vital to the operation of local schemes and that provisions in the default scheme could influence the decisions that local authorities take about the shape of the scheme that they wish to operate for working-age claimants, which will generally not be covered by the prescribed requirements.

It is because of the importance of both sets of regulations that the Government published their statements of intent in May, setting out in great detail what they intend to cover in these regulations. Importantly, the statement of intent made clear that with a very few limited exceptions the effect of these regulations would be the same as those currently in operation in relation to council tax benefit: that is to say, local schemes will be required to include provision in respect of pension credit-aged claimants that is the same as the current council tax benefit scheme. For the default scheme, regulations will recreate the current scheme for all claimants.

We are today publishing the draft regulations for the local scheme—which in the main will set out the requirements relating to those of state pension credit age, and which I will refer to as the pensioner regulations—and the default scheme. This will put beyond doubt that our intention is to recreate the effect of existing council tax benefit regulations in the default scheme and to require equivalent provision to be made for those of pension credit age in all local schemes.

Council tax benefit regulations have been in force in various forms for a number of years. Local authorities understand their operation and effect. It is not our intention to bring in significant new untested processes and procedures, and by publishing draft regulations well in advance of the regulations actually coming into force, and ahead of Royal Assent, there will be considerable opportunity for scrutiny by local authorities, Members of this House and the other place.

The default scheme is not intended to apply generally, but only in those authorities who fail to adopt a scheme in time, and for the first year of the localised scheme. Thereafter, any scheme in operation in a local authority will in effect be its adopted scheme, and it will be able to review and alter or replace it for 2014. I understand that the Delegated Powers and Regulatory Reform Committee has indicated that additional scrutiny is needed because local authorities may choose to model their schemes on the default scheme. If they choose to do this, they will in effect be choosing to model their scheme on the existing regulations. The changes that we will be making in bringing forward our own regulations will be limited and largely confined to taking into account changes in other parts of the welfare system. While local authorities may choose to model their schemes on the default scheme, they will not be required to do so.

In relation to the pensioner regulations, government may from time to time need to amend the regulations. This may be needed to amend cash values in the means test, or to reflect future changes to the welfare system. It would not be a good use of parliamentary time to require a debate each and every time an amendment is required.

In conclusion, I am not persuaded that it is sensible to make subject to the affirmative procedure regulations that will recreate provisions that have been in operation for a number of years and that will be published in draft form for consultation while this Bill is still before the House and well before Report. This will give noble Lords ample opportunity to debate the regulations, and I am not clear what value there would be in further parliamentary debate at the point where they are made. In publishing draft regulations now, noble Lords will nevertheless be able to consider while the Bill is still before Parliament what, if any, provisions in the draft regulations differ sufficiently from the existing regulations to warrant making the regulations subject to the affirmative procedure. I therefore suggest that the noble Lord withdraws his amendment.

--- Later in debate ---

Amendment 79A withdrawn.

[Earl Attlee]

My Lords, this may be a convenient moment to adjourn the Committee until Thursday at 2 pm.

Committee adjourned at 7.58 pm.

Olympic Games: Security

Earl Attlee Excerpts

Thursday 12th July 2012 Lords Chamber

[Earl Attlee]

My Lords, I remind the House of the benefit of short questions in order that my noble friend will be able to answer as many questions as possible.

[Lord Addington]

My Lords, when my noble friend replied she referred to the fact that two weeks ago we had an inkling that this was not happening. Can she give a better guide to the process of the information that was being fed to and fro, and give the House an idea of what was happening and when? When did we know there was going to be a problem? That is the core of this situation. We have a reserve and are deploying it, but when did we know that we might have to call on it? That is the big question. Secondly, will anything that goes wrong be brought front and centre in a review process of what happened in the Games? A legacy of learning from mistakes will be important.

Railways: High Speed 2

Earl Attlee Excerpts

Wednesday 11th July 2012 Lords Chamber

[Earl Attlee]

My Lords, I congratulate my noble friend Lord Astor for securing this debate on a very important subject. I also thank noble Lords for their typically well informed contributions. It is certainly not a matter of nimbyism. It is important and right to raise questions about a project as significant as HS2 and I am happy to try to address such questions this evening. Large scale infrastructure projects are not new or unusual. They have been going on for many years and they have been controversial. For instance, the Jubilee line extension was controversial at the time of its conception, but where would we be without it now?

In his opening speech, my noble friend questioned the benefits that we expect HS2 to deliver. I want to reassure him on this point. I believe passionately in a successful Britain, a country that can compete and thrive in a global economy. To achieve this we need infrastructure fit for the 21st century and beyond. We cannot just make do and mend. Good transport equals good economics. One of the best ways to support British business, power up the recovery and put people back to work is to invest in, and modernise, our transport networks. HS2 will revolutionise travel in our country, transforming connectivity between London, the Midlands and the North, and, as the noble Lord, Lord Adonis, said, it is the best decision. It will provide a step change in the capacity of the rail network to accommodate the growing demand for long-distance travel, providing up to 18 trains an hour, each with up to 1,100 seats. Without it, our main north-south rail arteries will become increasingly disrupted and overcrowded, damaging both our economy and our way of life.

HS2 will slash journey times for passengers between our key cities and regions. It will be a truly national network benefiting the whole country. While the high-speed line itself runs to Birmingham, Manchester and Leeds, the new trains will be designed to continue onto the current network, providing direct services to destinations further afield, such as Liverpool, Newcastle and Glasgow. It will help rebalance the economic geography of the country, supporting thousands of jobs and unlocking growth and opportunity for generations to come. It will be a truly transformative project.

Some noble Lords have questioned whether a new high-speed network is the best way to provide the additional north-south capacity our country needs, suggesting instead a programme of enhancements to the existing network, but this would provide only a short-term answer to the demand challenges addressed by HS2, and even then, only at the cost of significant disruption to passengers on affected lines, all the while sacrificing the connectivity benefits high-speed rail will bring.

Several questions related to the approach taken to assessing the economic viability of the project. In January, when my right honourable friend the Secretary of State for Transport announced her decision on HS2, she set out the economic case underpinning this project and the department will shortly be publishing further updated economic analysis. However, the benefit-cost ratio analysis forms only one part of the decision-making process for this strategically important project. There are wider strategic considerations as well, which I outlined a moment ago. I will try hard to answer as many supplementary questions as I can and when I fail I will, of course, write.

The noble Lord, Lord Rosser, asked about the two hybrid Bills. He will know that each hybrid Bill requires a very considerable amount of work to determine what powers are needed. Several noble Lords, including my noble friend Lord Astor and the noble Lord, Lord Stevenson of Balmacara, claimed that there is no economic case for HS2. I beg to disagree. HS2 continues to have a good economic case. The Government have always been clear that as well as offering good value for money in itself, there are wider social and economic benefits associated with improving connectivity and supporting regeneration in our major cities.

My noble friend Lord Bates was concerned that HS2 will not rebalance the economy. He talked about the north-south divide and the unintended benefit for London at the expense of the regions. The Government’s position has the support of businesses and their representative organisations across the country, which express their belief in the importance of improving our transport network, and specifically our intercity rail network, in order to enable higher economic productivity.

The noble Lord, Lord Stevenson, asked about the release of the Major Projects Authority report. The Cabinet Office has a policy of not releasing the reports for two years, but they will be released at the appropriate point. Noble Lords asked me about the DfT’s record in forecasting and modelling transport demand and they suggested that it is poor. The Department for Transport has significantly improved its passenger forecast modelling in recent years. As acknowledged by my noble friend Lord Astor, we have a better understanding of what drives passenger demand, better computer modelling and our approach to risk analysis has improved.

The position of HS1 and HS2 are very different. Eurostar was accessing a completely new market for intercapital rail travel in competition, it transpired, with a burgeoning short-haul deregulated aviation market. HS2 will relieve a seriously congested existing railway between the two largest conurbations in the country—a long-existing market where demand is well understood and predicted to grow. My noble friend Lord Bradshaw suggested that our appraisal is based on the over-inflated value put on business travellers’ time. The analysis underpinning HS2 has been based on the Department for Transport’s well established approach to appraisal, one that is recognised across the transport industry and conforms to the highest standards of evidence. I know that my noble friend is very concerned about this point, especially in connection with the appraisal of road transport schemes.

Many noble Lords talked about route selection. In terms of the London to West Midlands alignment, HS2 Ltd considered more than 90 options for stations and sections of the route. There are obvious benefits to staying close to existing transport corridors where possible, which is why HS2 Ltd’s recommended route crosses part of the Chilterns close to the A413 and the Chiltern line and, indeed, uses part of the Great Central line. Overall, an M40 route would be an inferior option. It would be longer, have lower maximum speeds, impact on more population centres, resulting in unacceptable impacts on communities and it would be more expensive. In answer to one noble Lord—I think it was my noble friend Lord Bates—since the main capacity constraint is in the south, HS2 will start in the south.

The noble Lord, Lord Stevenson of Balmacara, suggested that the nation could not afford it. The nation cannot afford not to invest in HS2. Investment in HS2, and our wider rail network, can help us overcome the economic challenges we face and secure the country’s economic future. The construction costs will be spread over two decades and on this basis will involve an average level of annual spending of less than £2 billion a year at 2011 prices.

My noble friend Lord Astor suggested that a new railway is not needed to solve the railway capacity problem. By the mid-2020s forecasts show that without HS2, our main north-south rail arteries will be becoming increasingly disrupted and overcrowded, damaging our economy and our way of life, as pointed out by my noble friend Lady Scott of Needham Market. The Government have carefully considered the option of providing additional rail capacity, including upgrading existing lines. These might provide a short-term fix, but not a long-term solution. While alternatives may offer a good benefit-cost ratio, none is able to offer the scale of benefits or change that HS2 offers and would not deliver the increase in capacity that we require. Even the best alternative proposed would lead to decades of disruption on the existing network and lead to unreliable and overcrowded services and more freight on our roads. In answer to the question from the noble Lord, Lord Rosser, the capacity constraints make HS2 essential. The value of time saved is taken into account in the BCR.

My noble friend Lady Seccombe talked about community engagement. The Government and HS2 looked long and hard at possible changes to the route. However, the final design of the route is not yet set. The final design will be developed in consultation with local communities as part of the environmental impact assessment. Once that is complete, we expect to consult on the environmental statement in spring 2013. I encourage everyone with an interest to participate in that consultation. We want local communities to get engaged in the design through their local forums. I do not understand how the problem described by my noble friend arose. I hope that she will brief me later after the debate.

[Viscount Astor]

My Lords, as we have 10 minutes, may I ask my noble friend to address one issue? Does he accept that the benefit/cost ratio has fallen below 1.5? I will quite understand if he is unable to give a detailed answer, but perhaps he would be kind enough to write to me and other noble Lords who have spoken today.

[Earl Attlee]

My Lords, I have already undertaken to write where I have not answered. I am endeavouring to get through all my Box notes as fast as possible.

I know that there is no easy way of building a railway in our country but the concerns of local residents are an important priority for the Government and HS2 Ltd will ensure that local views are fed into the design process and that local communities are aware of what progress has been made with the railway.

My noble friend Lady Seccombe asked what the Government are doing to address blight. The Government recognise that HS2 is already having an impact on communities along the line of route. That is why the exceptional hardship scheme was introduced. When the Secretary of State for Transport announced the decision to proceed with HS2 in January 2012, the Government also committed to introducing a generous compensation package for the long term that goes beyond what was required in law. Developing the right property compensation package for HS2 is complex, as it must be fair to those affected by HS2 proposals while also recognising our broader responsibilities to the taxpayer. The Government will shortly be consulting on the detailed proposals to help affected property owners, with the aim of introducing long-term compensation measures as soon as possible.

My noble friend Lord Astor asked about the HS2/HS1 link, a point raised previously by the noble Lord, Lord Berkeley. I can assure my noble friend that the Government intend to connect HS2 to HS1 through a link built in the first phase. This will enable trains to run directly between HS2 and HS1 without the need for passengers to change trains. There are clear strategic advantages from integrating Britain’s new high-speed rail network with the only existing high-speed line in this country and thence to the growing high-speed rail network on the continent.

My noble friend Lord Astor talked about the demand for HS2 in a digital age. Some have questioned the demand projections underpinning the case for HS2, positing a world in which improved digital communication replaces the handshake and the face-to-face conversation and thus the train journeys that make them happen. If we turn to history, it is clear that the advent of the telegraph, the telephone and now the tweet have not lead to reductions in travel demand—far from it. I reassure the House that the Government will continue to keep the economic case and indeed the wider business case under review throughout the life of the project to ensure that it reflects the latest research, evidence and understanding of the project.

HS2 is much more than just a BCR. It is about a step change in capacity and connectivity for passengers. It is about unlocking the potential of our major cities and regions, supporting jobs and driving growth. It is about building a dynamic society, a thriving economy and a successful Britain. HS2 is not just viable; it is a vital part of our future prosperity.

[Viscount Younger of Leckie]

My Lords, I beg to move that the House do now adjourn during pleasure until 8.42 pm.

Local Government Finance Bill

Earl Attlee Excerpts

Tuesday 10th July 2012 Grand Committee

[Earl Attlee]

My Lords, I know the noble Earl is speaking to very complex amendments. However, I remind him that the Companion suggests that 20 minutes would be sufficient for moving an amendment. I hope that the noble Earl is coming to the end of his remarks.

[Noble Lords]

Oh!

--- Later in debate ---

[Earl Attlee]

To make a quick comment about my intervention on the noble Earl, I was merely observing that he had been speaking for 20 minutes. I allowed for the fact that he was probably coming to the end of his remarks. Also, this is a self-regulating Committee. If the Committee wants to take a longer speech, the Committee can do so.

[Baroness Hanham]

My Lords, I am not sure that I can wind this up in 20 minutes, but I will do my best, gracefully, as I go along. I first thank the noble Earl for raising this subject in the way that he has. I am also extremely grateful to him for the discussions that we have had following the previous day, when I pointed out to him that if I had to answer every amendment one by one I would have 30 pages of speaking notes, which might take us longer than 20 minutes.

With the noble Earl’s agreement—and, I now hope, the Committee’s—I propose to tell the Committee what the noble Earl’s four main themes are, and will then write on each of the specific amendments so that the Government’s answer to each is there. That will help the Committee at the next stage. I am manifestly not going to be able to answer all the points today.

The answers are grouped under the noble Earl’s points about the valuation system not being well managed; that it should be independent of the Treasury; that the Valuation Office Agency and the Valuation Tribunal Service have been adopting, as the noble Earl put it, several bad practices; and that there are abuses by a small number of rating advisers. Those are the four themes that I will go through and, following the Committee sitting, we will make sure that every Member of the Committee and the Library has a response to each of the amendments. I thank the noble Earl for grouping them together, as it could have been even longer had he chosen to speak only to two or three at the same time.

First, on the resourcing and management of the rating and appeals system, ratepayers expect their rating assessment to be correct, and for appeals to be resolved quickly. This will always be the case, but under the rates retention system it would become increasingly important that the rating system delivered a good service for both ratepayers and local government. I appreciate the noble Earl’s concerns regarding the backlog of appeals in the rating system. We share those concerns. The Valuation Office Agency is working flat out to clear over 250,000 appeals by the end of March 2013, including the majority of the outstanding appeals against the 2005 rating list. It has recruited additional front-line staff and has transferred staff from other work areas to speed up the clearance times for these outstanding appeals. Around 75% of all appeals on the 2010 list to date have resulted in no change to the rateable value, but we are well aware of how significant business rates are to all businesses and that this makes the fast and efficient processing of appeals vitally important. Likewise, the Valuation Tribunal Service is proactively working to ensure that appeals that cannot be resolved through initial discussions with the Valuation Office Agency are listed and dealt with by the tribunal. In fact, only some 2% of listed cases result in disputes being brought before a tribunal panel, with the rest being settled between the parties.

I hope that I have been able to offer some comfort to the noble Earl that the valuation and appeal system will be able to cope with the rates retention. Let me also assure him that the resourcing and performance of the Valuation Office Agency and valuation tribunal are a matter for regular discussion in the Government, especially now as we move into the rates retention system. As with all public bodies, the Valuation Office Agency and valuation tribunal have to deliver their services in challenging financial circumstances, but we are fully aware of the important role that they will play in the rates retention system and we will ensure that they have the necessary capabilities to meet these objectives.

The second theme of the noble Earl, Lord Lytton, is the Valuation Office Agency’s response to rates retention. An example of those capabilities is the way in which the Valuation Office Agency has responded to the planned introduction of rates retention. Since as early as late last year, the Valuation Office Agency has been working with local government to understand what local authorities will need to budget effectively under rates retention. It recognises that there will be step change in its relationship with local government and it has established a dedicated project team for rates retention. This has already led to several discussions with local government and with the Local Government Association. While I understand the concerns of the noble Earl, I hope that he will agree that to date the Valuation Office Agency has responded well to the rates retention scheme and is working with local government to ensure its smooth implementation.

The Valuation Office Agency is independent. An essential part of any system of tax is that the public have confidence in their tax assessments—not only in the accurate level of those assessments but in the manner in which they have been reached. I agree with the noble Earl that the independence of the Valuation Office Agency is important. That is why valuation officers who perform their statutory functions, such as the assessment of individual rateable values, act independently of Ministers. In this respect they have to answer to the courts rather than to the Government.

We also have to recognise that the Valuation Office Agency is a public sector body, spending public funds, and is part of the delivery system for business rates and council tax. That is why it is right that the Valuation Office Agency should answer to the Government for its overall performance. As such, the Valuation Office Agency forms part of Her Majesty’s Revenue and Customs and reports to Ministers in the Treasury for its work. It also accounts to Parliament—this is the point about the report—in the form of an annual report, and senior officials in the Valuation Office Agency can be called to give evidence to Select Committees.

While I appreciate the noble Earl’s point, in practice we have to strike a balance to preserve both the independence of the Valuation Office Agency’s statutory functions and the need to maintain the accountability of public servants. The noble Earl’s amendment would prevent the Valuation Office Agency from reporting to either the Treasury or the Department for Communities and Local Government, and under those circumstances I do not believe that we could deliver that accountability.

The noble Earl also raised concerns about some of the practices and procedures of the Valuation Office Agency and the valuation tribunal. Having just stressed the importance of the independence of the Valuation Office Agency when exercising its statutory functions, I think that the Committee would be disappointed if I signalled a willingness to interfere in its day-to-day work. I appreciate the concerns that the noble Earl’s amendments have raised in such areas as invalid appeals and the use of a strike-out by the valuation tribunal. We have powers to make regulations on any matter relating to the valuation tribunal and we have made regulations under those powers that describe when a strike-out can be used. However, in line with other tribunals, we do not describe all the necessary procedures in those regulations, but instead allow the valuation tribunal to make directions. Those directions describe the procedures that must be followed in taking an appeal through to a valuation tribunal hearing. The Secretary of State has given the valuation tribunal, in line with other tribunals, the power to strike out appeals where the appellant has failed to follow the directions.

This is not a matter that we take lightly. It is important for the effective operation of a fair judicial system that a valuation tribunal is able to set directions and enforce them through the use of a strike-out. The tribunal will consult its users before it introduces any standard directions, and any parties will be made fully aware of the requirements, by means of practice statements and information leaflets, when they make an appeal. Therefore, while noting the noble Earl’s concerns, I do not believe that we should change the current system. Allowing these matters to be set out in directions rather than regulations will ensure that the tribunal can lay down procedures that reflect the nature of the court and are responsive to changing circumstances. The system would not be improved through our direct intervention or by bringing all the procedures into regulations.

The noble Earl referred also to abuses by some agents. He raised valid points about abuses of the system by ratepayers’ representatives. I know that he works closely with the Royal Institution of Chartered Surveyors and the Institute of Revenues Rating and Valuation. Both organisations have clear professional standards. The Valuation Office Agency includes guidance on its website about employing a rating agent and how to contact these organisations for advice, so it would not be appropriate to regulate in this area. I hope that the noble Earl will agree that by stringently and consistently applying professional standards, the professional bodies and the Valuation Office Agency can address some of the abuses that he mentioned.

I have not addressed every amendment—as I said I would not. However, I thank the noble Earl for the knowledge he brought. I hope that he will feel able not to press his amendments on the basis of the explanations provided and of the assurance that, before Report, he will have a reply to each one.

I was asked by the noble Lord, Lord McKenzie, whether under the current system local government pays all costs of mandatory reliefs. It pays between 0% and 75% of the costs of reliefs for eligible businesses and some not-for-profit agencies. If a local authority chooses to go beyond the existing rate reliefs to grant extra relief using the business rate discount powers in the Localism Act, it can meet the cost locally. If not, the cost will be reimbursed. However, from next April the system of funding business rate reliefs will change as part of wider reforms. We will shortly publish a consultation paper setting out the details of this. The basic principle is that changes in rates income, including changes in relief, will be shared 50:50 with central government. I hope that that answers the noble Lord’s question.

There may be other points that noble Lords wish to pursue with me. I think that I answered the point of my noble friend Lord True about the fact that a number of important issues have been raised, and individual replies will be given on all the amendments so that we can consider them further at a later stage.

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[Earl Attlee]

My Lords, I am grateful to the noble Baroness, Lady Hollis, for introducing her amendment. She started by talking about the poll tax years. I well recall them but it was long before I came to your Lordships’ House. I do not believe that this legislation has those weaknesses but I am well aware that I face a formidable adversary. In parliamentary terms, I have admired the noble Baroness for many years. I am delighted at last to start working with her on legislation.

The noble Lord, Lord McKenzie, asked me when the Government decided that council tax benefits would be localised and included in universal credit. That decision was made in the spending review of 2010.

The effect of Amendments 89, 90 and 91 in the name of the noble Baroness, Lady Hollis, and with the support of the noble Baroness, Lady Sherlock, would be to make support for council tax part of universal credit. I know that this is a matter dear to the heart of the noble Baronesses. Amendment 70A seeks to establish that nothing in the Local Government Finance Bill would prevent council tax support from being included in universal credit. The Government have been clear that council tax will be localised and will not form part of universal credit. Council tax is a local tax and it is right that local authorities, which are responsible for setting and administering council tax, are free to decide the level of support to be offered to working-age taxpayers. Nevertheless, I have listened carefully to the concerns expressed in Committee about the working poor. Localisation means that local authorities will be able to align the system of council tax support much more closely with the existing system of council tax discounts and exemptions, and with local decisions on the level of tax.

The noble Baroness, Lady Hollis, and other noble Lords mentioned the effect of protecting pensioners. Of course, all noble Lords will be aware that not all pensioners receive council tax benefits; only those who need the benefit get it. The noble Lord, Lord Smith of Leigh, talked about the problem of the housing market, of which all noble Lords will be aware. However, local authorities will be able to take account of this when devising their scheme. Many noble Lords, including the noble Lord, Lord Greaves, talked about the effect of the 10% cut in CTB from the centre. It is worth remembering that council tax benefit doubled under the previous Administration. The noble Lord, Lord Beecham, asked who will pay the bill. The answer is that the taxpayer will pay the bill because the taxpayer is still paying 90% of the cost of council tax benefit.

This policy is consistent with the drive for greater local financial accountability and decision-making. The noble Baroness, Lady Hollis, suggested that we are just passing the risk on to local government and asked what happens if a local authority runs out of money. The Government intend local schemes to be fully integrated with the council tax system, with support offered in the form of a council tax reduction. Where demand for support increases above or falls below local forecasts, billing authorities will collect less or more council tax than had been estimated at the beginning of the financial year. Provision is made in the Bill to enable billing authorities to pass on any reduction in council tax receipts in a year, allowing cash-flow pressures that would otherwise fall on the billing authority alone to be shared with other local authorities.

Localisation will give local authorities a financial interest in the provision of support for council tax and a bigger stake in the economic future of their local area; I am sure that the Committee accepts that point.

[Noble Lords]

No!

[Earl Attlee]

My Lords, making councils financially responsible for providing support creates stronger incentives for them to get people back into work. This reinforces the positive benefits of driving economic growth in their areas, provided through the retained business rates system. Furthermore, if the claimant count can be reduced, it may be that the local authority can devise more generous council tax benefit schemes.

Localising support for council tax is intended to deliver a 10% saving on the council tax benefit bill and is an important contribution to the Government’s vital programme of deficit reduction. This saving will need to be delivered. However, localisation gives local authorities a significant degree of control over how the 10% reduction in expenditure is to be achieved, enabling them to balance local priorities and their own financial circumstances as they see fit. After all, not all local authorities have the same mix of claimants, and I am sure that noble Lords are not suggesting that central government should dictate to each local authority how its scheme should work.

[Baroness Hollis of Heigham]

My Lords, perhaps the Minister will come on to this later, in which case I will shut up, but can he give me three examples of local authority decision-making exclusive to a small district council that would not be shared by its neighbour?

[Earl Attlee]

My Lords, I may well have to write to the noble Baroness on that point.

[Baroness Hollis of Heigham]

My Lords, if the Minister cannot give even one example of the core thesis that this is all about localism, it is very clear, if I may say so, that the department has not either consulted properly or done its homework.

[Earl Attlee]

My Lords, I am quite confident that my department has done its homework, but inspiration may arrive.

Local government has previously expressed concerns about ensuring the ongoing direct payment of council tax support funding to councils if it is integrated with universal credit. Localisation ensures that funding is allocated directly to local authorities. We recognise the importance of helping local authorities to develop and administer schemes that support universal credit. In answer to the noble Baroness, Lady Sherlock, it will not be in the interest of local authorities to establish schemes that fail to provide positive work incentives and which risk locking residents into low aspiration and poverty. Universal credit will not be sabotaged, as was suggested by the noble Baroness, Lady Hollis.

The noble Baroness, Lady Sherlock—and many other noble Lords—asked me how universal credit income will be taken into account in local council tax support. I will respond to this point in more detail in relation to Amendment 79B. It might be helpful, however, if I made a few points now. In relation to its own local share, it will be up to a local authority to decide how, if at all, universal credit income is to be taken into account for working-age claimants. In relation to the default scheme that will come into effect if a local authority fails to adopt a scheme by the deadline of 31 January, universal credit will be taken into account in the following ways: either the income assessed under universal credit, with some adjustments, is less than a defined minimum income amount, in which case the claimant will receive a 100% rebate; or their income exceeds this amount and a means test is applied. In both cases, the assessment will use, with some adjustments, data from the universal credit assessment of the income needed to live on. I will explain these points in more detail when we get to the relevant amendment.

The Government have published guidance on how local schemes can support improved work incentives, and we are working with the Department for Work and Pensions to enable data from universal credit to be shared with local authorities for the administration of local schemes. The noble Baroness, Lady Lister, and the noble Lord, Lord McKenzie, talked about calculations on universal credit. The noble Baroness helpfully read out a Written Answer on whether the calculations can take into account universal credit income. As the noble Baroness will be aware, the second half of that Written Answer explained that the default scheme will take account of universal credit income. We will be publishing draft regulations setting out that approach shortly.

Amendment 83, in the names of the noble Baronesses, Lady Hollis and Lady Sherlock, would extend the requirement for local authorities to consult on schemes under the current benefit structure or universal credit. At present, council tax benefit is centrally prescribed, with very limited local authority discretion, and it is not clear what purpose a requirement to consult would serve. We are clear that council tax will not form part of universal credit in future.

Members of both Houses, and from both sides of the House, have expressed their support for the principle of localisation. We trust local government to administer the key services that make a crucial difference to the lives of the most vulnerable in society. It is right that we trust it to take greater responsibility for the administration of local taxation in relation to those groups. Obviously I have not been able to answer every point asked of me, but I will write and place a copy in the Library.

[Baroness Sherlock]

My Lords, I thank the Minister for that answer and for his attempt to address some of the questions raised in the debate. I asked how we would advise a council to construct a scheme that would manage to protect both the poorest and work incentives. He answered half that question in the sense that he assured me that a council would not wish to do anything that would damage work incentives. He did not answer the other half, and crucially he did not explain how one might construct a scheme that did both. Perhaps he could elaborate on that.

[Earl Attlee]

My Lords, I believe it will be possible for a local authority to do both, but of course I will write in greater detail.

[Baroness Hollis of Heigham]

Will the noble Earl tell us who he would take money from, who currently receives CTB?

[Earl Attlee]

My Lords, that is a matter of detail for local authorities to work out.

[Baroness Sherlock]

My Lords, I am very grateful. I look forward to receiving a letter outlining a scheme that might meet those criteria. There will be a lot of interested people waiting to read it. I thank the Minister.

[Lord Greaves]

My Lords, I am grateful that the Minister specifically responded to some of the points I made. He asked, “Who will pay the bill?”, and answered, “The taxpayer”—by which of course he meant the Government, although clearly most government funds come from taxation of every kind. He pointed out that in future the Government will pay only 90% of the costs, which is, in other words, a 10% cut in the requirement to pay from government funds—taxation in general. What he did not explain was why it was fair to cause what most councils will find themselves doing by imposing that 10% on a small group of people—those of working age who claim council tax benefit. It is a clear transfer of that burden from everyone in the country who pays all different sorts of taxes to a very small number of people. The Minister did not explain why that was fair.

Secondly, he said that it would be an opportunity for councils to align council tax benefit—the new council tax reduction scheme—with existing council tax discounts. I do not understand what “align” means, and perhaps he would like to explain it.

[Earl Attlee]

My Lords, unfortunately, I did not catch the noble Lord’s final question. In response to his first point, he said that the difficulty with the scheme was that it would hit a small proportion of the population. The local authority will devise a scheme but, more importantly, it could at the same time also reduce its budget a little, if it wanted to. It is at the local authority’s discretion.

[Lord Greaves]

I wonder if the Minister could write to me on my question about the word “align”? He specifically said, if he checks, it would be possible to align—that was the interesting word—council tax reductions with existing council tax discounts. They seem to be very different things at different levels and I do not know what “align” means at all.

[Earl Attlee]

My Lords, I can assure the noble Lord that we will be very careful to answer all questions.

[Lord Greaves]

Thank you.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, we support the thrust of these amendments. I will start with Amendment 73A, spoken to by the noble Lord, Lord Jenkin, and supported by the noble Lords, Lord Shipley and Lord Tope, about the new burdens doctrine. I was broadly going to support this anyway. A new burden in this context would be if there were increased take-up of the benefits system in a subsequent year, so on that basis it is doubly worth supporting. It is not as though we are dealing with a new service or something of that nature, but if we are including in that definition the fact that there will be changes in the volume of take-up, it is certainly right to push back at the Government on that.

My noble friend Lady Hollis’s amendment gave a devastating critique of what the proposals will actually mean for individual local authorities and the people who will be hurt. My noble friend talked about adjoining authorities, one that included DLA in the computation of income and one that did not. What a nonsense when people are being forced into those sorts of judgments.

The noble Lord, Lord Shipley, said that one of the problems is that the timescale is too tight. I hope that we will be able to have common cause in an amendment that is coming up—I hope shortly; if not, next week—to address that specific issue.

My noble friend Lord Smith asked what local authority would not want to find jobs for young people. Part of the problem for some local authorities is that their economic regeneration departments are under pressure from the cuts that are already there, so it is not lack of desire to do that; the capacity to do it is becoming increasingly constrained.

Issues were raised about who is going to do the forecasting for the council tax benefit expenditure for the year in question, not only for 2013-14 but for subsequent years. The fear has been expressed here—and I share it—that 90% of forecast subsidised council tax benefit expenditure in reality will be an underestimate for what actually comes to fruition.

Perhaps I can press the Minister on a couple of techie points. I would guess that at the moment the reimbursement to local authorities for council tax benefit is on subsidised council tax benefit expenditure, and I think that is because there is not a full subsidy where a benefit is paid incorrectly or late. How is that going to work under a supposed localised system? Who is going to make the judgments, under various schemes that do not have the same parameters, whether a benefit is paid incorrectly or late? Is that what we mean by the reference to subsidised council tax expenditure?

Can the noble Earl also deal with the fact that this is going to be funded by way of the business rate retention scheme? What does that actually mean in practice? Are we saying that part of the central share is going to be used to fund this? Will it be deducted from the total business rates collected in the first instance and then split on a local and central basis? Precisely what does that mean?

On the specific issue of having to forecast subsidised council tax benefit expenditure, if that means making a judgment about that which is paid properly, correctly and in accordance with the scheme, it is clearly going to be much more difficult with a whole raft of different local schemes. The fundamental point that noble Lords have made is that is that the 10% cut—or whatever it turns out to be—is going to impose impossible conditions on local authorities having to make the judgment of Solomon. It is deeply uncomfortable and deeply unfair.

[Earl Attlee]

My Lords, I thank the noble Baroness, Lady Hollis, for the explanation of her amendments. The noble Baroness first asked me what was wrong with the CTB scheme. The answer is that there is no incentive on the local authority to reduce the claimant count.

[Baroness Hollis of Heigham]

Sorry, I could not hear that.

--- Later in debate ---

[Earl Attlee]

There is no incentive on the local authority to reduce the claimant count because, as their claimant count and the CTB goes up, they get the money from the DWP.

[Noble Lords]

Oh!

[Lord Greaves]

It has been said that the existing claimant count is about 60% of people entitled to it. Is the Minister saying that it is wrong for local authorities to encourage those people who are entitled under the present or new system to actually claim? Under the new system, there would be a real incentive for local authorities to discourage people from claiming. Effectively, because it is a discount, the more people that claim, the lower the council tax base will be in that authority.

[Earl Attlee]

No, my Lords, I am not saying that. People should claim the benefits to which they are entitled. I am saying that the system is designed to encourage local authorities to go for local growth in order to reduce the claimant count. I fully accept the noble Lord’s point that people should claim the benefits to which they are entitled. The local authority may—

[Baroness Sherlock]

I just want to check that I have not misunderstood the Minister. Since council tax benefit is payable to people in work as well as people not in work, economic growth could still lead to people in work claiming benefits. Is he saying that an objective of localisation is to reduce the number of people who claim the successor to council tax benefit?

[Earl Attlee]

Not quite, my Lords. One of the objectives is to encourage better quality work, with better quality employers in higher technology businesses using a more skilled and higher-paid workforce, to still reduce the cost of the council tax benefit.

[Baroness Sherlock]

This scheme was designed to encourage the creation of high-tech work? Could the Minister explain that? I am sorry but maybe I have not understood the connection between those two things.

[Earl Attlee]

My Lords, there is an incentive for local authorities to encourage businesses which tend to pay higher salaries into their area. One of the complaints about the localisation of business rates is that it encourages retail outlets which tend not to pay very high wages. If a local authority can encourage higher paying businesses into its area, it will be able to reduce the expenditure on council tax benefits.

[Baroness Hollis of Heigham]

I then have two questions, if the Minister will allow me. First, why does he think that local authorities are not doing that now? Has he any evidence that local authorities are not seeking to encourage high-paying employers with high-tech skills into their patch? Secondly, that will almost always mean poaching them from somewhere else. As the Government knows, there is very little opportunity nationally for fresh economic growth beyond that. What advice would he give to local authorities to poach businesses from other areas?

--- Later in debate ---

[Baroness Lister of Burtersett]

The Minister will of course be aware of the House of Commons’ Communities and Local Government Committee report on localisation issues and welfare reform. It said:

“We have seen little evidence to support the hope that new and better-paying jobs for individuals, immediately sufficient to off-set the 10% reduction in the benefit budget, will inevitably follow from”—

the incentives that have been discussed; and,

“the means of economic growth are never solely in the gift of individual local authorities”.

What evidence did the Government have that the Committee did not to support the Minister’s contention?

[Earl Attlee]

My Lords, on the activities of local authorities to encourage businesses to come to their areas, of course local authorities do that now—I fully accept that—but they will do even more because they have a greater incentive. The noble Baroness quite properly made the point about poaching. It was a good point. Actually, we need to encourage businesses to locate in the UK and not in either another European state or further afield. It is not a question of poaching from next door necessarily, but if the local authority adjacent to you is less business friendly, you might find that businesses will locate in your area.

[Baroness Hollis of Heigham]

My Lords, are we saying that a district council will have the resources to send someone to Brussels to seek the relocation from Europe of a firm that may be willing to move a branch to a rural district in Norfolk? Forgive me, but get real.

[Earl Attlee]

My Lords, I am real, thank you very much.

[Lord Beecham]

I take it that we have finished that little discourse. I shall just revert to the question of the noble Lord, Lord Greaves, about what happens if more people claim benefits. What would happen if councils, or indeed the Government, went so far as to encourage people—particularly pensioners, 60% of whom do not claim—to do so? There is, I believe, £1.8 billion of unclaimed council tax benefit. What happens if those people start to claim? That would presumably take us beyond the £500 million. Who pays for the benefit for those people? Will the Government pay 90% of it or will it all fall on the local authority?

[Earl Attlee]

My Lords, it is clear that a local authority could devise a scheme that would increase the number of claimants. It would then have to take account of that in its budget. Whether local authorities choose to do that is a matter for them.

[Lord Greaves]

Let us assume that a local authority does not devise a scheme that encourages more claimants, but the number of claimants in that area goes up for whatever reason; and that the local authority runs a scheme to means-test people for housing benefit. My authority will probably do that in the first year, although it will be put out to consultation. What if the 60% of people who claim at the moment goes up to 80%? At the moment, it is a national benefit and the Government would automatically pay the cost of the extra 20 percentage points. Under the new scheme, the cost would fall on the local authority because it is a discount, not a national benefit. Increasing the number of people claiming by 20 percentage points would effectively reduce the council tax base of that authority. It is not money that is paid out to people; it is simply deducted from their bill.

We all, I hope, want people to claim benefits to which they are entitled. However, if the local authority, local campaigners for welfare and benefits, or local councillors with the interests of their residents at heart organised a campaign to increase the number of people claiming under the new system, it would reduce the amount of money coming into that authority. Will the Government adjust the grants to that specific authority over a period to take account of that, and how would that be done?

[Earl Attlee]

My Lords, I accept the noble Lord’s analysis of what would happen but the question is: why does it not happen now? Why do we not suddenly see a 20% increase in claimants? The noble Lord is describing a hypothetical situation.

[Lord McKenzie of Luton]

The Minister may wish to cast his mind back to the Pensions Bill, which we debated a couple of yours ago, and the representations that were made by the Royal British Legion, for example. It wanted a change to the name of council tax benefit because it believed that elderly people in particular were dissuaded from taking it up. They saw it as a benefit and that was something with which they were uncomfortable.

--- Later in debate ---

[Lord Tope]

My Lords, I said in the previous debate that simply changing the name from council tax benefit to council tax support is likely to increase the number of people who feel able to claim support, having, for whatever reason, felt uncomfortable about claiming benefit. That change alone, which was not produced by local authorities, in intended to increase take-up.

My advice to the Minister is that when in a hole, one should stop digging. We are getting a bit stuck here. I have heard it said by Ministers—although never in this House—that it is necessary to give local authorities an incentive to get more people back to work. I find that both patronising and deeply offensive. Some local authorities are better able to do it and have better circumstances in which to do it. However, I cannot believe that there is a local authority anywhere in the country that would say it has no incentive and does not want to get its local people back into work. Performance may differ greatly but I am sure that the intention is the same. Therefore, we are a bit stuck on this. It is an unanswerable question—as the noble Baroness well knew when she asked it. Perhaps we should spare the Minister his suffering and move on with the rest of the debate.

[Earl Attlee]

My Lords, on this point, not all eligible pensioners take up their council tax benefit. A number of factors affect the take-up rate. One is the stigma attached to the word “benefit”. That is why the Royal British Legion campaigned for a change in 2009. However, it is just one factor affecting take-up. There are many others, including the complexity of making a claim, people’s confusion about whether they are entitled to it and their aversion to disclosing information in answer to questions that they feel are intrusive. The noble Baroness, Lady Hollis, is nodding in agreement. In estimating future demand, local authorities will want to consider all these factors together.

[Baroness Hollis of Heigham]

How will they pay for it?

[Earl Attlee]

My Lords, I need to make progress.

[Lord Greaves]

I agree that the Minister needs to make progress, but will he reflect on this with his officials and write a clear letter about what will happen and who will pay the extra cost if the take-up rises? That is the issue that worries us. It is clear that we will not resolve it today, but reflection by the Minister and some information in writing would be extremely helpful.

[Earl Attlee]

My Lords, I will cover that in my concluding remarks. The noble Baroness, Lady Hollis, suggested that schemes would be determined on the basis of councillors’ prejudices. I refute this, as does my noble friend Lord Shipley. Schemes will have to be constructed by the council, not on the basis of individual councillors’ prejudices. They will not be in a position to take decisions on individuals but will agree to the best system after considering any changes they think they need to make to the current scheme—or they can use the default scheme which, as noble Lords know, is more or less the current scheme.

The noble Lord, Lord Smith of Leigh, made an interesting observation. He said that he supported the localisation of council tax benefits, but not this scheme. If that is so, what scheme would the noble Lord support?

[Lord Smith of Leigh]

One that is fully funded, so we do not have to make local authority cuts.

[Earl Attlee]

My Lords, we would all love to have a fully funded council tax benefit scheme.

[Baroness Hollis of Heigham]

We have one—and it is just fine.

--- Later in debate ---

[Earl Attlee]

But unfortunately we have to make savings.

The noble Baroness, Lady Hollis, suggested that this reform does not support local financial accountability. I disagree. Currently, local authorities can put up council tax without any regard for the impact on the cost of council tax benefit. This reform changes that by ending the subsidising of council tax increases from the benefits bill. There have been previous attempts to address this acknowledged problem. The recent report by the Institute for Fiscal Studies, to which the noble Baroness Lady Sherlock referred, noted that this reform restored the link between council tax increases and the benefits bill.

I was asked who should not get CTB. It is not black and white. The point of localisation is that councils will have the option to continue with the current scheme and find savings elsewhere, or to reduce some awards a little and raise money on empty homes. Localisation will mean that councillors will have choices about how they manage the cuts. There may be different schemes across the country. We trust local government to choose how to deliver local services to vulnerable groups. We trust them to deliver this scheme to support local people with their council tax bills. This is local accountability in action.

Speaking to Amendment 73A, my noble friend Lord Jenkin asked what happens once the spending review period ends and whether there are any guarantees for local government. Funding for the first two years of localised schemes is derived from the Office for Budget Responsibility forecast for spending on council tax benefit, which reflects existing spending and therefore assumptions about underlying demographic changes and council tax increases. Thereafter, decisions about overall levels of funding will be taken as part of the spending review process, which will provide an opportunity to consider cost pressures. Funding will be allocated via the retained business rate system, and the recent consultation set out provisional allocations.

[Lord McKenzie of Luton]

I am sorry to interrupt the Minister; I know he is trying to make progress. Assuming the first year is 2013-14, if the forecast by the OBR proves to be inadequate, will there be a basis for revision for the subsequent year within the spending review? Can the Minister say precisely what funding being provided by the business rate retention scheme means in practice?

[Earl Attlee]

My Lords, that is one of those matters of detail that the noble Lord will have to look forward to in my letter.

The noble Lord, Lord Jenkin, asked whether this policy reform was a new burden. This reform is not a new burden. Local authorities will have a significant degree of control over how a 10% reduction in expenditure on the current council tax benefit is achieved, enabling them to benefit local priorities and their own financial circumstances as they see fit. The Government are committed to carrying out a new burdens assessment regarding the administration of the schemes, and are gathering data on administrative costs to support this assessment.

I was asked whether the Government would be able to adjust allocations. As I said, the spending review provides an opportunity to review overall funding levels. Funding is allocated through the retained business rates. Baseline allocations will be set for 2013. Councils will have the flexibility and responsibility to design schemes that match local circumstances. Adjusting allocations would undermine the key principle at the heart of our reforms to local government finance, since funding will be within the retained business rate system. As we discussed in previous debates, it is essential that there is a sufficiently long period between resets to incentivise growth. Frequent adjustments to funding allocations would undermine this wider principle. Local authorities will have a range of flexibilities enabling them to manage costs in the mean time, including making adjustments to their own organisations and costs.

Increasing local financial accountability is a key objective of the localism agenda. Localising support for council tax gives local authorities an increased stake in the economic future of their local area, strengthening the incentive to support people back into employment. It also increases financial accountability by helping to make local authorities accountable for decisions over council tax levels, putting an end to the central subsidy of council tax increases.

There is widespread recognition of the need to reduce welfare spending. As I mentioned, spending on council tax benefit doubled under the previous Administration and it is essential that we take steps to bring it back under control. The saving from localisation announced in the spending review is a crucial contribution to the vital task of tackling the deficit.

Localisation gives local authorities significant control over how to manage the reduction in funding. Authorities will be able to offer council tax reductions that reflect local circumstances and priorities. They can decide whether to pass the reduction on to council tax payers, use flexibility over council tax or manage the reduction within their budgets. The noble Baroness, Lady Hollis, talked about the difficulty of collecting relatively small amounts of money and I will have to weary the Committee by repeating that it is up to local authorities to devise their schemes and take account of that difficulty.

Amendment 71 makes delivering the savings impossible and would in fact encourage local authorities to plan for that. The intention behind it is not realistic. The 10% saving has to be delivered, and we have given local authorities the freedom to decide how best to do this in their local area.

I do not deny that we are in hard times. The noble Baroness went into government in 1997 in a period of steady economic growth. The present Government are faced with truly dreadful financial circumstances.

[Lord McKenzie of Luton]

Does the Minister accept that when the coalition Government came into office they were experiencing a period of economic growth?

[Earl Attlee]

My Lords, I will accept that, but we also know why we have gone into a double-dip recession, which is not our responsibility.

The default scheme is intended as a legal back-stop, a safety net to ensure that those in financial need can continue to receive support. To fund a default scheme fully, as Amendment 71 would require, would send a message that local authorities do not need to take responsibility for developing a local scheme. It would make delivering the saving—which was called for in the spending review—impossible. Local authorities do not need to wait for the default scheme. Pragmatic councils are pushing ahead with the job at hand. Local authorities are starting to think through how to manage the reduction to best reflect local priorities: Harrow, Brent and Chiltern councils are already consulting on the design of their schemes.

Amendment 75 seems to be intended to prevent local authorities from designing a scheme to help deliver a saving. This does not seem responsible. It is right that local authorities have the flexibility to decide how to manage a reduction in funding, reflecting the circumstances of their area. Constraining their ability to do this prevents them from taking sensible local decisions about their priorities and what is affordable.

At the end of our debate on the last group of amendments the noble Baroness, Lady Hollis, accused me of not answering some of her more technical questions—questions that, I suggest, even my noble friend Lady Hanham would find taxing, so it is not surprising that I cannot answer them. Of course I listen to the Committee’s concerns very carefully and I will discuss the technical points with my excellent team of officials. I do not accept that there is any weakness in the team behind me. Any weakness lies with me because I am not an expert in local government. However, I will try to serve the Committee as best I can.

[Baroness Hollis of Heigham]

My Lords, I thank the Minister for that reply. No criticism is made ad hominem of either the officials or the Ministers. However, when we are talking about localisation and cuts and we ask on whom the cuts should fall, it is not unreasonable to expect an answer other than merely, “That is for the local authority to decide”. When we ask who is getting too much council tax benefit, it is not unreasonable for us to expect the Minister to be able to tell us. When we ask which three needs might be genuinely local and not shared by other authorities, it is not unreasonable to expect an answer. They are pretty obvious questions on policy, and not technical at all.

A number of people have intervened on the Minister and we have engaged in the arguments. I simply cannot engage with his basic position that it is all right to increase the cuts that will fall on poor people in poorer areas, and to call this increasing local accountability. However, at this time of night, I beg leave to withdraw the amendment.

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[Noble Lords]

Hear, hear!

[Earl Attlee]

My Lords, I thank the noble Earl for the explanation of his amendment. It would require the Secretary of State to create regulations providing for the use of electronic council tax billing. However, billing authorities already have powers under Regulation 2 of the Council Tax (Administration and Enforcement) Regulations 1992 to serve council tax bills electronically, as long as it is by agreement with individual council tax payers. The Government believe that this is a sensible arrangement.

Clause 14 makes provision for the costly supporting information that goes with council tax bills to be provided electronically. However, regulations will state that hard copy must be provided if a bill payer requests it. The Government consulted on this measure and it was strongly supported by respondents. Relieving authorities of the duty to provide the information in hard copy may encourage the take-up of electronic billing, because all parts of the process can be paperless, if the taxpayer so chooses.

However, given that billing authorities already have the powers to send bills electronically, I do not see any need for the amendment and invite the noble Earl to withdraw it.

[The Earl of Lytton]

My Lords, I thank the Minister for that. I did not know that there was already a power and I am surprised to hear it, given that there appears to be a rather small uptake. I am heartened by what he had to say. I entirely agree with his sentiments. If the powers are there, let them be used, and perhaps his department could encourage greater use of them among billing authorities in the interests of economy and speed. I happily beg leave to withdraw the amendment.

Civil Aviation Bill

Earl Attlee Excerpts

Monday 9th July 2012 Grand Committee

[Lord Rosser]

My Lords, the purpose of these amendments is to stop the Bill from apparently removing the Treasury’s oversight on non-executive pay at the Civil Aviation Authority, which was provided for in the 1982 Act that established the CAA. Under the Bill’s proposals, decisions on pay, allowances, pensions or gratuities will be determined solely by the Secretary of State for Transport.

Following recent failures to take action over excessive pay until forced into it by political and public pressure, as with RBS and Network Rail where the Secretary of State for Transport initially denied that she could do anything about the level of bonus payments to top executives, there should not be any weakening of oversight on remuneration payments. At this time of increased and justified public concern about levels of pay and bonuses, it is hardly appropriate for the Government to be seeking to remove a layer of checks and balances on the setting of CAA non-executive board members’ pay.

The CAA non-executive members were paid varying amounts up to some £77,000 in 2010-11. Non-executive board members are not there simply to make up the numbers or to add a veneer of outside independence and challenge. They are there as critical friends to challenge and question the senior executives on both the policies that they are pursuing and the policies that they are not, including accounting and financial policies, and to ensure that appropriate corporate governance arrangements are not only in place but are being properly implemented and applied.

Under the Bill, the CAA non-executive members will also determine the terms and conditions on which the chief executive is to be employed and who should be appointed. Other executive members are to be appointed by the chief executive with the approval of the chair and at least one other non-executive member who also will have to approve the terms and conditions under which other executives are employed. The role and importance of the CAA non-executive members is further enhanced not just by the more influential role that the CAA will have but also by the fact that the Secretary of State and the chief executive must exercise their powers to secure that, as far as practicable, the number of non-executive members exceeds the number of executive members.

So at a time when there is increasing concern about remuneration packages and bonuses; at a time when CAA non-executives will be involved in the major senior executive appointments and their terms and conditions; at the same time as the role of the Civil Aviation Authority is being increased; and at the same time as the importance of non-executives is being increased by there being a requirement in this Bill for the number of non-executives to exceed the number of executive members, the Government decide that this is the appropriate time to remove the oversight that the Treasury has on non-executive pay at the CAA. The Treasury can provide a degree of impartiality over decisions on the remuneration of Department for Transport appointees, as well as having knowledge of what remuneration levels are for non-executive members appointed through other departments of state. The Government’s logic does not add up. I beg to move.

[Earl Attlee]

My Lords, I am grateful for the explanation given by the noble Lord, Lord Rosser, and I hope that I can clarify the Government’s position on these probing amendments. In the current political environment and with the public interest in these matters, I can quite understand why the noble Lord has tabled them.

There are several reasons why I cannot support all these amendments, to which I will come shortly. By way of background, the changes introduced by the Bill that these amendments seek to overturn complete a series of governance reforms recommended by Sir Joseph Pilling following his 2008 strategic review of the Civil Aviation Authority. Sir Joseph’s conclusion was that the involvement of two government departments in remuneration decisions was unnecessary. He said:

“In evidence to the review the Treasury explained that the CAA was the only regulator it looked at in this way … The statutory requirement for the Treasury to approve the Civil Aviation’s members’ remuneration and pensions is an anomaly. I recommend that the Department for Transport seek to amend the legislation so that the responsibility lies solely with the Secretary of State”.

He also asked the Department for Transport to consider the approach of some other UK regulatory bodies where the board appoints executive directors without ministerial involvement. The previous Government accepted those recommendations and consulted on the proposals reflected in the Bill. The Government agree with Sir Joseph’s conclusions that the oversight of the Treasury is an anomaly that adds no value. The Committee should note that there is no equivalent requirement for any comparable regulatory body, so Clause 96 implements an important aspect of the Pilling report. It would remove Treasury involvement in approving the remuneration of non-executive members. Removing Treasury oversight will also remove unnecessary government duplication; there is no need for two government departments to be concerned with CAA board remuneration. It will also reduce unnecessary delays in the appointment of non-executive members of the CAA.

There is nothing so special and different about the CAA board appointments that they alone of all regulatory appointments require the approval of two government departments. The Secretary of State will continue to be responsible for appointing non-executive directors and determining their remuneration. They are part-time posts that currently pay under £25,000 with some small additions, where applicable, for extra work. I note that the noble Lord, Lord Rosser, suggested that some were paid £75,000. They are not in a CAA pension or bonus scheme. It is therefore quite unnecessary for the Treasury to undertake the administrative burden of checking the decisions of the Secretary of State. I hope that that provides the Committee with the reassurance required and that the noble Lord will consider withdrawing his amendment.

[Lord Rosser]

Obviously, it is my intention to withdraw the amendment, but before doing so perhaps I may ask the noble Earl whether he said that the posts would receive less than £25,000. Is he saying that that was the case in the financial year 2010-11 for which we appear to have the figures?

[Earl Attlee]

The non-executive directors are currently paid between £22,000 and £25,000 and are not eligible for pensions or bonuses, although they can receive extra payments for extra days of work. I hope that that helps the noble Lord.

[Lord Rosser]

I note with interest the Minister’s response. Either the figures that I have are incorrect or an awful lot of extra work is undertaken, but obviously I can look at that. The key part of the Minister’s argument is that no other regulatory bodies have Treasury and appropriate department involvement. The Minister has been clear on that. I shall certainly want to reflect on his response, but I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Trefgarne]

My Lords, while the noble Lord, Lord Rosser, makes an interesting case for Amendment 67, I am somewhat neutral on the matter, and look forward to hearing the Minister’s reply. I must say that I am a good deal less enthusiastic about Amendment 68; general, somewhat ill defined duties such as those contained in that amendment are best left out of legislation, and I hope that the noble Lord will not press it.

[Earl Attlee]

My Lords, I fully agree with noble Lords on the need for the CAA to be efficient in carrying out its functions. Identical amendments to the ones now tabled by the noble Lord, Lord Rosser, were also tabled in the Commons both in Committee and on Report, and were defeated in Divisions.

I shall speak first to Amendment 67 on introducing a role for the National Audit Office. In Commons Committee the Minister announced a strengthening, outside the Bill, of the scrutiny to which the CAA is subject. Having considered this issue further myself, I remain unconvinced that there are compelling reasons to believe that NAO scrutiny of the CAA would deliver a different result from the current and new mechanisms by which the CAA’s functions are already audited and scrutinised. Moreover, the CAA is overwhelmingly funded by the aviation industry. Parliament recognised this in removing the NAO’s role from the CAA and certain other bodies in 1984. The issue was considered by Sir Joseph Pilling, in his 2008 strategic review of the CAA, who concluded that there was no need for NAO involvement. The recommendation was subsequently accepted by Ministers under the previous Government, and I have yet to be convinced that they were wrong.

It is true that other industry-funded regulators come under the scrutiny of the NAO but, unlike the CAA, they are generally either non-ministerial government departments or rely on government funding for a significant proportion of their income. The CAA’s situation is very different from regulators such as the Office of Rail Regulation. Although the ORR is funded by industry licences, it is distinct because of the high level of public funding that the rail industry receives.

I reiterate the strength of the scrutiny mechanisms already in place with the CAA. As was said on Report, the Secretary of State appoints the CAA’s external auditors. She presents the CAA’s accounts to Parliament by placing the annual report statement in the Library of the House of Commons; she is involved in the development of the corporate plan; with the Treasury’s consent, she approves the CAA’s borrowing and sets its required rate on return on capital; and she will continue to approve the remuneration of the chair and non-executive members of the CAA board. In addition, the CAA consults on its charges and fees. Clause 100 makes such consultation an explicit requirement. I therefore currently see no reasons why the NAO should audit the CAA, and ask the noble Lord to withdraw that amendment.

On Amendment 68, regarding efficiency, in practice the CAA is already subject to conditions and obligations that ensure that it is efficient. As announced by the Minister in the Commons, from 2013 onwards the Government will include in their annual accounts direction a requirement for the CAA to include an efficiency statement in its annual report. This would be subject to validation by the CAA’s external auditors, and the Secretary of State for Transport will approve the terms of reference for that work. The efficiency statement is likely to include a summary of value-for-money audits and post-project completion reviews, developments in processes and technology and a report on the remuneration and deployment of staff. The external auditors’ published statement in the annual report would contain a summary of their findings on the efficiency statement in the interests of transparency. Industry representatives on the CAA’s finance advisory group would be given an opportunity to discuss the statement before and after the external auditors had completed their activity. This establishes an annual process of scrutiny, with transparency to the industry and to Parliament, to which the Secretary of State will continue to present the CAA’s accounts.

During the past nine years, the CAA has reduced its workforce by 15%. It employed 1,057 full-time equivalents in 2003 and had reduced that number to 870 in March 2012. The CAA’s strategic plan contains the objective:

“To ensure that the CAA is an efficient and effective organisation which meets Better Regulation principles and gives value for money”.

Clause 1(3) and (4) and Clauses 83 and 84 already build in proportionality safeguards. The CAA is also required to follow the good regulation principles in the Legislative and Regulatory Reform Act 2006 and the statutory regulator’s compliance code requires that regulators,

“should be accountable for the efficiency and effectiveness of their activities, while remaining independent in the decisions they take”.

I am aware that this is very important to airlines represented by the British Air Transport Association.

I will continue to reflect on the matter and consider what further reassurances can be given to your Lordships on Report. In light of that, I hope that, at the appropriate point, the noble Lord, Lord Rosser, will consider withdrawing his amendment.

[Lord Soley]

Amendment 67 is still puzzling me, because the Minister’s argument seems to be that, because the airlines fund the CAA so heavily, there is a relatively small contribution from the taxpayer and, for that reason, the NAO need not be involved. I do not have the figures with me, but I do not think that the contribution from the taxpayer is so small as to be really insignificant. If we are saying that a public body such as this can be excluded from the NAO audit simply because it receives a fairly small amount of public money, that logic could be extended to almost any other public body of this type.

To use the Minister’s argument, if in time the railway industry was able to pay rather more for the Office of Rail Regulation, as one would hope, one would no longer need to have that looked at by the National Audit Office. The Minister seems to saying that this is purely a ministerial discretion issue; that is, “We will simply look at it. If the amount of taxpayers’ money is small enough, we won’t bother to put it under the NAO”—I do not use “won’t bother” in a dismissive sense; I mean that the Government will not bother to have the NAO look at it. However, there will come a point when we want the NAO to look it. Can the Government indicate what the trigger would be? Are we talking about £1 million or £5 million? What amount would suddenly trigger the Government saying that the CAA would be put under the National Audit Office? Alternatively, to use my example of the Office of Rail Regulation, if the railway industry suddenly started paying for most of it, would we say, “Well, they’ve reached this point. Therefore, we will no longer put it under the National Audit Office.”? I am not quite clear about what the policy is.

--- Later in debate ---

[Earl Attlee]

My Lords, noble Lords have advanced various arguments as to why the CAA should be audited by the NAO, but the Committee has not convinced me that the CAA would become any more efficient if we went down that route. If noble Lords want to make any progress with their argument, they will have to convince me that it would give a better outcome.

The noble Lord’s implied question was how much of the CAA’s budget comes from public funds. It is only 6%.

[Lord Soley]

Six per cent of how much? Six per cent of a large amount can be a large amount, too.

[Earl Attlee]

My Lords, I am afraid that I will have to write to the noble Lord on the CAA’s budget. As ever, I will give Members of the Committee a comprehensive answer to any of their more technical questions.

[Lord Rosser]

In writing that letter, can the Minister also give the relevant comparable figures for the other regulatory bodies to which we have referred—Ofgem, Ofwat, Ofcom and the ORR—and which are also funded in part by their industries? If the Minister’s argument on this issue is that the figure for the Civil Aviation Authority is particularly low in either percentage or actual terms when compared with other regulators, which are also partly funded from within their own industries, perhaps in sending that letter he could provide the comparable figures so that we can have a look at them.

I would comment only that while the Minister says that it is up to us to show the case for why a current arrangement should continue, there is to be a changed Civil Aviation Authority under the Bill. We are not talking about that authority as it is now but about one with enhanced powers and influence. I would have thought that the onus lay with the Minister to show us why the arrangements for the CAA should be different from those for other regulators, rather than the context in which he put it: of seeking to say that we have to make the case. It is the Minister who has failed to make the case, frankly, but I will leave it until we receive the letter from him with the information that he has said he will provide.

I am still not clear which clauses the Minister is saying provide the general duty of efficiency. I see a reference in Clause 1(3), to which I think the Minister referred, to the CAA having,

“regard to … the need to promote economy and efficiency on the part of each holder of a licence”,

for example, but that does not relate to the CAA’s efficiency. I can find references, which I think the Minister used, to activities being,

“transparent, accountable, proportionate and consistent”,

but those do not necessarily refer to being efficient or efficiency so I do not know what the noble Earl’s argument is. Which clauses is he saying cover the general duty of efficiency? My understanding is that this is not some unique clause that we are proposing to put in, as one can find examples of it applying elsewhere. Once again, why is the Minister saying that it should not apply to the CAA when, from what I have heard from him and from my understanding of the Bill, I cannot see such a clear reference as he can to a general duty of efficiency in any other clauses at present? I wonder if he can assist with that.

[Earl Attlee]

On Amendment 68, the noble Lord’s points are well made. I said that I will continue to reflect on the matter and consider what further reassurances can be given at Report. My reason for saying that is that the noble Lord has put his point very well.

[Lord Rosser]

I am grateful to the Minister. I heard him say that the first time round, but I am grateful to him for having reconfirmed that he is looking at this matter. I appreciate that he has not given any commitments. While I would not want to suggest that when the noble Earl says he is looking at a matter he is not doing it seriously, if I say that he is looking at it seriously I hope he does not take that in the wrong spirit and infer that I think he sometimes does not. However, in view of what the noble Earl has said, I beg leave to withdraw the amendment.

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[Lord Trefgarne]

My Lords, being 110 years old, naturally I am resistant to innovation of all kinds, although I hope not in all branches of aviation. None the less, one needs to take care with imposing duties of this kind upon the CAA in this particular area. For example, if it were to be pressed to incorporate a new kind of material in an engine, perhaps to make it quieter, the cost of certifying a new innovation of that kind can be substantial. My noble friend Lord Rotherwick refers to the desirability of introducing GPS approaches in more airports. One has to remember that GPS systems are outside the control of the CAA, the operators and NATS, and in the past have been subject to interference from hostile agencies, which is much to be regretted. I remember an occasion some years ago when the GPS system in the UK collapsed for a couple of days because there was some technical difficulty about which the CAA and NATS knew nothing.

One needs to take a little care about these things. The ground approach facilities, for example, to which my noble friend referred, are under the maintenance and control of the airport authority and therefore, you may say, more reliable, at least when the shortcomings are more readily known. That said, I do not want to stand in the way of these worthwhile innovations, and the advantages of GPS approaches to which my noble friend referred are very real and important, but one needs to take care. The CAA has taken a careful—if that is the right word—approach to the approval of GPS systems. That was right. It is being slowly convinced of their merit, which is right, too, but it did not jump in their direction as hastily as perhaps some others did. I am not standing in the way of innovation, but I ask the Minister to explain how the costs of all this will be met. Some of them may fall on the operators—to their advantage, no doubt, so that is a good thing—but we should take a little care.

[Earl Attlee]

My Lords, I am grateful to the noble Lord, Lord Davies of Oldham, for introducing this interesting, probing amendment, because it gives me the opportunity to say something about how innovative the aviation sector in this country already is and the CAA’s role as the regulator. My noble friend Lord Rotherwick spoke about innovation in navigational aids. I look forward to debating his Amendment 73, which will deal with these issues, but his comments were valuable nevertheless. He indirectly illustrated why the CAA should concentrate on regulation.

My view is that market forces should be allowed to drive innovation in industry and the regulator should be responsive to it. This is how things have worked so far between the aviation sector and the CAA. Indeed, just how innovative our aviation sector is is a measure of how well this arrangement has worked.

Let us consider one aspect of the aviation sector, the aerospace industry. Our aerospace industry is the world’s largest outside the USA, with a 17% share of the global market. Its annual turnover is more than £20 billion, and it directly employs more than 100,000 people, supporting a total of 230,000 jobs across the UK economy. Its workforce is highly skilled: 36% of its employees have university degrees or equivalent.

The aviation travel industry is equally innovative. In my opening speech at Second Reading, I paid tribute to this fact, saying:

“In 2010 … UK airports served nearly 400 international destinations. That level of activity is possible because over the past 30 years the aviation industry has changed to meet the needs of the customer. The emergence of low-cost carriers is one example of how the industry has innovated and diversified. There has also been an increase in the number of people travelling by air in this country, from 59 million passengers in 1982 to 211 million in 2010”.—[Official Report, 13/6/12; col. 1364.]

The CAA has its own international consultancy, Civil Aviation Authority International, or CAAi, which is a wholly owned subsidiary of the CAA. It is a leading, globally recognised aviation consultancy company that delivers and promotes best practice in aviation governance and education. CAAi provides technical advisory services across a range of aviation-related activities, environmental consulting, professional training, aviation examination services and certification against internationally recognised quality management standards. CAAi’s work contributes to enhancing safety standards worldwide.

The CAA is also quick to respond to innovation in the aviation industry. I have come across two examples in the past few days. The noble Lord, Lord Sugar, has raised with me the issue of PDAs in the cockpit. The CAA is assisting many UK commercial air transport operators to gain approval for the use of electronic flight bags. An electronic flight bag approval will allow an operator to replace many of its cockpit paper-based processes with an electronic solution such as a laptop or tablet device or with an aircraft manufacturer’s own certificated system. The CAA is working with EASA and ICAO to standardise and simplify the requirements for operational approval of electronic flight bags.

The second example is the CAA’s work on its future airspace strategy, alluded to by the noble Lord, Lord Davies of Oldham. As the noble Lord reminded the Committee, I offered some aviation briefing sessions to Peers shortly before Second Reading. As part of those, the CAA’s Director of Airspace Policy, Mark Swan, gave a presentation on its future airspace strategy. Through the strategy the CAA is modernising how we use our airspace in this country with the aim of achieving a,

“safe, efficient airspace, that has the capacity to meet reasonable demand, balances the needs of all users and mitigates the impact of aviation on the environment”.

Mark Swan explained that this aim depends on the ability to take advantage of technological developments. For example, new communications, navigation and surveillance improve situational awareness of users and controllers; increased navigational accuracy enables closer-spaced routes; and the amount of noise experienced by communities will be reduced as aircraft fly their routes more accurately and consistently. Operators will be able to free route in the upper airspace along the most fuel-efficient track. This is important. The noble Lord, Lord Davies, touched on emissions and the need to tackle them with technology and innovation. The future airspace strategy is an example of how the CAA can facilitate innovation in the civil aviation industry without the need for a new duty.

The noble Lord, Lord Soley, spoke previously about using advanced biofuels in the aviation sector, as did the noble Lord, Lord Davies, today. Today the noble Lord, Lord Soley, talked about quieter aircraft. He will recall that the quota system of regulating noise at Heathrow airport strongly encourages quieter aircraft. Indeed, under the quota system some aircraft cannot fly at all at night. While there are some obvious barriers, the Government believe that sustainable biofuels have a role to play in reducing carbon emissions from transport, particularly in sectors where there are limited alternatives to fossil fuels, such as aviation. The Committee on Climate Change has carried out studies on the potential for biofuels to reduce emissions from UK aviation in the long term. Its latest estimate is that biofuels could supply 10% of jet fuel demand by 2050, suggesting the impact that future innovation might have.

I said that it is my view that market forces, rather than regulators, drive innovation. I believe that the examples I have provided together show that the industry and the CAA have got the balance right.

[The Countess of Mar]

Does the noble Earl agree that in some cases market forces can have a derogatory effect on the industry? For example, it can lead to cutting corners. I think particularly of my own interest, the cutting of corners in reporting incidents on aeroplanes. Because an aeroplane has to be grounded, it means time out of action and competition within the airline industry is so great that it leads to reluctance on the part of employees to report incidents when they should. This leads to a backwards step as far as innovation is concerned, because, if they did report these things, maybe innovation would lead to improvements in facilities. I hope that the noble Earl sees what I mean.

[Earl Attlee]

I entirely agree with the noble Countess that market forces can have an undesirable effect. That is why we need a highly skilled and competent regulator, such as the CAA, to ensure that those undesirable effects of market forces are eliminated as far as possible.

I would like to quote from the Government publication Principles For Economic Regulation:

“The Government will not seek to add objectives, responsibilities or duties to regulators’ remits without detailed consideration of the impact of the addition on the overall framework, and consideration of cross-sector impacts and even then only when it is clear that the addition is the optimal way to achieve the outcome sought”.

I am not convinced that the addition of an innovation duty is,

“the optimal way to achieve the outcome sought”.

For the reasons I have identified, I believe that we are already in a good place with regard to innovation in the aviation industry. There is a risk that giving the CAA an innovation duty would oblige the CAA to meddle in the market and may even restrict the way in which the aviation industry would be able to innovate. This has been an interesting short debate. I can well understand why the noble Lord, Lord Davies of Oldham, has tabled his amendment, but I hope that he will withdraw it at the appropriate point.

[Lord Davies of Oldham]

There is no appropriate time like the present, so I will withdraw the amendment after I have given a few words of thanks, first, to those Members of the Committee who support the clear need for innovation. I also think that we needed reassurance from the Minister that the Bill provides sufficient powers and incentives to ensure that the limited part that the CAA can play in its role with regard to the industry is played as fully as possible against the very challenging objectives that we all need to meet through change, particularly those in aircraft engine design. However, I was extremely grateful to the noble Lord, Lord Rotherwick, for indicating that there are other aspects of technology that could be of great significance to the industry, to which the Minister also paid due regard.

I accept entirely what my noble friend Lord Soley said about government incentives for the development of new technologies in motor cars, and the licence system is a very effective weapon in those terms. But, as I understand it, neither the vehicles that airports use for towing things around nor their emissions are in any way subject to licence. Therefore, no incentive can be placed on the industry as regards those traction engines for a fresh, new design through the way in which they are licensed. I hope that the Minister has taken on board that we need some imaginative strategies. In fact, he has taken it on board because he is going to tell me about it.

[Earl Attlee]

My Lords, the noble Lord has suggested that ground vehicles at airports are not subject to regulations. I expect that I will be writing to him to point out that even non-road vehicles have limits on their emissions. There are complex and quite tough regulations to ensure that any ground vehicle reduces its emissions as much as possible. Even a vehicle that is not an on-road vehicle is still subject to regulations on emissions. I think that my letter will go into that.

[Lord Davies of Oldham]

I am grateful for that reassurance but it raises an obvious question. Some airports have taken this issue very seriously already but others have not. I therefore ask the Minister not to tell me how these machines can be improved but rather what is the incentive, compulsion or challenge given to those airports which are not improving to ensure that they do so in the future. That is the nub of this issue with regard to emissions on the ground and at airports.

Without any doubt, the biggest challenge is to the aircraft manufacturing industry. As the Minister indicated in his response, we are not negligible players in these terms and already have had one or two interesting innovations in which we have shown ourselves to be world beating. With this amendment, I was merely seeking to get reassurance from the Minister that he took these issues seriously and that the Bill empowers people sufficiently to give their spur to this development in any way that they can, while always bearing in mind the point made by the noble Lord, Lord Trefgarne, that all new technology is more expensive than that which it replaces if it is going to do a more challenging job unless we have real breakthroughs in terms of design, which from time to time in certain areas occur. In the past, the aviation industry has not failed us in that respect, but the challenges ahead are obviously very intensive. With the Minister’s largely constructive reply, I am happy to withdraw the amendment, as this is a timely moment to do so.

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[Lord Davies of Oldham]

My Lords, I have only one brief comment to make, one which I never thought I would make in Parliament or elsewhere. Oh the joys of Opposition for the Minister to reply.

[Earl Attlee]

My Lords, before turning to the detail of the points made, I must emphasise the importance of the clause that the amendment would alter. My noble friend Lord Trefgarne mentioned the congestion charge. I have been caught by it but I never dared to appeal. I just paid up. That might be because I knew that I was wrong.

The noble Lord talked about the higher success rate if you bring your lawyer. It may be that the appellant brings his lawyer because he is certain that he is right, so not surprisingly he wins his case. The noble Lord also asked about the appeal process. If someone who has been issued a fixed penalty notice is unhappy about that, he can take it to court in exactly the same way as a motorist can take a matter to court—like the McCaffrey case.

[Lord Trefgarne]

I confess that my memory is perhaps slightly hazy but my recollection is that one cannot take Transport for London to court. If one loses the appeal, that is that.

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[Earl Attlee]

My Lords, the offender will be able to take the matter to an independent appeal tribunal. I will write to the noble Lord with full details of how that system will work.

Clause 102 amends Part 3 of the Regulatory Enforcement and Sanctions Act 2008 to enable the CAA to make use of civil sanctions where it currently relies almost exclusively on criminal prosecutions, which are not always appropriate for technical infringements. The Bill will enable the Secretary of State by order to give the CAA access to a range of civil sanctions provided under Part 3 of the 2008 Act as an alternative to prosecution. We believe that criminal sanctions are disproportionate in relation to some offences, such as minor breaches or offences of an administrative nature.

I do not agree with my noble friend Lord Rotherwick when he suggests that the CAA will be encouraged to issue fixed penalties. The fines will go to the Consolidated Fund, as accepted by my noble friend. I think that he goes a little too far when he suggests that the CAA would abuse its powers and I totally refute the suggestion that these are revenue-raising powers. I was asked for examples. When the commander of an aircraft fails to produce licences for his or her flight crew in a reasonable time when requested to do so by an authorised person, he or she is guilty of a criminal offence and liable to summary conviction and a fine not exceeding level 3 on a standard scale. Should an offender fail to comply with such rules, a fine or civil penalty for breach may be a more appropriate enforcement action than a criminal prosecution, thus ensuring better compliance. I should point out that offenders will not find themselves in the dock because it is a civil penalty. I can assure my noble friends that secondary legislation will be required to grant the CAA these powers. It will be subject to full consultation and impact assessment. Any order will be subject to the affirmative resolution procedure in Parliament.

My noble friend Lord Rotherwick asked about the expected scope of compliance changes. The appropriate time to consider costs and benefits of the power is at secondary legislation stage. It would not be good use of public resources to calculate extensive options for what may not be the impact until Parliament has agreed the powers. In particular, Clause 102 inserts certain provisions of the Civil Aviation Act 1982 to the list of enactments in Schedule 7 to the 2008 Act. That enables the Secretary of State by order to give the CAA access to a range of civil sanctions in relation to offences contained in secondary legislation made under the 1982 Act. The provisions of that Act include Section 61 which enables the Secretary of State to make provision for offences to secure compliance with Air Navigation Orders. Such orders are key to the regulation of air navigation in the UK. I am sure that all noble Lords in the Committee would agree with that. They set wide-ranging rules that the CAA largely polices.

Turning to the amendment, as described by my noble friend, it would exclude Section 61 from Schedule 7 to the 2008 Act and thereby deprive the CAA of the use of a range of civil sanctions in relation to offences contained in the Air Navigation Order. This would dilute the intended purpose of Clause 102.

My noble friend Lord Rotherwick asked what the provisions will achieve. The inclusion of Section 61 of the 1982 Act in Schedule 7 to the 2008 Act is important, as it could give the CAA flexibility to use civil sanctions to enforce the provisions of the Air Navigation Order. That would be done only in appropriate cases where the application of criminal penalties was not a proportionate response to the offence which had been committed, particularly in the case of minor administrative breaches. The CAA will not automatically impose fixed monetary policies for breaches of the Air Navigation Order; the CAA will have available a range of civil sanctions under RESA, including fixed monetary penalties, variable monetary penalties, compliance notice and acceptance of enforcement undertakings for imposition. The CAA must publish guidance on the use of such sanctions under a duty to act proportionately under the Legislative and Regulatory Reform Act 2006.

In evidence to the Public Bill Committee on the Civil Aviation Bill in another place, a risk was raised that the inappropriate use of new civil enforcement powers could damage the open flow of information between the industry and the CAA. A recommendation was made that the CAA be required to consult on a formal policy before exercising the new powers. I hope that that will give my noble friend some comfort. I do not agree with any suggestion that the CAA would use the new enforcement powers disproportionately. That is because the Legislative and Regulatory Reform Act 2006 requires regulators to carry out their regulatory functions transparently, accountably, proportionately, consistently, and target them only where action is needed. That includes the CAA, and we are confident that the CAA will abide by those requirements. The Department for Transport intends to consult fully on any secondary legislation which will make civil sanctions available to the CAA in respect of relevant offences and to develop a full impact assessment—a point that I know concerned my noble friend.

For those reasons, I hope that my noble friend will consider withdrawing his amendment.

[Lord Trefgarne]

My Lords, is my noble friend willing to write to me with more detail about the intended appeal processes for the fixed penalty notices? I recognise, as he says, that secondary legislation is likely to be required before these processes come into place, but this is a subject of considerable concern, at least for me. As I explained, the present processes for dealing with appeals against, for example, fixed penalty notices from Transport for London, are unsatisfactory and I hope that they can be improved in respect of whatever the CAA is empowered to do.

[Earl Attlee]

My Lords, I will be delighted to write to all Members of the Committee explaining the Government’s intent on that issue.

[Lord Rotherwick]

My Lords, I thank the Minister for his full reply. He went a long way to try to answer all my questions. He still did not answer the question about whether the CAA asked for this.

--- Later in debate ---

[Earl Attlee]

My Lords, I can easily do that: it did.

[Lord Rotherwick]

That helps a lot: I now know who to hold responsible. I must point out that within the limited scope of the Bill, which pays hardly even any lip service to general and business aviation, in the one area where we are mentioned, we find ourselves caught on the stick, the discipline area; there are no carrots around. I know that my noble friend is a very generous Minister and I hope that there will be some carrots, having had the stick first.

I am grateful that he will write to my noble friend Lord Trefgarne about the consultation. In past consultations, general and business aviation has not always been represented. I would be most grateful if my noble friend feels able to go as far as to say that that will be the case this time: that there will be general and business aviation members of the consultation and, most importantly, that we are not treated like commercial pilots. We do not earn our living from our licence, we are private pilots who do our best to abide by the rules.

[Earl Attlee]

My Lords, I assure my noble friend that the GBA community will be included in any consultation.

[Lord Rotherwick]

My Lords, I am grateful for the Minister bending over backwards on all my questions. I will read everything with consideration and I hope that we might have the letter before Report stage, which, after all, will be at the end of the summer, in order to make a decision as to whether to come back to this issue again. In the light of that, though, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Rotherwick]

My Lords, I have great sympathy with my noble friend Lord Trefgarne’s opposition to the clause. I would be very interested to hear what the Minister has to say because I think that my noble friend’s concerns are those of many similar pilots.

[Earl Attlee]

My Lords, I would oppose my noble friend Lord Trefgarne’s intention. I believe that Clause 104 should remain part of the Bill. My noble friend said that his pilot’s licence was properly suspended for medical conditions. I currently have the same problem with my HGV licence because my blood pressure is too high—but the Summer Recess is coming soon.

My noble friend was concerned that it might be possible to identify a pilot’s condition because of those small cohorts. It is more likely that medical research would be into large cohorts, such as all pilots with condition X or all class 1 medical certificate holders. Should a smaller cohort be of interest, the data controller would normally look to seek consent first.

There are several reasons to keep the clause part of the Bill, by no means the least of which is that the Government are seeking to enact this change because it was recommended by your Lordships’ Select Committee on Science and Technology in 2007 and this is the first legislative opportunity that successive Governments have had to give effect to your Lordships’ recommendation.

I shall turn to the specific points raised by my noble friend so that I can give him the reassurance that he seeks. First, he has suggested to me—certainly in private; I cannot remember whether he has said this publicly—that the CAA may sell on medical records. I make it very clear that this is not the intention of the legislation and that the CAA has no plans to do this. There is also perhaps the prospect of the CAA requiring even more medical data from pilots and flight crew, because it might be useful for the purposes of later medical research. The CAA cannot ask for more medical information than it needs to consider an application for a medical certificate. The CAA has no intention or wish to ask for extra medical information and no mechanism under which to do so without obtaining individual informed consent. The CAA abides by the data protection principle of keeping the minimal data required for the purpose of medical fitness assessments. If an applicant were asked to provide medical information that appeared to have no relevance to their licence application, it could be expected that they would challenge the need for it.

Clause 104 does not provide the CAA with any further powers to collect medical information. Those powers are already there as part of the CAA’s licensing obligation under the Air Navigation Order. The CAA has no intention to expand the scope of the medical information that it requires of applicants, and this provision would not allow for that. The clause is there solely to permit the CAA to disclose the medical information that it already collects for medical research purposes, subject to the strict safeguards contained in Clause 104(3).

The Committee will note that the CAA does not set out to collect medical data but acquires such data from people wishing to be licensed as pilots, navigators and so on because it has to make a judgment on whether those people are medically fit enough to be licensed. We also think that making this change is a good thing to do. The Civil Aviation Authority receives medical information relating to flight crew and air traffic controllers in the course of its licensing functions. Clause 104 provides for the CAA to be able to disclose this medical information to medical researchers by amending Section 23 of the Civil Aviation Act 1982, subject to the strict safeguards included in the Bill. This information could be used for important medical research into the major functional and incapacitation risks to those individuals—for example, the risks of heart problems. We believe that an increased understanding of the main health risks may in turn lead to an improved understanding of the risk to public safety, which is vital in the aviation industry.

The types of important research envisaged here include the analysis of the electrocardiogram tracings of pilots over an extended period to determine whether small anomalies—that is, differences—seen in the tracings translate to heart problems later in their careers. Given the important benefits of this research, we consider that the provision represents a proportionate response to the legitimate aims pursued. I also remind the Committee that this proposal was supported in public consultation on the Bill, where the vast majority of respondents agreed with making anonymised medical data available for ethically approved research. It is of course vital that in doing this we include strong and effective safeguards to protect individuals’ privacy. The Government are committed to ensuring that medical research will not compromise the rights of individuals to have their confidential medical information protected. I have already answered one of my noble friend’s very good questions, which was about small cohorts.

Individuals’ rights under the Data Protection Act 1998 and Article 8 of the ECHR will be fully respected. The CAA will act as the data controller at all times. We have included strong safeguards in the clause to protect those individuals. First, medical information must be anonymised by the CAA before it is released to medical researchers. Secondly, the disclosure must be for medical research purposes approved by a research ethics committee. Thirdly, the CAA must consider that the research is likely to improve the understanding of health risks to those individuals required to provide medical information to them. Fourthly, the CAA must consider that it would be difficult or expensive to take the steps required by existing legislation to enable disclosure of all the information that is to be disclosed—for example, where the research cohort is particularly large. As the information disclosed by the CAA would be anonymised, any published research would also be in anonymous form. These cumulative safeguards will ensure the appropriate balance between enabling important medical research and protecting privacy rights. I therefore hope that my noble friend will feel able to withdraw his opposition to the clause standing part of the Bill.

[Lord Trefgarne]

My Lords, I am very much persuaded by the arguments that the Minister has put forward. It is important that this information is kept confidential.

I have just one other question to which I suspect my noble friend will not have answer off the cuff, but if he could write to me on it, I would be grateful. Am I not right in thinking that the CAA has access also to medical information on pilots held by the Ministry of Defence? It is important that that information, too, should be kept confidential, but it is also important that the information is available for the researchers if it can be done in a proper way and with proper safeguards. My noble friend may not have that information at his fingertips, but if he could write to me about the MoD position in this matter, I would be greatly obliged.

[Earl Attlee]

I can undertake to give what information I can. However, we both know a little bit about the Ministry of Defence and I am not entirely confident that it would have the data that the CAA would have.

Clause 104 agreed.

--- Later in debate ---

[Earl Attlee]

My Lords, I shall resist my noble friend Lord Trefgarne’s intention to oppose this clause and I urge that it should remain part of the Bill, with which I am sure my noble friend will agree. Clause 105 repeals Section 81 of the Civil Aviation Act 1982, which creates an offence of dangerous flying where an aircraft is flown in such a manner as to cause unnecessary danger to any person or property. In practice, prosecutions for dangerous flying have invariably been brought by the CAA under successive Air Navigation Orders, currently the Air Navigation Order 2009, rather than under Section 81 of the 1982 Act. I understand that my noble friend’s concern is about the relative penalties under the Act and the order, and I shall come to that matter in a moment.

The 2009 order is used because it sets out what needs to be proved for an offence to have been committed, including recklessness or negligence, more clearly than does Section 81 of the 1982 Act. Any prosecutions of dangerous flying would be carried out under one of the two articles in the Air Navigation Order. The first is Article 137, which provides that:

“A person must not recklessly or negligently act in a manner likely to endanger an aircraft, or any person in an aircraft”.

The second is Article 138, which provides that:

“A person must not recklessly or negligently cause or permit an aircraft to endanger any person or property”.

--- Later in debate ---

[Lord Rotherwick]

It may help if I jump in. I suspect that planes landing in the Scilly Isles were under CAT—Civil Air Transport. In certain situations, a private plane can be landed under VFR when a public plane cannot under IFR. I only suggest that that might be the case

[Earl Attlee]

My Lords, if the aircraft was being operated under the terms of the Civil Aviation Act, it is a matter for the CAA to regulate and investigate. It is not a matter for me to comment on. If it was an aircraft of the Ministry of Defence, it is not covered by the Civil Aviation Act.

[Lord Trefgarne]

My Lords, I am grateful to my noble friend for explaining all the penalties. Were I still authorised to fly, I should be very careful not to fly dangerously and fall foul of all the penalties he described.

--- Later in debate ---

[Lord Davies of Oldham]

I hear what the noble Countess says, and I heard that case deployed at the time when we met previously on this issue. Overall, though, my experience is that, whatever risks to livelihood, people have the greatest concern about threats to their long-term health and it is therefore not the case that they conceal these issues. The issue with the asbestos problem was not that people were concealing the impact; what was not being substantiated sufficiently was cause and effect, which is exactly the issue here.

[Earl Attlee]

My Lords, I am grateful to all noble Lords for their contributions to this debate. On the first amendment tabled by the noble Countess, airline pilots and crew members are already protected in this area by Part IVA of the Employment Rights Act 1996, which was inserted by Sections 1 to 2 of the Public Interest Disclosure Act 1998, both as workers who can make a protected disclosure to their employer and as individuals who can make one to the CAA. The CAA is a prescribed person for the purposes of that Act, which means that it can receive “protected disclosures” or whistleblowing from the civil aviation industry.

As for awareness of these rights, the CAA has a published statement on its website in relation to its whistleblowing policy which makes it clear that it will investigate all complaints in an appropriate manner, endeavouring to maintain confidentiality at all times.

I add for the sake of completeness that, as well as the protection afforded by the Act, the CAA has long established processes in place for incident-reporting and to safeguard confidentiality. The chief of these is the mandatory occurrence reporting scheme established in 1976. Consequently, the noble Countess’s amendment refers to protections already in place and is unnecessary.

The second amendment proposed by the noble Countess is also unnecessary. However, it also has an important and possibly unintended consequence which makes it unacceptable. The amendment would substitute the existing provision in Section 60 of the Civil Aviation Act 1982 with the wording that it proposes. This would be a backward step because it would cause the removal of the power which enables an Air Navigation Order to contain provisions,

“for safeguarding the health of persons on board aircraft”.

That power has already been used.

The duty on the Secretary of State of,

“organising, carrying out and encouraging measures for safeguarding the health of persons on board aircraft”,

now in Section 1(1A) of the 1982 Act, as inserted by Section 8(2) of the Civil Aviation Act 2006, was a widely welcomed reform. The existing Section 60 power is part of delivering that general duty. We do not want to lose that. I suspect that the noble Countess does not want to lose that either, but the effect, perhaps unintentional, of this amendment would be to remove the relevant subsection of Section 60. That is why I regard it as a backward step and why it is opposed by the Government.

There is also a second objection to this amendment. The matters listed in it are a mixture of UK legislation, European legislation and European Aviation Safety Agency technical specifications. They are already enforced by the appropriate regulators in relation to the protections that they give, including safety, technical integrity of aircraft and working conditions for those in the aviation industry.

The principal enforcement agencies are the Civil Aviation Authority and the Health and Safety Executive, and there is a memorandum of understanding, referred to by the noble Countess, between these two bodies setting out their respective responsibilities for enforcing occupational health and safety in relation to public transport aircraft while on the ground and in the air. It was drawn up by the two organisations with the aim of avoiding duplication of effort in the areas of overlapping mutual interest. There is therefore no need specifically to provide for the enforcement of these in an ANO.

The noble Countess suggested that the CAA was complacent. This is far from being the case. Successive UK Governments have investigated the matter thoroughly. The UK has an excellent safety record in aviation which we would not wish to lose by being complacent. Allegations of ill-health caused by cabin air have not been upheld by research. The main research study, published by Cranfield University in May last year, found no evidence of pollutants occurring in cabin air at levels exceeding available health and safety standards and guidelines.

However, I am well aware that the noble Countess has very strong views about the standards and guidelines. Levels observed in the flights that formed part of the study were comparable to those typically experienced in domestic settings. The department has now formally referred the published research studies to the Committee on Toxicity, the independent adviser to the Government on matters concerning the toxicity of chemicals, for it to consider the matter.

--- Later in debate ---

[The Countess of Mar]

My Lords, that is precisely what they are doing. The people I have contact with are ex-BALPA pilots and they are now complaining. If the Minister was to go to a meeting of the GCAQE, he would see a lot of ex-BALPA pilots.

[Earl Attlee]

What I find odd is that the noble Countess has been raising the issue for some time, but no pilot or any member of cabin crew apart from a very few who are in contact with her has ever approached me on the issue. I have received nothing about it.

The noble Countess also asked me about medical data. The swab test research undertaken by the Institute of Occupational Medicine in Edinburgh found concentrations of organophosphate compounds consistent with previous measurements. I remind the Committee that the main research study published by Cranfield University in May last year found no evidence of pollutants occurring in cabin air at levels exceeding available health and safety standards and guidelines. Levels observed in flights that formed part of the study were comparable to those.

[The Countess of Mar]

I remind the noble Earl that in none of those aircraft was there a fume event, but they still found TCP in the aircraft.

[Earl Attlee]

The noble Countess has made that point before. As a mere parliamentarian, I have to rely on the academic research being conducted in an appropriate manner and subject to peer review. All the published research studies have now been formally referred to the Committee on Toxicity which is, as I said, the independent adviser to the Government. When I first came into the House in 1992, I was rapidly aware of the noble Countess’s work regarding organophosphates and sheep dips.

In answer to a point made by the noble Lord, Lord Wigley, I am sure that the law is being properly applied. The noble Lord asked: how frequent are fume events? Incidence of fume events is extremely low. The most recent figures show that in 2010, there were 207 contaminated air events reported to the CAA mandatory reporting scheme out of 1.12 million passenger and cargo flights by UK carriers. That is 0.018% or less than 1 in 5,000.

[The Countess of Mar]

Does the noble Earl agree that the Science and Technology Committee found severe underreporting of fume events?

[Earl Attlee]

My Lords, I am not sure what would drive underreporting of fume events.

The noble Lord, Lord Davies, talked about his role in this matter and his discussions with the noble Countess some time ago. As I said, the UK has undertaken research where no other country has done so.

[The Countess of Mar]

I am sorry to interrupt the noble Earl, but Australia and the United States have done so.

[Earl Attlee]

My Lords, I am afraid we will have to have a difference of opinion on that matter. In view of what I have said, I hope that the noble Countess will feel able to withdraw her amendment.

[The Countess of Mar]

Will the Minister kindly address my question about the ability of the CAA to regulate through COSHH? I repeat: the CAA has no authority to enforce the COSHH regulations—this is from the CAA—and it is therefore inappropriate for the CAA to investigate any breaches of the COSHH regulations.

[Earl Attlee]

My Lords, in my answer I explained to the Committee that I am certain there is no gap in responsibilities between the HSE and the CAA.

[The Countess of Mar]

But the HSE has the ability to enforce COSHH regulations. The CAA has no ability to enforce COSHH regulations, on its own admission, and it is important that it should be able to.

[Earl Attlee]

Yes, my Lords, but as I explained to the Committee there is a memorandum of understanding, which the noble Countess referred to, to ensure that there is no gap between enforcement by the CAA and the HSE.

[The Countess of Mar]

I thank the Minister for his response but I find that really inadequate. The facts are there: the Health and Safety Executive has the ability to apply COSHH but the CAA, on its own admission, has not that ability. It is important because engine oils and their effects would come under COSHH. I thank the Minister for addressing my other points and I am also very grateful to the noble Lords, Lord Wigley, Lord Rotherwick, Lord Empey and Lord Davies of Oldham, for their contributions and kind comments, which I found quite embarrassing.

This is an important subject. I highlighted problems with sheep dip and I was told at first that it was perfectly safe. I was proved right on that occasion and I hope that noble Lords will listen to me because there are serious effects. What concerns me perhaps as much as anything is that passengers are never told when there has been a fume event. You might get a lady who is newly pregnant—perhaps she does not know that she is— and whose baby, when it arrives, has either a cognitive problem or a deformity. We know that foetal exposure to tiny amounts of organophosphates can be quite serious.

We really need to be looking at this more thoroughly. I know that when the Cranfield work was done, it was agreed that pilots would not be looked at until it could be established whether these toxic chemicals were in fact arising in airplanes. That work has been done and there has been a lot of criticism of it. I am not too happy about it, personally, because I have seen how such research can be twisted in order to provide the answer required and I mentioned intellectual corruption at Second Reading. I am not going to let go of this. I shall pursue it even beyond this Bill. I realise that it is difficult but the noble Earl will hear more of it. In the mean time, I beg leave to withdraw my amendment.

--- Later in debate ---

[Earl Attlee]

My Lords, I thank my noble friend Lord Rotherwick for putting forward this amendment. I can appreciate his desire to remove where possible unnecessary regulation and requirements on the aviation industry, which accords with the Government’s intentions on the red tape challenge. My noble friend has rightly drawn the Committee’s attention to whether there continues to be a compelling need for the mandatory carriage of automatic direction finding, ADF, equipment on some aircraft. I did a little research myself: I looked up ADF and it appeared to be Amsterdam Density Functional, which is,

“a Fortran program for calculations on atoms and molecules”.

I thought that that had got nothing to do with aviation and that I had therefore better stick to my notes.

My noble friend has a passion for ensuring that regulation is appropriate and that we take into account technical developments which can often make regulations out of date. The Civil Aviation Authority has advised that it agrees with my noble friend that the existing arrangements are no longer appropriate, given the recent progress in navigational equipment. I am therefore pleased to learn that the industry now benefits from some alleviation in a general exemption issued by the CAA.

I agree with my noble friend Lord Rotherwick that this matter is worthy of further investigation. It is of course an important safety issue and I am sure that the Committee will agree that it needs a proper and thorough safety assessment before we could remove this requirement. A meeting between my noble friend and the Civil Aviation Authority may be the first step to considering how best to proceed, including an assessment of if and when it might be possible to amend the Air Navigation Order. That would be a more suitable approach than through this Bill, as pointed out by my noble friend Lord Trefgarne. If my noble friend agrees, I would be happy to make the necessary arrangements. I note that my diary is already littered with protected dates for such a meeting with my noble friend. Therefore, I hope that my noble friend will withdraw the amendment at the appropriate point.

[Lord Trefgarne]

My Lords, just before my noble friend withdraws his amendment, perhaps I may point out that automatic direction finding equipment operating on the medium wave is very useful when it is not being used for navigational purposes—for example, for listening to the test match. The noble Lord may or may not use that in consideration.

Local Government Finance Bill

Earl Attlee Excerpts

Thursday 5th July 2012 Grand Committee

[Earl Attlee]

My Lords, I would like to declare that in terms of local government, I am still in short trousers.

[Baroness Hanham]

The noble Earl is not a vice-president of anything.

[Earl Attlee]

I thank noble Lords for their helpful explanations of these amendments. They deal variously with aspects of the local government finance report, particularly around the consultation arrangements that will apply. I agree that proper engagement is very important to ensure a successful outcome.

The Bill provides that the central and local shares, and the basis of calculation of payments flowing to and from local authorities, will have to be set out in the annual local government finance report. As we do currently, we will continue to consult local government on a draft local government finance report in the autumn before laying the report before the House of Commons in January or February each year. The noble Lord, Lord McKenzie, accepted this point in his opening remarks.

Amendment 25, tabled by the noble Lord, Lord Smith, and I think spoken to by the noble Lord, Lord McKenzie, seeks to bring forward the laying of the final local government finance report. Although I can sympathise with the good intentions of the noble Lord in bringing forward this amendment, I cannot recommend that the Committee accepts it. Amendment 25 would bring forward the process by three months from the current timetable.

The Government have always endeavoured to give local authorities the information they need as early as possible. The noble Lord, Lord McKenzie, asked me about the timetable. The current process for the local government finance report is as follows: the summer consultation is in about July and sets out the basis of calculation; the draft report comes out in approximately November and has the detail; and the final report comes out in January 2013. As for the future process, we may not need to carry out the summer consultation in future years unless there are substantial changes to the calculations.

In the past, the local government finance report timetable has been driven by the availability of up-to-date data to make the necessary calculations. Under a rate retention scheme, this will still be the case. For example, the September RPI figure, which will be used to uprate tariffs and top-ups, will not be available until later in the year. In reset years, the need for updated data will increase.

Although I cannot accept the noble Lord’s amendment, I can assure him that the Government will continue to use their best endeavours to ensure that local government, as far as possible, has the information that it needs to undertake its budgeting processes. Although I understand the intention behind each of the amendments in this group, I ask noble Lords to withdraw them. I believe they are either unnecessary, since, in practice, consultation with local government will continue to take place as it does now as a matter of course, or, in the case of the timing of the report, undesirable, since they may limit our ability to use the most up-to-date data for calculations. I am sure that that is not what the Committee desires.

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his reply and all noble Lords who have spoken in this short debate. Nearly every one who spoke was sympathetic to and in agreement with the thrust of these amendments. Indeed, that was the tenor of the noble Lord’s comments. I understood from what he said—it seems to be on the record and we will read it in Hansard tomorrow—that there is the clear intention to continue to consult with local government on a timely basis. That is very important.

We have to reflect a bit on the issue around getting that information available in November, but the noble Lord, Lord True, and the noble Earl, Lord Lytton, made some very powerful points in support of the amendment—in particular, the sooner you know what your resources are, the better able you are to deal with those who are looking to you for support and engagement.

I agree with my noble friend Lord Beecham, as ever, that there are other interested groups here, particularly concerning the central share and how that is going to be dealt with. I think that the noble Lord, Lord Shipley, was right when he said that the Localism Act has basically changed the scene so far as this is concerned. I take a degree of comfort from the Minister’s response—particularly the commitment to make sure that the consultation continues.

I guess that we will have to see what the nature of the components is. We will be coming later to what is likely to be in a local government finance report, given that formula grants are going to be less important, if not disappear altogether. We will also be dealing with what is in the document to consult on. In the mean time, I thank the Minister for her response and beg leave to withdraw the amendment.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords—

[Earl Attlee]

My Lords, the Committee has made very good progress but I would be extremely grateful if we could consider this amendment. I do not think it will take very long and it would be advisable to take it.

[Baroness Hollis of Heigham]

Why?

[Earl Attlee]

My Lords, I have agreed with the usual channels that we would do so.

[Lord McKenzie of Luton]

My Lords, I am happy with that and do not think it is going to take very long. I start with an apology for tabling these amendments just yesterday, but they arose out of the debate we had on Tuesday and I make no apology for returning to the issue of the local and central share, and what this entails. We accept entirely that the Government intend to use the central share for the purpose of local government in England, although, as defined, this does not have to mean actually paying it to local government. This is what the statement of intent promises. It is also clear that for the first two years of the scheme, revenue support grant will be made available to local authorities to keep them whole, because their local share of business rates will be below the control total set by the 2010 spending review.

This amendment looks beyond these years and requires revenue support grant to be paid in any year when the central share is positive. It is of course at this stage just by way of a probe, because it begs a lot of questions and we need a lot more detail to make it secure. However, it is designed to give the Government the chance to say how they are going to use the central share and on what basis. They must have some notion. What principles will be applied after 2014-15? Will its use be driven by a needs/resources approach or on some other basis? What is that basis?

I was going to have another go at a question I posed previously. I think it may have been dealt with in the letter I received from the noble Baroness—for which I thank her—just before Committee started. I have not yet had a chance to absorb it. I will perhaps reserve my powder on that particular issue but the substantive issue remains as to what that central share will be used for after those initial two years and on what basis will any use of it be determined.

--- Later in debate ---

Clause 4 agreed.

[Earl Attlee]

My Lords, I am extremely grateful for the forbearance of the Committee. This may be a convenient moment to adjourn until 3.30 pm on Tuesday 10 July.

Committee adjourned at 6.16 pm.

Civil Aviation Bill

Earl Attlee Excerpts

Wednesday 4th July 2012 Grand Committee

[Earl Attlee]

My Lords, I am grateful to the noble Lord, Lord Davies of Oldham, for raising this important and sensitive issue. I fully agree with your Lordships that we need to ensure that passengers are treated with respect and dignity at all points during their journey through an airport.

I hope I can reassure your Lordships by explaining that the goal that the amendment is designed to achieve is already covered by the Bill. Airports are required by European and domestic regulations to undertake security checks on all passengers, and it is the responsibility of airports to ensure that their customers are treated with dignity and respect.

Clause 80 inserts new Sections 21H and 21I into the Aviation Security Act 1982. New Section 21I requires the CAA to provide such aviation security advice and assistance as it considers appropriate to the persons listed in its subsection (3), including the managers of aerodromes in the UK. In giving such advice and assistance, the CAA has to have regard to the purposes to which Part 2 of the Aviation Security Act 1982 applies, which are broadly the protection of civil aviation against acts of violence. Therefore, if the CAA considered it appropriate, having regard to the purposes to which Part 2 of the Aviation Security Act 1982 applies, it could provide advice and assistance on maintaining the dignity of passengers wearing religious clothing when subject to security checks.

I know that some passengers may worry about security checks and feel uncomfortable about being subjected to them—I certainly do—but, like my noble friend Lord Rotherwick and, I suspect, the whole Committee, I understand that such searches are essential if security is to be maintained in the face of a real and continuing threat from terrorist groups that seek to do us harm.

As I am sure your Lordships will know, each passenger departing from a UK airport undergoes standard security processes irrespective of their age, gender or ethnic background. These checks ensure that they are not carrying articles prohibited from the security-restricted area on to the aircraft. This principle will not change.

Security staff are trained to recognise that some passengers may have particular concerns about searches, particularly searches of some religious clothing, such as those from the Sikh community who wear turbans. The noble Lord, Lord Clinton-Davis, referred to Orthodox Jews.

A problem emerged in April 2010 when new EU regulations came into force that required a hand search of turbans to be carried out. Physical contact with the turban causes hurt and offence to Sikhs. As pointed out by the noble Lord, Lord Davies of Oldham, other European states might not be so sensitive to these issues. My right honourable friend the former Secretary of State acted swiftly and instructed airports to continue with the method used prior to April 2010, which mainly involved hand-held metal detectors, while consideration was given to how to resolve the concerns expressed by the Sikh community. After intensive work, a pilot project was put together in a very short time and with the assistance of the Sikh community. The noble Lord pointed out that there is good co-operation between all communities because we are all in it together.

The trial is now under way at almost all the UK’s airports, using a combination of explosive trace detection and hand-held metal detectors as an alternative to a hand search of the turban. The trial is going well and we have been keeping the European Commission up to date with the results. My right honourable friend the Minister of State for Aviation has written to Ministers around Europe to highlight the importance of the issue and to draw their attention to the trial.

We hope that the trial will provide a sound basis of evidence for the EU in deciding on whether it is possible to change the European rules on security to meet the concerns of Sikhs and to ensure that they operate in a culturally sensitive way. The Department for Transport submitted a report on the trial to the European Commission on 28 June. The trial delivered good results and is continuing for the remainder of the summer at least.

[Lord Clinton-Davis]

Would it not be very simple for people who are especially vulnerable to be searched in private—in other words, to go to an area where other people are not present?

[Earl Attlee]

My Lords, the noble Lord makes a good point. Passengers may request a private search. I am confident on that point, but perhaps it would be helpful if I wrote to the Committee in a little more detail on it.

The trial delivered good results and is continuing for the remainder of the summer at least. We are actively engaging with the EU with a view to continuing to conduct such searches in this manner. I hope that the Committee will agree that the matter is under control.

[Lord Clinton-Davis]

Would the Minister say that the discussions with the commissioner concerned were very positive, or otherwise?

[Earl Attlee]

My Lords, I am very sorry, but I did not catch what the noble Lord said.

[Lord Clinton-Davis]

I think there have been discussions between the Government and the Commission. Is the commissioner concerned on the Government’s side in this matter?

[Earl Attlee]

My Lords, I am sure that the Commission is in a listening mode, because otherwise it could be storing up problems for itself in future.

[Lord Davies of Oldham]

My Lords, I am grateful to the Minister for that response, which was encouraging. I am sure the noble Lord, Lord Rotherwick, will recognise that, given the advanced years of many of us, we have great difficulty going through airport security without the implied suggestion that we have a submachine gun in our belt. When our belt has been taken off, the gun must be somewhere else. Having had a hip replacement a few years ago, I go through agonies at airport control. We all have to pay that price. I do not think that any of us doubt that airport security is of the greatest significance, and we all realise that some privations are attendant on it. However, some practices need to be looked at very carefully.

The Minister is assiduous in writing to us when he feels that he has not made a point absolutely explicit in a reply. I do not think that he needs to write to us on the question asked by my noble friend Lord Clinton-Davis. Privacy will not solve the problem. The issue is not that something is being done in public; it is that someone is touching the turban. Therefore, if the same security process is followed in private as in public, the offence will be exactly the same.

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[Earl Attlee]

My Lords, I absolutely accept the point about touching the turban, but there may be some other perfectly reasonable reason why a passenger does not want to be searched in public. They may want to explain a medical condition, for instance, that it would be too embarrassing to discuss in public, but as soon as they went into a private room they would be able to explain the circumstances and have a thorough search.

[Lord Davies of Oldham]

My Lords, of course I know that the practice occurs; it is essential where people have enormous sensitivities that ought to be respected. However, the amendment is about Sikhs. I am merely indicating that for a Sikh, an offence conducted in private is no less an offence than if it were done in the public arena. Therefore, the issue is how we maintain our security and check the Sikh population effectively when they travel, without giving extreme offence by touching the turban.

I am grateful that the Minister indicated that we are making progress on tests that will obviate the need to touch the turban, so I hope that the problem will soon be resolved. I beg leave to withdraw the amendment.

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[Lord Rosser]

My Lords, these are probing amendments to explore how the Government intend to ensure that there is no significant or damaging loss of staff with experience of relevant security issues when aviation security regulation functions are transferred from the Department for Transport to the Civil Aviation Authority.

As to the first amendment, Clause 82 refers only to the Secretary of State consulting the Civil Aviation Authority before making a transfer scheme to the CAA. Who else would the Secretary of State consult, particularly on the impact of such a transfer on individual employees who are directly affected or potentially directly affected? The second amendment requires the Secretary of State to review the impact of such transfers on the security functions of the CAA before making such a scheme, given that there does not appear to be a clear provision in the Bill, and proper assessment of the impact of such a transfer scheme on security and security functions must surely be a key responsibility of the Secretary of State before deciding whether to proceed.

It appears from the impact assessments for the legislation that the primary purpose of this switch of aviation security regulation functions from the Department for Transport to the CAA has been driven by financial considerations and the spending review, which may not be the most appropriate driving force for change when dealing with an issue of this nature—particularly when a highly successful security regime has been in operation since the tragic Lockerbie bombing.

The Transport Select Committee in the other place expressed concern that the decision to transfer aviation security regulation functions from the Department for Transport to the Civil Aviation Authority was included in the draft Bill at a late stage and was not subject to consultation. The committee also said that it was important that the CAA had sufficient security expertise to undertake its new role and that the Department for Transport and the CAA should investigate employment arrangements, possibly including secondments rather than transfers, precisely to avoid losing experience staff and expertise in the transfer of posts from the department to the CAA.

In Committee in the other place, the Transport Minister said that some 85 staff might be seconded rather than transferred, and no doubt the noble Earl will give an update on the present arrangements and intentions, the number of staff who will be transferred and seconded, and why being seconded would not be a better option for the staff as a whole. It would also be helpful if the noble Earl could say what steps are being taken to encourage staff affected to stay on in order to ensure that this transfer will not lead to loss of expertise in such a crucial part of our security provision and protection. I beg to move.

[Earl Attlee]

My Lords, let me begin with Amendment 52. The Department for Transport has already begun to engage with staff and their trade union representatives on the proposed transfer of staff from the DfT to the CAA. The department’s human resources unit has formally engaged with the Public and Commercial Services trade union and the Prospect trade union on matters relating to the proposed transfer of posts and post holders to the CAA.

There have been briefing events for staff, including a joint event with the CAA on 31 January, and staff are kept informed with regular written and oral updates. We will engage with staff and their trade union representatives as we develop the transfer arrangements over the coming months until the planned transfer in spring 2014.

Engagement with staff is vital, not least because we want to ensure that as many staff as possible transfer to the CAA, taking their skills and experience with them. A particular concern of the noble Lord, Lord Rosser, is that we do not lose this valuable expertise. We have no intention of doing anything that would cause unnecessary losses. We will work to provide as much visibility and clarity as possible about the transfer, but we cannot answer all the questions yet. The Government believe that there is no need to amend the Bill to achieve something that is already happening, so I hope that the noble Lord will withdraw Amendment 52 in due course.

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[Lord Soley]

Will the noble Lord clarify a point? Much of the concern is about staff morale. I know that this is not directly connected, but morale was a major factor in what happened with the Immigration Service. If this is not handled carefully, staff morale will go down and they will either work to rule—literally—to ensure that they are not guilty of making any mistakes, or they will just feel demoralised. I know that this is a probing amendment, which I am sure has been taken into account, but I have no doubt in my mind that the security issue is so important that staff morale is equally critical.

[Earl Attlee]

I remind noble Lords that we are in Committee, so we can speak as many times as we like. The noble Lord is absolutely right that staff morale in any organisation is key. This is of course a leadership issue, particularly for the senior personnel at the CAA. It must be remembered that some staff do not work in fixed locations; some of the staff who ensure that security is carried out properly are fairly mobile. But I accept that morale is an absolutely key issue.

[Lord Clinton-Davis]

Experience is a vital criterion, is it not?

[Earl Attlee]

It is indeed, my Lords. If we thought that we would lose a large number—or a majority—of the experienced staff due to this change, we would not do it. However, I see no reason why aviation security specialists who currently work for the DfT would not be equally happy working for the CAA. If they were being invited to work in the private sector, that could be much more of an issue. However, they will be transferring from one respected government department to another respected organisation.

[Lord Rosser]

I thank the Minister for his reply. I also thank my noble friends Lord Soley and Lord Clinton-Davis for their helpful contributions. The Minister said, I believe, that the driving force on the financial side was the principle that the user pays. Surely when we talk about aviation security regulation the principle that the user pays should not take precedence over the principle that we want the most effective security regulation arrangements.

I have not yet heard the Minister or anyone else argue that the current arrangements, which we have had for a number of years, are not highly successful and effective, as they are recognised to be. Frankly, if the real reason for this change is financial—namely, that the user pays—and is not based on improving the present arrangements for aviation security regulation, I suggest that the Government have got wrong the driving force for the change. Certainly I have not heard from the Minister any criticism of the current arrangements, any indication of how they have failed or any indication of how they will be made more successful and more efficient by the proposed change.

The Minister said that we should not go into detail about numbers. However, as I said, in Committee in the other place the Transport Minister referred to numbers and said that 80 staff might be seconded rather than transferred. I made reference to the view that was expressed that it might be better if staff were seconded rather than transferred.

[Lord Rosser]

I thank my noble friend for that point. Perhaps the Minister will comment on it in a moment.

I asked whether the Minister could give an update on how many staff will be transferred and how many will be seconded and say why secondment would not be a better option for staff generally. I am not asking him to go into the details of discussions that are taking place, but he might be able to respond to those particular points. Is the Minister willing to do so before I withdraw the amendments? I intend to withdraw them—as I said, they are probing amendments.

[Earl Attlee]

The Government believe that industry will benefit from the efficiencies that could be gained from having aviation security and safety regulation in one place. The CAA has potentially valuable experience of safety management systems that are designed to manage risks as effectively as possible. We think that this experience, coupled with the skills and experience of the DfT staff, could bring real benefit to how we regulate aviation security in the UK. That move would also mean that the principle that the user pays is applied to aviation security in the same way as it is applied to aviation safety.

Charging the industry for the regulation of aviation security will align it with the vast majority of other forms of regulation, including the CAA’s regulation of aviation safety. The aviation industry already meets the costs of providing security at close to £1 billion per annum, so the cost of regulation at £4.8 million per annum is a small addition that could be neutralised by efficiency savings arising from the reform package.

The noble Lord asked me about secondments, which the PCS trade union also raised in its evidence to the Public Bill Committee in the House of Commons. We can look at how secondments might be used as we develop our plans for the transfer. However, we consider that seconding DfT staff to the CAA instead of transferring them is unlikely to help to ensure that experienced staff remain with the CAA when the secondments end.

[Lord Clinton-Davis]

Will the noble Lord respond to my suggestion that this provision should be looked at regularly?

[Earl Attlee]

My Lords, I am sure that when they make a change, all Governments consider whether they have done the right thing. I am not sure about a formal review, but all Ministers look back to make sure that the changes that they have implemented are working.

[Lord Rosser]

I thank the Minister for the further information that he has given. I am sure that he will not be entirely surprised when I say that I still have the impression that this one is financially driven rather than driven by any real belief that the aviation security regulation function will somehow be carried out more effectively through the arrangements that the Government are proposing than they are at present. However, I have expressed my views on this and the Minister has replied on behalf of the Government. I also said that these were probing amendments, and I beg leave to withdraw the amendment.

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I ask the Minister to allay concerns, which I think are not confined to the opposition Front Bench but are widespread throughout Parliament, that reflect the obvious fact that, as far as the public at large are concerned, even more important than getting to another place on time is ensuring that one gets there or comes back. I beg to move.

[Earl Attlee]

I welcome these amendments, which enable us to consider an outcomes-focused, risk-based regime. I hope in responding to them to be able to allay the concerns of the noble Lord, Lord Davies of Oldham. However, I am not convinced that the amendment is related to the previous one, which concerned the important matter of DfT staff being looked after on transfer. They are separate issues.

The DfT has consulted on proposals to modernise the regulatory regime for aviation security. They are designed to promote innovation and efficiency, to ensure the best possible passenger experience and to bring the regime into line with better-regulation principles. The Government’s priority at all times is to ensure high levels of aviation security in the UK. We simply cannot afford a failure.

The proposed new approach is intended to give operators greater flexibility and responsibility to design security processes that deliver specified security outcomes, with greater emphasis placed on the needs of their passengers. A similar approach has been taken in aviation safety regulation.

Modernisation would be achieved by introducing the use of security management systems, or SeMS, by industry and a regulatory regime that is more outcomes-focused and risk-based—the so-called OFRB. SeMS is a systematic approach to managing and embedding security in the day-to-day activities of an organisation. We are starting with a series of pilots in which industry operators will develop the SeMS approach and, in so doing, create an enhanced internal security culture. Once these pilots have been concluded and we are satisfied that the SeMS framework is sufficiently robust, we shall look to roll it out generally across the industry. This will provide a sound basis for the design and development of the OFRB regime.

The proposed reforms represent a significant change in the approach to the regulation of aviation security both for the industry and the regulator. We have therefore decided to take an incremental approach to reform to ensure that the UK’s high level of aviation security is maintained at all times. This incremental approach also aligns well with the Government’s intention to embed in industry a culture of continuous improvement of the UK’s aviation security regime, as has been the case for aviation safety.

Many organisations have commented that the full benefits of OFRB—in particular, flexibility for operators in the design of security processes—require changes to the highly prescriptive European legislation, which specifies common basic standards for aviation security. We will use the SeMS pilots to build the evidence base necessary to engage with our European partners and to make the case for change. This will take some time.

I say in answer to the noble Lord, Lord Davies of Oldham, that the move to OFRB will not be a single big change but a continuing one—it will not be sprung on stakeholders. This is also necessary because some 1,000 industry entities in the UK are directed to implement aviation security measures, and it would not be feasible or sensible for them all to move to OFRB at once.

The Secretary of State intends to take forward the reformed approach to aviation security regulation under powers in Part 2 of the Aviation Security Act 1982 by giving directions to industry operators, such as airports. In passing Part 2 of the 1982 Act, Parliament has granted the Secretary of State a power to give directions to industry for the purpose of protecting civil aviation against acts of violence. Successive Transport Secretaries, irrespective of party, have made aviation security directions that they consider necessary to protect the security of civil aviation. The Secretary of State’s direction-making powers set out in Part 2 of the 1982 Act do not require the approval of Parliament before they can come into force.

Introducing a new layer of legislative approval for the introduction of an OFRB aviation security regime could risk damaging our ability to respond swiftly to implement necessary changes to aviation security in the face of continuing and evolving threats. These amendments would mean that if the response to a new threat affected the framework of the outcomes-focused, risk-based regime, an order would be required that would be subject to the approval of both Houses. This would inevitably take time, even with the most efficient business managers in charge of Parliament’s agenda. Your Lordships will know that it is sometimes necessary to make changes very quickly to respond to new threats, in some cases within a matter of hours.

For example, swift action, including an immediate ban on liquids, had to be taken in response to the liquid bomb plot. The plot was uncovered during the Summer Recess, and if it had been necessary to recall Parliament and have these matters debated by both Houses, it would have been impossible to respond effectively. I am sure that your Lordships will recall the printer bomb plot in October 2010, when it was necessary to place emergency restrictions on air cargo. If my right honourable friend the former Secretary of State had not been able to act quickly to ban certain consignments, we could have been left exposed to similar attacks.

Noble Lords will have seen the Written Ministerial Statement made by my right honourable friend the Secretary of State on the 26 June about the reform of the aviation security regulatory regime and the Government’s response to the preceding consultation. I can assure your Lordships that the Government will continue to keep Parliament informed as we develop, pilot and implement the new regime over the coming years. However, I hope the Committee will agree that Amendments 54 and 75 would not only be impractical but could have a damaging impact on our ability to keep passengers secure. Therefore, I urge the noble Lord to withdraw or not to move the amendments.

[Lord Davies of Oldham]

My Lords, I have a bone of contention with the Minister. I am not prepared to accept what he said about the new measures necessary to deal with the threat of the liquid bombs. Clearly effective action was taken and we all know the constraints. I can even remember the size of the cardboard box that Heathrow kindly provided for me to ensure that the baggage that I was taking to the cabin could be measured accurately. It was the least precise device that I have ever seen. Nevertheless, you cannot expect technology to appear at every point in an airport. I am not prepared to have that emergency response to a clearly individual, defined threat compared with a whole schematic change to the concept of airport security.

After all, it is the Minister who is dressing up the scheme in excellent technical language. It is he who has to take responsibility for the fact that the scheme arrived on the scene somewhat late and was not subject to scrutiny before it appeared in the legislation. It is the Minister who has to bear the responsibility for the fact that the most apparent thing to the industry about the scheme was that the costs were being transferred. We all know the driver for that, so he will not mind if there is an element of suspicion in the Committee that the issue that drives the scheme is the transfer of costs rather than the more successful implementation of a security regime.

The Minister has not even as yet identified the imperfections of the scheme under which we have been secure to a large extent in recent years. No, I do not expect him to detail how to make a bomb that is concealed from airport security, or anything ludicrous like that. However, I am asking him to make some clear comparison between the scheme under which we all travel safely now and the introduction of a new one which he says will be introduced partially and gradually. Parliament will get some kind of report, but there will be no question of Parliament actually evaluating the scheme, because it regards such amendments as unnecessary. The Minister is always assiduous in his replies on these amendments, but on this occasion he has not faced up to the challenge that we have laid down. I do not know whether he will want to give a little reassurance so that I can withdraw the amendment with a good conscience, otherwise I will be withdrawing it with a very bad conscience indeed. That would not matter much to the Minister, except that a bad conscience also leads to further consideration on Report.

[Earl Attlee]

I would not want to leave the noble Lord upset. However, first, I remind the Committee that my right honourable friend the Secretary of State retains responsibility for aviation security. None of this changes that. In addition, I would like to remind the Committee of one thing. If we were to adopt the noble Lord’s amendment, it could have unintended consequences. We might think that it would be fine; but when we wanted to change something quickly, we would come up against that most ancient law, the law of unintended consequences. We need to be extremely cautious, therefore, before we think about tying the hands of the Secretary of State and removing that flexibility that she has to give the necessary directions in respect of aviation security.

[Lord Davies of Oldham]

I would be the last person to want to see a reduction in the Secretary of State’s powers in this very important area, and I am not suggesting that Parliament will set out to destroy the security scheme for the aviation industry. Responsible Members of Parliament would do no such thing, of course. What we are looking for is a clearer evaluation than that presently to hand of the merits of this approach, apart from cost savings for the department. The industry will accept this grudgingly, because the costs are put upon it. It may be entirely proper that it should bear the cost. However, one would have thought that this would be presented to the industry with greater consultation than it has had.

As for Parliament, it is clear that we are all taking a great deal from the Minister on faith. I have no doubt that the concept is excellent, if it is ever clearly explained to me. However, the Minister has not taken the opportunity on this occasion to explain its merits over what we have at the present time. If he had said, “Of course, I can’t do that, because that would imply that I am giving some comparative analysis that would give information to hostile elements”, I would probably have taken that in my stride, but he did not say that.

[Earl Attlee]

Certainly not—that would be a weak argument. I can suggest, however, that if the noble Lord would like, I can organise a briefing between him and the officials who are handling this issue. We can go into it in greater detail and ensure that both of us are happy about it.

[Lord Davies of Oldham]

My Lords, the Minister is generous with letters that whizz round after Committee proceedings, and he is always generous in his replies, although they do not always meet the exact points. I am probably obliged to take him up on his offer of what will be an enormously illuminating occasion. However, I am not clear whether it will be of any use to other Members of the Committee, or to other Members of either House of Parliament, to know that the opposition spokesman will be a bit wiser in a few days than he is at present. The noble Lord might think that that suffices, but I do not. However, I beg leave to withdraw the amendment.

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[Lord Soley]

I go further than the noble Lord in commending the noble Lord, Lord Davies, on the skill with which he presented this amendment. He is right in principle, but the reason for my slightly mischievous intervention is my concern that one always finds provisions such as this being put into aviation Bills and not into train or road transport Bills. The reason for my concern is not that I am for or against the aviation industry, which after many years of kicking and prodding from people such as me has begun to get its act together on presenting its case on climate change and emissions, but that such provisions lead people to believe that you cannot fly but that you can travel as much as you like by road or rail, which is untrue.

I took great issue a few years back with front-page adverts from rail companies about high-speed rail links, saying, “Travel by train and zero emissions”. I thought, “Fantastic! Energy direct from the sun! We have no power stations using coal, oil, gas or nuclear fuel; we just direct it from the sun”. I pick up wonderful magazines, such as that of the RSPB, of which I am very fond, which tell me that we have to stop building airports and flying, and that it is really wicked. I then turn to the back pages and find between 10 and 20 adverts telling me to fly off to exotic places where I can see wonderful birds that are about to be wiped out by climate change. That is the cause of my slightly mischievous intervention on my noble friend’s amendment.

When we talk about building high-speed rail, which I am greatly in favour of, we are talking about producing concrete for a couple of thousand miles of track. To produce one tonne of concrete requires the production of one tonne of CO₂—to knock off 10 or 20 minutes of the journey time to Birmingham. We cannot make the case on climate change. We can make it on other grounds and do lots of other things on climate change. I can tell the right reverend Prelate, who made a useful speech, that one piece of good news for him is that many airlines, including BA, Virgin and Air New Zealand, are now flying with a mix of fuels in their tank that includes algae and other environmentally friendly fuels. Algae have a good future. They will never be an entire replacement—they will probably be about 20%—but they are making a difference.

Returning to the amendment, before I get pulled up, the principle is right but my preferred way to address this is that every transport form, road rail or air, ought to be instructed clearly to drive down emissions. That is what matters. I do not object to the amendment in principle, but it has to apply to rail stations and bus stations as well. If I stand in King’s Cross or Euston, I know that it is not oxygen that is being belched out of the train engines or the taxis with their engines running waiting to pick up people; it is CO₂. I would prefer that we said that we should drive down emissions across the board. For the past 20 or 30 years, I have never doubted the dangers of climate change—I have written about it from time to time—but we have to be realistic about it. At the moment, the way in which we measure it is not terribly accurate and has a long way to go. All forms of transport—rail, road, air and anything else—should drive down emissions. If we want to put up something to say what we think emissions are in airports, I have no problem with that in principle; I would just extend it to other areas.

[Earl Attlee]

I will begin with Amendment 57, because it raises different issues from the other two amendments. I am aware, however, that similarly worded amendments were tabled in Committee in the House of Commons and defeated in a Division.

Before turning to the detailed points made by your Lordships, it is important that I emphasise the function of the clause that the amendment would alter. Clause 83 gives the CAA a new and important statutory role in promoting better public information about the aviation industry’s performance. This is intended to improve choice in the market and address what economists call asymmetric information, in that passengers do not always have the information they need to compare the services on offer.

Giving consumers more information on service quality provided by airports and airlines will help to ensure that markets deliver consumer benefits in practice. These issues fall fairly and squarely within the remit that Clause 83 would give to the CAA. Indeed, these may well be issues that the CAA will wish to focus on, though I would not wish to pre-empt its consideration and consultation on the use of these functions.

In our previous sitting, we had a good debate about immigration and baggage handling, but no noble Lord has raised those issues today, so I shall not speak about them unless a noble Lord would like me to.

On Amendments 57 and 60, it is important to emphasise the importance of the clauses that the amendments would alter. I fully agree about the benefits that can be gained by giving passengers clearer and better information about the environmental impact of their travel choices, including the carbon impact. We are committed to ensuring that the transport sector plays a full part in delivering the emissions reductions needed to meet our Climate Change Act targets. The Government have already set stretching, legally binding carbon budgets which will see a 50% reduction in emissions by 2025, compared to 1990 levels, on a path towards an 80% reduction by 2050.

On 1 December, the Government published the Carbon Plan, setting out how we will meet the UK’s legally binding carbon reduction targets over the next two decades and beyond. The Carbon Plan details our ambitious plans to deliver major reductions in carbon emissions from the transport sector and from other sectors over the coming decades. It sets out a radical vision for the almost complete decarbonisation of cars and vans by 2050.

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[Lord Bradshaw]

Perhaps I may add my congratulations to the noble Lord, Lord Rosser, on what he has said. I do not know whether the amendment is acceptable in this form, but I look forward to seeing something at Report stage that will safeguard the interests of consumers.

[Earl Attlee]

My Lords, the amendment addresses two concerns, both of which I share. I can recall very well the debate initiated by the noble Lord, Lord Mitchell, on precisely these issues, and I hope that I gave a positive response at the time. One of the issues is the ability of the CAA to publish comparable information on air transport service pricing, and the other is that of showing the full costs of travel and surcharges. In responding, I will show that the first is already provided for in the Bill and that the second is being addressed in other ways.

The noble Lord, Lord Rosser, is right to say that the CAA should have a role. Clause 83 is widely drawn and thus gives the CAA a new and important statutory role in promoting better public information about the aviation industry’s performance. It imposes a duty on the authority either to publish, or to arrange for the aviation sector to publish, consumer information and advice that it considers appropriate to help people compare aviation prices and services. The judgment of what is appropriate will be a matter for the regulator, which is required to prepare and consult on a statement of its policy with regard to the use of these functions. The information that Clause 83 requires the CAA to publish, if it considers that appropriate, is defined in a way that includes price comparison data, and the proposed amendment will not therefore add anything to what the CAA will be able to do. For that reason, the amendment is not necessary, and the Government oppose it.

In the debate on Second Reading, the noble Lord, Lord Rosser, expressed his concerns about the full costs of travel and surcharges. I will therefore set out what the Government are doing to address the issue. On the full cost of travel, consumers are already protected throughout the EU by Article 23 of EU Regulation 1008/2008, which is sometimes referred to as the ticket transparency regulation. It requires airlines to display at all times their prices inclusive of all unavoidable and foreseeable taxes, fees and charges. It also requires any optional services such as checked baggage or priority boarding to be offered on an opt-in basis only, and that the prices for these optional extras are clearly and unambiguously displayed at the start of the booking process. In addition to displaying fully inclusive prices, the regulation requires a breakdown of the price into the fare and any taxes, charges, surcharges and fees where these are added. These services should be displayed clearly and unambiguously at the start of the booking process. These requirements are designed to ensure that consumers are able to compare the price of flights across a number of airlines and to ensure that they select only the optional extras they require.

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[Lord Soley]

I am slightly worried about the direction of travel of the Minister’s comments. It is one thing to say that they must publish information under Article 23; it is another to say that they are right up front so that a passenger knows. I do not believe that Ryanair has been giving true and full information to people in a way that enables them to assess the full cost, rather than flicking over it in the small print—although I accept that the print will not necessarily be that small. I would be happier if there were some proactive way to intervene—for the CAA, or whoever, to look at it and say, “This is utterly unacceptable and has to stop”. As far as I know—I have not tried it myself recently but this is what I have been told by passengers recently—this is still happening with Ryanair.

[Earl Attlee]

My Lords, I am sure that many noble Lords share the noble Lord’s view of that airline but, on the issue of publication, it is up to the CAA to determine what to publish, taking into consideration the results of the consultation.

On the second issue of payment surcharges, like the noble Lord, Lord Rosser, I share consumers’ concerns about the high level of payment surcharges applied by some companies and that often people are not aware of the level of these charges until almost at the end of the booking process. That makes it difficult to compare prices and shop around for a good deal. It is not right that a business should try to hide the true cost of its services by implying that its prices are made up of elements beyond its control when they are not.

Your Lordships will be aware that consumers are already protected against misleading pricing under the Consumer Protection from Unfair Trading Regulations. Additionally, on 23 December 2011 the Government announced our intention to consult on implementing the payment surcharges provision of the consumer rights directive ahead of the June 2014 deadline. We intend to issue a consultation in the summer to seek views on the timing of implementation and other details on how the provision should be applied. Responses to the consultation will inform our decision on timing and our guidance to businesses.

I hope that it is clear from what I have said that the intent of the amendment is already implicit in the primary duty and that effective mechanisms are already in place to secure the result intended. Given that, I hope that at the appropriate time the noble Lord will feel able to withdraw the amendment.

[Lord Rosser]

I thank the Minister for his reply, which I thought was going to be even more helpful than it proved to be, although I do not question his desire for transparency to be brought into charges and surcharges levied on air transport users.

I thought I heard the Minister say—when or shortly after he referred to the article under EU regulations—that the Civil Aviation Authority was of the view that airlines were complying with the regulation. If I understood correctly what the Minister said, and if the CAA is basically happy with the current situation, my only comment is that Clause 83(1), with its requirement for the CAA to publish or arrange for publication of information to assist users of air transport services, will not have any great force if the CAA considers that the situation is already satisfactory in relation to making the charges and surcharges known.

However, the extremely helpful contributions of my noble friend Lord Soley and the noble Lords, Lord Rotherwick and Lord Bradshaw, indicated that the current situation is not satisfactory and that charges are not easily and readily available to users of air transport services. For that reason, I feel somewhat concerned by the nature of the Minister’s reply. I get the feeling that the Civil Aviation Authority thinks that, in essence, the situation at the current time is satisfactory. Clearly, from the comments made in this debate, and from reports in the newspapers of individuals who have fallen foul of the surcharges, it is not. If the Government do not like the wording of the amendment, perhaps they will go away and produce wording that they think is appropriate. It is a test of how determined they are to be on the side of users of air transport services.

The Minister may argue that the issues are covered by this or that legislation or by something in the Bill, but Clause 83(1) makes no reference to charges or surcharges. Clearly there is still a problem here. This is an opportunity for the Government to show their determination to be on the side of the users of air transport services, who have suffered from these additional charges. The Government can show that by making it even more explicit than they believe it to be in the Bill that it is a duty and a responsibility of the Civil Aviation Authority to make sure that the full cost of travel for users of air transport services, including all relevant surcharges that such users will be expected to pay, is available through CAA channels or directives. The CAA would be regarded as an impartial and objective body that would give reliable information rather than information that might be open to more than one interpretation.

I beg the Minister to think again about this. The issue is about making information clear and stopping people finding additional charges that they did not expect. It ought to be possible—I argue that it is necessary—to make sure that the Civil Aviation Authority, with its powers under the Bill, should provide this service for air transport users. The Government should make it very clear in the Bill that that is part of the CAA’s role and that this is the kind of information that it should provide in a clear, objective and impartial form that is easily available to those who want to use air transport services. This is about the importance that the Government attach to highlighting this problem and dealing with it.

[Earl Attlee]

My Lords, I reiterate to the Committee that the Government accept that there is a problem. We are determined to deal with it but we need to do so in the right way. The noble Lord asked me about what I said about Article 23. Perhaps it is worth carefully going over it because it was carefully drafted. The CAA has been working with airlines to ensure compliance with this requirement and considers that the airlines that it worked with are now compliant with Article 23. That implies that the airlines that it did not work with are not compliant.

[Lord Soley]

That is the point: some of them are not. I could name Ryanair, but there are others too. Some of this is down to the psychological trick where, as you go through your booking form, usually on a computer, you tick the “something extra”. Each one on its own seems small; you get to the position where you enter your card number and book the flight; you say, “All right, I will go ahead”; and then you add it all up afterwards and it is painful. My noble friend Lord Rosser is right: we need to get much tougher on this.

I have not looked at Article 23. I will do so and I am grateful to the Minister for drawing it to our attention, but I have a strong feeling that unless there is a tough ruling on this we will not get what we want, or not for a very long time.

[Earl Attlee]

My Lords, I agree with the noble Lord’s analysis. However, it is open to and up to the CAA to determine how it will publicise the situation. It may choose to report on the headline price of a ticket offered by an airline and then say, “But just before you click, you will find out that it is three times more expensive”. It is a matter for the CAA to say how it is going to do this.

It may be helpful if I say what the CAA is already doing in this area. The CAA has researched the fees and charges of the top 24 airlines operating from the UK, including the cost of paying by credit card, booking an assigned seat and taking various weights of hold luggage, and has published a comparison table. This table provides consumers shopping around with the ability to see what charges they might face, and the ability to use that information to help them decide which airline to travel with, based on their individual needs. The CAA has also recently updated all the information and advice available to passengers through its website, in order to give pre-shopping advice as well as advice on resolving travel problems.

I am aware that I myself have never thought of looking at the CAA’s website when considering purchasing an airline ticket. Perhaps there is a lack of knowledge among consumers that this information is available.

[Lord Soley]

I do not think that the Minister is alone in not looking at the CAA website before booking his ticket; that is fairly common for most people. It is clear that the CAA is hearing this debate now. Could we ask it, through the Minister, to report to him on what it is doing so that he can let the Committee know? It is the sleight of hand by some of these airlines that needs to be addressed. As a Member of this House, I would like a very clear response from the CAA about what it is going to do because the situation is unsatisfactory.

[Earl Attlee]

My Lords, I am fairly confident that the CAA will be listening very carefully to what the Committee has to say.

--- Later in debate ---

[Lord Trefgarne]

I apologise for not being here earlier. I hope that I am in order in asking the Minister one question arising from Clause 83(1) on the reference to civil airports and all the divisions of the clause that relate to them. He will be aware that some military airports accept civil flights. What will be the position in that case?

[Earl Attlee]

My Lords, my noble friend has questioned whether Clause 83 should stand part of the Bill without having given notice on the Marshalled List. That does not put me in a very good position to answer his question. However, I am very happy to write to him.

[Lord Trefgarne]

Much obliged.

--- Later in debate ---

[Lord Trefgarne]

My Lords, like my noble friend Lord Rotherwick and, I think, my noble friend Lord Goschen, who is not in his place, I was much disappointed by the Minister’s replies to amendments about civil aviation earlier in our consideration of the Bill the other day. I hope that he will be a bit more forthcoming in response to the latest amendment from my noble friend, which has my strong support.

[Earl Attlee]

My Lords, I thank my noble friend for tabling the amendment. We had an informed debate about general and business aviation on the first day of Committee, and I committed to meeting my noble friend Lord Rotherwick and his team to discuss the interests of general and business aviation further. I am sorry that my noble friends were disappointed by my response on that occasion.

The proposed new clause seeks to replicate the information publishing requirements being imposed on the Civil Aviation Authority by Clause 83. However, the Bill already covers general and business aviation interests where the flights include passengers, cargo or both. So, for example, where a corporate flight is carrying business passengers, the proposed duty under Clause 83 will extend to these situations because the passengers comprise users of air transport services. In these cases, the CAA functions will allow it to correct the asymmetric information market failure that I alluded to when we debated Clause 83 in all instances where there are users of air transport services.

The Bill does not include either the part of general aviation that is for non-commercial leisure use or the part that comprises commercial services that do not involve the carriage of cargo or passengers. Examples of these are crop spraying, flight training and surveying—I suspect that that is a concern of my noble friend. The amendment extends a duty to publish information beyond passengers and cargo. However, the market for general aviation is more transparent than that for the ordinary consumer. General aviation users comprise trained and licensed pilots with ready access to networks and sources of information. Comprehensive information on what facilities are available to pilots at each UK-licensed airport and airfield is already freely available online from, for example, the UKGA website. Much more information is also available through published flight guides or from the relevant aerodromes.

A further duty on the CAA, as the amendment proposes, to take into account the reasonable interests of general and business aviation is therefore unlikely to make a material difference to the information that is available to those airport service users. Against that background, we do not think it appropriate to give specific prominence to the interests of general and business aviation or, indeed, to any other specific sector. Moreover, we consider that such a duty would impose an unreasonable financial burden on the CAA and the aviation industry. The burden would fall either on the aviation industry generally, which would not be equitable, or on the general aviation community, which as I have explained has access to the information that it needs. For these reasons, I hope that my noble friend will consider withdrawing his amendment.

[Lord Rotherwick]

My Lords, I thank my noble friend for his response and my noble friend Lord Trefgarne for his support. I have listened carefully to what the Minister said, but I think I will need to read it as well. The overall principle that I am trying to establish is that the CAA should have more regard to championing the cause of general and business aviation. At present, the sector does not feel that it has a champion to look after it, and this is but a small area in which it has concerns. However, I thank my noble friend once again for his kind words and I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Clinton-Davis]

My noble friend has addressed a very important issue. I speak as someone who is partially disabled. Some sort of annual report is desirable. I am not sure whether it has to be dealt with in legislation, but there ought to be a clear obligation to ensure that the requirement is enforced. I cannot understand why there should be any opposition to that. I do not care whether there is a requirement in law, but there ought to be an understanding, if there is not a requirement in law, that that should be invoked.

People who are disabled or have reduced mobility are highly important passengers. At the moment, their requirements are not properly met. Therefore the proposition advanced in the amendment ought to be implemented forthwith. Again, disabled and reduced mobility passengers are vital and should not be overlooked. I hope that the Minister will properly address the important point made by my noble friend Lord Rosser.

[Earl Attlee]

My Lords, of course the Government agree that it is important that airlines and airports are sensitive to the needs of disabled people and comply with the European regulation which has been enacted to protect the interests of people with disabilities. The noble Lord, Lord Rosser, has asked a specific question about how the CAA balances its duties under Clause 1 with the needs of disabled passengers. The answer is that the CAA has to strike a balance. The reason for that is that disabled passengers are also users of air transport services, so they need to be taken into consideration.

Unfortunately, however, I cannot support the amendment for several reasons. I must highlight concern about how it would work in practice: my first concern is practical. The amendment is drafted in such a way as to put the obligation to produce an annual report jointly on the Secretary of State and the Civil Aviation Authority. I have significant doubt about linking together the regulator and the Secretary of State in that way. The aviation regulator and the national enforcement body for European aviation consumer legislation is separate from the Secretary of State in respect of ensuring compliance with EU law, and the amendment could be seen to compromise the CAA’s independence in that role.

The second reason why I cannot support the amendment is that effective mechanisms are already in place to secure the commendable result intended. I say in answer to the noble Lords, Lord Rosser and Lord Clinton-Davis that the CAA already publishes an annual report and corporate plan and makes a considerable amount of consumer information available on its website. An extra annual report on a specific area of legislation, on top of those more wide-ranging reports, would be disproportionate. The CAA is already committed to the principles of better regulation and aims to be as transparent as possible in all its work, including compliance with and enforcement of consumer protection legislation.

The noble Lord, Lord Rosser, asked about the future of the Disabled Persons Transport Advisory Committee. The Government have gone out to public consultation on the future of the DPTAC. The consultation closes in September. The CAA continues to develop its capacity to help consumers and has advanced the setting-up of a new consumer advisory panel to act as a critical friend of the regulator as it moves forward in putting consumers at the heart of its regulatory efforts.

[Lord Clinton-Davis]

The noble Lord explained that there was an obligation on the CAA to do something like this. Do ordinary consumers have the ability to understand the obligations of the CAA at present? That is all-important; I am not sure that they have.

[Earl Attlee]

My Lords, the noble Lord makes an interesting point. In a debate on an earlier amendment I admitted that I had not looked at the information that the CAA published on issues such as fares. I also admit that I have never looked at the CAA website, and I suspect that most passengers never look at it. However, several organisations look after the needs of disabled people, and I have no doubt that they will look very closely at all the information that is published by the CAA.

[Lord Clinton-Davis]

That is not good enough. There is an obligation on everyone in this Committee to understand precisely how disabled people, or those with reduced mobility, are protected. It is absolutely important.

[Earl Attlee]

My Lords, if the noble Lord will let me finish my speech, he may gain a better understanding. Also, I will send him more details by post.

Noble Lords will know that the CAA announced in April that the chair of the new panel would be Keith Richards. Mr Richards has considerable experience of disabled air passenger issues, having been chair of the aviation working group at the Disabled Persons Transport Advisory Committee for many years, as well as a former head of consumer affairs at the Association of British Travel Agents. The CAA and the new panel chair will need time to develop a relationship, but, it would not be unreasonable to suppose that the experience of disabled passengers at airports and on planes will be of considerable interest to the new chair. I suggest that it would be better to allow the new CAA consumer panel to have the space to develop how it will go about its work, and how best to support and inform passengers, than to impose an obligation on it in the way suggested by the noble Lord’s amendment. In view of this, I hope that the noble Lord will withdraw his amendment in due course.

[Lord Rosser]

I thank the Minister for his response, and I thank my noble friend Lord Clinton-Davis for his very helpful contribution. I do not see the amendment, as the Minister implied with his last comment that he sees it, as imposing a great burden in future on the CAA. If part of the problem is that the Secretary of State is also involved and the Minister does not think that appropriate, that issue could be addressed in a further amendment at a later stage.

The Minister did not address the enhanced, more important and more influential role that the CAA will surely have under the Bill, which gives it additional responsibilities and lays on it a general duty to carry out its functions in a way that will further the interests of users of air transport services. Simply to say that it already produces a report perhaps does not do justice to the enhanced role and greater importance and influence of the CAA that appears to be provided for in this legislation.

--- Later in debate ---

[Lord Rosser]

I thank the noble Lord for that contribution. If the Minister had stood up and said that—unless he is going to say that such a passage is already in the annual report from the CAA, in which case I suspect that it would need to be expanded in view of its enhanced role—I might well have felt that it was a move in the direction of the amendment. My concern is not so much about whether the report is a separate document as about whether the issue is covered and addressed by the CAA. If it can address that properly and fully in an existing annual report, I am sure that that would go a long way towards meeting the point that I have made in the amendment.

[Earl Attlee]

My Lords, the noble Lord asked me about the difficult point of the CAA balancing the needs of different users. As I have already said, they are in the same group—that is, users of air transport services. However, there is nothing to prevent the CAA focusing on different groups of users in exercising its information duties. I will write to the noble Lord in greater and more carefully considered detail on these points. I can see that he is very interested in exactly how the legislation works. The matter is far too technical for me to be able to respond orally, and I am sure that it is much better handled in writing.

[Lord Rosser]

As I said, my main concern is not that there is a separate document but that the issue is covered. Can the Minister give assurances that in annual reports from the CAA—he has expressed his concern about the Secretary of State also being involved—the issues that we have been discussing can be addressed under the new powers that the CAA will have under the Bill?

[Earl Attlee]

My Lords, I think it is much wiser for me to confine all that to my letter to the noble Lord.

[Lord Rosser]

I am happy to accept that, if the Minister will address the matter in his response. In view of that, I beg leave to withdraw the amendment.

--- Later in debate ---

Moved by

[Earl Attlee]

61: Schedule 13, page 115, line 5, leave out sub-paragraph (3)

--- Later in debate ---

Moved by

[Earl Attlee]

63A: Clause 94, page 57, line 20, at end insert—
“(d) that a person (“P”) acting in the course of a business carried on by P does not in the United Kingdom facilitate the making available of flight accommodation by another person in circumstances in which one or more prescribed arrangements relating to payment apply, unless P meets the condition in subsection (1A).”

[Earl Attlee]

My Lords, the Air Travel Organisers’ Licensing (ATOL) scheme, which is run by the Civil Aviation Authority, has been effectively protecting holidaymakers from the insolvency of travel companies selling package holidays including a flight since the 1970s.

Last year, 18.5 million passengers were protected by the ATOL scheme, with 47,000 being repatriated and 146,000 receiving refunds when their travel companies became insolvent.

However, we need to modernise the scheme so that it better reflects the way that holidays are now bought and sold in today’s market, particularly with the increasing importance of the internet. For example, it has become increasingly difficult for consumers to know whether their holiday is a package holiday, and so protected under the ATOL scheme, or is comprised of individually sold elements that do not have full ATOL protection. The framework for businesses selling holidays including a flight could also benefit from being clearer and more consistent.

That is why on 30 April 2012, the Government introduced new ATOL regulations made under existing powers in the Civil Aviation Act 1982 to provide greater clarity for consumers about whether their holiday is protected by bringing flight-plus holidays sold by tour operators and travel agents into the scheme. Those are holidays which look like a package but which sit outside the legal definition of a package. From October, consumers will also receive an ATOL certificate whenever they purchase an ATOL-protected product confirming that their holiday is protected, increasing clarity about the scheme’s coverage.

Clause 94 would allow those reforms to go further by broadening the Secretary of State’s powers to make regulations under Section 71 of the Civil Aviation Act 1982 so that holidays sold by airlines could be brought into the ATOL scheme, as far as is consistent with EU law, as well as those arranged on what is called an agent-for-consumer basis.

The proposals were consulted on last summer. Bringing agent-for-consumer holidays into the ATOL scheme was strongly supported as a way of improving consumer clarity and ending a potential way for businesses to avoid the scheme. Bringing holidays sold by airlines into the scheme received mixed views. It was not supported by airlines, which argued that it would be disproportionate regulation. However, on balance, the Government decided that they should have the power to do that, because it could create a more consistent and coherent framework for businesses as well as further improving consumer clarity about the scheme’s scope. Should the clause become law, the Government would expect to consult stakeholders in 2013 on new draft regulations to give effect to these changes. The proposals were welcomed by both sides in discussion of the Bill in the House of Commons and in our debate at Second Reading.

While preparing for the introduction of the new ATOL regulations on 30 April, two circumstances were identified that might allow some businesses to avoid the ATOL scheme. Without addressing these, the objective of providing greater clarity for consumers and more consistent regulation for businesses could be compromised. It is not possible for these issues to be resolved through further secondary legislation, as the powers in Section 71 of the Civil Aviation Act 1982, even if amended by Clause 94, are not sufficient. For this reason, the Government have brought forward Amendments 63A to 63D. I shall deal first with Amendments 63A and 63B.

A model used by some businesses in arranging a flight-plus holiday is to facilitate the purchase of a flight; that is, purchasing a seat on a flight from an airline at the request of a consumer. By acting in this way, a business may not be covered by the current ATOL scheme and is not making available a seat on a flight by acting on behalf of the airline. The business’s way of trading may also not be that of an agent for the consumer, and so it would not be covered by the ATOL scheme if it were to be amended under the powers extended by Clause 94. However, it could be difficult for consumers to tell when the purchase of a holiday including a flight was being facilitated and sold outside the ATOL scheme, as the holiday purchase could be identical to those which are protected under the ATOL scheme. To reduce the risk of confusion for consumers and to ensure that the facilitating model does not provide a way for businesses to avoid the ATOL scheme, Amendments 63A and 63B would allow the Secretary of State to make regulations to require businesses that facilitate making available flight accommodation to have an ATOL licence. Although this may appear to be a broad power, it is important to note that it can be used only where a business makes or receives a payment in relation to the flight accommodation or facilitates the making or receiving of a payment.

I turn to Amendments 63C and 63D. The current ATOL regulation-making power in the Civil Aviation Act 1982 allows goods, services and other benefits such as hotel accommodation or car hire to be regulated when they are supplied in connection with a contract for a flight that is subject to the ATOL scheme. That is the basis for including flight-plus holidays in the ATOL scheme. However, some businesses could argue that as any hotel accommodation, for example, purchased by a consumer alongside the flight is supplied on an entirely separate contract from that for the flight, which might be clearly stated in their terms and conditions, the holiday is not subject to the ATOL scheme. To address this, Amendment 63C would allow future ATOL regulations to specify the circumstances where goods, services and other benefits purchased alongside a flight are to be regulated under the ATOL scheme rather than limiting them to where they applied in connection to the contract for the flight.

Finally, Amendment 63D is a consequential amendment to ensure that identical wording to that used in Amendment 63C is used in another part of Clause 94 concerned with goods, services and other benefits that are within the ATOL scheme. Subject to the passage of the Bill, the Government’s intention is to consult fully in 2013 with stakeholders on the potential use of the powers in Clause 94 as drafted. An impact assessment will also be produced as part of that consultation. Should the amendment to Clause 94 that I have outlined today become law, that consultation and the accompanying impact assessment will also include the use of the powers in the amendments.

To conclude, without these amendments there is a risk that the achievement of the Government's objectives for ATOL reform—to provide greater clarity for consumers about the scope of the scheme and a more consistent regulatory framework for business—may be compromised. The amendments are intended to ensure that those objectives can be achieved as envisaged. It is not the Government’s intention that that should lead to a significant extension of the ATOL scheme. I beg to move.

[Lord Davies of Oldham]

My Lords, the Minister is certainly correct in saying that the extension of the ATOL scheme contained in the Bill has won the support of both sides in the other House. We also indicated at Second Reading how much we approved of this extension of the ATOL scheme. We thoroughly endorse the main objective which the Minister is seeking to achieve and are delighted to see it in the Bill. I take it that the categories that are extended will receive the ATOL certificate in the same way as all others that are part of the scheme, so that consumers will know they are contained within the scheme under the new arrangements of Amendments 63A and 63B. I am making that assumption—if the Minister nods his assent, I am reassured on that front. That is excellent news.

On the other question, I understand the point that there is no attempt to greatly extend the boundary of the scheme while seeking to preserve protection in those specific cases. I hope that that boundary is easily maintained, because that is what is being put in the legislation. We all know that there are two categories of disappointed people. There are those who did not participate in the ATOL scheme and were never therefore covered, who are utterly dismayed when things go badly wrong. There is no event in one’s normal life much worse than a holiday going badly wrong. However, if anything, it is worse to think that you are covered when you are not. As long as there is clarity at the boundary about that, I am entirely satisfied with the amendments and am delighted to see them being proposed.

[Earl Attlee]

I thank the noble Lord for his support for my amendments. I beg to move.

Amendment 63A agreed.

Moved by

[Earl Attlee]

63B: Clause 94, page 57, line 33, at end insert—
“(1D) The arrangements relating to payment that may be prescribed under subsection (1)(d) are any arrangements under which P makes or receives payment, or facilitates the making or receipt of payment by another person, in connection with the making available of the flight accommodation.””

Vehicles: Insurance

Earl Attlee Excerpts

Wednesday 4th July 2012 Lords Chamber

[Earl Attlee]

My Lords, 1.2 million vehicles are recorded as being uninsured. Our actions to reduce this are, first, the offence of keeping a vehicle without insurance; and, secondly, allowing insurers access to DVLA driver details on penalty points and disqualifications in order to reduce fraud. The Secretary of State recently hosted a cross-government summit with insurers on measures to reduce the cost of premiums, which would lessen the incentive to drive uninsured.

[Baroness Oppenheim-Barnes]

My Lords, I thank my noble friend for that reply. Is he aware that in France all motor vehicles have to carry a pink disc alongside their equivalent of our tax disc, with their insurance details obvious in the windscreens at all times and updated when required by law? Surely this is a simple way of assessment as other members of the public will notice cars that are not carrying a pink disc and any policeman or other enforcement officer passing by will know immediately that a car is not insured.

[Earl Attlee]

I thank my noble friend for a very sensible suggestion. However, under the new system of continuous enforcement insurance the vehicle keeper will have to insure the vehicle or declare it to be off the road by means of a Statutory Off Road Notice. If the keeper does neither, a fixed-penalty notice for £100 will be issued. This will strip out the softer evader, leaving a smaller group of more persistent evaders for the police to target on the road. Another little difficulty with my noble friend’s suggestion is, of course, that the insurance may have been cancelled due to non-payment of the premiums.

[Baroness Scott of Needham Market]

My Lords, the number of young people who have been found to be driving without insurance has halved in the past three years, which is very welcome, but the very high cost of insurance for young people is proving very difficult for many of them. What discussions are the Government having with the insurance industry to make life a little easier for young drivers?

[Earl Attlee]

My noble friend makes an extremely important point. On 2 May, my right honourable friend the Secretary of State for Transport hosted a cross-government insurance summit with the insurance industry to take stock of the action taken since the Prime Minister’s summit in February to reduce the cost of motor insurance. We are working closely with the industry to outline further measures being taken to reduce premiums.

[Lord Foulkes of Cumnock]

Will the Minister explain why, while the number of motor accidents has gone down, the number of personal insurance claims has gone up? That means that the cost of insurance has risen substantially. Did the summit that he has just referred to discuss this, what conclusions did it come to and what action has been taken as a result of its conclusions?

[Earl Attlee]

My Lords, we are working with the insurance industry to reduce the level of fraud. We are aware, for instance, that at 76%, the UK has twice the average percentage of whiplash claims as a proportion of personal injury claims. So we are well aware of the problem and we are working on it.

[Lord Mawhinney]

My Lords, will my noble friend explain why he believes that the French Government and, I believe, the Irish Government find having insurance discs next to tax discs on the windscreen perfectly acceptable when, presumably, French and Irish people might be subject to the same temptations which he uses as an argument not to have it in this country?

[Earl Attlee]

My Lords, as I gently pointed out to my noble friend Lady Oppenheim-Barnes, the problem with an insurance disc is that the insurance may have been cancelled due to non-payment. What is the use of having an insurance disc that can be cancelled?

[Lord Campbell-Savours]

The Minister has not answered the question he was asked. If it works abroad, why can it not work here?

[Earl Attlee]

My Lords, I suggested very good reasons as to why it would not work.

[Lord Foulkes of Cumnock]

It does work.

[Earl Attlee]

We also have a much better system, which is continuous enforcement, and we will clamp down on those motorists who do not insure their vehicles.

[Baroness Gardner of Parkes]

Is the Minister aware that many people who come here from other European countries insure their vehicles there, bring them over here and then take them back again to buy very cheap insurance? If anyone has an accident here involving one of those vehicles, the claim is almost impossible to enforce. Is he aware of that and can anything be done about it?

[Earl Attlee]

My Lords, I am not aware of the detail of what my noble friend is telling me. However, I will ask my officials about it. I would point out that the number of foreign vehicles operating in the UK is relatively small.

[Lord Hughes of Woodside]

My Lords, I believe the Minister said that there has been a summit with the insurance companies and that the Government were working closely with the insurance industry. Will he publish the conclusions of those summit meetings with a checklist of what the Government are doing about it?

[Earl Attlee]

My Lords, I will write to the noble Lord with an update and place a copy in the Library.

[Lord Roberts of Llandudno]

My Lords, what conversations does the Minister have with other countries within Europe and with those outside to ensure that all the heavy trucks on UK roads are insured?

--- Later in debate ---

[Earl Attlee]

My Lords, we cannot use the DVLA database to work out whether a foreign truck is insured. It would be a matter of the truck driver producing his insurance paperwork, but I am not aware that there is a huge problem with commercial vehicles being uninsured. The much more serious problem is their mechanical state.

[Lord Davies of Coity]

My Lords, if there is some improvement as a result of what they do in Ireland and France, why do not we do something that will be an improvement on the current situation?

[Earl Attlee]

My Lords, I have already explained my position on the insurance disc. I cannot understand why noble Lords find it so difficult to understand. A few weeks ago I went out with Hampshire police and the police officer, using his ANPR equipment, stopped a motorist because she was uninsured. The reason she had no insurance was that it was cancelled because she could not keep up the payments on it.

Local Government Finance Bill

Earl Attlee Excerpts

Tuesday 3rd July 2012 Grand Committee

Amendments 16 and 17 not moved.

[Earl Attlee]

My Lords, this may be a convenient moment to adjourn the Committee until 2 pm on Thursday 5 July.

Committee adjourned at 7.23 pm.

Civil Aviation Bill

Earl Attlee Excerpts

Monday 2nd July 2012 Grand Committee

[Lord Berkeley]

Like the noble Lord, Lord Jenkin, I, too, was confused. I suppose there could be competition with baggage handling taxi services. The heart of an airport is, after all, the runways. Is it envisaged that there is competition between two runways? If it is, that is remarkably stupid. One never knows, and it will be interesting to hear what is subject to competition in this clause and what is definitely not, within a particular airport.

[Earl Attlee]

My Lords, I thank the noble Lord, Lord Rosser, for the explanation for the rationale behind this amendment. I am afraid that I must oppose it, for two reasons. The first is substantive and the second is technical.

The amendment would oblige the regulator to review its market power determinations at such intervals as it considers appropriate. Clause 7 provides that a market power determination is a determination by the CAA that an airport operator does or does not meet the market power test in relation to an airport area. Where it does, the operator is subject to economic regulation under the Bill. Where it does not, it is not subject to economic regulation.

Let me now turn to my reasons for opposing this probing amendment. The substantive reason is that the amendment is unnecessary. Clause 7(1) expressly empowers the CAA to make a market power determination,

“whenever it considers it appropriate to do so”.

I am mindful of the underlying purpose of Part 1 of the Bill which is broadly to further the interests of end users by regulating airport operators where necessary. I note also the CAA’s subordinate duty at Clause 1(4)(b) to have regard to the principle that,

“regulatory activities should be targeted only at cases in which action is needed”.

In answer to the question of the noble Lord, Lord Rosser, it is implicit that where changes in circumstances lead the CAA to believe that there are reasonable grounds to believe an operator presently subject to regulation should cease to be regulated, or vice versa, then it would investigate further. If appropriate, it would then conduct a full market power determination. I am reinforced in my view because Clause 7(2) obliges the CAA to make a market power determination in certain circumstances. Against this background, the noble Lord’s amendment adds little to the Bill

There is a further technical difficulty with the amendment, which I accept is a probing one. It is not wholly clear what is meant by a “review” of a market power determination. Presumably it is something short of conducting a full market power determination. Perhaps it may involve a consideration of whether the underlying circumstances have changed. However, no further provision is made to publish the results of the review or to take action in the light of its conclusions. In short, neither the purpose nor the effect of undertaking a review is made clear in the amendment.

My noble friend Lord Jenkin asked about competition between different facilities in an airport. The recommendation was made by the Competition Commission; we are implementing it.

[Lord Jenkin of Roding]

My noble friend must explain how it would work. I find it very difficult to see how it would if the facilities were under the same management.

[Earl Attlee]

My Lords, if they were under separate management there could be a competition situation. Under the current legislation, one simply cannot regulate because it does not provide for competition within one airport. Therefore, we are future-proofing the legislation.

The CAA’s functions under Chapter 1 comprise, broadly, deciding whether an airport operator should be subject to regulation—and if it should, regulating it accordingly. Clause 1(1) requires the CAA to carry out its functions under Chapter 1 in order to further the interests of passengers and freight owners in the provision of airport services. Under Clause 1(2) the CAA is required to promote competition when doing so, but only where it is appropriate to its carrying out its functions under Chapter 1. This is set out in Clause 1(2).

The concept of competition in provision captures competition in the provision of airport operational services between all airports, regulated and non-regulated, and competition in airport operational services within airports—for example, competition between terminals. However, the CAA must promote competition only where appropriate. It would not be appropriate to promote competition where the CAA was not carrying out its duty under Clause 1(1)—specifically, where promoting competition does not further the interests of users of air transport services in the range, availability, continuity, cost and quality of airport operational services.

[Lord Berkeley]

Perhaps I might seek confirmation of what the Minister said to the noble Lord, Lord Jenkin. Will he confirm that Clause 7(4) applies to airports where the number of passenger movements exceeds 5 million—I refer to a Written Answer of 20 June to the noble Lord, Lord Laird—and that therefore Heathrow, Gatwick, Stansted and Luton would all be covered by the clause?

[Earl Attlee]

My Lords, the large airport test certainly applies in Clause 7(2), which refers to areas located in large airports. It goes on to define a large airport. I suspect that the CAA can make a determination on any other airport at a later stage if it becomes apparent that it might be in need of regulation and meets the tests in the Bill. Therefore, I invite the noble Lord, Lord Rosser, to withdraw his amendment.

[Lord Rosser]

Perhaps I might ask the noble Earl one last question before I withdraw my probing amendment. The thrust of his response seemed to be that what I sought to achieve with the amendment was covered by other parts of Clause 7. Do other parts of Clause 7 allow the CAA to initiate a review of an earlier decision that it has made off its own bat, or only if it is asked to by a person listed in subsection (3)?

[Earl Attlee]

My Lords, my understanding is that as soon as the CAA realises that it is appropriate to initiate a review because circumstances have changed, it can do so.

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[Lord Berkeley]

My Lords, I shall expand a little on the comments of my noble friend Lord Davies of Oldham. A question needs to be asked: who will benefit from these three clauses? Will the passengers benefit? In my experience, when I want to go from A to B by air, I go to a website and look at the different airlines on different routes. Let us consider Stansted, for a change; we keep on talking about Heathrow. We are told that Stansted has lots of capacity. It has one terminal and one or two satellites from where the lower-cost airlines operate, and they make you walk a hundred miles to compensate you, presumably for paying lower landing fees. I suppose that those satellites, with a little engineering work, could be converted into a separate terminal, but how will the passengers benefit? When you book with an airline, you do so by considering price, timing or convenience. If you are going to book with easyJet to go to Dublin, for example, you do not have a choice of which part of the terminal, or which terminal, the plane will arrive at after landing. You are told where it will be. The passengers do not, therefore, have any choice over which terminal they can go to. They choose the airline and the airline tells you where you are going to end up.

I still cannot see who is going to benefit from these clauses. The airlines will not benefit, I imagine. Some of them pay lower landing charges than others and, as a result, are told to use a particular terminal—either close by or far away from convenient public transport and other facilities. You do not book with an airline because there is a better class of McDonald’s or a restaurant in some terminals. Are the airport operators going to benefit? I cannot see how. It will cost more, as my noble friend said. The suppliers will not get as big a volume of trade as they would if they were supplying a whole terminal. You could argue that they or someone might benefit from competition. And the passengers? I would be pleased to hear from the Minister about how they would benefit from these clauses.

[Earl Attlee]

My Lords, I thank noble Lords for their contributions but I am afraid that I must oppose the amendment and support the Question that these important clauses stand part of the Bill.

Inter-terminal competition may be some time off and the Bill makes no provisions about timing. However, it is important that we future-proof the legislation. The noble Lord, Lord Davies of Oldham, talked about disruption and consternation. Clearly, this would not be in the interests of passengers, and the CAA would therefore not allow such competition because it would be in conflict with its primary duty to the passengers and owners of cargo.

The noble Lord said that different airlines have different needs. He is, of course, quite right. Some airlines want to run a premium service and others want to be no-frills. However, the CAA will have to strike the balance between those differing requirements as well as replicate the effect of competition.

The Bill does not, in general, require inter-terminal competition but does accommodate the possibility. Promoting competition between terminals under the Bill would not happen if the cost implications of doing so meant that it would not benefit the passengers, again under the CAA’s primary duty. In the circumstances postulated, there is no question that the CAA would seek to require inter-terminal competition. If, however, an airport chose, say, to lease a terminal to a third party, the Bill would remain in service, and I will come back to that in a moment.

Clause 10 empowers the CAA to determine, by applying the criteria set out in Clause 9, including in cases where one or more separate entities have some form of management control over that area. Clause 11 contains provisions for the publication of operator determinations made under Clause 10 by the CAA. Clause 12 empowers the CAA to make operator determination in advance, on the basis of circumstances that may not yet have arisen.

The amendments to Clause 12 seek to remove the CAA’s powers to carry out an advance operator determination. However, before I get on to why the amendments are not desirable, I wish to reassure your Lordships on why “standard” operator determinations under Clauses 9, 10 and 11 are a necessary part of the legislation. These clauses are important for regulatory certainty, enabling a person to know whether they are the operator of an airport area for the purposes of Part 1. Otherwise, in difficult cases it will be uncertain who the operator is and who is not, and therefore who is and who is not subject to economic regulation. This means that they cannot be clear as to their legal obligations, and neither they nor their financial backers can know with certainty whether they will be subject to economic regulation.

The clause is not focused solely on the possible future scenario where intra-airport competition can be introduced. For example, it could apply where a whole airport was leased and some management functions were split between lessor and lessee. However, noble Lords have rightly pointed out that these clauses are important for ensuring that the Bill allows for the regulatory regime to work in a scenario where there are multiple operators of different airport areas at one airport—in other words, where there is inter-terminal competition. Inter-terminal competition is more likely to lead to more complex ownership arrangements.

I have already mentioned that it was a recommendation of the Competition Commission in its BAA Airports Market Investigation report of 2008 to allow for the regulatory regime to function where inter-terminal competition is present. The present legislation, the Airports Act 1986, does not allow for this possibility. If we, the Government, had not made these provisions, no doubt noble Lords would suggest that we should have done so, praying in aid the Competition Commission’s recommendations. It is important to note that these clauses do not empower the CAA to introduce inter-terminal competition; they merely ensure that if inter-terminal competition becomes a reality, the regulatory regime can accommodate the scenario.

Clause 10 empowers the CAA to make binding operator determinations on the basis of the circumstances at the time the determination is made. However, this is considered insufficient where a person wants to know whether they will comprise the “operator” in the event that they take some control over an airport area. Against this background, to allow for greater regulatory and commercial certainty, Clause 12 empowers the CAA to make advance determinations—that is, determinations on the basis of circumstances that have not yet arisen. This would include a determination that, if a lease were executed with specified terms, the lessee would or would not comprise the operator.

The first amendment would deprive the CAA of the power to make an advance operator determination. The Government cannot agree to this because it would increase regulatory uncertainty and possibly stultify commercial transactions. I therefore urge noble Lords to withdraw their opposition to the clauses.

[Lord Davies of Oldham]

My Lords, the Minister made the best fist that he could of a fairly weak argument. Of course, I recognise the merits of the clauses, in that he made it clear that it is important to define the operator and to know whom we are talking about. Who could possibly gainsay that proposition?

In objecting to the clause, I am not objecting to the sense that lies behind the elements within the clause to which the Minister addressed some of his remarks. I indicated that in opposing the clause I recognised this to be a fairly blunderbuss approach and that we have not refined our opposition in amendments—something that we may do in due course, perhaps on Report. However, I say to the Minister that in this general debate anxieties have been expressed across the Committee, and he has not allayed those anxieties at all, apart from—

[Lord Davies of Oldham]

I am delighted that the noble Lord had his anxieties allayed. They are obviously not as acute as those on this side of the Committee. In particular, if the noble Lord is all in favour of inter-terminal competition, perhaps he will ask the Minister to identify just where this is a raging success that we would want to encourage. The only specific example that we have so far is subject to considerable criticism. As the noble Lord indicated, airport operators are accurately defined in the legislation; I will not gainsay the necessity of that. None of them speaks well of future-proofing what they regard as a disadvantageous element of the Bill, which will introduce the possibility of inter-terminal competition. In particular, by putting it in the Bill in the way that they have, the Government limit parliamentary debate to secondary legislation. We know the limitations of that.

However, I seek to identify that this concept is a significant departure from how any British airport is run at present, and from how any successful airport is run elsewhere. Unless the Minister produces some evidence of how competition works to the benefit of the passenger—which he signally failed to do in his earlier contribution—the Committee will recognise that, far from my anxieties being allayed, they are more pronounced. Of course, I recognise that objecting to a clause standing part—or three clauses in this case, which is the first time that I have engaged in such an extensive operation—is something from which I shall have to resile fairly promptly. However, I do so to air a significant aspect of this debate. I say to the Minister that we are so dissatisfied with the response at this stage that he must assume that we will take this issue further on Report.

[Earl Attlee]

I am curious about the noble Lord’s attitude to the Competition Commission’s recommendation that we should provide for inter-terminal competition. Does he support that view or not?

[Lord Davies of Oldham]

Of course, I recognise the role of the Competition Commission and we applaud a great deal of its work. However, when it makes recommendations, one must also consider the industry’s likely response to the proposal that is being put forward. All I say is that the noble Earl has not identified any aspect of British industry that considers this to be an intelligent and sensible development. Nor is he able to identify any example from elsewhere in the world where this form of competition has redounded to the benefit of the consumer.

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Moved by

[Earl Attlee]

20: Schedule 1, page 66, line 13, leave out sub-paragraph (3)

[Earl Attlee]

My Lords, in moving government Amendment 20, I shall speak also to government Amendments 21, 22, 23, 30, 32, 33, 35 to 45 and 61 to 63. These 20 amendments are being taken together because they all relate to appeals to the Competition Commission and the Competition Appeal Tribunal. Some 13 of the amendments give effect to our position that the Competition Commission and the Competition Appeal Tribunal should decide appeals on the same grounds. The other seven amendments ensure that both the Competition Commission and the Competition Appeal Tribunal have regard to the duties imposed on the CAA as set out in Clause 1 when deciding an appeal. For brevity, I will refer to the Competition Commission as the CC and to the Competition Appeal Tribunal as the CAT.

It has come to the Government’s attention that the current drafting in the Bill gives rise to inconsistency between the grounds on which the CC and the CAT may allow an appeal. In the present drafting, although the legal grounds on which an appeal may be allowed are the same, the CAT is specifically required to decide the appeal by reference to these grounds and “on the merits”. There is no equivalent provision for the CC to decide the appeal “on the merits”.

The Government are concerned that this inconsistency creates unnecessary and undesirable legal uncertainty. We wish to correct this to shut out any risk that under the current wording it could be interpreted that different powers are being conferred on the CC and the CAT. In summary, these amendments propose changes to the provisions about appeals to the CAT to align them with provisions about appeals to the CC.

Amendment 30 is to one of the grounds on which the CC may allow an appeal under Clauses 24 or 25 which relate to appeals against conditions of new licences and modifications to the licence conditions. The amendment would change the ground on which the CC may allow an appeal from,

“that the decision was based on the wrong exercise of a discretion”,

as it is currently in the Bill, to,

“that an error was made in the exercise of a discretion”,

as per the amendment. This amendment is being made to clarify the current drafting.

The remaining amendments are specific to appeals brought before the CAT. Amendments 35, 36, 37, 40, 43 and 61 delete the subsections that contain the current grounds on which the CAT may allow an appeal in Schedules 1, 3, 4, 5 and 13. Amendment 20 deletes a provision stating that an appeal may be brought on only one of the current grounds. Amendments 21, 38, 41, 44 and 62 replace these grounds with the same grounds as provided for in Clause 26 concerning appeals to the CC from,

“that the determination is based on the wrong exercise of a discretion”,

to,

“that an error was made in the exercise of a discretion”.

In particular, Amendments 21, 38, 41, 44 and 62 ensure that the CAT’s consideration of appeals is consistent with the CC’s by, first, removing the phrase “on the merits” from the grounds on which the CAT must decide an appeal, as just discussed; secondly, introducing an overall requirement that the decision appealed against was wrong on specified grounds—error of fact, wrong in law, and error in the exercise of discretion; thirdly, restricting the grounds for determining the appeal in the same way as for the CC; and, fourthly, reflecting Amendment 20 which, as I have just mentioned, clarifies the grounds of wrong exercise of discretion.

The overall result of these 13 amendments is that both the CC and the CAT may allow an appeal only to the extent that they are satisfied that the decision appealed against was wrong on one or more of the following grounds: that the decision or determination was based on an error of fact; that the decision or determination was wrong in law; and that an error was made in the exercise of a discretion.

These amendments are important to deliver the Government’s policy intention that the grounds on which the CC and the CAT decide appeals should be the same. They are also in keeping with our wish to deliver an efficient and effective appeals regime. These amendments allow the CC and the CAT to take a decision that offers something more than judicial review but does not extend to a potentially lengthy full rehearing of the case. The remaining seven amendments again ensure consistency between the two bodies. Amendments 32 and 33 to Clause 30 specify that when the Competition Commission is carrying out its functions as specified under subsection (4) of Clause 30, it must have regard to the matters,

“in respect of which duties are imposed on the CAA by section 1”.

Amendments 22, 39, 42 and 45 import an express duty on the CAT to have regard to the CAA’s duties as set out in Section 1 when deciding an appeal under Schedules 1, 3, 4 and 5. Amendment 63 imports an express duty on the CAT to have regard to the CAA’s duties as set out in Section 4 of the Civil Aviation Act 1982 when deciding an appeal under Schedule 13. My officials have engaged extensively with the CAT and the CC on this matter and they are content with the amendments. I commend them to your Lordships.

[Lord Rosser]

My Lords, perhaps I may take one of the amendments in the group to make my point. Government Amendment 30 deletes paragraph (c) in Clause 26, which says that the Competition Commission may allow an appeal under Section 24 or 25 only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the following grounds, one of which is that the decision was based on the wrong exercise of a discretion. That wording has now been replaced in government Amendment 30 with the wording,

“that an error was made in the exercise of a discretion”.

I endeavoured to listen carefully to what the Minister had to say about this group of amendments and, if he did cover my point, I would be grateful if he could repeat his explanation. He seemed to say that this was all about clarifying the current drafting as opposed to explaining what the difference was between the wording in the Bill and what is being proposed, bearing in mind that it is not the same wording and therefore presumably does not mean exactly the same.

It would be helpful if the Minister could explain what this change in wording means. I refer to government Amendment 30 to paragraph (c) in Clause 26. Does the change from “wrong exercise” mean that although a decision was made incorrectly, the process was fine and the options to choose from were correct, the proposed wording,

“an error was made in the exercise of a discretion”,

is meant to imply that the exercise itself was flawed, had the wrong information to hand, was conducted incorrectly and options were considered that should not have been? It is important that we do not just get told, “We are seeking to clarify the current drafting”, but that we have a full explanation as to what the current wording in Clause 26 means—this relates to,

“that the decision was based on the wrong exercise of a discretion”,

and how that differs in meaning from the wording with which Amendment 21 replaces it,

“that an error was made in the exercise of a discretion”.

I hope that the Minister can clarify the position.

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[Lord Soley]

There is a reason I am picking up on this, of course. I am a member of the Delegated Powers and Regulatory Reform Committee. We are getting increasingly worried about the quality of drafting of government Bills. It looks like a case where the drafting has changed for some reason. I do not want to be critical of the parliamentary draftsman concerned without knowing the facts but, if we flag it up as rather odd, there might be an explanation. I do not know what it is, and I would quite like to.

[Earl Attlee]

My Lords, the Committee will recognise that parliamentary draftsmen work in peculiar ways. It may be helpful if I read out what I said on this particular amendment again. Amendment 30 is to one of the grounds on which the CC may allow an appeal under Clause 24 or Clause 25, which relate to appeals against conditions of new licences and modifications of licence conditions. The amendment would change the grounds on which the CC may allow an appeal from,

“that the decision was based on the wrong exercise of a discretion”,

to,

“that an error was made in the exercise of a discretion”.

The view was taken that the drafting in Clause 26(c) could have been better expressed. There was no external request to change this wording, but the Committee will understand that officials go over the drafting again. It seems to me that it is better drafting. Originally, the grounds of appeal were based on statutory precedent, based on retrospective appeals to the CC and the CAT. The wording varied slightly. That is how the inconsistency first arose.

[Lord Soley]

Perhaps I may come back briefly. In a way the Minister has answered the question. The Delegated Powers Committee—not just the parliamentary draftsmen—worries about the quantity of legislation and the way in which it is often hastily drawn up. We end up making changes of this type which do not seem to come anywhere other than in Bills that are brought out by the Government in a state of incomplete readiness. We end up having an awful lot of amendments on the Floor of the House. This has happened under successive Governments and therefore successive parliamentary draftsmen. I suspect that the fault lies both in the way we manage government and in the expectations we place on parliamentary draftsmen. It is an indication of how things can go wrong. My guess—it is only a guess; I am not a lawyer—is that the interpretation by a court of the original wording in the Bill would have been different from the interpretation by a court of the amendment tabled by the Government. On that basis I understand it but I am glad that the Minister clarified it.

[Earl Attlee]

My Lords, the amendment is intended to provide clarity.

[Lord Rosser]

Perhaps I may ask the Minister to clarify what the wording means. When I made my contribution a few moments ago, I asked whether the current wording,

“wrong exercise of a discretion”,

meant that if a decision was made incorrectly, the process was fine and the options to choose from were still correct. I then asked if the new wording,

“error … made in the exercise of a discretion”,

was intended to imply that that the exercise itself was flawed, that it had the wrong information to hand or was conducted incorrectly, and that options had been considered that should not have been. Does the wording we now have mean one of those two options—and, if so, which one?

[Earl Attlee]

My Lords, it is probably best if I write to noble Lords; this is a very technical point.

[Lord Jenkin of Roding]

I have not heard an answer to my question. Why were there different rules for the Competition Commission and the Competition Appeal Tribunal? What was the original reason for having different rules? I entirely support the proposition that the rules should be the same; it makes a great deal of sense. However, I am puzzled by why somebody at some stage thought they should be different.

[Earl Attlee]

My Lords, as I said, originally the grounds of appeal were based on statutory precedent and retrospective appeals to the CC and the CAT. The wording varied slightly; that is how the inconsistency arose.

[Lord Jenkin of Roding]

At least we are getting it right.

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Moved by

[Earl Attlee]

21: Schedule 1, page 67, line 4, leave out sub-paragraph (1) and insert—
“( ) The Competition Appeal Tribunal may allow an appeal under paragraph 1 only to the extent that it is satisfied that the market power determination or operator determination appealed against was wrong on one or more of the following grounds—
(a) that the determination was based on an error of fact;(b) that the determination was wrong in law;(c) that an error was made in the exercise of a discretion.”

--- Later in debate ---

[Lord Berkeley]

My Lords, following the comment of my noble friend Lord Soley about immigration, by coincidence I have in the Crime and Courts Bill an amendment about the immigration service which may be discussed later tonight. The service is woefully inadequate, as my noble friend said. The delays are reflecting very badly on the country.

Passenger satisfaction should be measured in respect of immigration delays as well as many other things, because they are quite significant. My suggestion that I shall probably put tonight is that the immigration service should be given targets. I am not sure that this Government like targets but there might be a target for people with EU passports to wait for not more than 10 minutes, and for those from third countries to wait for not more than half an hour. We can debate what the targets should be. The crucial thing is that the immigration service should be required to pay some kind of compensation to the airlines if they exceed those targets, unless there is an emergency or something like that.

As several noble Lords have said, the key is to have this information. I would much rather see it come from the licence holder than from the immigration service, which might be tempted to massage the figures slightly. My noble friend Lord Davies can think about whether it should go in as a further amendment on Report, but we ought to measure this matter along with some of these other issues to get independent information on passenger satisfaction regarding everything they see when they arrive at or leave an airport.

[Earl Attlee]

My Lords, I am aware that similar amendments were tabled in the Committee and Report stages in the House of Commons. These amendments provide us with a welcome opportunity to return to some important issues for passengers.

The noble Lord, Lord Bradshaw, talked about comparisons with the bus and rail industry arrangements. There is no reason, however, why the CAA cannot look at those rules and regulations when devising licence conditions and learn from what happens in another industry. The noble Lord, Lord Soley, talked about first impressions. They do matter and I have been impressed with the work going on at Gatwick to improve the appearance of the airport and the way it works.

The noble Lord, Lord Empey, touched on the issue of a market survey and said that passenger satisfaction is at the core of what we are trying to do. It is, but it is the duty of the CAA to achieve the desirable outcomes by means of the licence conditions.

The noble Lord, Lord Berkeley, talked about immigration issues, as did other noble Lords. A few years ago, I declined to visit the United States, even at public expense, because, frankly, I thought that the immigration arrangements there were so awful that I did not want to do it. I just said, “No, I will stay here and be with your Lordships”.

[Lord Berkeley]

I congratulate the noble Lord. That was very brave.

[Earl Attlee]

We will see what happens in the next reshuffle.

My honourable friend the Immigration Minister is reviewing what additional data may be published by the Home Office and shared with port operators. Meanwhile, the border force has responded to recent problems in a number of ways. It is tackling short-term peaks with a pool of trained staff, working with airports and airlines to ensure that they provide more accurate passenger manifests and flight schedules so that the border force can flexibly deploy staff at the right times and places, creating a new central control room for the border force at Heathrow that uses mobile teams for rapid deployment, and implementing new rostering and shift patterns. The border force is also working with Gatwick and Heathrow airports to improve passenger flows, using more specific measures such as e-gates and other biometric checks.

There can be no doubt that passengers want efficient baggage-handling services when they travel by air. The experience of recent years has also demonstrated how vital it is that airports prepare effectively for potential disruption. It is clear that the aviation sector as a whole needs to have effective means of dealing with passenger welfare during disruption of services. While I can therefore understand and agree with the sentiment behind these amendments and what noble Lords have said, I cannot recommend accepting them into the Bill. The text of the Bill already provides the most effective means of protecting passenger interests in relation to the matters raised.

Clause 18 and the licensing regime as a whole will give the CAA the flexibility to tailor licence conditions to the specific circumstances facing individual airports with substantial market power. This flexibility is an important means of minimising the distortions associated with regulatory intervention and ensuring that action taken by the CAA is proportionate. However, we also believe that giving the independent expert regulator flexibility and discretion in deciding the content of the licence is the most effective way to protect the interests of present and future passengers. If Parliament chooses to use this legislation to hard-code certain points in licences, it would constrain the regulator’s freedom to decide what priority should be afforded to different passenger concerns and what costs should be allowed for the delivery of competing consumer priorities. As the Minister of State said in Committee in the House of Commons, amendments such as these would make the licence system unbalanced because passengers care about a whole range of different issues. Moreover, a prescriptive approach in the Bill is likely to make it more difficult for the regulator to adapt its approach to the changing concerns of passengers. In 2005, who would have thought that volcanic ash would have been a major problem later on?

If we were to adopt these amendments, they would oblige the CAA to give greater weight to these factors than other matters that might become equally or more important to passengers in the future. This danger was recognised by the noble Lord, Lord Soley. Your Lordships can be very confident that the CAA will already use the new licensing powers proposed in the Bill to focus on, for example, operational resilience and passenger welfare in the event of extreme disruption—not least because of the CAA’s Clause 1 duties, as the noble Lord, Lord Davies, recognised. And why it would it not do so?

As we have discussed in Committee, in response to a request for advice from the Secretary of State, the CAA published an indicative licence in January to assist Parliament in its scrutiny of the Bill, and a copy has been sent to the House of Commons Library. At the request of the Department for Transport, the draft licence includes provisions on operational resilience. The proposals in condition 7 would require the licence holder to operate the airport efficiently and use its best endeavours to minimise detriment to passengers arising from disruption. The noble Lord, Lord Davies, mentioned disruption due to winter. When I visited Gatwick Airport before the most recent winter and saw all the new equipment in place, I was absolutely confident that the winter would be very mild.

It would also require the airport to draw up, consult on and gain the CAA’s approval for an annual resilience plan setting out how it would secure compliance with its obligations under the condition. The licence holder will then be obliged to comply with the commitments it has made in its resilience plan. The CAA sought initial views from industry in drafting the indicative licence. However, since Parliament has not yet concluded its consideration of the Bill, the CAA has not yet started to consult on proposed licence conditions for each airport that will be subject to regulation.

If the system proposed in the Bill is implemented, the CAA will consider the extent to which it is necessary or expedient to include conditions in a licence for operational resilience and other matters such as passenger welfare. The CAA expects that activities that might be expected to be part of the new licence regime would include taking into account other obligations on service quality standards, and the success of codes of conduct and voluntary arrangements being adopted by industry. Against this background we believe that putting specific requirements in the Bill on issues such as baggage handling and operational resilience could prove to be a disproportionate response that would place an unnecessary restriction on the CAA’s flexibility to develop proportionate and effective ways to address passenger concerns—and might even lead it to address the wrong ones.

In summary, the Bill provides the CAA—the body with the relevant operational expertise—after appropriate consultation, with the flexibility to determine appropriate and effective licence conditions. The amendments in this group could undermine our goal of giving the specialist regulator a flexible toolkit to protect the passenger. Therefore, I hope that the noble Lord will withdraw his amendment.

[Lord Davies of Oldham]

My Lords, I am grateful to noble Lords who introduced significant points, to which the Minister paid due regard—about as much regard as he paid to the points that I made in my opening speech. If through the amendments in this group I had sought to introduce microscopic instructions to the CAA on what it ought to do that would limit its capacity to fulfil its duties, I would quite understand the thrust of the Minister’s response. However, the first of the three amendments to which I addressed my remarks requires publication of an annual survey. This is not desperately specific but merely indicates that it would be a very good idea if the licence holder—the airport authority—gave some account to the general public of the effectiveness of its operation.

The second amendment suggests that the licence holder should develop passenger welfare plans. That is not specific; it merely indicates that it should be incumbent on the licence holder to fulfil the obligation that apparently underpins the Bill, which is to provide a better service to passengers. The third amendment merely suggests that support is necessary and should be provided for stranded passengers at airports. There is no Member of this Committee—including the Minister—who does not agree that action must be taken in this area. The Minister went so far as to indicate that strenuous efforts had been made to ensure that the numbers of such stranded passengers would decrease. I am not sure that Gatwick has the equipment to affect the climate and make our winters milder, but I know exactly what he meant. It now has the equipment to keep aircraft manoeuvring and able to fly, whereas over the winter that caused so much distress the airports did not have that.

We are merely asking for provision to be made for stranded passengers—an objective that the Minister says he shares—and I cannot think that the actions of the Civil Aviation Authority are cabined, confined or constrained by including these amendments in the provision on how the licence is granted. However, at this stage, I accept that the Minister is not as warm about these amendments as he is about the forecast for future winters, and I beg leave to withdraw the amendment.

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[Lord Berkeley]

Does my noble friend agree that the key to the amendment is the word, “buying”. There is nothing to stop the provision of different queues for first-class passengers or others at check-in or security. The question is: have they paid extra to go through that facility rather than for the facilities on the flight?

[Earl Attlee]

My Lords, I am aware that a similarly worded amendment was tabled in Committee in the House of Commons, but that related to Clause 83, on provision of:

“Information for the benefit of users of air transport services”.

The stated aim of that amendment was to close a perceived gap in the information that will be published under that clause on what passengers can expect to experience when departing or arriving at an airport, especially in relation to how long they should expect to wait to have their passport checked. The Government supported the broad intention of that amendment. Giving consumers more information on the quality of service provided by airports and airlines will help to maximise the benefits that markets deliver to passengers. However, the Minister of State ultimately resisted the amendment on the basis that the Bill already enables the CAA to require the collection and publication of information on check-in, baggage handling and security queues. He further explained that the UK border force, the authority responsible for border controls relating to arriving and departing passengers and goods, is responsible to Ministers and Parliament, and said that this is a more effective and appropriate means to hold the UK border force to account than giving the CAA power to oversee its activities.

The amendment today goes further than the previous one by seeking to prevent users from buying preferential access to check-in, security, immigration control and baggage reclaim processes. In considering the amendment, the Committee should note the distinction between check-in and baggage reclaim processes, and aviation security and border-control processes—the latter being subject to exacting standards enshrined in legislation. For example, airports are required, pursuant to international standards and EU and domestic regulatory requirements, to ensure that all passengers undergo security screening to specified levels. This is subject to monitoring and enforcement through security inspections and tests by the regulator. Legislation also requires full travel document checks to be conducted on all passengers, including all British citizens, arriving at the UK border. As the Minister of State made clear in the House of Commons, the security of our borders and the checks that need to be undertaken to protect us from those who would enter our country to do us harm are treated with paramount importance.

I am aware that the BAA runs a VIP suite scheme at Heathrow. The UK border force does not charge BAA or the VIPs any money for the provision of this service, nor does the BAA cover any border force costs. I will write to the noble Lord, Lord Davies of Oldham, with full details of the number of years that these arrangements have been in place. As long as standards of security and immigration are maintained at all times and in respect of all passengers, the Government do not wish to prevent the market offering access to these services, which are tailored to the needs of passengers. However, there is no question of reduced security, as suggested by the noble Lord, Lord Davies.

Your Lordships will no doubt be aware that a number of airlines offer faster check-in services to premium travellers who are willing to pay a premium for the service. The Government do not wish to prevent passengers benefiting from such products. If the concern is that the purchase of preferential access to check-in or baggage control processes would be an impediment to competition, the Bill already provides the CAA with the necessary powers to address that.

In summary, aviation security and immigration processes at UK airports must comply with exacting standards that are enshrined in legislation. There is no scope for passengers to pay to avoid these processes. The Government believe that the amendment goes too far in attempting to prevent the market offering access to these and other services that are tailored to the specific needs of users. I hope, therefore, that the noble Lord will consider withdrawing the amendment.

[Lord Davies of Oldham]

I am grateful to the Minister for his response, although I still believe that he is failing to recognise the context in which we find ourselves. That answer might have sufficed a decade ago, but as he knows only too well, we are operating a very stringent security regime at our airports. We all know the privations that occur from time to time. We know that people have to queue for hours on end because of the necessary requirements. The Government say that it is about security and the market has the right to provide preferential treatment for some. It seems to me that the concept of security is an obligation for every citizen. I do not see why there are favoured circumstances for a few, nor do I think it is conducive to the implementation of the security requirements if people believe that there is an inherent unfairness. The noble Earl made no reference whatever to that. Of course I recognise that no payment has been made by the airport to the Home Office with regard to this. However, if people are being transferred from heavily pressed desks to facilitate entry for those who have paid a premium, one should not be at all surprised that the difficulties occurring at airports are growing acutely. I beg leave to withdraw the amendment, but the Minister may come to rue the day.

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[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—

[Lord Soley]

The point that the noble Earl makes is a fair one but it is perfectly possible, with the government draftsmen, to make a more refined and specific amendment, if necessary.

[Earl Attlee]

I absolutely agree with the noble Lord, Lord Soley. It is my duty to point out a drafting error in case my noble friend wants to run the amendment on Report. If I had not identified the problem in Committee and suddenly jumped up on Report and said, “Actually, the amendment is defective”, I think I would be a little unpopular.

The Government remain of the opinion that the broad rights of appeal provide an effective means of improving the accountability of key regulatory decisions. The process enables the interests of both airport operators and materially affected airlines to be taken into account. We therefore believe it is correct that this right of appeal should extend to licence conditions that relate to financial arrangements. An airline seeking to appeal a financial resilience condition, or the absence of such a condition in the first licence granted to an operator, will need to satisfy the Competition Commission that it is, in this context, a person whose interests are “materially affected” by the decision.

Any dispute over whether a derogation would cause a breach of existing financial arrangements would be most likely to arise from legal questions about the true construction of the loan agreement and/or the licence condition. These could ultimately be resolved through judicial review and, in the mean time, an airport operator could seek an injunction to preserve the status quo. Further comfort may be drawn from the fact that, subject to a government amendment that has been tabled being agreed, the Competition Commission, in deciding an appeal, will be obliged to have regard to the duties imposed on the CAA. Markets should therefore be reassured that the risk of existing creditor protection in an airport operator’s funding structure being unintentionally removed and triggering an event of default is extremely small.

We acknowledge that there is a possibility that the uncertainty created by an airline making an appeal to the Competition Commission on a licence condition relating to financial arrangements could affect an airport operator’s ability to access capital markets to raise finance while the appeal is being considered. However, as the timing of an application for leave to appeal is predictable, we consider that this is something an airport operator could successfully manage by pre-funding its financing requirements. We remain of the opinion that the right of appeal for airlines would not have significant negative consequences for an airport operator’s ability to raise debt in the capital markets.

[Lord Trefgarne]

Will the noble Earl say how long the appeals will take? He said that they would be of no consequence and could be temporarily ignored while the appeal process continued, but how long would that take?

[Earl Attlee]

My Lords, it may be helpful to the Committee if I outline the process. The initial consultation stage is a reasonable period set by the CAA. The period to bring an appeal, and the earliest date that licence modifications could come into force, is six weeks. For regulated representations the length of time is eight weeks. The appeal period is 24 weeks. Therefore it could be quite a long period. However, the appeal can be rejected because it is frivolous, vexatious or unlikely to succeed. The Competition Commission can make that determination quickly—but if it thought that there were good grounds for an appeal, the process would take longer. Frivolous or vexatious appeals, or those unlikely to succeed, could be determined quickly.

While the government position is clear and we have already communicated it to BAA, I have listened very carefully to noble Lords’ concerns and will communicate them to my right honourable friend the Minister of State for Aviation. I do not see that it would be in the airlines’ interests to attempt to overturn financial derogations determined by the CAA to be in passengers’ interests, where to do so would cause an event of default. The appeals regime has been designed to deter frivolous or vexatious appeals, as I mentioned. Furthermore, where the CAA proposes to grant a licence, including a condition furthering a financial derogation, or proposes to modify a condition containing a financial derogation, special conditions will apply.

[Lord Soley]

I am grateful but the Minister seems to be heading in the direction of neither moving on this nor looking at it again. He has described an appeal process that could take longer than six months. So it is a six-month possibility. He said earlier that the amendment put down by the noble Lord, Lord Jenkin, was too extensive. I understand that but I do not believe it is beyond the wit of the Government to come back with an amendment that is more specific. It should be possible and I do not see why it cannot be considered.

[Earl Attlee]

My Lords, noble Lords suggested that the appeal process would take six months. I am suggesting that the Competition Commission will very quickly be able to determine whether the appeal is frivolous, vexatious or unlikely to succeed. I do not believe the CAA would grant a derogation unless it was absolutely certain that it would pass scrutiny from the Competition Commission. There is also the point that the licence condition does not come into effect until the appeal is heard.

I reiterate that I am not taking this away and I am not reflecting on it. I will, however, discuss the matter in detail with my right honourable friend.

[Lord Trefgarne]

I am bound to tell the noble Lord that his answer has been wholly unconvincing on this matter. I hope he will undertake to reconsider and bring forward amendments if he thinks fit at the next stage.

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[Lord Rosser]

My Lords, as we have just been discussing, Clauses 24 and 25 deal with appeals to the Competition Commission in respect of, first, the conditions of new licences and, secondly, modification of licence conditions. Under the Bill, persons who operate a dominant area at a dominant airport require a licence to levy charges. An appeal lies to the Competition Commission against a decision by the Civil Aviation Authority to include, or not to include, a condition in a licence when it is granted, and an appeal also lies to the Competition Commission against a decision by the Civil Aviation Authority to modify a licence condition.

An appeal can be brought only with the permission of the Competition Commission and the Bill states that the Competition Commission may refuse permission to appeal only on one of the following grounds: that the appeal is brought for reasons that are trivial or vexatious, or that the appeal does not have a reasonable prospect of success. Clearly, from the wording in the Bill there is a concern that trivial or vexatious appeals should be stopped. I am sure we would all agree with that objective, and my amendment seeks to add in a further ground on which permission to appeal can be refused—namely, that the appeal does not demonstrably show that it is in the interests of users of air transport services, in order to further minimise the potential for frivolous or vexatious appeals.

The primary duty of the Civil Aviation Authority, as set out in Clause 1, is that it must carry out its functions in a manner which it considers will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services. Surely, then, there must be an argument for saying that in any appeal to the Competition Commission against a decision by the Civil Aviation Authority to include, or not to include, a condition in a licence, or in any appeal against a decision by the CAA to modify a licence condition—both instances relating to persons who operate a dominant area at a dominant airport—it should also have to be shown quite clearly that the appeal is in the interests of users of air transport services, bearing in mind that that is the primary duty and responsibility placed on the Civil Aviation Authority, whose decision is being appealed.

Clause 30, on the procedure on appeals, states that subsections (1), (2) and (5) of Clause 1 apply to the carrying out by the Competition Commission of its function of deciding an application for permission to appeal under Clauses 24 and 25. Clause 30 refers to subsections (1) (2) and (5) of Clause 1, and subsection (1) refers to the Civil Aviation Authority having, where appropriate, to carry out its functions in a manner which it considers will promote competition in the provision of airport operation services. In a debate on an amendment when we were previously discussing the Bill in Committee, the Minister said that subsection (1) of Clause 1 would take priority over subsection (2) as far as the Civil Aviation Authority was concerned if promoting competition in the provision of airport operation services conflicted with its duty under subsection (1) to carry out its functions in a manner which the Civil Aviation Authority considers will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services.

However, it is not clear whether the giving of priority to subsection (1) over subsection (2) in Clause 1 where there is any sort of conflict applies also to the Competition Commission under Clause 30. Without it apparently being clear that it does, the Competition Commission, bearing in mind its name, might well give greater weight to promoting competition when deciding whether or not to refuse permission to appeal, rather than wanting to satisfy itself that the appeal is in the interests of users of air transport services, which is clearly stated in this amendment and is in accordance with the primary, overriding duty of the Civil Aviation Authority as laid down in Clause 1(1).

I hope that the Minister will either accept the amendment or be able to provide an assurance that giving priority to subsection (1) over subsection (2) in Clause 1 applies equally to the Competition Commission in Clause 30 as to the Civil Aviation Authority. I beg to move.

[Earl Attlee]

My Lords, I thank the noble Lord for explaining the concerns that his amendments seek to address. However, I believe that the Bill already takes those concerns into account. The proposed appeals process has been carefully designed to ensure that where an appeal is brought, ordinarily for it to succeed, the appeal body should consider whether it is in passengers’ interests in the provision of airport operation services. It is our aim to have in place an appeals process that facilitates transparency and a timely manner of resolution of appeals, and that permission to appeal should be granted only where appropriate. However, we do not wish to stop those whose interests are materially affected from appealing. In meetings with airlines and airport bodies, my officials have sought to assure parties of this.

Clauses 24(5)(b) and 25(5)(b) as currently drafted already ensure that permission to appeal a licence condition or licence modification would be refused if the appeal did not have a reasonable prospect of success. Where an appeal had a reasonable prospect of success, it would be unjust and wrong in principle to refuse permission. In answer to the important question put by the noble Lord, Lord Rosser, I refer the Committee to Clause 30, which contains provisions stating that the Competition Commission “must have regard” to the same duties as the CAA in the discharge of stated functions. Included in these is the determination for permission to appeal under Clauses 24 and 25.

The Bill as drafted empowers the Competition Commission to refuse to grant permission to appeal so as to avoid parties bringing an appeal as a “spoiling” tactic. Nor can appeals be used as a delaying tactic. The default position is that the CAA’s licence condition or modification comes into effect while the appeal is being heard. Therefore, I do not believe that the inclusion of a further subsection in Clauses 24 and 25, as suggested by the noble Lord, would add anything of further substance to the Bill.

In the light of those assurances, I hope that the noble Lord will be willing to withdraw his amendment.

[Lord Rosser]

Before I do so, while I think that the noble Earl has probably given me the assurances that I seek, perhaps I may ask him again directly whether he is saying clearly that, under the terms of Clause 30 where it states—as I indicated and the noble Earl has repeated—that subsections (1), (2) and (5) of Clause 1 apply to the carrying out by the Competition Commission of its functions, which include determining appeals brought under the two clauses that we are talking about, in carrying out those functions the Competition Commission is bound in the same way under Clause 1(1) and (2) as the Civil Aviation Authority is itself. Will it have the same general duty in respect of determining whether those appeals should be heard? In other words, it is to give priority—and see as its primary duty as the Competition Commission—to making the decision to furthering,

“the interests of the users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services”,

thus ensuring that that duty overrides the duty to promote competition in the provision of airport operation services. I think that that is what the Minister said to me, but I should be grateful if he could confirm that that is the case.

[Earl Attlee]

My Lords, the Competition Commission must have regard to the CAA’s general duty under Clause 30, as per the set of amendments accepted earlier today. We do not believe that it would be sustainable for the Competition Commission to promote competition where to do so would be inimical to the interests of users of air transport services, as described in Clause 1(1).

[Lord Rosser]

I do not seek to play with words; I am just anxious to be clear. The Minister said that the Competition Commission must “have regard”. Does that mean that its general duty in hearing these appeals is the same as the CAA’s general duty under Clause 1, which states that its primary and overriding responsibility in determining whether those appeals should be heard is to,

“further the interests of users of air transport services”,

rather than, where there is a conflict, to promote competition? I do not know whether we are playing with words over “have regard to”. In the Minister’s view, does that mean that the Competition Commission is bound in the same way as the CAA is in its general duty under Clause 1(1) and (2)?

[Earl Attlee]

My Lords, the short answer to the noble Lord’s question is yes.

[Lord Rosser]

In that case, since the Minister’s very specific answer makes it clear that the Competition Commission has the duty in the same way as the CAA has the duty under Clause 1(1) and (2), I beg leave to withdraw the amendment.

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Moved by

[Earl Attlee]

30: Clause 26, page 18, line 10, leave out paragraph (c) and insert—
“(c) that an error was made in the exercise of a discretion.”

--- Later in debate ---

[Lord Rosser]

The amendment relates to Clause 29, which deals with appeals determined by the Competition Commission under Clauses 24 and 25, which we have just discussed. Clause 29 states:

“A determination made by the Competition Commission … must be contained in an order”.

Later, it states that the Civil Aviation Authority,

“must take such steps as it considers requisite for it to comply with the order”.

It then goes on to say:

“The steps must be taken … if a time is specified in the order or is to be determined in accordance with the order, within that time, and … otherwise, within a reasonable time”.

The effect of the amendment would be to remove “within a reasonable time” and insert,

“within the period of 24 weeks beginning with the day on which the Competition Commission published the relevant order”.

This is a probing amendment, which seeks to find out what the Government mean by “within a reasonable time” and how they believe those words should be interpreted. Do they mean more or less than 24 weeks and, if it could be more than 24 weeks, will the Minister give some examples of where it might be reasonable for the Civil Aviation Authority to take longer than 24 weeks to comply with an order made by the Competition Commission when no specific timescale is laid down by it? It would also be helpful if the Minister could say who will be responsible for deciding whether the Civil Aviation Authority has taken steps to comply with an order within a reasonable time. Will it be the Civil Aviation Authority itself, the Competition Commission, the Secretary of State, the courts or some other individual or body?

As I say, this is a probing amendment. I hope I have explained the motive for tabling it and the issue that we hope the noble Earl will address. I beg to move.

[Earl Attlee]

My Lords, the amendment seeks to amend subsection (7)(b) of Clause 29. The clause contains provisions relating to the publication of, and other matters connected to, the determination of appeals.

The current drafting provides that the CAA must take steps to comply with the appeal determination within any time period specified in the order. When none is specified, it must do so within a reasonable time. I am unable to support the amendment for two reasons. First, we do not think that it is necessary. Under subsection (7)(a) of the clause, the Competition Commission may specify a time limit in the order. We would expect it to do so if and whenever appropriate. Why would it not do so? Secondly, in circumstances where it is not appropriate to specify a period, it will be necessary to afford the CAA a reasonable time within which to comply with the order. What will comprise a reasonable time depends upon the context. There may be cases where action should be taken in fewer than 24 weeks and others where it is not reasonable to expect the CAA to take action within that period.

The noble Lord, Lord Rosser, asked me to give examples. I do not have any to hand but there may, I suggest, be a requirement to provide IT facilities or some capability that might require the CAA to procure something. It simply would not have time to take the necessary procurement action, although it might have every intention of doing so and perhaps give assurances that it would do so.

Against this background, to set an arbitrary time limit of 24 weeks is not appropriate and may cause injustice. Therefore, it is prudent to retain the flexibility that subsection (7)(b) provides the CAA. This flexibility is consistent with our wish for the CAA to be an efficient regulator but to allow it appropriate periods of time to comply with orders. I hope that in the light of my explanation the noble Lord will be willing to withdraw the amendment.

[Lord Clinton-Davis]

I have a certain amount of sympathy with what has been said but the trouble with this provision is that it lacks specificity. That is desirable in legislation. I have some doubts—perhaps the Minister can remove them—as to whether these sorts of provisions are capable of determination without difficulty. Perhaps I am wrong about that. The Minister ought to take another look at this matter. We are on the same wavelength on this. There is no doubt that we are in agreement about the provision that the Minister has in mind but I am doubtful about the wording.

[Earl Attlee]

My Lords, I am not a lawyer but I do not have any difficulty in understanding the provisions. I do not understand why the Competition Commission or the Competition Appeal Tribunal would not set a time limit if it were appropriate to do so. If it were inappropriate—the CAA might have said that it was already complying and had no intention of stopping complying—it would be totally unnecessary to impose a time limit. However, I would expect the Competition Commission to impose a time limit if it were desirable.

[Lord Rosser]

I thank the Minister for his reply. I also thank my noble friend Lord Clinton-Davis for the points he made. Obviously it is my intention to withdraw the amendment since it is probing in nature, but will the Minister respond to the other point I made about who will determine whether it has been done within a reasonable time? The clause provides that it should be done “within a reasonable time” if no time limit is set. Who makes the decision as to whether it has been done within a reasonable time?

[Earl Attlee]

My Lords, I do not know the answer to that question, but I imagine that if it was not done within a reasonable time, there would be a mechanism for the appellant to go back to the Competition Commission or the Competition Appeal Tribunal. However, if I have got that wrong, obviously I will write to the noble Lord.

[Lord Clinton-Davis]

I would have expected the Minister to say that the phrase “within a reasonable time” is used repeatedly in other legislation. Will he consider that?

[Earl Attlee]

My Lords, the terms “a reasonable time” and “a reasonable person” are frequently found in legislation. The noble Lord is absolutely right.

[Lord Rosser]

I am happy to leave this in the context that if the Minister finds that the response he has given to me on who will determine whether it has been done within a reasonable time is not the position, he will write to say that. As I say, it is a probing amendment to try to find out more about the Government’s intentions so far as the definition of “within a reasonable time” is concerned, and what kind of cases might come within that category rather than in subsection (7)(a), which provides that,

“if a time is specified in the order”.

I thank the noble Earl for his response and I beg leave to withdraw the amendment.

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Moved by

[Earl Attlee]

32: Clause 30, page 20, line 29, leave out subsection (2)

--- Later in debate ---

Moved by

[Earl Attlee]

34: Schedule 2, page 80, line 41, after “matter” insert “, information or evidence”

[Earl Attlee]

My Lords, this is a minor and technical amendment and as such I do not expect it to be controversial. It seeks to make the drafting in sub-paragraph (2)(a) of paragraph 22 of Schedule 2 consistent with the rest of that paragraph. It corrects the omission of the words “information or evidence” from the phrase “matter, information or evidence”. This phrase can be found elsewhere in paragraph 22. So this amendment makes sub-paragraph (2)(a) consistent with the other provisions in paragraph 22 of Schedule 2, which delineates the circumstances in which the Competition Commission may allow new matters, information or evidence to be adduced in appeals brought before it. Paragraph 22 of Schedule 2 generally prohibits the Competition Commission from considering any matter, information or evidence in an appeal that was not in the appeal before the Civil Aviation Authority.

However, in common with other appellate jurisdictions, there are limited circumstances where, in the interests of justice, this general rule needs to be capable of being displaced. It is necessary for the power to displace this rule so as to be co-extensive with the scope of the general prohibition. I beg to move.

[Lord Davies of Oldham]

My Lords, I agree with the Minister. Try as I might, I can find nothing controversial in his amendment.

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Moved by

[Earl Attlee]

35: Schedule 3, page 87, line 38, leave out sub-paragraph (3)

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Moved by

[Earl Attlee]

40: Schedule 4, page 90, line 3, leave out sub-paragraph (3)

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Moved by

[Earl Attlee]

43: Schedule 5, page 91, line 34, leave out sub-paragraph (3)

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[Earl Attlee]

My Lords, just in case the issue about the Competition Commission comes up again during our debate today, I would like to clarify what I said in response to the point made by the noble Lord, Lord Rosser, about the CC having regard to the CAA’s general duty. As an appeal body, the CC must have the flexibility to decide an appeal justly and according to law. A duty to “have regard to” is not the same as a case where the CC must apply exactly the same duty as the CAA, but the primary duty will have great weight in the CC’s decision. It seems very unlikely, having regard to the constrained grounds under which an appeal may be made—an error of law, fact and so forth—that the CC would allow an appeal that was inimical to passengers’ interests.

Flexibility arises from Clause 1(5). Where there is conflict between the interests of different classes of passengers, the CAA is generally free to choose whose interests it prefers. The CC would also have regard to this provision. I will write to noble Lords so that any interested parties can pick up this clarification.

I welcome this debate about the slots and thank the noble Lord, Lord Empey, for explaining his concerns. I also pay tribute to the work that the noble Lord has done not just in Westminster but in Brussels. It is an object lesson in how to achieve these objectives. The new clause is intended to allow the CAA to take actions to help protect the provision of regional air services to congested London airports, such as directing airports to ring-fence slots for regional services or structure their charges so as to favour regional services.

The Government take the matter of regional connectivity very seriously. The noble Lord, Lord Davies, mentioned the problems of regional airports, for example some of those in Scotland. As I said before, we recognise the vital contribution that regional airports make to local economies, and that high-quality regional connectivity is hugely important. For remoter areas of the UK, regional air services are not a luxury but a vital means of connectivity. As the Committee will be aware, and as I confirmed at the first Grand Committee sitting, European Union regulations govern the allocation, transfer and exchange of slots at Heathrow and other slot co-ordinated airports in the UK.

EU slot regulations follow the Worldwide Slot Guidelines determined by the International Air Transport Association, reflecting the fact that commercial aviation is a global business. Council Regulation (EEC) No 95/93 on common rules for the allocation of slots at community airports provides common rules throughout Europe for slot allocation. These are aimed at providing airlines with fair and equal access to airports across the EU through independent and transparent slot allocation procedures. Members are required to ensure that independent airport slot co-ordinators are appointed to manage slot allocation at airports where capacity problems occur.

EU law does not allow either the Government or the CAA to have any role in slot allocation apart from the limited exception provided by the public service obligation procedure. EC Regulation No 1008/2008 allows member states to impose public service obligations to protect air services to airports serving a peripheral or development region or on thin routes to any airport on its territory where such a route is considered vital for the economic and social development of the region.

It would be open to regional bodies—for example, local enterprise partnerships and the devolved Administrations—to apply to the Secretary of State for Transport to impose a PSO on an air route if they feel that a case can be made which satisfies the EC regulation. If approved, this would permit slots to be ring-fenced at a relevant London airport. However, one of the important principles of the PSOs is that they can be imposed only when it is necessary to ensure adequate services between two cities or regions, rather than for the purposes of linking individual airports—a point recognised by the noble Lord, Lord Empey. Importantly, that means that when judging whether a region has adequate services to London, it will be necessary to take into account the level and nature of services to all five of London’s main airports, as well as surface transport connections.

Unfortunately, I have to repeat what I said before: there is no other mechanism for the Government to intervene in the allocation of slots at Heathrow or other London airports. Under European law, the potential for the ring-fencing of slots at Heathrow to protect regional services is to be dealt with by the rules on PSOs only. Therefore, any proposals to override the strict criteria and processes by which European Governments can intervene in route operations would be incompatible with EU law. I think the noble Lord understands that but still seeks a solution.

[Lord Berkeley]

On the basis of the noble Earl’s argument, it would seem that there can be no grounds for having a third runway at Heathrow until all four of the other airports that he just mentioned are full.

[Earl Attlee]

My Lords, this is not a debate about the third runway. Whether we have a third runway at Heathrow is not relevant. If we got a situation in which we had a third runway and then ran out of capacity at Heathrow, we would still have the same problem.

In addition, the application of traffic distribution rules—the TDRs—is also governed by EU law, which prohibits the implementation of discriminatory rules, including on geographical grounds. As a result, the introduction of TDRs to protect particular regional air services is not an option as it would also be incompatible with EU law. If the amendment seeks to empower the CAA to give a direction to the airport to structure its charges so as to discount airport usage for regional services, I regret that this would not be possible for a number of reasons. If it is not in the interests of users of air transport services on the grounds of the range, availability, continuity, cost and quality of airport operation services, it would not be consistent with the primary duty for the CAA to give such a direction.

In addition, EU directive 2009/12/EC on airport charges introduced common principles on the levying of airport charges at community airports above a certain size to ensure transparency and consultation. That directive was transposed into UK law through the Airport Charges Regulations 2011. Airport charges must not discriminate between users but charges can vary in the interests of the public and in the general interest, provided the reasons are relevant, objective and transparent. The CAA has an enforcement role regarding the Airport Charges Regulations, so it would not be consistent for it to direct on the structure of airport charges. However, as your Lordships are aware from the opening remarks of the noble Lord, Lord Empey, the EU slot regulations are in the process of being reformed in Europe at present. The European Commission’s “Better Airports” package includes proposals to amend the EU slot regulations, which provides an opportunity for the UK to highlight this issue with the European Commission and to explore the inclusion of measures to help secure the ongoing provision of air services between UK regions and congested London airports.

I fully understand the concerns behind the noble Lord’s proposed new clause, but I am unable to support it for the reasons given. Nevertheless, I assure the Committee that the Government are committed to supporting regional airports and regional connectivity. We will also consult on a new aviation policy framework, which will include a focus on regional airports. We will also issue a call for evidence on maintaining the UK’s international connectivity. I would welcome the contribution of the noble Lords and their constituents to that debate and I hope that the noble Lord, Lord Empey, will consider withdrawing his amendment.

[Lord Bradshaw]

Before the noble Lord, Lord Empey, speaks, I have to say that that is one of the most convoluted answers that I have ever heard. We say in these debates that we will read Hansard, but we shall do so with a wet towel around our heads this time. I believe it is incumbent on the Government here in London to find a method by which the air services to Belfast, of which I was a regular customer, can be maintained. They are incredibly expensive now compared with similar flights elsewhere. The customer is being short-changed. I hope that the Minister and his colleagues will bear it in mind that this must be put right in any review of aviation legislation.

[Earl Attlee]

My Lords, I could paraphrase what I have just said by saying that we cannot do what the noble Lord wants because of EU regulations but the EU is working on it.

[Lord Empey]

I am grateful that I needed no wet towel for that answer. I thank the Minister for his response. It is a very convoluted issue with all these parallel processes taking place. However, at the end of the day, there is a problem that could exist in the future, although it does not exist right now, and we should not be in the position of being entirely at the mercy of a particular airline or of being involved in some kind of commercial tug of war that can isolate a region. This is deliberately not a Northern Ireland-only issue.

To sum up, I thank the Minister. I shall continue to work on this and I believe that there is an appetite to do something about it. I will take the advice of the noble Lord, Lord Bradshaw, and read Hansard, and I will keep open my option of returning to this matter on Report. However, in response to the Minister, I beg leave to withdraw the amendment.

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[Earl Attlee]

My Lords, I am grateful to the noble Lord, Lord Rosser, for tabling the amendment. An amendment of this kind would address a recommendation of the Delegated Powers and Regulatory Reform Committee in its helpful report on the Bill, which was published four days before the start of Grand Committee. I have no complaint, but we will need a little more time to determine which way to go. However, I agree with the general aim of the amendment and have much sympathy with it.

The current drafting of the amendment is not technically correct. It would need alternative drafting to make a consequential amendment to the Airports Act 1986, where the provisions are to be inserted. I therefore wish to consider the matter further, with the intention of bringing forward a government amendment on Report. However, I do not anticipate having any difficulty with accepting the advice of the DPRRC. I hope that this reassures your Lordships that my intention is for a government amendment to be brought forward on this, in order to respond effectively to the DPRRC recommendation that if the purpose of the order provided for in sub-paragraph (11) of paragraph 2 of Schedule 8 is to ensure that the threshold can be increased for reasons other than inflation, the current negative procedure should be amended to an affirmative procedure to give Parliament greater scrutiny. With this assurance, I hope that the noble Lord will withdraw his amendment.

[Lord Rosser]

I thank the Minister for that very helpful reply. I fully accept that the amendment might not be worded in the appropriate manner. It appears from what he said that he intends to take the matter away with a view to producing an amendment that is in the right place in the Bill and says the right things to achieve the recommendation of the Delegated Powers and Regulatory Reform Committee. On that basis, I beg leave to withdraw the amendment.

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Moved by

[Earl Attlee]

47: Schedule 9, page 101, line 40, leave out “In section 74(3) (exceptions from restrictions on disclosure of information)” and insert—
“( ) Section 74 (restriction on disclosure of information) is amended as follows.
( ) In subsection (3)”

[Earl Attlee]

My Lords, the amendments in this group are minor and technical amendments to paragraph 3 of Schedule 9, which contains the consequential provisions for amendments to be made to other Acts. In particular these are amendments to the consequential provisions relating to Section 74 of the Airports Act 1986. Their purpose is to tidy up the consequential amendments in the Bill to Section 74(4) of the Act. The current Bill does not provide for amending Section 74(4) of the Airports Act 1986 and the amendments seek to correct this. Section 74(4) provides that the restriction on disclosure of information does not limit the disclosure of information in reports of the Competition Commission under Section 45 of the Act, and does not apply to information that has been made public as part of such a report.

Section 74(4)(a) will be redundant once Part 4 of the Airports Act 1986 is repealed. This is given effect to in Clause 76(1) of the Bill. However, paragraph (b) will continue to be relevant to information previously disclosed in Competition Commission reports under Part IV of the Airports Act 1986. If Section 74(4) were left as it is, it would not be technically incorrect. However, it is desirable to make this minor amendment to ensure that redundant references are removed, while ensuring transparency over the effects of past reports published by the Competition Commission. I beg to move.

Amendment 47 agreed.

Moved by

[Earl Attlee]

48: Schedule 9, page 102, line 3, at end insert—
“( ) In subsection (4)—
(a) leave out paragraph (a), and(b) in paragraph (b), for “such a report” substitute “a report of the Competition Commission under section 45”.”

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Moved by

[Earl Attlee]

49: Schedule 10, page 107, line 44, leave out sub-paragraph (1)

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[Earl Attlee]

My Lords, this is another minor and technical amendment to paragraph 7 of Schedule 10. The schedule contains the main transitional provisions for the regulation of operators of designated airports under the Airports Act 1986. Paragraph 7 provides the power to amend the schedule. The amendment is being made because sub-paragraph (1) of paragraph 7 is no longer required following the minor and technical amendment made to Clause 107 during the Commons Committee stage which contains a power with the same effect. The amendment deletes sub-paragraph (1) of paragraph 7 because it repeats what is set out in Clause 107. Doing so, however, requires sub-paragraph (2) to be amended to make reference to Clause 107. The amendment does not alter the effect of sub-paragraph (2) of paragraph 7 because we believe that it is important to maintain that certain provisions in Schedule 10 should not be able to be amended through paragraph 7, such as the interim period ending at 31 March 2014. This is the last day of the current regulatory settlement known as Q5, and we do not wish to disturb the current regulatory settlement period. I beg to move.

Amendment 49 agreed.

Moved by

[Earl Attlee]

50: Schedule 10, page 108, line 1, after “power” insert “under section 107”