Railways

Henry Smith Excerpts

Thursday 25th April 2013 Commons Chamber

[Mr Burns]

Cruel.

Before I was so cruelly interrupted by the hon. Gentleman, I was talking about the important issue of safety.

[Henry Smith (Crawley) (Con)]

Will my right hon. Friend give way?

[Mr Burns]

If my hon. Friend will forgive me, I want to make some progress.

The Commission’s explanation is that removing authorisation powers to the agency will help to address the delays that some operators have reported when seeking authorisations from national safety authorities. That is especially the case for cross-border operations where a train may run through more than one member state. We are not currently aware of significant costs or delays for railway undertakings in obtaining those authorisations in the UK, so we are not convinced that there is a problem in the UK. That is why we need to safeguard practices that already work here.

Overall, the Commission needs to be clearer about how the changes to the directive will contribute to market opening. Another Commission proposal is to change the authorisation process for trackside signalling, which would have a significant impact in the UK. There is not yet much experience in the UK of the authorisation of trackside signalling by the national safety authorities. However, UK projects are more likely to prefer to seek authorisation from the national safety authority rather than the agency, because they have not encountered difficulties so far.

The Commission has explained that to deal effectively with authorisation delays and cross-border problems it requires action at the EU level. It argues that individual member states acting independently cannot address such problems. However, at the Transport Council on 11 March, my right hon. Friend the Secretary of State proposed that there might be an alternative to moving powers away from national safety authorities to the agency. We have suggested giving the market a choice about where the authorisation is obtained from, so we propose exploring with member states and the Commission an approach that would enable rail undertakings to choose whether to obtain an authorisation from the relevant national safety authority or the agency. The same principle could be extended to give the industry a choice about where it needs to apply for trackside signalling authorisations. The UK is continuing to push for our choice of approach so that the national safety authorities and the agency could have the power to authorise vehicles.

The details of the recast of the interoperability directive are being negotiated in Council working groups. However, there are indications that our views about choice are being listened to and that other member states support our idea, which gives us grounds for encouragement. We will keep a close eye on how the proposals develop to try to ensure that we get the best outcome for Britain and the rail system in Europe. We will try to preserve as much flexibility as possible for member states to determine what work needs to be authorised and the applicable standards.

Let me turn to the impact of the proposals to require a railway infrastructure manager to be separate from a railway undertaking. The Government will need to understand the possible effects on several areas, including alliances between Network Rail and railway undertakings, and joint working arrangements. Within the package are requirements to ensure the effective independence of the infrastructure manager within a vertically integrated undertaking. The Government are looking further at how they will influence the holding company model, as used by Eurotunnel in respect of the channel tunnel and the cross-border rail services that run through it. There will also be points to consider for the railway structure in Northern Ireland, which remains vertically integrated.

Sir Roy McNulty concluded in his report—we accept this—that the key to delivering long-term efficiencies in the rail industry is the alignment of incentives between track and train. Alliances or partnerships between Network Rail and the passenger train operators are central to our approach. Alliances are expected to maximise efficiencies and to ensure that minority freight and open-access operators are protected, not discriminated against. They do so by ensuring that capacity allocation and charging decisions are undertaken outside the alliance to avoid discrimination against smaller train operators, including freight operators. Safety is protected by ensuring that ultimate accountability rests with the statutory duty holder. We believe that that is compatible with the open competition in rail markets that the Commission wants, but we are worried that the way in which the Commission’s proposals are formulated might prohibit certain types of alliances, such as between Network Rail and rail undertakings, and joint working arrangements, such as integrated control centres and performance improvement projects. The proposals therefore might prevent us from achieving the benefits that we anticipate. I know that the Transport Committee’s report stated that joint working between Network Rail and train operators should not be prohibited or unduly restricted. We will continue to engage closely with the European Commission and Parliament, and other member states, to ensure that our concerns are addressed in the final proposals.

On the impact of the proposals on franchising, we welcome the commitment to market opening.

Rail Franchising

Henry Smith Excerpts

Tuesday 26th March 2013 Commons Chamber

[Mr McLoughlin]

I think I would need a bit more notice before answering that question. If my hon. Friend writes to me, I will look at the issues in more detail. [Interruption.] The Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), says, “Just get on with it.”

[Henry Smith (Crawley) (Con)]

I very much welcome my right hon. Friend’s statement. Thameslink and Southern Railway recently announced new rolling stock to operate from the four stations within my constituency. Can he assure me that the changes to rail franchising announced today will not affect the delivery of that rolling stock?

[Mr McLoughlin]

It certainly should not affect the delivery of the new trains. I know of no reason why it should and if I am wrong, I will obviously write to my hon. Friend.

Oral Answers to Questions

Henry Smith Excerpts

Thursday 28th February 2013 Commons Chamber

[The Minister of State, Department for Transport (Mr Simon Burns)]

I have considerable sympathy with the hon. Gentleman’s point. [Interruption.] If the hon. Member for Garston and Halewood (Maria Eagle) keeps quiet, she will hear my answer. It is the same answer that I gave to the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy) when he raised the issue. We provided the money so that it could be invested in that service, but the Scottish Government decided, in the short term, not to invest in it. We hope that they will divert the money back to the improvements for which it was intended.

[Henry Smith (Crawley) (Con)]

T5. Next month EasyJet will start to provide regular scheduled services between London Gatwick and Moscow. Obviously that is welcome in that it will forge greater trade links, but the visa requirements are extremely bureaucratic and stringent, both for Russian business men visiting this country and for British business men visiting Russia. Can my right hon. Friend assure me that he will speak to the Home Secretary and the Business Secretary and try to resolve the issue?

[Mr Burns]

My hon. Friend has raised an important issue. As he knows, my right hon. Friends the Home Secretary and the Foreign Secretary are primarily responsible for such matters, and I will certainly discuss with Ministers in their Departments what can be done to improve the situation.

High Speed Rail

Henry Smith Excerpts

Monday 28th January 2013 Commons Chamber

[Mr McLoughlin]

As I said earlier, some of my discussions with various bodies have been curtailed until the route is announced, but those conversations should start in earnest as a result of today’s announcement.

[Henry Smith (Crawley) (Con)]

I commend my right hon. Friend for his statement. He is right about how important connectivity with the London hub airport will be when the issue of the hub is determined. Will cognisance also be taken, however, of the importance of linkage with major international gateways to the south of London, such as Gatwick airport and the Gatwick Express?

[Mr McLoughlin]

My hon. Friend is right. We cannot look at these things singly, but must consider how they impact not only on Heathrow airport but on other airports and availability to constituents who wish to use those services.

Rising Cost of Transport

Henry Smith Excerpts

Wednesday 9th January 2013 Commons Chamber

[Maria Eagle]

No, I think once is enough.

Together with the rising costs of housing, fuel and food, the rising cost of transport is adding to the cost-of-living crisis now making life much tougher for households across Britain. Yet Transport Ministers and the Government are so out of touch with the pressures that families are under that they are making it easier for private train companies and bus companies to hike fares and increase their profits—

[Henry Smith (Crawley) (Con)]

Will the hon. Lady give way?

[Maria Eagle]

I will in a moment. These companies are doing that off the back of struggling commuters and passengers. The pain is not yet over. This year, we are set to see even greater pressure from the rising cost of transport as the Government unveil their rail fares and ticketing review, with proposals for even higher fares at the times when most people need to travel.

[Maria Eagle]

My hon. Friend is entirely correct. Even now, this Government could put that right by simply removing that power from the train companies, as we did in office. I invite the Secretary of State, who is relatively new to his job, to consider that.

We have Transport Ministers and a Government who are so out of touch with the pressures that families are under that they are making it easier for the private train and bus companies to hike fares and increase their profits off the back of struggling commuters and passengers.

[Henry Smith]

Will the hon. Lady give way?

[Maria Eagle]

I will give way to the persistent hon. Gentleman.

[Henry Smith]

I am grateful that my persistence has paid off. Will the hon. Lady acknowledge the considerable investment in rail? For example, my constituency has a £26 million upgrade of Three Bridges station, a £53 million upgrade of Gatwick station and extra rolling stock from Thameslink and Southern. The travelling public are seeing real improvements.

[Maria Eagle]

I acknowledge that over a number of years, under the current Government and the previous Government, there has been big investment in rail travel. That is a good thing and I do not deny that.

--- Later in debate ---

[Gareth Johnson]

Will the hon. Lady give way?

[Henry Smith]

Will the hon. Lady give way?

[Maria Eagle]

No. Those are the changes to fares and ticketing that passengers want, not the Government’s approach, which seems to be more about what is in the best interests of the train companies, not commuters.

If the Government are out of touch with the impact of fare rises on commuters, Ministers are even more woefully out of touch with the consequences for bus fares and services of their funding decisions since the election. When they set out plans to cut 28% of funding from local transport and axe a fifth of the direct support for bus services, Ministers claimed, incredibly, that that could be done without an impact on fares. The Minister, the hon. Member for Lewes, told the House:

“When I spoke to the industry following the spending review announcement, it indicated that the cut was so minimal that it hoped that it could absorb it without fares having to rise, which is what we hope will happen.”—[Official Report, 2 December 2010; Vol. 519, c. 953.]

What incredible naivety.

For the subsequent two years, those who rely on local bus services have had to listen to the Minister, with his fingers in his ears, denying all knowledge of the consequences of the cuts. At Transport questions last April, he said of bus services that

“there have not been the cuts that the Opposition are so keen to talk up.”—[Official Report, 19 April 2012; Vol. 543, c. 485.]

At Transport questions in November, he again refused to accept the truth when my hon. Friend the Member for Nottingham South (Lilian Greenwood) warned him of the higher fares and reduced services in communities up and down the country.

We now have the truth, because the Government have had to publish the annual bus statistics for 2011-12. They clearly show an average increase in bus fares of 6.5% in England and an even higher average increase of 7.6% in non-metropolitan areas. Those are increases of more than double the rate of inflation on services that are relied on by some of the poorest in our communities.

--- Later in debate ---

[Mr McLoughlin]

I am not accusing the noble Lord of misleading anybody; I am informing the House of what he did as Secretary of State. He may have wished his changes to last longer, but they did not and were solely for that one year. Indeed, when the 5% flexibility was introduced in 2004 it led to some increases of 11% under the previous Labour Government in 2009 alone. That flexibility was suspended for one year—an election year.

However, that is not Labour policy now. How do we know? Well, let us look at Wales where this year under the Labour devolved Administration fares went up by RPI plus 1%, with flexibility of 5%.

[Henry Smith]

My right hon. Friend is right. Labour says it has changed its policy on fare flexibility, but in Wales, where it is in charge of the devolved Administration, it has agreed flexibility of up to 5% on train fares.

[Mr McLoughlin]

Indeed; I am grateful to my hon. Friend. I hope no Welsh Labour MPs support the motion tabled by the shadow Secretary of State. If they do, not only will they back up my argument that we are having a synthetic debate introduced by an Opposition who have synthetic policies on transport costs, but they will not mean what they say. When Labour is in a position to change the rules, it does not do so. In Wales, it has accepted the flexibility it believes it needs to provide a proper service; the Labour Government in Wales have acted in exactly the same way as the UK Government.

Rail Fares

Henry Smith Excerpts

Wednesday 5th September 2012 Commons Chamber

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

I am in a difficult position because I support the sentiment, but oppose the motive behind the motion. The motive is opportunism of the worst kind.

I support the sentiment because I am very concerned about hard-pressed rail commuters in Sittingbourne and Sheppey, and I want them to be helped. My hon. Friend the Member for Sherwood (Mr Spencer) compared his constituents and commuters in the south-east. I should point out to him that only a small percentage are bankers travelling to the City of London. The vast majority of my constituents are no better off than his.

Let me read out part of a letter—one of many—that I have received. It states:

“Dear Mr Henderson,

Once again I find myself writing to you on the subject of rail fares. As you will have seen in the press, the Government announced that rail fares will rise in January by an average of 6.2%. By my calculations, this will bring the cost of a non-High Speed, train only season ticket from Sittingbourne to Victoria to £3,954.88. My wife and I both commute from Sittingbourne to Victoria to work in Westminster and the increase will mean the cost of getting to work will take 22% of our combined take home pay—the increase will hit my wife particularly hard as it will represent 30% of her monthly income. The rises come at a time when many people, including us, are experiencing frozen pay or pay cuts.

Theresa Villiers said on the BBC yesterday that the increased fares will ‘make life better’ for rail users by paying for improvements.”

[Henry Smith (Crawley) (Con)]

The point about investment in rail is important. I commute into London most days, and I welcome the £26 million investment going into Three Bridges station, and the £53 million investment that will go to upgrade track capacity at Gatwick station.

[Gordon Henderson]

My hon. Friend is right about investment, but commuters on Southeastern railways have heard the same tired old tune, year in, year out, and frankly they have stopped believing it, if they ever did. We may have the Javelin service into St Pancras, but that is hardly high speed as it spends most of the journey on the tortuous route through Strood and Gravesend.

The letter continues:

“High speed also means higher cost, due to the supplement charged to travel beyond Gravesend. The service into Victoria has deteriorated over the years to the point where most “fast” trains take almost an hour and 10 minutes to travel from Sittingbourne to Victoria”.

Only 30 years ago the journey was 50 minutes, so travel times have gone up rather than down. I suggest that those who support High Speed 2 consider the impact of High Speed 1 on my constituency.

That letter just about sums up the frustration felt by my constituents—frustration that did not happen overnight but has been bubbling up for many years. The motion calls on the Government

“to restore the one per cent above inflation cap on annual fare rises”.

My constituents, however, have had to pay fares linked to the retail prices index plus 3% for many years because that formula was written into the franchise agreement for Southeastern railways, which runs trains in north Kent. That greater fare increase in Kent was to pay for improvements that were allegedly introduced in the area prior to April 2006, although my constituents often wonder what those improvements were. If those improvements were HS1, that would add insult to injury because people find themselves either paying for a superfast service that is not fast and goes to a London station to which few of them want to travel, or paying for a standard train service that takes longer than it did 30 years ago.

Rail Investment

Henry Smith Excerpts

Monday 16th July 2012 Commons Chamber

[Justine Greening]

I understand the point that the hon. Gentleman is making. It is a relevant question. The Welsh Government have not raised that issue with me directly, but it is something that I am interested in considering. Perhaps he will forgive me if I reflect and get back to him as my thinking on HS2 develops.

[Henry Smith (Crawley) (Con)]

Does my right hon. Friend agree that the reported contention of the Opposition that this significant rail investment will not create jobs is completely absurd?

Rail-Air Connectivity (South-East)

Henry Smith Excerpts

Tuesday 26th June 2012 Westminster Hall

[Henry Smith (Crawley) (Con)]

Once again, it is a pleasure to serve under your chairmanship, Mr Williams. I am grateful to have the opportunity to raise the issue of improving rail-air connectivity for London and the south-east. As a successful trading nation, we rely on aviation, and our commerce relies on connectivity. In the brief time that I have, I want to concentrate on the importance of air-rail connectivity for the world’s busiest two-terminal, one-runway airport.

The Government’s economic strategy rightly wants to see improved links with emerging markets. UK businesses trade 20 times as much with countries where there are daily flights than with those with less frequent or no direct services. Ministers correctly want to boost growth through increasing inward investment and boosting exports. Improved international connectivity is therefore critical. Gatwick airport’s recent investment programme has made it a credible competitor to London Heathrow airport.

My right hon. Friend the Prime Minister was quite correct when he recently said that, under new ownership, Gatwick is emerging as a business airport for London, competing with Heathrow. The airport has recently invested £1.2 billion in facilities. In April, it announced proposals to invest a further £1 billion from 2014 to 2019. All of the money is going into making Gatwick a better, not a bigger, airport. Today, Heathrow, the UK’s largest and major hub airport is effectively full. Whether further capacity should be provided is a debate for another day. However, Gatwick is not full. At times of peak demand, such as in August, there are constraints, but, averaged out over the year, Gatwick currently operates at approximately 78% of capacity. There is potential for a further 11 million passengers to use Gatwick every year—a 25% increase on today’s levels, and a new runway is not needed to accommodate such numbers.

If Gatwick has airport capacity that can be used, the question becomes how do we best utilise that. There is no doubt that Gatwick faces a competitive disadvantage in taking on Heathrow to deliver this connectivity. Gatwick is not a “hub” airport. In pure economic terms, “hub” airports are more attractive to airlines than point-to-point airports. Although, under current market and capacity conditions, Gatwick could not become a “hub”, it is competing, and it is serving routes that are traditionally the preserve of Heathrow. It is at best simplistic, and at worst fundamentally inaccurate, to suggest that because Heathrow is full, there is no alternative in terms of enhancing the UK’s international connectivity to emerging markets.

Surface transport links are key to airline choice and can encourage full use of existing capacity. At present, Gatwick is engaging directly with Governments and national carriers in emerging markets, and asking them what it will take for new routes to the UK to be established. They hear time and again that airlines want to come to London, and that their choice of airports rests on available capacity, suitable facilities and, crucially, the airports’ surface connectivity to London. If we want new international air links to the emerging markets, good rail access to the airports that can provide them is critical.

The UK national infrastructure plan rightly recognises the national role that London’s airports have in increasing economic output and in enabling business to access new and larger markets. Indeed the NIP has identified Gatwick’s current £1.2 billion capital investment programme as one of the country’s top 40 infrastructure projects. It also outlines that the Government will

“improve road and rail links to the UK’s international gateways to help maximise the efficiency and competitiveness of the whole transport network.”

A £53 million upgrade of Gatwick rail station is already under-way. It will deliver much-needed additional platform capacity, concourse improvements and local track and signal infrastructure.

The focus now is on the services that run in and out of Gatwick station. Gatwick is already the home of the busiest airport railway station in the UK with more than 10 million passengers every year, and proportionally more people travel by rail to and from the airport than any other major UK airport. There is already a substantial growth in forecast demand. Along with Gatwick’s substantive growth, the number of ordinary commuters who use the same rail links is forecast to grow by 29% by 2026. The Brighton main line, which is effectively Gatwick’s main rail artery, is near capacity, and peak services on the line were already at almost 80% back in 2009.

The new Thameslink project will help the airport. Already, it is quicker to get to the City of London from Gatwick than from Heathrow. The airport should see a doubling in train frequency from 2018 through Thameslink, and someone living in, for example, Peterborough or Cambridge will be able to go directly to Gatwick by rail for the first time. It is partly due to this Government’s decision to progress the Thameslink upgrade project that we will see clear improvements in north-south links to and from the airport. However, further improvements are necessary.

A consistent implication from Ministers has been that the welcome improvements that Thameslink will bring are sufficient to deliver the improved rail connectivity and capacity that Gatwick will need in future. In my view, a far more holistic approach to improvement needs to be taken and, in particular, one that takes into account just how central high-quality express services from Gatwick to London Victoria are to the airport’s growth.

[Zac Goldsmith (Richmond Park) (Con)]

I congratulate my hon. Friend on securing this important debate. Does he agree that many of his arguments relating to Gatwick also apply to airports such as Stansted, which have masses of spare capacity and many millions of unused passenger journeys, but which, like Gatwick, suffer from very poor transport links, and that, if they were improved, they would transform an unattractive airport into a very attractive one and a potential alternative business hub?

[Henry Smith]

I am grateful to my hon. Friend for his intervention. I apologise if my contribution seems a little parochial in its concentration on Gatwick, but the points relating to Gatwick are replicated for other airports, not just in London and the south-east, but around the country.

Over the past few years, Gatwick has lost direct links to Oxford, Birmingham, Manchester, Watford and Kent and, importantly, due to decisions taken by the previous Government, the Gatwick Express is now under threat. On-board ticketing has been discontinued, and 25-year-old carriages have replaced new ones.

[Iain Stewart (Milton Keynes South) (Con)]

I congratulate my hon. Friend on securing this important debate. He has highlighted the important point that the rolling stock that is now used on the Gatwick Express is inadequate for airport passengers because there is insufficient luggage space, and wheelchair access is difficult. The irony is that that stock has replaced purpose-built stock, which has been cascaded elsewhere on the network. I urge my hon. Friend to impress on the Government that when we argue for the Gatwick Express to be a dedicated franchise or part of a broader franchise, there should be flexibility to have appropriate rolling stock to make it an attractive airport link.

[Henry Smith]

My hon. Friend raises an erudite point. It is incredible that purpose-built rolling stock for the Gatwick express is now elsewhere on the network and that, as he rightly points out, unsuitable carriages are used. The matter is even worse because the Gatwick Express starts many of its journeys in Brighton, and by the time those carriages have reached Gatwick station, particularly at peak times, they are already full, and arriving air passengers cannot get a seat on what is supposed to be a dedicated service to London. Additionally, Network Rail is proposing a further stop for the Gatwick Express at Clapham Junction, which would be a retrograde step. It would threaten Gatwick's ability to compete with Heathrow, and because of that, reduce its potential for growth.

Passengers are noticing the trend. Already, the Gatwick Express ranks below its equivalents at Heathrow and Stansted, and is at the bottom of comparative league tables for other services, behind airports such as Heathrow, Hong Kong, Kuala Lumpur and Stockholm. Gatwick is not effectively connected to locations to the east and west of the airport either, with no direct rail service to and from Kent. Trains have to go via London, meaning that the 2 million passengers from Kent who use the airport every year cannot reach it directly.

The new Southern-Thameslink franchise must deliver improvements to the Gatwick Express. In December 2009, the Government announced that they were inviting tenders for new franchises for the south-east region from 2015. The new service will integrate those currently operated by First Capital Connect and Southern, including the Gatwick Express. From 2015, nearly all rail links in and out of Gatwick will be operated by one company, with the exception of a direct link to Reading. We currently have the unique opportunity to address many of the issues.

Preserving the Gatwick Express is a priority. It should be recreated as an all-day, dedicated service between Gatwick and London, to support Gatwick’s role as a key economic driver for London, the south-east and the UK economy as a whole. To guarantee its success, bidders for the franchise should be required to outline a vision of how both the quality of the journey and the range of direct routes to and from Gatwick can be improved. In addition to the invitation to tender for the new franchise including direct express rail services to London from the airport, there must also be a clear requirement for fit-for-purpose rolling stock that caters for the needs of air passengers—so ably pointed out by my hon. Friend the Member for Milton Keynes South (Iain Stewart)—as it is clear from Gatwick’s research that the current stock is not. Gatwick is particularly concerned about the installation of ticket gates at the airport railway station and the removal of on-board ticketing adversely affecting passenger experiences.

In the long term, the requirements in the recent rail Command Paper need to be implemented. The paper states that during the next regulatory cycle Network Rail and the broader rail industry should look at how best to improve surface access to major airports. Network Rail should, as part of its development of the south-east’s rail network, take advantage of the new capacity that the Thameslink programme will provide from 2018, to reorganise the way in which lines running though Gatwick are used. Gatwick’s plans for long-term infrastructure improvements deliver a win-win solution for commuters and air passengers alike. The line that supports Gatwick’s direct rail links into London is important for both air passengers and local commuters, and the airport is not suggesting that the needs of the airport outweigh those of the everyday user.

I note that the Office of Rail Regulation has projected that, independently of air travel, passenger numbers on the main line running in and out of Gatwick could grow by 29% by 2026. The office believes that Gatwick airport’s technical proposal would allow for the needs of both sets of users. This is not an either/or choice for the Government, but a solution for all.

The plans that Gatwick has published support the growth of the airport and help to ensure a better experience for the ordinary commuter using the same rail links. They provide adequate capacity for the projected growth of both sets of users, and help to deliver the connectivity that the national economy needs. In essence, they meet the needs of most user groups, and the interests that Ministers should consider.

There would be substantial benefit to the Treasury, too, because air-rail users pay a premium. Gatwick Express users reduce Government subsidies by £27 million every year, lessening the burden on the taxpayer. More users would mean less taxpayer money being spent on the network, and keeping the service as a non-stop one would allow a further £6 million to be saved by reducing journey times.

Direct rail links to Gatwick would help to improve the environment for inward investment in the south-east, because 51% of potential investors cite international transport links as an important factor in deciding where to locate. Easy rail access to airports means better links to key export markets. In the short term, Gatwick’s proposals would greatly assist the airport in marketing itself internationally to airlines operating from emerging markets, because a high-quality, dedicated rail link is key in their decision-making process. In that way, improved rail links would help efforts better to manage the capacity shortages that airports in the south-east face, and which have the potential to hamper our economy.

Civil Aviation Bill

Henry Smith Excerpts

Tuesday 22nd May 2012 Commons Chamber

[Henry Smith (Crawley) (Con)]

It was a pleasure to speak on Second Reading and an honour to serve on the Public Bill Committee earlier this year. As I said on those occasions, and it is worth repeating now, the airport and airline industry has changed significantly in the more than a quarter of a century since this area of legislation was significantly addressed. Since the British Airports Authority—latterly known as BAA—was privatised in 1986, London’s largest airports, Heathrow, Gatwick and Stansted, have been subject to the same economic regulatory regime designed to ensure that they did not abuse their monopoly position. The prices that Gatwick airport, which you will know is in my constituency, Mr Deputy Speaker, charges airport passengers are currently capped by the CAA, which sets them in accordance with Competition Commission recommendations. The revenues from those prices often appear listed on passenger tickets simply as “airport charges”, but of course they are used to pay for things such as runways, airfield facilities, terminal security, baggage systems and future development. Price caps are normally reviewed every five years. The Bill rightly reforms this process.

Gatwick airport supports the Bill’s key principles, which herald a more flexible regulatory system that better reflects the way in which today’s aviation sector operates. Nevertheless, Ministers should recognise the relationship between the economic regulation of London’s airports and the Government’s priority of attracting new direct routes to emerging economies, which will help to grow the UK economy. My right hon. Friend the Prime Minister recently acknowledged that, under new ownership, Gatwick is emerging as a business airport, competing with Heathrow. Indeed, the airport’s operators have established new routes to countries such as China, Vietnam, South Korea and Hong Kong. Such progress shows that Gatwick can compete to provide direct links to those emerging economies, fulfilling the ambition it has of being a gateway to Asia.

[Graham Stringer (Blackley and Broughton) (Lab)]

My point probably applies more to Heathrow than it does to Gatwick, which is obviously the hon. Gentleman’s main interest, but does he agree that the decision of COMAC—the Commercial Aircraft Corporation of China—to locate in Paris rather than in London, mainly for airport capacity reasons, shows that the Government’s aviation policy has failed because it is essentially an anti-aviation and anti-business policy?

[Henry Smith]

I would not accept that the Government’s aviation policy is either anti-aviation or anti-growth, as shown by the fact that we are now on Third Reading of a Bill that will produce greater flexibility in this sector—vital for a trading nation such as ourselves. I believe the Government should be congratulated by hon. Members on both sides of the House on that achievement.

Returning to my principal interest of Gatwick airport—I am the local Member of Parliament—I believe that it can grow by a further 11 million through-passengers than the current market share shows. The airport’s overall market share is only about a quarter of the total. Gatwick is not a monopoly, so it does not need to be economically regulated. The market should be allowed to work. Deregulation would allow Gatwick the flexibility to invest with pace in new infrastructure to accommodate developments such as the new A380 aircraft and undertake much-needed investment in areas such as the border zone. Through deregulation, Gatwick can emerge fully in line with the views expressed by my right hon. Friend the Prime Minister as an airport that can fairly compete with Heathrow and others. As an economically regulated airport, Gatwick cannot invest flexibly or price services according to what individual customers want or what the market will support.

The Bill outlines a series of tests that must be met for an airport to be regulated. These aim to determine whether an airport has substantial market power and, if so, whether there is a risk of abuse of that position, which existing competition law is insufficient to control. An airport that meets the market power test requires from the CAA a licence to operate, which may include a price cap on what can be charged to carry passengers.

With Gatwick being sold by BAA two and a half years ago and now separately owned and operated, I very much agree with the Transport Select Committee’s findings:

“Given the greater degree of competition that now exists between airports in the south east of England…the CAA should undertake its economic regulatory duties with a relatively light touch.”

Several members of the Public Bill Committee expressed a similar view. On Report, my hon. Friend the Member for Rochester and Strood (Mark Reckless) said, correctly in my opinion:

“If Gatwick feels that it should invest significant sums of money in better terminal facilities in order to service the A380s and…allow the sorts of routes to high-growth markets in Asia that we so strongly support, I see no strong reason why it should be prevented from doing so and charging what the market will bear. I believe that that could be to the benefit of the consumer.”—[Official Report, 25 April 2012; Vol. 543, c. 1031.]

Similarly, in Committee my hon. Friend the Member for Amber Valley (Nigel Mills), whom I am pleased to see in the Chamber, noted that the CAA started

“from a position that… airports are regulated, and appears to want to keep them that way…. we should regulate airports only where there is a definite need to do so, and where there is a real advantage to the user, rather than looking to regulate unless we can find a way out of it.”––[Official Report, Civil Aviation Public Bill Committee, 28 February 2012; c. 153.]

There is clear evidence that Gatwick is now competing with other London area airports. Airlines and passengers are moving between those competing airports in the south-east, and airlines are choosing Gatwick in preference to other airports to establish brand-new routes to countries that are key trading partners. Any legal test should reflect those trends, and there should be no risk of presumption towards regulation.

The correct threshold for economic regulation of any company, including an airport, involves the application of the legal concept of dominance, which is well established in both European Union and United Kingdom competition law. It is used, for example, to determine whether telecom network operators should be subject to economic regulation in all EU member countries. Any test for market power should also be one of dominance. That would ensure a consistent approach to assessing whether there is a need to regulate in line with the regulation of other industries.

I welcome this updating of legislation for the air industry. I believe that it gives us an opportunity to enhance our gift as an innovative aviation and trading nation, and to grow the economic prosperity and employment that we need.

Oral Answers to Questions

Henry Smith Excerpts

Thursday 19th April 2012 Commons Chamber

[Mrs Villiers]

In deciding the rules on ticket offices, it will of course be important to consider carefully how best to deploy staff in a way that keeps passengers safe and secure, so the issues the hon. Gentleman raises will be an important part of our thinking before we decide whether any changes need to be made.

[Henry Smith (Crawley) (Con)]

T10. Will my right hon. Friend join me in paying tribute to the staff of Virgin Atlantic, Gatwick Airport Ltd and the South East Coast ambulance service for their professionalism when assisting passengers following the emergency landing of flight VS27 earlier this week?

[Justine Greening]

Yes, I will. I echo my hon. Friend’s thanks and praise for the staff of both companies and members of the emergency services who responded to the emergency landing at Gatwick on Monday. It is obviously too early to speculate on what exactly caused the incident, but it is now being investigated by the Department’s air accidents investigation branch.