Civil Aviation Bill

Justine Greening Excerpts

Monday 30th January 2012 Commons Chamber

[The Secretary of State for Transport (Justine Greening)]

I beg to move, That the Bill be now read a Second time.

A successful aviation sector goes hand in hand with a growing economy; they are two sides of the same coin. That is why we need to ensure that the regulatory framework for civil aviation in the UK enables the sector to make a full contribution to economic growth, without compromising the high standards consumers rightly expect from the industry. Passengers are the lifeblood of successful aviation, so, above all, the Bill puts the interests of the consumer first, enabling the regulator to address the things that passengers care about most.

The aviation industry in the UK is vital and dynamic, and it has changed dramatically since the current regulatory framework was introduced in the 1980s. In many areas, competition has flourished and passengers have benefited, but while the industry has innovated and diversified, much of its regulatory framework has remained fixed and inflexible. There is compelling evidence that the current regulatory regime is distorting competition between airlines and needs to be reformed. When competition is distorted, the people who suffer are the consumers and customers—the 211 million passengers who travel by air each year and the freight customers who rely on aviation to transport their goods quickly and efficiently and make reliable connections with global markets.

We need only recall the scenes at airports closed by bad weather last winter to be reminded just how much people can suffer when air travel lets them down. The current regulatory regime proved itself a blunt and ineffective tool when it came to dealing with the issues that arose last winter—and we need to put that right.

With our independent Civil Aviation Authority we already have a world-class expert regulator with a first-class track record on safety, so the aim of this Bill is to give more responsibility to the CAA and to provide a better regulatory framework that would enable it to introduce more flexible and proportionate regulation and to take timely action on the issues that matter to passengers.

The Bill will devolve more responsibility to the specialist regulator for aviation, and will remove regulatory functions and unnecessary intervention by Government. It will also ensure that the CAA operates in a transparent and accountable manner, so that when appropriate it can carefully weigh up the costs and benefits of regulation as an integral part of the decision-making process. As a result, future regulatory intervention will be directed only at areas in which it is strictly necessary. For the first time, the regulator will be allowed to give the public reliable information about the sector’s performance and its environmental impacts, and about measures taken to address them. Moreover—this will be important as we work to reduce the deficit—the Bill will substantially reduce taxpayer funding for the regulation of aviation. It surely makes sense for the costs of regulation to be met by the sector itself.

The Bill focuses on three key areas: reform of the economic regulation of airports, a range of measures giving the CAA a role in aviation security and in the reform of its own regulatory framework, and reform of the air travel organisers’ licensing scheme to improve the protection of passengers. I will explain each of those in turn.

Let me begin with the importance of competition and the economic regulation of airports, a vital area that accounts for two thirds of the clauses in the Bill. Most airports up and down this country are subject to effective competition and do not need economic regulation, but for the small number with substantial market power, economic regulation is vital to defend consumers’ interests.

The case for reforming airport economic regulation is compelling. Few people would claim that the current regime, which, after all, was designed 25 years ago, is giving passengers the quality of service that they deserve. The industry and the regulator have urged change as well, and three years ago the Competition Commission concluded that the legislative framework distorted competition between airlines by adversely affecting the level, specification and timing of investment at airports and the service that passengers receive.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Does the Secretary of State think that the takeover of British Midland International by the British Airports Authority will increase competition in the provision of air services to Scotland? What will the Government do to ensure that slots at Heathrow will be protected for the purpose of transport between Scotland and the rest of the United Kingdom?

[Justine Greening]

The hon. Gentleman is right to raise an issue that we also consider important. BAA also wants to ensure that it remains competitive, with connections to new markets, and that is the balance that we want to be struck. I know that the subject was raised last week at Prime Minister’s Question Time, and I know that the Prime Minister takes careful note of such matters. The hon. Gentleman will be aware of the work that the Government did to help ensure that we kept the connection between Northern Ireland and Newark airport in New York. We are strongly committed to ensuring that we have the connections between airports and across the country that our economy needs to be successful.

Part 1 of the Bill replaces the current framework for the economic regulation of airports with a flexible, modern regime designed to put consumers first. The current “one size fits all” system of economic regulation is rigidly focused on a five-year price control regime. The Bill replaces that with a flexible licensing regime which can be directed at areas where regulation adds real value, and which will allow the CAA to reduce or remove unnecessary regulation. The CAA will have the power to incentivise and improve airport resilience, and to take more speedy action to tackle poor performance. When competition in the market grows, airports will be removed from regulation when that is in passengers’ interests.

I understand the importance of clear and certain decision-making to the ability of businesses to make long-term investments in our transport infrastructure, particularly when billons of pounds of investment are at stake. Independent economic regulation ensures that there is no political interference, which is why it is such a common feature of modern economic regulatory regimes. The Bill will remove the Secretary of State’s role in deciding which airports are regulated and will give that responsibility to the independent CAA, which will need to make decisions based solely on the need to regulate and to protect the interests of consumers.

[Gavin Shuker (Luton South) (Lab/Co-op)]

The Secretary of State has said that the CAA will have additional powers and responsibilities. Will she say a little more about that? I find it odd, for instance, that it is excluded from the remit of the National Audit Office.

[Justine Greening]

The hon. Gentleman correctly points out that exclusion and I will address his point shortly. When Sir Joseph Pilling reviewed that matter in 2008 he concluded that the current approach was appropriate.

Importantly, the CAA’s decisions will become more accountable because the Bill will provide greater access to challenge regulatory decisions. As the CAA discharges its responsibilities, it is essential that its decisions are guided by the needs of customers. Therefore, clause 1 establishes for the first time a single, clear, primary duty on the CAA to further the interests of consumers—all passengers and owners of air freight both now and in the future—and, wherever possible, to do that by promoting competition.

Some airlines have argued that the CAA’s duty should be extended to airlines as users of airports, alongside passengers. The airlines are important of course, but I am in no doubt that if conflicts of interest arise between airlines and passengers, the regulator must be squarely on the consumer’s side. To protect consumers at all airports, the Bill gives the CAA powers to enforce competition law concurrently with the Office of Fair Trading in the airport services sector.

[Mr Tom Harris (Glasgow South) (Lab)]

The Secretary of State makes a valid point about what should happen if a conflict of interests were to arise between passengers and airlines. However, can we not address this issue by stating in the Bill that the CAA’s prime obligation is to passengers and that the airlines are specifically a secondary priority?

[Justine Greening]

I do not think we need to go that far. As I have said, the Bill’s key purpose is to provide clarity on what the CAA must focus on primarily, which is consumers. It is important to provide that clarity.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The Secretary of State rightly points out that consumers’ interests can be protected by promoting competition and thereby giving passengers greater choice, but how does the Bill address situations that cannot be dealt with by more competition, such as passengers facing long queues to get on and off planes? In the short term, that will not be addressed by competition, so how might the Bill help in such respects?

[Justine Greening]

The Bill cannot deliver absolutely everything in respect of the aviation industry. It will, however, deliver a key element of the regulatory framework that will sit alongside how the industry operates. Competition is working. We need only consider the investment that both Heathrow and Gatwick are putting into winter resilience to see that passengers will make a choice between those two airports based on which one they believe they can rely on. As a result, we are seeing competition lead to far more investment on that side of airport operations. I have seen that development for myself, and I greatly welcome it. Providing the CAA with these new powers will promote effective competition by enabling the CAA to make use of its specialist knowledge and to co-ordinate its use of economic regulation and general competition powers.

Turning to modernising the regulators’ wider role, part 2 of the Bill includes changes to how the CAA operates by improving transparency and accountability, removing unnecessary Government funding and involvement and cutting red tape. Transparent information is of huge benefit to the public. It gives all of us as consumers the means, if we want to use them, to compare different services on offer to us and to judge for ourselves which we want to buy. In keeping with this approach, clauses 83 and 84 introduce two new information duties for the aviation regulator, to serve the interests both of consumers and those affected by air travel.

The CAA would arrange for consumer information to be published to help passengers and freight users make more informed choices about what is on offer, while having regard to the principle that the benefits of information should outweigh the cost. Similarly, the CAA would publish information for the public about the environmental effects of civil aviation in the UK, and the measures taken to limit environmental harm. What is more, it would be able to use both those powers to issue advice and guidance to the industry so that it can improve standards of service and operate more sustainably. As we modernise the legislative framework, we are taking the opportunity to give the CAA new freedoms to appoint its own executive directors and to carry out criminal proceedings without recourse to Government. As criminal proceedings can be both slow and costly, the Bill would also enable the Secretary of State to give the CAA powers to enforce existing offences through civil sanctions where they are more proportionate.

The Bill also includes some other measures enabling the disclosure of anonymised medical data about aviation workers who are subject to health checks by the CAA. That would pave the way for valuable medical research into the particular health risks for specialist workers such as flight crew and air traffic controllers.

Let me move on to our proposals to improve the regulation of aviation security. This section of the Bill is relatively short, amounting to just five clauses and two schedules, but I know the House will rightly consider it carefully. Above everything else, passengers expect the highest levels of safety and security.

For me, keeping people safe and secure when they travel is and will continue to be of key importance. At present, aviation safety is regulated by the CAA while security regulation is carried out by officials in the Department. The CAA has an excellent track record as a safety regulator, as good as any in the world, and it has empowered our airlines and airports to develop safety management systems that keep safety at the heart of their operations, striving for ever safer and more efficient systems. That is why I believe there would be real benefits to bringing the CAA’s impressive specialist expertise to the regulation of aviation security.

In the past, security regulation has been criticised for being too process-driven, too often relying on a tick-box approach. Although those arrangements have kept people safe, too often their inflexibility has caused frustration on the ground at airports. There would be attractive benefits for passengers if we could empower the experts to find the best and most efficient way of maintaining the highest levels of security for air travel. That means more involvement from the experts in aviation operations, which can bring real benefits. Of course, it is essential that the Secretary of State should stay responsible for aviation security policy and for giving security directions, although it also makes sense for the specialist expert regulator to have a role in maintaining and improving aviation security. Consequently, the Bill includes provisions for the CAA to keep under review security directions made by the Secretary of State and for it to provide advice and assistance to the industry and Government. With its track record in handling safety, I believe the CAA will approach those new responsibilities with the rigour they deserve.

[Mr John Leech (Manchester, Withington) (LD)]

Can we be assured that the transfer of staff from the Department to the CAA will not result in a loss of expertise in the security sector within the Department for Transport?

[Justine Greening]

We have considered that very closely and it is one reason why these changes will not happen overnight. They will take place over the next two to three years so that we can ensure we get the right staff transferred with the right expertise. As my hon. Friend points out, we have a wealth of security expertise within the Department and across Government and that will still be there for us to draw on within the Department for Transport. I am assured of that.

[Maria Eagle (Garston and Halewood) (Lab)]

Is the right hon. Lady at all concerned that the division of responsibilities will create new interfaces that might cause delay and problems in the swift implementation of policy?

[Justine Greening]

That is a very fair question and it is one that I have considered carefully, too. I do not believe that it will cause a problem at all; in fact, it will enhance the security approach that we are able to take. It will mean a far more ongoing and rigorous approach to security that will manage to combine the highest standards of security and safety at airports while delivering a more streamlined approach for passengers on the ground. That is better for everybody.

Clause 82 makes provision for the transfer to the Civil Aviation Authority of rights, powers, duties and liabilities as the Secretary of State considers appropriate. That will allow us to transfer to the CAA the experienced staff who carry out the regulatory compliance and vetting functions currently carried out by civil servants in my Department. That will not only devolve more responsibility to the CAA but will have the further advantage of bringing the “user pays” principle to aviation security. It is not right or fair that the taxpayer currently subsidises the cost of aviation by paying for its regulation. At a time when our overriding priority is to reduce the inherited debt and when difficult choices are being made about funding priorities it is right that the cost of regulatory compliance should be met by the industry that benefits from it and not by the taxpayer.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Has my right hon. Friend considered the impact of the transfer of powers from the Department’s Transport Security and Contingencies Directorate to the CAA on TRANSEC’s residual functions, particularly in relation to maritime safety and elements of rail safety?

[Justine Greening]

Yes, we have considered that and we are very happy that we will continue to strike the appropriate balance in our internal departmental expertise on security in all those areas. That is absolutely vital and we will not compromise on it in any way. We seek to have a more proportionate and smart approach to ensuring that we maintain the very highest standards of security and safety in our airports.

The final area of the regulatory framework that the Bill seeks to reform is the regulations covering the air travel organisers’ licensing scheme, or ATOL as it is known to millions of people each year. Those people have the peace of mind that comes from knowing that their package holiday is financially protected and that they will not be left stranded if a travel company becomes insolvent. Since the scheme was set up the holiday market has diversified, partly due to the innovations that internet booking has allowed. As a result, the holiday industry has told us that it is no longer clear to consumers whether their holiday has the protection of ATOL. Clause 94 will allow us to make regulations to improve clarity for the consumer by adding more flight-based holidays into the ATOL scheme, including holidays sold by airlines. That will mean that businesses selling holidays that include a flight should have a more coherent and consistent regulatory framework in which to operate.

[Mr Peter Bone (Wellingborough) (Con)]

I refer hon. Members to my declaration in the Register of Members’ Financial Interests. This area is very important because it is not clear to consumers at the moment whether they are protected or not, with some people on a flight being covered while others on the same flight are not. I do not think the Government are going far enough in that they are not going to say that all people on all flights are covered, but why not?

[Justine Greening]

No doubt my hon. Friend will want to return to this issue in Committee, but I think that our proposals are measured and will mean a real step forward in the number of consumers that ATOL can protect, while also making ATOL more financially sustainable in the longer term, which is important. The clauses that relate to the reform of ATOL are long overdue and are welcome. I appreciate that he might want them to go further and I look forward to having that debate in Committee because this is an incredibly important aspect of the Bill for people up and down the country who want to be able to book their holiday knowing that it has the protection they want behind it.

In conclusion, the Bill brings together the Government’s commitment to having a successful and sustainable aviation sector with our agenda on regulation. It will allow the CAA to modernise the way it regulates, bring a stronger consumer focus to its activities and improve transparency and accountability. It will also create a stable environment for investment in airports and will allow the UK aviation sector to continue to thrive and develop. I commend the Bill to the House.

--- Later in debate ---

[Maria Eagle]

The hon. Gentleman is correct, and proper security is always a balance between managing to make sure that the efforts of those who wish to commit terrorist offences on planes are foiled while, at the same time, not wishing to subject consumers and passengers to indignity or extensive delay. It is correct that the Department should have a full understanding of the extent of any threats so that it can make appropriate policy. It is just in those areas that we want to probe a little more in Committee precisely to assess the practical impact of the proposals.

It is unfortunate that the introduction of the Bill and its Second Reading should come so soon after the publication of the draft Bill. Considering that this package of reforms has been in preparation for many years, and given that it was widely believed that its introduction had slipped to the next Session, it is unfortunate that there has been a sudden rush of last-minute enthusiasm to bring it before the House. Consequently, the planned pre-legislative scrutiny, which we supported, has been curtailed. The Transport Committee has done its usual impressive job, but it had just three weeks to take evidence and produce recommendations on the proposals, many of which have been in gestation for six years or more. That meant that the Government have not been able to consider those recommendations in detail and improve the Bill before its introduction. Consequently, we are debating a Bill—and I hope that this is the case—that will doubtless be amended by the Government in Committee, which is a remarkable state of affairs for a measure so long in preparation.

The industry itself has rightly expressed concern about the limited opportunity it was given to engage with officials before the Bill’s introduction in Parliament. BAA, it is fair to say, may be affected more than other player in the industry by the measure, yet it says that it could secure only a single one-hour meeting with the Department for Transport in the past three months, which falls short of what might be expected for a regulatory Bill of this nature. There will be, at the very least, a suspicion that the hasty introduction of the Bill has less to do with the industry’s needs and more to do with the needs of business managers, who doubtless begged the Secretary of State to let them have something for the Commons to do, because the Government’s legislative programme is bogged down in chaos in the other place.

[Justine Greening]

I have met BAA on a number of occasions since taking on my present role, so I can assure the hon. Lady that there has been plenty of opportunity for BAA to raise any concerns with me.

[Maria Eagle]

I am grateful for the right hon. Lady’s intervention. I was just quoting what BAA said, and I hear what she says about her own efforts, which I commend.

There are three key reforms in the Bill—to economic regulation, to the Civil Aviation Authority itself, and to the transfer of security functions. I want to turn briefly to the wider aviation context within which the reforms will sit. We agree that the current framework for airport economic regulation is outdated and needs reform. It has been clear for some time that the CAA does not have the powers to apply the regulatory regime in a way that best benefits passengers and reduces costs for the industry. We are also dealing with a very different aviation landscape since the introduction of the existing regime, not least because of a major increase in passenger numbers, low-cost airlines, growth in regional airports and changes to ownership required by the Competition Commission. The proposed licensing regime, together with a more flexible and targeted set of regulatory tools, will better enable the CAA to carry out its work, while making its decisions more accountable, and reduce unnecessary regulation.

It is also right that the regulatory regime governing airports be reformed to put passengers at its core. The CAA’s primary duty should be to promote the interests of passengers. That was our intention in developing the reforms, and we are pleased that that approach has been accepted and adopted by the Government. We hope that in Committee the Minister will look carefully at the arguments that have been made and be clearer about how the CAA is to weigh the often differing interests of current versus future air transport users and, as the Select Committee has urged, explain in more convincing detail how the proposed aviation consumer advocacy panel will work in practice and, in particular, how it will identify, represent and promote the interests of passengers and relate to the regulatory process.

The lack of a specific requirement to publish passenger welfare plans is a major omission and should be addressed. It was a key recommendation from the Select Committee following its inquiry into the failure of both Government and industry to prepare and respond adequately to the severe winter weather in December 2010. The appalling experience faced by many passengers, particularly at Heathrow, demonstrated the need for the sector significantly to up its game in relation to passenger welfare. I welcome the new powers that the legislation will give the CAA and the Government and hope that the Secretary of State will issue clear and robust guidance to airport operators on winter resilience. However, we would like to see a specific obligation on the CAA to include in any licence issued a requirement that airports provide support to stranded passengers.

The Government must also ensure that each recommendation of the Quarmby report on the resilience of England’s transport systems in winter is implemented, particularly those relating to the need for early decisive action on whether to cancel services; the supply of de-icing and anti-icing products or road salt; better liaison between airports and local highway authorities over the treatment of appropriate public road networks; and improved access to performance statistics on the management of disruption by airlines and airports.

The former Transport Secretary, the right hon. Member for Runnymede and Weybridge (Mr Hammond), stood in the snow at Heathrow just over a year ago and pledged to learn the lessons of the chaos passengers faced. I know that because I was standing in the snow freezing alongside him and, more importantly, alongside thousands of stranded passengers. At the time he blamed Heathrow for seriously underestimating the amount of de-icer required and raised the prospect of establishing a central reserve for emergencies, much as exists for road salt. The Government should provide an update on this—they have gone quiet lately—and on the other promises made at the time. As well as the powers that this Bill rightly gives the CAA, the current Secretary of State must ensure that the Government do not take the view that this is all the responsibility of the industry. There is a strategic and economic need, as well as a UK reputational requirement, for the Government to get a grip on winter preparedness. I recall the Minister responsible for aviation telling the media on Boxing day 2010 that the Bill would do just that, but it is not obvious to me that it does it sufficiently well, so we will explore that further.

The CAA should also be required to focus licences on the specific experience of passengers in airports. That means, as the Transport Committee has urged, specifically structuring licences to address key areas of passenger satisfaction, including immigration and baggage handling. We all know that the failures that most give rise to frustration and anger, not to mention ruining business trips and holidays, are delays caused by inadequate management of immigration and poor baggage handling. Of course, although airports should rightly have obligations in this respect, the Government must also recognise that their decisions have an impact that is out of the hands of airport operators, not least the way they resource and manage the UK Border Agency. The speed and scale of the Government’s cuts is putting pressure on the agency. People across the country fear that corners are being cut and border security is being put at risk by the scale of the Government’s border cuts. Some 6,500 staff are going from the agency, with 1,500 going from the UK border force, including more than 800 this year alone. In the past year, we have already had the situation whereby the Home Secretary did not know what changes to border controls she had agreed to, how they were being implemented or how great the security risks were, and relaxing controls was a direct consequence of those staffing reductions.

It is incredible that the Government have overseen a reduction in checks at border control. The public expect proper immigration controls, and passengers expect there to be sufficient staff to prevent massive delays at airports, which damage our image and can impact on investment and business competitiveness. We agree that the passenger must be placed at the heart of the regulatory regime, but the Government must do the same as they carry out their responsibilities.

The Government should also consider the airlines’ case that, in the context of airport regulation, they too are customers. Although we agree with the Government that the law should be absolutely clear that the CAA’s primary duty is to passengers, we agree also that there is a case for a secondary duty to airlines, so the Minister should look again at the decision not to include such a duty.

Although it is right that we set out a primary duty on passengers to send a clear signal to the CAA about how it should manage competing interests, it is right also that we set out further duties. In doing so, however, the Government have chosen to omit the reference to environmental obligations that we intended the Bill to include. That is a mistake, so I very much hope that the Minister will reflect on it and think again.

Back in March 2009, the consultation document on economic regulation that the then Secretary of State published proposed that

“the CAA should have an environmental duty with respect to its economic regulatory functions.”

The final report of the Cave review recommended

“a duty on the CAA to protect the environment, subject to guidance on specified environmental matters by the Secretary of State.”

In December 2009, the previous Government published their decision document on economic regulation and concluded that one of the supplementary statutory duties should be

“to have regard to the airport operator’s legal obligations to comply with applicable environmental and planning law.”

When one considers the secondary duties that have been set out, one finds the absence of any environmental obligation to be a clear omission—and a late one: it was included in the press release accompanying the publication of the Bill, just not in the Bill. The CAA will be obliged

“to ensure that licence holders can finance the activities which are subject to the relevant licence obligations; to secure that all reasonable demands for airport services are met; to promote economy and efficiency on the part of licence holders in its provisions of airport services at regulated airports; to have regard to guidance issued by the Secretary of State; to have regard to any international obligation of the UK; to have regard to principles of better regulation.”

All those obligations are of course right, and we support them, but there seems to be no justifiable reason for removing the proposed additional requirement on the CAA in terms of economic regulation: to have regard to airport operators’ compliance with environmental and planning law. Without that, airports may be reluctant to invest in improving environmental performance, be it noise, vibration, visual disturbance or emissions.

It is not good enough for the Government to say it is obvious that airports must comply with statutory obligations and it does not need re-stating in the Bill. The issue is whether airports feel that they can recover the cost in charges to airlines. The consequence, as the Transport Committee has warned, is:

“Without giving the CAA a supplementary duty on the environment in relation to its economic regulation role, there is some risk that airports may be reluctant to invest in improving environmental performance.”

--- Later in debate ---

[Maria Eagle]

I thank the hon. Lady for her intervention.

There are precedents within the EU of a single company controlling a larger percentage of slots at one airport, but I am sure that the Secretary of State will appreciate that the situation at Heathrow is different because of the capacity issues that significantly restrict the potential for competition. I fully understand and respect BA’s wish to expand its operations, not least to pursue the new long-haul markets from Heathrow that are needed for our economic competitiveness. However, many years before a high-speed rail service becomes a reality between Scotland and London, and Heathrow in particular, we must balance that with the need to maintain the domestic air links on which the Scottish economy depends.

I have two final points on the economic regulatory aspects of the Bill. First, there are concerns that there is no requirement on the CAA to consult on how it intends to prioritise and balance its new duties and discretion. Secondly, the Government must clarify who does and does not have a right of appeal on a decision by the CAA in respect of licence conditions, and how they intend to prevent repeated and unfounded appeals.

On the second major purpose of the Bill, which is to modernise the CAA’s governance, we agree that reform is needed and we support most of the proposed changes. Of course, there are changes that have been made without the need for legislation, such as the creation of a separate chair and chief executive. We do, however, question the decision to remove the requirement for the Treasury to approve the levels of remuneration for non-executive members of the board. Are we not seeing right now the need for greater, not less oversight of remuneration? I suppose that the experience of the past few days has shown that it is doubtful whether the Government would exercise their powers over excessive bonuses even if they retained them, but it might be a good idea to hang on to them.

It is also wrong that the CAA remains outside the remit of the National Audit Office, unlike all other industry regulators. That should be addressed, and there should be an explicit efficiency duty as recommended by the Transport Committee. I hope the Government will agree that it should be relatively straightforward to reach agreement on those issues in Committee. We agree on the outcomes that we want to see achieved through the modernisation, and I look forward to working with Ministers to improve the Bill further in the areas that I have mentioned.

We have much greater concern about the third major area with which the Bill deals, which is the Government’s proposals for a major change in how aviation security in ensured. They have not made the case for the change. It was included in the draft Bill at the last minute and has not been subjected to adequate scrutiny, and enough people across the industry have concerns about the proposals to require the Government to look again at whether they have got them right. We are open to being persuaded, but Ministers have more to do if they wish us to support the proposed changes.

I appreciate that under the Government’s proposals, the Secretary of State will remain responsible for aviation security policy and for making aviation security directions under the Aviation Security Act 1982. That is well and good and correct, but by enabling the transfer of a potentially very wide range of security functions to the CAA, the Government risk fragmenting an approach that has served us well. Let us not forget that the current arrangements, including the now abolished specialist unit Transec, arose from the tragedy of Lockerbie. We should not move lightly away from an approach that had such a tragic loss of life as its reason for existing, particularly not when the clearly stated purpose of the proposals is, to quote the Department’s impact assessment, to

“Reduce the costs to the taxpayer in line with SR”—

spending review—

“commitments by introducing the user pays principle.”

The changes that the Government propose are not minor. For example, they want to pass to the CAA the obligation to make arrangements for carrying out vetting, including those for renewing and withdrawing clearance. The CAA, rather than the Secretary of State, will maintain the list of persons approved for the provision of a particular aviation security service.

There are also concerns about the ability to retain staff. The Bill will allow for the transfer from the Department for Transport to the CAA of about 85 aviation security posts currently responsible for the review and upkeep of aviation security regulations, and for the monitoring and enforcement of the industry’s compliance with security requirements. The Transport Committee’s recommendations on that matter should be considered carefully, including the permitting of secondments rather than transfers to avoid the loss of experienced staff and expertise.

The Committee’s recommendation to delay the change, to bring it in line with the introduction of the outcomes-focused risk-based security regime, also makes sense. The airlines are concerned about the lack of transparency of the likely costs of the changes, and therefore about the impact on passengers, on to whom costs will be passed. There is real concern that although the costs of the transfer will materialise, the supposed reduction in obligations as a result of the move to the outcomes-focused regime will not.

Those concerns are particularly acute for smaller regional airports, which play a vital role in their local economies and will not easily sustain major additional cost burdens. The Government need to reassure the sector that they will retain an active engagement in operational matters, enabling airports to take the lead in the knowledge that they will have ministerial backing.

It is clear that there are growing tensions between the UK Government and the EU over security issues such as the permitting of full-body scanners without a right to select an alternative form of search. We have strongly supported the Government’s stance on that, although it is now important that Ministers work closely with their European partners to ensure a common, and preferably similarly robust, approach to security across the EU. The approach taken in the Bill risks leaving the industry without a clear lead or protection from Government on the decisions that it takes, be they on trials of new forms of security screening or other matters.

According to the explanatory notes, the Government’s Regulatory Policy Committee estimates that

“the impact on public expenditure gives expected savings in the order of £5.4m per annum.”

It is far from clear how the cost savings to the Department from the abolition of the security function can be secured without putting at risk high levels of aviation security or imposing a burden that will ultimately fall on passengers.

The Regulatory Policy Committee also identified transitional costs of transferring the security function of approximately £1.5 million, as well as ongoing costs beyond the transition, not least because

“the CAA will be responsible for upgrading systems in perpetuity”.

It is therefore

“likely that the CAA may borrow from the National Loans Fund to fund IT improvements.”

I appreciate that the Secretary of State inherited her predecessor’s plans to meet the 15% cut in the Department for Transport budget. She has shown a willingness to look again at some of his rasher decisions, and I hope that she does so in respect of that major change to aviation security, for which the case has not yet been made.

I urge the Government to think again about one other aspect of their aviation policy. An announcement is expected in the Budget—if not before—on the sale of their remaining stake in NATS. Recent media reports have suggested that DFS, Germany’s state-owned air traffic service, has been in talks with the Government. Yet again, just as with our rail industry, the Government’s ideological obsession turns out to be not so much opposition to a public stake in delivering transport services as an opposition to a British public stake in doing so. Just as the Dutch national railway will this week begin to operate the East Anglia franchise, with Deutsche Bahn and SNCF snapping at its heals on other parts of the network, our airspace might be controlled, in effect, by the German Government.

There are several very serious reasons why the Government would be wrong to withdraw completely from NATS. The current shared-ownership model between Government and airlines works well. The airline group has opposed an outright sale of the Government’s stake and raised the prospect of the industry walking away. The airlines are best placed to ensure the success that NATS has become, not least because of their healthy self-interest in safety and industrial relations. There are concerns about the impact of a foreign power taking a stake in NATS on the integration of civilian and military operations, which would put at risk the operational benefits of that integrated approach. There are also questions about the Government’s ability to play a leading role in air traffic policy at EU level if they become the only Government to have given up their stake in their air traffic service.

[Justine Greening]

It is probably wise for me to remind the hon. Lady that the Labour Government part-privatised NATS in the first place.

[Maria Eagle]

I am well aware that the Labour Government sold a stake in NATS. I am talking about the Secretary of State’s predecessor’s proposal to sell all of it. It is a question of the Government retaining a stake. If she is willing to confirm that the Government will retain a stake, I will be happy to give way to her. She shakes her head.

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[Maria Eagle]

If the hon. Gentleman would wait just a moment, he might hear my suggestion.

Two weeks ago, the Prime Minister was apparently persuaded of the case for a new airport in the Thames estuary, a position that lasted a full 24 hours before the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker) slapped him down. Then the papers were briefed that new runways at Gatwick or Stansted were back on the agenda, despite the coalition agreement seemingly ruling that out. British business cannot afford this chaos and confusion continuing until or even beyond the next election. That is why I have made a clear offer to the Secretary of State for us to work together and put aside our differences for the good of the country to see whether we can agree a joint position on how we can meet the capacity issues in light of the decision on Heathrow. We have been disappointed that, three months on, the Government have not responded to that offer.

I was, however, encouraged by the constructive response from the Conservative party chair, Baroness Warsi, on last week’s BBC “Question Time”, in response to my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg). She said:

“Some serious discussions—cross-party discussions—have to take place, because I don’t think anyone in this country wants us to be a republic which is left behind and really nobody wants to trade with.”

Leaving aside why the chair of the Conservative party believes that we are a republic, she is right to agree with us that we need a cross-party approach, and about the consequences of not agreeing a way forward. If the Transport Secretary would like to confirm that she does accept our offer and is willing to begin talks on how we can move forward on this issue together, then I am happy to give way.

[Justine Greening]

Part of the challenge is that the hon. Lady’s party has so many different policies on so many different days, it is difficult to know whom we would be talking with.

[Maria Eagle]

Coming from a party that last week had a different policy every day, none of which was in accordance with the majority party’s manifesto or the coalition agreement, it is a bit of a cheek for the Secretary of State to put that point to us.

A successful, thriving aviation sector is crucial for our economic competitiveness. It is vital that industry can plan for the future with certainty, not least to deliver the investment needed to provide the additional capacity required if we are not to fall further behind our EU competitors. I welcome the Government’s decision to bring forward this Bill and take forward the reforms that we began—

--- Later in debate ---

[Justine Greening]

I can report to the House that the Minister of State is watching the BBC Parliament channel in hospital at this very moment, so I am sure that she is following matters from afar.

[Jim Fitzpatrick]

I am sure that the House is grateful for that update and good news from the Secretary of State.

As I was about to say, we have a good idea about those aspects of the Bill that we will want to look at in particular, given all the background information, briefings and papers with which we have been supplied.

There have obviously been numerous briefings from industry stakeholders, community groups and others, mostly welcoming the Bill in general but asking for specific issues to be raised, and we will do our best to examine them; some we will be able to support, but all we will wish to look at more closely.

My hon. Friend spelt out several issues in some detail. There is a broad welcome for the general reform of the CAA and its role, but questions will need to be addressed about security, environmental duty, passenger welfare and protection, NATS and the role of the National Audit Office. As she said, we have interests in all those areas. She outlined our concern about security and the need for assurances that the proposed new arrangements will be able to respond quickly to events, and on the quality and experience of the staff who will have to be either transferred or recruited. There are also the questions of costs and ultimate decision making.

On the environment, there is a clear change of policy from that of the previous Government. The Transport Committee explored the issue with the Minister of State, and we will wish to return to it because, notwithstanding the fact that many airports are good neighbours to nearby residents, we want best practice to be adopted at all airports. It appears to us that a duty would have been the best way forward.

The passenger as customer needs to be assured that their position is protected at the airport and against companies failing, so we, like many hon. Members, welcome the ATOL changes. As my hon. Friend graphically recalled, however, her experience in the snow last year with the former Secretary of State was not a happy one for her, for him or, most importantly, for the passengers who were stranded, so we want safeguards against such situations. Passengers deserve the best protection against failure, but we recognise that airports are at the mercy of other forces outside their control.

The question about the role of airlines and secondary duties, which the Transport Committee raised, seems to be addressed in the Bill but warrants consideration, as do the various competition structures and appeal mechanisms outlined in the Bill and its schedules.

My hon. Friend raised several other issues, which the Bill Committee will I am sure be keen to discuss with Ministers, including how the aviation consumer advocacy panel will work, the lack of detail on the requirements to publish passenger welfare plans, the performance of the UK Border Agency and baggage handling, to mention just a few.

The Secretary of State opened the debate and clearly outlined the measures in the Bill: the greater accountability in the CAA reforms, the transfer of security and the extension of ATOL. I have mentioned the points that my hon. Friend the Member for Garston and Halewood made in reply. She welcomed the Bill but expressed the hope that we would improve it in Committee. She commended the Transport Committee, but expressed concern about the time it had been given to do its work. As I have mentioned, she covered comprehensively our concerns, especially on the security provisions.

The hon. Member for Crawley (Henry Smith), whose constituency covers Gatwick, is knowledgeable on aviation matters. He raised several relevant questions, including over the possible break-up of airports and the role of the CAA.

My hon. Friend the Member for Liverpool, Riverside, the Chair of the Transport Committee, made a useful and insightful contribution, in which she referred to a number of concerns that the Select Committee had registered. As I and other hon. Members have said, we will consider those concerns in the Public Bill Committee.

The hon. Member for Finchley and Golders Green (Mike Freer), who apologised that he would not be here for the winding-up speeches, spoke up for business travellers. He and my hon. Friend the Member for Garston and Halewood raised important questions about the UK Border Agency. He also spoke about regulation and security.

My former ministerial colleague at the Department for Transport, my hon. Friend the Member for Glasgow South (Mr Harris), made the case for ministerial cars strongly. He expanded on the need for a vibrant aviation industry. He argued that aviation need not be and is not the enemy of the environment. He also made a powerful case about the capacity constraints at Heathrow.

The hon. Member for Spelthorne (Kwasi Kwarteng), who I do not think is in his place, confused the Chamber about his position on the third runway. He seemed to make points both for and against it. I wish him well in maintaining the ability to articulate opposite positions. He is in good company in this place. Perhaps he could send me a copy of his press release on his speech, as I am sure that it will be worth reading. He also made good points about the industry and the Bill.

My hon. Friend the Member for Sedgefield (Phil Wilson) and other hon. Members spoke about regional airports and asked about their role and capacity. He spoke specifically about the future of Durham Tees Valley airport and the impact of the value of Heathrow’s slots on UK aviation. He made a strong case for the continuance of his local airport, as did others. He has been lobbying on that issue for a considerable time.

The hon. Member for Cambridge (Dr Huppert) raised a number of issues that he wanted to be raised in Committee. I am sure that they will be. He apologised to the House and hoped that we would not be disappointed at his brevity. I assure him that we would never be disappointed at his brevity. I cannot imagine how he arrived at that conclusion.

My hon. Friend the Member for Luton South (Gavin Shuker) is another member of the Transport Committee and also has an airport close to his constituency. He drew on both aspects to raise some key points, including capacity.

The hon. Member for Congleton (Fiona Bruce) raised a number of issues about the extension of the ATOL scheme and its weaknesses at present.

My hon. Friend the Member for Bolton West (Julie Hilling) raised questions about timing, the level of scrutiny, the absence of an environmental duty in the Bill and security.

The hon. Member for Tamworth (Christopher Pincher) did not seem to accept that the Bill has arrived earlier than expected. Perhaps his ministerial colleagues could clarify that for him and reassure him, as did my hon. Friend the Member for Luton South. The hon. Gentleman raised European comparisons and the critical role that aviation plays in the economy.

My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) raised the need for environmental progress. He spoke about the environmental progress that has been made and about the absence of such a duty in the Bill. He raised the BMI takeover, as did a number of other colleagues.

The hon. Member for Milton Keynes South (Iain Stewart), another member of the Transport Committee, gave us the benefit of his examination of the key issues. He confirmed that Milton Keynes neither has nor needs its own airport.

My hon. Friend the Member for Feltham and Heston (Seema Malhotra) made her maiden speech. It was warmly received on both sides of the House, as maiden speeches generally are. Her contribution demonstrated a confidence and self-assurance that I am sure will serve her constituents well in the years ahead. Her description of her constituency and of the significance of Heathrow underpinned the relevance of her contributing to this debate. I hope that her mention of various local media outlets will ensure that her speech is covered well. I would be very surprised if it was not. She undoubtedly has the prospect of a long and distinguished time in this place. I look forward to watching her progress in the years ahead.

The hon. Member for Folkestone and Hythe (Damian Collins) was generous in his praise of my hon. Friend’s maiden speech and made a number of points, particularly about how to reduce the environmental impact of stacking by increasing capacity rather than constraining it. I strongly recommend that he talks to his party’s Front Benchers to suggest that they take up the offer of cross-party talks made by my hon. Friend the Member for Garston and Halewood. His contribution was very thoughtful and covered the role of his local airports, and I agreed with much of what he said.

In contrast, I disagreed with many of the points made by my hon. Friend the Member for Luton North (Kelvin Hopkins), who is not in his place. He spoke briefly about security and his opposition to increased capacity, and argued for more regional airport usage. His local airport is already very successful, and he argued that it could do more.

I have to report that, as the hon. Member for Amber Valley (Nigel Mills) rose, the batteries in my hearing aids ran out, and sadly the spare batteries were also flat. Some would say that that was good timing, but that would be very cruel. He is very softly spoken even with the amplification at the back of the Benches, but he spoke of the need, or rather lack of it, for regulated competition and of the five airports within 50 or 60 miles of his constituency. He raised questions about the ATOL provisions which I am sure will be asked in Committee, whether he is with us or not.

The hon. Member for Stockton South (James Wharton) mentioned Durham Tees Valley airport and powerfully supported my hon. Friend the Member for Sedgefield in the cross-party campaign for it to maintain its position. He was generous to my hon. Friend the Member for Feltham and Heston; in fact, I believe he was the first Conservative Back Bencher to own up to having been a recent visitor to Feltham and Heston. A number of colleagues repeated that afterwards.

The hon. Member for Thurrock (Jackie Doyle-Price) argued for less regulation and more market influence, and consequently a better deal for the passenger, but she also called for clarity in decision making and for a more mature debate—something that Labour has been offering and would very much like to take place.

The hon. Member for Witham (Priti Patel), another visitor to and admirer of Feltham and Heston and its new MP, accepted that she was making a number of points that had already been raised, but wanted to cover them again. She also raised the important point of investment in aviation across the globe and our falling behind our international competitors in developing our infrastructure.

The hon. Member for Daventry (Chris Heaton-Harris) explained how important aviation was to his constituency in particular, and agreed that the regulations covering the industry needed updating. He made a strong pitch for a British Airways business lounge pass, and I sure The Daily Telegraph will be very keen to report his progress. He might want to keep us all posted on how he gets on with that one.

The hon. Member for Rochester and Strood (Mark Reckless), who was the final Back-Bench speaker, raised the question of the fitness of the regulations for the 21st century.

As many Members have mentioned, the aerospace and aviation sectors are vital elements of the UK economy. Collectively, the industry is a major earner, manufacturer and exporter. Aviation’s role in connecting us with the rest of the world is key to growth, which has sadly been lacking in the Government’s economic performance since they came into office.

Aviation has made huge strides in addressing its environmental sustainability. At a recent aerospace reception here in the House, it was stated that the new A380 was 25% cleaner and quieter than its predecessors. In fact, it was said to be more fuel-efficient than a Toyota Prius. If someone drove it down the M4, they would not have to pay the London congestion charge.

Aviation is worth £11 billion to UK gross domestic product and employs 200,000 people directly and 600,000 indirectly. It is a critical industry, yet Government policy is in disarray. My hon. Friend the Member for Garston and Halewood offered cross-party talks to address the critical need for a national plan, and it is a very sad comment on the coalition that the Government did not respond positively. The offer still stands.

The CBI, London First, the British Chambers of Commerce, the TUC and industry stakeholders are seeking a plan—a strategy to map out how aviation will develop and contribute to our economic recovery. They will clearly have to wait for that, for as my hon. Friend pointed out, “better not bigger” is a slogan, not a policy. At least we have the Bill.