Civil Aviation Bill

Lord Davies of Stamford Excerpts

Wednesday 13th June 2012 Lords Chamber

[Lord Davies of Stamford]

My Lords, I thoroughly agree with the remarks of the noble Lord, Lord Rogan. When I was Shadow Secretary of State for Northern Ireland, and therefore about twice a month a regular customer of Belfast City Airport, I realised how enormously important for the economic self-confidence of the Province is that link to Heathrow and, through it, to international networks. I also very much agree with my noble friend Lord Clinton-Davis, who spoke of course, on the basis of very considerable personal experience in having held two immensely important positions in civil aviation. I will follow very much the logic of what he said.

Of course, as always, I listened with great attention to the Minister. He started off by saying something that we would all agree with, which is that aviation is “vital to our economy”—I think I noted down his remarks correctly. To my amazement, he did not say anything at all about the fact that the aviation industry is in fact facing a major competitive threat at the present time and is extremely worried about the future. You might hope that a Government of the day would take that on board and do something about it. Far from it, unfortunately. That is a very troubling situation.

Most of us were brought up thinking complacently—perhaps we always were very complacent about this—that Heathrow was the biggest airport in Europe and so we were quite safe as we had the centre of at least the European aviation industry right here in our country. That is no longer true and is becoming less true all the time. Already two of Heathrow’s rivals, Roissy Charles de Gaulle and Frankfurt, have more aircraft movements than Heathrow. By the end of this decade, which is only eight years away, they will almost certainly have more passengers, as will Schiphol, so Heathrow will be number four and going down.

Heathrow is enormously important and I make no apology for focusing on it. I fear that the noble Lord, Lord Bradshaw, was completely wrong to say that it is all right because although there is not enough capacity at Heathrow there is enough capacity at Birmingham, Luton or somewhere else. People who want to come to London want to get there as quickly as possible. That is particularly important in the business world. Frankly, the noble Lord did not focus at all on the enormously important economics of the hub and spoke system—what an economist would call the networking effects, which are so important in the aviation industry. If Heathrow is not allowed to become a hub, somewhere else will and it will not be Luton or Birmingham. It will be Schiphol, Paris or Frankfurt. I illustrate that by means of a brief personal anecdote.

In February I was lucky enough to be part of a parliamentary delegation to Mexico. The IPU was rightly concerned to save taxpayer funds and got the best deal that it could, which involved us flying via Schiphol. We went to Schiphol and changed, which meant that we flew 300 kilometres in the wrong direction and 300 kilometres back over the United Kingdom again. That is 600 kilometres more than we needed to fly. We took off twice rather than once. As we all know, most carbon emissions occur on take-off and early altitude gains. I should think that we emitted twice the carbon that we would have done had we been able to fly directly from Heathrow to Mexico City. I witnessed some colleagues taking advantage of Schiphol Airport’s fine duty-free shopping facilities. That, again, is very good news for the economy of Schiphol and of the Netherlands but very bad news for this country. I say to the Government and to the Liberal Party—they should be aware of that and focus on it but they simply are not doing so.

The Bill sets out the obligations of the Secretary of State. I am, of course, totally in favour of the Bill, which was conceived by the previous Labour Government, as has already been pointed out. Clause 2 is headed: “Secretary of State’s general duty”. Clause 2(1) states:

“The Secretary of State must carry out the functions listed in subsection (3) in a manner which the Secretary of State considers will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services”.

The Secretary of State is doing nothing of the kind at present, nor did her predecessor. That is precisely why we have the current problem and why it is cheaper to fly to Mexico City via Schiphol than it is to take off directly from Heathrow—that is, taking off from Heathrow to Schiphol, and then flying from Schiphol to Mexico. Why is that the case? It is because there are not enough slots at Heathrow. Therefore, airlines that want to put on more flights cannot run them from Heathrow. They have to reserve the slots at Heathrow for the high-margin flights going to destinations such as New York, Chicago and Washington DC, where there are lots of first class and club class passengers. The other aircraft with a greater proportion of discounted passengers have to go elsewhere, and so they go to Schiphol, Roissy or Frankfurt. That is the simple logic and the Government must face up to that fact.

The key issue is not just the importance of the aviation business as regards employment. As has been said, it generates nearly half a million jobs in this country. However, it is important for two other reasons as well. First, it is not the only factor or the leading factor but is certainly a factor in location of business decisions. If you decide that you want to locate an international headquarters in a particular city, one of the things that you undoubtedly take into account is the air communications. If you put your office in London and you have to go via Birmingham to get there, that is a very major disincentive to coming to London at all. The aviation business is very important as regards business traffic. It is also important as regards tourism. If you ask the Government whether they care about tourism, they will say, “Of course, we care very much about tourism. It is a very important industry”. However, in practice, they are handicapping tourism over and over again. We have the problem that we are not part of the Schengen visa system so people coming to this country as part of a European tour—the bulk of private tourists from outside the EU coming to the EU come on organised tours—often will not take the trouble, time or additional cost involved in purchasing a British visa. That is a big handicap. We now have the longest delays at our border controls of anywhere in Europe as a result of mismanagement by this Government. That is also a handicap. If we now have shortages of airline slots and people are diverted to Birmingham—I again take the example put forward by the noble Lord, Lord Bradshaw—that will also be a considerable deterrent to tourism. Therefore, it is no use the Government saying that they care about tourism if their policies have the effect of weakening British tourism’s competitiveness worldwide. That is exactly the situation.

[Lord Trefgarne]

Everything the noble Lord is saying is directed towards more operations, more slots and more flights from Heathrow. What was the policy of the Government, of whom he was a distinguished member, between 1997 and 2010?

[Lord Davies of Stamford]

Our policy was to expand Heathrow and build a third runway. That was the policy which I supported then, which I support now and which I trust my party will support again at the next election. It is the only policy that seems to make any sense. As regards the third runway that we were planning to build—the BAA third runway—I read an interesting proposal the other day which I recommend to the noble Lord, who knows a lot about this subject. It was produced by the Institute of Directors. Noble Lords may be surprised to hear a member of the Labour Party referring to the Institute of Directors but I thought that it came up with an interesting proposal for a third runway to be built within the existing perimeter of the airport to the south, which would be something like 2,600 metres in length and would greatly improve the situation. The scheme has been well documented and the noble Lord may like to look at it. However it is done it is clear that all the airlines and BAA are of one mind on this—the solution is the one that, had we won the previous election, we would have implemented, I am proud to say.

Of course, the whole of this is against the background of the present Government’s neglect of infrastructure generally. We have had the postponement of the high-speed rail project.

[Lord Bradshaw]

As regards neglect of the infrastructure, under the Labour Government nine miles of railway were electrified. Under this Government, I think that 833 miles will be electrified. I also draw attention to the fact that a lot of money is being spent on Manchester and Birmingham Airports and a great deal of investment is going into Gatwick.

[Lord Davies of Stamford]

I commend all that but there is no question that this neglect applies to a number of vital major projects. One of them is the third runway for Heathrow and another is the high-speed rail project, which is unaccountably delayed. Perhaps it has been pushed off sine die; I do not know. I do not think that we shall ever see it again under this Government, although I hope that we do, of course.

Another such issue is nuclear power. I have asked about this in the House. We are 10 years away from the date when all the AGRs have to be decommissioned but the Government have not succeeded in getting one new project launched. It takes a minimum of eight to 10 years to build a new nuclear power station. These are major areas of neglect. I have to say to the party opposite that any Government who govern with two eyes focused simply on the next morning’s headlines or opinion polls and do not think about the long-term interests of the country are betraying the public interest and will be seen in historical retrospect as a historical failure.

I have to say another thing that the Government will not like, which is that a recession is rather a good time to bring forward investment in social overhead capital—in infrastructure—because factor costs are lower during a recession. It is also rather a good idea to create some demand and jobs during a recession because—I know that the Government do not want to hear this—the fact is that austerity alone will not relaunch growth. I would have hoped that all these important infrastructure projects would have been brought forward, which they would have been by an imaginative Government genuinely concerned with the long term.

I hope that my strictures will have some effect. I am sure that the Minister will not say now that he agrees with my criticisms of the Government but I hope that the Government will think very carefully about these matters and come forward with a policy on all of them which is a little bit more worthy of the enormously important role which they have in looking after the interests of the country during their mandate of office.

--- Later in debate ---

[Lord Soley]

Like other speakers, I welcome the general thrust of this Bill. I am sure that we shall make some improvements in Committee. I would like to see it in the context of a proper aviation policy, which I fear we do not have at the moment. I am rather nervous about some of the papers that might come out from the Government, although the Prime Minister today, in answer to Zac Goldsmith, the MP for Richmond Park, declined to give a commitment that, if re-elected, the Government would not build a third runway. This argument is moving and there are growing numbers of people who recognise that the only realistic possibility is the expansion of Heathrow. It is something that I have been saying for many years, but I will not spend a great deal of time on it now because the House and other people have heard my views on many occasions. I simply reiterate that at a time of economic recession, a third runway is estimated to add some £8 billion to the British economy, and all the investment is totally private sector. The idea of not doing it is crazy. If we do not do it soon, we will continue to lose out. A number of Members around this House have made that point.

I want to make an additional point—and this is where it would be good if the noble Lord, Lord Bradshaw, could talk to the noble Lord, Lord Rogan. I do not think that the noble Lord, Lord Bradshaw, understands the concept of a hub airport. That is curious because he seems to love trains, and I presume that he understands the concept of what is in effect a hub railway station. People go to the big railway stations in big cities to interchange to get to other places.

Perhaps I may give the noble Lord, Lord Bradshaw, an obvious example, and I would like him to think it through, because the opponents are getting in the way of the advantages that would accrue to us if we took the necessary decisions. I could give him many examples similar to that of the Japanese businessman who wishes to invest in Europe and has investment meetings here. He wants to fly on to his factory in Liverpool and can do that by going to London, getting a train across to King’s Cross, getting the train to Luton, and then flying to Liverpool. Or he could go to Euston and get the train all the way to Liverpool. Alternatively, he can fly to Amsterdam, have his meeting there, decide his investment policies, and fly straight to Liverpool. That is true of dozens of regional airports around Britain. We are not just doing damage to London; we are doing damage to our regions and it is important to understand that.

I will not proceed further on that, other than to make the more general point that in aviation generally we still have the second largest and second most advanced aerospace industry in the world. Although we will not retain that position much longer, for all the obvious reasons about emerging countries, we can retain the great advantage that we have, particularly in science and technology. We can do that only if we have a good civil aviation policy and a defence policy that goes with it to support the aviation industry. Everyone in the industry understands that, and that is why when I make speeches such as this I get so much support from across the whole industry. That is generally recognised by all, and I ask the noble Lord, Lord Bradshaw, to talk this through with people, understand the concept of the hub and why you cannot have more than one hub airport in one major area. You can have several hub airports in a large country, but not otherwise. That is important.

I wanted to mention investment in Heathrow and so on. Although the noble Lord, Lord Jenkin of Roding, who has had to slip out for a while, has saved me some time, I want to reiterate this issue—which the noble Lord, Lord Patten, also touched on. There is a problem here. My understanding is that it would not require much tweaking of the Bill to give Heathrow the protection that it needs in terms of investment policies in infrastructure. We could look at that in Committee, because it is an important matter which we should flag up.

I want to refer to two other matters mentioned by another speaker. Clearly, we must give the CAA a duty of efficiency, and the National Audit Office is relevant in this context. The idea of the CAA not being answerable to the National Audit Office is, frankly, dumb. I believe that we were thinking of doing that some time ago when we were in government and considered introducing a similar Bill. That was the intention.

I want to say a quick word about the issue of airline holiday sales and the Air Travel Organisers Licensing scheme. My understanding from the CAA is that it believes that airline holiday sales should come under the new ATOL arrangements. It was drawn to my attention that the number of people whose holidays are protected by the ATOL scheme has reduced considerably, and today only around 50% of holidaymakers travel with full financial protection from ATOL. Those figures are from the CAA. We should all recognise and support its proposal.

Security issues, dealt with in Clauses 78 to 82, are very important. This is perhaps not the moment to discuss them in detail, although we may do so in Committee. I am slightly worried about the way that we are tackling this area. It is difficult to get right, although it may be that the Government have received advice from the security industry generally, including the security departments of government. However, we need to get this right. I remember the Minister saying at one time that her plan was to make Heathrow better, not bigger. When you look at the queues at Heathrow you realise that, whatever else she has done, she has not achieved that.

Part of the reason is that we have not tackled effectively the whole issue of immigration, passport clearance and so on. The recent sacking of the head of that department has produced a situation where there is almost a work to rule. I am not justifying that, but if you tell the workforce that they must obey the Immigration Rules to the letter, they will do that—and that is what they are doing. That may be good, bad or indifferent, but you cannot easily blame those staff without recognising that the Government, by saying what they said and doing what they did, have made the problem far worse. We have to rely to a considerable degree on the good sense and, above all, the training of these people. If you tell them that they cannot use that good sense and training and give them a set of rules which you tell them to obey to the letter—and if you tell them that they will lose their jobs if they do not follow the rules to the letter—then they will obviously do just that: follow the rules to the letter. That would account for the terrible queues at Heathrow, which have done immense damage. The airport’s position in the international airline stakes is bad enough.

My noble friend and colleague Lord Davies of Stamford said that Heathrow was now number four in terms of aircraft movements. It has slipped to number eight in terms of the destinations it serves. That is by far the most serious slippage for a major airport. To compound that with a lack of effective ground operations in terms of clearing the queues and so on is therefore a major failure.

[Lord Davies of Stamford]

Just to set the record straight, what I actually said was that Heathrow is currently third in Europe for aircraft movements—behind Roissy and Frankfurt—but that it will be fourth by 2020, behind Roissy, Frankfurt and Schiphol, both in terms of movements and passenger numbers.