Civil Aviation Bill

Lord Patten Excerpts

Wednesday 13th June 2012 Lords Chamber

[Lord Patten]

My Lords, I am quite fearful of the effects of delaying what are, admittedly, politically and environmentally difficult decisions about airport capacity—not just for this year or next, but over the next several hard years for the United Kingdom’s economy and its employment. It may turn out to be seven quite lean years or more for the people and economy of the whole of western Europe. Against such a background, even the signals that we send out to potential investors—well in advance of actually being able to do anything on the ground to improve airport capacity—may well be critical, because they know good news is coming, albeit a bit delayed.

That said as background to my points, and declaring my business interests, I seek assurances that nothing in this Bill as drafted can get in the way of urgently needed airport capacity improvements. There may be some doubt about this. However, in general and overall, I welcome the sensible provisions that the Bill contains, following obviously careful ministerial consideration of the excellent and far-sighted recommendations of that distinguished public servant, Sir Joseph Pilling. It is good, therefore, to see that improvements have already been made to the way that the CAA works, even ahead of this legislation. In particular, there is the critically important separation of powers between chairman and chief executive. Its governance structures certainly needed modernisation and updating to reach reasonable modern standards.

The CAA should certainly be in a position, for example, to appoint its own senior executive directors and go on to fix their pay, easing the pressure on Ministers, who should not be involved in what are essentially operational matters. However, for a thoroughly modern public corporation, a board as large as proposed in this Bill—16—might turn out to be rather a lot for useful discussion. At the other end of the size spectrum, fixing pay, which is in the Bill, may need slightly wider scrutiny than that of the chairman and just one other non-executive director. That balance probably better demands two independent directors at least, for the avoidance of doubt. I also hope that the CAA, as it rolls forward, will be very leery—I never know how to spell that, but doubtless the Hansard account of my speech will get it right—of the advice of remuneration consultants. They often seem to be as unreliable and inflationary in their recommendations for increases in executive pay as rating agencies once were in their business recommendations.

We must see this Bill not in isolation, but in relation to the two aviation documents that the Government are likely to launch in the not too distant future; I hear rumours of July. First, there is their consultation on a sustainable airport and aviation framework, which is very important. Secondly, they are consulting on options for maintaining airport hubs in the United Kingdom. My noble friend Lord Bradshaw talked about their importance. I hope that I can go on calling him my noble friend, despite what is going on at the other end of the Palace of Westminster as I speak, and that we do not all need counselling as we go forward. What he said was interesting, and it is precisely why I seek assurances that none of the market power competition provisions in this Bill relating to specified dominant areas and dominant airports could be used in as yet unforeseen ways to inhibit the best choice being made as quickly as possible for the vital London airport expansion. These range from a third runway at Heathrow, as just put forward by the noble Lord, Lord Davies of Stamford, to fantasy schemes on estuarine islands and elsewhere.

To my mind, and I would like to test this against the provisions of the Bill, the best current option would be to bring into use the second Gatwick runway, as will be permitted from 2019. The two runways at Gatwick could then be linked to the present two runways at Heathrow by a cut-and-cover tunnel and rapid transport rail system. I know that this is a suspiciously round number, but I am assured that at current costs this could be done for about £5 billion. Shuttling between the two ends of what would be a unified hub, with two runways at Heathrow and two at Gatwick, could be done in 12 minutes or less. The payback for the Exchequer for this scheme, which of course is vital in our constrained economy, could be met by a £10 take-off or landing charge to clear the cost in 20 years or less. Once it was built, this would undoubtedly become known as the Gatrow Express in one direction and the Heathwick Express in the other.

That is my example and I simply ask this: suppose the Government decide that this—or any other scheme—is what they want to do. Does anything in this Bill prevent it being driven through if the scheme turns out to require dominance by one body, as defined in this Bill? Therefore, could the anticompetitive measures, which otherwise may be very welcome, be used to inhibit such development in the national economic and environmental interest? If the Bill was enacted in its present form, could it be used to slow down and prevent such development purely on competition grounds?

I say to the Minister that this is not some probing Committee-stage point, but one of general overarching principle. Have those drafting the Bill considered the possibility of future-proofing its provisions against the unlikely; and the difficulties of delays caused by the unlikely happening, as tiresomely it sometimes does? In a different way, I reflect what my noble friend Lord Jenkin of Roding—not presently in his place—said. He pointed out the uncertainty facing BAA in Heathrow in its necessary capital-raising grants, which we all support for infrastructure reasons. However, uncertainty would also be damaging if those who wish to come and develop using private sector money are inhibited from so doing. After all, look at the time it takes to bring about the simplest changes in the air transport system.

Take the world’s biggest airport, Atlanta, in space-rich Georgia. There are no problems there with overflying or inhibitions about developing much cherished green-belt land and the rest. The most recent proposal there was not to delay building a controversial extra runway, and not expansion inhibited by any competition regulations, but simply to build a much needed new international terminal in what is the world’s busiest airport. It has taken 16 years even in that relatively regulation-free, environmentally free and uninhibited atmosphere. We do not have 16 years in the UK. Wherever expansion happens, it will have to be in the London area. We have in aviation terms nothing like 16 years unless we continue to see our competitive advantage bleeding away. The Government need maximum room for manoeuvre. They should not be shackled in any way by their own legislation and I want to make absolutely certain that one potential set of shackles is not hidden in the middle of this Bill.