Civil Aviation Bill

Mark Reckless Excerpts

Monday 30th January 2012 Commons Chamber

[Priti Patel]

I welcome my hon. Friend’s intervention, and make the observation that that is indeed very true; it really is!

I welcome the Bill and the emphasis it places on furthering the interests of passengers and the modernisation of the Civil Aviation Authority. I suspect that many of my remarks will already have been made, but there is no doubt that reforming the existing framework to slash back the rigid regulation and the burdensome bureaucracy currently in place is a positive step. Granting the CAA greater independence from the Government will take important aspects of aviation regulation—the designation of airports for price capping, for example—out of the political sphere, while enabling the CAA to take on the responsibility to enforce competition law will help empower passengers and cargo owners.

The future of aviation in this country and the economic benefits derived from air travel that we have heard about in the debate will no doubt depend heavily on this legislation and subsequent actions from the CAA. I hope that the CAA will utilise its new powers wisely and act in a way that promotes competition to make our airports competitive and strong.

We should remember that our airports are not just places where passengers and cargo are transported across the world, as they are vital economic hubs essential to jobs and growth in our economy across the country—not just in London and the south-east. As we have heard from many colleagues, regional significance is key. Ministers and the CAA must be mindful that while this Bill will support competition between airports in the UK, our airports need a regulatory framework that, importantly, lets them attract investment so that they can compete with their global rivals.

Anyone who has travelled regularly overseas on business will recognise and acknowledge the improvements that many other countries have made to their airports. As we have heard, whether it be Amsterdam, Frankfurt, Hong Kong, Shanghai, Dubai and the Gulf or India, amazing things are being done with their airports. This brings us back to the point about consumer experience, but also the experience of business travellers. This is not about convenience alone, but about making sure that these are vital economic and competitive hubs.

Many of the airports are impressive. They have expanded their capacity. Dubai, for example, built another airport in next to no time. Such developments make these cities and countries much more attractive for business and leisure purposes. Passengers who travel to various destinations are stopping off at these airports, which have incredible facilities—new runways and terminals, for example. This frees up capacity and enables our economic rivals to develop airport hubs. We need to wake up to this and learn from their experiences. We need to look at what has worked and what has not worked. It is amazing that some countries seem capable of building these airports overnight. We talk about being open for business, but if we want to be an economic powerhouse, we have to get some insights from these other countries.

These rival airports offer ever-increasing numbers of destinations to fly to, so we have to face the challenges of capacity—not just at Heathrow, as the regional airports are also important. I do not want to see our airports becoming the end-point for global aviation travel rather than being an important hub. We must facilitate this hub issue and link up to worldwide destinations. I certainly do not want to see the UK losing out to other hubs, including European hubs. At a time when we need to ensure that Britain is open for business, if we do not act swiftly enough to come up with the right kind of aviation approach and strategy, we will lose out on international competitiveness. I hope the Minister will assure me that, observing their duties as set out in clauses 1 and 2, the CAA and the Secretary of State will further the interests of users of air transport services, will take all necessary steps to ensure that our airports are the most attractive places for passengers to visit, and will offer passengers more choice.

As consumers, passengers want not just the best possible price but a good travelling experience. Over the years terminal 5 has overcome its initial major teething troubles, but I remember what it used to be like there for people travelling with families. Nothing can be worse than a dreadful airport experience, particularly for those travelling with young children. Such experiences can be really off-putting, especially when airlines are not co-operative in informing people about what they can and cannot take on board, and I hope that there will be some improvement in that regard.

Innovation and investment are also key issues. I think that we can do more to increase business travel, and to help our regional airports. We in Essex have Stansted airport, which is not far from my constituency: it is 15 minutes’ drive up the A120. Stansted has had an interesting time over the past few years, partly because it has expanded to become a hub for new airlines servicing the United States and Asia. That initially represented something of a trial for the airport. It started at what was a bad time for the global economy, when there was a lack of business passengers. I believe that the Bill can help to empower Stansted and other regional airports, so that they can innovate and invest in accordance with their own regional growth strategies at a time when enterprise zones are coming on stream.

[Mark Reckless (Rochester and Strood) (Con)]

My hon. Friend has mentioned regional airports, airports in Essex, and innovation and investment. Is she aware of the work that has been done at Southend airport, which has received considerable support to enable it to expand and provide the area with a real economic boon?

[Priti Patel]

I know about that work. I also know how hard organisations such as Essex chamber of commerce and other business partners and stakeholders are working to assess viability and sustainability and attract investment to Essex and the south-east.

Stansted serves more than 18 million passengers each year, and is the third busiest airport in the United Kingdom in terms of passenger numbers. In that respect, it ranks only slightly below Heathrow and Gatwick. Its planes fly to 150 destinations, and it offers many scheduled flights to European airports as well as flights on low-cost airlines. My hon. Friend the Member for Thurrock (Jackie Doyle-Price) mentioned one of those. Members have also mentioned the environment. Stansted has a great record of mitigating environmental problems, minimising the disruption caused by noise by ensuring that 99% its of aircraft stick to their flight paths. Half the number of passengers travelling to Stansted use public transport.

I have mentioned Stansted for economic reasons. It is a vital catalyst for regional and national growth, it is a cargo hub, and it employs more than 10,000 people. One in six of those jobs is filled from my constituency and the wider district of Braintree. Such airports—Heathrow was mentioned in this context by the hon. Member for Feltham and Heston—are vital in providing our constituencies and regions with employment and investment.

It is essential for Ministers and the CAA to bear in mind that increasing airport capacity is not an unreasonable objective. Environmental concerns have been mentioned, but above all we should consider the interests of passengers and the need to demonstrate to the world that the United Kingdom is open for business. This is not just about airports in the south-east; it is about UK plc. I touched on the role of enterprise zones earlier. They will be central to the facilitation of inward investment, and I think that they should be complemented by a great and robust aviation strategy for the United Kingdom.

[Chris Heaton-Harris (Daventry) (Con)]

It is a pleasure to take part in a debate that has featured a sparkling maiden speech from the hon. Member for Feltham and Heston (Seema Malhotra). I spent a great deal of time in what is now her constituency, trying to ensure that she did not get the job. My wife lived there when we were courting, and I know it reasonably well. I know, too, how important the biggest airport in the country is to the constituency, and how many people work there. I know that she will be a very good champion of all her constituents, and I congratulate her again on her maiden speech.

It is also a pleasure to follow the hon. Member for Witham (Priti Patel), who reminded us of the importance of runways in the context of aviation. There was an incident not so along ago when a jet coming into Heathrow did not quite make it, and that proved that runways are all-important.

Let me record my sympathy for the Minister of State, Department for Transport, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), who was to have responded to the debate. I hope that I am correct in describing her as a right hon. Member. If she is not one, she should be, for she is excellent. Unfortunately, in a bid to become road safety Minister, she was injured in a cycling accident and is undergoing surgery.

As we have heard from Members on both sides of the House, including the hon. Member for Feltham and Heston and my hon. Friend the Member for Tamworth (Christopher Pincher), aviation plays a critical role in UK plc. My constituency, which is in the heart of the midlands, near junctions 15 to 19 of the M1—anyone who remembers seeing the old Rugby radio mast while driving up the M1 will know where it is—is now typified by a number of jobs that rely on the aviation industry. It is a hub for all the cargo that is shipped up from Heathrow, down from East Midlands airport and across from Birmingham. It is because so many jobs in my constituency rely on the aviation industry that I wanted to speak in the debate.

However, aviation is important to the economy in many other ways. I was recently lucky enough to travel to Kazakhstan, Azerbaijan and Georgia. All the people whom I met in those growing economies had this in common: they were desperate to come to the city of London, and, if they had any money, they wanted to spend it here. We need a gateway that can accept all those fantastic consumers of the future, and can welcome those who wish to do business with us and invest in us.

The experience at Heathrow airport is very different, however; it is a shopping centre with a couple of runways attached. For the Heaton-Harris family, getting to a gate at Heathrow airport involves an awkward shopping experience. The last flight I caught out of there cost me only a couple of hundred pounds, but the shopping experience almost trebled that. I know only too well, therefore, how much business comes from airport shops.

I have an airport in my constituency. The wonderful airport of Sywell has a rich history and an interesting and controversial present, which is why that is the only comment I shall make about it.

Turning to our country’s larger airports, much of our aviation regulation is governed by 1980s-style legislation, which is one of the reasons this Bill has been introduced. This Government and the last Government both realised it needed to be updated.

[Mark Reckless]

My hon. Friend talks of 1980s-style legislation as if it were a bad thing. Does he not remember who our Prime Minister was at that time, and might he therefore like to reconsider that remark?

[Chris Heaton-Harris]

I am suddenly enamoured with 1980s-style legislation. Indeed, I had the haircut to go with the music of that era—I had some follicles back then.

The Bill offers a package of reforms to make regulation and the sanctions that support it flexible, proportionate, targeted and effective. It proposes removing unnecessary regulation and intervention by central Government and devolving more responsibility to the independent specialist regulator, the CAA. It also seeks to make the CAA accountable and to ensure that it weighs both the costs and benefits of its decisions. Further, it proposes that some of the costs of regulating aviation should be moved from general taxation to the aviation industry, so that the people who use it, pay for it. That is the right way forward.

Above all, the Bill puts the consumer first, and I am all in favour of that. I am a regular customer of the aviation industry—although I would like to be a more regular customer—and when booked on a Ryanair flight I become the Michelin man, as I will wear all my clothes because I do not want to pay the excess sum for booking in a suitcase. I am also the man who has to repack his “smalls” in front of the waiting British Airways passenger queue because my baggage weight has exceeded the limit and the lady at the check-in desk has said, “23 kilos and a few extra grams is too much.” I am all for more deregulation and common sense in the aviation industry, therefore. It is very important that the consumer is put first in respect of the regulation of airports, which have substantial market power. The CAA’s primary duty should be to consumers. Passengers and, importantly, the owners of cargo must have a greater say.

The Bill also gives the CAA a role in promoting better public information about airline and airport performance. I support the clauses that provide that. Transparency and greater information are essential. As a consumer, I like to be able to look at relevant information and choose my airport and carrier. In that regard, the more transparency, the better.

--- Later in debate ---

[Mark Reckless (Rochester and Strood) (Con)]

It is a pleasure to follow my hon. Friend the Member for Daventry (Chris Heaton-Harris), who told us about his courting days under the Heathrow flight path. I am sure that colleagues were delighted to hear that he still regularly returns to Heathrow with his now wife. It is not clear whether they do this on their anniversary or not, but it seems that a certain amount of shopping at Heathrow is involved.

I am also pleased to follow my hon. Friend the Member for Witham (Priti Patel), who put the case for Essex very well and looked strongly after the interests of her constituency and Essex more widely in her remarks about Stansted, the strong progress on expansion and the strong economic role being performed at Southend. I know that the councils for Southend, Thurrock, Medway, Kent and Essex are working together as a local economic partnership on sensible proposals on aviation and alternative options to the Thames estuary option, which was so ably dismissed by my hon. Friend the Member for Thurrock (Jackie Doyle-Price). The Secretary of State was not in her place at that time, but I have every confidence that the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker) will pass on those very strong arguments in private as strongly as he does in public. Let me also take this opportunity to thank the Secretary of State for the very strong support she has shown for our area by holding back the increase in the Dartford tolls and in what she has done on train regulation and fares.

The debate has been largely non-partisan. Indeed, the regulation of aviation has been a non-partisan and technical area on which both parties have worked closely with Whitehall going back all the way to 1967 when the Edwards committee first looked at aviation regulation. It took a full two years to report, in 1969, to the then Secretary of State Anthony Crosland, and the report led to a White Paper from the then Labour Government. With the new Conservative Government in 1970 came the Civil Aviation Bill, which followed through on that preparatory work. There are clear parallels between that work and the way we are working together on these issues now.

It is worth noting that when the CAA was set up it was a pathbreaker for other regulators. The then Minister for Trade, Michael Noble, said, on introducing the Bill, that the CAA would be a “constitutional innovation.” He went on:

“The key point perhaps is that we are in this Bill hiving off a regulatory function. Ministers remain responsible to Parliament for policy, but detailed decision rests with the Authority.”—[Official Report, 29 March 1971; Vol. 814, c. 1173.]

That was new then, but we have since seen the development of regulators in many different contexts. The challenge between ministerial and parliamentary responsibility and expert opinion remains with us today and is core to this Bill.

A very positive development, in contrast with what we saw in the late 1960s and early 1970s, was the fact that the Pilling review of the Civil Aviation Authority was brought about by elected colleagues on the Transport Committee rather than by ministerial decision. That report was published in July 2008 and was followed up by Labour Ministers in the previous Government in a statement to the House and then in a consultation paper. The fact that that all came as a result of the Select Committee is new and is very much to be welcomed. When the previous Government engendered the proposals, the then Minister noted that

“as now, the CAA will only be able to act where it is reasonable and proportionate and where it has legal power to act.”

However, the CAA responded:

“The DfT’s proposals build on many activities already undertaken by the CAA, but give them a clear statutory basis”.

The then Minister did not explicitly accept that the CAA had been operating beyond its statutory remit, but the Bill is long overdue, as it will bring clarity to what the CAA does, and make sure that that is Parliament’s intention.

[Steve Baker]

Does my hon. Friend share my slight concern that more flexible regulation may result in greater uncertainty in major capital investments in airports? Has he considered whether the CAA will be able to provide the stability that investors need?

[Mark Reckless]

Our right hon. Friend the Prime Minister set out three clear principles on quangos and cases in which they might be justified. Conservatives are strongly against unaccountable quangos, but the three scenarios that the Prime Minister set out were, first, a precise technical function that needed to be performed to fulfil a ministerial mandate; secondly, a requirement for politically impartial decisions on public money in particular circumstances; and, thirdly, cases in which the facts needed to be transparently determined. The CAA fulfils the need for a precise technical function to be performed to fulfil a ministerial mandate.

I welcome the Bill. Although, as my hon. Friend the Member for Wycombe (Steve Baker) said, it provides more flexibility, it engenders far greater clarity. To date—and we have given this to the CAA—the authority has had four different objectives, but there is a lack of clarity about their order, so, inevitably, it has great discretion in how it chooses to balance those potentially competing objectives.

In the Bill, under the single duty that the Government propose giving to the CAA for consumers and their interests, it is much clearer where the authority is going. Regulation, while more flexible, should none the less be more predictable to people in the industry and to other stakeholders. That is broadly welcome. The same applies to appeals. If anyone is dissatisfied with a CAA decision, the only recourse is simply judicial review and the application of Wednesbury principles as to whether the decision has been properly made. The appeal process in the Bill is much improved, because a specialist competition tribunal will be introduced, and it will look at the objectives that have been set for the CAA by Parliament. It will assess in an expert yet judicial way whether or not they have been properly met. Ministers are not persuaded that there should be a right of appeal for the Secretary of State on licence conditions, but when regulations are extended to price cap anew or to remove a price cap, the Secretary of State may have the right to appeal. It is not clear from the explanatory notes whether that reflects the EU dimension or whether Ministers genuinely believe that that is a positive measure.

The cap application is significant. Manchester was de-designated, and Ministers made that decision—a statutory order was made—but the principles behind that de-designation were not clear, making investment difficult in some circumstances for the aviation industry. If we have a clear parliamentary test of when a price cap is needed, that should provide greater clarity for industry participants.

It would be difficult to have an environmental objective and a consumer objective, then look to an independent regulator to balance the two. The right approach for the greenest Government ever is for Ministers to make those decisions and to set a clear framework, whether in taxation or planning, for industry. That is the best way to balance those objectives.

A key issue is flexibility, and flexibility in the price cap is particularly valuable. The CAA currently has an opportunity to set the price cap only once every five years, and when circumstances change the price regime can be left looking inappropriate, but nothing can be done about it. For example, the CAA’s decision notice, published in March 2008, states that

“at Heathrow, the CAA has built into the price caps contingent funding for the costs of developing further”—

during the five-year period—

“the option to expand the capacity of the airport.”

The House of Commons Library has confirmed that that was a reference to the potential third runway at Heathrow, which of course did not happen and—Ministers are very clear—will not happen. None the less, Heathrow is still to be regulated on the basis of an RPI plus 7.5% a year increase in the overall landing charge revenue, but there is no opportunity to review that in the light of the decision not to develop a third runway at Heathrow.

The shadow Secretary of State, if I heard her correctly, said that the Government have a blanket ban on expansion at airports in the south-east. I believe that that is quite wrong. Look at what Luton airport is doing through its road show and expansion in capacity or, as my hon. Friend the Member for Witham explained, what Southend airport is doing. Last week I met representatives of Birmingham airport, who talked about expanding by 25 million passenger movements, the vast bulk of which would relieve pressure in the south-east. At Gatwick a significant increase in capacity is planned, even before the second runway restriction runs out in 2019.

The key criterion is the benefit to consumers of the regulation. However, there is something about aviation regulation that makes it different from other regulation, because in the middle there are the airlines. Sometimes their interests are the same as the consumer’s, but other times they are not. The landing charge at Heathrow is perhaps only £16 a passenger, compared with £50 to £80 for “Boris island”, and £16 or thereabouts is really not expensive. Given the economic benefits of using Heathrow, a huge amount of the benefit accrues to the airlines that happen to have slots there. The regulation in those slots is imperfect and has developed over time, but were the regulator to increase charges at Heathrow, it is not immediately obvious to me, as an economist, whether that would be passed on to consumers in the usual way. To the extent that Heathrow is almost at capacity and landing charges are so low, despite the high value of a slot, an economic analysis suggests that lower restrictions on landing charges might lead to a lower slot price and greater flexibility for the efficient allocation of slots, rather than that necessarily being passed on to the consumer. How the CAA will regulate this is therefore an important area of principle to consider.

The chairman, deputy chairman and non-executive directors of the CAA will be appointed by the Secretary of State, which is very sensible. It is difficult to see why the Secretary of State would also want to appoint all the executives, let alone determine their precise remuneration. We want to ensure proper accountability to Parliament. Some colleagues have mentioned the National Audit Office. I understand that the chief executive would be signed off by the Secretary of State as well, although the nomination would be made by the non-executive directors. I also hope that we would have appropriate parliamentary scrutiny of those appointments.

I am grateful to colleagues on the Transport Committee for the work they have done on this. It is excellent that everyone is working together and I look forward to hearing the Minister’s comments. It is certainly a strong positive for the regulation of the sector in this country.