Vehicle Technology and Aviation Bill (Fifth sitting)

Richard Burden Excerpts

Tuesday 21st March 2017 Public Bill Committees

[The Chair]

Welcome back to the Vehicle Technology and Aviation Bill Committee. We resume line-by-line consideration of the Bill, which seems to have made very good progress last week under the chairmanship of the right hon. Member for Enfield North (Joan Ryan).

Clause 12

Smart charge points

[Richard Burden (Birmingham, Northfield) (Lab)]

I beg to move amendment 14, in clause 12, page 7, line 38, after “security” insert “and provide safeguards against hacking”.

This amendment clarifies that smart charge points must have measures in place to safeguard against the risk of being hacked.

[The Chair]

With this it will be convenient to consider new clause 7—Cyber Security and hacking of automated and electric vehicles—

“The Secretary of State must, within the next 12 months, consult with such persons as the Secretary of State considers appropriate on what steps will be required for the effective cyber security of automated and electric vehicles to protect those vehicles against hacking.”

This new clause would require the Government to consult on the risks of automated and electric vehicles being hacked and to ensure that measures are in place to address this.

[Richard Burden]

Before speaking to the amendment, may I thank the Minister for his latest letter about the Bill, which, as ever, is very helpful?

Clause 12 is quite broad. It allows the Government to impose requirements and specifications for charge points. We know from the policy scoping notes that the Government circulated last week that they do not yet know quite what regulations they want to introduce, but that the Bill will give them the power to introduce those regulations via the negative procedure. For the reasons we discussed last week, I do not expect Ministers to know, right now, all the regulations that they will need to introduce, but I question whether the negative procedure is appropriate. I will address that point in more detail when we debate further amendments today.

Amendment 14 and new clause 7 address cyber-security and hacking. Any element of data, digital infrastructure or digital function is incredibly valuable and increasingly involves a risk of being hacked, as we know. The data, infrastructure and digital function behind the charging infrastructure and its interface with electric and automated vehicles are no different. We need to address cyber-security and data protection in relation not only to charging, but to the electric and automated vehicles themselves.

[Rob Marris (Wolverhampton South West) (Lab)]

My hon. Friend will be interested to know that I had a great discussion last night with the hon. Member for Stafford (Jeremy Lefroy), who drives a Nissan LEAF. He showed me an app on his phone that not only can tell him the current state of charge of his vehicle, which is parked up in Stafford, but—should he so desire—can turn on the heating in it while he is sitting in the Members’ Tea Room. Unfortunately, when we have apps like that, there are great opportunities for hacking.

[Richard Burden]

My hon. Friend is absolutely right. That example from the hon. Member for Stafford (Jeremy Lefroy) makes the point very clearly: there is huge potential to communicate with vehicles—for people who own or rent them, but equally for people who we would not want to be able to communicate with them.

Amendment 14 relates to charge point cyber-security. Clause 12 contains a range of non-exhaustive specifications that a charge point must comply with, and it appears that that will involve a large amount of data being transmitted from the charge point. Measures are therefore needed to ensure that charge points and the data they process are protected against attempts at hacking. I think that is what the Government are getting at in subsection 2(e), but I ask the Minister to clarify whether that provision also covers cyber-security and the risk of hacking. I also invite him to clarify who the information that clause 12 refers to is to be shared with, and where.

New clause 7 is more broadly focused on the cyber-security of automated and electric vehicles themselves. The Bill does not seem to touch on that, but it will be a significant barrier that will need to be addressed if these vehicles are to be deemed safe, secure and reliable. The example that my hon. Friend the Member for Wolverhampton South West gave illustrates that point absolutely.

[Sir Greg Knight (East Yorkshire) (Con)]

When we talk about hacking, we tend to visualise a spotty youth on a computer in a bedroom, but it can also mean commercial hacking. The company that has provided the charging point may want the data of people who use its facility.

[Richard Burden]

The right hon. Gentleman is absolutely right. The nature of hacking is that it can come from anywhere if someone knows how to do it. As he says, that can be the individual spotty youth in a bedroom, but hacking can also be done for commercial purposes, which is equally a risk. That is why manufacturers invest millions of pounds putting systems in place to protect future vehicles from being hacked.

That is welcome, but the Government must also play a role, particularly if we are seeking to encourage development and uptake of such vehicles in the UK. Cars will also be particularly vulnerable when serviced. Somebody put it to me the other day that the nature of the information systems in our vehicles are becoming such that taking them to be serviced is a little like taking a laptop to be serviced and handing it over with all its passwords. We need safeguards. It is not beyond the realms of possibility that if those safeguards are not in place, information could be uploaded to or downloaded from an electric or automated vehicle being serviced that would allow hackers to obtain information or, perhaps worse, control safety-critical elements of the vehicle’s function.

In the case of an automated vehicle, the obvious risk is when driving. In extreme scenarios, people could find themselves going somewhere they do not want to go, travelling at a speed they do not want to travel at or, in the most dangerous case, not stopping when they need to stop. I would welcome an indication from the Minister whether his Department has discussed the issue, and what the assessed risk was of those vehicles being hacked. Furthermore, in line with new clause 7, I ask him to consult the industry on what steps might need to be taken to address that risk and whether Government action will be necessary as part of that.

[Rob Marris]

My hon. Friend may be aware that there has already been a case in the United States in which a vehicle with high-level electronics—not a driverless vehicle, but a vehicle for sale on the road; I cannot remember the make—was hacked as part of a process, to show that an existing vehicle could be taken over through its electronics. It is already possible with vehicles that require drivers.

[Richard Burden]

I was not aware of that precise case, but my hon. Friend makes an important point. Once a vehicle generates that kind of data and information, it is always possible for it to be accessed and used in a whole range of quarters. It could be used for commercial purposes, as the right hon. Member for East Yorkshire said, if a firm wants to know the individual’s driving habits and target them for marketing or other purposes. It could be used for malicious purposes, potentially causing harm to the driver or occupants of the vehicle. It could be used accidentally, to return to the example of spotty youths in their bedrooms, for something seen to be a bit of a laugh that could have severe and dangerous consequences. The technology and skills are out there now.

The point I am making in the amendment, and in particular in the new clause, is that once we move to the much more rapid expansion of uptake that we want for electric and automated vehicles, the scale of the risk becomes much greater. That is why it is important.

[Rob Marris]

It has just come back to me that the vehicle involved in the American experiment was a Jeep, and that it happened in July 2015, so it was quite some while ago. That case involved benign hacking to show that it could be done, but it demonstrates to us all the dangers if we do not have the kind of protection that new clause 7 would provide.

[Richard Burden]

My hon. Friend is right. It indicates that when we come to a decision later on new clause 7, it will be important for all Committee members to consider it seriously. This is not something that should divide us along party lines; it is something that we should all be concerned about. We have more issues and questions about some aspects of clause 12, but as the amendments relating to most of them have been grouped under clause 15, I will leave it there for now and keep the Minister and other hon. Members in suspense.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I want to make a few brief points. Cyber-security is clearly a huge issue in this day and age, so we should consider it as we go forward. We need to think about where the endgame is for us: it is the 2050 target of all vehicles on the road being low-emission. That is partly predicated on the roll-out of the smart charge point grid and the use of electric vehicles. If we are looking towards that 2050 horizon, we need to take as many steps as we can to ensure that there is a practical roll-out and a safe mechanism. This and neighbouring clauses are about certain roles, responsibilities and liabilities, so making the owners and suppliers of charge points responsible for their security, and setting out regulations that define that safety and security, makes sense. For that combination of simple reasons, I support the amendment and the new clause.

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[Richard Burden]

Before the previous intervention, the Minister was talking about the consultations that he is already undertaking with the industry, in particular discussions towards setting up a list of principles to govern cyber-security. Will he give a little more detail about who he is consulting? He referred to the industry: does that mean the manufacturers of vehicles or of charge points, or does it mean the broader industry beyond the automotive sector?

[Mr Hayes]

Actually, it means all of them, but it would be helpful for the Committee if I set that out separately. We could describe in greater detail some of the work that I have set out, including the development of core principles, the establishment of a dialogue and international work. I am more than happy to set that all out in detail and assure hon. Members that it is significant. It is right that the hon. Gentleman should seek greater clarity and I will happily provide it before the Committee ends its consideration of the Bill.

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[Mr Hayes]

Yes, absolutely: regulations will be made, as appropriate and at the right time. That was a perfectly fair question.

With that, I invite the Committee to reject the amendment. Better still, I invite the hon. Member for Birmingham, Northfield to withdraw it, so that we are not obliged to reject it. I do so having given commitments that I will follow through on as soon as possible.

[Richard Burden]

I am grateful to the Minister for his comments. On the issue of process and the powers that Ministers will take, I fully accept his point that they are not yet in a position to know the exact regulations for which they will want those powers. We will discuss that issue of process when we consider the next group of amendments. Nevertheless, I accept what he has said, namely that powers are necessary and that regulations cannot yet be drafted.

I am also grateful to the Minister for the commitments that he has given today, first to the publication of the principles on which cyber-security will be addressed—that is really important—and, secondly, to consultation of the kind envisaged by the amendment and new clause 7, and, thirdly, to making the laying of regulations a mandatory issue, not simply a discretionary issue.

I get the impression that the Minister feels passionately about this issue; I think we transported him back for a moment to his previous job as the Minister with responsibility for cyber-security. I have absolutely no doubt that he takes the matter seriously. On the basis of what he has said, I will not press the amendment to a vote. We will reflect on what he has said and on whether to withdraw the new clause when we come to consider it, but for now, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12 ordered to stand part of the Bill.

Clause 13 ordered to stand part of the Bill.

Clause 14

Exceptions

Question proposed, That the clause stand part of the Bill.

[Sir Greg Knight]

Mr Gray, I know that you are more interested in horses than in brake horses. I always find the Minister intriguing, but I find what he is proposing in this clause particularly intriguing. In subsection (3), he is asking the Committee to agree that regulations may exempt a person or public charging point specified in the Bill. Can he give the Committee an example of the circumstances in which he envisages an exemption being applied?

[Mr Hayes]

I am always delighted to hear from my right hon. Friend on such matters. It might be helpful for me to set out the purpose of clause 14 and, in doing so, address the specific point that he made.

The purpose of the clause is, first, to provide the power to make exceptions to the obligation set out in the regulations and, secondly, to provide a safeguard against situations in which the requirements set out in the regulations flowing from the powers in the Bill have unintended consequences. These include where the regulations risk placing unreasonable requirements on businesses in order to comply, or where technological innovation advances in ways that could not have been anticipated at the time of drafting the regulations. Those are some of the reasons why the clause was drafted in this form.

The effect is to give the Secretary of State the ability to decide that the obligations contained in the regulations made under the Bill do not apply in particular or given circumstances. To ensure transparency, the Secretary of State will be required to publish any determination made using the powers. Being a veteran in all such legislative matters, my right hon. Friend will understand that the purpose of that is to ensure that the clause is used consistently and in a way that is open to scrutiny.

My right hon. Friend asked me about the types of situation in which the power might be used. They include where it would be unreasonable for a person to comply due to their particular circumstances—a good example would be a remote service station with very limited access to grid infrastructure—and where the aims of the regulation may be achieved by means that do not necessarily meet the exact requirements of the regulation—for example, where smart functionality is delivered through an innovation that could not have been anticipated at the point when the regulations were drafted.

Those are two areas where exceptions might be applied of the kind that I have described. Although, I am confident that I have satisfied my right hon. Friend with that assurance; maybe I have not, but that is for him to judge. At least, I hope that he will now understand the purpose of the clause as drafted.

Question put and agreed to.

Clause 14 accordingly ordered to stand part of the Bill.

Clause 15

Regulations

[Richard Burden]

I beg to move amendment 15, in clause 15, page 9, line 1, leave out from “consult” to end and insert—

“(a) the National Grid,

(b) large fuel retailers and service area operators as defined under section 10, and

(c) any other such persons as the Secretary of State considers appropriate.”

This amendment would require the Secretary of State to consult specifically with the National Grid, large fuel retailers and service area operators before introducing regulations.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 16, in clause 15, page 9, leave out line 14.

This amendment makes the first regulations made under section 12 subject to an affirmative resolution.

New clause 5—Review of regulations in Part 2—

“(1) Within 12 months, and once in each 12 month period thereafter, the Secretary of State must lay a report before Parliament on the regulations made using powers granted in Part 2 of this Act.

(2) The report must consider—

(a) the effectiveness of the regulations,

(b) the impact the regulations are having on public charge point operators,

(c) the impact the regulations are having on fuel retailers,

(d) the impact the regulations are having on the National Grid, and

(e) how the regulations are impacting on the uptake of electric vehicles.”

This new clause would require the Secretary of State to lay a report before Parliament each year assessing the effectiveness and impact of the regulations in Part 2.

[Richard Burden]

The theme of the amendments and the new clause is consistent with the themes of so many of the amendments we have moved, in that it requires the Government to consult widely before regulations are implemented. One significant area that our proposals would deal with is the impact that the expansion of charging points may have on the national grid, which the Bill barely addresses, although it is mentioned in the policy scoping notes that were circulated last week. It occupied a good amount of discussion in the evidence sessions last week.

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[Mr Hayes]

What an interesting short debate. Amendments 15 and 16 and new clause 5 deal with consultation on and approval and assessment of new regulations made under the powers. One might say that that theme has underpinned the approach taken by the Opposition in the Committee so far. It is a theme with which I have considerable sympathy—indeed, were I in their place I think I would make the same argument. When Governments take powers that by necessity are unspecified—in this case, for the very reasons that I and the hon. Gentleman have articulated—it is important that they are checked by a commitment to consult and consider properly before, during and after their application. That, essentially, is the argument that the hon. Gentleman has made.

Amendment 15 would require the Secretary of State to consult with National Grid and large fuel retailers before making regulations. G. K. Chesterton said:

“To have a right to do a thing is not at all the same as to be right in doing it.”

The powers that are given in the Bill confer on the Government a right to do things, but we need to ensure that we are right in doing them. I entirely agree with the hon. Gentleman that it will be important to consult a wide range of stakeholders in relation to making regulations under the powers, including those we are discussing.

That gives me the opportunity to say a word or two about the contribution of the hon. Member for Wolverhampton South West, which, I have to say, I anticipated. He raised these matters, as he described, in the evidence sessions—I have the Hansard report before me. There is an appropriate range of questions to be posed about the impact of charging on the grid, which is why we heard from those we did in those evidence sessions. Without wishing to exhaustively repeat what was said, it might be instructive to draw attention to Mr Marcus Stewart’s remarks:

“By applying smart charging, you can accommodate a lot of electrical vehicles without necessarily having to increase that overall total capacity at a total system level. If you have clusters of demand at a local level, you would expect there to be local reinforcement to accommodate that—fast charging, for example, can provide heavy loads at certain points on a system, but you would connect that to a slightly higher voltage tier to ensure sufficient capacity. The system has the capability to deal with it if the type of charging is smart.”

Then he said—[Interruption.] Mr Gray, I could tell you were beginning to tire of my exhaustive account of the evidence. Mr Stewart then said:

“The provisions put forward in the Bill make total sense to us.”––[Official Report, Vehicle Technology and Aviation Public Bill Committee, 14 March 2017; c. 24, Q46.]

They make total sense to me too, because it is absolutely essential that we continue to consult for the reasons offered in the evidence sessions and highlighted by my right hon. Friend the Member for East Yorkshire, who drew attention to the fact that a great deal of this will be about the co-operation leading to demand management, which will smooth demand and by so doing change assumptions about supply.

The Committee has to some extent enabled me to recall my time as a Minister in the Home Office and as the Minister for Energy. When I was the Minister for Energy I became convinced that demand management was a vital tool for ensuring that there was adequate capacity to meet changing patterns of demand. I suspect that successive Governments have put too little emphasis on energy demand management. The debate about energy has usually been about different kinds of supply, by volume and kind, but Governments should think more creatively about demand management. The hon. Member for Birmingham, Northfield mentioned the charging mechanisms that allow for that and, as I said in the evidence sessions, there is some history of using charging and tariffs creatively, but we could do a lot more in that respect. The Bill will catalyse fresh thinking. If we can change the orthodoxy about where and how people charge their vehicles, and rapid and smart charging is central to that change, as Mr Stewart described, we can look forward with confidence to the group responding in the way he suggested it would. It will require that challenge to the orthodoxy and that degree of creativity and imagination about how we can incentivise and encourage certain kinds of behavioural change.

One of the things the House of Lords Select Committee recommended when looking at automated vehicles, which could be applied to this part of the Bill as well, was a greater emphasis on behavioural change and our analysis of what people might do as a result of the new technology’s availability. We need to put more emphasis on that and my Department will do so. We are engaged in work with the academic sector and with others to test the behavioural changes that may ensue from these quite radical alterations to what people drive, how they drive and where they drive. The lesson we have learned in recent years is that economists should have spent more time thinking about behaviour and less time thinking about statistics. We will not make that mistake this time around. We will think about behavioural changes, including the way people charge their vehicles and the impact that has on the grid.

As the hon. Member for Birmingham, Northfield said, we have included in the Bill, in clause 15(3), a broad obligation to the relevant parties, which definitely includes the stakeholders he mentions in the amendment. It would therefore not be appropriate to start specifying exactly which organisation should be consulted at this stage. I said earlier that I am committed to consultation, and I will reinforce that in writing to this Committee, as well as saying it now.

Amendment 16 would require regulations made under clause 12 relating to smart charge points to be approved under the affirmative procedure. As I am sure you, Mr Gray, and the members of the Committee are aware, I am a great believer in Parliament having the opportunity to debate secondary legislation when necessary, but there is good reason for having regulations made under clause 12 using the negative procedure. I will explain why.

The electric vehicle charge point market is innovative and fast-growing, which may require the Government to intervene quickly if the market does not develop as we expect. Moreover, these provisions will be largely about the technical functionality of smart charge points, shaped by consultation and engagement with industry experts, with whom we already have strong and broad requirements to consult. In summary, I do not anticipate any further debate on the principles, so it could be regulated for as a matter of technical detail. If there were a fundamental change to the principles associated with the Bill, it would be perfectly reasonable for us to come back to the House, but I do not anticipate that happening.

New clause 5 relates to the post-regulatory review. The argument is made that we should look at these matters periodically. Part 2 of the Bill will give rise to secondary legislation, so let me assure the Committee of the value I place on reviewing the effectiveness and impact of all regulations. The essence of the argument used by the hon. Member for Birmingham, Northfield is correct: we will need to look at these matters and review them regularly, for the reason that I have given. I do not think that one can make an argument that this is a highly dynamic area of work and then claim simultaneously that we are not going to review it or consider it closely. He is right to make the case.

Section 28 of the Small Business, Enterprise and Employment Act 2015 already places a duty on a Minister of the Crown to make provision for a review when making secondary legislation—the hon. Gentleman will know that well, but I have a copy should any Member want to look at that. So yes, we should review, and that is already in law. I do not think it needs to be in the Bill. I hope hon. Members will be reassured that I will fulfil the existing duties in relation to secondary legislation, that I will consult widely and thoroughly before any regulation, and that the approach to its publishing and scrutiny set out in clause 15 is proportionate.

I am back to where I began. It is right that the Government show that the application of the regulations and powers is proportionate, necessary and fit for purpose—that it responds to the dynamism that I have described. That absolute assurance is the reason that I am asking the hon. Gentleman to withdraw his amendment.

[Richard Burden]

As the Minister identified, the amendments and new clause cover three areas. The first is consultation. Amendment 15 would try to ensure the right level of consultation on the pressure on the grid. Amendment 16 deals with the nature of the parliamentary scrutiny of any regulations that come from that, or from other consultation; that is the second area. The third is the willingness to review and to make sure, in a dynamic situation, that we have got this right as time goes forward—and to be prepared to change where that proves necessary.

We have had a particularly interesting debate on amendment 15, and I am grateful to my hon. Friend the Member for Wolverhampton South West for his contribution. If the expansion of electric vehicles takes place on the scale that we want it to, we are potentially dealing with major pressures on the grid. There is the nightmare scenario that my hon. Friend talked about, but it does not have to be that nightmare. There is also potential for demand management, which the Minister has talked about. There is the potential for using electric vehicles as repositories for power that can be fed back into the grid—a point made by Quentin Willson in our evidence session.

As yet, we do not know what the right mechanism will be to try to ensure that there is not the pressure on the grid that could lead to the nightmare scenario. It could be regulation; it could be market mechanisms; it could—and I suspect it will—be a combination of the two, but we are not yet in a position to know what is right. That is why consultation with all the relevant stakeholders is absolutely necessary. We felt it was important to put that in the Bill. I am grateful to the Minister for his assurance that the Government are seized of that, and his agreement to write to members of the Committee with more details of how he envisages that consultation taking place.

[Mr Hayes]

I am following the hon. Gentleman’s argument closely. There is an additional point: the more places that people can charge for more of the time, the more intrinsic—or implicit, if we like—the smoothing of demand will be. In a sense, if we concentrate charging, we risk the kind of spikes that he described, so as part of the Bill, there is a beneficial effect on demand of the kind that I have set out.

[Richard Burden]

What the Minister has said is right. To be absolutely clear, I think that the opportunities presented by the expansion of the use of electric vehicles and the move towards a zero-emission, low-carbon future in personal mobility far outweigh the risks, but there are risks, and it is right that we address them in our scrutiny of the Bill.

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[Rob Marris]

I sense that my hon. Friend is considering whether it would be appropriate, in the interests of democracy and accountability, to press amendment 16 to a vote. May I suggest that he might like to consider the position between now and Report, rather than dealing with the issue today?

[Richard Burden]

My hon. Friend makes a good point. Clearly, there is a great deal for us all to consider between now and Report. The Minister put forward various issues and said he would consider various issues and get back to us. My hon. Friend the Member for Wolverhampton South West may be right that the precise wording of the amendment is not as good as it should be, but the Minister has not convinced me of the merit of the argument that regulations should be introduced by means of the negative procedure. I will not press the amendment to a vote now, but I give the Minister notice that we wish to return to this issue. I hope that, as the Bill continues its progress, he will reflect on that. Perhaps by the time we get to Report, his position will have changed, and we could look at having the affirmative procedure.

New clause 5 is about review, and I am pleased by what the Minister said about it. He was absolutely clear that Ministers have to be prepared to reassess, review and change if necessary. I welcome that assurance. Again, in the same spirit in which we have approached these matters elsewhere, I do not intend to press the new clause to a vote.

I simply say to the Minister that we have shown ourselves to be very reasonable in withdrawing our amendments. He, in turn, has shown himself to be very reasonable in the clarifications and assurances he has given to the Committee, but sometimes it is important to put things in the Bill. Some people do spend hours poring over Committee debates, but the law will be what is in the Bill, and sometimes we need to be clear in the Bill exactly what we are saying. That is why we tabled the new clause. I hope the Minister will reflect, before Report, on whether some kind of review mechanism could be put up in lights in the Bill. I certainly hope that he will consider the point about the affirmative procedure in relation to amendment 16. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 ordered to stand part of the Bill.

[Mr Hayes]

On a point of order, Mr Gray. I have listened to what has been said and, for clarity and the record, I reinforce that I will write to the Committee on a range of the matters that we have spoken about this morning. I will oblige my civil servants—I know they like me being strict with them—to produce that letter as a matter of urgency, so the Committee can consider it before our next sitting. I hope that it will be, to use the hon. Gentleman’s term, expressed in the spirit that has underpinned our scrutiny thus far.

[The Chair]

The Minister is most courteous and considerate, and he has kept the Committee as informed as he possibly can, but he will understand that that is not, of course, a point of order, grateful though we are to him for it.

Clause 16

Licensed air traffic services: modifying the licence and related appeals

[Richard Burden]

I beg to move amendment 30, in clause 16, page 11, line 31, at end insert—

“(5) Within five years of this Act receiving Royal Assent, the Secretary of State must conduct a review of the process for appealing against modification of licence conditions.”

This amendment requires the Secretary of State to review the modification appeals process within five years.

I apologise for my tardiness, Mr Gray. My head was still in electric vehicle mode. I was sitting in a car when I should have been boarding the aircraft. I have now got myself on to the runway and am in civil aviation mode for part 3 of the Bill. The amendment would require the Secretary of State to review the appeals process for the licence changes within five years of them taking effect.

There is a great deal of support from industry stakeholders, including the Civil Aviation Authority and NATS, for the modification and modernisation of the licence regime that we are talking about today. During the evidence session, we heard that these proposals are similar to measures in place for Heathrow and Gatwick, and that the changes envisaged by this Bill would be welcome and helpful to both the Civil Aviation Authority as the regulator and NATS as the operator. We Labour Members accept that.

The basis of this amendment and the review we are calling for is that in the evidence session, when I asked the Civil Aviation Authority about the frequency of new appeals, the answer we received was that nobody really knows yet what the impacts of these changes will be. Indeed, in its impact assessment, the Department has forecast between 16 and 36 possible modifications of varying significance relating to issues around price controls, financial resilience and service continuity. It concedes that, in the example of service continuity, historically, there have never been any modifications to the licence. The impact assessment recognises that the assumptions on the number of appeals are highly uncertain in one section, but then notes that changes brought about by the new pan-European single European sky air space reform could lead to a number of major changes for NATS in the coming years. Despite the uncertainty of the impact, the Government’s impact assessment says that there will be a post-implementation plan in the form of a “light touch”—their words—review of the new arrangements after five years and a full review after 10. That is welcome, but nowhere does the Bill reference that commitment.

I want to make it clear that we do not oppose any of the bases that the Government have put forward for the need to make changes to the licence modification regime, but with such uncertainty about what changes they are going to make, how many modifications may be sought and what their impact should be, we think that a scheduled review after a period of time would make rational sense.

In the Committee’s evidence session, the Civil Aviation Authority agreed that it would make sense to review the powers that had been introduced. I would welcome the Government’s looking sympathetically at the amendment and reassuring us that the kind of review that we seek, which the impact assessment assumes will take place anyway, will be taken on board by Ministers.

[Mr Hayes]

We now move to a very different and equally important part of the Bill. The proposal is a relatively small but significant change to the arrangements to which the hon. Gentleman drew our attention. He mentioned the importance of reviewing regulations. Again, we fully agree with that sentiment. It is the practice of the Government to review regulations, and I hope that is reflected in how we develop the regulatory changes that we are making in the Bill. Licence qualifications are not a regular occurrence, and appeals against licence qualifications are rarer still. For example, in the four years since the establishment of a similar review for airport licences, there have been no appeals. It is therefore unlikely that there will be enough appeals in five years to warrant a meaningful review of the process.

I am sympathetic to the idea of a review, but I am not sure that the amendment’s five-year timescale is appropriate. I also think that the scope of the review is defined too narrowly to warrant a meaningful evaluation of the changes to the regulatory regime. I am arguing for a review of a more fundamental kind over a longer period. These changes reflect the broad direction of travel as successive Governments have learned lessons on how best to regulate monopoly industries, to ensure a focus on safety, efficiency and efficacy. Any review that we conduct must consider the effectiveness of the licensing framework as a whole, looking at the impact on its customers and the lessons learned in other sectors. I hope to be able to provide assurance that the framework for regulating our air traffic control provider will be reviewed through such a review process, which will encompass all aspects of the regulatory regime, as appropriate at the time, and not just the appeals process, given what I said about appeals being rare in the past and likely to be so in the future.

The hon. Gentleman is right that we will need to look at this when it is changed. We should do so comprehensively over a meaningful time period. The post-implementation review will be carried out with the corporation review of the entire licensing framework, rather than specific aspects of it. With that assurance, I hope that the hon. Gentleman will withdraw his amendment.

[Richard Burden]

The basis of this part of the Bill and the clause that the amendment relates to is uncontentious. At the moment, if the Civil Aviation Authority wishes to review NATS’s licence and there is an objection by NATS, there is a potentially long and complicated process with reference to the Competition and Markets Authority to try to unscramble it. The basis of the clause is right in saying that the Civil Aviation Authority should have much clearer powers to suggest a modification, and NATS should have the right to appeal. It is a simple change and it makes sense. NATS agrees with it and the CAA thinks it is a sensible change. There is not a big difference between the parties in Committee on that.

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Modification of licence conditions under section 11 of the Transport Act 2000: appeals

[Richard Burden]

I beg to move amendment 29, page 22, line 17, schedule 1, at end insert—

“(3A) An owner or manager whose interests are materially affected under subsection (2)(c) may be defined by regulations made by the Secretary of State following consultation on and publication of the criteria used to determine whether such persons are deemed materially affected.”

This amendment would require the Government to clarify what other persons or parties they intend to permit to appeal, who are not directly affected by licence modifications but may be considered materially affected.

The amendment is not only about the procedure by which NATS as the operator can appeal against proposed licence modifications by the CAA, but about who else will be in a position to appeal. The Bill refers to the Secretary of State’s power to give “prescribed aerodromes” a right of appeal. The amendment would give the Secretary of State power to prescribe proper scrutiny. We recognise that one of the benefits of the changes in the appeals process is the value of bringing in other parties to appeal, including owners or operators of aircraft, such as airlines. The extension to parties financially affected is clear, but what is less transparent is the permissions to parties materially affected by licence changes and the right of the Secretary of State to prescribe which operators can appeal on that basis.

The question we really want to ask the Minister is this: why is it necessary for the Secretary of State to have such power, other than to risk excluding some parties who may have reasonable grounds to lodge an appeal? Surely the Government could leave that to the Competition and Markets Authority.

Otherwise, if the Government are to decide, it is only fair that they should publish the criteria that they intend to use to prescribe who else will have the right to appeal against license modification, and to define who is materially affected by any such modifications, so that we can be assured that the power the Government are taking for themselves will be exercised reasonably.

[Mr Hayes]

Edmund Burke said that:

“Good order is the foundation of all things.”

The hon. Gentleman seeks in his amendment to ensure that the arrangements in the Bill are properly ordered, and that the powers are exercised through the proper channel. The effect of the amendment, as he describes it, would in part be to duplicate the proposed power to define through regulation which airports are considered to be materially affected by a licence condition, and to oblige us to consult on exercising the power. Once again, I assure him that such consultation is already standard practice and will continue to be so.

Like the hon. Gentleman, I think that there is little difference between us; this is a matter of exploring the application of a change introduced by the Bill that we all think is necessary. I am grateful to him, therefore, for the amendment, which provides me with an opportunity to clarify the Government’s intent in relation to aerodromes being able to raise appeals against licence modifications.

For absolute clarity, there are five airports at which the licence holder serves as a monopoly provider, in the particularly complex airspace in the south of England. As the purpose of the licence is to provide economic regulation, it is appropriate for those five airports to have access to the appeals mechanism provided in the schedule. Therefore, the Government intend that the regulations introduced under the power will list the five relevant airports, as the licence itself does. I would expect the regulation to remain in line with the licence in that respect.

Our approach has been determined through consultation prior to the Bill—the hon. Gentleman will be familiar with that consultation. As I said, it is certainly standard practice to consult when the Government make regulations of this kind, and I would expect to do so if anything were to change that approach in future. The consultation was clear, as he implied, that the change is a necessary improvement to existing licensing practice. The five airports—for the record, they are Heathrow, Gatwick, London City, Luton and Stansted—are particular for the reasons that I have given. Elsewhere, the service is provided commercially either by NATS or another company, or in-house by the airports themselves. The complexity of the airspace requires no further explanation —it is self-evident.

The hon. Gentleman mentioned the Competition and Markets Authority. In addition to the Government’s role, that authority, which is the body that will determine appeals under this regime, must determine on a case-by-case basis whether the materially affected test has been met by a complainant, even if eligible to raise an appeal. The Government should therefore not seek to duplicate that role by further defining “materially affected”. We can rely on that body in the way he described. The changes in relation to those five particular places are necessary and, the consultation suggests, desired. With that, I hope that he might withdraw his amendment.

[Richard Burden]

I am afraid the problem is that, if there is a danger of duplication, it is in the Bill, which gives the Secretary of State power to define a prescribed aerodrome—in other words, the power to define which airports or, indeed, other operators will or will not be able to appeal. Our nervousness is about what criteria will be used.

The Minister may be right that it would over-complicate things to ask Ministers to replicate the decisions that could come from the Competition and Markets Authority, and to define narrowly in advance what being materially affected means in relation to a licence modification. However, I am not sure that it is unreasonable to say that, if the Government are going to take the power that the Bill gives them to prescribe who can and who cannot appeal in particular cases before we get to those cases, they should publish the kinds of criteria that they will use when making those decisions. That is what the amendment tries to get at.

I do not insist that amending the Bill is the only way of achieving that, but I hope the Minister will be able to reassure us by accepting that it is reasonable for us to ask the Government to publish at least the criteria they will use to decide which airports or other operators they prescribe and which they do not prescribe, without at this stage asking them to identify those airports or other operators.

[The Chair]

I take it that the hon. Gentleman seeks to withdraw the amendment.

[Richard Burden]

I was anticipating an intervention by the Minister.

[Mr Hayes]

The hon. Gentleman, being an experienced Member of the House, knows how to provoke an intervention, and he has done just that. The Bill and regulations will define who is eligible. We are clear about that. The CMA will apply the test. As he said, those are separate functions, but I am inclined to agree with him that it is not unreasonable to make clear the criteria that he describes. I will think about how we can do it, but it is not necessary to do it in the Bill. He would not expect us to do that anyway, of course. I will reflect not on how we can establish the criteria, but on how we make them known. That seems perfectly reasonable, and I will go away and think about it.

[Richard Burden]

I am grateful to the Minister for that entirely spontaneous intervention. As ever, he has been very helpful. He has grasped what I was getting at. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Schedule 2 agreed to.

Clause 17 ordered to stand part of the Bill.

Schedules 3 and 4 agreed to.

Clause 18

Air travel organisers’ licences

[Richard Burden]

I beg to move amendment 22, in clause 18, page 13, line 20, at end insert—

“(4) The Government must publish a review within one year of this Act receiving Royal Assent the impact on UK consumers using EU-based companies affected by changes to consumer protection introduced by this section.”

This amendment requires the Government to regularly review the impact of the new regulation to ensure that it is working and not adversely affecting UK consumers using EU-based companies.

We moved from cars to licence modifications for NATS and its relationship with the Civil Aviation Authority, and we now move seamlessly to the air travel organisers’ licence. Essentially, the clause will update ATOL to ensure that it is harmonised with the 2015 EU package travel directive. As with other parts of the Bill, many of the changes that this part of the Bill envisages will be covered in regulations, but broadly it will extend ATOL to a wider range of holidays and protect more consumers.

UK travel companies, we are told, will be able to sell more seamlessly across Europe, as they will need to comply with protection based not in the country of sale but the country in which they are established. Those are the objectives that the Government seek to achieve. As with other parts of the Bill, there is no difference of principle between the Government and the Opposition on this matter. Indeed, it is a result of that package travel directive that it has been necessary to put such a provision in the Bill. However, we seek clarification on some issues, which is why I tabled amendment 22.

--- Later in debate ---

[Alan Brown]

I support the hon. Gentleman’s principle. The amendment states:

“The Government must publish a review within one year”

of Royal Assent, but the explanatory statement says that the Government must “regularly review the impact”. By stating only that there must be a review within one year, that is asking for only one review. As we move into the post-Brexit world, would a review after one year be appropriate? We may need to look at the wider consequences as we go forward.

[Richard Burden]

The hon. Gentleman is right that the amendment talks about a year, which is because we want to get that ball rolling. As with so many other things, the environment is changing—that is particularly the case in relation to Brexit. ATOL will still be there post-Brexit, although when we discuss the next group of amendments we may explore possible changes.

The package travel directive will no doubt still be there for the states that are still members of the European Union. What is uncertain at this stage is what the interface will be between those two things post-Brexit. The Government must address that. As I said, we ask them to get the ball rolling within a year of the Bill receiving Royal Assent, but the hon. Gentleman is right about the need for regular review, particularly in the light of Brexit.

[Mr Hayes]

There are many reasons to be proud to be British and to be subjects of the United Kingdom—I think all members of the Committee would agree with that. One of them is that we have done rather well in respect of protecting those who book holidays. The regime we have developed over a long time has afforded considerable protection to people who book holidays and then, through no fault of their own, find themselves in some difficulty. There is nothing worse than a much hoped for and anticipated holiday being spoilt by an eventuality over which one has no control.

However, it is important that we also recognise that the way in which people book holidays is changing. Essentially, the purpose of this part of the Bill, and the consultation that preceded it, is to bring the arrangements up to date, to take account of those different patterns of behaviour and those different business models. The hon. Member for Birmingham, Northfield is right to probe these matters in the way he has, because although we have consulted widely—I will refer to the consultation in my response—we are making changes that will have an important impact; otherwise, we would not be making them. It is essential that we do so with care.

I fully support the purpose of the amendment. Indeed, the relative level of protection offered by European economic area-based companies was one of the concerns about which the Government sought views in the consultation. Our conclusion was similar to that expressed by John de Vial of ABTA in the evidence session. Members of the Committee will remember that he drew attention to the issues that we have begun to consider, namely that the changes proposed through the package travel directive will improve the position for UK consumers. That directive will raise the bar across the board, which he said

“can only be a good thing.”––[Official Report, Vehicle Technology and Aviation Public Bill Committee, 14 March 2017; c. 64, Q147.]

However, I fully agree with the sentiment of the hon. Gentleman’s amendment that we must keep the situation under review.

It is fortunate, therefore, that the current legislative framework already requires the Government to review the impact of any regulation made under the Bill within five years of its being laid. I mentioned earlier in our consideration the Small Business, Enterprise and Employment Act 2015. It is one of the few Acts of Parliament that I did not take through Committee, and is notable for that fact alone. It is also an important protection of the kind sought by the hon. Member for Birmingham, Northfield. That Act requires the Government to conduct and publish reviews of any secondary legislation.

Perhaps the Committee will allow me to say one or two more things about the consultation that we have conducted. Consultation documents are available to the Committee—both the consultation and the Government response; but I shall highlight one or two aspects of it. We held a number of workshops to seek views, and they were attended by a large number of insurers, airlines, online travel agents, credit card and transaction systems operators, accredited trade bodies and consumer groups. I shall not read out the list of consultees as it is very long, but it includes all the relevant people that one might expect, from consumer groups, business organisations, airlines, travel organisations and so on.

One of the key considerations was the protection, Europe-wide and beyond—worldwide—for travellers. Given the consultation, we asked questions of the kind that the hon. Member for Birmingham, Northfield has put, and received the encouraging view from consultees that it was very important to move the scope of ATOL protection from a place of sale to a place of establishment. That is to reflect the change I have described in the way in which holidays are sold and, therefore, the way in which they are bought. It is important to update the regulations, which means continuing to review them in the way the hon. Gentleman set out. It may be that the change is a trend change, and the way people book holidays will continue to alter over time. I personally—rather like you, I suspect, Mr Gray, although I do not know—go along to my Co-op travel agent in Spalding and book my holiday by conventional means. I find that most satisfactory; but there are people who prefer a more modern approach to these things, and, while modernity is not always to be recommended, it is, however sadly I say it, a reality. As a Minister, I have to deal in reality, whereas in my private life I can indulge in all kinds of magic.

Moving quickly from magic to fact, we will continue to review things as the market develops, in precisely the way the hon. Member for Birmingham, Northfield has recommended to the Committee. It is worth noting that these changes will come into effect across Europe only from 1 July 2018, which, 12 months after Royal Assent, will mean that at most we will have seen only nine months for the changes to take effect. I doubt whether any significant volume of people will have bought holidays from EU-based companies over that time. Most companies will be very likely to stay within local arrangements that their consumers know, at least for the time being—because, of course, the reason I go along to the Co-operative travel agent is that I know and trust it, and most people who are booking holidays want that kind of reassurance.

Those who do, however, want to take advantage of flexibility, will be likely to take time to assess how the new arrangements bed down before they change their own practice. Given those uncertainties about pace and scale, which will of course only be added to by what we do not yet know about the outcome of Brexit negotiations, I suggest a flexible timetable for further review; five years seems appropriate, which is why the Government are legislating accordingly. That is also what we are currently in the process of for the 2012 changes, by the way, because we are now considering a set of changes that were obviously made in 2012.

--- Later in debate ---

[Mr Hayes]

Mr Gray, I will try to respond in certainly no more than seven minutes, and ideally in less time.

Consumers are clearly a priority for the Government. In December 2016 the Secretary of State for Business, Energy and Industrial Strategy chaired a roundtable of representatives of a range of consumer bodies, charities and academics to discuss, among other issues, the impact of EU exit on consumers. As I said at the outset of this short debate, British consumers enjoy strong protections, and there is an effective consumer regime to help them to get the best deal. Sometimes markets fail and competition is not strong and consumers suffer, and it is important that the Government do not hesitate to step in and strengthen competition and/or protect those affected. In that regard, there is absolute clarity in my mind about the purpose—and, by the way, the efficacy—of the Government. It has now become fashionable—once again, thank goodness—to recognise that Government can do good. That is something I have always known and believed, and it is now back in fashion, as are so many of my long-held views.

So why is the legislation needed? The new travel package directive, which was published in December 2015, was introduced to ensure that consumer protection kept pace with modern travel habits and the modern market. The UK Government will need to transpose it into UK law before 1 January 2018. Primary legislation is needed to amend the powers of the Civil Aviation Act 1982 to update the ATOL scheme and align it with changes to UK and EU regulations, but a perfectly reasonable question, as asked by the hon. Member for Wolverhampton South West, is: how is all that affected by Brexit?

Until the negotiations are complete we, of course, remain a member of the European Union. The new EU package travel directive was agreed, as I said, in 2015. The measures in the Bill will ensure that the ATOL regulations and the revised package travel regulations are properly aligned in the short term, but retain the ability to adapt the scheme when the UK leaves the EU. In any event, the Government believe that the changes brought about by the new directive will have a positive impact on UK businesses and consumers, raising consumer protection standards across the EEA. That view was reflected in the consultation, with the majority of correspondents believing that the proposals will allow greater harmonisation of protection against the European market, which will ultimately benefit the consumer and businesses. To put it bluntly, I think that this is an example of where something has been agreed across the European Union for good reason and with good purpose. Although I cannot anticipate the negotiations, my view is that incorporating the provisions into British law will provide a baseline of support, which we would hesitate in any way to undermine.

I hope that I have satisfied all members of the Committee about the Government’s absolute determination to protect the interests of the consumer and to make the regulations fit for purpose in the modern age.

[Richard Burden]

Although the Committee might be remembered for the term “The Hayes hook-up”, it certainly will not be remembered for referring to the Minister as “Skyscanner Hayes”.

The Minister has spotted the inadequacy in the amendment, regarding the request for a review after one year. The timeframe is out of kilter because of when the package travel directive comes in and the Bill receives Royal Assent. On that basis, I will not press the amendment to a vote, but there are still issues that the Government need to consider. I am grateful to the Minister for committing to a review of the provisions. I am pleased about that, but the fact is that none of us really knows what the impact of Brexit will be.