Air Travel Organisers’ Licensing

Simon Burns Excerpts

Thursday 22nd November 2012 Westminster Hall

[The Minister of State, Department for Transport (Mr Simon Burns)]

It is a pleasure to serve under your chairmanship, Mr Williams, and I am pleased that the Transport Committee has secured this debate on a very important subject.

Before I get to the detail of the points that have been raised and of the Government’s approach, both to the Committee’s report and in terms of our response to the recommendations, I must make an abject apology—not only to you, Mr Williams, but to the hon. Member for Liverpool, Riverside (Mrs Ellman); to the shadow Minister, the hon. Member for Poplar and Limehouse (Jim Fitzpatrick); and to others who have come to the debate—for the fact that I turned up late.

I was under the impression—totally wrongly, as it happens—that the debate would start at half-past 2, and I had planned on that basis. What had not been taken into account was the fact that we have, of course, modernised our hours since the middle of October and that debate starts at 1.30.

I am very, very sorry about that. I am furious with myself that I have been discourteous to the Transport Committee and to the Chamber. I can guarantee you, Mr Williams, that this will never happen again, as it affects me, and I hope that, in that spirit, you and hon. Members will accept my apology. There is no excuse whatever.

[Mrs Ellman]

I completely accept the Minister’s apology. At times, we all get caught out by changes in the timetable. Until relatively recently, I thought the debate was at 2.30, then I discovered that it was to start at 1.30. It is perfectly understandable.

[Mr Burns]

I am extremely grateful to the hon. Lady, who is being remarkably generous in the circumstances. Although I appreciate her kindness, there is no excuse for what has happened. I should have been here at 1.30, but I do thank her.

It is clear that the hon. Lady’s Committee has taken a keen interest in ATOL reform and I am glad to have the opportunity to discuss it further following the Committee’s report, which was published in April. Since the Committee reported on ATOL reform, significant changes to the scheme have come into effect that have greatly improved its functioning. Reform of the ATOL scheme is necessary to increase consumer clarity, ensure its efficient functioning and, in the longer term, put it on a self-sustaining financial basis.

On 30 April, the same day as the Committee’s report was published, the Civil Aviation (Air Travel Organisers’ Licensing) Regulations 2012 came into force, bringing flight-plus holidays into the scope of the ATOL scheme. A flight-plus holiday is one where the consumer requests to book a flight and accommodation or car hire within a two-day period. That change gives consumers greater clarity and covers many more people. It means that, essentially, if one buys something from a travel agent or tour operator that looks like a package holiday, including a flight, one should be protected by ATOL.

The Civil Aviation Authority has reported that in 2012-13, 2.5 million more holidaymakers can be covered, thanks to that single change. The flight-plus reform has enjoyed broad support from industry, consumer groups and other stakeholders. As the Committee and our analysis have suggested, it is critical that consumers are aware of their coverage. Flight-plus has gone a long way towards clarifying the ATOL scheme and reducing the chances of consumers mistakenly thinking that they are covered, but further to address that, on 1 October, we introduced the ATOL certificate, which is a standardised document given to every person booking an ATOL-covered holiday. It sets out the coverage and says what to do if things go wrong.

The introduction of the ATOL certificate has been widely welcomed by the travel industry and consumer groups alike. On its launch, it received favourable coverage in the travel industry and national press. The travel trade has worked hard to get ready for all the ATOL reforms, and I applaud its efforts to do so. The CAA has also done a very good job in supporting the travel trade in its preparations. Receiving the ATOL certificate shows that holidaymakers and travellers are covered; equally, not receiving an ATOL certificate with a booking indicates that people are not covered. It removes any uncertainty and gives holidaymakers and travellers peace of mind.

To make the changes effective, the holiday-buying public must be aware of them. To that end, the CAA is preparing for a publicity campaign in the next few months to increase awareness of the changes. Fortunately, that will coincide with a significant period when people are preparing for and buying their summer holidays, immediately after Christmas. That is a relevant and appropriate time to start getting the message across.

We are pleased with what we have achieved with the ATOL scheme thus far. It goes a long way towards addressing a number of the points in the report. We intend to address some of the remaining issues in the ATOL scheme using new powers in the Civil Aviation Bill, which completed its progress through Parliament earlier this week and will receive Royal Assent in due course.

[Jim Fitzpatrick]

I hope that the Minister will forgive me if I have missed this point in his comments, and if he has not covered it, perhaps he will do so.

We referred to the fact that the percentage of holidays covered by ATOL is falling because of the different ways in which people book their holidays. The figure was 98% in 1992, but it is down to below 40%. Will the Minister tell us the percentage of holidays covered by the current scheme and the estimate of the number that will be covered following the reforms that he has introduced and the amendments made to the Bill? How much of a gap will there be?

Will the Minister be looking to address that gap, which we need to close, when he undertakes consultation in the spring, although we will never get to 100%, because some people will always book their own holiday and do their own thing? Will he give us those answers at some point?

[Mr Burns]

I am extremely grateful to the hon. Gentleman, and I will certainly come back to him because I also want to deal with a number of points raised by the hon. Member for Liverpool, Riverside.

Before the hon. Gentleman’s valid intervention, I was about to say that we are pleased with the achievements that the ATOL scheme has so far realised. We believe that they go a long way to addressing a number of the points in the report. We intend to address some of the remaining issues in the ATOL scheme using the new powers in the Bill. For example, holidays sold by airlines are not required to be ATOL protected. That creates a regulatory inequality and potential confusion for holidaymakers. It is important to have a consistent regulatory framework for businesses selling holidays, including a flight, as far as is consistent with EU law.

Further, some consumers are not protected when buying a holiday because that holiday was procured on an “agent for the consumer” basis. That means that, rather than selling a holiday to the consumer, the travel agent technically buys one on the consumer’s behalf, as we discussed on Tuesday in the main Chamber, which means that it is outside the scope of the current ATOL scheme. The powers in the Bill will allow that method of avoiding the scheme to be removed.

Some companies might claim that they are merely facilitating a purchase of a flight, but neither buy on the consumer’s behalf nor make available or sell flight accommodation to them. Thus, they might argue that they are outside the scope of the ATOL scheme. That business practice is a potential avoidance approach. The Bill will give my right hon. Friend the Secretary of State powers to require such businesses to hold an ATOL licence.

The Bill is awaiting Royal Assent. Our intention is to create a level competitive playing field and to avoid holidaymakers mistakenly thinking that they have protection when they do not. Holidays including a flight that look like package holidays should be protected like package holidays under the ATOL scheme. These further reforms will go a long way towards ensuring that.

Of course, before taking further steps, we will consult widely. Subject to parliamentary processes, we expect to produce an impact assessment and launch a consultation on draft regulations in 2013. Our decisions will be based on the outcome of that consultation.

[Mrs Ellman]

I am reassured by the information that the right hon. Gentleman is now giving us, but can he say when he anticipates that a new scheme or the new regulations will be operational?

[Mr Burns]

I would very much like to do so, but that would give too many hostages to fortune at this stage, because, as I said, we are going to base our decisions on the outcome of consultations. The consultations will be on draft regulations. Obviously, that is a due process, with time scales. Once we have had a consultation, we will have to consider fully the responses to it and any lessons that we may learn from it—any points that arise. Therefore, I hesitate to give a precise timetable that I could be held to, because often, for the best reasons and intentions, one does not keep to a precise timetable, which then leads to further problems. However, I can assure the hon. Lady that we are determined to do this because we want to get protection for those who deserve and should have protection. We want to get it right, effective and appropriate, and we will do it without cutting corners as soon as it is practically possible to do so.

Let me return to the intervention from the hon. Member for Poplar and Limehouse about the figures. This information may be helpful to him. As I understand it, ATOL coverage is now at about 50% for leisure trips abroad by air. We expect flight-plus reforms to increase that to 55%. No estimate has been made at this stage of further increases from reforms that will be made by the Civil Aviation Bill. However, we expect that to be included in the consultations next year, so that when we move forward with our precise proposals to tackle these problems, we may be in a better position to upgrade the second of the figures that I gave the hon. Gentleman and anticipate the increase in the coverage percentage as a result of the proposals that we will bring forward. I hope that that was of some help to the hon. Gentleman.

[Jim Fitzpatrick]

I appreciate the statistics that the Minister has just cited. I confess to being a little surprised that, with the advent of flight-plus, the protection goes only to 55% of people travelling abroad on holiday. I am not pointing the finger at anyone and saying that they are responsible for that, but it shows the size of the problem facing the Government, because the other 45% of travellers are the ones the Government will have to pick up the tab for if they need emergency flights to get them home. Those are the people the taxpayer wants to ensure are paying some insurance cover for themselves.

[Mr Burns]

I can understand the hon. Gentleman’s point. I think, though, that, up to a point the relatively small increase in the coverage reflects the fact that the number of people who buy a package holiday in the conventional sense is far greater than the number of people who will buy a flight-plus plan. I think that that is one of the main reasons for the relatively small increase in the percentage.

On ATOL and our proposals, our aim—from the actions that we have already taken and those that will flow from the Civil Aviation Bill—is to provide clarity about coverage rather than to protect everyone. The ATOL certificate will help to show consumers when they are or are not covered. They can then decide what level of protection they purchase through insurance or by paying by credit card, which is an element of the protection in the scheme. The scheme will give greater clarity to individuals before they decide what to purchase.

[Jim Fitzpatrick]

One point referred to earlier is the consumer’s awareness of whether what they purchase is ATOL-protected. That is a huge issue, because the more that people realise they are uninsured or unprotected, the more likely they are to think about that and to decide that it is worth the £2.50, as it currently is, to protect their family and themselves against anything that might happen, and with which they may not be familiar.

The Minister may not be able to respond on this now, but in due course, when the CAA launches the extended scheme, will it seek the biggest possible buy-in, particularly from the companies that offer protection, to have as much publicity as possible? That would raise the awareness of consumers, and allow companies engaged in the scheme to point the finger at those that are not, and say to people, “If you go with them, you are not covered; if you come with us, you are.”

[Mr Burns]

The hon. Gentleman makes an extremely valid point. For any scheme, a crucial element, apart from its effectiveness, is people’s understanding and knowledge of what they may—or, more importantly, may not—have protection against.

I have every confidence that companies, whether tour operators or airlines, will do all they can to make potential customers aware that they are covered by the scheme, because that is a positive selling point for customers and gives them peace of mind. However, as I said earlier, the CAA will also publicise the scheme proactively to ensure that people are generally aware of their protections if they make purchases from those covered by the scheme or from those who, in due course, will be brought within its ambit through our use of the powers contained in the Civil Aviation Bill.

It will become part of people’s mindset that the protection exists, and they will want to know whether they are protected because of the possible implications if they are not. This is slightly off the subject, so I will keep the comments brief, but that is like people going abroad under their own initiative, who may not get the health card for the reciprocal health arrangements in Europe if they travel there, or private health insurance if they travel further afield—to the United States or wherever—although, if they are taken ill or have an accident and need medical treatment, they will face catastrophic bills that could, for instance, completely change their family’s financial position.

The more publicity there is and the more that people are aware of what the situation is and what protections they have, the more the consumer will be interested and concerned to find out exactly what they are buying.

[Mrs Ellman]

Does the Minister know when the CAA intends to embark on the advertising and the promotion of information? Will the CAA do that with the industry itself, and will the advertising relate to the consumer needs that we have already identified? One feature that has been constant, certainly over the many years that the Committee and people elsewhere have looked at the issue, is the confusion in the customer’s mind about whether they are insured, and about what they are covered for and when.

[Mr Burns]

I am grateful to the hon. Lady for that intervention, because it raises an important issue. As I said earlier, we expect the campaign to be launched by the CAA immediately after Christmas. That is when many people consider purchasing holidays for the summer, so it will be relevant at that time. It will seek to make people aware not only of the ATOL scheme—for those who are not aware of it, and I fear that many are not or do not fully understand what it is—but of the changes and improvements made during this year. It will also provide clarity, so that the message gets across to those who are purchasing a holiday, flights or whatever, that as well as looking for value for money and so on, they should check whether their purchase is ATOL-protected and what that protection means.

[Jim Fitzpatrick]

I was going to ask the Minister another question but, if I may, I will ask him a supplementary to the one from my hon. Friend the Member for Liverpool, Riverside.

The Minister has said that the CAA is looking to start advertising in the new year. We all know that summer holidays start being advertised on Boxing day. That is the sort of time when people are indoors and when those who work have a few days off, and they will be tempted by the adverts on the TV. That is the time for the industry to advertise. My hon. Friend asked whether the CAA will be engaged with the industry. An imprimatur on adverts—that they are CAA-approved—might be the way to co-ordinate the publicity campaign between the industry, which will have greater buy-in from the customer, and the CAA, which might have their future bills reduced.

I wanted to ask about the Minister’s earlier comment on people not taking out private health insurance, for example, when they go to the United States. Most people know that if anything happens to them there, they face a massive health bill, and I think that most people therefore take out private insurance. Are there any figures for the comparison between the number of those who travel to such difficult places and the 50% to 55%, who the Minister says are ATOL-protected against the collapse of their airline?

[Mr Burns]

On the last point, to the best of my knowledge, there are no figures, and I suspect that, by their nature, it would be difficult to find any accurate figures. However, there is one benefit. The hon. Gentleman talks about the north Atlantic route, on which the two main carriers are British Airways and Virgin. At the moment, they have both voluntarily signed up, so their passengers have the protections. They have done that simply because they want to give such protection to their customers, and I pay tribute to them for doing so voluntarily.

As the hon. Gentleman rightly says, the start of the advertising campaign is intended to coincide with the Boxing day bank holiday. He and I are familiar with the huge number of adverts that traditionally emanate immediately after breakfast on that day.

On whether the CAA will consult the industry, I have no doubt that it will. The CAA wants a focused system of advertising that gets across the message. It is open, as the Government are, to views, opinions and recommendations that will help it come up with the most informative and best advertising, and with maximum coverage for their message.

I am not sure that I altogether have the same faith as the hon. Gentleman in human nature. Although, to the best of my knowledge, no figures can prove or disprove this, I suspect that significantly more people do not bother to get health insurance to go across the Atlantic than either of us might think, particularly those who go for only a short period and try to wing it, believing that nothing will happen to them. However, that is a slightly different point.

Let me now move on to the European angle that the report covered. The Committee called for a clearer distinction between the consumer protection and the repatriation functions of ATOL. Much depends, however, on what happens at the European level with the planned reforms of the package travel directive. The ATOL scheme implements in part the PTD requirement for insolvency protection for consumers. We expect the Commission to announce its reform proposals in spring 2013, and the Government will consult on what position the UK should take. The form of the Commission’s proposals will help determine how we implement further changes to the ATOL scheme, so we will not consult on the new ATOL regulations until the Commission has announced its proposals, because, as both the hon. Lady and the hon. Member for Poplar and Limehouse will accept, it would be rather pointless to put the cart before the horse.

The scheme is financed by the air travel trust fund. For historic reasons, the ATTF has a deficit and requires a commercial borrowing facility, backed by my Department, of up to £20 million. The introduction of the ATOL protection contribution and the increased number of protected passengers have, thanks to our recent reforms, brought more money into the fund, and the deficit now is on track to being eliminated in the next year or so. That presents an opportunity to reform the finances of the ATOL scheme.

The Government will consider broader changes to the scheme and invite comments on its funding and management to ensure its continued effectiveness. Our aim is to ensure that the scheme is equitable for consumers, the travel industry and the taxpayer.

The hon. Lady raised a number of matters during her contribution. On some, for the reasons that she is aware of and that I am acutely aware of, I will have to write to her to give her the answers. She asked whether airlines and tour operators based in other countries will be covered by the scheme. All sales of package holidays in the EU are covered by the protections in the PTD, but under EU law we cannot require airlines or tour operators established in a European economic area state, other than in the UK, to have an ATOL licence to protect sales of flight plus holidays. That is why we want to examine the Commission’s proposed reforms to the PTD before consulting on any new ATOL regulations, as that might extend protection to all or some flight- plus type holidays. We want to understand the impact on UK airlines and other businesses as part of that consultation, and, as I say, we will engage in that once the Commission has published its proposals.

The hon. Lady also asked about the discussions on travel insurance between the EU and the Government. All I can say is that they are ongoing. The most appropriate time to discuss them is within the whole consultation process on the PTD in due course next year.

In conclusion, as might be clear by now, ATOL reform is not a simple process, but at each step of the way, the Government have acted to create an effective and financially self-sustaining scheme. To ensure effective protection for travellers and holidaymakers, the Government have increased the extent of coverage, improved consumer clarity and moved to bring more holidays into the scope of the ATOL scheme. We shall keep the principle of effective protection in mind as we consider further changes to the ATOL scheme in the near future.

Once again, I thank the Transport Committee for its constructive comments and I am glad to have had the opportunity to debate this important issue. Again, I offer my sincere and deepest apologies to the members of the Committee for the position that I put them in at the beginning of the debate.

Transport

Simon Burns Excerpts

Tuesday 20th November 2012 Ministerial Corrections

[Maria Eagle]

To ask the Secretary of State for Transport for how many hours work Eversheds LLP charged his Department in respect of work relating to the West Coast Mainline franchise; and at what hourly rate.

[Official Report, 17 October 2012, Vol. 551, c. 338W.]

Letter of correction from Simon Burns:

An error has been identified in the written answer given to the hon. Member for Garston and Halewood (Maria Eagle) on 17 October 2012.

The full answer given was as follows:

[Mr Simon Burns]

In total, Eversheds LLP charged the Department for 420 hours work relating to the Intercity West Coast franchise competition. For reasons of commercial confidentiality, we are unable to disclose the hourly rates that were charged.

The correct answer should have been:

[Mr Simon Burns]

In total, Eversheds LLP charged the Department for 1,164 hours work relating to the Intercity West Coast franchise competition. For reasons of commercial confidentiality, we are unable to disclose the hourly rates that were charged.

Civil Aviation Bill

Simon Burns Excerpts

Tuesday 20th November 2012 Commons Chamber

[The Minister of State, Department for Transport (Mr Simon Burns)]

I beg to move, That this House agrees with Lords amendment 1.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss Lords amendments 2 to 72.

[Mr Burns]

In an increasingly globalised world, air travel is fundamental to the long-term competitiveness of the United Kingdom. However, much of the legislation that governs aviation dates from the 1980s, and it is therefore imperative for the legislative framework to be brought up to date. The Civil Aviation Bill introduces, and makes possible, reform in four key areas: the economic regulation of airports, the legislative framework of the Civil Aviation Authority, the air travel organisers’ licence scheme, and aviation security. The Bill has secured wide support, and we have worked hard to address issues that have raised concern in this House, in another place, or in the industry.

The vast majority of the amendments made since the Bill was last in this House are minor and technical, including Lords amendments 23 to 27, 29 to 36 and 44 to 71. I shall refrain from entering too deeply into the details of those amendments at this stage; suffice it to say that they are predominantly concerned with improving the drafting, clarifying the wording, removing areas of ambiguity, or excluding doubt to ensure that our policy intentions are properly met and delivered in full.

Let me deal briefly with three notable issues on which amendments have been agreed in another place: the imposition of environmental duties on the CAA, the efficiency of the CAA, and the Secretary of State’s powers to make regulations relating to the ATOL scheme.

The environmental impact of aviation has been raised during the Bill’s passage through both Houses, and the Government take it very seriously. In particular, there has been a great deal of focus on giving the CAA additional duties to take account of it. Lords amendments 1 to 4 respond to that concern by giving the CAA a supplementary environmental duty to which it must have regard in performing its airport economic regulation functions. The amendments are intended to make it clear that in conducting those functions, the CAA must have regard to the ability of the regulated airport operator to take reasonable measures to reduce, control or mitigate adverse environmental effects that are generated by the activity of the airport—and aircraft using the airport—to which the licence relates. For example, a reasonable measure could be a cost-effective energy saving investment project, such as the installation of solar-powered lighting in terminal buildings, which would lower the airport’s future energy costs. Environmental issues in this context would include noise, vibration, emissions and the effects of works carried out at the airport. The amendments also provide clarity that reasonable costs of environmental measures undertaken by licence holders may continue to be taken into account in the regulatory settlement, where the measures are in the interests of passengers and owners of cargo and to do with the provision of airport operation services.

We have always been clear that airport operators, whether or not they are subject to economic regulation, should be able to invest in appropriate environmental measures. For example, if an unregulated airport undertakes investment in environmental measures that benefit passengers, the Civil Aviation Authority will be able to look to this and approve a reasonable similar investment in the regulatory settlement at a regulated airport.

The Government do not believe that the absence of an environmental supplementary duty would prevent the CAA from approving environmental investment where that is in passengers’ and cargo owners’ interests. However, following detailed consideration of the matter, the Government decided there is a benefit to making this clear in the Bill. Certainly, the Bill should not be seen as placing a restriction on investment in environmental measures at licensed airports where they benefit passengers and freight owners in the provision of airport operation services.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

I am sure departmental officials will have briefed the Minister that we debated at length in Committee whether an environmental duty should be placed on the CAA in respect of the operation of airports. There was a subsequent debate about the suggestion of the Minister’s predecessor, the right hon. Member for Chipping Barnet (Mrs Villiers), that such a measure would apply only to Heathrow. There is therefore a debate to be had about whether the environmental duty should cover all airports, or just Heathrow. Will the Minister confirm that the proposed CAA environmental duty that the Government have accepted will operate across the entire aviation industry?

[Mr Burns]

The hon. Gentleman is right: I have been extremely well briefed by some excellent civil servants, who have had to play catch-up, because I am a Johnny-come-lately to this debate as a result of the events of 4 September this year. I confirm that this duty will apply not just to Heathrow, but also to the other regulated airports of Gatwick and Stansted. I hope that reassures him.

A regulated airport should not be required to spend on environmental measures where a competitive airport would not do so, because that could create market distortions by placing greater burdens on regulated airports than non-regulated airports. Furthermore, not only have the Government sought to address these concerns through their own amendments, but on Report in another place Opposition amendments to the proposed Government amendments strengthening the wording of this duty were also accepted. I hope the House will recognise that as a genuine effort to reach an agreed position on including appropriate environmental considerations in the Bill. We are confident that we have struck the right balance on the environment, and that the CAA will be better placed than ever before to take environmental matters seriously.

On CAA efficiency, we agree with industry stakeholders that it is important to hold the CAA to account. There are a number of provisions in existing legislation that require the CAA to carry out its activities efficiently. Lords amendment 22 inserts a new clause that will provide for greater transparency and accountability in the CAA’s efficiency measures. Section 21(3) of the Civil Aviation Act 1982 already requires the Secretary of State to lay before each House of Parliament a copy of the CAA’s annual report on its performance and its functions in that accounting year. If Lords amendment 22 is accepted, in future this annual report laid in each House will include an efficiency statement by the CAA and an assessment by the independent auditors of that efficiency statement. The provisions will give the CAA a further incentive to secure value for money and to be as efficient as possible in performing its functions. I am pleased to say that the amendment was welcomed in the other place, where the Opposition commended it, saying:

“This is an excellent proposal, which will guarantee that the efficiency of the CAA will be subject to scrutiny”.—[Official Report, House of Lords, 7 November 2012; Vol. 740, c. 1062.]

I hope that the new clause will enjoy a similar level of support in this House.

Lords amendments 17 to 20 provide the Secretary of State with further powers to close down potential ways around the ATOL scheme. The Secretary of State already has the power to regulate businesses that make available flight accommodation and, under clause 94 of the Bill as introduced, will have the power to regulate businesses acting as an agent for the consumer. However, after the Bill was introduced, the Government and the CAA found possible loopholes that needed to be addressed in further powers.

The first loophole concerns a potential business model whereby a business argues that it is neither making available flight accommodation nor acting for the consumer but is instead merely facilitating making available flight accommodation. That business could then argue that it is not in the scope of either the existing ATOL regulation-making power or those in the Bill as introduced. Lords amendments 17 and 18 address that loophole by giving the Secretary of State powers to include businesses that facilitate making available flight accommodation in the ATOL scheme.

Secondly, amendments 19 and 20 give further necessary clarity to the regulation-making power in instances where goods and services sold alongside flights, such as accommodation or car hire, can be protected under the ATOL scheme. By closing potential avoidance approaches, those four amendments will help the Government meet our stated objectives of providing greater clarity for consumers about what holidays and flights are included in the ATOL scheme as well as a more consistent regulatory framework for businesses.

I have dealt with the main substantive issues covered by the Lords amendments. The remaining amendments, as I alluded to, are the majority and are technical and drafting amendments that clarify issues so that there is no shadow of a doubt about the Bill’s intentions.

[Jim Fitzpatrick]

Like the Minister, we welcome the Bill and the Lords amendments. We supported much of the Bill in Committee and continue to do so today. This is my first opportunity to welcome the new Minister of State to his position and to face him across the Dispatch Box, so I wish him well in his new role. It is probably good to be meeting on relatively friendly terms on our first outing.

We are very pleased that the Government have accepted a number of amendments. In the other place, the noble Earl Attlee said:

“The noble Lord, Lord Davies of Oldham, is very insistent and persuasive. He is clearly convinced that his amendments will improve the Bill. My Bill team manager will probably kill me, but I can accept”.—[Official Report, House of Lords, 7 November 2012; Vol. 740, c. 1003.]

Clearly, I need to take advice and lessons from my noble Friend on how to be insistent and persuasive, because we tabled those amendments, a number of which were accepted in the other place, in Committee and raised the subject again on Third Reading. We were spectacularly unsuccessful in persuading the Government to accept a single amendment, so we obviously need to speak closely to our colleagues in the other place to see how they were able to secure agreement.

--- Later in debate ---

[John McDonnell (Hayes and Harlington) (Lab)]

There is not much more to say after that contribution, except that the key issues of noise and emissions pollution are absolutely critical to my constituents and, as the hon. Gentleman said, to a much wider area of the south-east. That is why I welcome the amendments, wherever they were drafted—I think forensics could prove where they come from.

The key issue for my constituents is how the targets will be set, monitored and reported. It would be useful if the Minister clarified what role this House will have in monitoring the implementation of this legislation. In the past we have received the CAA’s annual reports and individual determinations but, given that the legislation represents a significant break, I think that a regular report from the Secretary of State would be extremely useful, even if it was only an annual report. We could then have a full debate on the Floor of the House to monitor issues such as the environmental impact.

[Mr Simon Burns]

It might be helpful at this point if I reassure the hon. Gentleman that, as I said in my introductory remarks, there is and will continue to be an annual report from the CAA, and it will be up to this House to debate it, in a variety of shapes and forms, at any time it wishes.

[John McDonnell]

That is incredibly helpful. I encourage Members to join me in ensuring that we have that annual debate, which we have not had up to now. The legislation places duties not only on the CAA, but on the Secretary of State. Therefore, I think that it is important that we have an annual report from the Secretary of State on the fulfilment of his or her duties that we can debate, because this is a critical piece of legislation for so many of our constituents.

[Mr Burns]

I intend to speak very briefly and not to detain the House for long, because I understand that many hon. Members wish to contribute to the important debate that will follow. I will deal briefly with some of the issues raised by hon. Members because, as those aficionados who attended Second Reading and Committee will know, there has been a thorough debate and considerable engagement between those with differing views and opinions, not least in another place. [Interruption.] I will not get involved in the little squabble between the official Opposition and the hon. Member for Argyll and Bute (Mr Reid).

The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) mentioned the important matter of emissions. I do not want to get into an in-depth debate or to regurgitate what has already been said. On the question of the duty to work with others to meet the UK’s emissions targets, we believe that the Opposition amendments are unnecessary, as was pointed out in Committee and on Report. That is because, as he will accept, this Government and the CAA already take environmental matters very seriously, and the Government’s approach is to ensure that the aviation sector makes a significant and cost-effective contribution towards reducing global emissions. Moreover, the Opposition amendments were technically flawed, although I accept that that could have been remedied during the subsequent procedures in this House. We feel that our general approach, with the way in which we have listened to the arguments and the amendments that have been made, is the right way forward and that it gives the protections whereby the environmental issues will be taken very seriously.

--- Later in debate ---

[Jim Fitzpatrick]

rose—

[Mr Burns]

I am beginning to regret giving such a detailed response because it has invited an intervention, to which I am more than happy to give way.

[Jim Fitzpatrick]

I am grateful to the Minister. In the absence of the European emissions trading scheme and of an international agreement in the ICAO, but with ongoing dialogue, will the Government engage with the Committee on Climate Change to look at aviation and, for that matter, shipping emissions, because they are not incorporated in UK targets although people naturally feel that they are significant?

[Mr Burns]

We will engage wherever necessary to seek to reach solutions that are viable and will achieve the objectives set out, provided that they are the right course of action and the correct way forward.

Let me pick up the points made by the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Bury St Edmunds (Mr Ruffley), because I think that I dealt with the matter raised by the hon. Member for Hayes and Harlington (John McDonnell) in my intervention. [Interruption.] Well, I thought I did; I hope that he will be generous so that we can make progress. As the hon. Member for Strangford and my hon. Friend the Member for Bury St Edmunds will know, the context for dealing with the environmental issues surrounding Heathrow, Gatwick and Stansted, for example, are all fully dealt with in the Bill.

I felt at times that the hon. Member for Strangford was going a little further on to the wider issue of hub airport status. I have to say to him, in the nicest possible way, that that is obviously beyond the scope of this Bill. However, I hope that he will take reassurance from the fact that in order to look at the whole area of the future of aviation policy, to meet our commitments and to protect our position as the significant hub airport presence for western Europe, we have set up, under my right hon. Friend the Secretary of State, the Davies inquiry, which will look across the range at the best way forward on aviation policy, the best way to deal with capacity and connectivity issues—

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Will the Minister give way?

[Mr Burns]

No, because I really do want to make progress.

The inquiry will report in due course, and it would be extremely foolish of me to try to prejudge or anticipate it, but no doubt the hon. Member for Poplar and Limehouse will, if he so wishes, be prepared to contribute to it by submitting his views on issues that he clearly holds to be very important, as indeed they are.

In conclusion, as the hon. Gentleman has said, this process, which started with the Bill’s Second Reading in January, has involved friendly, vigorous and constructive engagement between the Government and the Opposition. I pay tribute to my predecessor, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), for the way in which she led on the Bill until the final prize was taken from her grasp and given to me. I also pay tribute to the hon. Gentleman and his colleague the hon. Member for Barrow and Furness (John Woodcock) for their constructive engagement in ensuring a strengthened and even better Bill at the end of the process than it was at the beginning. That is what Parliament is all about—making sure that we get the right answers to the questions posed. I think that the Bill as it was originally drafted was very good but, by listening and engaging, we have been able to strengthen it further, and this short debate has illustrated the co-operative way in which both sides have engaged in the process.

I could not finish without thanking those who are often the unsung heroes of the process of taking a Bill through Committee. Members in this House and the other place do not know their names and rarely see the hard work that they do day in, day out. They are, of course, the civil servants in the Department for Transport and its Bill team. They have worked extremely hard to ensure that our proceedings could go as smoothly as possible and that all the amendments were analysed properly, so that only those that merited it were accepted, even in modified form. I pay tribute to them and to all Members who have contributed so much to the Bill, both in this place and in another place, and I look forward to its becoming law, because it is badly needed to upgrade the existing legislation, which dates back to 1982.

Lords amendment 1 agreed to.

Lords amendments 2 to 7 agreed to.

Telford Rail Services

Simon Burns Excerpts

Monday 19th November 2012 Commons Chamber

[The Minister of State, Department for Transport (Mr Simon Burns)]

I congratulate the hon. Member for Telford (David Wright), not only on securing this debate but on the courteous and inimitable way in which he has made his case. He raised a number of important issues, and I will do my best to respond to them in the time available.

The hon. Gentleman is correct to say that Shropshire no longer has a direct service to London. Wrexham, Shropshire and Marylebone Railway provided a direct service from Shropshire to London and was—as the hon. Gentleman said—an open-access operator run as a commercial entity. Many of WSMR’s passengers were disappointed when Deutsche Bahn decided to stop those services. That was, of course, entirely a commercial decision for Deutsche Bahn, and not something in which the Government could intervene. I understand, however, that the decision was made on the basis that the service could not provide a return on investment, and that the operator had made considerable losses since it was launched in April 2008.

WSMR held track access rights to run services from Marylebone to Wrexham until December 2014. Once it stopped running those services, any operator—either passenger or freight—could have applied to the Office of Rail Regulation for the rights to run trains on those routes. Alternative services are provided by other rail companies, such as Virgin West Coast, London Midland and Chiltern Railways, which is also owned by Deutsche Bahn. It is worth noting that even with a change at Birmingham International, existing services on Virgin and Arriva Trains are up to half an hour quicker than WSMR services from London to Shrewsbury.

As I am sure the hon. Gentleman will appreciate, the cancelled west coast main line rail franchise is our top departmental priority at the moment, and I am truly grateful for the hon. Gentleman’s input to the wider debate. Clearly, serious mistakes have been made. I understand that the cancellation of the west coast competition came as a great disappointment to many passengers, and particularly to his constituents in Telford, given that First Group had stated publicly that it would introduce the direct services between Telford and London that the hon. Gentleman has spoken about.

As part of the two consultation exercises that the Department held on the inter-city west coast service, we received a number of representations about reintroducing direct services to Shropshire from London in the future. Although the Department did not specify a requirement for a direct service from Telford in the invitation to tender, we expected bidders to take account of consultation responses when developing their service proposals. All bidders therefore had the opportunity to propose enhanced services to Telford. However, the contents of bids are commercially confidential, and some bidders have chosen not to put details of their proposals in the public domain. I am therefore not in a position to confirm whether or not that was the case for the other shortlisted bidders, as it would be inappropriate and wrong for me to disclose what was in the confidential bids.

As the House knows, the Secretary of State has asked for two reviews of the west coast main line franchise process. The first, led by Sam Laidlaw, is examining the events that led to the cancellation of the ICWC franchise on 3 October. An interim report from Mr Laidlaw setting out what went wrong, and his initial thinking on why it went wrong, was published on 29 October. His final report is due at the end of this month.

The second review of the wider rail franchising programme—by Eurostar chairman Richard Brown—is due by the end of this year. Decisions on the timing and nature of competitions for future franchises will be taken once we receive Richard Brown’s report, so it would be wrong to speculate on his findings at this stage, including the implications for any services to and from Telford.

Obviously, we must learn lessons from the reviews and will need to run a new competition for the west coast franchise. The Government are fully committed to a franchising system that delivers for both the taxpayer and the fare payer, with private sector investment and innovation helping to drive the improvements and value that passengers deserve. We want that to happen as quickly as possible, but we want to get it right, which will take some time. I hope that the hon. Gentleman will therefore forgive me for not speculating about the Laidlaw and Brown reviews today, but I should like to reassure him that we will continue to keep the House informed of all developments, as we have done so far.

As I have said, although the cancelled ICWC competition did not have a direct service to Shropshire included in the specification, I can assure the hon. Gentleman that, when we are in a position to restart the bid, he will have an opportunity to make the case on behalf of his constituents.

A future west coast operator would also need to consider rolling stock for services. Unlike the majority of the network covered by the west coast franchise, the line to Shrewsbury via Telford is not electrified, meaning that any direct services would need to use more expensive diesel trains rather than today’s Pendolino trains. The House will recall that the coalition Government reaffirmed our commitment to a rolling programme of electrification of the rail network when we announced the latest phase of our investment programme in the summer, which will see more than £9.4 billion invested from 2014 to 2019 to deliver a greener, more cost-efficient railway that is better for freight and for passengers. This comprehensive investment programme represents the largest and most ambitious modernisation of our railways since the Victorian era. It includes an electric spine route running from the south coast to the east midlands, and a massive improvement of services in south Wales. I expect future phases of the programme to extend electrification even further. The lines serving Telford and Shropshire might well be a route that is considered.

Telford currently has two services an hour to Wolverhampton and Birmingham—there are slightly more in the peak hours—one of which is the fast service travelling direct to Wolverhampton before calling at Smethwick Galton Bridge for the interchange with Snow Hill line services, which go on to Birmingham New Street. The other service is the stopping service. I am aware that the existing services are very popular, although I am afraid I cannot promise to mandate new services at the moment. That said, nothing in the franchise agreements prevents operators from putting on additional services if there is sufficient passenger demand. The Department would be happy to look at any proposal that would mean that that happened. However, operators would want to reassure themselves that any new services were commercially viable, and that appropriate rolling stock was available, before they considered implementing new services. As with direct services to London, I expect that bidders for the next west coast franchise will want to look carefully at that to see whether such an opportunity exists.

The hon. Gentleman mentioned existing services and cited the example of an elderly gentleman who had to stand on his journey to Telford. I have considerable sympathy with him. I believe it is important that we have enough capacity on trains on the existing service to minimise such situations. I fully appreciate that travelling on a crowded train is not ideal, and I am sure the hon. Gentleman agrees. Clearly, in some places, railways are the victims of their own success, with more people travelling on the rail network than ever before—I am talking not just about the Telford line, but about the whole of England and Wales.

Although I am not able to promise more capacity in Telford, I can assure the hon. Gentleman that the Government are facing up to the issue of capacity across the network. For example, the west midlands will soon benefit from 40 new rail carriages that have been ordered and are expected to come into service in 2014, strengthening a number of different services on the London Midland network. Although the Shropshire line through Telford is not planned to be a direct recipient of that additional capacity in this phase, this is a rolling programme targeting the most crowded sections of the network. I give the hon. Gentleman the assurance that we will keep the train situation in his constituency under review.

It is important that existing services operate reliably, and I seek to reassure the hon. Gentleman. London Midland, for example, has faced driver shortages in recent weeks. That has affected passengers on its network, including on the Shropshire line. We take that problem very seriously indeed and are working closely with London Midland to address it so that we can reduce the sort of incidents and situations that have arisen on the line, causing problems for the hon. Gentleman’s constituents and those of other hon. Members in recent weeks.

I thank the hon. Gentleman for his kind words on the investment at Telford station, which is being delivered as part of the national stations improvement programme. It is a reflection on the hon. Gentleman that he is prepared, in a debate of this nature, to be generous in recognising what is going on in his constituency, and the improvements that are being made to benefit his constituents. As he will appreciate, the national stations improvement programme has made a total of £150 million available over five years to improve passenger facilities at busy stations in England and Wales that the public have identified as not up to scratch.

The choice of schemes, as the hon. Gentleman will be aware, has been managed at a local level with Network Rail and train operating companies working together to agree the most efficient way to deliver the upgrades. As the hon. Gentleman alluded to in his comments, Telford was one of more than 240 stations to benefit from the programmes so far. It is now nearing completion and has been a good example of that co-operative work. It shows that through continued investment in stations across the network—nearly £1 million on the project in Telford alone—we can make a real difference to the passenger experience. Although the programme at Telford has suffered some setbacks during its course, I believe that when the work is completed and passengers are able to enjoy the new facilities, such as the new, refurbished waiting rooms, they will agree with both of us that this has been money well spent.

We remain committed to further station improvements across the country, and as the hon. Gentleman will be aware, the recent high-level output specification announcement included a further £100 million of funding for station improvements up to 2019, as well as another £100 million to extend the Access for All programme, delivering improvements for disabled people, also to 2019. The programme is of crucial importance, because there are still a number of stations where the facilities for access for disabled people are unacceptable and need to be improved. This investment will go a considerable way towards rectifying that problem in many stations.

The hon. Gentleman clearly feels that there is a lot of demand for services between Telford and London, and he has presented a strong case on behalf of his constituents in a reasonable and responsible way. I realise that I have not agreed that his points will be specified as a requirement in the next west coast franchise, but it is interesting to note that in the previous competition at least one bidder decided that there was a commercial case for running these services. As I said, he and other hon. Members will be able to contribute to the consultations prior to the franchise being drawn up, and they will have a chance, yet again, to express their views, and those of their constituents, on what is rightly for them an important issue—that of a direct service from Shrewsbury and Telford to London and back.

As I said, it is interesting to note that at least one bidder in the previous competition decided that there was a commercial case for running the services, which helps the hon. Gentleman and other hon. Members in making their case. As we prepare to re-launch the west coast pre-franchising process, the Department will need to examine a wide range of options.

I would like to thank the hon. Gentleman for giving me the opportunity to respond in the House, and to explain the current situation and some of the constraints on what I can and cannot say owing to commercial confidentiality. I recognise that we are in this unfortunate situation regarding the west coast main line, but I urge him to make his case during the consultation process prior to the franchise agreement being drawn up. I wish him well in his endeavours on behalf of his constituents.

Question put and agreed to.

Printed Photo ID Market

Simon Burns Excerpts

Tuesday 13th November 2012 Commons Chamber

[The Minister of State, Department for Transport (Mr Simon Burns)]

I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on securing the debate. I know that this issue is important to him, because this is the second debate that he has secured on this topic in the past 10 months. In the previous debate, the then Under-Secretary, my hon. Friend the Member for Hemel Hempstead (Mike Penning) promised to meet my hon. Friend and a delegation from the photographic industry. That meeting took place in March and further meetings have since taken place with officials from the Driver and Vehicle Licensing Agency. I think we now have a very good understanding of the situation and I would like to set out some of the key issues concerning the driving licence and the driver’s photo.

The DVLA plays an important role both in law enforcement and road safety. The photographs that have been incorporated in driving licences since 1998 provide critical support for the police and other enforcement agencies by linking the person behind the wheel with the entitlements to drive that they hold—or perhaps do not hold. The photographs held on the DVLA database are just as important as those on the licence itself, because the police have direct digital access to them for motoring enforcement. The quality of the images is therefore paramount. That helps the police recognise repeat offenders, and just as importantly it makes it easier for ordinary motorists who—in the past, and sometimes still today—have been asked to take their documents to police stations. The Driving Standards Agency also has digital access to photographs on the DVLA database. A high-quality image is important for all of them, as I am sure my hon. Friend fully appreciates, given his comments.

DSA driving test examiners have in recent years seen an increase in impersonations or substitutions at driving tests. High-resolution images that can be made larger on screen provide greater confidence when checking the identity of an individual and counter the direct challenge to road safety. The quality of images has increased greatly over recent years. Almost all photographs are now taken, stored and transmitted digitally. The industry itself has been transformed. That change has been driven not by Government intervention, but by customers and the way that they choose to use the products on offer. At the same time, these new technologies have hugely reduced the cost of taking photographs. However, there is a downside for organisations such as the DVLA and the police, in that such photographs are open to manipulation, especially if taken by the individual using their own equipment.

The DVLA continually seeks cost-effective ways of improving the quality of images that it receives and of increasing convenience for customers while meeting the Government’s drive for “digital by default”. An example is the face-to-face service available at post offices which, since 2010, has included taking photographs at the counter. That service is now available at 752 outlets, as my hon. Friend mentioned, and has proved to be a simple and cost-effective solution for customers. The quality of the photographs taken is controlled by software in the equipment and face-to-face supervision by the counter staff. The process adopted for renewing driving licences with photographs that are 10 years old, for example, takes just over three minutes. That includes taking the photograph, capturing any data changes, collecting payment and transmitting all the information securely and electronically to the DVLA. The driving licence lands on the customer’s doormat typically within two or three days of their arriving at the post office counter.

There are also major efficiency benefits for the DVLA. The transactions can be fully automated and, because of the personal supervision at the counter, there are virtually no rejections of data owing to the quality of the image. The service is a major improvement. Feedback from customers has been hugely positive: over 80% state that they would recommend the service to family and friends.

Alongside that new customer channel, the DVLA introduced in 2011 a web channel for direct customer use. In those transactions, on agreement with the applicant, photographs already submitted to and verified by the Identity and Passport Service are reused by the DVLA. There are constraints on the age of such photographs, but it allows the public to make the transaction from home in an entirely convenient and effective way.

Those two channels are very much in line with the Government’s digital strategy, which was published at the start of November by my right hon. Friend the Minister for the Cabinet Office. Digital transactions are securely and conveniently undertaken and are making significant savings across Government. Web channels have been in place since 2005 for first applications for driving licences and replacement driving licences, and for new driving licences for the over-70s and for those wishing to notify a change of address, but in the choice of the three available channels we have seen a migration from paper to the web over the past two years. Some 18% of customers now choose the web, 28% use counter services and the remaining 54% of transactions are dealt with on paper.

The web channels and the counter service currently sit alongside the older paper channels, but those channels are inconvenient for customers. The forms are less easy to navigate than their electronic equivalents, which have in-built checking systems, and customers must obtain photographs separately and post them along with their forms. Processing paper copies is vastly more time consuming and costly for the DVLA than electronic requests, especially for rejected transactions, which are inconvenient and expensive for all concerned.

Introducing the new web and counter services for 10-year driving licence renewals has saved the DVLA at least 200 staff and brought a financial saving of around £5 million each year for the Government. At the same time, the quality of photographs, the accuracy of data and customer satisfaction have increased and the number of rejections has fallen. Continuing and expanding the digital and automated channels forms an important part of achieving the DVLA’s target of reducing its annual running costs by £100 million, against its 2010 baseline, by the end of this Parliament.

My hon. Friend will have seen this morning’s announcement of the Post Office as the successful bidder for the DVLA front-office counter service contract. I know that the vast majority of right hon. and hon. Members will welcome that award, because it is an important part of ensuring that post offices and sub-post offices, both urban and rural, have an opportunity to provide a valuable service within our local communities. However, the contract has been let as non-exclusive specifically to avoid the creation of a monopoly supplier of a range of services to Government, including photographs, and to allow collaboration with the photographic industry to continue. I believe that my hon. Friend has already received an assurance on this aspect in response to his recent parliamentary question. I assure him that we do not want a monopoly supplier, because that is not in the best interests of customers, the Post Office, or the photographic industry in general.

The DVLA and I do not wish to create monopolies, but we do want to provide choices for customers and to allow the market to determine the solutions for the future to support industry in moving in the right direction. We want to take all the opportunities we can through advances in technology to improve customer services in quality and cost; to use digital technology to reduce manual administrative tasks while improving security and seeking automation of processes from one end to the other to improve accuracy and quality of data; and to actively pursue the wider Government agenda to move to “digital by default” wherever possible.

Where there are new opportunities, there are always challenges of change, and changes that are enabled by new technologies can be disruptive for existing industries. That is why the DVLA needs to work with the photographic industry to enable this transition from the old to the new in order to develop a solution that works for the DVLA and other Government agencies but, equally importantly, that provides the best solution and retains choice of provider for the public.

The meetings and workshops between the DVLA and the photographic industry have identified two possible solutions for exploration. The contract award to the Post Office and the solution that it has in place now needs to be considered as part of the next workshop to assess how these solutions interact with or complement the counter services contract. There are two major providers to be considered: first, the professional photography sector, which already takes digital photographs and in many cases will need to make only relatively simple adjustments to its processes to transmit the photographs in order to interface with DVLA systems; and secondly, self-service photo booths, which may need the phasing in of additional technology to meet the full digital approach to benefit both customers and the DVLA best. As my hon. Friend said, the next workshop to take that collaboration forward is scheduled for a fortnight’s time. It will be attended by representatives from the self-service booth sector as well as those from the professional photography sector—specialist high street chains and independents.

My hon. Friend the then Under-Secretary formally initiated that collaborative effort, and it would be extremely helpful to continue the work with a further meeting between my hon. Friend the Member for Mole Valley and Department for Transport Ministers. That would be an important opportunity for us to review progress following the meeting with industry representatives towards the end of this month. It will be important for Government to work with the industry to develop solutions that are less expensive, more convenient and, equally importantly, maintain choice of provision for customers, which is the nub of my hon. Friend’s argument. I hope that he will accept the invitation to that meeting; I suspect that he will, because he requested one in the closing moments of his speech.

The crucial thing is to get the interested parties and my hon. Friend around the table so that we can begin fully to thrash out the alternatives, the opportunities and the different proposals; see what can be done to take forward a system that will provide not only choice but value for money both for taxpayers and for customers; and ensure that we have a plethora of different outlets to provide a service whose technological improvements, which we cannot afford to not keep abreast of, are advancing dramatically. At the same time, we cannot be seen to be creating monopolies that will undermine the vibrant role that the private sector, which has played such an important role in the photographic sector in the past, can continue to play.

I am confident that our meeting will be productive and useful for all sides. I look forward to it so that we can address the control and security improvements required by the DVLA in order to address fully the fraud and ID security challenges that it faces. It will also provide an opportunity to discuss the variety and freedom of choice offered by the private sector’s contribution, in its different facets, to a service that is used so often by so many of our constituents up and down the country.

Question put and agreed to.

West Coast Main Line

Simon Burns Excerpts

Monday 29th October 2012 Commons Chamber

[Guy Opperman (Hexham) (Con)]

I welcome the speed and transparency of the interim Laidlaw report and endorse the calls of other hon. Members for lengthier franchises. Today the all-party group on rail in the north looks forward to meeting the Minister of State.

[The Minister of State, Department for Transport (Mr Simon Burns)]

I have already been there.

[Guy Opperman]

Yes, and I am sure that my right hon. Friend will be coming back.

Will the Secretary of State confirm that this Government’s increased investment in things such as the northern hub and the expanded service for the north will continue in the long term?

Rail Freight Traffic

Simon Burns Excerpts

Wednesday 24th October 2012 Westminster Hall

[The Minister of State, Department for Transport (Mr Simon Burns)]

Thank you, Sir Alan, for calling me to speak. It is a pleasure to serve under your chairmanship and I congratulate the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) on securing this debate. I think that all hon. Members taking part in it will join me in wishing her a speedy recovery from her affliction, although it did not seem to impinge in any way on her ability to make her case.

I also give the hon. Lady a commitment. I have just over 10 minutes in which to speak; if I do not deal with all the points she raised in her speech, I will write to her about them.

I will start by making two points that need to be made clear at the outset. First, the framework of charges for both freight and passenger operators is set independently of Government by the Office of Rail Regulation, which, as the hon. Lady knows, is the independent economic regulator for the railways in Great Britain. The ORR establishes the charging framework by means of a periodic review, which also establishes Network Rail’s outputs and funding.

Secondly, the proposals in the ORR’s consultation document are just that—proposals. The ORR has received a number of responses to those proposals, which it is now considering. I understand from the ORR that it intends to publish its decision on whether to introduce a freight-specific charge in its consultation conclusions document, which is to be published next month. I should reiterate that no decisions have been taken yet and that the ORR is aware of the concerns that have been raised by the hon. Lady, other hon. Members and other interested parties.

Given the fact that these are matters for the ORR, it follows that there is a limit to the extent to which it would be appropriate for me to make any comment on them. However, I can explain the steps the Government are taking to promote continuing growth in the rail freight industry.

We support the ORR’s plans to give the freight industry early assurance over the level of access charges by setting a cap on them. It is crucial to any industry’s forward planning that it has a clear indication of what its likely costs will be. The Government wish to facilitate the continuing development of a competitive, efficient and dynamic private sector rail freight industry. We are committed to ensuring that policies and regulations should work to that end and not create unnecessary transactional costs or other obstacles to the achievement of those objectives and future growth.

Although the Department for Transport cannot direct the ORR, we can and do provide guidance on the overall approach that we see as the framework for the ORR’s activities, and we expect the ORR to take that guidance into account in its decision making. For example, in an industry where planning and operational decision making are increasingly devolved, we want the ORR to have regard for the importance of sustaining efficient and commercially predictable network-wide freight operations when it takes decisions about access rights and charging structures.

Of course, as the hon. Lady will realise, it is not only the Westminster Government who provide guidance to the ORR; the Scottish Government provide guidance too. Scottish Ministers have stated that they expect the ORR, in developing the track access charges arrangements for freight operators, to use a mechanism that recognises the impact that freight operators have on the network but maintains the attractiveness of rail to freight customers and is sufficiently adaptable to prevent the outputs of businesses in Scotland from becoming uncompetitive in their key markets.

The Government’s strategy for the railways was set out in the March 2012 Command Paper.

[Sandra Osborne]

Given all that the Minister has said about the position of the Government and of the Scottish Government, is he surprised that the ORR could even think of coming up with this proposal, which is so obviously going to be damaging?

[Mr Burns]

The hon. Lady makes a pertinent point, but I think that she is trying to tempt me. What I said at the beginning of my comments—and this is perfectly valid—is that the ORR has made a number of suggestions and proposals that have been put out to consultation and it will reach conclusions on the right way forward when it makes its announcement in November.

As always in consultation documents, there is a range of options to be considered, some of which will be adopted while others will be discarded. That is part of the consultation process and it is perfectly valid, provided that the ORR considers the responses to the consultation and any guidance and advice that the British Government, the Scottish Government or others give them.

I was referring to the March 2012 Command Paper before the hon. Lady’s intervention. It set out how our passenger and freight railways support the Government’s overall transport vision: by supporting economic growth; by facilitating business, commuting and leisure journeys; by providing a greener transport option than road and aviation; and by relieving congestion on our road network. Among other things, the Command Paper states that there is a strong case for Government to continue providing support for the rail freight industry, to create a level playing field.

The rail network transports approximately 90 million tonnes of goods per year. It is of strategic importance—rail freight delivers more than a quarter of the containerised food, clothes and white goods we use and delivers nearly all the coal for the nation’s electricity generation. It also invests heavily in the provision of its services; there has been about £1.5 billion of private sector investment in rail freight since 1995.

The role of the rail network in the delivery of coal to the electricity supply industry should not be underestimated. In winter, coal-fired electricity generation regularly contributes more than half the country’s daily electricity needs, and even in summer it can commonly provide 40% of the supply.

I know that the Scottish coal producers play an important part in providing coal to power stations in England; more than 60% of their rail deliveries to the electricity supply industry are to English power stations. Clearly, the Scottish coal industry has a keen interest in the ORR consultation and in any determinations that could have an impact on its market, especially when about 78% of the UK power industry’s demand for coal burned by power stations is already met by imports rather than by domestic production—a point that the hon. Lady made very clearly in her speech.

There is a very delicate balancing act to be managed here, between trying on the one hand to ensure that Network Rail can recoup an appropriate share of the infrastructure management costs from the rail operators—the ORR’s proposals would be worth around £50 million a year in additional track access charges—and on the other hand trying to ensure that the charges on individual market sectors are not more than they can realistically absorb.

There are a number of elements to the charges that freight railway operators pay for access to the network: a capacity charge; a traction electricity charge; a fixed charge designed to recover the cost of freight-only lines; and the variable track usage charge that is the subject of this debate.

For the next funding control period starting in 2014, the ORR is proposing to replace the current freight fixed charge with a new charge designed to ensure that freight operators pay a contribution towards Network Rail’s fixed costs that are associated with rail freight. That charge would be levied on rail freight market sectors that have the ability to bear the charge.

The level of the charge, and the different sectors’ ability to pay it, is, as the hon. Lady knows, the basis for the ORR’s initial conclusions, which are at the heart of the consultation launched in May. Those initial conclusions suggest that the charges should be levied not only on electricity supply industry coal and the movement of spent nuclear fuels—as they are now—but on iron ore and other coal movements, and that these charges should be based on rail tonnage and possibly on distance travelled.

There is fierce competition in the logistics market, not only between the various freight operating companies but between the rail freight operators and the road haulage sector. It is also important to remember that whereas the rail sector is expected to pay all the external costs for its mode of transport—the cost of wear and tear on the infrastructure, and the cost of measures to mitigate environmental impacts—that is not currently the case for road transport.

That is one of the reasons why rail freight operators pay only a proportion of the track charges paid by franchised passenger operators. It is also one of the ways in which the Government have been seeking to level the playing field between road and rail. Moreover, it is worth bearing in mind that in control period 4, which covers the period from 2009 to 2014, rail freight benefited from a 29% reduction in its access charges.

As I am now running out of time, I say again that I will write to the hon. Lady on the other points that I had wished to make in response to this debate. However, in conclusion I will just come back to the point that I made at the beginning. The ORR has made its proposals as part of a consultation exercise and it has received a large number of representations. As is the case with any consultation, the ORR will now consider the arguments that have been made in the representations that it has received, in order to review its proposals before it takes further steps.

I assure the hon. Lady that the ORR will give full consideration to all the representations it receives from a wide group of people—from hon. Members, the British Government, the Scottish Government and others—before it publishes its recommendations later this year.

[Sir Alan Meale (in the Chair)]

I thank the Minister and hon. Members for their contributions to the debate. I particularly thank the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne), who secured the debate; I also wish her good health.

Oral Answers to Questions

Simon Burns Excerpts

Thursday 18th October 2012 Commons Chamber

[Andrew Stephenson (Pendle) (Con)]

1. What assessment he has made of the potential for reintroducing the Colne to Skipton rail link.

[The Minister of State, Department for Transport (Mr Simon Burns)]

The Department for Transport has not made an independent assessment of the economic benefits arising from reopening the Skipton to Colne line. Where local travel needs are the central objective, we look to the local authorities concerned to take the first step in evaluating benefits and prioritising available resources.

[Andrew Stephenson]

I hope the Minister has seen my early-day motion 479, setting out the work of the Skipton East Lancashire Rail Action Partnership campaign group, which is fighting for the line to be reopened. Will he meet with me and representatives of SELRAP to discuss the huge potential benefits of reopening the line?

[Mr Burns]

I hope my hon. Friend is reassured when I say that I have seen and read early-day motion 479. I am more than happy to meet with him and, if he agrees, I think it would be sensible to meet with the relevant local authorities as well.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

2. If he will consider abandoning the planned privatisation of the East Coast Mainline rail service.

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[Nick Smith (Blaenau Gwent) (Lab)]

6. What his plans are for electrification of the Welsh Valleys lines.

[The Minister of State, Department for Transport (Mr Simon Burns)]

On 16 July, the Government announced the electrification of the Welsh Valleys lines and the line between Bridgend and Swansea. Under the plans, about two thirds of the population of Wales will be on an electrified train route. The cost of the projects is estimated at some £350 million and the work is expected to be undertaken between 2015 and 2019, as my right hon. Friend the Secretary of State said.

[Nick Smith (Blaenau Gwent) (Lab)]

Passenger numbers on the Ebbw Vale to Cardiff line have gone through the carriage roof. Transport infrastructure is crucial in Blaenau Gwent, which again saw unemployment rise last month. Will the Minister ensure that the Welsh Government have the funds to redouble the line and improve train frequency and will he bring forward the 2019 date for the completion of electrification, to boost our economy?

[Mr Burns]

I hope that the hon. Gentleman will agree that the answer that I have just given is a significant boost not only to the Welsh valleys, but to the main line from Cardiff to Swansea. It will create tremendous opportunities for regeneration for business and other passenger travel, and there will be the ancillary advantage of changes and improvements to the rolling stock once the project has been completed.

[Michael Fabricant (Lichfield) (Con)]

Having just received a speeding fine from South Wales police for going at 35 mph in a 30 mph zone—it was quite a shock for me this morning—the news about electrification and all the other good news that the Minister mentions greatly encourages me to use the railways in future.

[Mr Burns]

I am extremely grateful to my hon. Friend. That just goes to show that the old adage is always the best adage: “Let the train take the strain”.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

7. What recent changes he has made to the national guidelines on the issue of blue badges. [R]

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[The Minister of State, Department for Transport (Mr Simon Burns)]

In July this year, the Government announced a £4.5 billion investment in new trains under the intercity express programme. That will include new trains to replace the existing high-speed train sets on the east coast main line.

[Mr Leigh]

In the eastern counties, we are very appreciative of the fast service and the excellent rolling stock up to Newark. However, when one gets beyond Newark and into Lincolnshire, one enters a time that land forgot—and, indeed, that the Department for Transport seems to have forgotten. Will the Minister assure me that, as part of the invitation to tender process, he will ensure that there is sufficient good-quality rolling stock, in particular diesel trains, so that the long-standing campaign involving me, my hon. Friend the Member for Cleethorpes (Martin Vickers) and the hon. Member for Great Grimsby (Austin Mitchell) for a direct service to Cleethorpes, via Market Rasen, has some chance of success?

[Mr Burns]

I am extremely grateful to my hon. Friend for that question. I hope that I can go some way towards reassuring him by saying that the Government are committed to having 35 new trains on the east coast, which will be a combination of electric trains and bi-mode diesel and electric trains. It would be premature to say where those trains will feature on the network, but consideration will be given to the need to improve the service along the whole line.

[Tim Loughton (East Worthing and Shoreham) (Con)]

16. If he will commission a feasibility study for a Worthing/Lancing bypass due to traffic congestion on the A27.

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[Mark Garnier (Wyre Forest) (Con)]

T6. When addressing the thorny issue of airport expansion, will the Minister look carefully at the huge economic benefits that can be offered at Birmingham airport? Not only is there extensive local support for expansion, but it is an excellent airport.

[The Minister of State, Department for Transport (Mr Simon Burns)]

I thank my hon. Friend for that question. He makes a valid point: Birmingham is an excellent airport and I was extremely pleased to be able to present it with the airport of the year award at last Thursday’s national transport awards. On the wider issue, Birmingham, like many other regional airports, has a vital role to play in servicing its local community and pushing forward the growth agenda. As my hon. Friend will be aware, the Howard Davies commission will consider the whole issue of our hub status, aviation policy and airports and no doubt Birmingham will wish to contribute to that process.

[Mrs Linda Riordan (Halifax) (Lab/Co-op)]

T4. The Caldervale line is in urgent need of new rolling stock as the current units are totally inadequate for the 1 million passengers who use Halifax station every year. Will the Minister inform the House when those passengers will get the new trains that they badly need?

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[Alison McGovern (Wirral South) (Lab)]

T9. In June, the then rail Minister told me that the Government were “making progress on the Thameslink procurement”.—[Official Report, 12 June 2012; Vol. 546, c. 67WH.]In August, The Guardian reported that the contract for new trains would be delayed until the autumn, and it is now the autumn. The delivery of new trains for Thameslink frees up electric rolling stock to move north, but any delay puts that in jeopardy. Will the Minister meet me and Merseytravel to guarantee that we will not end up with an electrified line from Manchester to Liverpool but no electric trains?

[Mr Simon Burns]

Yes. As I know the hon. Lady is aware, significant investment is being made in Thameslink—some £6 billion is being invested, £4.5 billion of which is for the infrastructure and £1.5 billion of which is for the rolling stock. I understand her concerns. My Department and I are working to ensure that the rolling stock is ready for the project and I would have the greatest pleasure in meeting the hon. Lady at her convenience.

[Duncan Hames (Chippenham) (LD)]

Will the Minister confirm that Access for All funding will not be raided to pay compensation to franchise bidders and that the project to build lifts at Chippenham station is therefore still on track?

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[Zac Goldsmith (Richmond Park) (Con)]

British pilots in my constituency are concerned that EU proposals on pilot flight time limitations will weaken the current rules and that, as a result, flying will become less safe. Instead of lowering our standards to harmonise with the EU, should not the EU be raising its standards to harmonise with ours? Failing that, will the Department at least explore with the British Air Line Pilots Association additional safety measures to cover those areas that would otherwise see standards drop?

[Mr Simon Burns]

I am grateful to my hon. Friend for that question. As he will be aware, the Government place the highest priority on safety, both for passengers, and for those who fly and work on our airlines. We are playing a vigorous role in this Europe-wide initiative, and it is for the Civil Aviation Authority to lead. The Government will do nothing with which the CAA is not content, and we will continue to consider the issue as it moves forward.

[Julie Hilling (Bolton West) (Lab)]

As a directly operated railway, the east coast main line returned £187 million to the taxpayer last year. How much money will Virgin pay to the taxpayer during the period of extension to its west coast main line franchise?

Rail Fares

Simon Burns Excerpts

Wednesday 5th September 2012 Commons Chamber

[Maria Eagle]

No, I have taken several interventions and I want to make progress; otherwise I will take up the entire debate with my opening speech, which is not what Members want.

If train companies were banned from increasing fares any more than the strict limit set by the Government, we could then have a political debate about what is the affordable level for that cap, rightly taking into account the state of the public finances, but that decision would at least be more transparent and enforced. My noble Friend Lord Adonis, when he was Transport Secretary, took such a step and banned train companies from increasing regulated fares beyond the cap set by the Government. He has been very clear about this in oral and written evidence to the Transport Committee. [Interruption.] The right hon. Gentleman for Ch, Ch—

[The Minister of State, Department for Transport (Mr Simon Burns)]

Chelmsford.

[Maria Eagle]

I knew it began with a “Ch”—that might be a way to remember it in the future. The right hon. Gentleman has not taken too long to get back into the habit of heckling from the Front Bench—perhaps he never got out of it in his role at the Department of Health.

My noble Friend Lord Adonis has made it clear in oral and written evidence to the Transport Committee, and on many other occasions, that he fully intended the ban on train companies flexing the fare cap to continue into subsequent years. That would be perfectly possible. I have said on many occasions that the previous Government should have taken action earlier, but the fact is that when times got tough they acted, but when times got tougher still this Government chose to give back to the train companies the right to fiddle the fare cap.

Cost of Living

Simon Burns Excerpts

Wednesday 16th May 2012 Commons Chamber

[Dr Huppert]

I do agree, and at some point we can have the debate about why we need that reform to have a properly democratically accountable Chamber in the other place, but now is not that time.

We heard an interesting take from the hon. Member for Gainsborough on how the Government would be doing much better if they were a pure Conservative Government—they would be cutting much more—and we heard from the right hon. Member for Manchester, Gorton that they are cutting far too savagely. The truth is that a pure Conservative Government probably would be cutting more and we are acting as a restraint on that and trying to achieve the correct outcome, which lies somewhere between the—in my view—excessive cuts advocated by one side and the continued overspending advocated by the other.

There is often a debate about Keynesian economics. Keynes was a good Liberal and a good Cambridge man, and he said a number of very sensible things. One was about making sure that we spend in recessions, but the flip side of that is that we do not spend as much during the boom years, so that we have money left. We cannot spend in the boom and also have money to spend in the bust; it simply does not work. Keynes was also clear about how much could be spent and, indeed, the high priority on keeping bond yields low so all that could be afforded. He was a very complex man and his work should not be reduced to a simple catch phrase.

I want to talk about the cost of living in relation to transport, because it is one of the areas I focus on in this House and on which I lead for the Liberal Democrats, but also because it is one of the few parts of Government activity that affects most people pretty much every day of their lives. Transport has a huge effect on us, and the cost of travel affects a huge amount of what we do throughout our lives. Governments for many decades, when focusing on the cost of transport, have thought principally about cars; too little thought has been given to cycling, walking and public transport.

[The Minister of State, Department of Health (Mr Simon Burns)]

And train spotting.

[Dr Huppert]

Let us consider the railways, as the Minister suggests. We know about the cuts. The length of our railway network has halved since 1950, but ever since 1980 the number of people using the network has doubled, resulting in a crippling downward spiral in which fare rises have been used to prop up a creaking system while services have declined. British railways are now 30% less efficient and 30% more expensive than their European counterparts. Under Labour, fares rose significantly above inflation year on year. The shadow Secretary of State for Energy and Climate Change did not seem to know the figures when I challenged her on this earlier, so let me give them to the shadow Secretary of State for Transport. Rail fares during Labour’s 13 years in government went up by 66%—inflation over that period was 17% in real terms—which is a huge increase. Even now their policy has not changed; it is still to have rail fares going up above inflation. Even the amendment to the motion calls for rail fares to go up 1% above inflation.

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[Dr Huppert]

I am sorry that the shadow Secretary of State is not prepared to defend her party’s record in government or the fact that it is still calling for fares to rise above inflation. I would like them to go below inflation—[Interruption.] If the hon. Lady listened more and spoke less, she would hear what I am going to say. I think that rail fares need to come down, but we do not have a majority Government. As we heard earlier from the hon. Member for Gainsborough, this is not a pure Conservative Government, but it is not a pure Liberal Democrat Government either.

[Mr Simon Burns]

Thank God!

[Dr Huppert]

On that point we are all united.