Civil Aviation Bill

Steve Baker Excerpts

Monday 30th January 2012 Commons Chamber

[Maria Eagle (Garston and Halewood) (Lab)]

Let me begin by wishing the aviation Minister, the right hon. Member for Chipping Barnet (Mrs Villiers), well. Opposition Members were very sorry to hear of her accident and we wish her a speedy recovery from her injuries and from the surgery she is undergoing.

The Civil Aviation Bill started its life under the previous Administration and we were pleased, as was the industry, to see it included in the Queen’s Speech after the election. We will vote for the Bill’s Second Reading today and the Government will, in principle, have our continued support, subject to the scrutiny that this Bill should rightly receive as it progresses through its parliamentary stages and subject to the making of appropriate reassurances and necessary amendments.

The proposals that the Government inherited to reform the framework for airport economic regulation and modernise the CAA’s governance and operations are broadly correct. In a number of areas, we share the view of the Select Committee on Transport that the Bill could be improved, particularly in relation to passengers’ welfare and the sector’s environmental obligations. Should the Government not introduce their own proposals to do so we shall seek to improve the Bill in Committee.

We support the Government’s decision to use the legislation as a vehicle to reform and extend the ATOL scheme to provide greater protection for consumers, reflecting changes to the way in which holidays are sold today, as the Secretary of State set out. The Government have also decided to use the legislation to go beyond the economic regulatory purpose that was originally envisaged in the transfer of responsibilities relating to aviation security, which has emerged since the election or, more specifically, since the Government spending review. However, there are serious concerns about whether it is a desire to cut costs, rather than improve security, that is driving the changes. The Opposition will therefore require much greater assurance from the Government about how the changes will work in practice if we are not to seek to make amendments to the provisions or even to remove them during the Bill’s passage through the House.

[Steve Baker (Wycombe) (Con)]

Does the hon. Lady share my concern that passengers, as well as needing security, are worried about convenience and, indeed, their dignity?

[Maria Eagle]

The hon. Gentleman is correct, and proper security is always a balance between managing to make sure that the efforts of those who wish to commit terrorist offences on planes are foiled while, at the same time, not wishing to subject consumers and passengers to indignity or extensive delay. It is correct that the Department should have a full understanding of the extent of any threats so that it can make appropriate policy. It is just in those areas that we want to probe a little more in Committee precisely to assess the practical impact of the proposals.

It is unfortunate that the introduction of the Bill and its Second Reading should come so soon after the publication of the draft Bill. Considering that this package of reforms has been in preparation for many years, and given that it was widely believed that its introduction had slipped to the next Session, it is unfortunate that there has been a sudden rush of last-minute enthusiasm to bring it before the House. Consequently, the planned pre-legislative scrutiny, which we supported, has been curtailed. The Transport Committee has done its usual impressive job, but it had just three weeks to take evidence and produce recommendations on the proposals, many of which have been in gestation for six years or more. That meant that the Government have not been able to consider those recommendations in detail and improve the Bill before its introduction. Consequently, we are debating a Bill—and I hope that this is the case—that will doubtless be amended by the Government in Committee, which is a remarkable state of affairs for a measure so long in preparation.

The industry itself has rightly expressed concern about the limited opportunity it was given to engage with officials before the Bill’s introduction in Parliament. BAA, it is fair to say, may be affected more than other player in the industry by the measure, yet it says that it could secure only a single one-hour meeting with the Department for Transport in the past three months, which falls short of what might be expected for a regulatory Bill of this nature. There will be, at the very least, a suspicion that the hasty introduction of the Bill has less to do with the industry’s needs and more to do with the needs of business managers, who doubtless begged the Secretary of State to let them have something for the Commons to do, because the Government’s legislative programme is bogged down in chaos in the other place.

--- Later in debate ---

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

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

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

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

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

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

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

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

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

However, the CAA responded:

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

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

[Steve Baker]

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

[Mark Reckless]

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

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

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

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

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

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

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

during the five-year period—

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

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

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

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

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

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