Civil Aviation Bill

Theresa Villiers Excerpts

Tuesday 22nd May 2012 Commons Chamber

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

I beg to move, That the Bill be now read the Third time.

Throughout the consideration of the Bill, the debate has been informed and constructive. I thank all Members who have taken part, including Opposition Front Benchers such as the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), the shadow aviation Minister. We have also been assisted by the excellent report prepared by the Select Committee on Transport. I reiterate the thanks that I have given to the Committee and its Chair for their work on pre-legislative scrutiny.

The Bill has enjoyed considerable cross-party support at every stage in its passage through the House, and its key elements have been broadly welcomed by airports, airlines and a number of other stakeholders. That reflects the efforts made not just by this Government but by our predecessors in office to listen to the industry’s concerns and respond effectively to them to put together a balanced reform package.

In the year of the London Olympics and the diamond jubilee, we are reminded once again of the crucial role that the aviation industry plays in bringing millions of tourists to this country. That is just one element of its wider contribution to the UK economy. The Bill will modernise the framework for the economic regulation of airports, greatly improve transparency and accountability and put the passenger interest right at the heart of the new regulatory system. There is widespread agreement that the current one-size-fits-all regulatory regime is inflexible and outdated. The system proposed in the Bill will deliver more effective protection for passengers and a lower regulatory cost for industry.

At the heart of our proposals is a new primary duty to further the interests of passengers and freight owners. The Bill will also enable the Civil Aviation Authority to tailor measures to each individual airport, allowing it more flexibility to target intervention in the most proportionate way.

With a strong emphasis on the price control process, the current rules leave the CAA with very limited options if problems occur between five-yearly reviews. The new licence system in the Bill will allow for real-time regulation, empowering the CAA to act swiftly if an airport is failing its customers on, for example, service quality, winter resilience, volcanic ash or any challenges that it is not yet possible to foresee.

Clause 1(3) and (4) require the CAA to carry out its economic regulation functions in a transparent, accountable, proportionate and consistent way. To respond to points made in earlier debates, we are strengthening the scrutiny to which the CAA is subject by giving a new accounting direction to the regulator, requiring it to include an efficiency statement in its annual report, which will be subject to validation by its external auditors.

The primary duty to passengers, which is so pivotal to the Bill, will provide greater certainty and clarity for airport operators, which in turn will encourage long-term investment in the improved facilities that passengers want. A shift to more independent economic regulation also removes risks associated with political interference, which is why it is a common feature of modern regulatory regimes.

The Bill will also make the CAA’s decisions more accountable than they have ever been by introducing a new appeals process. The Government worked hard with both airlines and airports to come up with an appeals system that gives effective redress to airlines without turning the new regulatory regime into a two-tier system, which would have dragged the Competition Commission or the Competition Appeal Tribunal into everyday CAA decision making. The result of that work is that the Bill provides appeal rights to both airlines and airport operators that are significantly more effective than existing remedies. However, not just businesses benefit from greater transparency and clarity. The Government believe that providing the right information for consumers can sometimes achieve better results than traditional regulatory intervention, so the Bill will give the CAA new functions on collecting and publishing information on issues such as service quality to help consumers to make informed decisions on competing operators in the aviation sector.

The Bill contains important security provisions—keeping people safe and secure when they travel is paramount. The Secretary of State is responsible for aviation security policy and for giving security directions. That will not change under the new approach we are advocating, but the Government believe that giving the experts in aviation operations a greater say in how security is delivered will improve our ability to guard against the very real threats we face.

The CAA has valuable experience not just of regulation generally, but of safety management systems that ensure that risks are controlled as effectively and efficiently as possible. We believe that that track record on safety will assist the CAA in overseeing the delivery of the new security management systems, which are an important element of the move to an outcome-focused, risk-based approach to security, which has been debated extensively during the Bill’s passage through Parliament.

I am also convinced that vesting those regulatory functions for security in the CAA will benefit the aviation industry, because it will henceforth be able to deal with a single regulatory body rather than the current two bodies. Moreover, we expect that the complementary measure—the introduction of an outcomes-focused, risk-based approach to security—will enable security checks to be integrated more closely into the general business of the airport. That should open the way to more cost-effective and more passenger-friendly ways of delivering security outcomes.

Plans for the proposed move of responsibilities in relation to security regulation to the CAA are already being developed. The Department for Transport is in discussions with the Department’s staff who are likely to be affected and with their trade union representatives, because we are keen that as many employees as possible stay in post when their jobs transfer to the CAA, taking their skills and valuable experience with them.

[Julie Hilling (Bolton West) (Lab)]

The Minister said that the Department has had conversations with the staff and their representatives. Can she give us any more information about that, because—as she will be well aware—one of the concerns we raised during the passage of the Bill was about the loss of expertise if staff did not follow their jobs to the CAA?

[Mrs Villiers]

We are in discussions with both the CAA about the practicalities of the move and with those Department for Transport staff whose posts we expect to move. At the moment, we are not able to give them all the answers on all the issues, partly because the Bill has not passed as yet, but also because issues such as pensions are under review both in the civil service and in the context of the CAA. But we are very conscious of the need to try to provide as much visibility and information as possible, and we are working to do that, although it will take time to work through certain issues.

On environmental matters, the Opposition tabled an amendment on Report—it was extensively debated—that would have imposed a supplementary environmental duty in relation to the CAA’s airport economic regulation functions. I understand the motivation for such an amendment, as I said on Report and in Committee, but I believe that its aim is already provided for in the Bill, which already allows the CAA to approve reasonable investment in measures that mitigate environmental impact. No doubt the discussion on whether further clarification on that point is needed on the face of the Bill will continue in the other place in the same constructive and thoughtful way that it has in this House.

I must emphasise, however, that the Bill already includes important new information provisions to help us address the environmental impact of aviation. The Bill gives the CAA powers to collect and publish information about the environmental effects of civil aviation. Not only could that be used to give more information to communities affected by aircraft noise—hon. Members know how significant an issue that is for many people—but it will ensure that passengers have better information about the environmental impact of their travel choices than is currently available. We believe that improving transparency will help us to harness consumer power in pushing for progress towards cleaner and quieter planes.

Some have called for more on the environment to be included in the Bill, but to be effective, environmental measures need to be applied proportionately across the whole sector and not just focused on those airports that happen to be subject to economic regulation. So separately from our efforts contained in the Bill to reform economic regulation, a number of initiatives are under way to deliver cross-sectoral action on the environmental impact of aviation. Adding aviation to the European emissions trading system is expected to deliver carbon savings across Europe of some 480 million tonnes in the period to 2020. Both NATS and the CAA have a strong focus on reducing fuel burn and addressing noise in their work on improving airspace management, and the Government will soon publish a consultation on a sustainable framework for aviation. We are clear that aviation should be able to grow, but it must also play its part in delivering our environmental goals and protecting the quality of life of local communities affected by aircraft noise and other local impacts.

[Julie Hilling]

The Minister said that the consultation document will be published “soon”. During the passage of the Bill, we have talked about future legislation that would enable environmental concerns to be addressed, so can she tell me what “soon” means in this context?

--- Later in debate ---

[Mrs Villiers]

We will publish the consultation in the summer alongside a call for evidence on maintaining the UK’s hub capacity.

Last, but definitely not least, the Bill will grant the Government the power to extend ATOL protection to flight-inclusive holidays sold by airlines and those sold on an agent for the consumer basis. Extending the ATOL scheme has received strong support in the House and has the long-term support of the Transport Committee. If the Bill is adopted, we would expect to consult next year on whether the new powers should be exercised.

In conclusion, by establishing a single, clear, primary duty to passengers as the overriding principle of economic regulation, the Bill will incentivise investment in our airports by providing greater clarity and certainty for airport operators and investors; put passengers’ interests at the forefront of the regulatory regime; give the CAA far more effective powers to intervene swiftly if an airport fails its customers; and open the way for a further extension of the ATOL scheme, which for nearly 40 years has provided financial protection and peace of mind for millions of holidaymakers. I urge the House to support the Bill.

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

I begin by thanking all my colleagues who sat on the Bill Committee for their support, assistance and advice, as well as those who helped on Report, outside stakeholders who sent submissions and/or gave evidence and the Transport Committee for its scrutiny of the Bill.

We welcome and support the Bill. On Second Reading, my hon. Friend the Member for Garston and Halewood (Maria Eagle) said that we would support the Bill. That was no surprise. Much of it was drafted when we were in government, so there was a legacy. However, the timing of its arrival was a bit of a surprise, so the Transport Committee scrutiny was a little dislocated. Indeed, the Government’s response to the Select Committee was published only last Friday. It is good that it is out, but it demonstrates that there were surprises in the timing.

Not only was the arrival and timing a surprise but the inclusion of the security clauses, which were not in the original Bill, was not expected. Also, importantly from our point of view, the environmental protection measures, which were in the original draft Bill and mentioned in the Department for Transport press releases announcing the publication of the Bill, surprisingly did not appear in the Bill. That was a disappointment to the Opposition, and I shall return to it.

I do not want to appear too critical, however, although it might come across that way in due course, because, as I said, we support the Bill. In Committee, the Minister was as courteous as usual, although she and the Government did not accept a single amendment—she did so quite politely—even when she was injured and might have been a bit more vulnerable. The fact that Ministers did not accept any amendments was a matter of considerable disappointment to us, particularly given that we had the support of many stakeholders and recommendations from the Transport Committee.

The Minister has well covered two of the obviously key elements of the Bill—putting the passenger at the core of the CAA and updating the industry’s economic regulation. However, a number of other issues were raised in Committee, highlighting the strengths and weaknesses of the Bill, and I wish briefly to refer to some of them. We had a good discussion on security and the outcomes-focused, risk-based system. We support those arrangements, but, as my hon. Friend the Member for Bolton West (Julie Hilling) said, we were concerned about the arrangements for staff transfers and the certainty of their entitlements on wages, conditions, pensions and redundancy agreements. The staff side raised concerns that members of staff might be worried and often not accept or apply for transfers. The potential haemorrhaging of staff in such a sensitive area was of concern to the whole Committee, so it was good to hear the Minister provide additional reassurances before and after my hon. Friend’s intervention.

The Minister mentioned the ATOL reforms, which we all support, despite the delays. We will do what we can to help the Secretary of State and the Minister of State introduce and enact the reforms, because that is what we all want. Recent pronouncements have perhaps pointed towards more complications arising, which is obviously frustrating not only to the Department and the Government, but to all concerned.

Let me turn to the opportunities that were missed. On the environment, we proposed a duty, as the Minister mentioned. We also suggested including environmental aspects in the licensing conditions for Heathrow, which we think would be reflected right across the industry. On the passenger experience, we proposed that the responsibility for producing welfare plans should be a matter for the licensing arrangements for Heathrow, given the experiences in recent years of passengers being stranded, with all the difficulties that we have seen, heard about and, in some instances, experienced. It is interesting that the indicative licence produced for the Civil Aviation Authority suggested that the licence that it will produce for Heathrow ought to contain passenger welfare elements. We think that the Government could have given a firmer steer by referring to that in the Bill, which would have helped. We also made various suggestions about the efficiency and scrutiny of the Civil Aviation Authority, although I will return to those presently.

There are two additional areas that the other place will want to take account of: one was mentioned in Committee, whereas the other was not. The first is the honesty and accuracy of ticket prices, particularly from the bucket airlines, and the hidden surcharges. The CAA could clearly play a role in addressing that, and I am sure that the issue will be raised in the other place. The other issue, raised most recently, is the suggestion that certain passengers should be able to fast-track themselves through security and immigration for a price, which has caused quite a bit of consternation among passengers generally. Given that the suggestion has been made since Report, I suspect that the other place will want to see how things could be obviated to ensure fairness for everybody going through our airports.

Let me look briefly at the three areas I have mentioned. On the environment, we had a bit of banter with the Government about their mantra, which we hear all too frequently, of wanting to be the greenest Government ever. We obviously had quite a bit of disagreement about whether the Bill reinforces that claim. Indeed, the Minister for shipping, who is in his place, and I had a discussion this afternoon about this being the greenest Government ever in terms of environmental protection. However, I do not think that Mr Deputy Speaker—[Interruption]—if he was paying attention—will let me go there. [Hon. Members: “Ooh!”] My apologies, Mr Deputy Speaker: I wanted to ensure that you did not allow me to stray, because, seeing the hon. Gentleman in his place, I could easily have gone down that cul-de-sac.

On reporting and giving information to passengers, clauses 83 and 84, which we covered extensively, are welcome. However, we thought that there ought to be a duty on the Civil Aviation Authority, as there is on every other economic regulator, to take account of the environment. Reading between the lines, I am not sure whether the Minister’s comment that she expects the matter to be raised in the other place was perhaps an indication of more openness from the Government or that they might be prepared to look at this again.

One element of licensing to do with the environment that was raised by a number of my hon. Friends concerns protection for neighbourhoods, planning permissions and the rest of it. We think that including that in the licence would give communities greater strength and the certainty that airports and the aviation industry would take account of the sensitivities mentioned by the Minister of State.

The last thing we suggested—which the Government did not think it was appropriate to pick up—was the requirement for ticketing to show the environmental impacts of different modes of travel, thereby helping passengers to make decisions based in part, perhaps, on the difference between the environmental impact of going by air and the impact of travelling by rail or coach. I will be surprised if that suggestion is not examined further in the other place.

On the passenger experience, the reporting, information gathering and publishing will, again, be welcomed. However, as I have said, we think that the welfare plans should have been included in the licence, and that represents a missed opportunity by the Government.

[Mrs Villiers]

I feel that I ought to reiterate the reassurance I gave in Committee and on Report. We, too, are very supportive of a focus on passenger welfare plans. We just do not believe that the content of the licence should be hard-coded in legislation. We believe that the best approach is to give the independent, expert regulator the responsibility to decide what licence conditions are appropriate.

[Jim Fitzpatrick]

I fully accept that; we have a disagreement over whether this ought to be in the licence. We think that putting this in the Bill would strengthen the requirement and give a much clearer indication to the regulator that the Government expected it to look at this as a key area, particularly given the experience in recent years. We are talking about a difference in emphasis, rather than a difference in principle, because we all want passengers to be better protected against the vagaries of the weather or other factors detrimentally affecting them.

Labour Members raised the whole question of the information on queuing times, and not just in baggage-handling areas. The key area where we disagreed was on whether immigration queues could or should be counted and measured, with information given to the public. Obviously, the Government’s position is that immigration and the immigration service, the UK Border Agency and the UK Border Force are the responsibility of the Home Office, and therefore it is not appropriate to deal with them in this Bill. However, given the further recent confusion over what the queuing time actually is, particularly at Heathrow, and given the disagreements on measuring between the airports and the immigration service, we think that the CAA could have played a very constructive role in that area, authoritatively collating the evidence and publishing it. As with a number of the other amendments that we failed with, I am sure that the Lords will wish to return to that.

On CAA efficiency and National Audit Office scrutiny, we again agree to differ, but at least the Minister did come up with a proposal to strengthen the scrutiny, which, in some way, addressed the concerns we were raising. Obviously, we will monitor how the proposal works in effect. We hope that it will give greater reassurance to the airlines and other customers that the CAA will operate as we would all wish.

In conclusion, this was a good Bill in draft and, in essence, it remains a good Bill, but there is still much room for it to be even better. We hope that the other place will be able to make the improvements that we were, sadly, unable to make.