Clause 96 - Non-executive members of CAA
Civil Aviation Bill
12:15 pm

Jim Fitzpatrick (Poplar and Limehouse, Labour)

I beg to move amendment 73, in clause 96, page 59, line 32, leave out paragraph (b).

Roger Gale (North Thanet, Conservative)

With this it will be convenient to discuss the following:

Amendment 74, in clause 96, page 59, line 34, leave out paragraph (a).

Amendment 75, in clause 96, page 60, line 1, leave out paragraph (b).

Jim Fitzpatrick (Poplar and Limehouse, Labour)

These are simple probing amendments in a somewhat toxic territory, because they raise the question of Treasury scrutiny of bonuses. Clearly, controversy on the subject is raging in a number of different businesses and industries and across the political landscape, so why does the Bill remove Treasury oversight of bonuses? We fully support the clause and the creation of non-executive members of the CAA. The clause updates the Civil Aviation Act 1982 and introduces non-executive directors, who have an important role in the healthy operation of businesses, organisations and companies. It also deals with gender language issues, and replaces “chairman” with “chair”.

The Treasury has oversight of remuneration packages for non-executive directors. It may not wish to, or never have to, interfere in the determinations of the CAA, but it has that oversight should it need to. There was some publicity this morning about remuneration packages in the public sector. An article in The DailyTelegraph compares the Prime Minister’s salary with those of chief executives of local authorities. Some of them are paid almost twice as much as he is; that hardly seems to be appropriate remuneration. Any Prime Minister, given the responsibility of the office, appears to fare poorly compared with others in the public sector, let alone the private sector.

Here we have some kind of handle on, and oversight of, remuneration packages. The Government have been criticised with regard to bonuses given to some in the public and private sectors; the previous Government were criticised too. I assume the Department for Transport will still have some role, but the Treasury should also have a role. The clause eliminates the Treasury’s role in the oversight. Could the Minister explain why she thinks that is an appropriate move in the present climate?

Theresa Villiers (Minister of State (Rail and Aviation), Transport; Chipping Barnet, Conservative)

I am grateful for the shadow Minister’s explanation, and for his indication that these are probing amendments. Let me give some background. The changes introduced by the Bill that the amendments seek to  overturn complete a series of governance reforms recommended by Sir Joseph Pilling, following his 2008 strategic review of the Civil Aviation Authority. Sir Joseph Pilling’s conclusion was that the involvement of two Government Departments in remuneration decisions was unnecessary. He concluded that:

“The statutory requirement for the Treasury to approve the Civil Aviation Authority members’ remuneration and pensions is an anomaly. I recommend that the Department for Transport seek to amend the legislation so that the responsibility lies solely with the Secretary of State.”

The Government agree with Sir Joseph Pilling’s conclusion that the oversight of the Treasury is not needed. The Committee should note that there is no equivalent requirement in the case of any comparable regulatory body. Now that a full-time chief executive has been appointed, to whom the executive members report, it does not make sense for them to be appointed by the Government, so the clause implements another important aspect of the Pilling report. This is the one element of the Pilling report relating to CAA governance that requires primary legislation.

Removing Treasury oversight will also remove unnecessary Government interference in the affairs of an expert, independent regulator. It will also deal with unnecessary delays in the appointment of executive and non-executive members of the CAA. There is nothing so special or different about CAA board appointments that they alone, of all regulatory appointments, require the approval of two Departments. I hope that I have provided some reassurance to the shadow Minister. Appropriate mechanisms are in place to hold to account the decisions made by the CAA about remuneration, and I do not consider that additional Treasury oversight is needed.

Jim Fitzpatrick (Poplar and Limehouse, Labour)

As I said, these are probing amendments, although we feel strongly about the issue, because of its pertinence and significance. We have listened to what the Minister said, and we want to reflect on it, so with the proviso that we might come back to the issue on Report, I beg to ask leave to withdraw the amendment.