Civil Aviation Bill

Part of Oral Answers to Questions — Communities and Local Government – in the House of Commons at 4:43 pm on 30 January 2012.

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Photo of Maria Eagle Maria Eagle Shadow Secretary of State for Transport 4:43, 30 January 2012

I thank the hon. Lady for her intervention.

There are precedents within the EU of a single company controlling a larger percentage of slots at one airport, but I am sure that the Secretary of State will appreciate that the situation at Heathrow is different because of the capacity issues that significantly restrict the potential for competition. I fully understand and respect BA’s wish to expand its operations, not least to pursue the new long-haul markets from Heathrow that are needed for our economic competitiveness. However, many years before a high-speed rail service becomes a reality between Scotland and London, and Heathrow in particular, we must balance that with the need to maintain the domestic air links on which the Scottish economy depends.

I have two final points on the economic regulatory aspects of the Bill. First, there are concerns that there is no requirement on the CAA to consult on how it intends to prioritise and balance its new duties and discretion. Secondly, the Government must clarify who does and does not have a right of appeal on a decision by the CAA in respect of licence conditions, and how they intend to prevent repeated and unfounded appeals.

On the second major purpose of the legislation, which is to modernise the CAA’s governance, we agree that reform is needed and we support most of the proposed changes. Of course, there are changes that have been made without the need for legislation, such as the creation of a separate chair and chief executive. We do, however, question the decision to remove the requirement for the Treasury to approve the levels of remuneration for non-executive members of the board. Are we not seeing right now the need for greater, not less oversight of remuneration? I suppose that the experience of the past few days has shown that it is doubtful whether the Government would exercise their powers over excessive bonuses even if they retained them, but it might be a good idea to hang on to them.

It is also wrong that the CAA remains outside the remit of the National Audit Office, unlike all other industry regulators. That should be addressed, and there should be an explicit efficiency duty as recommended by the Transport Committee. I hope the Government will agree that it should be relatively straightforward to reach agreement on those issues in Committee. We agree on the outcomes that we want to see achieved through the modernisation, and I look forward to working with Ministers to improve the Bill further in the areas that I have mentioned.

We have much greater concern about the third major area with which the Bill deals, which is the Government’s proposals for a major change in how aviation security in ensured. They have not made the case for the change. It was included in the draft Bill at the last minute and has not been subjected to adequate scrutiny, and enough people across the industry have concerns about the proposals to require the Government to look again at whether they have got them right. We are open to being persuaded, but Ministers have more to do if they wish us to support the proposed changes.

I appreciate that under the Government’s proposals, the Secretary of State will remain responsible for aviation security policy and for making aviation security directions under the Aviation Security Act 1982. That is well and good and correct, but by enabling the transfer of a potentially very wide range of security functions to the CAA, the Government risk fragmenting an approach that has served us well. Let us not forget that the current arrangements, including the now abolished specialist unit Transec, arose from the tragedy of Lockerbie. We should not move lightly away from an approach that had such a tragic loss of life as its reason for existing, particularly not when the clearly stated purpose of the proposals is, to quote the Department’s impact assessment, to

“Reduce the costs to the taxpayer in line with SR”— spending review—

“commitments by introducing the user pays principle.”

The changes that the Government propose are not minor. For example, they want to pass to the CAA the obligation to make arrangements for carrying out vetting, including those for renewing and withdrawing clearance. The CAA, rather than the Secretary of State, will maintain the list of persons approved for the provision of a particular aviation security service.

There are also concerns about the ability to retain staff. The Bill will allow for the transfer from the Department for Transport to the CAA of about 85 aviation security posts currently responsible for the review and upkeep of aviation security regulations, and for the monitoring and enforcement of the industry’s compliance with security requirements. The Transport Committee’s recommendations on that matter should be considered carefully, including the permitting of secondments rather than transfers to avoid the loss of experienced staff and expertise.

The Committee’s recommendation to delay the change, to bring it in line with the introduction of the outcomes-focused risk-based security regime, also makes sense. The airlines are concerned about the lack of transparency of the likely costs of the changes, and therefore about the impact on passengers, on to whom costs will be passed. There is real concern that although the costs of the transfer will materialise, the supposed reduction in obligations as a result of the move to the outcomes-focused regime will not.

Those concerns are particularly acute for smaller regional airports, which play a vital role in their local economies and will not easily sustain major additional cost burdens. The Government need to reassure the sector that they will retain an active engagement in operational matters, enabling airports to take the lead in the knowledge that they will have ministerial backing.

It is clear that there are growing tensions between the UK Government and the EU over security issues such as the permitting of full-body scanners without a right to select an alternative form of search. We have strongly supported the Government’s stance on that, although it is now important that Ministers work closely with their European partners to ensure a common, and preferably similarly robust, approach to security across the EU. The approach taken in the Bill risks leaving the industry without a clear lead or protection from Government on the decisions that it takes, be they on trials of new forms of security screening or other matters.

According to the explanatory notes, the Government’s Regulatory Policy Committee estimates that

“the impact on public expenditure gives expected savings in the order of £5.4m per annum.”

It is far from clear how the cost savings to the Department from the abolition of the security function can be secured without putting at risk high levels of aviation security or imposing a burden that will ultimately fall on passengers.

The Regulatory Policy Committee also identified transitional costs of transferring the security function of approximately £1.5 million, as well as ongoing costs beyond the transition, not least because

“the CAA will be responsible for upgrading systems in perpetuity”.

It is therefore

“likely that the CAA may borrow from the National Loans Fund to fund IT improvements.”

I appreciate that the Secretary of State inherited her predecessor’s plans to meet the 15% cut in the Department for Transport budget. She has shown a willingness to look again at some of his rasher decisions, and I hope that she does so in respect of that major change to aviation security, for which the case has not yet been made.

I urge the Government to think again about one other aspect of their aviation policy. An announcement is expected in the Budget—if not before—on the sale of their remaining stake in NATS. Recent media reports have suggested that DFS, Germany’s state-owned air traffic service, has been in talks with the Government. Yet again, just as with our rail industry, the Government’s ideological obsession turns out to be not so much opposition to a public stake in delivering transport services as an opposition to a British public stake in doing so. Just as the Dutch national railway will this week begin to operate the East Anglia franchise, with Deutsche Bahn and SNCF snapping at its heals on other parts of the network, our airspace might be controlled, in effect, by the German Government.

There are several very serious reasons why the Government would be wrong to withdraw completely from NATS. The current shared-ownership model between Government and airlines works well. The airline group has opposed an outright sale of the Government’s stake and raised the prospect of the industry walking away. The airlines are best placed to ensure the success that NATS has become, not least because of their healthy self-interest in safety and industrial relations. There are concerns about the impact of a foreign power taking a stake in NATS on the integration of civilian and military operations, which would put at risk the operational benefits of that integrated approach. There are also questions about the Government’s ability to play a leading role in air traffic policy at EU level if they become the only Government to have given up their stake in their air traffic service.