Transport Bill

Part of the debate – in the House of Lords at 4:45 pm on 9th November 2000.

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Photo of Lord Whitty Lord Whitty Parliamentary Under-Secretary, Department of the Environment, Transport and the Regions 4:45 pm, 9th November 2000

My Lords, I understand the objectives of the noble Lord in moving this amendment. However, we have already made clear that it is the duty of the Government to safeguard national security and the amendment would not override that. It is not simply the golden share which safeguards national security in this structure.

We have taken great care to ensure that national security is protected throughout the PPP proposals. It may be helpful to the House if I set out the different layers of protection for national security which are already in place. Clause 38(2) of the Bill provides that the Secretary of State may, at any time, give such directions to a licence holder as he considers necessary in the interests of national security. Clause 94(1) provides that the Secretary of State may give directions to any listed person in any time of actual or imminent hostilities or of severe international tension or of great national emergency.

Clause 28 provides that the Secretary of State may apply to the court for an air traffic administration order, so that an administrator can take control of the assets of a licence company in various circumstances. Such circumstances include a situation where the company has been or is likely to be in contravention of the Section 8 duty to provide a safe system for the provision of air traffic services, or where the company is, or is likely to be, in breach of an enforcement order. In either case it would be inappropriate for that company to continue to hold its licence.

In the licence, schedule 3 provides for its revocation in various circumstances, including, first, where a licensee fails to notify the Secretary of State of any change, transaction or arrangement of which it becomes aware which would enable a person or group of persons directly or indirectly to control or materially to influence the policy of the licensee, or would enable that person or group of persons to do so to a greater degree; or, secondly, that such a change, acquisition, transaction or arrangement takes place despite the Secretary of State issuing a notice of objection that, in his opinion, it would be against the interests of national security or relations with the government of another country.

The strategic partnership agreement, which is a contractual agreement between the Government and the strategic partner, will require the approval of government directors for the raising of loans and the acquisition or disposal of material assets. It will require the prior consent of government directors for the appointment of the strategic partner's executive directors and ensure that the strategic partner must offer first refusal to the Government if it proposes to sell any of its shares in NATS.

That range of protections deals with the issue of national security. The special share is therefore only one of a network of controls which ensures a high level of protection for the public interest. As the noble Lord, Lord Brabazon, pointed out, the articles of association also provide, under the special share, the principal right to veto certain events, including amendments to certain articles and the issue of any shares by NATS. In addition, those articles will prevent any shareholder, other than the Government and the strategic partner, holding more than 15 per cent of voting share capital. In any case, this will only be of relevance following a flotation of NATS. At present, of course, the Government have no intention of permitting such a flotation.

In addition to those powers attaching to the special share is the further range of protections in relation to national security which are provided in the legislation itself, in the licence and in the strategic partnership agreement. The real motivation behind this amendment may be concerns that the ultimate owner of NATS or of the strategic partner or part of the consortium which forms the strategic partner could at some future date turn out to be unsuitable. It is clear that we have a number of powers under the Bill to prevent them taking action or not taking action which would be against the national interest. Those include acquisitions, buying in and raising loans from sources that would be inimical to the national interest.

Although I agree that the protections offered by the golden share are important and will be liable to any challenge in the European Court, I can also assure the noble Lord that there are several other protections for national security. I hope, therefore, that the noble Lord will not pursue his amendment.