National Air Traffic Services

– in the House of Lords at 2:52 pm on 18 June 2002.

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Photo of Lord Smith of Clifton Lord Smith of Clifton Liberal Democrat 2:52, 18 June 2002

asked Her Majesty's Government:

What they intend to do to improve the technical operation and to secure the financial viability of National Air Traffic Services.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, technical issues are operational matters for National Air Traffic Services. NATS suffered a significant drop in revenues following the terrorist attacks of 11th September 2001. The situation was addressed in March, when the Government and the banks agreed a short-term loan facility up to 30th September 2002. NATS is currently seeking discussions with a new private sector investor as part of a long-term solution. The Government intend to match an appropriate level of private sector investment.

Photo of Lord Smith of Clifton Lord Smith of Clifton Liberal Democrat

My Lords, I thank the Minister for that reply, but does he recall that on 17th April, in reply to a similar Question asked by my noble friend Lady Scott of Needham Market, the Minister, the noble Lord, Lord Filkin, stated that all the parties involved,

"are making a contribution towards ensuring that NATS has a robust financial structure for the foreseeable future".—[Official Report, 17/4/02; col. 942.]?

Since then, a further £65 million subsidy has been promised by the Government. What is the total paid out by the Government since privatisation of NATS? When will it end? The not-for-profit company, with all the much-vaunted private sector management techniques that it was to bring, has turned out to be an always-loss-making outfit.

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I find a number of curious elements in that question. I said that we matched a short-term loan facility of £30 million in March of this year. During NATS's evidence to the Transport Select Committee last week, it became clear that the proposed private bidder for an additional contribution to NATS was the British Airports Authority and that it was discussing a contribution of between £50 million and £65 million. In my Answer, I said that we are prepared to match that. I see nothing contradictory between that and what my noble friend Lord Filkin said earlier.

Photo of Lord Clinton-Davis Lord Clinton-Davis Labour

My Lords, does my noble friend accept that, like others around the world, the United Kingdom Government continue to assist airlines with their insurance burden as a result of the events of 11th September? Can he explain why the Civil Aviation Authority, the regulator in this case, does not believe that a similar role should be played to help NATS to cope with the financial consequences of that appalling and unprecedented event?

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, there are two questions there. The first is the question of support for insurance cover, which is a responsibility of the Civil Aviation Authority, which is independent. As my noble friend knows, it has been providing that support.

On the second point, I assume that he is referring to the application for price increases. In the consultation paper issued on 21st May, the CAA expressed the view that NATS is a sound business and that the public/private partnership is working but needs financial strengthening. It has made suggestions and sought views on ways in which price changes could take place that would not simply be to correct deficiencies in the balance sheet—for example, proposals for a floor and ceiling on volumes of traffic. The consultation ends on Friday and no doubt the CAA will announce its conclusions in due course.

Photo of Baroness Knight of Collingtree Baroness Knight of Collingtree Conservative

My Lords, has the Minister noted the comments this morning about some of the cheaper airlines sacrificing safety for their own financial advantage? Does that have any bearing on this Question and does he have any comment to make about that?

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I have a personal comment to make as one who returned from France by Ryanair yesterday morning. The turnaround was certainly very sharp between the arrival at Stansted and the return. But beyond that, no, that is a matter for the Civil Aviation Authority and the industry's safety regulator. I should note that in the first five months of this year only one near miss was recorded, in comparison with five, six or seven in previous years.

Photo of Lord Williams of Mostyn Lord Williams of Mostyn President of the Council, Privy Council Office, Lord Privy Seal and Leader of the House of Lords

My Lords, I think that there is time for both speakers, so perhaps we can start with our side and then hear from the noble Lord, Lord Rotherwick.

Photo of Lord Hoyle Lord Hoyle Labour

My Lords, is my noble friend aware that the British Airports Authority has expressed concern about the attitude of the regulator, the Civil Aviation Authority, towards NATS?

Photo of Lord Rotherwick Lord Rotherwick Conservative

My Lords, is the Minister concerned that the impending 21 per cent cut in staff at NATS will impinge on future safety? Does he think that that will inhibit the future development of technology in that much-needed area?

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, the noble Lord, Lord Rotherwick, over-generalises. There is no suggestion of any cut in air traffic control staff. Indeed, recruitment continues at the level of 140 recruits a year, which is sufficient to deal with existing traffic and predicted traffic increases. There is a possibility of cuts in support staff, but that arises from changes in the move to Swanwick and in the operations that are required to be carried out at Swanwick. None of that involves any risk to safety.

Photo of Lord Tebbit Lord Tebbit Conservative

My Lords, does the noble Lord regret that his Government gave up his party's policy that air traffic control was not for sale?

Photo of Lord McIntosh of Haringey Lord McIntosh of Haringey Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I do not think that the attempt by the noble Lord, Lord Tebbit, to drive a wedge between myself and my Government is appropriate.