Aviation: UK Civil Aviation — Question for Short Debate

– in the House of Lords at 7:38 pm on 23rd January 2012.

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Photo of Baroness Gibson of Market Rasen Baroness Gibson of Market Rasen Deputy Chairman of Committees, Deputy Speaker (Lords) 7:38 pm, 23rd January 2012

To ask Her Majesty's Government what are their plans for the future of the United Kingdom civil aviation industry.

Photo of Baroness Gibson of Market Rasen Baroness Gibson of Market Rasen Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I am very pleased to introduce this short debate this evening on this important and indeed timely topic. I thank the Airport Operators Association for its assistance with my speech.

Photo of Lord de Mauley Lord de Mauley Lord in Waiting (HM Household) (Whip)

My Lords, will noble Lords leave the Chamber quietly so the noble Baroness can make her speech?

Photo of Baroness Gibson of Market Rasen Baroness Gibson of Market Rasen Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, in my capacity as a council member of the Air League, in my work with Youth in Aviation, as president of an air training corps, and as a member of the Air Cadet Council, I take a close interest in all matters relating to aviation. The civil aviation industry in the UK employs around a million people-352,000 directly, a further 344,000 people indirectly, and many more in its vital role in inbound tourism. It also contributes £50 billion to GDP and more than £8 billion to the Exchequer, according to a report published last year by Oxford Economics.

We are world leaders in designing and building aero-engines and airframes, in the design, construction and operation of airports, and in the safe and efficient management of scarce air space. Aviation is vital to any country and to any economy. However, it is especially vital to the United Kingdom for two clear reasons. First, and most obviously, it is because we are an island. It is the most efficient and sometimes the only way in which goods and people can get to and from the United Kingdom. Secondly, it is because we are and have been for many centuries a trading nation; a full 55 per cent of all our exports beyond Europe are carried by aeroplane, and we are all aware of the importance that the ever growing BRIC economies will have in the recovery of our nation.

All the nations and regions of the UK rely on good air links to connect them to the emerging world markets. Inward investors also need good air links not just to fly in essential parts and equipment but to ensure that their senior managers, executives and technicians have ready access to their offices and plants in the UK. Access to an airport with good global connections is vital, and there is another reason why we need to maintain and expand our aviation connectivity with the world. Tourism is already an important industry for the UK, with over 2.5 million jobs and £115 billion of GDP dependent on it. Shortly after he came to power, the Prime Minister expressed as one of his ambitions to make the UK one of the top five tourist destinations in the world. Given our heritage, our global positioning and the quality and quantity of the visitor attractions that we have to offer, this should not be an overambitious target. Indeed, the Tourism Alliance believes strongly that there is a need for aviation capacity to be expanded. It believes that that would support the goals that the Government have set for tourism growth, which should include consideration of current capacity, mid-term growth and an infrastructure for delivering long-term capacity.

Two big issues are preventing the aviation industry from playing its full part in helping to expand the economy and create more jobs. The first of these is taxation. I understand that the UK already has the highest level of aviation taxes in the world. The government standard or top rate of air passenger duty is up to 8.5 times the EU average, and the Chancellor has said that he proposes to raise it yet again by twice the rate of inflation during his Budget in March. This is at a time when aviation has just entered the EU Emissions Trading Scheme, which will add another layer of cost and complexity.

I urge the Government to think again about this tax rise. In the short term, it may raise extra revenue for the Treasury, but in the medium and long terms it will scare away airlines and routes and damage employment prospects for thousands of people. Other EU countries are lowering or scrapping their domestic aviation taxes as the EU Emissions Trading Scheme is phased in, and the Government should seriously consider doing the same.

The other big issue that is having a highly detrimental effect on UK civil aviation and preventing it playing its full role in boosting the economy and creating jobs is capacity. The whole of the UK and its regions rely on good air links to attract inward investment to facilitate the efficient deployment of key personnel, to open up access to new markets and to facilitate the export of goods. Airports are privately funded; they are looking not for government money, just for government support and permission to grow as and when extra capacity is required.

We are all aware that it is in the south-east of England that the problem is most acute. As European airports expand and plan for four, five or even six runways, Heathrow-currently our only hub airport-is stuck on just two. All three main parties have set their faces against additional hub runway capacity, but it is up to the Government to come up with a viable solution. There are a number of schemes requiring consideration relating to Heathrow, Gatwick and Stansted, through to a brand new airport in the Thames Estuary or, indeed, elsewhere. There are pros and cons associated with every solution and tonight I do not have a firm proposal to make. However, it is the job of the Government to examine all these options and come up with a speedy solution. The alternative will be that Schiphol becomes the UK's hub airport, just as Europort became our capital's seaport by default. This would result in the loss of tens of thousands of jobs and many billions of pounds of revenue, and all with no benefits to the environment.

Currently, flights and emissions are being displaced rather than obviated. Indeed, as people take connecting flights to Europe to avoid air passenger duty, the impact on the environment can be considerably greater. The Government need to take the lead on this issue, which is why the announcement last week that they will consult on the options for the creation of a new hub airport is welcome. A rapid and firm decision is needed that will ensure that the UK has a world-class hub airport fit for the 21st century.

We must support the UK's aviation sector, in which we are world class and which employs so many people, contributing so much not just in GDP and tax but in what it enables other key sectors of the economy to do. Finally, I ask the Government again not to bring in further swingeing increases in air passenger duty and make the highest aviation taxes in the world even higher. Failure to address these issues-taxes that are too high and airport capacity that is too low-will send a sad signal to the world that we are not truly open for business.

Photo of Baroness McIntosh of Hudnall Baroness McIntosh of Hudnall Deputy Chairman of Committees, Deputy Speaker (Lords) 7:46 pm, 23rd January 2012

I congratulate my noble friend Lady Gibson on introducing this debate. She is a very fine advocate for what we must all agree is a very important industry. That is about as far as she and I are going to agree in the course of this debate. Before I come to my rather more disobliging points, I recognise that a lot of what she says about the challenges facing the aviation industry and the necessity for government to be clear about its policies is absolutely right.

I have no expertise in aviation whatever, but I have some experience of the ups and downs of aviation policy, having serially harassed my own Government on the subject of airport capacity for a number of years, chiefly on environmental grounds, which my noble friend touched on, about which there is a great deal to say-but not by me in the little time that we have available this evening. I want to make just one point, or to ask one question of the Minister.

Despite welcome assurances from the Government early in their life that there would be no further runways at Heathrow, Gatwick or Stansted-and I declare an interest as a long-term supporter of the Stop Stansted Expansion campaign-runway capacity is still a major live issue, as my noble friend said, and an important matter for the civil aviation industry. The credibility that is suddenly now being accorded to the proposal for a new airport in the Thames Estuary is interesting for a number of reasons. Although there are many attractions to a solution to our capacity problems that envisages most approaches and take-offs being over water, I am tempted to say to supporters of that scheme, "Good luck with that one, but if you think that the human population of Heathrow was a problem, try the birdlife of Kent".

My reason for being intrigued by the timing of this latest proposition to build a whole new airport comes from my experience that Governments of all persuasions have, I am afraid, a tendency to speak with forked tongue on the matter of airport expansion. I mean no offence to present incumbents when I say that. I am not a natural conspiracy theorist, but I can see the possibility, once the estuary plan has once again bitten the dust, as I fear it will-or sunk under the waves-of whoever is then in power shrugging a collective governmental shoulder and saying, "Oh well, then, we'll have to go back to Stansted, or Heathrow, or Gatwick, or maybe all three". The problem is that if I can see this, so can the airport operators-notably BAA, which has spent a great deal of time and money in its so far unsuccessful efforts to get new runways at Heathrow and Stansted. In doing so, it has effectively blighted whole communities by buying up land and properties, most of which it retains, despite, in the case of Stansted, being under instruction from the Competition Commission to sell the airport.

My question to the Minister is this: when the Government say no more runways at Heathrow and Stansted, what do they mean: no more for 30 years, for 10 years, until the end of this Parliament, or just until we change our minds? I am sure the Minister would accept that uncertainty about this question still hangs over communities in these areas, which are grateful for the reprieve they have had but nervous that it may only be temporary. I would be very grateful if the Minister could put them out of their misery.

Photo of Baroness Kramer Baroness Kramer Liberal Democrat 7:51 pm, 23rd January 2012

My Lords, my noble friend Lord Bradshaw had hoped to speak on this issue and the House would have been very interested to hear him because he is clearly one of the leading experts in this field. I regret that I am only the understudy since he is unable to be here. I must also declare that I am a member of HACAN, the protest group that is made up primarily of residents but is now fairly international, which opposes further expansion at Heathrow and works closely with those of a similar view at both Stansted and Gatwick.

I am very pleased that the Government will be consulting, hopefully in the spring, on a sustainable framework for aviation, but it is absolutely crucial that green and environmental issues are at the forefront of that conversation. This House will be very aware that since 1990 the proportion of total UK carbon emissions from aviation has doubled and that we have serious climate change targets. Whether or not it is within the context of those targets or a broader context, climate change must surely be a real concern, and if we do not manage capacity in aviation as we look at those climate change issues, surely we make a mockery of being committed to the climate change problem at all. I stress that when we talk about airports, we are talking not just about carbon emissions from aviation itself but about the travel to and fro, which is overwhelmingly by car-and anyone who thinks that you can completely switch that in any circumstances to public transport has not looked at the behaviour of those who regularly use London's current airports and who insist, when they have many bags, on using road services.

In reference to some of the comments that have been made on tax, surely now of all times, when we are all under pressure, aviation ought to be carrying more of its own weight. The very favourable tax climate that aviation enjoys dates back to when it was a new industry. Those new industry tax breaks, given a generation ago, in essence remain with aviation today and are only gradually being countered. Like many others, I would much rather that we were not doing this on a per-passenger basis and I hope very much that the Government will achieve their goals in Europe of shifting to a per-plane basis and getting the tax associated with the emission levels for each plane. The very notion that we should be giving further tax breaks to an industry that is already paying less than other transport rivals strikes me as absolutely extraordinary.

Perhaps I can join some of those who see the estuary airport as something of an election ploy. I suspect that this project will bite the dust by the time we get to mid-May, but I will make a couple of comments on it because it addresses one of the issues raised: that of capacity. Even in their most aggressive forecasts, the Government are basically saying that 470 million passengers will be flying by 2050, but the estuary airport plans and similar raise that capacity to 700 million-way beyond even the most aggressive forecast. If you are looking at this from a climate change perspective and you want both to shift to rail and to eliminate unnecessary travel through the use of new technology, some would say that 380 million passengers per year is a much better target to work towards. We are looking at a lot of capacity around the UK, not at places such as Heathrow, but we are a country not simply a city, which I think people sometimes do not notice. As we look at putting in new capacity, here we are talking about rebalancing an economy that is looking to the north to rebuild its industry, jobs, prosperity and growth. Yet how can we look seriously at a mechanism that seeks to put all that additional capacity back down into the London area? I would argue that that is illogical.

I will not even talk about the price because no one, I think, is able to put a price on it yet, but we have issues of safety such as bird migration and the wreckage of the community that currently serves Heathrow and that is based around Ealing and Harlesden. All those people will be unemployed or will perhaps move to some new city out near the new airport. There are all those issues, as well as the environmental ones.

I realise that I am running up against my four minutes, so I simply say this: most of the problems that people have with aviation are to do with the fact that some airports, and Heathrow is one of them, are not passenger-friendly or very well run, and you cannot get through immigration. That is what drives everyone absolutely insane. The better operation of what we have and making innovations in aircraft-these are the things that would make a real difference.

Photo of Lord Monks Lord Monks Labour 7:56 pm, 23rd January 2012

My Lords, I start by declaring an interest as president of the British Airline Pilots Association, which organises for about four out of five of Britain's pilots. Of course, the debates about civil aviation are very much moving centre stage in many ways. We have heard different views from different corners of the House during this debate. I put myself on the side of those who say this industry is a success story for Britain, or it has been so far. It represents 2 per cent of GDP and something like half a million jobs directly and indirectly depend upon it. When it is not working properly, whether that is due to snow or Icelandic volcanic eruptions, you can see the effects on our national life. My question to the Minister is: what more can be done to recognise the importance of the industry?

We know about the capacity constraints, which my noble friend Lady Gibson referred to. I am afraid that those who are opposed to airport development have got to recognise that the demand for air travel is going to grow substantially over the next period. Capacity is going to grow either here or in Amsterdam or maybe Paris or Frankfurt. Those airports are gearing up for this growth and are no less environmentally conscious than we are-probably more so, particularly as far as Schiphol is concerned-so let us not think that they are polluters or carefree people who would besmirch the environment. It is very important, in this exercise that the Government have started, that we get a clear idea of the timetable for decisions soon. Whether they are in favour of expanding Heathrow, which I tend to favour, or building a new airport elsewhere, the key thing is that somebody has got to bite the bullet and take decisions.

The other point I would like to make briefly is concern about pilot fatigue. As the pressure for turnarounds and on planes and crews becomes greater as demand for air travel grows, airlines are putting pressure on some staff, particularly the pilots at present. As some of you will know, proposals from the European Aviation Safety Agency on pilots' hours would relax the present UK standards, which are pretty strict and I think exemplary, and align us with American standards. Usually I am on the pro-European side of these arguments, but on this particular one I do not want to see any watering down of the standards that have applied in Britain rather well. Pilot fatigue is still a problem. You hear some horrific stories when talking to pilots, and it is important that we take this issue seriously. I am interested in the Government's view on these EU proposals and how the EU can be persuaded to level up rather than down.

Photo of Lord Soley Lord Soley Labour 8:00 pm, 23rd January 2012

My Lords, in congratulating my noble friend Lady Gibson on securing this important debate I want to move on to make a prediction, if I may, which is that in due course the Government will reverse their position on airport expansion in the south-east. It is a matter of time. I do not expect the current Minister to do it today because he will stick rigidly to the government line, which I have discussed with him a number of times, but increasingly the Government are concerned about it. They ought to have been concerned about it before making that foolish promise before the election not to expand Heathrow, as the problem for Britain is now acute. Amsterdam, in effect, is our hub airport. Frankfurt is taking all the work from India and China. Madrid is taking it increasingly from South America and will increasingly move it from North America, which is why British Airways will eventually move more of its operations there than it has already. The situation is really serious.

I would simply say to the noble Baroness, Lady Kramer, who to my mind has always had her head in the sand on this, that when I spoke at a meeting in her then constituency there were a couple of hundred people, mainly from the Green Party, the Liberal Party and the Conservatives. As she will know, I was not given a welcome when I was speaking in favour of the expansion of Heathrow but the chairman, to his infinite credit, suddenly asked everyone to indicate who had flown from Heathrow that year- and everybody put up their hands. That is the hypocrisy which lies behind this. I say to the noble Baroness and to other people, yes, we have to address the environmental issue-I will touch on that in a moment-but remember that all the polling in the 12 local authorities around Heathrow shows a much more divided opinion about whether people are in favour of or against expansion. Why is it divided fairly evenly? Precisely because so many people work at Heathrow: 76,000 on the airport and another 100,000 dependent on its remaining a premier hub airport. However, it is no longer a premier hub airport. It is great that Heathrow can fly you to seven British regional cities, but Amsterdam will fly you to 21.

People say to me, "Well, we are going to have the high-speed link", but remember that the high-speed link is not coming until the end of the 2020s. Tell me what is environmentally good about producing millions of tons of concrete to create that line, each tonne requiring the production of one tonne of CO2, and what is environmental about knocking 20 minutes off the journey time to Birmingham. I am in favour of the high-speed rail line, but do not kid yourself that it is an answer to the environmental issues or to the problem of airport expansion.

Let us come to the environmental issue. Aviation was slow to respond to the pressure. One of the things I said when, many years ago, I took on the job-which I no longer have-of campaign director for Future Heathrow was that unless people upped their game on the environmental issue, they would not win on this case. They needed to up it and they have. As I have reminded people before, we would not know half of what we know about climate change if it were not for the aerospace industry. How do your Lordships think we measure it, and why is Britain so advanced in climate change science? Because we have the aerospace industry, the second most advanced in the world, producing the technology that tells us about it. What is the answer? It is already happening. Most of our new airliners coming on-stream are better not only environmentally-much better in terms of fuel efficiency-but in terms of noise. I still have a room in London, not far from Kingston. When the A380 flies over my old constituency, where I have lived for 30-odd years, why is it so much quieter? You can hardly hear the A380 when it goes over, whereas you could really hear the old ones. They are getting quieter and more fuel efficient.

This is my final point. As the Minister knows, I referred him to the new developments in fuel. Algae is a hopeful one. Virgin airlines, New Zealand airlines, American Airlines, British Airways and a host of others are flying now with a fuel mix. They do not use kerosene. The noble Baroness is out of touch on this. Most of the United States Air Force in Afghanistan uses algae as a fuel in its aircraft. Why? It is because it has strategic needs for it. There are scientific answers to this problem, and if we do not use them we will throw thousands of people out of work just to satisfy some people who will want to go on flying and still complain about the noise or the pollution.

Photo of Lord Empey Lord Empey UUP 8:04 pm, 23rd January 2012

My Lords, I congratulate the noble Baroness, Lady Gibson, on securing this debate this evening. It is very timely.

First, I agree with the noble Lord, Lord Monks, about pilot fatigue. I have a son who is in that sector and his schedule over the past month frightened me. I have been in contact with the department on this issue for some months and I hope that when the EASA is considering this, it will not only follow much more closely the CAA guidelines but take into account the representations of the people who actually do this job, not the people who simply treat it as theory.

With regard to what the noble Baroness, Lady Kramer, said, I would say to her that it will be the Thames estuary or Heathrow. We are not going to get both because airlines are not going to split their bases, their engineering, their back-up and so on. I suspect that they will be either at one or the other.

Following on from my introducing the Airports (Amendment) Bill to this House in December 2011, I want to draw the attention of your Lordships to the connectivity issues that exist in the United Kingdom, and to ensure efficient communications between our major regions and cities. We debated this issue in Grand Committee on 15 November, and I believe that there is a lot of support in this House to draw attention to the fact that, if you do not have adequate connectivity, it is not going to be possible significantly to build up your business efficiency and attract investment to the regions.

It is no use saying, "We can fly you to an airport in the basic region of the south-east or in London", which under European directions you can give a public service obligation to do. It has to be between the major cities in the region and the hub airport, wherever that may be. The issue for me at the moment is that my Bill would give the Government a power which they currently do not have: to ensure that the CAA can pass judgment. I hope to go to Brussels next month to see the chairman of the transport committee of the European Parliament and to lobby there, because there is a significant European dimension to this.

Like the noble Lord, Lord Soley, I had a hub airport in what was my constituency and I have had issues with it over its opening hours and various other things, but we all use it. The fact is that the issue is not only the airport itself; it is how that airport is connected to the major centres of population. Unless you can get from the regions to the major hub airport, which for the foreseeable future is Heathrow, then we are doing a disservice to our country. We put large amounts of money, as does the European Union, into regional development. One of the key issues there is aviation connectivity. In Northern Ireland, for instance, we do not have a realistic alternative. We do not have rail connections. Yes, we have a ferry, but, realistically, that is not going to do the job.

As we move forward, I hope that the Minister will give us some guidance as to whether the Government will seriously consider the regional connectivity issue in the forthcoming consultation and the legislation that will be before both Houses later this year.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour 8:09 pm, 23rd January 2012

My Lords, I, too, congratulate my noble friend Lady Gibson of Market Rasen, on initiating this debate at this opportune moment. The decision to look at expansion, including the "Boris Island" project, and to exclude a third runway at Heathrow, is the most disgraceful piece of misgovernance that I can remember in transport economics in my lifetime, and I did postgraduate work in transport economics after doing economics at Cambridge and have worked for the World Bank in this field.

With no cost-benefit or origin and destination analysis, this is banana republic demotics. Suddenly you have a so-called review of hub airports without being able to expand Heathrow. This is a disgraceful way to conduct business, and I ask the Minister how he can possibly justify it. Will he take note of some of the things that have been said in this debate that make it clear-if I can mix my metaphors-that this is no way to run a railway?

I have no axe to grind for the British Airports Authority, but Mr Colin Matthews, its chief executive, hit the nail on the head the other day when he said that London cannot have two hubs. How, other than by closing down Heathrow, can you say that Boris's island is going to be the hub? It is absurd, ridiculous-I do not know how many more adjectives one needs to use to get the absurdity of this understood.

This is not a question of transport and economics versus the environment. I am going to be personal: I have always been involved both in transport economics and in the environment-I started a sustainable environment project-and for many years I have tried to see how the two can be reconciled. I think it was my noble friend Lord Soley who made the point that many people make these "green" remarks about terrible things going on with planes in the sky, but it is exactly like the car-when you ask people, "How many miles did you drive last year when middle-class people were opposing a bypass?", the answer is normally 10,000 miles. That is how things are; there is a lot of middle-class versus working-class nimbyism regarding Heathrow and Richmond going on here.

My final remark is about how a proper inquiry should be carried out. The costs that have been mentioned in the press would mean that if the Government are going to claim-as a Conservative Government believing in the market economy-that we should have regard to commercial principles, how is it that they are not having regard to commercial principles about how to make a profit rather than trying to subsidise the outcome, if you are going to have a Thames estuary site with a cost as high as £70 billion, without any clue why these so-called sovereign wealth fund investments are more than just wishful thinking? Will the Government reconsider the basic fallacy of having two hubs or closing down Heathrow, and will they, even at this stage, put Heathrow and the expansion of its third runway-Schiphol and so on, as my noble friend Lord Monks and others have said-back into the mix?

Photo of Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde Labour 8:13 pm, 23rd January 2012

My Lords, I, too, thank my noble friend Lady Gibson for initiating this important debate at this time, particularly in view of the state of our economy. I also declare that I am a board member of NATS air traffic control, although obviously I am not speaking for it today.

We talk about aviation as though it is something that belongs to the industry, but actually our aviation policy is for our economy. It is the conduit through which we have been able to carry our exports. We are an island-nothing will change that-so we need aviation. We are a trading nation as well; over one-third of our exports by value go by aviation. That helps our economy.

Heathrow has been mentioned a number of times today. It is our pre-eminent airport, and until recently it was regarded as number one in the world. Other nations have caught up with us, though, and a number have overtaken us. Schiphol now proudly presents itself as London's fifth airport, with the runways that it has. Heathrow's Terminal 5 was first talked about 25 years before it opened. What happens in France, Germany and Amsterdam and across Europe? Within five years they conceive of an idea and they build it.

There is no doubt that our economy needs our aviation, especially environmentally friendly aviation. I would go so far as to suggest that the airlines have gone a long way to try to meet that; indeed, British airlines led the discussions in Europe on emissions trading, which has been a substantial help.

It is important that we recognise where we are. The Government's announcement about consulting on the proposed new airport in the Thames Estuary and on aviation is an important measure, and I welcome it for considering our long-term policy. However, with Heathrow working at in excess of 90 per cent of its capacity, I suggest that we cannot sit back and wait for the outcome of that commission's work. When we get the consultation document in March, will it contain what the Government propose regarding the protection of our economy, our jobs and our exports for the short term? We need capacity expansion in the UK in the short and medium term, and we cannot wait another 20-odd years to get a long-term policy in place. I ask the Minister that direct question.

The third runway at Heathrow has been mentioned and it will not go away. We saw in excess of 30 Conservative MPs last week in another place sign a paper complaining about their Government's policy. I join them in complaining about my own party's policy; we, too, pulled away from a long-standing agreement that the third runway at Heathrow would be seriously considered. However, that would not provide all the capacity that we need. We have heard about Stansted, but what about Gatwick and Luton? I do not think that there would be opposition in Luton to expansion there.

We need a government policy that will answer these issues, not for the airline or airport industries but for our economy and our jobs. Two weeks ago the Chancellor of the Exchequer was in China. He wants us to do business with that country. In 2010, 3 million Chinese visited Europe. Do you know how many came to the UK? Four per cent. Therein we have the problem. Europe has direct flights from 22 cities to emerging markets; the UK has none. If we do not grasp this problem and do so quickly, we will see our economy go further into the mire. Aviation could certainly be a way of helping to pull us out of it.

Photo of Lord Spicer Lord Spicer Conservative 8:18 pm, 23rd January 2012

My Lords, I had not intended to join in this debate, but I would like to make one point. As has been said already, Heathrow has, for the past 40 years-certainly since I was Minister for aviation-been the number one international interchange airport in the world. Gatwick, as it happens, has been number three for some time. Heathrow is now full up. There is no doubt about it. It is full. The only question before us is what we do about it.

Various ideas have been put forward. One is to run trains to Birmingham. That will take a bit of time, if it comes about, and is not going to do an awful lot for international travel. Heathrow is an international hub interchange airport. The idea that the noble Lord, Lord Lea of Crondall, called "Boris's island" is a wonderful one, but has been around for the past 40 or 50 years. Maplin was the first attempt at it. Even if it is a good idea, it is going to mean a decision about shutting down Heathrow-the noble Lord was absolutely right about that-and it is not going to happen for the time being. It is not going to happen for another 30 or 40 years.

The solution to Heathrow, which is an immediate problem, has to be found pretty well immediately. The only solution available-and I have put this to Ministers in Questions several times in the past year or so-is that of a third runway. There is no alternative. I was the Minister who laid the first sod at Stansted. We attached to Stansted a 20 million air traffic movement condition, so Stansted is not available. Anyway, airlines do not want to fly to Stansted. They want to fly to Heathrow and change there.

The issue is, do we have an asset which is going to grow with the market, or do we allow ourselves to have the competition from Schiphol and all the other places that people have talked about? This is an immediate decision. It needs to be taken straight away and there really is no way round it, other than making a decision about the third runway.

Photo of Lord Rosser Lord Rosser Opposition Whip (Lords), Shadow Spokesperson (Defence), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Transport) 8:20 pm, 23rd January 2012

My Lords, I also extend my thanks to my noble friend Lady Gibson of Market Rasen for securing this all too brief debate on the future of our civil aviation industry, a subject which has been thrust back into the limelight by the Government's announcement of a consultation looking at options for maintaining the UK's aviation hub status, including the possibility of a major new hub airport in the Thames estuary.

It is an interesting announcement, since, assuming its birth was not related to the forthcoming London mayoral election campaign, it represents a considerable potential U-turn from previous statements of no new runways at any of the three largest airports in London and the south-east, and a lack of enthusiasm for an airport in the Thames estuary. The Government's failure to set out a strategy for aviation which addresses capacity issues, among other things, is now putting jobs and growth at risk. The Government's call for airports to be "better not bigger" is a slogan, not a policy. The Government have no established policy around the future of the UK's civil aviation sector beyond a statement in the coalition agreement that the Government will refuse permission for new runways to be built at Heathrow, Gatwick and Stansted. Perhaps the Minister could tell us when he responds whether, in the light of the consultation just announced, that is still the Government's policy or not.

What we need is a strategy that works for the south-east as well as for our network of regional airports which are so crucial to our economy. The Government should have accepted our offer to work together on a cross-party basis to agree a long-term strategy for aviation. Setting an agreed long-term strategic direction for aviation is vital, particularly bearing in mind that our hub airport, Heathrow, is already working to virtually maximum capacity, we are falling further behind our EU competitors, passenger numbers are projected to grow significantly, the industry needs to be able to plan with certainty for the future-not least to deliver investment to provide additional capacity-and the UK has 11 per cent of Europe's airspace and 25 per cent of its traffic.

Any new capacity must go hand in hand with tougher targets on reducing CO2 emissions from aviation to tackle the industry's contribution to climate change. The industry can be proud of the huge advances that have been made in this direction already. However, with the significant growth in air passenger numbers forecast, we will not achieve, by 2050, the broader 80 per cent cut in emissions on 1990 levels to which we committed in the Climate Change Act 2008 without aviation playing a greater role. Future aviation growth must, we believe, go hand in hand with a greater cut in aviation emissions than we agreed, when in government, of reducing to below 2005 levels by 2050, a target to which the present Government have not affirmed their commitment. The industry's own sustainable aviation road map makes clear that, by 2050, it is possible to get absolute levels of emissions down to levels seen at the turn of the century, even as passenger numbers are projected to grow very significantly, so there seems to be a measure of agreement that it is possible to do more.

The aviation industry contributes more than £11 billion to the UK's gross domestic product. It supports up to 200,000 jobs directly and up to 600,000 indirectly across the UK. It is deeply worrying to the industry and the business world, among others, that while we know what the Government are against, there is still no credible strategy for aviation even on the horizon, which sets out the approach that this Government favour.

Photo of Earl Attlee Earl Attlee Lords Spokesperson (Department for Transport), Lord in Waiting (HM Household) (Whip) 8:24 pm, 23rd January 2012

My Lords, I start by congratulating the noble Baroness, Lady Gibson, on securing this evening's debate, in which we have heard articulated wildly opposing views. As all noble Lords know, aviation makes a huge contribution to our economy and our society as a trading nation, as pointed out by the noble Baroness. It generates economic output of up to £9 billion a year. The noble Lord, Lord Rosser, suggested that it was £11 billion; I do not know which of us is right. It supports thousands of jobs, drives our tourism sector and gives British businesses a vital gateway to the global marketplace. If this country is to grow and prosper in the future, aviation must be able to grow and prosper. I think all noble Lords are agreed on that.

Aviation provides regular connections not only to today's major world economies but to the emerging economies. However, we recognise that there is a price to pay for every flight-a price that is measured in noise, local air pollution and carbon. To continue enjoying the benefits of a growing aviation sector, we need to make sure that growth is sustainable. That is exactly why the Government are developing a new sustainable aviation strategy. However, in answer to the noble Lord, Lord Rosser, we cannot do this overnight. From the very start, the Government made clear that unsustainable aviation growth was unacceptable. We have maxed out on what the people surrounding Heathrow Airport can tolerate.

Instead, we have been working hard to make our airports more effective. We have a range of initiatives under way to deliver that ambition. For example, last week the Civil Aviation Bill was introduced to Parliament. This will give the CAA more flexible powers to respond to passenger issues and better target issues such as airport resilience. Our South East Airports Task Force, which was set up to improve operations at major airports, has explored measures for improving punctuality, tackling delay and strengthening resilience at Heathrow, which are being trialled. It has also endorsed plans to improve the current aviation security regime, on which we have consulted and are developing. We are also looking at how we can tackle delays and reduce the need for aircraft stacking through the CAA's Future Airspace Strategy and the Single European Sky.

As well as these initiatives, we still need to address the bigger question over future demand and future connectivity. The National Infrastructure Plan we published last year was clear that we must maintain the status of the UK as an international hub for aviation. We recognise that it is vital to maintain the UK's connectivity to improve our links to the emerging economies and promote inward investment and inbound tourism. That is why we are planning to launch a call for evidence on options for maintaining the UK's hub status alongside our draft framework. Through this we aim to reach an evidence-based conclusion on how to meet the UK's long-term connectivity needs. The noble Baroness called for rapid and firm decisions. However, the Government will consider these matters very carefully and make the right decisions, not necessarily rapid ones.

In the shorter term, we welcome the recent launch of new routes from Gatwick to Ho Chi Minh City and Hanoi, and the announcement that Air China will launch a Gatwick-Beijing route. These are the sort of global connections that British businesses need, and not just from London. We know how crucial our regional airports are in helping to balance growth across the country and to relieve crowding, where possible, at our south-east airports. We also recognise the importance of connecting the regions to London by air and rail to maximise the benefits.

To make this growth sustainable, we need to find new ways to decarbonise aviation. We will work with the industry to boost investment in and research into low-carbon technologies and fuels. For example, we welcome the research that countries such as the US have done in the use of algae-based sustainable fuels. Developing innovative fuel sources will be the key to enabling aviation to grow in a sustainable and successful way. We want to see Britain at the forefront of delivering greener air travel. The inclusion of aviation in the European emissions trading system from 1 January was an important step. Now we need to push for international agreement in ICAO on aviation emissions to get the level playing field that will ensure that aviation is able to grow globally in a balanced and fair way.

The noble Baroness, Lady Gibson, urged the Government to reconsider the issue of aviation taxation. The Government accept that the current economic climate is very challenging both for consumers and the aviation sector. However, if the Government are to meet their overall fiscal projections, we must balance the risk of growing competition from abroad with the Government's need to raise revenues from the sector. The rise in APD rates announced in the Autumn Statement does no more than keep pace with inflation and will give certainty to the industry for the two-year period to 2013. It is also worth remembering that it is important to look at the country's taxation as a whole. Unlike other countries in the EU, the UK charges no VAT on flights. My noble friend Lady Kramer talked about the favourable taxation status of the aviation industry.

We continue to believe that tackling climate change is one of the most important challenges we face and that all sectors, including aviation, should contribute globally to the 2 degrees Celsius goal. The Government continue to support emissions trading as one of the key instruments for reducing CO2 emissions from aviation.

Many noble Lords talked about the proposal for a Thames estuary airport. We are interested in innovative proposals for maintaining the UK's aviation hub status and we will consider all proposals submitted that meet the criteria set out in our call for evidence. A new airport in the Thames estuary is one idea that has been put forward in response to our recent scoping exercise, but we need a much more detail level of evidence, in particular on costs, funding and wider impacts, before we are in a position to develop which approach the Government should support. That is why we need the call for evidence.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

I am most grateful to the Minister for giving way, but I take it that he is not going to leave this point before answering the question: how can he possibly justify a review of the hub in Britain while excluding Heathrow? Is that not rather like, as someone said, reviewing the expansion of supermarkets without including Tesco?

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

I have and I am sitting down.

Photo of Earl Attlee Earl Attlee Lords Spokesperson (Department for Transport), Lord in Waiting (HM Household) (Whip)

My Lords, first, I have explained that we have already maxed out on what the local people around Heathrow can tolerate.

Photo of Earl Attlee Earl Attlee Lords Spokesperson (Department for Transport), Lord in Waiting (HM Household) (Whip)

Secondly, this Government have an open mind, which is the right way to go into a consultation. The noble Baroness, Lady McIntosh of Hudnall, effectively asked whether we are going to do a U-turn on Stansted. The commitment in the coalition agreement still stands.

Photo of Lord Rosser Lord Rosser Opposition Whip (Lords), Shadow Spokesperson (Defence), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (Transport)

In the light of what he said about the Government having an open mind, will the noble Earl confirm that the previous government statements about no new runways at any of the three largest airports in London and the south-east no longer stand?

Photo of Earl Attlee Earl Attlee Lords Spokesperson (Department for Transport), Lord in Waiting (HM Household) (Whip)

Definitely not, my Lords. The noble Lords knows perfectly well that that is in the coalition agreement and will stay.

The noble Lord, Lord Monks, asked me what more can be done to support industry and its people. The Government recognise the value that the aviation industry brings through supporting a network of highly skilled workers that adds value to the economy. The sector is at the forefront of technological progress, delivering R&D projects and large-scale investments that drive industry and the economy forwards. It is important that the trade union sector fully engages in the consultation process. The noble Lord also touched on the important issue of pilot fatigue. On the matter of flight-time limitations, we will support the proposed requirements only if the Civil Aviation Authority determines that they provide an appropriate level of protection against crew fatigue.

The noble Lord, Lord Soley, touched on the 76,000 employees at Heathrow, plus those in related service industries. We have to take their position into consideration as well. The noble Lord also talked about biofuels. The Government are clear that sustainable biofuels have a role to play in reducing CO2 emissions from transport, particularly in sectors such as aviation where there are limited alternatives to fossil fuels. In recent years, the aviation industry has conducted research and carried out flight tests to help provide information on different fuels. This work has demonstrated that biofuels for aviation are technically feasible. However, there are currently a range of barriers to introducing biofuels, including sustainability, scalability of the feed stocks and commercial viability. The Government will continue to work with European partners, the wider international community and industry to explore how to bring about a significant increase in the use of biofuels in aviation. Advanced biofuels, such as those derived from algae, when commercialised, could offer particular advantages, such as reduced land use impact.

On UK connectivity with China, the Government recognise the importance of developing and maintaining good links between the UK and emerging economies. That is why this March we are calling for evidence on options for maintaining the UK's hub status. Heathrow currently has fewer scheduled flights to mainland China than Paris or Frankfurt, but more than Amsterdam. However, if flights from Heathrow to Hong Kong are included, there are more flights from Heathrow to China than from any other EU hub. Hong Kong serves around 45 destinations on the Chinese mainland.

The noble Lord, Lord Empey, raised the issue of connectivity with the regions, particularly Northern Ireland. The Government recognise the vital contribution that air connections make to regional economies and acknowledge Northern Ireland's concerns about the air service between Northern Ireland and Heathrow should BMI be sold to British Airways. However, airlines operate in a competitive commercial environment, and it is for individual airlines to determine the routes that they operate. The options for supporting regional air services to London are limited. Member states can impose public service obligations to protect air services to remote airports, which could permit slots to be ring-fenced. However, they can be imposed only between specific cities, not specific airports, a difficulty identified by the noble Lord, Lord Empey. We have written to the EU Commission on that point, but there is no other mechanism for the Government to intervene in the allocation of slots at UK airports. The noble Lord introduced the Airports (Amendment) Bill, which would provide for the protection of air services between Heathrow and the UK regions. The Government are considering in detail the measures included in the Bill.

The noble Lord, Lord Lea, got quite excited about a number of points. Although we are committed to not authorising additional runways at Heathrow, Gatwick and Stansted, we are looking at our aviation policy framework with an open mind. The aviation industry is vital to our country. Our next step is to publish the draft aviation strategy and call in March for evidence on hub connectivity. With that strategy, we want to move away from the polarised opinions that have dominated discussion in the past and develop a broader consensus for change.

Photo of Baroness Dean of Thornton-le-Fylde Baroness Dean of Thornton-le-Fylde Labour

I will detain the Minister for only a short time. Can he answer my question? Will the consultation document contain the Government's proposals for dealing with the short and medium-term issues on capacity?

Photo of Earl Attlee Earl Attlee Lords Spokesperson (Department for Transport), Lord in Waiting (HM Household) (Whip)

I will have to write to the noble Baroness on that detail.

With the strategy, we want to move away from the polarised opinions that have dominated discussion in the past and develop a broader consensus for change, one that recognises aviation's integral role in generating growth and jobs, in providing the global connections on which businesses rely, but also acknowledges the real need to address the impact of flights on local communities and on climate change, a consensus that supports both a flourishing and responsible UK air transport industry.

J

Earl Atlee is right to want to support both a flourishing and a responsible aviation industry. But he should consider whether the aviation industry may have flourished too much already - aided by tax concession worth over £10 billion a year inthe UK alone. These tax oncessions are at the expense of other sectors of the economy, the budget deficit...

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