Examination of Witnesses

Civil Aviation Bill – in a Public Bill Committee at 2:27 pm on 23rd February 2012.

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Theresa Villiers, Robert Catherall and Richard Hatfield gave evidence.

Q 176

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

Good afternoon. Minister, for the sake of the Official Report, would you like to identify yourself?

Mrs Villiers: My name is Theresa Villiers. I am Minister of State for Transport.

Q 177

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

Thank you. Would you care to make a brief opening remark?

Mrs Villiers: I should be delighted to do that. First, I should like to introduce Rob Catherall. He is the regulation policy manager for airport economic regulation. Richard Hatfield is due to join us in a moment, but as we are running so admirably ahead of target, he is on his way.

Q 178

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

You are quite right. We are running ahead of schedule. If there are any questions that you feel Mr Hatfield needs to answer that others cannot, then we can park those and come back to them when he arrives.

Mrs Villiers: That seems a very pragmatic solution. I very much look forward to a lively debate in Committee on the key areas which are already starting to emerge as the points of contention. I hope there will be some consensus over the core goals of the Bill. We have built on some excellent work by the previous Government. We have also drawn on the views of major stakeholders  including airports and airlines in coming to the package that we are presenting to Parliament. We believe that a primary duty to passengers will deliver tremendous benefits, and enabling the CAA to intervene in real time, rather than having to wait five years for a blunt instrument of a price review to protect passengers’ interests, will be a major step forward for passengers. We believe airports will benefit from less bureaucracy and lower cost. We believe airlines will benefit because they have much more effective appeal rights under this framework than under the previous system. At its heart I hope that we can command a lot of support for the Bill and I look forward to a debate on the points of contention.

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

Perhaps we can start by finding out whether the Opposition agree with you.

Q 179

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

May I begin by apologising for our low numbers this afternoon? It is no disrespect to the Minister at all. I am sure she realises that, but a number of our colleagues have gone to the cycling debate in Westminster Hall which, as a keen cyclist, she may well want to attend herself.

I can confirm that there is a lot of consensus on many aspects of the Bill. I personally had a briefing from the Minister and her officials before these public sessions were organised. I am grateful for that. I know that one or two other colleagues benefited from that opportunity too. My only question for the Minister is this: has she heard anything in the past few two days that has given her pause for thought and if so can we expect some additional Government amendments? She may still be reflecting on some of the things she has heard, but some witnesses may have given her pause for thought and if so does she want to share that with us?

Mrs Villiers: We are, of course, always open to the proposals made to refine the Bill. There is a technical amendment that we may propose to the Committee, which would insert “the Bill” into one clause. I am not sure I remember which.

Robert Catherall: It is clause 107.

Mrs Villiers: Apart from that, we do not have plans at present to introduce amendments in Committee, but, as I said, we will listen to what hon. Members have to say. If there are parts of the Bill that we can refine and improve as a result of the parliamentary scrutiny process, we will not hesitate to do that.

Q 180

Mrs Villiers: I know what’s coming.

Q 181

Photo of Mike Freer Mike Freer Conservative, Finchley and Golders Green

You have heard me raise with numerous witnesses that the scope of the clause on the publication of information should include the performance of UKBA. I appreciate that that is a Home Office function, so I stress that the amendment would need to be carefully worded on publication of information that affects the air passenger user. Basically, BAA, Gatwick and Passenger Focus would support it, and even the CAA and BATA said that they would support that particular provision being extended. Provided we could get the wording correct, what is your view on extending that scope?

Mrs Villiers: As you know, I cannot agree with you that this is the appropriate vehicle to impose transparency requirements on UKBA, but we are in agreement on the overall benefits of transparency. Indeed, across Government we have a commitment to introduce a more transparent approach. Following on from the points made on Second Reading, I met with the Immigration Minister, my hon. Friend the Member for Ashford (Damian Green) to discuss this matter. You will appreciate that the DfT and the Home Office are in regular dialogue over UKBA because of the overlap. UKBA reports to the Home Office of course, but it does have an impact on the performance of our airports. My hon. Friend made it clear that he is prepared to look at these matters again to see if more transparency is possible, and, in particular, he is prepared to consider whether it is possible for more port-by-port based information to be published, but that would be a voluntary arrangement and would not be part of the formal framework provided by the Bill.

Q 182

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

May I continue down that line? On the data that the Bill will enable passengers to receive and understand, a key thing that I want to know is how long it will take from the plane reaching the gate to my being able to get on my way home. In many ways, if the UK Border Agency queue is slow, my bags will be waiting for me, but if the border agency queue is fast, I will have to wait for my bags. Will it not be a bit of nonsense to have that information, if I do not have information on the thing that probably delays me the most on my arrival?

Are not the airports the best placed people to know the time it takes from when a plane hits the gate and the doors open to when I am through, clear and able to leave? It would not be a matter of the UKBA having to publish that information; what I want to know as a passenger is the length of time between landing and my being out of the airport. I cannot see any reason why the airports could not collect and publish that data.

Mrs Villiers: We certainly do not see the UKBA as a service provider in that sense—the UKBA has important border security functions. It reports to the Home Office and it would be inappropriate for the CAA, as the aviation regulator, to impose transparency and regulatory requirements. Having said that, as I said to Mike, the Home Office is responding to the points that have already been made in this debate to see if it can start to deliver more of the type of transparency that colleagues would like to see. It already publishes data on a national level and will look at whether it would be possible to publish more information on a port-by-port basis, which it would be prepared to share with the airlines and the CAA.

Q 183

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

My point was that we would require the airport to publish the time it takes from gate to exit. I am not sure that I necessarily want or need to know the components of each particular queue or even the fact that at some airports there is a 20-minute walk from the gate to get to the border agency desk, as there was at terminal 3 at Heathrow this week. It is about requiring the publication of how long it takes to go from the landing time I can see on my ticket to being clear of all the stuff I have to do at the airport. I cannot see that one component being the responsibility of somebody else prevents the publication of that total time.

Mrs Villiers: That is certainly an interesting idea, and the concept of looking at the entire journey though the airport is one in which passengers are interested. What the UKBA has been doing at Gatwick is an interesting example of a pilot that has seen more integrated working between it and the airport operator and the sharing of additional data compared with that available at other ports. That is an example of where the UKBA is already engaging and starting to respond to some of the concerns that my hon. Friends have raised and, indeed, were raised by the Government’s south-east airports task force. The UKBA may be prepared to consider such an approach elsewhere in the future, which would benefit passengers.

Q 184

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

Good afternoon, Mr Hatfield. Thank you for joining us. You are not running late; we are ahead of schedule, and the Minister has introduced you in your absence. Thank you for being here.

Richard Hatfield: That is very kind.

Q 185

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

Minister, you have heard today that even the leadership of the CAA is positive and open-minded about the idea of being subject to value-for-money assessments by the NAO. Do you continue to believe that the CAA should be the only regulator outside of that orbit?

Mrs Villiers: I do not see a need for the NAO to become involved in the CAA’s activities. The CAA is already subject to audit and scrutiny. That was, of course, considered by the previous Government and the Pilling report, neither of whom concluded it to be a necessary change. The simple fact is that the CAA is not dealing with public money; it is dealing with the money of the aviation and airline industry. The CAA is funded by the industry, and the NAO’s functions are primarily focused on taking account and keeping track of taxpayers’ money. The NAO does a fantastic job, but I do not see that the current arrangements are inadequate. I find it quite instructive that, as far as I can see, not one piece of evidence to the Transport Committee mentioned this as an issue of concern to the people affected by the Bill.

Q 186

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

But you recognise that the CAA would be unique among the economic regulators if it were not subject to the NAO? What is the reason for that?

Mrs Villiers: As I have said, the CAA is an economic regulator funded by the industry, and the NAO is tasked with keeping track of taxpayers’ money. I draw on the work done over a number of years that concludes that there is not a pressing case to bring the CAA within the NAO’s remit. I have not heard, as yet, anyone give a strong reason why the NAO would make a difference or achieve a result different from the current means by which the CAA’s functions are audited and scrutinised.

Q 187

Photo of Iain Stewart Iain Stewart Conservative, Milton Keynes South

Minister, may I return to the publication of consumer information? This morning, I asked Mr Haines from the CAA about the role he envisages for the new consumer panel in determining the type of information that should be published and made available to air passengers. My interpretation of his response is that he regards the consumer panel as just one of several bodies that will  shape that information and its role will be rather organic. Are you satisfied with that, or do you think the Bill should be a little more prescriptive in setting the consumer panel’s role?

Mrs Villiers: I do not see a need for additional prescription on that in the Bill. As I hinted in the question I asked this morning, my view tends to be that, when one is looking at the passenger interest, research is a key part of effectiveness, which is why Passenger Focus is effective in the rail and bus market. I know that the CAA includes that as part of the plans for its consumer panel. Another key element, which is important for an effective consumer panel, is a degree of independence, and it is very much part of the CAA’s plans that the panel will have such independence, so that it can act as a critical friend and challenge the CAA on its approach to consumer issues.

Q 188

Photo of Simon Wright Simon Wright Liberal Democrat, Norwich South

What further specific requirements on the CAA to take environmental factors into account were considered, but ultimately not included in the Bill? Why was that?

Mrs Villiers: I am pleased that someone has brought up the environmental issue, because I want to be absolutely clear that I yield to no one in the seriousness with which I take the environmental impact of aviation—particularly noise, but also carbon. Throughout my time in Parliament, I have always been rigorous in asserting that we need to take seriously the environmental impact of aviation, and that of course requires, in appropriate circumstances, legislation and regulation. My point is that airport economic regulation is not an appropriate vehicle for delivering that kind of environmental regulation.

The Bill, as drafted, clearly gives the CAA the ability to authorise investment that has an environmental focus. That has been the case under the old regime, and the CAA is confident that it can continue to authorise such investment, because that is ultimately in the passenger interest, which is what the CAA is being asked by the Bill to protect. We need to take seriously the environmental impact of aviation, but adding in environmental duties and placing them on an airport simply because it is subject to economic regulation is not the right way forward. We need to look across the board and impose whatever regulation is necessary depending on the environmental impact of the airport and not whether it wields substantial market power.

Q 189

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne

I would like to ask about ATOL, and my question is probably not the one that you think I am going to ask. Were there any discussions in the Department about the possibility of actually getting rid of ATOL altogether?

Mrs Villiers: We certainly discussed whether we should look to scale it back and challenge consumers to go out and sort out their own travel insurance. ATOL going completely was never on the table, because we are required by the package travel directive to ensure that consumers who buy packages in the traditional sense—the narrow legal sense—are protected in the event of insolvency. That is compulsory, so there would be no question of removing ATOL protection.

We did look seriously at the option of trying to use transparency as a way to fix the problem of many people thinking that they are buying a protected holiday  when they are not, but, for many of the reasons aired earlier this afternoon by ABTA, we just did not think that that would work. It would be difficult to generate an effective transparency requirement. At the moment, the insurance industry is certainly not producing products that have the extent of protection that ATOL gives, and there is a reason for the Government intervening in this market. The reality is that, at a time when people’s incomes are squeezed by current economic circumstances and when a significant chunk of their annual income may be devoted to a holiday, it is entirely reasonable for the Government to step in to help to ensure that money is protected in the event of insolvency—where it is reasonable to do so. People expect protection, and they want protection, so extending the scope of the ATOL scheme to more holidays is a responsible thing to do to help to protect people’s hard-earned cash in the event of a travel company’s insolvency.

Q 190

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

That sounds like a firm commitment. Is that right? If so, are you prepared to go beyond the enabling power in the Bill and actually write it into the Bill?

Mrs Villiers: We have a firm commitment to extend ATOL protection. We are committed to extend it to flight-plus holidays sold by travel agents and tour operators, and we will soon be presenting to Parliament secondary legislation to that effect.

In the Bill, as you say, there are enabling provisions that would allow the Government to bring airlines that are selling flight-plus holidays into the scheme. We think there is a case for doing that—broadly for some of the reasons I have just ventilated, about the general case for extending ATOL protection—but we have not made a final decision yet on whether to activate the enabling powers. Before we do that, it would be very important to conduct an appropriate impact assessment and to consult thoroughly all the parties that could be affected. In terms of good governance, it is important that we have all the evidence on the table before we take a decision on how far we extend the ATOL scheme.

Q 191

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

Thank you. My final question is on the concerns we have heard today about transferring the security function; do you dismiss those out of hand?

Mrs Villiers: Of course, it is very important to listen carefully to all points of view; that includes the work force and those who are delivering the services on the ground. A lot of detailed work will need to be done before the transfer can take place to the CAA. We are convinced that we can make this system work, but getting the practicalities and the details right will be the work for the next few months. That is one of the reasons why the transfer of responsibilities does not take place immediately, but is scheduled for 2014—if I have got that right.

Richard Hatfield: indicated assent.

Mrs Villiers: We have a working group focused on this very closely. We expect to be able to produce a note for the Committee when we get to that part of the proceedings, perhaps to give you some more information about how we see the practicalities of the transfer going forward. We remain convinced that this will be a positive move, but we appreciate that a lot of careful work needs to be done, to ensure that it works well in practice.

Q 192

Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry

It is very good to see you, Minister, because when I spoke in the Second Reading debate, you were doing something else—being fixed after your cycling accident.

Mrs Villiers: Yes, I was on the operating table, literally.

Q 193

Photo of Chris Heaton-Harris Chris Heaton-Harris Conservative, Daventry

I suppose that is a half-reasonable excuse for not being there. I want to ask for clarification on the Department’s plans for a more efficient, outcome-based approach to aviation security regulation. The Under-Secretary of State for Transport (Norman Baker), who was on the Floor of the House at the time, kindly wrote back to me. I want to clarify a point, because he said:

“The outcome-focused regime will take several years to be phased in.”

What does phasing-in mean in this circumstance? There is a difference between big and small companies, and how they would be able to work this?

Mrs Villiers: I have a personal interest in this, because I will be the first aviation Minister who sets the alarms off every time I try to get on a plane, now I have a chunk of titanium in my collar bone.

With the outcomes-focused, risk-based approach to regulation, as we have heard from witnesses, part of it is giving more responsibility to the airports to decide how best to deliver the outcomes, and to develop systems to deliver the outcomes that can then be approved by the regulator as valid and workable. It is not a question of the Government saying, “Right, here is your outcomes-focused, risk-based regulation. Get on with it.” It is a two-way process, so the airports look at how the processes are working and devise ways in which they can deliver security effectively. It is not a single process; it is each airport looking at some of the best ways to do it. That is one reason why the change is inevitably going to be gradual; some people out there at the front will want to get into their own special outcomes-focused approach, while other airports might want to stick with a more traditional approach and move at a slower pace.

Another reason why it will be gradual is that there is a debate, because a lot of security regulation is determined at an EU level and there is scope—even without any changes at an EU level—to use an outcomes-focused, risk-based regime. However, if we want to use it more broadly, we also need to win the arguments in Europe. There is every reason to believe that Europe may want to head in that direction as well, but, as you will be well aware, the processes in Europe do not often tend necessarily to be very fast. Again, the extent of the coverage of this new approach will slightly depend in the longer term on whether we can get changes in Europe. Richard, would you like to talk about the process of introducing outcomes-focused measures?

Richard Hatfield: The Minister has picked up two of the main reasons. The third part of this will actually be done through trials. We are not going for a big-bang approach. We will try some of the new ideas probably at less obviously risky airports or threatening environments before industry rolls them out on a wider basis. Taking the point at the start of this sequence about not doing anything unduly risky, we think this is a very sensible way to move. We want to try some of these ideas before we put the whole weight of the new approach upon them. That is the third element of why we are proposing to phase this in.

Q 194

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

Minister, when we are looking at reforming how ATOL works, I guess you will have heard of the problems many schools have had with Skiing-Europe, which effectively went bust. The way it satisfied the requirements of the package tour directive was by having insurance for financial insolvency. Then, the insurance company promptly decided that it had fraudulently obtained the policy and cancelled it. That meant there was no protection for people who had validly booked a package holiday. Have you considered, when reforming ATOL, whether there was any need to reform how the whole directive is applied, to make it work properly in all situations, as well as just for air transport? Should we just move to a situation where it is all bonded and not insurance-based, or should there be some stronger rules so that insurance companies cannot weasel out in cases where they have not done their checks before accepting the policy?

Mrs Villiers: I agree that what is in the Bill is only an element of a wider reform of ATOL. There have certainly been various cases where problems have arisen: people thinking they were protected and it turned out they were not; or even holidays that should have been protected, except that the appropriate payments had not been made. The CAA is very focused on trying to remedy those issues. There has been some progress.

In particular, what we are seeking with the ATOL certificate is an important way to ensure that the whole system works better, so that people get used to the concept of asking for the certificate, and that they have greater certainty that when the agent says it is covered, it genuinely is. Part of the strategy that the Government have on ATOL, alongside the CAA, is to try to raise awareness of ATOL as a scheme, and to raise awareness of the importance of consumers checking whether they are covered and preferably getting hold of a certificate as further reassurance. That is an important part of the secondary legislation, which we are taking forward in parallel to the reforms in the Bill.

Q 195

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

On a separate topic, one of the issues associated with scarce airport capacity is that what might be the most profitable route for airlines or airports may not be in the best interests of consumers across the country overall. I wonder whether certain slots into Heathrow might be at risk from Scotland or Belfast, following the sale of bmi. Do the Government think there is a need for Government or regulator involvement there, or should it just be left to the market to decide?

Mrs Villiers: I know it is an issue of concern to many, and indeed it was raised this morning in the Chamber. As things stand, EU rules would prevent any kind of intervention by the Government. EU rules require slots to be allocated by an independent organisation, with airlines free to decide how they use those slots. We think that the competition in UK aviation has brought huge benefits to consumers, so we would need to proceed with great caution if there were any question of intervening  in that free competition. We certainly have the opportunity, with the discussion of the airports package in the EU, to look at these issues. We are absolutely adamant that regional connectivity is crucial for our economy. That is one of the reasons why we are pursuing HS2. We will, however, in our overall work on our aviation strategy, keep in mind the importance of ensuring that we continue to have excellent regional connectivity between the rest of the country and the London airports.

Q 196

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

Would you like to make any guesses or predictions as to how many airports need to be economically regulated by the CAA when it gets the power? Do you think it will stay at three, or do you think there is some scope for the figure to come down?

Mrs Villiers: The ethos of the Bill is to take that decision out of the DFT and to ensure that it is made by an independent regulator. I am slightly nervous of setting hares running unnecessarily, so I might refrain from answering that.

Q 197

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

But you would be extremely surprised if any more airports became economically regulated in the medium term?

Mrs Villiers: I see no evidence of any airports heading to the market power level that would bring them within the remit of the current rules or the rules we are debating in the Bill.

Q 198

Photo of John Woodcock John Woodcock Shadow Minister (Transport)

My question is supremely relevant to the Bill. What do you think of the point, made by BAA this week, that the market power clauses are unnecessarily complex and you could have something simpler in the Bill, with the CAA being given more flexibility to shape the test?

Mrs Villiers: We think we have maximised the CAA’s flexibility. Again, this is a key thrust of the Bill, so it is impossible to sit here now and work out with confidence  all the things we will need to do to protect passenger interests over the next 20 years. We want to give the CAA as much flexibility as possible. There are certain limits—we need to ensure, for example, that the CAA does not accidentally start regulating car parks. We have to have some limit to ensure that the CAA’s focus is on airports and so that we do not, by accident, bring its remit to cover all sorts of other areas. We will engage carefully and closely with BAA to understand its concerns on this issue, but I hope I have given it some reassurance that the Bill will not operate in the way it fears it might. Robert may want to come in and talk specifically about the points that BAA made.

Robert Catherall: The Bill has been drafted to ensure that there are several possibilities regarding how airports can operate in the future within that regulatory framework. It is important that the Bill be able to allow for multiple operators to be regulated, which the current framework—the Airports Act 1986—would not allow. That requires, as the Minister said, defining the airport, and that is partly where the complexity comes from. However, it is important to deliver that policy. [Interruption.]

Photo of Roger Gale Roger Gale Parliamentary Assembly of the Council of Europe (Full Member)

For the benefit of the record, and because I, too, believe in transparency, I was just being asked whether it was possible to extend the evidence session to bring in the Minister for Immigration, the hon. Member for Ashford (Damian Green) to talk about the work of UKBA in arrival halls. The feeling is that that is outside the scope of the Bill, which is why I said no. There are one or two other issues as well.

Are there any further questions for the Minister? No. At our next sitting we will commence clause by clause consideration of the Bill. I thank you, Minister, and your civil servants, for joining us.

Ordered, That further consideration be now adjourned.—(Iain Stewart.)

Adjourned till Tuesday 28 February at half-past Ten o’clock.