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Clause 15 - Granting licence

Civil Aviation Bill – in a Public Bill Committee at 1:00 pm on 1st March 2012.

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Amendment proposed (this day): 17, in clause 15, page 11, line 3, at end insert—

‘(c) include an impact assessment by the CAA for the licence conditions imposed on the airport.’.—(Jim Fitzpatrick.)

Question again proposed, That the amendment be made.

Photo of Theresa Villiers Theresa Villiers The Minister of State, Department for Transport

It is a pleasure to see you back in the Chair, Sir Roger. Before the Committee adjourned, the shadow Minister asked me for a breakdown of the savings delivered by the Bill. We will get the opportunity to look at that matter in more detail, for example when we discuss aviation security. There may be some redistribution of costs following the Bill, and although some of the savings will be experienced by regulated airports, some additional costs might be felt across the sector. That is the case for information, which we will no doubt discuss in some depth, and for security, which we will also consider under the relevant clauses.

The Bill will involve some additional costs because it transfers regulatory responsibility for security from the Department for Transport to the Civil Aviation Authority, which is funded by industry. As we discussed during the evidence session, the Bill is accompanied by our ongoing work to move to an outcome-focused, risk-based security regime, which we expect to be better and more efficient, and to provide the possibility for reduced costs in the delivery of security—costs that are currently borne by airports.

Let me come to other points raised by the shadow Minister and the hon. Member for North West Durham. As I said in my opening remarks, it is crucial that we look carefully at the cost impact of our proposals, in terms of both economic regulation and the Bill as a whole. It is clear from the CAA’s general duties in clause 1(4) that it must consider the impact of any proposed regulation effected by the new framework.  The obligation in clause 1(4) to take a “proportionate” approach requires the CAA to assess the costs and benefits of its decisions in a number of contexts, including the contexts that we are considering in this clause. In effect, the CAA will have to publish an analysis of costs and benefits in setting licence conditions. In clause 15(7)(b), the CAA is required to give

“reasons for the conditions included in the licence”.

The appeals system means that the CAA will need to justify its decision, and it cannot do that without providing evidence that it has conducted an appropriate assessment of costs and benefits that will enable it to comply with its obligations under clause 1(4).

It is not clear from the amendment whether the Opposition wish to impose an obligation on the CAA to publish a cost impact assessment that is as detailed as those that Departments produce for new legislation. A cost impact assessment can mean a range of exercises and analyses. I recognise the value of analysing the costs and benefits of important decisions, and that is one of the reasons why, as I have explained, the Bill would effectively oblige the CAA to publish such an assessment. We should, however, think carefully about the cost of any obligations that we impose on the CAA, and the extent of potential bureaucracy. Ultimately, those costs will be passed on to industry and passengers.

However, even setting aside the better regulation duties in relation to proportionality in clause 1(4), which, as I said, provide protection in relation to the point raised by Opposition Members, the primary duty, which we discussed at length on Tuesday, also provides protection against the sorts of disproportionate cost burdens that hon. Members are concerned about.

The primary duty to passengers helps to provide safeguards on cost impacts, because the Bill requires that all economic regulation decisions taken by the CAA, including the imposition of licence conditions under the provisions that we are considering, must further the interests of users of air transport services in the provision of airport operation services. Of course, where the cost of a proposed licence condition or set of licence conditions is seen to outweigh the benefits that it would confer on end users, it is difficult to see how that could be consistent with the primary duty to further the interests of end users, for which there has been broad support both in this Committee and among the stakeholder community.

Indeed, further protection is provided by clause 15(7)(b), (c) and (d), which require the CAA to publish the reasons for conditions included in the licence, how it has taken into account any representations made to it, and the reasons for any differences from the conditions that were initially proposed, and when doing so the CAA must demonstrate that it is being consistent with its duties, including the proportionality duty in clause 1(4) to which I referred. In effect, therefore, the Bill already requires the CAA to publish some analysis of costs and benefits in relation to its decisions. Against that background, requiring a full impact assessment could be disproportionate.

I hope that I have been able to give hon. Members across the Committee some reassurance that there are already safeguards built into a Bill that, overall, should reduce costs for the aviation sector. I hope that the amendment will be withdrawn.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

Having received that clarification and those assurances from the Minister, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 15 ordered to stand part of the Bill.

Clauses 16 and 17 ordered to stand part of the Bill.