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Clause 18 - Licence conditions

Part of Civil Aviation Bill – in a Public Bill Committee at 2:00 pm on 1st March 2012.

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Photo of Theresa Villiers Theresa Villiers The Minister of State, Department for Transport 2:00 pm, 1st March 2012

The amendments would apply only to airports subject to economic regulations, so would not deliver what the hon. Gentleman wants. The clauses on information provisions later in the Bill may start to address such concerns by enabling the CAA to ask for information, which can be looked at consistently across different airports. He may be getting ahead of himself, because that excitement awaits us next week.

As I have made clear, I can understand and agree with the sentiment behind a lot of what is in the amendments, but I cannot recommend accepting them. I ask my colleagues to vote against the amendments if the Opposition press them. The Bill provides a more effective means to protect passenger interests.

Clause 18 and the licensing regime as a whole will give the CAA the flexibility to tailor licence conditions to the specific circumstances of individual airports that have substantial market power and thus fall within the remit of economic regulation. Such flexibility is an important means of minimising the distortions associated with regulatory intervention and ensuring that action taken by the CAA is targeted and proportionate. “One size fits all” does not necessarily provide the right answer in this sphere, as in others.

Giving the independent regulator flexibility and discretion in deciding the content of licences is the most effective way to protect the interests of present and future passengers, as called for by a number of hon. Members, including the hon. Member for North West Durham. If Parliament chose to accept such amendments and hard-code certain specific points into licences, that would constrain the regulator’s freedom to decide what priority should be afforded to different passenger concerns and what costs should be allowed for the delivery of competing consumer priorities.

The amendments would unbalance the licence system, because passengers care about a range of issues. Indeed, various hon. Members have mentioned security, which is not included in the amendments. Some issues for which there may be a pressing case for regulatory intervention at one airport may simply be an irrelevance and an unnecessary additional cost if required at a different airport.

The shadow Minister himself acknowledged that there might be different needs at different airports, and I ask the Committee to recognise that the expert independent regulator is the right body to decide between competing priorities, which is in line with best practice across the regulatory sector and the previous Government’s approach. A prescriptive approach in the Bill, which the amendments would introduce—they require the regulator to do certain things—would likely make it much more difficult for the regulator to adapt its approach—not only between different airports, but to the changing concerns of passengers.

If we were to adopt the amendments, the Bill would oblige the CAA to give greater weight to the factors that it sets out, but other matters might become equally important or much more important to passengers in the  upwards of 20 years that we expect the regime to be in operation. The approach set out in the amendments goes against the point, raised throughout our considerations by the hon. Member for Blackley and Broughton, about the need for proportionate regulation.

My hon. Friends the Members for Milton Keynes South and for Finchley and Golders Green have highlighted concerns about the limitations of the snapshots that one might get from passenger surveys. Let me make it clear that the Government take winter resilience seriously. It is important that the Committee does not talk down the efforts that many of our airports are making to address that problem, not least the significant investment at Gatwick, Heathrow and other airports.

I reassure hon. Members that the CAA will use the new flexible licensing powers set out in the Bill to focus on winter resilience and passenger welfare in the event of extreme weather disruption, regardless of whether they are included in the Bill as the amendments propose.

In response to a request for advice from the Secretary of State, the CAA published an indicative licence, to which the shadow Minister has referred, in January to assist Parliament in its scrutiny of the Bill. A copy of the indicative licence is in the House of Commons Library, and at the Department for Transport’s request it includes provisions on winter resilience. Condition 7 requires the licence holder to operate the airport efficiently and to endeavour to minimise detriment to passengers from disruption. Condition 7 also requires the airport to draw up, consult on and gain the CAA’s approval for an annual resilience plan setting out how the airport will secure compliance with its obligations under the condition. The licence holder is also obliged to comply with commitments it has made in its resilience plan.

The CAA sought initial views from industry in drafting the indicative licence. Because Parliament is still considering the Bill, the CAA has not started to consult formally on proposed licence conditions for each airport that will be subject to regulation. If the system proposed in the Bill goes ahead, the CAA will consider the extent to which it is necessary or expedient to include in its licence proposals conditions for operational resilience and other matters, such as passenger welfare or baggage handling. The CAA expects that those conditions will include the taking into account of other obligations on service quality standards, and the success of codes of conduct and voluntary arrangements being adopted by the industry. Such options should be available to the regulator. The regulator may want, via the licence, to opt for compulsion, but there are also lesser means of ensuring that the passenger interest is protected, if the airport adopts a voluntary code that is subsequently approved by the CAA.

The amendments would constrain the CAA’s powers to opt for lighter-touch approaches. Against that background, we believe that putting specific requirements in the Bill concerning matters such as baggage handling and winter resilience might be disproportionate and would place an unnecessary restriction on the CAA’s flexibility to develop proportionate and effective ways to address passenger concerns and adapt to changing passenger concerns over decades to come.

I hope I can give the Committee further reassurance, particularly on clause 1(3)(d), which requires the CAA to have regard to guidance from the Secretary of State on economic regulation. The Bill contains a provision  for the issuing of guidance to the CAA, to which it must have regard when making regulatory decisions. We expect high-level policy guidance to include matters relating to resilience conditions, such as winter resilience. That is another way in which the Bill provides, without containing a prescriptive requirement, for such matters to be at the forefront of the CAA’s work.

I now turn to the questions about UKBA. Members who were keen for the licence condition to cover matters relating to UKBA will be disappointed, because clause 77 makes it clear that certain Crown functions are outside the scope of the Bill. The accountability for the actions of UKBA and the UK border force is properly to Ministers and Parliament rather than to the aviation regulator, and every member of the Committee will be aware of the robust exchanges that regularly occur in Parliament concerning the security of our borders. The shadow Minister asked me to relate the discussions I have had with the Home Office. As I said in my evidence to the Committee last week, UKBA contributed usefully to the Government’s task force on south-east airports, and I recently met with the Minister for Immigration, my hon. Friend the Member for Ashford (Damian Green) to discuss the questions about transparency that were raised on Second Reading. As I said in my evidence, he indicated that he was happy to look again at transparency in relation to UKBA, and to consider whether it might be appropriate to publish port-by-port information.