Clause 24 - Appeal to Competition Commission: conditions of new licences

Part of Civil Aviation Bill – in a Public Bill Committee at 10:45 am on 6th March 2012.

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Photo of Theresa Villiers Theresa Villiers The Minister of State, Department for Transport 10:45 am, 6th March 2012

Thank you, Mrs Riordan. I am sure that the Committee will wait with bated breath for the contribution of the hon. Member for Blackley and Broughton, who raises an important point in amendment 5 that we will be able to debate later.

I am grateful to the hon. Member for Barrow and Furness for raising the issue and for giving us a chance to debate one of the most important aspects of the Bill. If I may trespass on your patience for a little longer than usual, Mrs Riordan, I would like to explore some of the broader issues relating to the appeals process, because it is crucial.

For both technical and substantive reasons, I cannot support the amendment. At the technical level, I question why it has been tabled to clause 24(2)(b) but not clause 25(2)(b), which contains the same phrasing. Accepting the amendment would create an unjustified and irrational inconsistency between the grounds on which an appeal could be made regarding the conditions of a new licence, and those on which an appeal could be made against the modification of licence conditions.

I do not accept the heart of the argument put forward by Opposition Front Benchers, and nor do I believe that a case has been made for the concept of “materially affected”, which the amendment seeks to delete, being problematic to apply in practice. Whether someone is materially affected by a decision is a question of fact for the Competition Commission to decide. The concept of something being “material” is used in many other legal contexts without giving rise to problems of predictability and consistency. For example, under the Electricity and Gas (Internal Markets) Regulations 2011, permission to appeal may be refused by the Competition Commission where a person is not materially affected. The terms “material”, “material change”, “material circumstance”,  “material considerations”, and so on, have all previously been used in statutes, and the term has been used in legislation since at least 1906. A recent example can be found in section 897(2)(b)(i) of the Companies Act 2006, which refers to the

“material interests of the directors of the company”.

A further reason for the Committee to oppose amendment 21 is that it would have a negative impact on the effectiveness of the reformed system of economic regulation proposed in the Bill. It would be a significant and fundamental change. I must say that I see a surprising inconsistency in the Opposition Front-Bench team’s position. They were adamant last week that airlines were effective representatives of passengers and should have an important role in the regulatory system, and they tabled amendments to that effect. Now, however, they are seeking to dilute what is probably the most important right that the Bill grants to airlines—one that I believe airlines will be able to use effectively to defend their interests and, crucially, the interests of passengers.

As Committee members will probably be aware, the Bill draws on work going back some years, including the Pilling report, the Cave review and various consultations under the previous Government. There is no doubt that the appeals process has been the subject of lively debate throughout the deliberations that have led the Government to where we are today and the Committee to this amendment.

The shadow Minister has alluded to the dilemma that the Government faced on the kind of appeal rights to grant: on the one hand, we want a balanced and fair system that will be effective in holding the CAA to account for its decisions and the impact of those decisions on passengers; and on the other hand, it would be unwise, and it would not be right, to create such broad appeal rights that we end up with a slow and expensive two-tier decision-making system of the sort outlined by the hon. Member for Barrow and Furness.

Various options were considered, including vesting a right of appeal in airports and the Secretary of State, to ensure that we do not end up with a two-tier system. The airlines were concerned about that, but, to their credit, they took a constructive approach by proposing a number of ideas and working hard to develop an effective but constrained right of appeal that balances the competing concerns that I have outlined.

After extensive engagement with different stakeholders, including airlines, a more powerful right of appeal than the judicial review options available under the current system was included in the Bill—I welcome the shadow Minister’s supportive approach to that—but that powerful right of appeal is still limited in important ways to ensure that it cannot be used to clog up the decision-making process unreasonably. The right of appeal is available only to materially affected airlines, for example, but it is also constrained in other ways: an appeal does not suspend a licence condition, except in some limited and defined circumstances; and appeals are adjudicative, rather than investigatory.