[Jim Dobbin in the Chair] — Aviation

– in Westminster Hall at 12:00 am on 4th July 2012.

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Motion made, and Question proposed, That the sitting be now adjourned.—(Greg Hands.)

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood 9:30 am, 4th July 2012

It is a pleasure to serve under your chairmanship, Mr Dobbin, and to have the Minister respond to the debate.

My interest in airports first came about because, at a time when many boys want to be train drivers, my younger brother had an ambition to be an airport manager. Consequently, whenever we went on holiday, my indulgent parents would take us to the airport four or five hours before we needed to be there, and my brother would go around and catalogue the catering outlets and investigate the cleaning rosters. I was delighted, a few years later, when he decided that he actually wanted to be a doctor.

As an economist, I worked for a short period on airline alliances, but my most significant involvement with aviation came 10 years ago when, following a leak in the Financial Times a few months earlier, the then Labour Government published the “South East and East of England Regional Air Services Study”—SERAS—which proposed an airport twice the size of Heathrow at a location it described as Cliffe, in the constituency I now represent. Then as now, many felt that that was a stalking horse to make airport expansion elsewhere seem more attractive by comparison.

Our first response was to look at that airport study, which we noted excluded any consideration of Gatwick expansion, on the basis that there was a planning agreement, and it looked no further at that idea at all. I was sort of blooded on that issue when I first asked whether that decision was perhaps irrational and something that would be questioned by the courts. Initially, a judicial review was proposed, which ultimately led to the Labour Government being forced to consider the case for a second runway at Gatwick, even though they had previously decided against it.

The debate that took place showed that an estuary airport would be environmentally devastating, and that the economics simply did not add up. I and many others were delighted to campaign with the Royal Society for the Protection of Birds, the Friends of North Kent Marshes, and many others who made the case that having a huge airport in the middle of Europe’s leading wetland landscape, with its millions of birds, was probably not a good idea.

The assumption by some that no people live in that area and that there would be no opposition was put paid to by more than 20,000 people who live on the broader Hoo peninsula, and who would suffer egregiously from such an airport. In addition, large numbers of people live on both sides of the estuary, and any flights taking off in a westerly direction would create new flight paths over heavily populated areas of London.

The idea that such an airport would somehow be a problem-free solution that people would not complain about is, to coin a phrase, for the birds.

Photo of Jackie Doyle-Price Jackie Doyle-Price Conservative, Thurrock

To follow on from that, one point made by advocates of the estuary solution is that the area is crying out for new jobs. Does my hon. Friend agree that that ignores the economic growth that is already happening, particularly in south Essex, with the expansion of the port? That is the future of the estuary—ports, not airports.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

My hon. Friend makes a good point, and I congratulate her on her work in campaigning for economic development in her area. The fundamental point is that although jobs might be created—I do not deny that there would be a lot of jobs; perhaps 200,000, as some estimates suggest—they would come 10, 15 or 20 years from now, and would be almost entirely taken by a vast migration of people who would be forced to uproot themselves, perhaps from around Heathrow, and move to a new area. In terms of Government engineering, I cannot see the case for that in a free society.

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

I congratulate my hon. Friend on securing this important debate. Has he seen the report issued by the South East local enterprise partnership, which states that if we allowed our existing airports to expand, we could increase the number of jobs by about 100,000? That would generate in excess of £4 billion per annum.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

Yes, I have seen that report, and I have a copy with me. Indeed, I encouraged Medway council, and through it the local enterprise partnership, to commission that excellent study. My hon. Friend and neighbour is right, and I will draw significantly on the analysis in that paper during my speech.

As well as the environmental issues, there is a knock-down argument against the Thames estuary airport: it is vastly more expensive to build a new airport than to expand existing provision. Recently, some of those issues have been revisited with Boris’s pie-in-the-sky proposals, whether for Boris island, for a Foster monstrosity over the Isle of Grain, or even to look again at the Cliffe option that was so unambiguously rejected. Some newer issues have come to the fore. For instance, there is the London Array wind farm, and billions of pounds of investment have been put into a major liquefied natural gas terminal. There is the Richard Montgomery, a sunken vessel laden with high explosives, which this Government—unlike the previous one—tell us about, and provide reports on, to clarify the risk. Furthermore, issues of air traffic control have become even more significant than they were 10 years ago, partly because of the expansion of Schiphol airport over that period.

I note from the Parsons Brinckerhoff report mentioned by my hon. Friend Tracey Crouch that Richard Deakin, the chief executive of the National Air Traffic Services, said that the proposed site for the new airport was

“directly under the convergence of major arrival and departure flight paths for four of London's five airports.”

Pointing to the Thames estuary on a map, he said:

“The very worst spot you could put an airport is just about here…We’re a little surprised that none of the architects thought it worthwhile to have a little chat with the air traffic controllers.”

Photo of Jo Johnson Jo Johnson Conservative, Orpington

I congratulate my hon. Friend on securing this debate, but I am a bit depressed by the combination of nimbyism and sticking-plaster solutions that he puts forward. Is he aware that the UK remains without any direct connection to 11 cities in mainland China that are expected to be among the 25 biggest cities in the world by 2025? Only a hub airport can deliver the sort of connectivity for which businesses in Orpington, and doubtless in my hon. Friend’s constituency, are crying out.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

I encourage my hon. Friend to listen to the rest of my speech, and not merely to recycle briefings that I, too, have received. There are many arguments for a hub airport, and I do not deny that some are valid. Many, however, are recycled by industry players with strong vested interests that are not necessarily those of the country as a whole. However, I will address my hon. Friend’s point later in my remarks.

Finally, some estimates suggest that the cost of the proposal will be £40 billion, £50 billion or even £100 billion. The Parsons Brinckerhoff report, a substantive piece of work, argues that

“even the £70 billion being discussed is a conservative estimate.”

Boris tells us that that money will come from private investors. Yes, but they will want a return. Even if we are looking at a 5% interest rate over a 50-year period, a return on that sort of money will add at least £50 to the cost of every plane ticket from the airport. Why would airlines, passengers, the Government, indeed anyone, want to pay that sort of money when the cost of expanding existing airports—including some that Members present may be promoting—is so much smaller?

The coalition Government were right to reverse the policy that the previous Government decided on in 2003. To recap, the then Government’s recommendation was a second runway at Stansted by 2011-12, a third runway at Heathrow by 2015 to 2020 and, following our judicial review, a second runway at Gatwick from the mid-2020s. The strongest reason why we were right to overturn that is that the projections on which the Labour Government operated from 2003 were, as I and many others set out clearly at the time, wholly unrealistic. They were based on a low case of 400 million passenger movements for the UK by 2030, and a high case of 600 million.

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne

I am listening with great attention and fascination to my hon. Friend’s speech, but he has not addressed a very pertinent point raised by my hon. Friend Joseph Johnson: at present we do not have access, or cannot fly directly, to those cities in China. I know that my hon. Friend Mark Reckless will come to that in his speech, but I am conscious that it is probably one of the most important questions that he could address, and I would very much like to hear his thoughts on it.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

In deference to my hon. Friend, I shall bring forward my remarks on that point.

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

Before my hon. Friend does so, will he say if he welcomes the fact that Heathrow delivers more flights to China than any of its continental rivals, meaning that we have excellent connectivity to important emerging markets such as China?

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

Yes, I hugely welcome that. From listening to the debate that is dominated by a small number of players with the strongest vested interests and the most public relations consultants, one would get almost the reverse impression. When we talk about flights to China, it is important to remember that the reason why we have relatively few different city destinations—that is separate from the overall number of flights, which the Minister was right to raise and I think is more important—is that it is for the convenience of British Airways, the dominant player at Heathrow, to use Hong Kong as a hub airport for China, in exactly the way that it uses Heathrow as a hub here, through the Oneworld alliance and Cathay Pacific.

Photo of Jo Johnson Jo Johnson Conservative, Orpington

First, on a point of fact, according to BAA, London has only 31 flights a week to two destinations in mainland China, whereas there are 56 to three such cities from Paris Charles de Gaulle airport, and 51 to four such cities from Frankfurt. Furthermore, my hon. Friend references Hong Kong and Shanghai. Surely he is aware of the additional cost that comes from having to route products, goods and services through Shanghai and Hong Kong, as opposed to sending them directly to where the market is, in mainland China. Our businesses are crying out for connectivity. That is an obstacle.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

I made no mention of Shanghai. The reason why there are only 31—

Photo of Jo Johnson Jo Johnson Conservative, Orpington

Hong Kong is a transhipment point.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

I mentioned Hong Kong, and the reason why Hong Kong is used so much is that that is hugely to the economic benefit of BA, Cathay Pacific and the Oneworld alliance. They use Hong Kong for exactly the same reasons why my hon. Friend promotes Heathrow—these great hub economics, which are certainly to the benefit of the airline providing a service. There are arguments for hub airports, but the arguments that my hon. Friend makes for point-to-point services to more cities are very strong ones. As for why we do not have them, I refer to a written answer from the Minister in March 2012. I do not know whether my hon. Friend Joseph Johnson has seen it. It states:

“China—restricted to six points in the UK and six points in China since 2004”— according to a 2004 treaty—

“with a current limit of 31 passenger services per week by the airlines of each side allowed”.—[Hansard, 14 March 2012; Vol. 542, c. 239W.]

If my hon. Friend would like to see more flights to more Chinese cities, the way to do it is to rip up that treaty, and for the UK to move to a unilateral open-skies position that allows any Chinese airline to fly to any city in the UK.

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne

I am trying to work through the maze of complicated arguments that my hon. Friend is presenting, but I have just a simple question. Does he believe that the United Kingdom as a whole needs more aviation capacity?

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

There is an argument about competitiveness, and that argument is for today. Our colleagues are arguing that businesses in their constituencies require the opportunities now. Therefore we should be making the most of our existing airports, rather than waiting two decades for a new airport to be built to maximise opportunities.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

I agree. There is huge scope for what my hon. Friend describes. It would hugely benefit not just the Medway towns and the south-east region, but the country as a whole.

I want to talk about one other area where the lobbyists have a certain position. I received a document yesterday from the Mayor of London, who tells me that he is delighted that I am having this debate. He says:

“France’s hub airport, Paris Charles de Gaulle (56 departures per week), has better connections to Brazil than Heathrow (27 departures per week).”

The reason is that we have a bilateral treaty with Brazil, with a current limit of 35 passenger services a week between the two countries. Again, that is vastly to the benefit of BA, which routes flights to Latin America, including Brazil in particular, through the joint hub that it now has in Madrid, through Iberia following the merger. We do not get pressure from BA to change that, because it hugely benefits its profits, but BA’s market capitalisation is in the low billions. The idea that our whole airline policy and the network of treaties negotiated by the previous Government should restrict those flights and prevent Brazilian or Chinese airlines from flying into our large cities is a huge mistake.

Photo of Paul Maynard Paul Maynard Conservative, Blackpool North and Cleveleys

Even if we were to rip up every treaty that my hon. Friend has identified as a block, does he seriously believe that there is sufficient capacity at our hub airport? Will a hub airport alone sustain newly developing point-to-point routes? Does he seriously argue that Heathrow could suddenly accommodate more routes to developing countries?

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

Yes, I do argue that. The limit on Heathrow’s routes to developing countries is largely because of the fact that those who have the slots find it most profitable to put on vast numbers of flights to New York and almost as large numbers to Hong Kong. It would benefit the country as a whole much more if there were a wider network of routes, rather than just what happens to benefit British Airways and maximise its profits. To get to what my hon. Friend suggests, the treaty we need to rip up is the treaty of Rome, because it is under European directives—[ Interruption. ] The reason why the slots are organised as they are is that they have been capitalised into property rights for the airlines that historically happen to have used them, and it is because of European legislation that that has been allowed to happen. If we want a more effective route network for our country as a whole, within the existing constraints of Heathrow—of course, others will argue that it needs to be bigger or we need a hub somewhere else and so on—European legislation prevents us from having that. Anyone who wants to set up a marginal route to an emerging market needs to buy out, at vast expense, one of the existing airlines, particularly BA, which has a near monopoly power. They have to give BA a huge amount of money to take the slots they need for those routes. The reason why they cannot do that is cost, yet we have treaties that restrict the amount of access that overseas airlines have into the UK. They could otherwise be flying into Gatwick, Stansted or Birmingham as city pairs, but the routes and slots are at Heathrow, and the regulation creates that monopoly power.

Photo of Kwasi Kwarteng Kwasi Kwarteng Conservative, Spelthorne

Is my hon. Friend seriously suggesting that the key to our aviation problems is ripping up the treaty of Rome?

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

It would certainly help. There are other ways in which the issue could be addressed; for instance, the air passenger duty regime. Many lobbyists are against the size of air passenger duty, but in operating conditions where there is an almost perfect monopoly at Heathrow and, at peak and to an extent shoulder periods, a monopoly at Gatwick, what happens through the increase in air passenger duty is that some of the monopolised value of those slots and the power of the grandfather rights are given instead to the public purse. It is not a situation of perfect competition in which costs are passed on. To the extent that costs rise, whether they are landing fees or APD, that will largely be absorbed into the price, giving greater public benefit, and possibly driving some of the marginal leisure stuff out of Heathrow and Gatwick.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

Would the hon. Gentleman mind running past me again how the treaty of Rome is an obstacle to more liberal air service agreements with other countries? When I was aviation Minister, we signed agreements with a variety of countries to allow more liberalised flight access to both countries, and the treaty of Rome was not an obstacle then. Given Gatwick’s recent expansion into five new routes, the treaty does not seem to be an obstacle. How will tearing up the treaty of Rome solve our aviation competitiveness questions?

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

There are two problems: first, the treaty of Rome gives property rights in-slot to airlines that have traditionally had them, which prevents new airlines from coming in with marginal routes to new emerging market countries, due to the cost of buying out the monopolist. Only more and more fights to New York or Hong Kong make such routes work. Secondly, the previous Government protected the monopolistic BA with restrictive agreements that prevent Brazilian airlines from flying here, saying that there should be no more than 35 passenger services a week and allowing only 31 a week to China. If we want more flights to emerging markets, we should just let Brazilian and Chinese airlines fly to any UK airport they want, without insisting on reciprocal rights for BA. That is what is holding the country back; the interests of Britain are not the interests of BA.

The final section of my speech is about our other airports. In 2010, we rightly said no to an estuary airport and to extra runways at Gatwick, Stansted and Heathrow. That was the right policy for this Parliament. I do not know the Liberal Democrat position on when or if there should be future runway capacity in the south-east, but it is right that the Conservatives at least look at the case for new runways as and when demand requires. A lot can be done with existing capacity. Gatwick is expanding strongly and setting up point-to-point routes in new emerging markets, which I welcome. That would be helped if Gatwick were allowed to invest in the A380 facilities by charging more and coming to its own arrangements with new airlines to build those facilities without existing suppliers having a veto. I would support greater deregulation of Gatwick in that regard.

I understand that the option now being promoted by the Mayor of London is Stansted. Since the previous White Paper and the Labour Government’s view, usage at Stansted has fallen off significantly and intercontinental flights there have stopped. The Mayor says that we should expand Crossrail to Stansted, and I am keen to discuss that. He may have ideas that I have not appreciated fully, and that are certainly a lot more constructive than his pie in the sky proposals for a Thames estuary airport.

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge

I congratulate the hon. Gentleman on securing the debate. When I spoke to those at Stansted recently, they made it clear that, given that the airport was at only 50% capacity, they want no more discussion of a second runway—that just messes up their relationship with the local community. Stansted wants a better rail service. I hope that he will support that.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

That is certainly the position in the short-term. I am keen to see better surface travel into Gatwick. The deterioration in the train service there is most unfortunate. Investment is strongly in the national interest.

The British Chambers of Commerce initially proposed a “Heathwick” arrangement. There are some issues with the economics of it, but the existing system is the reason why it could be attractive. If we allowed Gatwick to invest £5 billion in a super-fast railway to Heathrow—by the way, BA, it would take 15 minutes airside, rather than an hour to connect them—it would be regulated capital and would lead to higher slot prices at Gatwick, which is a good thing anyway. Our problem with aviation in this country has been that we have held down the cost of landing fees at Heathrow and Gatwick, which means that they are operating at near capacity with all the problems mentioned. If we allowed landing fees to rise and entirely deregulated Gatwick and Heathrow, there would be a big transfer of economic value from the airlines to BAA.

Another way to do it would be differential APD, particularly on short-haul flights at Heathrow. Because we could get the cost back from higher landing charges at Gatwick, Heathwick, although not ideal, might make sense within the existing system; it would press out some of the leisure point-to-point flights from Gatwick and allow intercontinental flights to come there.

From Heathrow’s promoters, we hear that it is a great hub, that we need just one hub and that Paris Charles de Gaulle has more destinations than us, but those destinations are in French west Africa—Mali, Bangoui and Ouagadougou. I do not think that there is any suggestion that that should happen from Heathrow. Most demand is leisure, not business. Heathrow still flies more people and planes than other airports, even those with four or six runways.

We do not necessarily need a hub that is ideal for those who happen to operate that hub. There is a suggestion that a dual-hub is not ideal. That is true, but it is an awful lot better than no expansion and forcing more and more people to use European airports. According to the constrained Department for Transport forecast, which I find questionable in a number of ways, if we do not allow expansion in the south-east, 25 million rather than 4 million people will fly from Belfast by 2050 and 12 million people rather than 700,000 will fly from Exeter by 2030.

I question the plausibility of those forecasts, but if we deregulate air travel and allow a second runway at Gatwick in due course, after the agreement runs out in 2019—I agree with Dr Huppert that it should not be immediately—it will make it more attractive for the airline to expand in the airport. At some point, the Liberal Democrats may think that we will need at least one runway in the south-east. The strongest demand from the vested interests is for that to be at Heathrow, but there is a strong argument for the country as a whole for it to be at Gatwick. It would benefit from being there because we would then have competing hubs, with potentially another airline alliance based at Gatwick. It would drive down prices, serve more destinations and operate for the benefit of UK consumers as a whole, rather than just those who happen to have the strongest vested interests and shout loudest in current consultations.

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley

I congratulate my hon. Friend on securing the debate. If I may intrude on the London and south-east grief with a question about the midlands, what are his views on encouraging passengers from the midlands and further north not to go to Gatwick or Heathrow for their leisure flights, but to use the airport they are driving past? Does he support the idea of a congestion charge around London to make regional airports more competitive?

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

Higher APD on short-haul flights from Gatwick and particularly Heathrow could allow airports beyond the south-east to compete for marginal business that might make more sense at those airports, particularly the leisure flights of people based in the midlands and the north who are flying point to point. Similarly, if we deregulated our international air agreements, there would be a better chance that intercontinental networks would base themselves at Birmingham airport, for example, which now has a longer runway.

Photo of Julian Sturdy Julian Sturdy Conservative, York Outer

My hon. Friend makes a powerful case. An argument is that regional airports across the country will take up some of the slack. My airport, Leeds Bradford, has invested heavily—£11 million—in expansion and has new links to Heathrow. Is it not the case that despite the important role that regional airports play across the country, they will not lessen the need for expansion in the south-east and London? Ultimately, people want to fly into the capital city of a country and we cannot get away from that fact.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

Yes, I think that is right. My argument is that it is entirely conceivable to have two hubs. Heathrow currently has many more passengers and planes using it than most of the other supposed competing hubs. The problem is that the slot prices are very high and profits are being maximised by those who, under EU law, own the property rights in those slots. If instead we allow a second hub, and Gatwick is the more attractive and conceivable hub to develop, and both operate in that way, competing airlines would drive down prices and give many more links to emerging markets, rather than very thick routes to New York and Hong Kong. That is my view, but perhaps the Mayor of London has considered matters that I have not. Stansted, and potentially regional airports—Southend and, I am delighted to see, Luton are developing in this way—could take many more point-to-point leisure flights, rather than them flying from Gatwick, or even Heathrow. Why does Heathrow have so many flights to Orlando? Why does it have flights to Malaga or Larnaca?

There is a very strong case for Gatwick. Many regional airports can help with the load. The debate that we have been having about aviation has been horribly distorted by what I am afraid are preposterous efforts by the Mayor of London to put the Thames estuary airport on the agenda, 10 years after it was categorically ruled out, and by the issue of Heathrow. Very strong vested interests want expansion at Heathrow. There are some economic arguments for the country as a whole for expansion there. However, there are costs, in terms of those living under the flight path, and in terms of our political promises; and the value of politicians sticking to what they promise is strong.

As to what the Transport Secretary says, and the argument that “It is all very well talking about a third runway at Heathrow, and mixed mode, but what is the next step?” it is incumbent on those who want expansion at Heathrow to say what happens in 30, 50 or more years. The reason the Secretary of State does not get the answers is that those with a vested interest at Heathrow—BAA and British Airways—do not want unlimited expansion there. It would undermine their monopoly position. The idea of going for mixed mode is attractive to BA—not necessarily to BAA, because it does not get the higher regulated capital. A third runway allowing marginal expansion of perhaps another 20 million passengers is attractive, because it maintains the value of the slots but allows them to develop. My hon. Friend Kwasi Kwarteng may want to discuss the fact that if we want Heathrow to be a mega-hub, perhaps remaining the biggest in the world and taking on Dubai as well as competitors in Europe—there are strong arguments against that, particularly from the point of view of people who live in the area, and the environment—it could mean taking over RAF Northolt and putting in several runways linked into Heathrow, as a long-term single giant hub solution.

Despite arguments that two hubs are not ideal, that is a far better solution than complete constraint on any expansion, or only looking after the interests of Heathrow. If we were to see the Oneworld alliance at Gatwick— short-term expansion is being done very well at the moment, and there could be longer-term expansion, but only once the 2019 agreement runs out—it would be a much more sensible way forward. There is a basket of other options, all of which make more sense than harking back to the preposterous estuary airport proposal, or looking at UK aviation solely through the issue of a third runway at Heathrow.

Several hon. Members:

rose —

Photo of Jim Dobbin Jim Dobbin Labour, Heywood and Middleton

Order. I have had seven notifications from hon. Members who want to speak. I intend to call the shadow Minister at 20 minutes to 11, so we have less than 40 minutes for those seven speeches.

Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton 10:02 am, 4th July 2012

It is a pleasure to serve under your chairmanship, Mr Dobbin, for what I think is the first time.

I congratulate Mark Reckless on obtaining this important debate on the different issues relating to competition in the aviation industry. I agree with many of the points he made, and it is worth exploring further the points with which I disagree. He is serious about trying to find a solution to the country’s aviation policies, and that is worth discussing. Judging by the expressions of everyone taking part in the debate, there is agreement that Boris island is a complete non-starter. It is a decoy duck, Potemkin village, a red herring, or, as the previous Labour Secretary of State said, bonkers; it will not happen. But it is part of the illusions around aviation policy—which are the basis not of what the hon. Gentleman has been saying but of the Government’s policy—that somehow we do not know what has been happening in aviation, and there is more information to be found out. That simply is not true.

Going back to the Roskill commission in 1969 and a series of other White Papers and investigations, more is known about aviation policy in the south-east of England than about possibly any other area. If we want to be competitive, there must be more airport capacity in the south-east. Otherwise, the decline and damage that lack of aviation is causing to the economy will continue. I do not agree with the hon. Gentleman that it is right to suspend any discussion for the length of the Parliament. It might be right for the coalition agreement, but it is not right for the economy.

Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton

I will in a moment, but I want to go through some of the points that the hon. Gentleman made.

I do not think the “Heathwick” proposal works in detail. When I give way to the hon. Gentleman I want him to tell me about any city in the world—Toronto, Washington, Glasgow—that has tried having two airports. There are examples all round the world of countries saying “We will have an intercontinental airport here and a domestic one there,” and finding that neither of those airports has worked. Off the top of my head, I cannot think of a city with two competing hubs. The nature of hubs, and what makes them valuable—both for countries and airlines—is that airlines from all over the world go into them, with great interconnectivity. The idea of competing hubs is a contradiction in terms, and there is no real evidence that having two adjoining airports works.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

I am delighted to have some discussion of the issue in the current Parliament, and I look forward to hearing from the Minister what decisions may be made about how that discussion should happen. I just do not think we should build any new runways during this Parliament.

I disagree about dual hubs. Perhaps the idea has been tried in, say, Tokyo and one or two other places and has not been ideal, but we are not making a comparison with the ideal; we are making a comparison with the constrained capacity possibility that 14 million people might try to fly from Exeter. Expanding Gatwick, rather than restricting it, will not result in the perfect economic hub airport, but hubs give declining returns, to scale, to the extent that they get bigger and bigger. If we allow flights to new emerging markets and competing hubs operating in the competitive interest of the country, rather than one hub operating in the interest of the monopolist based there, that would be a significantly better airline policy than the one we have.

Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton

All I would say is that the proposition has not worked. We are in decline and we need extra runways in the south-east. Only one new runway has been built in this country since the second world war. Heathrow was, I think, originally planned to have 12 runways, albeit in a different configuration. The hon. Gentleman can look at the history books if he wants to.

The hon. Gentleman’s argument relies on two issues: first, that our connections to China, as the Minister of State said, mean that we are not really suffering; and secondly, that slots are too cheap at Heathrow, and if we freed up that market we would help the economy as a whole. Let me give some evidence.

The Frontier Economics report, “Connecting for Growth”, which was produced in 2011, showed that trade is 20 times higher where there are direct flights to cities in China. It estimates that the UK is missing out as trade goes to France, Germany and Holland, and quantifies the cost to the UK economy of a lack of connections as £1.2 billion a year. Taking that present value over 10 years, that amounts to £14 billion. Paris and Frankfurt boast 1,000 more annual flights to the three largest Chinese cities, Beijing, Chongqing and Guangzhou, than we get from this country. The Minister of State is right to say that we send a large number of flights to Hong Kong, and that there is hubbing in the Oneworld alliance at Hong Kong. The City of London is doing quite a lot of damage at the moment, but if we consider some of the effects, and the latest financial centres index, the Hong Kong index has gone up by 21 and London has gone down by three. There is a correlation, if not a direct one, between the hubbing that is going on there and the damage that is being done to the UK economy. Forbes Magazine has shifted the UK down from sixth best country in the world in which to do business to 10th best. One contributing factor is our connections with other countries.

Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

Does the hon. Gentleman agree that some of the problems that he has just described result not from lack of capacity but from poor prioritisation? Hundreds of flights every day to and from Heathrow involve places that do not in any way contribute to Heathrow’s hub status. We have short-haul flights, flights to Malaga and 15 flights a day to Cyprus. Such point-to-point flights could happen at any other airport. We have masses of spare capacity, but it is not all at Heathrow. If that is the problem, surely the priority is to make better use of existing capacity and to get rid of some of those pointless flights that could easily happen elsewhere.

Photo of Graham Stringer Graham Stringer Labour, Blackley and Broughton

I always find that a particularly difficult argument to be put by Conservatives, who suddenly want to plan routes and move away from a completely deregulated market in Europe—apart from where it is constrained by slots. Having argued ideologically for that position, all of a sudden they want to tell aeroplanes that they can only go from Manchester and Leeds and not from London. I do not believe that that is the Conservative party’s position at all. Even if we put up the price of slots, which has been kept artificially low by how slots are regulated, we would not necessarily get the flights going to the right parts of the world that will benefit this economy. We would get even more flights going to New York and the west coast of the United States because those are the most profitable routes from this country in the short term. The two cheap slots would not solve the problem because the central issue is lack of capacity.

I have a few more facts from the London chambers of commerce that represent the views of 350 business leaders from the BRIC countries: 92% made the general point about the importance of direct flights; 67% said that they were more likely to do business in a place if there were direct flights to it; and 62% said that they would only invest in an area if there were direct flights between the city in the country in which they were operating and the city in which they were likely to invest. Such flights to Brazil, Russia and China are limited.

I wanted to talk about the damage that air passenger duty is doing to regional airports, but I do not think that there is time because of the number of Members who wish to contribute to this debate. None the less, such duty is doing damage and the Government really need to change their policy. Twenty-two of our competitor countries in the EU have no air passenger duty whatever, so imposing a duty is a ridiculous anti-competitive position for this country to take.

I want to talk a little about how we use capacity in the regional airports. It is not possible to, as the hon. Members for Rochester and Strood and for Richmond Park (Zac Goldsmith) suggested, somehow move flights about, but there is no reason whatever why we could not have a completely open skies policy in the regional airports. There is 15 times more capacity in our regional airports than would be provided by one extra runway at Heathrow. It would be against the law to direct flights within Europe to that runway; that simply could not happen. At the moment, airlines are reluctant to make use of the partial open skies policy in relation to major regional airports with fifth freedom rights, but the Government must agree that, and sometimes there are difficulties. Airlines, which have a real interest in getting into Heathrow, are suspicious that if they use the facility of partially open skies in the regional airports they will be kept out in any future negotiations to get into Heathrow. Having a completely open skies policy in the regions, however, might shift out one or two intercontinental routes. It will not change the whole structure of aviation, but it will help.

Finally, the central point of the Government’s policy, especially the Liberal Democrat part, seems to be that constraining capacity in the south-east will help the environment and not damage the economy. I hope that I have shown that that constraint in the south-east is already damaging our economic competitiveness, and the answer to that is to build extra runways and not a new airport. It is worth saying, and it has been said before, that our policy is damaging not only our economy, as we are, in effect, helping other hubs in France, Germany, Denmark, Spain and Holland to do better, but our environment. When planes take off from the United Kingdom, taking passengers to airports such as Schiphol to pick up intercontinental flights, they are putting more nitrous oxide, sulphur oxides and carbon dioxide into the atmosphere than would otherwise be the case. Although the whole aviation debate needs to be opened up, the solutions have been known for a long time, and the Government have had their head in the sand for their whole time in office.

Photo of Jim Dobbin Jim Dobbin Labour, Heywood and Middleton

Order. Six Members still wish to speak in this interesting and important debate, so they will have roughly four minutes each before those on the Front Bench respond

Photo of Paul Maynard Paul Maynard Conservative, Blackpool North and Cleveleys 10:17 am, 4th July 2012

It is a pleasure to serve under your chairmanship, Mr Dobbin. In four minutes, I will speedily go through some of the points that I want to raise. First, may I mention the passengers? We did not hear my hon. Friend Mark Reckless say much about them. It is almost as if they are a pain in the neck for wanting to travel. I happen to regard leisure travel as a good thing—rather liberating, in fact. May I also say—I did not hear my hon. Friend say this—well done to the Government? The Minister might be shocked by that remark, given my track record on aviation.

The South East Airports Taskforce has effectively sweated our assets in the south-east, increasing throughput at all major airports. Like Graham Stringer, I speak as a northern MP. Most of my constituents and businesses stopped using Heathrow as a hub long ago, which is one reason why Heathrow is already in decline. For the north of England, the hub is Amsterdam or Paris, which is a major national problem.

I congratulate the Government on their recognition, earlier this year, that we need a hub airport in the UK, and that we need only one hub airport. If I had more than four minutes, I could give a lecture on the economics of hub dynamics. There is no such thing as a twin hub; it is a contradiction in terms. I could tear out my hair in frustration every time I see that idea printed, or hear it being discussed. If we tried to make Heathrow and

Gatwick a joint hub airport, all we would do is guarantee their obsolescence within a decade and the downgrading of the UK. It would be an absolute national disaster.

We have heard a lot about China. Some people say mainland China, while others say China, which allows us to accommodate Hong Kong into our calculations. Let me talk specifically about Wuhan, which has been of interest to the Department for Business, Innovation and Skills. Air France has just launched a service to Wuhan to facilitate PSA Peugeot Citroën’s joint venture with Dongfeng Motor Corporation. Despite labouring under the heavy burden of the treaty of Rome, France has somehow managed to put its economic interests ahead of the interests of Brussels. How it managed it I would love to know, because we could then replicate it here. Clearly, it has put economic interests ahead of narrow, petty interests.

I am fascinated to note that COMAC—the Commercial Aircraft Corporation of China, a new Chinese aircraft manufacturer—is basing itself in Europe not in London but in Paris. I wonder why that is. Could it be because France has better links to China? Could it be because France is where China is getting inward investment from? Surely not.

If I had had more time this morning, I would also have mentioned air passenger duty. I realise that it is a controversial issue, but I make this plea: will the Department for Transport try to encourage the Treasury to conduct an independent economic assessment, bringing in all relevant factors, of the overall cost of APD to the UK economy? If I had more time, I would go on to talk about Chinese tourism. I know that it has been the subject of what might be called civil war in higher echelons in the Government, but it crystallises the problem that we face in this country. The problem is not that we have APD per se; it is the scale of our APD, compared to that charged by our competitors, that is a real problem.

We have heard lots of discussion about south-east airport capacity and about where airports should or should not be sited. We have also heard mention of New York, which has found what I would described as a “string of pearls” solution—a number of sizeable airports, all of which act as international gateways, but none of which actually act as hubs. There is a perfectly logical and coherent argument to be put forward to say that that is what the UK might need. I would disagree with that argument, but it would be a rational argument to make.

Interestingly, in the Mayor of London’s submission, ahead of this debate, I could find no mention of Boris island. Can the Minister confirm that that option has been officially removed from the table? I looked very carefully; perhaps it was my eyesight, but I just could not see it.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Human Rights) 10:21 am, 4th July 2012

Thank you, Mr Dobbin, for calling me to speak.

I congratulate Mark Reckless on securing this debate and bringing the issue to the House today. In four minutes, I quickly want to give the Northern Ireland angle. In particular, I want to mention a subject that is often talked about, and perhaps hated: air passenger duty. It is an issue that must be considered.

Recent press coverage of APD shows that the Government raise very little money from internal flights from Northern Ireland, and airlines actually take advantage of the tax and retain it when flights are not taken up, as they charge a fee and most people do not ask for the refund. That was not the intention with regard to the tax, and that is the first thing that must change if we are to boost competitiveness.

I spoke to the hon. Gentleman yesterday about this debate and I said very clearly that I wanted to put forward the Northern Ireland angle. With the Government committed to regional rebalancing in the UK, and an economy that is heavily reliant on the south-east, where better to start than with a change to APD? I understand that APD does not apply to flights to Scottish islands. If the Government are serious about rebalancing the UK economy, surely Northern Ireland should have the same treatment in relation to APD as the Scottish islands. Making that change would send a strong signal that the Government are serious about regional rebalancing.

As a frequent flier from Northern Ireland to the mainland UK, I am well aware of flight prices and the critical importance of having a good flight system and links. Having spoken to various airport managers, I know there are some central themes that continually emerge. I want to touch on those themes quickly.

The first is future national economic growth. The UK needs improved links to key emerging markets. I was surprised to learn that UK businesses trade 20 times as much with countries to which there are daily flights than with those countries with which we have a less frequent service, or no direct service at all. It is very clear that the more direct flights to countries we have, the more our economy will grow, the more employment will grow, and the more we all benefit. We must boost growth by increasing inward investment and exports. Improving international connectivity is critical if those things are to happen. That is one reason why competitiveness is an essential component of growth. We should have regular contact with the BRIC countries—Brazil, Russia, India and China—and we should open up more links with them, because that will boost our economy.

London is open for business, and so is Gatwick airport, in particular. However, although in the summer months Gatwick is at full peak capacity, at other parts of the year it is not. Sometimes it is operating only at 78% capacity. The hon. Member for Rochester and Strood spoke about that. There is potential for a further 11 million passengers to use Gatwick every year, which would represent a 25% increase on current levels. Gatwick has secured new direct routes to China, Hong Kong, South Korea, Vietnam and Nigeria. In each of these countries, there are opportunities for economic benefit, and the routes can only strengthen and enhance the possibilities.

Dr Huppert spoke about the need to improve rail surface access links to airports, and that is important, too. Millions of air passengers go on to use other transport infrastructure, such as rail lines. It is imperative that those lines are up to the standard that is expected of a thriving central business hub. That will encourage new flight-lines, which in turn will encourage competitiveness in the market. As soon as bmibaby pulled out of Belfast City airport last month, all the other airlines there upped their prices, and the reason was clear—they had less to compete with. Their flights were being almost filled at higher prices, which in the long term will affect businesses. A flight from Belfast can cost approximately £400 to £500. One can get a flight to the USA for £450. There has to be something wrong there, with regard to competitiveness.

The UK aviation industry provides about 352,000 jobs and more than £8.6 billion in tax each year, as well as contributing more than £50 billion to Britain’s gross domestic product. It is a major player in the economy of Great Britain, and when it comes to improving Britain’s international competitiveness, it is very important.

In conclusion, in a history class many moons ago, I was taught that the secret of the success of Great Britain was her mastery of the seas; that probably shows my age. That was not simply about having a good fishing fleet, or the Royal Navy; it was about having connections and building up trade all over the world. That must be an ingredient in our continuing success, and the key to true competitiveness.

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge 10:26 am, 4th July 2012

I congratulate Mark Reckless on securing the debate.

We are world leaders in the aviation industry. London is the best connected city in the world, with seven runways operating at six airports, and Birmingham, Manchester and Edinburgh all pose formidable regional challenges to the dominance of the south-east. Gatwick is opening new routes to China, Vietnam and South Korea. British Airways has global alliances for massive hub operations. Airlines are competing to make use of the capacity we have, particularly since the BAA monopoly was broken.

However, there are constraints. By 2050, the UK must cut its carbon emissions by 80%. That is an important and challenging task, and if we allowed unconstrained expansion of aviation, as has been suggested by some Members, I believe that it would be all but impossible to achieve it. Given the environmental constraints, what kind of growth can we manage to have?

In 2009, the independent Committee on Climate Change said that if we are to meet our 2050 target, the aviation industry must not emit more than around 37.5 million tonnes of carbon dioxide a year by 2050. Allowing for increased plane loads, new technology and fuel improvements, that allows for a 60% increase on current passenger numbers to around 368 million passengers per annum. That is the carbon budget that we can have.

What is the capacity constraint? We have enough spare capacity in this country already. We can get to the limit imposed by our environmental obligations without any new runways anywhere: not at Heathrow, not at Gatwick, and not at Stansted. That is why the Liberal Democrats oppose the expansion of the airports in the south-east. We have spare capacity, and if we were to build more capacity and make use of all of it we would do irreparable damage to our global environment.

It is very hard to forecast demand, as the old “predict and provide” approach of the previous Government tried to do. Even in the US, the Federal Aviation

Administration says that it is not possible to make reliable forecasts beyond 2030, so I simply do not understand how any Government think they can forecast demand to 2050. That is particularly true given that, with the possible exception of the Secretary of State for Business, Innovation and Skills, people are very bad at forecasting recessions and other economic changes.

We also have local environmental problems that make a huge difference to our nation’s well-being. One in four of all those in Europe who are affected by aviation noise live under the Heathrow flight path. I find it astonishing that so little has been done about that, and that the previous Labour Government were so keen to keep blindly increasing Heathrow. Now Labour are completely and utterly unclear as to what their policy on Heathrow expansion is; if Jim Fitzpatrick, the shadow Minister, wants to try to say what it is, I would be delighted to hear from him. No?

Aviation planning has categorically failed to take account of the north-south divide, and how we can ensure that we provide decent air quality and access to decent public transport. About half of all emissions from aviation are actually caused by the ground access to the airport rather than by the planes themselves. Rail access, which is being called for by so many airports now, is critical in reducing those emissions.

This is a very abbreviated speech so I cannot go through all the detail. What is the way forward? I have been very clear about Heathrow, Gatwick and Stansted; I say a big “no,” and I am delighted that that is what the coalition agreement says. I have also been very clear about what we need to do to control UK aviation policy. We need to get the greatest hubbing potential that we can and achieve the greatest economic benefit possible, given all the constraints.

We should support growth, such as we are seeing at Gatwick; a fifth of Gatwick’s capacity is still free. Gatwick is doing well and it wants a new rail service. Stansted is half-full; its big call is for a new rail service, not a new runway. Birmingham is looking to expand and Manchester already has two runways. We need to provide the rail links to make those airports work.

We also need to reform air passenger duty. It is poorly designed, has a number of anomalies and favours short flights for which there are overground alternatives. We should be moving towards a per-plane duty. We should introduce new noise limits in population centres to incentivise quieter planes, and tough requirements for low-emission surface access, to reduce the overall impact. We also need to support the European Union’s emissions trading scheme, to promote the “polluter pays” principle.

What about the hub? Although the Government have done well to rule out proposals for a third runway and other expansion, we should also put an end to talk of mixed-mode operations at Heathrow. They cause damage to the air and through the noise they create; they are a non-starter and provide very little benefit. Heathrow is badly located, and mixed-mode operations would give all the pain with little of the gain. We need to move point-to-point flights elsewhere, as has been discussed, reform the EU allocation rules and perhaps consider a departure tax. Heathrow is not the place for a hub airport, but as Members have said, Boris island is certainly not right either, for a whole range of reasons; it is expensive, there is a higher risk of bird strike and it does not serve the north.

Our consideration of where to have a new hub needs to be subject to some serious constraints: a strategy for removing excess capacity above the climate change cap outside the airport; no net increase in the number of UK runways, so that we would have to close some to make up for new openings; greater recognition of the need to serve both north and south; and significantly lower noise impacts than at Heathrow. We could have something that is better both economically and environmentally, and I hope that the Government will consider the matter very carefully.

Photo of Robert Syms Robert Syms Chair, Regulatory Reform Committee 10:31 am, 4th July 2012

The UK aviation industry has been a remarkable success story, post war. It is the second largest in the world. It has been so successful that most of us take it for granted and assume it will always be there. Sometimes we are a little disparaging of British Airways as a national carrier, but it is a competitive world out there, and in Schiphol, Charles de Gaulle and Frankfurt there are people who want to compete with us and take jobs away. The aviation industry creates lots of well-paid jobs for lots of people, so we must think clearly about where we are going with it.

It is perfectly sensible to say “We will not expand Heathrow” or “We will not expand Gatwick” or “We will not expand Stansted”, but it is not sensible to say that we will not expand any of them. At some point, we have to increase airway capacity in the south-east of England. Some of the Belper pilots who came to lobby us last week pointed out that one of the most environmentally dangerous things is to have 15 aircraft sitting on a runway running their engines while waiting for a take-off slot. Sometimes, an additional runway might not necessarily be a bad thing environmentally. We can do a lot to have smart working at Heathrow, and I agree with my hon. Friend Zac Goldsmith that considering slot allocation would be a sensible way to begin.

It would be sensible to have a link between Heathrow and Gatwick. Given their proximity, a fast rail route would provide consumers with more diversity and variety of choice. However, the principal area that ought to be expanded is Stansted. I use the airport myself, and sometimes it looks as though it is half-shut. It has a lot of capacity but its biggest weakness is the rail link with central London. Passengers amble through the Essex countryside wondering whether they will ever get to the airport. On one occasion I was late for a flight, and I burnt up a lot of nervous energy on the way. If we could get a fast rail connection from Stansted to the rest of the rail network and the tube system and halve the journey time from 60 minutes to 30 or 35, many more people would use the airport. Stansted is as far from London as de Gaulle is from Paris and Schiphol is from Amsterdam, and potentially there is capacity for more people to start using it.

The other advantage of Stansted is that significant numbers of people do not live around it. One only has to stand in the constituency of my hon. Friend the Member for Richmond Park and watch the number of aircraft coming in to realise that putting a lot of money into expanding Heathrow is not the environmentally sensible thing to do. One has to pay regard to the many millions of people who live below the flight path.

We can be smarter. We can invest in rail links and, at some point, we will have to increase capacity by putting in more runways, with the logical place being the underutilised Stansted. Although Heathrow will always remain the hub, we can be a bit smarter with the airports around London and make them a bit more efficient, thereby promoting our national interest.

Photo of Nigel Mills Nigel Mills Conservative, Amber Valley 10:34 am, 4th July 2012

It is a pleasure to serve under your chairmanship, Mr Dobbin. I congratulate my hon. Friend Mark Reckless on securing the debate. We have, I think, focused a little too much on the impact in the south-east and have not looked at the full national interest, although my hon. Friend tried to do so. I want to talk about the impact of aviation policy on the midlands.

One thing that pushes flight numbers in the south-east up to near capacity is passengers from the midlands needlessly driving down to use its airports—Gatwick in particular—to go on holiday, when there are perfectly sensible flights, probably to the same places, from midlands airports, which, in many cases, people drive straight past. Trying to find ways not of forcing but of encouraging such passengers to use the midlands airports rather than the London ones has to be a way of solving the problem. I agree with Graham Stringer that it is strange for a Conservative to want to regulate and to force people to do something, so I suggest that we do exactly the opposite. The problem is that once we start regulating an industry and a market, we end up with a problem and decide that the solution is to regulate a bit more or a bit differently, or to bolt something on, to try to force a change in the behaviour that the regulation created in the first place. I suspect that the answer in this case is to deregulate much more of the industry.

I am not at all convinced of the logic of forcing BAA to sell Gatwick, and now Stansted, only to end up still economically regulating both airports. Surely we only regulate a dominant player in the market, and it is hard to see how in one market there can be three. I would free everything up and let Gatwick and Stansted compete with Heathrow, to see what they could do. That would get us a much better short-term fix than any of the other options.

In the midlands, what can we do to encourage people to use the regional airports? An interesting report was produced by Birmingham airport, and we have all seen the adverts on the tube about not putting all our eggs in Heathrow’s basket. If we are talking about fast rail links between airports and London, we have a plan for that; it is called high-speed rail to Birmingham, and it will reduce the journey time from Birmingham airport to London to just over 40 minutes, which is not far off the aspiration that my hon. Friend Mr Syms mentioned for Stansted. I have driven to Stansted airport a few times, and it is an awful place to get to—a terrible location. I cannot see any real attraction in it. No offence to Dr Huppert, but it is not a solution for a national airport for the UK. Such a solution would be a complete disaster. If we want fast rail links into London, let us have high-speed rail, and then Birmingham airport can become London Birmingham airport, or some other such preposterous name.

More seriously, if we are trying to balance the economy away from the south-east, and out to the midlands and the north, aviation can play a role in encouraging airports in those areas to get more flights, including flights to the new emerging markets. The midlands is the centre of the UK’s manufacturing industry, so it would be good to have links between those local businesses and the major areas they serve. My constituency, for example, has about 550 employees at Rolls-Royce, who fly all over the work. If we are a Government looking at regional benefit rates and regional pay, why can we not consider regional air passenger duty? We have done it for Northern Ireland, so why not do it elsewhere and try to give the areas concerned a chance to build up their competitive airports, increase capacity, attract new routes, and generally grow the market outside London?

I do not pretend that the majority of people will not want to fly to London, and that that is not where the economic powerhouse will be, but we ought to consider the scope and capability that exists outside London as well, rather than just forcing people into the capital’s airports, which happen to be relatively cheap to fly to because they already have full capacity, in which they are protected, and because regulation keeps the prices down.

Finally, if we want our national hub to be truly national, we must ensure that regional airports to which the rail journey is too long have access to the hub. Otherwise, airlines will discontinue their routes to Belfast and Scotland, for example, because they can make more profit from routes to New York, and the hub will become purely a London and south-east one. That is not an attractive way of growing the economy all around the country.

Photo of Jim Dobbin Jim Dobbin Labour, Heywood and Middleton

We have hit the deadline of 20 minutes to 11. I call the shadow Minister.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport) 10:39 am, 4th July 2012

It is a pleasure to see you in the Chair, Mr Dobbin. I congratulate Mark Reckless on securing this important debate. We all keenly anticipate the publication of the Government’s consultation documents—a subject that I will come back to later. If they had already published them, we might not have needed this debate. None the less, this is a great opportunity for the Minister to update us on the documents.

As many Members have said, aviation is a success story, whether we are talking about the Scottish airports, Manchester, Birmingham, East Midlands, or the other regional airports. The focus of this debate, and the focus generally in recent years, has been on London and the south-east. The third runway debate has overshadowed the excellent work, which a number of colleagues have mentioned, being done at Gatwick, London City, Luton and Stansted, but the capacity of the south-east remains the big issue.

Our aviation industry is central to our economic prosperity and should be a key driver of growth, without which we have no prospect of emerging from the dangerous economic situation that we are in. The industry contributes at least £11 billion to UK GDP—more than 1% of the total—although briefings for this debate state that the figure is £23 billion. It also supports up to 200,000 jobs directly and 600,000 indirectly across the UK. However, just as the Government do not have a credible strategy for growth, they have not yet managed to set out a credible strategy for aviation, let alone the role that it could play in our economic situation. Aviation is a crucial sector on which our economy depends, and the reaction from business to the Government’s decision not to set out an aviation strategy until the latter part of this Parliament has ranged from incredulity to plain bemusement.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

If the Minister will allow me to get to end of my remarks, I will be happy to give way to her. I hope that I will be able to give way, but I am constrained by time.

The chairman of the Airport Operators Association, Mr Ed Anderson, has said that, while the industry knows what the Government are against,

“we are not sure yet what it is in favour of”.

He went on to describe “better, not bigger” as an “election slogan”, saying:

“Better not bigger doesn’t constitute a strategy.”

Sir David Rowlands, a former permanent secretary at the Department for Transport, has described the Government’s policy as “mildly extraordinary”. Baroness Valentine, who speaks for London First, said earlier this year that the

“government seems content for aviation policy to drift.”—[Hansard, House of Lords, 24 March 2011; Vol. 726, c. 872.]

She has also said, most damningly, that

“the Government’s aviation strategy is damaging our economy and enhancing that of our EU rivals.”

Seventy-four business leaders wrote to The Times, saying that setting a long-term strategic direction for aviation in London, the wider south-east and across the country is a vital part of delivering the growth and jobs the country needs. They concluded that all options must be considered—short term and long term—to address growing demand. Only last week, John Longworth, the director general of the British Chambers of Commerce, said:

“The Government must stop tiptoeing around on aviation because of short-term political considerations. Unless politicians grasp the nettle and make some tough decisions, both our export and inward investment potential will suffer.”

I hope that the Minister will indicate when we will be able to see the consultation documents.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

I assure the Minister that if I finish what I have to say by 10.47 or 10.48 am, I will give way to her, but I want to get my points on the record.

Joseph Johnson, who is no longer present, gave a couple of quotes from the Mayor of London’s briefing. To save time, I will not repeat what he said, but he did not cite two points—although others have mentioned this—relating to the loss of visitors to the UK. The Mayor’s briefing states:

“While France and Germany each managed to attract between 500,000 and 700,000 visitors from China in 2010, the UK had only 127,000. In total, France earns £1.3bn per year from Chinese tourist spending on visits in the country, compared to the UK’s Chinese tourist spending receipts of £115m.”

It also notes:

“France’s hub airport, Paris Charles de Gaulle (56 departures per week), has better connections to Brazil than Heathrow (27 departures per week). In 2009, inward investment from Brazil totalled $800m in France, and only $1.7m in the UK.”

The Mayor has a strong argument on those figures.

The Government seem to accept that there is a capacity issue. In the Budget statement, the Chancellor referred to south-east capacity, as did the Prime Minister in response to a question from Zac Goldsmith during Prime Minister’s questions. As I have said, we are waiting for the Government’s consultation document to indicate their likely direction of travel. Constraints on aviation, whether from a lack of capacity or lack of investment, will not stop flights happening—or increasing. As Members have said, those constraints will simply displace flights from the UK to Schiphol, Charles de Gaulle or elsewhere.

The hon. Member for Rochester and Strood effectively articulated the arguments against the proposed estuary airport. He made some interesting points about EU competition law, and I will consider them carefully.

My hon. Friend Graham Stringer spoke with great authority on the issue, as he always does. He mentioned in passing other factors that affect aviation, such as air passenger duty, which was also mentioned by other colleagues. Nobody developed the argument, but APD is a huge factor in whether people decide to go to the UK or elsewhere in Europe. Given that it brings in between £2 billion and £3 billion for the Treasury, it will not surrender APD, but that is a factor and it needs to be looked at.

Another big issue that affects our economic performance is visas and the obstacles we place in the way of people who want to come to the UK, particularly from China. Moreover, as we discussed at length during deliberations in the Civil Aviation Bill Committee, the performance of the UK Border Agency—I accept that it is not the Minister’s responsibility—is harming the way that potential tourists and business visitors perceive the UK, because of what they read and hear in the media.

Lack of time meant that we did not have the opportunity to hear a lecture by Paul Maynard on hub dynamics. I would be interested to read it, so perhaps he could send me a copy. He made the point about the decline in our aviation industry and the rise of Schiphol and Charles de Gaulle.

Jim Shannon reinforced the points about connectivity and regional access, and Dr Huppert raised the issue of emissions. That issue has to be addressed, and we were addressing it when we were in government. The industry was confident that it could meet the levels set, but it meant using the emissions trading scheme, with the expectation that emissions would rise and that the industry would have to offset them elsewhere within the industry.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

I assure the hon. Gentleman that I have nearly finished—I have three minutes left—and will give way to him when I have done so.

As I was saying, the industry was confident that it could meet the levels set, but the bottom line is that Lib Dem policy on aviation is the obstacle to the Government having any policy at all, certainly before 2015.

Mr Syms mentioned the need for more capacity and made the case for Stansted, and Nigel Mills asked how we can give more support to regional airports and proposed deregulation.

The aviation industry and Britain’s wider business community came together last week to call for a cross-party consensus on aviation that lasts beyond the term of one Parliament. For several months, the shadow Secretary of State, my hon. Friend Maria Eagle, has repeatedly offered to take the politics out of aviation, put party differences aside and work together on a joint aviation strategy for the good of the nation. It is a clear, unambiguous offer, with no catch. Aviation matters to the country, the economy and businesses and families throughout the country. It is an industry that needs stability in the long term and a long-term plan that straddles Parliaments and Governments. We must not repeat the party political wrangling that turned the proposed third runway at Heathrow into a political football, and we must agree to stick to the agreed strategy, whatever the outcome at the next election.

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

These issues are very important, so why have the Opposition not suggested any ideas for dealing with the long-term capacity challenges in the south-east? They have suggested nothing at all.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

The Minister knows that we had a game plan in place, but we lost the election. Then, as a gesture, to try to achieve national consensus on this important issue, we said that we would drop support for the third runway so that we could have cross-party talks. We have not even had the courtesy of a reply from the Secretary of State for Transport about engaging in talks. Until the Government introduce their consultation—it is they, not the Opposition, who are responsible for creating aviation policy—it is a bit rich of the Minister to ask me about policy.

Photo of Julian Huppert Julian Huppert Liberal Democrat, Cambridge

The hon. Gentleman said that the Labour party dropped its support for the third runway as a gesture. Will he be clear on what his party’s policy is now? Is it against a third runway, or is it merely in favour of having a blank page that can be filled with anything in future?

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

The hon. Gentleman tempts me to respond but, given that I fully explained our policy during a five-minute discussion only two days ago, I think that he knows what it is, and that he is just playing games to try to throw me off. He knows that we are in the throes of devising our aviation policy, and I assure him that it is likely to be formulated way before the coalition reveals its policy, which we do not think will be published until 2014, or even 2015.

Finally, I have the following questions for the Minister. What is it that the Government will publish? How long have we been waiting for the documents? What exactly will they consult on in the documents and—the most important question of all—when will we see them?

Photo of Theresa Villiers Theresa Villiers The Minister of State, Department for Transport 10:50 am, 4th July 2012

I congratulate my hon. Friend Mark Reckless on securing the debate, which has been excellent; there have been many very useful contributions. There is no doubt that the UK has a highly successful aviation sector, and I pay tribute to the energy and enterprise that we see from that industry, in the face of challenges as tough as the global slow-down and, of course, rising world oil prices. Developments over the past 20 years, such as the introduction of low-cost, no-frills airlines, have provided real passenger benefits and unprecedented choice and opportunity to fly.

In the year of the Olympics and the diamond jubilee, we are reminded once again of aviation’s critical role as the route to bringing in tourism. However, the very success of our aviation industry presents us with a key challenge: how do we accommodate growth and seize the benefits generated by aviation while meeting our environmental commitments and addressing the quality-of-life impact of aircraft noise?

It is very clear that London is one of the best-connected cities in the world, with its five busy and successful airports—six, if newly expanded Southend is included. Together, those five airports provide direct links to around 360 international destinations, including virtually all the world’s great commercial centres. That compares with just 309 such links from Paris, and 250 from Frankfurt. Heathrow provides more flights to New York than Paris and Frankfurt put together, and has more flights to the crucial BRICBrazil, Russia, India and China—economies than other European hubs, including more services to China.

Airlines are launching new routes to key emerging-market destinations. BA has recently announced a new service to Seoul. China Southern Airlines now flies from Heathrow to Guangzhou. Gatwick has a new Air China service to Beijing, and the aviation industry continues to invest and innovate. Birmingham airport will shortly begin constructing a runway extension better to enable it to serve long-haul destinations. The operators of Heathrow and Gatwick are investing £5 billion and £1 billion respectively over the next few years in better infrastructure. Of course, it is important to press for the further liberalisation of aviation, in terms of opening up the opportunity for UK airlines to provide flights to more destinations—something called for by my hon. Friend the Member for Rochester and Strood.

Photo of Mark Reckless Mark Reckless Conservative, Rochester and Strood

Why does it need to be UK airlines? Surely the benefit for the UK is to have airlines—Brazilian or Chinese as much as UK ones?

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

Naturally, trade agreements on aviation between different countries provide mutual benefits. Liberalisation and expanding the range of airlines that can serve routes between the UK and other countries can provide real benefits economically and for passengers. We seek mutuality in these agreements, but we are also prepared to consider a more open approach for regional airports along the lines proposed by Graham Stringer.

It is true that Heathrow is pretty much full, and Gatwick, too, is starting to fill up. However, it is simply not true to claim that London’s connectivity is falling off a cliff-edge. We are taking action right now to make our airports better, as well as preparing for the longer-term challenges of capacity in the south-east. We are reforming the way aviation security is delivered to make it more passenger-friendly and cost-efficient. We are trialling a set of operational freedoms at Heathrow, which we hope will make the airport more resilient and reliable. However, we will carefully have to assess their environmental impact. We are finally making progress on the single European sky, which has the potential to cut fuel-burn, improve punctuality, address noise and increase capacity.

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

I am sorry, but I do not have time. If I have time at the end, I will give way.

We have an extensive programme of surface access improvements under way. Hon. Friends were right to raise that as being important for our aviation competitiveness. Manchester is getting a new Metrolink extension and will benefit from Northern Hub improvements. Gatwick station is getting a major upgrade; Thameslink will benefit Gatwick and Luton; Luton is getting improved access from the M1; and tunnelling has started on Crossrail. That project will ultimately see Heathrow connected to the City and Canary Wharf by train directly for the first time.

In the longer term, High Speed 2 will provide greatly improved surface access to Heathrow and Birmingham. As my hon. Friend Nigel Mills mentioned, that is a real game-changer, bringing Birmingham within easy travelling distance of many more people across the country. Of course, our HS2 plans will also provide an attractive rail alternative to thousands of short-haul flights coming into our south-east airports. That will potentially free up even more space for the long-haul destinations that hon. Members have rightly identified as crucial to our economic success.

However, good government is about not only tackling the problems of today, but preparing for the future. That is why the Chancellor announced in last year’s autumn statement that we would explore the options for maintaining the UK’s aviation hub status, with the exception of a third runway at Heathrow. The coalition is clear that it does not support a third runway at Heathrow. The airport is unique in Europe, in terms of the magnitude of its noise impact on densely populated areas. Thousands live daily with a plane overhead every 90 seconds, and have more planes that wake them up at 4.30 in the morning. The quality-of-life impact of a third runway and up to 220,000 more flights over London every year would be massive, and there is no technological solution in sight to ensure that planes become quiet enough quickly enough to make that burden in any way tolerable. We do not support mixed mode, which would see the end of the much-valued respite period that means so much to those who live with Heathrow noise daily.

We need a better solution. Last year, we kicked off the process of deciding what that will be, with the publication of our scoping document on aviation. The 600 or so responses we received are being used to prepare our draft aviation policy framework consultation, which will be published shortly. We plan to adopt the final framework in March next year, as set out in our business plan. It will set out the overarching economic and environmental framework within which we want to see aviation grow. We also intend to issue an open call for evidence on maintaining the UK’s international aviation connectivity. We will fully consider all representations to that consultation. The shadow Minister, Jim Fitzpatrick, wants us to go faster, but had no ideas whatever to share in today’s debate.

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

The consultation will be published shortly.

Photo of Jim Fitzpatrick Jim Fitzpatrick Shadow Minister (Transport)

Does “shortly” mean before the summer recess?

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

The consultation will be published shortly. The decision is a crucial one that requires objective, thorough and evidence-based analysis of our connectivity needs and how best to meet them in a sustainable way. We do not want to make the mistake that the previous Government made of coming up with the wrong solution and seeking to reverse-engineer the evidence. Put simply, that landed them in court and ensured that they failed to deliver any new capacity. We need to get this right. We need to base our decisions on the evidence, and on a process that allows the communities affected by any of the options fully to take part and ensure that their voice is heard.

Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

Can my right hon. Friend tell us what work her Department has done on considering the viability of maintaining two hubs rather than one? We have today heard a lot of statements from Members, but no evidence at all, that we must have a single hub. Has her Department looked at that question, and are there any data she can share with us?

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

Certainly the debate that will be triggered by our call for evidence will look at a range of options, including how a hub can interact with highly successful point-to-point airports, and will consider connections between our airports to see if they can provide a way to improve and enhance our connectivity. Those are the sorts of ideas we have already been looking at, because they were proposed in response to our scoping document, and they will provide an important basis for future debate over the next few months on how we maintain London’s and the UK’s top-class connectivity.

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

I am afraid that I am about to run out of time, so unfortunately not.

My hon. Friend the Member for Rochester and Strood raised a number of issues about the potential for a new airport—issues relating to cost, airspace management and impact on the local environment. It is, of course, vital to consider the sorts of questions he raises about costs and local environmental impact whatever options are put forward as a result of our call for evidence. Those are important questions to ask, and important criteria against which to judge any of the potential ways to address the future connectivity needs of the south-east airports. On air passenger duty, as hon. Members will be aware, taxation is a matter for the Chancellor.

To conclude, we are taking forward a range of measures right now to improve our airports and ensure that they are top-class international gateways to the rest of the world, and we are carrying out the process needed to determine our future connectivity needs. We believe our approach represents a responsible, structured and proper process that takes us towards delivering a sustainable solution that will maintain the UK’s connectivity and competitiveness in the future.