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National Air Traffic Services

3.31 pm

Mr. Bernard Jenkin (North Essex) (by private notice): To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the proposed sale of shares in National Air Traffic Services.

The Minister for Transport (Mrs. Helen Liddell): In response to a written question from my hon. Friend the Member for Great Yarmouth (Mr. Wright), the Government have announced today their intention to proceed with a public-private partnership for National Air Traffic Services. A copy of the answer and the response to the consultation document are in the Vote Office and the Library.

This is a new and innovative enterprise, providing a genuine partnership between the public and private sectors and creating a new partnership company that will deliver a safe, modern and efficient air traffic control system for the future. For some time, considerable--[Interruption.]

Madam Speaker: Order. I want no running commentary from the Opposition Front Bench while the Minister is making a statement at my request.

Mrs. Liddell: Thank you, Madam Speaker.

For some time, considerable concern has been expressed by many official bodies and individuals about the problems arising from the growth in air traffic. Those concerns have centred on safety, on long-term investment and on management control. In response, the Government have produced radical plans for dealing with air traffic control. We have consulted widely and we are now in a position to announce our proposals.

The public-private partnership for NATS will create a proper separation between the operation of air traffic control and its safety regulation, so as to enhance safety. The operational strength and the safety record of NATS are among the best in the world, but it needs a wider range of management skills and access to capital to meet the challenges of the future, and in particular to cope with the ever increasing rise in traffic.

We want to build on the strengths of NATS, bringing in new management skills, in particular project management expertise; to improve aviation safety; to secure long-term investment of £1 billion over 10 years; and to retain public accountability in a strategic industry. Safety is paramount and always will be.

Last week's report from the Environment, Transport and Regional Affairs (Transport Sub-Committee) summed up the matter. The United Kingdom has an excellent safety record and we have to work very hard to maintain it. We must always guard against complacency, but we should also avoid scaremongering. The Civil Aviation Authority's safety regulation group will continue to regulate aviation safety to the highest standards. There will be no profits before safety in the NATS public-private partnership or anywhere else in United Kingdom aviation.

The aviation community, the Select Committee, the former Monopolies and Mergers Commission, the trade unions and others have been calling for years for safety

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regulation to be separated from service provision. This public-private partnership will create a proper separation between the operation of air traffic control services in the new partnership company and their safety regulation in the separate independent Civil Aviation Authority. It will provide NATS with more flexibility in investment and management decisions, give NATS the commercial opportunities that it lacks in the public sector, provide the right structure to maximise efficiency, and introduce the commercial, financial and project management expertise that NATS needs.

Our new partnership company can do all those things relatively quickly, and only it can provide all those benefits. It will be a real partnership. The Government are retaining a 49 per cent. stake in NATS, while NATS staff will have a 5 per cent. share. There will be an equal element of gifted shares to all employees, with an opportunity to buy more. A private-sector strategic partner will take the remaining 46 per cent. of the company.

The strategic partner will give NATS access to private capital, enable that capital to be utilised to best effect, and supplement NATS' operational strengths with investment and project management skills, and with commercial experience. That will enable the company better to meet the key investment needs that we face in the United Kingdom. Around £1 billion will have to be invested over the next decade. In time, that will provide the ability to grow the company internationally, extending NATS operational excellence worldwide.

The Government's involvement with the new partnership company will continue. We will appoint some of the company's non-executive directors, and there will be a specific requirement for board unanimity on the specific matters necessary for protecting the taxpayer's financial interests, such as the policy for dividends or reinvestment.

The Government will hold a golden share and will have statutory powers to direct NATS to act in a certain way in the event of crisis, war or national emergency, or to enable the Government to protect national security and the United Kingdom's bilateral and international obligations. The joint and integrated civil and military use of air traffic control systems can and will continue under the public-private partnership.

However, the Government and the strategic partner are not the only interested parties. A key innovative feature of the new partnership company will be a new stakeholder council. That will bring together Government representatives, the strategic partner, NATS management, customers and staff representatives in a forum for full and open consultation about the company's plans and strategies for tackling the challenges that we all face.

Operationally, NATS is one of the best air traffic services in the world. We will build on that, and the public-private partnership will guarantee the future of both Prestwick and Swanwick as part of a two-centre strategy. We want to maintain and enhance NATS' operational excellence. We want to build on its strengths by adding new access to private capital so as to ensure more robust investment. We want to access better management to ensure the completion of both the Swanwick and Prestwick air traffic control centres. We want to give the company an edge in the changing international world of air traffic management.

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This is a whole new approach to the management of our air traffic control. It embodies a new safety framework, a new public-private partnership, a new form of management structure, a new form of public accountability and regulation, a new commercial freedom giving access to long-term investment, a new stakeholder council representing all the industry, and a new range of employee rights and security.

The Government are committed to establishing United Kingdom air traffic control as a world leader, securing enhanced safety not just in the skies above Britain, but throughout the world.

Mr. Jenkin: Let us be clear that the Minister for Transport did not volunteer her statement. Why must the Government be dragged kicking and screaming to the Dispatch Box to explain the detail of one of their most controversial policies? Why did the right hon. Lady deliberately withhold until this morning the answer to the written parliamentary question due yesterday? Why was it given only after she had briefed the press and after she had been given a free ride on the "Today" programme? What respect does that show for Parliament? When will the Government show some respect for their own Back-Bench Members and the rest of the House?

I have looked forward to today's statement, and I am grateful to you, Madam Speaker, for its occurrence. We would naturally welcome a straightforward privatisation of national air traffic control that gave clear ownership to the private sector and that was properly regulated for safety by the Civil Aviation Authority. We shall examine the small print of the new privatisation very carefully. It has all the hallmarks of another convoluted compromise, like the public-private partnership on the tube, when the Deputy Prime Minister was forced to accept a Treasury-driven deal in which he did not believe.

I have four key questions: what is the nature of the privatisation; who will be in control; what are the implications of possible foreign ownership; and what have been the costs of more than two years of Labour dither and delay?

First, what is the difference between this public-private partnership and privatisation? Does the Minister agree that if something walks like a duck and quacks like a duck, it is a duck? If the Government are transferring 51 per cent. of shares and day-to-day control to the private sector, why is that not privatisation? The trades unions think it is privatisation--so do we; so does the City; and even most of the right hon. Lady's party thinks that this is privatisation.

Is the Minister haunted by Labour's anti-privatisation scare stories from before the election? The Prime Minister then attacked the Conservatives, saying that

"the Government cast around for any hapless part of the public sector to privatise. Air traffic control is floated as a possibility".--[Official Report, 16 November 1994; Vol. 250, c. 15.]

That notion was described as crazy by the then Labour transport spokesman, the right hon. Member for Oxford, East (Mr. Smith), who went on to declaim to an ecstatic Labour conference:

"Labour will do everything to block this sell-off. Our air is not for sale."

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Where is he today? Why has the Minister for Transport not had the courage to tell her own Back-Bench Members that this proposal is a privatisation?

Secondly, who will be in control? If the Government own 49 per cent., employees 5 per cent. and the private sector 46 per cent., who will actually control the business? Will the right hon. Lady confirm that she intends, as stated in the conclusions to her consultation which were published today, to allow the private sector clear operational control?

Thirdly, why have the Government spun the names of potential bidders in the media, but not--even now--come clean with the House? Will the Minister confirm that the Government are contemplating the sale of the controlling stake in Britain's air traffic control system to a foreign bidder? Will she confirm that the name in the frame is Thompson CSF of France? Has she discussed with the Secretary of State for Defence the crucial questions that that may raise about foreign intervention in matters of United Kingdom national security?

What is the relevant expertise and experience of a French-owned company--40 per cent. of which is, incidentally, French Government-owned? What can that company bring to the deal when France has one of the worst, most heavily unionised and chaotic air traffic control systems in Europe? Is it the third way to privatise over here so that a foreign Government can have a stake over there? Or is this another example of what Scots call the auld alliance?

Finally, why have the Government been dithering for more than two years? Does the Minister not realise that while the Government were searching for a way to spin this privatisation in the media and her Department was missing its slots in the legislative timetable, Britain's air traffic system has been starved of capital investment and has had its investment plans shelved, as is pointed out in today's devastating report from the Select Committee chaired by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody)? That means that congestion and delays are being stored up for the future so that business men and holidaymakers will be kept waiting in airport lounges or sitting around on aircraft runways waiting longer for take-off because of Labour's years of indecision. Is this not another example of Labour's contribution to a standstill Britain?

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