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Mr. Jenkin: I did not refer to the threat of hostile foreign ownership in my speech, but the right hon. Gentleman is making an extremely important point on national security. Does he agree that the weak golden share provisions are not sufficient to withstand that threat? We would certainly not countenance any transfer to the private sector unless the golden-share provisions could be made absolutely watertight, which means insulating them from any threat from European Community law.

Dr. Strang: I am grateful to the hon. Gentleman; that is an important point. The Government would argue that we could rely on the golden share.

Mr. Raynsford indicated dissent.

Dr. Strang: My hon. Friend indicates that that is not true; I withdraw my comment. I thought that there was some protection. Presumably, he is saying that there is no protection. The golden share relates to the articles of the new privatised company.

Mr. Raynsford: I was shaking my head because I was disagreeing with the interpretation of the hon. Member for North Essex (Mr. Jenkin), who implied that only the golden share provided the security. As my right hon. Friend will know, having studied the Bill carefully and been a member of the Standing Committee, specific clauses--clauses 86 and 87, I think--give the Secretary of State very clear powers to intervene in a national emergency to safeguard national interests. That is the proper safeguard.

Dr. Strang: I am grateful to my hon. Friend, but that is a tangential point. Who is to say that there would be such intervention if the private company, which may be owned initially by some British-based company--I think

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that a United States-based company is also in the frame now that the Government have got the list of potential private owners down to three--were sold to, for example, a Hong Kong-based company? Frankly, the Government of the day would not regard that as an emergency. The sale would go through and the worry would be over any subsequent national emergency.

Mr. David Chidgey (Eastleigh): Does the right hon. Gentleman agree that there is a further, perhaps even more worrying, dimension? It is possible that part of NATS could be acquired not just by a foreign company but a company in the public ownership of a foreign country. Who is to say--I look forward to the response--that we can guarantee that another country's foreign policy will be at one with our own?

Dr. Strang: The hon. Gentleman makes an interesting point. He will understand if I do not go too far down that road, although he enables me to make this point: there is all this talk about privatisation helping us to facilitate European co-operation, almost implying that the new privatised air traffic control system will take over some of the European systems, but does anyone believe that the French will privatise their air traffic control system or that a private British air traffic control company will be allowed to buy the nationalised air traffic control system in France? No one believes that France is at all likely--certainly not in my life time--to privatise its air traffic control system. The danger is the reverse.

Mr. Jenkin: The Minister's reaction to the right hon. Gentleman's comments cannot stand uncorrected. The provisions that the Minister says give the Secretary of State powers to intervene in a national emergency are not insulated from any European Community injunction either. The Government insist that the provisions are so insulated, but they will carry on losing their cases in the European Court of Justice on those matters, just as they have in the past.

Dr. Strang: I am grateful to the hon. Gentleman. He will recall some fun in Committee at the expense of his Euro-scepticism, but he is right that the golden share is threatened by the European Union. I have correspondence with the appropriate Treasury Minister confirming that. One only has to read Lord Lawson's book on the golden share of the British National Oil Corporation to understand that such provision is a very tenuous line of defence. That is what history shows--and it is even more the case for NATS privatisation given the statements that are emanating from the European Commission, which has plans for Europeanisation of air space. That strengthens the case for ensuring that the service provider is under the Government's complete control. The only way to do that is to retain it in public ownership.

I shall conclude, because many hon. Members want to speak in the debate. Let me be up-front: I support the amendment because I believe that delay means that privatisation will disappear. I stress to my hon. Friend the Member for Ayr, whose constituency includes Prestwick, that I distinguish between the Government's policy and the Labour party's manifesto for the next general election. I do not believe that the Labour party will fight the next

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election campaign on a policy of privatising our air traffic control system. The amendment would prevent the Government from selling off any equity in our air traffic control system before the general election. That would have the effect of preventing a future Labour Government from selling our air traffic control.

5.30 pm

Mr. Moore: I am glad to follow the right hon. Member for Edinburgh, East and Musselburgh (Dr. Strang), who has again passionately presented the important arguments against privatisation from his perspective. From Second Reading last December and throughout the Bill's passage through the Commons, Liberal Democrat Members have opposed the privatisation of National Air Traffic Services. Our colleagues in another place continued that vigorous opposition. Like the right hon. Gentleman, our preferred option is the abandonment of privatisation and the creation of a trust or an independent publicly owned company. However, we acknowledge that delay is currently the only option, and we believe that a virtue can be made of that.

We share the right hon. Gentleman's view that delay greatly enhances the chances of the whole process falling through. Regardless of that, there should be a delay not least because privatisation did not appear in the Labour party's manifesto at the last election. I did not nick the Enigma code-breaking machine, but one would need to have possessed it to interpret the Prime Minister's introduction to the manifesto as meaning that air traffic control would be privatised. Thousands of others took a similar view. To put it bluntly, we were told that our air was not for sale. More fool us for believing that.

NOP conducted a recent poll on behalf of a leading trade union, the Institution of Professionals, Managers and Specialists. It showed that 76 per cent. of the public remain opposed to a sale of air traffic control, and only 14 per cent. support the proposals. That says everything we need to know about wider concerns outside the Chamber.

As we have debated the privatisation at length in the Chamber, in Committee and in another place, we have gleaned more and more details of what will happen under privatisation. Those details have come out grudgingly or through leaks, rather than through Government openness. We have mounting anxieties about the way in which NATS will be regulated after privatisation. There are serious questions about the suitability of some of the strategic partners who have come forward for consideration.

At the outset, the Minister raised an issue that was a feature of broadcasts outside the House earlier today. He made it almost a point of principle that sending back the Bill would be an insult to another place. He said that the popular will should prevail. The popular will, as reflected in opinion polls, does not support the measure. Their Lordships rightly pointed out that there was no manifesto commitment to privatisation. However, the most important point is that this Government have done more than any other in the past 50 years to reshape the other place in a manner that suits their purposes. There is, therefore, a sweet irony in the fact that the other place is kicking stuff back for us to reconsider.

At the heart of this debate is the investment requirement of NATS, which must be satisfied if the paramount objective of ensuring safety in our skies is to be

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maintained. Liberal Democrats have consistently accepted that investment is required, but we continue to deny that privatisation is the only way to achieve that. Our central concern, and that of many people throughout the country, is that privatisation could have a dangerous impact on safety.

Mr. Dalyell: My life, the hon. Gentleman's, and those of many of our constituents are constantly in the hands of the captains of British Midland and British Airways who fly us between Edinburgh and London. What is his view of their reaction?

Mr. Moore: The hon. Gentleman refers to the trips that he and I frequently make between Scotland and the House. I have sat beside him on many occasions, and he has carried out an informal poll of the pilots of British Midland and British Airways, which he kindly shared with the rest of the cabin. I agree with him in this instance--I have done so on many occasions previously--that there is strong opposition among pilots to the proposals. The Government should listen carefully to that message. I support the hon. Gentleman's comments.

I was drawing attention to the fact that financial considerations are at the heart of this debate. The most recent accounts for NATS show that the service increased turnover to £566 million in the past year and produced an operating profit of £63 million and a net cash inflow to the business of some £9 million. The point is that NATS has consistently paid for itself.

We believe that the investment requirements could also be paid for--a case could be made directly to the Treasury about the need simply to provide such investment. However, we do not believe that that is the only route. One could, through a trust or an independent publicly owned company, secure the financial regime that would allow the organisation to borrow against the strength of future cashflows. The Deputy Prime Minister and others have argued for months that they have advanced the only option, but it is increasingly clear that that is not the case. The Government's option does not bear much analysis.

Air traffic control after privatisation will remain heavily regulated. To all intents and purposes, it is a monopoly, and rightly so. As the right hon. Member for Edinburgh, East and Musselburgh said, demand and growth in that sector are severely constrained and outwith the control of NATS. The commercial concern that takes over the organisation must find its return and improve profits by focusing on costs. The public throughout the country are concerned about the matter to the extent that cost cutting will focus on areas that are essential to safety--as yet, they remain to be convinced.

Politicians on both sides of the House and elsewhere have argued about that matter for months, but we do not need to worry about who is right or wrong because we can turn to NATS itself, as hon. Members who spoke earlier have already done. Earlier this year, the economic regulatory group at the Civil Aviation Authority sent out a second consultation paper on setting en-route services charges in United Kingdom airspace for the first five years after privatisation. As has already been said, it contained significant average price reductions and real cost-per-flight reductions in the charges that would be allowed. It also opposed making massive capital expenditure reductions to obtain efficiency gains.

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The response of NATS to that paper was, to say the least, rather blunt. Its response document in May contains a paragraph that gets to the point. It states:


As recently as 16 October, in a presentation to the air traffic control work force, NATS management repeated those criticisms. They said that ERG was proposing a tougher average annual real price reduction


NATS could not have been any clearer about its position. It concluded that the severe cuts in operating costs and investment were inconsistent with the proper carrying out of NATS functions.

Apart from the concern of NATS about how it will be regulated after privatisation, there is our serious concern about the nature of the strategic partners who want to be part of the privatisation process. One of the key players in the Novares consortium is Lockheed Martin, a huge American multinational. It is the prime supplier at Swanwick, it has the contract for the new Scottish centre, and it is greatly involved in telecommunications and other systems. It is not in the habit of running air traffic control services. Its only motivation in this instance can be to ensure that it controls the paymaster of a service which, through overruns and delays, has already cost it some £150 million at Swanwick. That surely represents a major conflict of interest--a fact which the Government have yet to see fit to countenance.

The Airline Group--one of the other significant players--has been set up as a not for profit consortium. Most of the important United Kingdom airlines, including British Airways and British Midland, are part of that consortium. They do not themselves believe that the profit motive is appropriate in the case of this privatisation. The other side of the coin, is the fact that there is naturally a conflict of interest, because they are far the most significant customers and it would be handy for them to control the whole operation to the potential disadvantage of competitors.

How can such conflicts of interest be overcome? A document sent out by the Government inviting tenders stated clearly that those with a real or perceived conflict of interest would be eliminated from the process, but the Minister and his colleagues have yet to explain how the Government have dealt with concerns about very real public sector conflicts of interest.

There has been silence in response to criticisms, even those from NATS. Just as worrying, however, is the silence from the other part of the CAA with a direct interest in the process--the safety regulation group. I can trace no public statement of the group's observations about the proposed structure, or about the serious points made by NATS and others. Does the group agree with the current approach, or does it disagree? We do not know. Checking the Department of the Environment, Transport

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and the Regions website earlier today, I did not find even the NATS response to the economic regulatory group. I certainly did not find anything from the safety regulation group. The information concerned, however, goes to the heart of the debate, and until it is in the public domain the public are right to be suspicious.

When the Minister kindly gave way to me earlier, I had an exchange with him about the number of safety inspectors who will be employed after privatisation. He defended himself by saying that the Government would devote more resources to safety if more were asked for. That is a hugely complacent attitude. If the Government really believe in the safety case, which they have put passionately on many occasions, they should ensure that they--or at least the CAA--take steps to increase resources and, in particular, increase the number of inspectors who will be required to check what is going on after privatisation.


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