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9.39 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Keith Hill): As this is, after all, the season of good will, I should tell the hon. Member for North Essex (Mr. Jenkin) that he did his best. Of course, the hon. Member for Witney (Mr. Woodward) would have done far better, but he is now--I am delighted to say--my hon. Friend. The Government's gain is very definitely the Opposition's loss. [Hon. Members: "Where is he?"] He will be in the Division Lobby, that is for sure.
The Transport Bill deals with four main areas of change: congestion charging, buses and local transport plans, our proposals for a new structure in the railways, and National Air Traffic Services public-private partnership. The Government's proposal to introduce a public-private partnership for NATS has been the subject of serious and important speeches in today's debate. Among those speeches, however, I do not include those by hon. Members from either of the main opposition parties. Let us be entirely clear about it: despite the weasel words of Conservative Front Benchers, their position remains as it always has been--full privatisation of NATS, which is an option entirely rejected by the Government, by every key player in the industry and, not least, by public opinion.
Mr. Salter:
Will my hon. Friend give way?
Mr. Hill:
I shall not give way now. [Hon. Members: "Give way."] My hon. Friend knows that I am tremendously fond of him and that I shall certainly look in his direction eventually. I should point out, however, that 17 Back Benchers spoke about NATS, taking a total of two hours, and that, regrettably, I am alone and have only approximately 10 minutes to deal with the subject. However, I shall return to my hon. Friend in due course.
From Liberal Democrat Members we have had the usual defence of the status quo: it should all be paid for out of the public purse or by public sector borrowing. As usual, the Liberal Democrats are stranded among the flotsam and jetsam, high on the shoreline of history.
Mr. Don Foster:
Will the Minister give way?
Mr. Hill:
No, not yet, but in due course.
I pay tribute to the excellent record of our air traffic controllers and to their outstanding commitment to safety standards in the industry. However, the trade union side in NATS accepts that it is unreasonable to expect the taxpayer to fund the new investment that NATS so urgently requires. I believe that that view is widely shared also by those of my hon. Friends who have expressed reservations about the form of funding proposed by the Government.
Mr. Salter:
Will my hon. Friend give way?
Mr. Hill:
My hon. Friend is so persistent that I shall give way at last.
Mr. Salter:
Will my hon. Friend expand on the suggestion that we made--that the Transport Research
Mr. Hill:
I am grateful to my hon. Friend for that. The TRL privatisation was undertaken by the previous Government, using a competitive tender process. We intend to use a similar process for NATS. There is nothing to stop NATS management or a not-for-profit group submitting a bid, as happened with TRL. The organisation would, of course, have to meet all of our criteria for a strategic partner, and the Government must ensure that the value of our 49 per cent. is retained--it is, after all, a public asset. If a not-for-public organisation is able to do that, there is no reason why it should not be considered on an equal footing with any commercial bid. I hope that that is helpful to my hon. Friend.
Mr. Foster:
Is the Minister able to explain by what considerably contorted logic he arrived at the conclusion that a proposition for an independent publicly owned company issuing bonds to raise money is the same as the status quo?
Mr. Hill:
The crystal clear logic by which I arrived at that position will unfold in the course of my subsequent remarks.
Enormous, new and exciting opportunities will open up in world aviation in the next few years. By 2010, in United Kingdom airspace alone, there will have been an increase in air traffic movements of 60 per cent. New technology will bring with it the opportunity to export British air traffic expertise on a major scale. In 10 years, it could be possible for air traffic movements into Hong Kong, for example, to be controlled from Swanwick or Prestwick--from the other side of the world.
It is vital that Britain should be at the forefront of the new technology in order to seize these market opportunities, but the competition will be severe. Over the next 10 years both NATS and Eurocontrol expect air traffic control centres in Europe to have consolidated from 30 to six. To meet that challenge, we need state of the art control centres at Swanwick and Prestwick. That is why we need the £1 billion that the strategic partner will generate from the private sector for new investment in NATS over the next 10 years.
Why should the public purse foot that bill or shoulder the financial risk when money is available from the private sector? The lesson of past decades is that public sector borrowing, with its limited horizon of three years at most, simply cannot guarantee the long-term finance necessary to commission the new en route centre at Swanwick, and, I remind my right hon. and hon. Friends from north of the border, the new Scottish centre at Prestwick. My hon. Friend the Member for Ayr (Ms Osborne) made a very good speech, and I remind her that, as the Prime Minister said earlier this year, the Government are fully committed to the new Scottish centre and the public-private partnership will be obliged to complete it.
Mr. Redwood:
Does the Minister intend to write off NATS debt, or will he promise to strike out in Committee the clause that gives him that power as he has now decided that it is not necessary?
Mr. Hill:
Those are matters for negotiation on the development of the PPP. No action is required on the face
The PPP is about more than finance alone. We are all aware of the long and sorry history of inefficiency and delay at Swanwick--five years late in delivery, with a massive cost overrun, and Bechtel brought in, as usual, to project manage the new centre at Prestwick. The truth is that NATS, for all its considerable operational skills, lacks top level skills in key areas such as project management and investment, as well as financial management. That is why, in the Government's view, the independent publicly owned company solution advocated by a number of my right hon. and hon. Friends will not do. It would permit limited borrowing freedom--but under the same management as before.
We do not believe that an IPOC, or a similar solution, would offer the real efficiency driver that would enable NATS to rise to the challenge of new opportunities in the global aviation market. The PPP will enable NATS to sell its operational expertise abroad, to train staff and offer safety management to other air traffic control providers around the world, and, in the longer term, to run those systems for them. These are commercial ventures, the financial risk of which it is proper for the private sector--not the taxpayer--to bear. We need to establish a structure of incentives and disciplines to maximise efficiency. We need to give NATS the commercial freedoms and the management skills to make best use of them. That is why we support the PPP.
In implementing the PPP, it is of course vital that there should be no compromise on national security or safety. I reassure the House that there will be no such compromise. My right hon. Friend the Member for Edinburgh, East and Musselburgh (Dr. Strang) dwelt on national security in his speech. Let me make it clear that the Bill gives the Government the power to direct NATS in the interests of national security. That power will be written into the operating licence. It is exactly the same principle as that which allows the Government to requisition a ship in wartime.
Mr. Hill:
The strategic partner will be selected only after stringent suitability tests, and the Government will have powers to ensure that the PPP--[Hon. Members: "Give way."] I will not give way. I must cover the other provisions of the Bill.
The Government will have powers to ensure that the PPP remains in the hands of a fit and proper person whose ownership would not compromise the public interest or national security. The fact is that safety is, and will always be, the Government's overriding priority. Indeed, in establishing the PPP, we shall make a positive contribution to aviation safety by separating safety regulation from service provision. For the first time, we shall create a properly independent safety regulator, to ensure that safety standards are maintained at their existing high levels and improved where necessary--a development long recommended by the airlines, the Select Committee on the Environment, Transport and Regional Affairs and the former Monopolies and Mergers Commission.
There will be no profits before safety under the public-private partnership, any more than there are now at Belfast, Bristol, East Midlands, Leeds Bradford,
Humberside, London Luton and Newcastle airports, or at any of the 83 airports nationwide that have private sector air traffic control and which are subject to the air safety regulator and safely handle more than 21 million air passengers every year. We want to maintain and build on some of the most stringent air safety standards in the world. There will be no reduction in safety standards or in the safety regulator's powers to enforce them under a public-private partnership. It is for those reasons that I ask the House to oppose the amendment.
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