Draft Transport Act 2000 (Designation of Transferee) Order 2001

[back to previous text]

Mr. Foster: I understand how difficult it would be for the Minister to comment on any of the three bids. However, on four separate occasions he has stated for the record that there is a competition. It is normal in a competition for the rules to be published. All I am asking him to do is to give us a clear indication of the rules. What criteria are to be used in making the judgment and what values are to be attached to each of those criteria?

Mr. Ainsworth: Throughout the passage of the Transport Act, we discussed the reasons for choosing a PPP. The reasons for adopting that course are the issues that are being taken in account in the evaluation of the three bids. They include taking NATS forward, obtaining investment and putting in place the necessary management to modernise and manage the system into the 21st century. Mandatory issues such as safety and the national interest are also important. However, the order does not cover those issues, so I am not required to discuss specific weightings. My right hon. Friend Lord Macdonald of Tradeston agreed that he would report back after three months on the consultations that he and my predecessor—my hon. Friend the Member for Sunderland, South (Mr. Mullin)—had undertaken during that period. When there is a preferred bidder, we will report to the House.

Mr. Clifton-Brown: Will the Minister give way?

The Chairman: Order. Before I call Mr. Clifton-Brown, I rule that the Committee may discuss procedure and its relationship to the order, but not the merits of the three bidders. I call Mr. Clifton-Brown.

Mr. Clifton-Brown: I hope that my intervention will come within your stricture, Mr. Pike. Is the prospectus for the competition in the public domain? If not, will the Minister place a copy in the Library?

Mr. Ainsworth: As I have said, a report on the consultations that have taken place will be made at the end of the three months. When there is a preferred bidder, that will be reported to the House. In the meantime, three commercial organisations have made bids to run NATS and those bids are being evaluated by the Department. I am not at liberty to go further than that because it is not the purpose of the order.

Mr. Clifton-Brown: The purpose of the order is to transfer the existing CAA shareholding to a new company known as NATS No. 2, which will then be sub-sold. The prospectus must exist, because otherwise there would not be three preferred bidders. As that document appears to be secret, will the Minister tell the Committee how widely advertised and circulated it was?

Mr. Ainsworth: The fact that the Government are going down this road has been in the public domain for a long time, so there cannot be too many people in a position to make a serious bid to become the strategic partner who have any doubt about the fact that that possibility exists.

The hon. Member for Bath talked about conflicts of interest. Although I cannot, for reasons of bidder confidentiality, reveal the detail of any individual bid, I can assure the Committee that the Government have made the necessary arrangements to ensure that any perceived or actual conflicts of interest will be addressed and resolved. We have built a two-stage check into the bidding process. First, each bidding group was required to identify and suggest remedies that would resolve to our complete satisfaction any conflicts of interest that existed as they submitted their indicative bid. Only those bidders who satisfied us in that way were allowed to participate in stage 3—the preparation of best and final offers. In the third stage, which is on-going, the second check comes into play. It requires an exhaustive and detailed account of how each proposed stratetegic partner would demonstrate to us that any remaining conflicts of interest could be handled. I assure the Committee that no group will be appointed as a strategic partner if we have any doubt about how conflicts of interest will be neutralised.

I have talked about the three-month agenda, which I think that the hon. Members for Cotswold (Mr. Clifton-Brown) and for Poole raised. The hon. Member for Cotswold also asked about employee shares and the employee pension scheme. We have touched on the issue of shares, but let us go over it again. The shares are for the staff and may not be sold to anyone else, including the strategic partner. The scheme to determine the value of the shares will be fair. It remains in draft form, but has been discussed on a number of occasions with the NATS trade unions. Those discussions are continuing.

Mr. Clifton-Brown: In other such schemes, retired employees have been allowed to continue to hold shares. If that is not the case, the scheme would discriminate against current employees of CAA who are to retire in a year or two and who might wish to buy shares at this stage to hold in their retirement.

Mr. Ainsworth: It is proposed that the 5 per cent. share will be for current NATS employees. When a transfer takes place, it will affect NATS employees. When people retire, they will have to put their shares back into the pot so as to maintain the availability of the 5 per cent. pot for the employee share issue. That happened in a number of the share issues under the previous Conservative Government, for example, the Jaguar share issues operated on exactly the same basis.

Arrangements have been made to protect the pensions arrangements of NATS employees when the PPP is established. Those arrangements were considered by both Houses during the passage of the Transport Act and were widely welcomed. The terms of the trust deed of the Civil Aviation Authority pension scheme, to which NATS employees belong, prevents the strategic partner from removing any surpluses from within the scheme. I hope that I have covered the issues that have been raised.

Mr. Clifton-Brown: I was careful in my wording: my questions related not only to removing assets from the pension scheme but to pension fund holidays. If the people who bought into the company found that there were considerable surpluses in the pension scheme, they could run down its assets by adopting several years' pension fund holidays. Can the Minister confirm that that will not happen?

Mr. Ainsworth: The strategic partner would be prevented from removing any surpluses. There have been discussions, to which I have now become party, with the trade unions and others involved in the pension scheme. I will write to the hon. Gentleman to make absolutely sure that I can satisfy him on this issue.

Mr. Clifton-Brown: Will the Minister copy that letter to the whole Committee?

Mr. Ainsworth: Sure.

We have had a long and interesting debate, as we expected. Our debate should not be about the principle of PPP, because Parliament gave its blessing to the Government's proposal to create a PPP when it approved the necessary powers in the Transport Act. Today's debate is about the safeguards that Parliament wanted to be established.

Mr. Clifton-Brown: I raised some important points which the Minister still has not addressed. I asked about the powers of the special share in relation to directors and dividend policy, and the indebtedness of the company that is being transferred. Those are important issues. I hope that he can deal with them before he concludes.

Mr. Ainsworth: I tried to cover all the points that the hon. Gentleman raised. The special share will enable the Government to have input into the policies of the new NATS company and its dividend policy. We are fully aware that the different bids contain different approaches, but that is not a problem. As I said, far wider considerations are contained in our policy when deciding which of the preferred bidders will be chosen. The golden share or the special share is robust, it is sustainable and it will give us those protected rights.

Mr. Don Foster: The Minister has now said on three occasions that Lord Macdonald has given assurances that there would be a report back on the consultation held during the three month period. At least three Opposition Members have asked for precise details about that. Is it to be a report back to both Houses of Parliament? Will there be an opportunity for debate in both Houses? Will it come before or after the decision is made? The Committee is entitled to a bit more detail than we have had so far.

Mr. Ainsworth: I think that I said that the manner of the report back would be handled by the business managers in the usual way. If the hon. Gentleman remains more alert that he was last week, he will have an early input into how it is done.

I am not sure that I have answered all the questions but I shall consider them after the Committee and fill in any gaps in hon. Members' knowledge later. The issue is important and I shall ensure that hon. Members have the necessary information.

The Chairman: Before I put the Question, I thank hon. Members for their good wishes. This was one of the easier sittings; I might not always be as lenient as I have been today. I, too extend my good wishes to the Minister in his new position.

Question put:—

The Committee divided: Ayes 9, Noes 4.

Division No. 1]

Ainsworth, Mr. Robert
Heppell, Mr. John
Hughes, Mr. Kevin
Jones, Helen
Kemp, Mr. Fraser
Naysmith, Dr. Doug
Osborne, Ms Sandra
Pickthall, Mr. Colin
Winterton, Ms Rosie

Brake, Mr. Tom
Clifton-Brown, Mr. Geoffrey
Foster, Mr. Don
Syms, Mr. Robert

Question accordingly agreed to.


    That the Committee has considered the draft Transport Act 2000 (Designation of Transferee) Order 2001.

Committee rose at three minutes to Six o'clock.

The following Members attended the Committee:
Pike, Mr. Peter L. (Chairman)
Ainsworth, Mr. Robert
Brake, Mr.
Clifton-Brown, Mr.
Foster, Mr. Don
Heppell, Mr.
Hughes, Mr. Kevin
Jones, Helen
Kemp, Mr.
Naysmith, Dr.
Osborne, Ms
Pickthall, Mr.
Syms, Mr.
Taylor, Mr. Ian
Winterton, Ms Rosie

Previous Contents

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2001
Prepared 12 February 2001