Select Committee on Environmental Audit Written Evidence


APPENDIX 12

Memorandum from the Strategic Aviation Special Interest Group (SASIG)

SUMMARY

  SASIG supports the need for the aviation industry to cover its external costs. The current publication entitled Aviation and the Environment: Using Economic Instruments is too narrowly focussed. The current use of Air Passenger Duty (APD) should not be a substitute for a properly constructed policy to ensure that aviation covers all its external costs. The effect of covering these costs may reduce demand but that in itself should not be the reason for having a properly constructed policy.

BACKGROUND

  1.  The Strategic Aviation Special Interest Group (SASIG) of the Local Government Association comprises over 70 local authorities that have an interest and responsibility for major aviation issues within their administrative areas. The population represented by SASIG is some 23 million. SASIG has played an active part, working with the Department of Transport, in seeking a long-term aviation strategy for the UK that looks at least 30 years ahead.

  2.  SASIG welcomes the study by the Environmental Audit Committee on the progress being made to incorporate the external costs in the definition of a long-term aviation strategy. SASIG made representations to the Department for Transport in September 2001 requesting such a study, as part of the technical work in advance of the current consultation on the Future Development of Air Transport in the UK. The concept of aviation meeting its external, including environmental, cost was enshrined in the Integrated Transport White Paper of 1998. It is a matter of some considerable regret that it has taken until 2003 to attempt to put flesh on that policy aspiration.

  3.  On 14 March 2003, the Government published "Aviation and the Environment: Using Economic Instruments". SASIG will be responding to the consultation. SASIG has also given evidence to the Commission for Integrated Transport which is undertaking a study of the same subject.

  4.  This paper is SASIG's response to the Environmental Audit Committee. Comments are offered on the five specific issues listed in the call for evidence.

  Issue 1:   Can the full environmental costs of aviation be identified? What are the main issues of principle and methodological difficulties in attempting to do so? Can remote but potentially catastrophic risks be properly reflected in such an approach?

  5.  Government policy is that the "external, including environmental, costs should be met". This is clearly wider than just meeting the environmental costs. In particular it needs to take on board the economic costs of securing the economic benefits. There are a host of economic costs, particularly to a local area. The economic benefits in terms of jobs and spending power need to be considered against the local costs of congestion, overcrowding, competition for scarce labour and the cost to the local authorities of transport improvements. The economic benefits of aviation have been articulated in a study commissioned by the aviation industry from Oxford Economic Forecasting. It did not study the economic or environmental costs.

  6.  It is notoriously difficult to put a cost on many of the environmental impacts of any development. What value can be put on over-heating of a local economy or the loss of sleep? But just because it is difficult, it does not mean that an attempt to assess the size or cost of the impacts should not be undertaken. SASIG does not consider it has the expertise to undertake the task, but, as set out in paragraph eight below, an attempt has been made to list those topics which may need to be considered.

  7.  The Government has attempted to cost some elements in their report on "Using Economic Instruments". Intuitively it seems that the values suggested for noise and local air quality are far too low. Both topics, but particularly noise, are a source of major annoyance over a very large area around major airports.

  Issue 2:   How comprehensive and accurate are the environmental costs included in Aviation and the Environment: Using Economic Instruments, and in the Department for Transport's consultation The Future Development of Air Transport in the United Kingdom.

  8.  As mentioned above, SASIG has been critical that the DfT has not progressed the matter of external costs as part of the technical work leading up to the present consultation exercise. Annex A is a paper SASIG submitted to DfT almost two years ago in an attempt to spur them into activity.

  9.  The paper seeks to identify the range of external costs. It will be seen that the matters are very much more comprehensive than just looking at climate change, noise and local air quality.

  10.  The process of establishing the true costs of each of the listed topics would be difficult and time consuming. SASIG suggests that it is first important to identify all the external costs in a comprehensive list. Only then is it reasonable to decide which can be costed, when that can be done and how the costs can be paid.

  11.  In some cases the costs will be internalised by the industry and reflected in both the drive for technological improvements and in higher fares. The industry will presumably try to overcome the problem so as to minimise the effect on fares. In this way imposing external costs will have exactly the right effect of reducing environmental damage.

  12.  In other cases the costs could take the form of compensation to those affected. This could be done on an individual property basis (eg better noise insulation) or on a community basis (eg specialist help to schools to overcome noise in the outdoor classroom).

  Issue 3:   Has the Government defined the correct environmental policy objective for aviation—that, where appropriate, the industry should pay for its environmental costs? How does this relate to the Government's primary objective for airports—to maximise the significant social and economic benefits, whilst seeking to minimise the environmental impacts?

  13.  SASIG accepts that aviation, like all other industries, should meet its external costs. This is the polluter pays principle. The minerals industry pays an aggregates levy that was calculated to reflect its environmental damage. The waste industry pays a landfill tax. Both these mechanisms seek to reflect the true costs of those activities on society at large and seek to make the industries sustainable.

  14.  The Government has given an undertaking that aviation should be sustainable. However, the precise meaning of the phrase is less than clear. The present consultation report from the Treasury and DfT (para. 1.3) says:

    "The development of aviation should be sustainable: that is to say, a proper balance should be struck and maintained between economic, environmental and social considerations. Policy for airports should aim to maximise the significant social and economic benefits, whilst seeking to minimise the environmental impacts".

  15.  Prior to establishing an aviation policy it is of critical importance that the Government should make clear—and indeed agree with a wider audience—what is meant by "a sustainable aviation policy". Referring to the definition given in paragraph 14 above, is it a balance of the three factors (economic, social and environmental) or is it capturing the first two and then mitigation to minimise the environmental impact? It now seems that the Government is basing its work on the latter definition. The two approaches are very different. Sustainability should not just be about maximising economic and social benefits. There are both cost and benefits at an economic, social and environmental level. A sustainable policy is where all three are considered equally.

  Issue 4:   Would the incorporation of environmental costs be sufficient to achieve sustainability in the air transport sector? What additional measures, if any, would need to be taken if this were to have little impact on rates of growth? To what extent is there a tension between the policy of incorporating environmental costs (especially of carbon) and the Government's long-term objective of a 60% reduction in CO2 by 2050?

  16.  If it were possible to incorporate all the economic, social and environmental costs, then there may be no reason to inhibit the growth of aviation. But the real problem is seeking to agree on those full costs. Noise is but one example where the definition of noise disturbance is too narrow.

  17.  Currently the Government is relying on the effect on house prices within the 57dBA Leq daytime contour. Noise affects people well outside that area (down to and even beyond the 54dBA Leq daytime contour) but also affects people at night and outdoors—for example in their gardens and in their leisure activities. There is also a great problem for schools, both indoors and in outside play areas.

  18.  As with air pollution issues, the need is to reduce the noise not just compensate for it. If the cost to the industry is high enough, then the drive to reduce levels of noise should get greater but there is always going to be a point at which noise cannot be further reduced.

  19.  The solution may lie in a multi-strand approach.

    —  First, all forms of noise insulation should be available to people living in areas worst affected—possibly out to the 54 dBA Leq contour.

    —  Secondly, those houses closest to an airport—possibly within the 65 dBA Leq contour, should be bought by the airport if so requested by the owner.

    —  Thirdly, night flights should be more severely curtailed (this is now the subject of separate consultation in respect of Heathrow, Gatwick and Stansted), with very heavy financial penalties to cover those movements judged to be essential.

    —  Fourthly, the industry should pay for all local schools to have access to outdoor space in areas away from aircraft noise. In effect this may mean moving some schools.

    —  Fifthly, the permitted level of noise from an individual aircraft should be gradually lowered, with fines for exceeding the level used for noise mitigation measures.

    —  Sixthly, there should be some form of compensation devised for the affect of noise on open spaces. This may need to take the form of a grant to be used to improve the facilities available to the users.

  20.  The overall cost for the above measures is likely to be high. That should help to drive reductions in aircraft noise. It also needs to be understood that the reason noise is a problem is that, in many cases, airports are too close to houses. In developing a long term aviation strategy one of the overriding criteria for airport location should be to minimise adverse effects.

  21.  Global air pollution creates similar problems. Aviation is forecast to contribute a growing share to global warming effects. This is because, as other industries reduce their emissions, aviation is forecast to grow so fast that its emissions will increase. The answer probably lies in setting an actual limit. To meet it the industry would either have to improve its emissions performance or simply not grow.

  Issue 5:   Given the international context, what practical options for incorporating environmental costs are really available to the Treasury and the Department for Transport, and how should any revenues be used?

  22.  There should be three approaches.

  23.  First, the Government should take a lead at an international level, with the European Union, in seeking to ensure that many of the costs are rapidly reduced. Technology is available to reduce noise but the standards being imposed in Chapter 4 certification are not as low as could be achieved. Nor are the older aircraft being phased out quickly enough. There should be cost penalties for not achieving reductions.

  24.  Secondly, UK action should be taken. This could be done by imposing charges on airlines, airports or passengers and using that income to remove or reduce impacts. The charge could be an enlarged Air Passenger Duty (APD) but rather than treating it as a tax (ie an income for Government) it should be spent by the airports or the local authorities for the good of the local community. This could be classed as an environmental levy. If the Government want to retain APD as a tax, then the environmental levy would be a second charge on passengers and could be itemised as such on the tickets. In that way passengers would be made to understand the issue better.

  25.  Thirdly, airport expansion should only be sanctioned where the impacts are minimised. In some regions, this can be done by the expansion of existing airports. In the South East that is not a solution. A new airport is needed and whilst the option at Cliffe has been strongly criticised by some, there are better options being advocated as part of the consultation process.

CONCLUSIONS

  26.  There is a fear in the aviation industry, and possibly in Government, that increasing the cost of aviation will reduce the economic benefits by slowing down the growth rate of passengers. It is by no means clear that higher charges to passengers are a real deterrent, particularly as the industry has recently been able to reduce average fares at a greater rate than was forecast.

  27.  All industries are now being persuaded, by force if necessary, to improve their environmental performance. The aviation industry has certainly made great attempts to do so itself but its impact is still growing because its passenger numbers are still growing. Introducing a regime to ensure the external costs are met will ensure that those who benefit from aviation pay their full costs. Subsidies to airlines, airports and passengers need to be eliminated.

April 2003

Annex A

AVIATION—EXTERNAL COSTS

  The Government, in the Integrated Transport White Paper (1998), stated that "aviation should meet the external costs, including environmental costs, which it imposes. As the Government now moves towards a consultation exercise on a 30 year airports and aviation policy it seems important to get a better understanding of the external costs of aviation.

  The following table sets out some initial thoughts on the external costs of aviation. It is based on an informal discussion between elected members and officers of SASIG, together with a few invited guests. It is not necessarily comprehensive and, at this stage, is intended to widen the debate and promote other contributions to the topic. It is accepted that some of the factors may produce positive benefits, the costs therefore would need to be set-off against the other costs.

  The Strategic Aviation Special Interest Group of the Local Government Association,

4 September 2001
TopicMeasures Comments
SAFETY & HEALTH
Population at risk inside Public Safety Zones * Blight value of property
* Insurance costs
* Cost of accidents/deaths
Need to include all properties in the PSZ
Population at risk outside Public Safety Zones * Blight value of property
* Insurance costs
* Cost of accidents/deaths
Need to include properties in a wider contour, as air traffic route changes can be made without consultation
Safeguarding policies* Cost to Local Authorities of administering policy
* Cost to owners of the restrictions imposed by safeguarding
Planning for major emergencies* Cost to Local Authorities If the airport did not exist, then likelihood of an emergency would be much less
Handling major emergencies* Estimated cost, annualised by probability assessment
Vortex implications* Full cost of preventative measures
* Price of fear?
National policy needed over the extent of any schemes
Health of passengers* Costs of Deep Vein Thrombosis
* Costs of poor air quality in cabins
Need to take account of the costs in terms of lives and hospitalisation
ECONOMY
Road and rail infrastructure* Costs attributable to aviation but not paid for as part of expansion scheme Demands for new road, rail and tube may be distanced from an airport eg London Tube system heavily overloaded by tourists
Associated infrastructure* Additional sewage and water capacity
* Additional hospital capacity
It is assumed that an airport makes additional provision necessary
Congestion on local roads* Costs to other users, particularly businesses
Congestion in the air* Full cost of all Air Traffic Control provision and use
Labour poaching* Costs to local businesses of losing employees to higher paid jobs at the airport
* Costs to local residents of loss of services eg buses, shops
Subsidy to aviation from preferential tax regime * Full cost of fuel tax
* Full value of VAT saved by the aviation industry
Tourism leakage* Difference in UK tourist spending abroad and visitor spend in the UK
* Losses to UK tourist resorts of visitor losses as foreign travel gets cheaper
Figures show a net loss to the UK economy
Development pressures* Cost to Local Authorities of controlling unauthorised development
* Costs to Local Authorities of handling "airport related" development
Off-airport car parking on farms and hotels is a huge problem


ENVIRONMENT
Aircraft noise* Reduction in value of all properties and land affected
* Cost to the Department of Health of noise derived illness
* Value of the loss of sleep, particularly from night flights
* Impact on schools, both in terms of indoor and outdoor learning
* Loss of tranquillity at open spaces
* Effects on wildlife
* Cost to Local Authorities of monitoring and control
This should cover the effect on all properties, not just those affected by any expansion. It should also cover a larger area than the 57 Leq contour
Local air quality* Cost to the Department of Health of air pollution derived illness
* Costs to individuals of pollution derived illnesses eg asthma
* Costs to local business of providing additional air quality control measures because oh high levels of air pollution from an airport
* Effects on wildlife and plants
* Cost to Local Authorities of monitoring
This should cover the effect on all properties, not just those affected by any expansion. It will also need to include properties in a wider area, as air traffic route changes can be made without consultation.
Note that some local businesses are being required to install additional measures to minimise their pollutants.
Climate change* Requirement to reduce high level emissions, over specified time period
* Proportional cost of sea and river defences against flooding needed to combat global warming
* Costs to agriculture of sea and river flooding resulting from global warming
Emissions trading may be an alternative, providing it is accepted internationally that other sectors can make even lower reductions than currently planned.


URBANISATION
Infrastructure* Cost of water treatment plant not otherwise met by the airport
* Cost of sewage disposal facilities not otherwise met by the airport
* Cost of flood prevention measures associated with airport site
The overall growth of development at and around an airport area may create the need for additional facilities at a higher than marginal cost.
Housing and employment location* Cost of the distortion to regional planning guidelines by the need to locate new housing and employment to support airport growth
* Cost of providing housing to meet labour demands associated with airport
The location of an airport could damage a planned change in regional geography if it is wrongly located.
Heritage* Value of the damage caused to townscape, heritage and landscape by new development
* Effects on biodiversity
Retail* Effect of airport shopping on other retail outlets The effects may be widespread but some airports seek to attract local people to landside shops. In addition airside shops could facilitate shopping that would otherwise take place in established shopping locations
Community effects* Cost of dependency on aviation Any location that is heavily dependent on one industry becomes vulnerable to cut backs in that industry.


SURFACE ACCESS
Infrastructure* Any costs not met by the airport for roads, railways and buses
* Costs of congestion (if not covered earlier)
Off-airport car parking* Costs to the Local Authorities of controlling and enforcing planning policies
* Costs of providing additional parking at or around railway stations
Off airport parking often takes place in fields and around hotels, without first seeking planning permission.
Traffic at night* Cost of overall disturbance and noise
* Cost to Local Authorities of monitoring




 
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