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Regional Air Access to London

The Secretary of State for Transport (Mr Alistair Darling): The Government have today published guidance on the Protection of Regional Air Access to London, copies have been placed in the Libraries of the House. This guidance was foreshadowed in "The Future of Air Transport" White Paper (December 2003) and follows extensive consultation with stakeholders.

The aim of the guidance is to clarify how the Government will interpret the criteria in the relevant European Regulation (EC 2408/92) when assessing applications for Public Service Obligations (PSOs) to protect existing regional air services to London. A more precise definition of the criteria will provide a firmer basis for the discussion of individual cases with both airlines and regional bodies.

"The Future of Air Transport" White Paper recognised the concern of regional stakeholders about the availability of landing and take-off slots at major London airports. It stated that the Government were prepared to intervene in well defined circumstances to protect slots at the London airports for regional services through imposing PSOs. Where services already exist from UK regional airports to London (defined as City,
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Gatwick, Heathrow, Luton and Stansted airports), this intervention would guarantee a minimum level of scheduled air services on these routes.

The criteria for PSO imposition are set out, but not precisely defined in EC Regulation 2408/92. In 2004, The Government consulted on interpretations of these criteria and the agreed definitions are set out in the guidance. The Government consider that in order to justify intervention in the market, a PSO application must illustrate the benefits to the regional and national economy that would otherwise be lost if a service was withdrawn. It will be the responsibility of regional bodies to make a case for a PSO against the criteria. In order to assist regional bodies in assembling the evidence required to demonstrate wider benefits, the guidance contains an Annex which provides a common methodology for assessing the economic benefits of maintaining an adequate air service to London, so as to ensure transparency and comparability.

Final judgment on the eligibility of a route for PSO imposition rests with me, as Secretary of State for Transport, and would be based on the merits of each case set against the criteria in Regulation 2408/92. If an application is supported, the Department would notify the European Commission and air carriers operating the route, and a PSO would be imposed to the extent necessary to ensure on that route the adequate provision of scheduled air services satisfying fixed standards of continuity, regularity, capacity and pricing. After a PSO has been imposed on a route, European Law (Regulation 95/93 as amended) allows Member States to reserve slots at airports on that route so that an airline cannot use them for a service to an alternative destination. The reservation of slots is at the discretion of the Member State and can only take place at airports designated as "co-ordinated", which in London are Heathrow, Gatwick and Stansted.

The Government think it unlikely that the imposition of a PSO on a route to London would require subsidy. All regional routes to London are currently commercially viable. Should subsidy be required, however, it would be the responsibility of the relevant regional body to reimburse the Department for these funds. PSOs will be reviewed every three years to ensure that their imposition is still appropriate and the obligations set out are being met.

In addition to clarifying the interpretation of the European Regulation, the guidance also supports a voluntary early warning system for airlines operating regional routes to London. This invites airlines to provide as much notice as possible, preferably at least four months, of their intention to withdraw from, or reduce services on routes to London. Whilst I recognise that airlines operate within a competitive commercial environment, I believe that the early warning system strikes a good balance between the need to maintain an adequate level of regional services to London, and limiting the Government intervention in the market.
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The system offers regional partners together with the Government the time and opportunity to explore all potential solutions to ensure continuity of regional services into London.


Autumn Performance Report

The Secretary of State for Work and Pensions (Mr. John Hutton): I am publishing today the Autumn Performance Report of the Department for Work and Pensions. The report is intended to supplement the Department's annual report published in June 2005 (Cm 6539).

The report provides the latest account of how the Department is performing against its Public Service Agreement targets. Copies have been placed in the Library.

Social Fund

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. James Plaskitt): I would like to expand upon the Pre-Budget Report 2005 announcements on the treatment of capital in the discretionary Social Fund.

The Government have already announced a number of significant improvements to the budgeting loan scheme to take effect from April 2006, which will amount to an increase in finding of £210 million over three years. There will be further publicity about these for customers and advisers nearer April.

In addition, to ensure that budgeting loan recipients are not penalised for having small amounts of savings, Pre-Budget Report 2005 announced that the capital allowances available to budgeting loan applicants would be increased from April 2006. The current rules mean that capital of up to £500 (for people of working age) or up to £1,000 (for pensioners) is ignored when deciding whether a budgeting loan should be awarded and the amount of the loan. Capital in excess of £500/£1,000 will be offset against the amount of loan sought. From April 2006 the allowances will increase to £1,000 (people of working age) and £2,000 (pensioners).

The crisis loan scheme works differently from the budgeting loan scheme, with all resources available to the applicant taken into account when deciding whether a loan can be made. There is no capital allowance and one will not be introduced.

The Government are also currently exploring the scope to make early improvements to the community care grant scheme, to tighten its focus on the cases with the strongest case for help. This currently operates the same capital allowances as the budgeting loan scheme and we will consider whether the same change or any other change should be made to the treatment of capital as part of this work.