Select Committee on Transport Minutes of Evidence


Examination of Witnesses (Questions 620-639)

MS KAREN BUCK MP AND MR DAVID MCMILLAN

1 FEBRUARY 2006

  Q620  Mrs Ellman: But who decided that the CAA should run down safety work before EASA was undertaking it?

  Mr McMillan: The decision was taken by the CAA in consultation with industry, as I understand it.

  Q621  Mrs Ellman: Did the Government have any role in that?

  Mr McMillan: I honestly do not know. I do not believe we were consulted. If I am wrong we will certainly write to you.

  Q622  Chairman: You do know there is a problem with certification, did you not, Mr McMillan? There is a problem with certification and that is well known, is it not?

  Mr McMillan: There is a problem with certification in the sense that it has passed to EASA and they are not doing the research, yes.

  Q623  Chairman: No, in the practical sense that EASA is not performing the role of certification in the way that the CAA have been doing. It is not providing the same level of speed and efficiency and performance.

  Mr McMillan: I am sorry; I misunderstood the question. Absolutely, there is a problem.

  Q624  Chairman: Then surely Mrs Ellman's question is even more relevant. Why did the Government, knowing that there was a problem in this field, not say both to the CAA and to EASA on the one hand, Why are you running down research?", and on the other hand, Why are you not appointing sufficient people to deal with this?".

  Mr McMillan: The position is that we have not encouraged the running down of research. Our expectation is that research should be continued by the organisation competent, be that the CAA or EASA. We need to ensure that that is happening.

  Q625  Mrs Ellman: Yes, but, Mr McMillan, can I stop you? The problem we have identified is that the CAA has stopped doing this work before EASA have taken it on themselves. Was the Government aware that that was happening?

  Mr McMillan: I became aware of it recently, is the answer to your question.

  Ms Buck: We know that this is at the heart of our dilemma, that we are in a process where EASA is taking on certain functions but in this first year of operation it has become apparent very quickly that there are delays and difficulties in delivering on key areas. The almost day-to-day balancing act that has to be undertaken with the CAA is how do you ensure that EASA is brought up to fitness to function and that there is not a double burden on industry and so forth without compromising the safety work that is going on in this country? There is not a magic solution to this, as Mr McMillan has already said. There is not an unlimited pool of resource and of expertise out there so this is a very fine balancing act that is going on at the moment.

  Q626  Mrs Ellman: The decision, it appears, was taken by the CAA but would you not feel that the Government should have some involvement in this area on the principle that surely it should be concerned if the CAA is stopping its safety work before EASA is taking it on itself, and the same could apply in other areas?

  Mr McMillan: Many of the problems which the Committee is very rightly raising today are problems of transition. It is absolutely clear that the transition has not been as well handled as it should have been and that is deplorable. What has now happened is that a transition working group has been set up involving all the national aviation authorities in EASA and it is led by the UK member of the board, I am pleased to say. The aim of this is to ensure that the kind of lacuna which you have lit upon here is not allowed to continue, that there is proper planning as to who is going to be doing what during this transition period and that it is properly managed. It would have been excellent had this transition working not been necessary and had the secretariat of the agency been better able and perhaps more resourced to do this work for themselves. That is not the position we have found ourselves in so we are taking urgent remedial action to put this right. That is the position we are now in. It is a transitional process which we need to have managed very effectively.

  Q627  Mrs Ellman: Are there any other areas of work where you think these transitional problems are being encountered?

  Mr McMillan: The main other area which is of concern is the central one of manpower planning which the Chairman and others have been referring to and that is one which is being tackled, as I say, early and objectively.

  Q628  Mrs Ellman: Does the Department have any concerns about lighter touch regulation? Do you feel that could compromise safety standards?

  Ms Buck: We would argue that that is not a term we recognise. The CAA regulatory regime is about being risk focused. Lighter touch" implies a reduction. It is an appropriate use of resources and a far better way to proceed to ensure that in general you target your work at those operations where there are reasons to believe there are risks.

  Q629  Mrs Ellman: But could a risk-based approach not lead to problems even if those problems only manifested themselves later on?

  Ms Buck: It is a question of where the balance is struck always, is it not? The CAA has to balance a number of competing interests and pressures, safety being absolutely paramount. I think we all agree, and I am sure the Committee would agree, that the industry is certainly concerned that there needs to be a recognition of costs and that those costs are not passed on and borne by the industry, and therefore having an equal regulatory regime for some of those areas of service that have a distinguished record and where there are no reasons to believe that they are falling into a high risk category would not be a reasonable use of resources.

  Q630  Mrs Ellman: How is this required 6% annual rate of return from the CAA justified?

  Ms Buck: The 6% rate of return is predicated upon the capital resource that the CAA has and its exposure to its pension entitlements and its other liabilities and we consider that to be reasonable for the nature of the business.

  Q631  Mrs Ellman: When was this last considered?

  Ms Buck: We will check and let you know.

  Q632  Mrs Ellman: The CAA is the only European aviation regulator that is self-funding, is it not? Are there any plans to look at that again?

  Ms Buck: My understanding is yes, but what we understand to be the case is that a number of other European countries are beginning to look at that, and obviously EASA itself is a kind of step in that direction because those costs are passed on to industry.

  Mr McMillan: Funding models do vary across Europe and it is true to say that the CAA is at one end of the spectrum where all costs are recovered from those entities which enjoy the benefits of their regulation. For example, the French Government, the DGAC, is now charging the French industry for certification activities, for safety regulation activities, and I know that other countries are looking at the same thing. Of course, to the extent that EASA does come into play there is, there is a fees and charges regulation which will apply across the whole of Europe, so for many countries they will be facing charges and fees for the first time for these activities. The tendency is to move towards user paying as opposed to government paying.

  Q633  Chairman: So the simple answer to the question is yes, it is true that the CAA are the only people who are charging?

  Mr McMillan: Fully, yes that is the truth.

  Q634  Mrs Ellman: How do you know that the CAA are efficient?

  Ms Buck: The CAA is tasked with a number of responsibilities, including ensuring that it bears down on costs. It has set a number of objectives in that respect, and indeed in the current period the expectation is that costs will be kept below the current level of inflation, so that is a requirement, and industry itself expresses a view on costs and does so both directly to the CAA and to me. The CAA also was a party to the Hampton Review of Regulation and is playing a very important role in the whole Better Regulation framework.

  Q635  Mrs Ellman: It has been put to us that the CAA is over-reliant on the airlines because of the funding structure. Would you share that view?

  Mr McMillan: I do not know if that evidence has been put to you by the airlines. I rather doubt it. The fact of the matter is that the CAA has a strong reputation for independence and integrity. It gets its revenue from a variety of sources. Yes, clearly, a very large proportion of it comes from the airline industry but I think the airline industry would consider that they have a robust regulator atop them.

  Q636  Mrs Ellman: Would you say that general aviation has been given a fair deal?

  Ms Buck: I think that question is partly springing from the fact that they expressed a number of concerns about the safety charges review. General aviation I think is a very welcome and very important strand of the aviation sector and what I do think is very helpful is the fact that the CAA has decided to proceed with the regulatory review and also the general review of general aviation over the coming months. I think that is very helpful. It is a very good time to take stock. In the representations that have been made to me by general aviation there was a sense of, We are making an important commitment here to the economic activities that we undertake through training and so forth but nobody really recognises and appreciates what it is that we do". That is anecdotal but it is important that that evidence is marshalled and put forward and I think that the review that the CAA will undertake will be very helpful in benchmarking that cost.

  Q637  Mr Wilshire: Can I go back to the safety issues? Mr McMillan has told us that in respect of the rundown of the safety issues research he only became aware of that recently, I think were the words he used. Could he tell us exactly when he became aware and how he became aware?

  Mr McMillan: You are testing my memory, Mr Wilshire. I think it was in connection with this inquiry.

  Q638  Mr Wilshire: So until we conducted an inquiry the department was blissfully unaware that there were safety problems?

  Mr McMillan: I do not think that is what I said, Mr Wilshire. I said I was unaware of the particular fact of the rundown of safety research in relation to the matters which we were talking about earlier.

  Q639  Mr Wilshire: Have you given instructions to the CAA to resume that work until somebody else is able to do it?

  Mr McMillan: No.


 
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