Select Committee on Transport Minutes of Evidence

Examination of Witnesses (Questions 640-659)



  Q640  Mr Wilshire: I think this is something which we need to look at in the context of the transition planning which I was talking to you about. If it proves that that is not going to be an acceptable solution then clearly we will need to go back to the CAA on that issue.

  Ms Buck: It is important to point out that there is a difference between the safety research and the certification. I am pleased again that Roy McNulty has assured us that in his view, the CAA's expert view, safety is not currently being compromised. He said, Not today and not tomorrow". That is advice that we take very much to heart. We want to make sure, and the CAA wants to make sure, that EASA delivers effectively and we will not seek a safety compromise in that process but we are in a dynamic situation. We are driving this forward, we want to see the CAA work. If necessary we will pull stumps, we will do what we have to do here, but at the moment, and we have a meeting set for next week in the middle of these negotiations, the absolute priority is to drive forward and make sure that those functions that are appropriately being moved towards the European level are moved.

  Q641  Mr Wilshire: I am grateful to the Minister for saying that because this is the very point I want to come to next. On both occasions you have correctly quoted Sir Roy as saying, Not today, not tomorrow". You then said that he had indicated that at some stage in the future safety could be compromised. My language, because I specifically asked him about the 70,000 constituents I represent who are smack up against the boundary fence, was, Perhaps it is not tomorrow or the day after but will there come a point when their safety is compromised"—not could be"; is" was what I asked—and the answer I got was, Yes", so we are not talking about hypothetical; we are talking about something that in his view will happen, and you then have gone on to say that the CAA will step in. I am delighted at that, that is exactly what should happen, but the question I want to ask you is, are you certain that the CAA has the power to step in now Brussels has got involved and, secondly, have you yet instructed them to step in should it become necessary because my 70,000 constituents are going to become very worried shortly?

  Ms Buck: Absolutely. I have no reason to doubt that the CAA has the capacity to take what action is necessary.

  Q642  Mr Wilshire: Capacity or authority?

  Mr McMillan: Authority as well, if we were persuaded the system was not working.

  Ms Buck: The Secretary of State has also left us in no doubt that that is his intention. There was no equivocation in any of this. We want EASA to work but if we are at a point or close to a point where we believe that safety is being compromised, and we are not there now, we will take what action is necessary and we believe that we have the resource and the capability to do that.

  Q643  Mr Wilshire: How long are you prepared to give EASA to sort themselves out before you take action?

  Ms Buck: Do not forget that there are a number of different strands within EASA to be delivered. To be fair, we have a very high level meeting next week. I do not think you can set an arbitrary deadline for this, I really do not.

  Q644  Mr Wilshire: Why not?

  Ms Buck: Because it would be arbitrary, by definition. I am not sure that I can sit here now and say to you, This is the kind of deadline we will set". The point is that this is under constant review. It is constantly being assessed within the department and within the CAA and if we believe that we are at a point where any of those processes, certification or regulation, are compromising safety then we will take what action is necessary.

  Q645  Mr Wilshire: But if you are not prepared to set a deadline it sounds remarkably to me as though you are saying that what you will do is wait until it becomes dangerous and then do something about it.

  Ms Buck: No. I absolutely refute that. I cannot sit here now and say to you, This is what the deadline will be". After next week when we have had the high level meeting we have a number of processes in train at the moment that Mr McMillan has outlined to deal with budget issues, to deal with manpower issues, which are very much at the heart of what is going on up here, and we have to assess in almost a daily process how that is being delivered.

  Q646  Chairman: It is clear now what the position is but I am sure Mr McMillan also accepts that the Committee are very worried about this and when we are preparing the report it would be extraordinarily helpful if we could have a note after that meeting with some indication of what the Department has agreed and where it thinks it is going. Otherwise, frankly, this is something we are going to return to again and again.

  Ms Buck: No problem.

  Mr McMillan: I wonder if it would help, Chairman, if I were to offer you a note which sets out not only the outcome of that meeting, which I hope will take us forward, but also the range of activities that we are engaging in to try and address this issue collectively because I think you can get a better picture of what is going on if we do not limit it just to that one thing.

  Chairman: I am all for better pictures, Mr McMillan.

  Clive Efford: I am not asking for a response to this now because you have asked the Department to write to us, Chairman, but one of the points I want to stress is that we have received evidence from an aviation safety expert that EASA has not even published a budget for its research, which is an area of concern if they have not even set out the money they intend to invest in that area of research, and yet the CAA has transferred that responsibility to them.

  Q647  Chairman: Point taken, Mr McMillan? Note included.

  Mr McMillan: Absolutely, Chairman.

  Q648  Graham Stringer: Can you tell us what there is about the aviation industry which requires a regulator to be a completely different structure from anywhere else in the UK, ie, the CAA is an economic regulator, a safety regulator, it does all sorts of things that regulators in other parts of the economy cannot do? What is it about aviation which determines that it should have a regulator structured in such a way?

  Ms Buck: I suppose my best answer to that would be to say that probably the safety agenda is of such a different order and such a priority that we have seen it as necessary and desirable, and believe it has been effective, that the economic and safety regulations are combined in a single organisation.

  Mr McMillan: The question is interesting: what is there specifically about this industry which requires it to be regulated in a different way? I think there are various strands to that. One strand is, as the Minister says, that it is an industry where there is a peculiar interplay between economic regulation and safety regulation and we need to get those two things very carefully together. It is also an industry where there is a very large international aspect to the activities which it engages in and, although that is true, I am sure, of other industries, I think in the aviation industry it plays a particularly large role in it and that means that there are many opportunities to learn from the economic side, the consumer protection side and the environmental side of a single body. Also, frankly, it has grown up that way and it has proved to be a very robust and effective model.

  Q649  Graham Stringer: Those are interesting answers, but we have heard evidence from the piloting by other people that there is a conflict between safety regulation and economic regulation, that the economic regulator is saying, We want fewer delays at peak time so you have got more capacity", whereas safety considerations might be different and regulating air space might have a third consideration. It is odd in that situation that they are in the same organisation where there are conflicts which are determined by one person. Usually safety is separate, is it not, or in one body?

  Ms Buck: It is absolutely inevitable that there is always going to be some form of critical tension between a number of different objectives. The argument is, I suppose, whether the addition of another layer of cost and bureaucracy would be cheaper for industry and more effective at delivering what has been handled in the safety regime, and I do not see any reason to think that that is the case.

  Q650  Graham Stringer: Why do you not think that is the case when you have said, and everybody round this committee will agree, that safety is paramount? Is it not more likely to be more effective, if safety is paramount, if there is one safety body whose only function and task is to look at the safety of the industry?

  Ms Buck: I do not really see why that should be the case. It is very much an argument where, with the safety agenda coming first, it has to be assured within the industry that the economic and costs case does not compromise safety and vice versa. That tension is going to exist. In effect, if I can just turn this round, I think the case would have to be made persuasively on the basis of track record and the presentation of an argument that an alternative would be better. I have not seen that. If that argument were to be made then no doubt this would be something that we would all reflect upon.

  Q651  Graham Stringer: People in evidence have made that argument and there have been other cases in other transport industries where the safety regulator has been pushed to one side because there were other considerations involved. I am thinking about the Health and Safety Executive which the Government decided to take out of rail regulation because the man in charge of it was basically pushed to one side. Both in principle and in practice there have been problems. I am surprised, though I do not want to use any pejorative terms, that you are relaxed about them being in the same structure when, in answer to the first question, you could not really give a reason as to why they are together in the first place or that there are any real benefits of that.

  Ms Buck: I would not describe myself as being relaxed. What I would say is that if the system is working well, has an excellent track record and is held in very high esteem across the board there must be a robust case for making changes. I am not saying those changes can never be made and that a robust case will not appear. All I am saying is that I do not think that is the case at present and in the rail industry we are turning back in the other direction.

  Q652  Graham Stringer: You have read the evidence to this Committee, I take it, for this interview?

  Ms Buck: I have read a lot of the evidence.

  Q653  Graham Stringer: So you have read the evidence where some of our witnesses are saying that at least two of the four airports that are now economically regulated could be taken out and it could be left to the market to determine their landing charges. Do you have a view on that?

  Ms Buck: As a Department we have not been approached on that issue. I think you are talking about Stansted and Manchester.

  Q654  Graham Stringer: That is correct.

  Ms Buck: There were some criteria set out about 10 years ago which were effectively what would be used to judge whether there was a case for de-designation, looking at profitability and the extent to which the monopoly existed. It would be for those airports to come forward with an argument for de-designation and it may well be that that case could be made. We would have to be assured that the model for competition was there and proven and that it could be tested against that, and also that in a very rapidly changing situation, as outlined in the Air Transport White Paper, we would not then be called upon perhaps a few years down the line to re-designate. If all those criteria were met there is not in-principle opposition.

  Q655  Graham Stringer: But that might be a good idea, might it not, to be able to re-designate to test the system and see if there was any abuse of a potential monopoly system, so you would be able to look at which way landing charges were going and which way the price of tickets was going? Would that not be a good idea?

  Ms Buck: It has merit and I think uncertainty can be set against that. What I welcome is the fact that the CAA are carrying out a market analysis to see whether those conditions exist. I think that is going to be a very interesting piece of work so let us review it. As I say, it is for those airports on a set of criteria which are out there to come forward and say, Is this something that you would want to consider?", and that may be the case.

  Q656  Graham Stringer: Do you think it is a good idea, as again some of our witnesses have said, if BAA, which is clearly a monopoly in the London area, was broken up into three separate companies based on Gatwick, Stansted and Heathrow?

  Ms Buck: The question is, would that introduce competition, and I am not sure in the position of those London airports that that would be the case.

  Q657  Graham Stringer: Do you not think that if Heathrow and Gatwick were separate companies they would not compete for traffic and airlines? Liverpool and Manchester compete, Birmingham and East Midlands compete. In a much bigger market why would Gatwick and Heathrow not compete on price?

  Mr McMillan: I suppose it is possible that competition between those airports might intensify if they were in different ownership. There are lots of issues which are raised.

  Q658  Graham Stringer: There is no competition at the moment because they are the same company, so it would not intensify; it would begin.

  Mr McMillan: Those airports do have other competitors in the London market which exist, but I do take your point. There are other issues which I think Ministers would want to reflect on, although this is no longer a matter of ministerial discretion; this is mostly a matter for the competition authorities. Under the Enterprise Act it is for the OFT to make a recommendation to the Competition Commission as opposed to ministers intervening in the market in the way you suggest.

  Q659  Graham Stringer: BAA do take a lot of notice of the Department's views. They are interested in whether the Department has a view, if not the responsibility.

  Ms Buck: I am sure they are but part of the principle of the Enterprise Act is that we feel it is not necessarily appropriate for the department to be giving a steer on something like that.

  Mr McMillan: The final point I want to make is that one of the key considerations, if we amended it, would be what arrangement of ownership in the London system is going to give you the necessary capacity in the quickest time that you can deliver, because one of the key issues for the south east is to get more runway capacity into the system? One of the key questions would be to decide whether you would secure that more quickly by having airports in common ownership or airports which are independently owned. That then plays back into the decision which the CAA will be taking in due course as to how we are going to treat the three airports as part of this quinquennial review.

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