Examination of Witnesses (Questions 640-659)
MS KAREN
BUCK MP AND
MR DAVID
MCMILLAN
1 FEBRUARY 2006
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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