Select Committee on Transport Thirteenth Report

List of recommendations

Management of the CAA

1.  The Government has been negligent in its failure to undertake strategic reviews of the role, remit and objectives of the CAA as required by the Sponsorship Statement. We recommend that the Department for Transport carry out a root and branch review to examine the continuing need for the CAA and the extent to which its functions could be more effectively undertaken in other ways. (Paragraph 5)

2.  It is highly unlikely that the CAA, with its four major functions of ensuring safety, determining airspace policy, economic regulation of aviation and licensing of air travel organisers, would be created in its current form, as a single Authority, today. It is a tribute to the professionalism of the CAA's current staff that the potential conflicts inherent in the Authority's structure have been avoided. Nonetheless, the potential for conflict remains and the Government should keep the CAA's structure under review. We recommend no changes in the present organisational structure. However, we recommend that the CAA, in formulating its policy and communicating its instructions, should seek to deepen the level of co-operation between its different regulatory groups, to ensure that the message it delivers to those it regulates is consistent and clearly conveys the primacy of safety considerations. (Paragraph 17)

3.  We do not recommend any widening of the CAA's remit to include a duty to promote enterprise and innovation in the aviation industry. We agree with the CAA that this role is better filled in the UK by the Department for Transport and the Department of Trade and Industry. (Paragraph 20)

4.   There is a perception of a lack of clarity about the role and status of CAA advice in policy-making within the Department. We recommend that the critical review we have suggested the Department undertake should give consideration to the Department's channels and processes for communicating with the CAA to ensure greater transparency about the expected role of the CAA in policy-making. (Paragraph 26)

European Aviation Safety Agency

5.  We are emphatically opposed to any diminution in safety standards in the UK in the name of harmonisation. We are favourably disposed to the principle of European co-operation to create joint safety standards and enforcement only if it genuinely assists all European Union countries in matching the highest aviation safety standards. (Paragraph 32)

6.  It is with dismay that we have learnt of the chaotic state of the European Aviation Safety Agency (EASA), which at this time is not able to fulfil its declared purpose. EASA is an accident waiting to happen—if its problems are left unchecked, we believe it has the potential to put aviation safety in the UK and the rest of Europe at risk at some point in the future. (Paragraph 36)

7.  The United Kingdom cannot and must not transfer any further powers from the CAA to EASA until the Government is assured that the serious problems of governance, management and resources at EASA have been resolved. We welcome the Minister's assurances on this. (Paragraph 38)

8.  we are concerned that the operational difficulties within EASA mean that a knowledge gap is developing which has the potential to undermine safety innovation in the aviation industry. We recommend that the Government make representations to the European Commission to ensure that action is taken to remedy this gap. The CAA must resume the research it has so far curtailed.there should be no further closure of CAA departments and functions before the Government is absolutely satisfied that the comparable departments and functions at EASA are fully operational. (Paragraph 43)

9.  We welcome the representations made by the UK to EASA's Management Board and to the European Commission about the Agency's present ineffectiveness, and we are encouraged to note that the CAA has observed some improvement in the situation over the year. It is clear that there is much still to be done, however. We recommend that the Government continue to make the strongest possible representations in order to ensure that urgent and decisive action is taken to make EASA fit for purpose within no more than two years. (Paragraph 48)

10.  We understand that the ability of the CAA and the Government to relate information to industry regarding the transfer of responsibilities to EASA has been hampered by the delays and uncertainties experienced by EASA itself. (Paragraph 52)

11.  We are concerned that many organisations remain uncertain about what is happening and how the transfer is being handled. We therefore recommend that the CAA make this information more readily available via its website, with a clear description of powers already transferred and those that will follow, along with details of the impact on the CAA's costs and charges. (Paragraph 52)

12.  We are concerned by indications of low morale among CAA staff as a result of uncertainties over the transfer of responsibilities from the CAA to EASA, and by the associated loss of experienced staff from the aviation regulation industry. (Paragraph 57)

13.  We recommend that the CAA work with the Department for Transport to draw up a detailed assessment of the speed and scope of the transfer of responsibilities to EASA as soon as circumstances within EASA allow, and that it should ensure that staff are kept fully informed about this process. We are encouraged to hear that the situation has improved in recent months, with more UK staff being recruited by EASA. (Paragraph 57)

Performance of the CAA

14.  The CAA offers, on the whole, a good service, and has proper regard for its own efficiency. (Paragraph 62)

15.   We recommend that in future, when publishing assessments of its performance, the CAA include details of the level of influence its activities have had on the recorded outcome, the lessons it has learnt in conducting the exercise and the action it plans to take to improve performance further. (Paragraph 62)

16.  It is important that the CAA ensure it has in place effective systems for receiving feedback from those it regulates about which parts of its service could be improved, and that it responds to any complaints or suggestions in a timely manner and reports on these issues in an acceptable way. (Paragraph 64)

17.  The CAA is not making proper use of targets as a means of focusing activity and driving improvements in performance. We recommend that the CAA review its performance indicators regularly and consider the value of establishing targets for those indicators currently without them. In addition, we recommend that the CAA review those targets already in place to make sure they are realistic and challenging enough to ensure the organisation and its staff are motivated to seek improvement. (Paragraph 69)

18.  There is an opportunity to improve the administrative efficiency of the CAA through electronic means. We recommend that the CAA monitor closely the progress of the Electronic Document and Records Management System and take action as necessary to ensure that it does not fall behind its completion schedule of December 2007. (Paragraph 72)

19.   In order to ensure that the CAA is accountable for its performance, not only to those it regulates but also to those on whose behalf it is regulating, we recommend that it enter into discussion with all its stakeholders about what information they would find useful and relevant, and that it publish this information in an appropriate and accessible way, providing a justification for any information which it considers it inappropriate to publish. (Paragraph 76)

20.  The lack of an accessible system for appealing the CAA's decisions is a source of concern for a number of organisations. We recommend that the Government conduct a consultation on the merits of establishing an independent authority, along the lines of the Office of the Telecommunications Ombudsman, to which appeals about the CAA's decisions can be directed. (Paragraph 79)

21.  We note that the CAA seeks to follow the five principles of good regulation and that it recognises the need to continue improving its regulatory performance. We are encouraged that it is willing to engage with the Better Regulation Commission and the Department for Transport in order to achieve better ways of working. We expect to see evidence that the CAA continues to lend its experience to the development of the Government's better regulation agenda. (Paragraph 84)

22.  As yet, no organisation appears to have evaluated any of the CAA's Regulatory Impact Assessment processes. We therefore recommend that the Government, or the CAA itself, arrange for a selection of the CAA's existing RIAs to be reviewed as a matter of urgency by the National Audit Office or a similarly independent body, and that any lessons learnt are fed into future assessments. (Paragraph 87)

23.  We recommend that the CAA consider the merits of conducting an RIA whenever policy changes are proposed, even in instances not strictly stipulated by Government guidance. Where the CAA subsequently decides not to produce an RIA it is essential that it offer an explanation for this and enter into dialogue with its stakeholders to ensure they understand, if not agree, with this reasoning. (Paragraph 90)

The CAA's resources

24.  We recommend that the Government and the CAA publish a justification of the funding model to ensure that the rationale is well understood by all those who must meet the costs of the CAA. We further recommend that the CAA clearly demonstrate to those it regulates and those on whose behalf it regulates that it is avoiding the potential problems associated with this form of funding identified by the Better Regulation Commission: namely failing to keep its costs to a minimum, gold-plating, and failing to withdraw from unnecessary regulatory areas. (Paragraph 95)

25.  We recommend that the NAO be granted access to the CAA to conduct value for money and efficiency studies consistent with those carried out for other regulators. (Paragraph 101)

26.  The changes to the Safety Regulation Group's charges are likely to have a significant impact on members of the general aviation community and we are concerned by the suggestion that some pilots may choose to fly "outside the law". We therefore recommend that the Government and the CAA carefully monitor the impact of these changes, and take action where necessary to ensure that charges are fair and equitable and that operators in the general aviation sector are not unduly affected. (Paragraph 105)

27.  We welcome the Government's promise to reconsider the level of the CAA's required return on capital employed and recommend that, once complete, it should publish a detailed explanation of this review process and a justification of the level settled on. We recommend further that the level be kept under regular review to ensure that it remains at the lowest level necessary to allow the CAA to function effectively and provide a fair, not asset-sweating, return to the Exchequer. (Paragraph 109)

28.  We recommend that the CAA publish more detailed information about its financial management processes and more data relating to its performance in this area. We welcome the CAA's move to producing quantifiable targets for efficiencies as part of its 2006/07 Continuous Improvement Programme. We recommend that progress against these targets is subsequently reported in sufficient detail in the CAA's annual reports and corporate plans, with clear reconciliation between targeted and achieved efficiency gains, to allow the CAA's stakeholders, including Parliament, to scrutinise the Authority's performance effectively. (Paragraph 112)

29.  We are concerned by the evidence we have heard about the CAA's ability to recruit and retain appropriately qualified and experienced staff in the face of limited resources and competition from private sector organisations such as National Air Traffic Services. (Paragraph 116)

30.   We recommend that the Government review the effectiveness of market supplements as a means of bridging salary disparities. We further recommend that the CAA and the Government consider non-financial incentives for making careers with the CAA more attractive, including provisions for flexible working, training and personal development. (Paragraph 116)

Economic regulation of airports

31.  We accept the CAA's argument that its flexibility is somewhat constrained by the framework within which it must conduct its economic regulation of airports. We therefore believe that the Government should review the whole process of price control. (Paragraph 123)

32.  We recommend that the Government review the continuing need for the designation of airports subject to economic regulation by the CAA as a matter of principle, and that it publish an assessment of the relative merits of this approach compared to the use of standard competition legislation to regulate the abuse of dominant position by airports. The Government should consider de-designating Manchester and Stansted as a first step. (Paragraph 128)

33.  If the Government decides to retain the principle of designation, we recommend that it further consider whether designation is best conducted by the Secretary of State, or whether the flexibility of the CAA would be improved if it were allowed to designate which airports should be subject to price controls. (Paragraph 128)

34.  The institutional model for the economic regulation of airports is anomalous. We recommend that, as of the next price control review, the Government implement its own 1998 proposals to make CAA airport review decisions subject to the standard regulatory model, in which the CAA reaches airport price control decisions based on its own review and the airports, as the regulated organisations, subsequently have the right of appeal to the Competition Commission. (Paragraph 133)

35.  We welcome the introduction by the CAA in its current airport price control review of the concept of 'constructive engagement'. (Paragraph 140)

36.   We recommend that the CAA conduct an assessment of the use of constructive engagement in relation to the current price control review at each of the designated airports, to identify good practice and areas requiring further attention. In particular, the CAA should ensure that the burden placed by the process on the resources of smaller airlines does not prohibit their involvement. (Paragraph 140)

37.  We remain of the opinion that the BAA monopoly should be broken up. We are pleased to note that the Office of Fair Trading has launched an investigation into the UK airports market and we hope it will report its conclusions sooner rather than later. (Paragraph 142)

Airspace regulation and aviation sustainability

38.  It is of paramount importance that the CAA should give top priority at all times to matters of safety. (Paragraph 152)

39.  We recommend that, as a minimum, the CAA be required to consult more widely, more openly and at an earlier stage of the process with local authorities, interest groups and individuals concerned about the environmental impact of airspace changes. We recommend further that the CAA should be required to make clear the reasons for its decisions as a matter of course. (Paragraph 152)

40.  To assist the CAA in giving proper consideration to environmental concerns, we recommend that the Government amend its Guidance on Economic Objectives to make it clear to the CAA and other stakeholders what balance it expects to be struck between commercial and public benefit and environmental impact. (Paragraph 157)

General aviation

41.  We heard a wide range of concerns raised by members of the general aviation community in relation to over-regulation by the CAA and bias towards the commercial aviation sector. We therefore welcome the completion and publication by the CAA of both its Strategic Review of General Aviation in the UK and its Regulatory Review of General Aviation in the UK, and we support the recommendations they make. (Paragraph 167)

42.  We are concerned to note the findings of the CAA's Strategic Review in relation to future potential skilled labour shortages in aviation, and we urge the Government and the CAA to work with the general aviation sector to help it continue to contribute to future skilled labour supply. (Paragraph 167)

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