4.43 pm
Maria Eagle (Garston and Halewood) (Lab): Let me begin by wishing the aviation Minister, the right hon. Member for Chipping Barnet (Mrs Villiers), well. Opposition Members were very sorry to hear of her accident and we wish her a speedy recovery from her injuries and from the surgery she is undergoing.
The Civil Aviation Bill started its life under the previous Administration and we were pleased, as was the industry, to see it included in the Queen’s Speech after the election. We will vote for the Bill’s Second Reading today and the Government will, in principle, have our continued support, subject to the scrutiny that this Bill should rightly receive as it progresses through its parliamentary stages and subject to the making of appropriate reassurances and necessary amendments.
The proposals that the Government inherited to reform the framework for airport economic regulation and modernise the CAA’s governance and operations are broadly correct. In a number of areas, we share the view of the Select Committee on Transport that the Bill could be improved, particularly in relation to passengers’ welfare and the sector’s environmental obligations. Should the Government not introduce their own proposals to do so we shall seek to improve the Bill in Committee.
We support the Government’s decision to use the legislation as a vehicle to reform and extend the ATOL scheme to provide greater protection for consumers, reflecting changes to the way in which holidays are sold today, as the Secretary of State set out. The Government have also decided to use the legislation to go beyond the economic regulatory purpose that was originally envisaged in the transfer of responsibilities relating to aviation security, which has emerged since the election or, more specifically, since the Government spending review. However, there are serious concerns about whether it is a desire to cut costs, rather than improve security, that is driving the changes. The Opposition will therefore require much greater assurance from the Government about how the changes will work in practice if we are not to seek to make amendments to the provisions or even to remove them during the Bill’s passage through the House.
Steve Baker (Wycombe) (Con): Does the hon. Lady share my concern that passengers, as well as needing security, are worried about convenience and, indeed, their dignity?
Maria Eagle: The hon. Gentleman is correct, and proper security is always a balance between managing to make sure that the efforts of those who wish to commit terrorist offences on planes are foiled while, at the same time, not wishing to subject consumers and passengers to indignity or extensive delay. It is correct that the Department should have a full understanding of the extent of any threats so that it can make appropriate policy. It is just in those areas that we want to probe a little more in Committee precisely to assess the practical impact of the proposals.
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It is unfortunate that the introduction of the Bill and its Second Reading should come so soon after the publication of the draft Bill. Considering that this package of reforms has been in preparation for many years, and given that it was widely believed that its introduction had slipped to the next Session, it is unfortunate that there has been a sudden rush of last-minute enthusiasm to bring it before the House. Consequently, the planned pre-legislative scrutiny, which we supported, has been curtailed. The Transport Committee has done its usual impressive job, but it had just three weeks to take evidence and produce recommendations on the proposals, many of which have been in gestation for six years or more. That meant that the Government have not been able to consider those recommendations in detail and improve the Bill before its introduction. Consequently, we are debating a Bill—and I hope that this is the case—that will doubtless be amended by the Government in Committee, which is a remarkable state of affairs for a measure so long in preparation.
The industry itself has rightly expressed concern about the limited opportunity it was given to engage with officials before the Bill’s introduction in Parliament. BAA, it is fair to say, may be affected more than other player in the industry by the measure, yet it says that it could secure only a single one-hour meeting with the Department for Transport in the past three months, which falls short of what might be expected for a regulatory Bill of this nature. There will be, at the very least, a suspicion that the hasty introduction of the Bill has less to do with the industry’s needs and more to do with the needs of business managers, who doubtless begged the Secretary of State to let them have something for the Commons to do, because the Government’s legislative programme is bogged down in chaos in the other place.
Justine Greening: I have met BAA on a number of occasions since taking on my present role, so I can assure the hon. Lady that there has been plenty of opportunity for BAA to raise any concerns with me.
Maria Eagle: I am grateful for the right hon. Lady’s intervention. I was just quoting what BAA said, and I hear what she says about her own efforts, which I commend.
There are three key reforms in the Bill—to economic regulation, to the Civil Aviation Authority itself, and to the transfer of security functions. I want to turn briefly to the wider aviation context within which the reforms will sit. We agree that the current framework for airport economic regulation is outdated and needs reform. It has been clear for some time that the CAA does not have the powers to apply the regulatory regime in a way that best benefits passengers and reduces costs for the industry. We are also dealing with a very different aviation landscape since the introduction of the existing regime, not least because of a major increase in passenger numbers, low-cost airlines, growth in regional airports and changes to ownership required by the Competition Commission. The proposed licensing regime, together with a more flexible and targeted set of regulatory tools, will better enable the CAA to carry out its work, while making its decisions more accountable, and reduce unnecessary regulation.
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It is also right that the regulatory regime governing airports be reformed to put passengers at its core. The CAA’s primary duty should be to promote the interests of passengers. That was our intention in developing the reforms, and we are pleased that that approach has been accepted and adopted by the Government. We hope that in Committee the Minister will look carefully at the arguments that have been made and be clearer about how the CAA is to weigh the often differing interests of current versus future air transport users and, as the Select Committee has urged, explain in more convincing detail how the proposed aviation consumer advocacy panel will work in practice and, in particular, how it will identify, represent and promote the interests of passengers and relate to the regulatory process.
The lack of a specific requirement to publish passenger welfare plans is a major omission and should be addressed. It was a key recommendation from the Select Committee following its inquiry into the failure of both Government and industry to prepare and respond adequately to the severe winter weather in December 2010. The appalling experience faced by many passengers, particularly at Heathrow, demonstrated the need for the sector significantly to up its game in relation to passenger welfare. I welcome the new powers that the legislation will give the CAA and the Government and hope that the Secretary of State will issue clear and robust guidance to airport operators on winter resilience. However, we would like to see a specific obligation on the CAA to include in any licence issued a requirement that airports provide support to stranded passengers.
The Government must also ensure that each recommendation of the Quarmby report on the resilience of England’s transport systems in winter is implemented, particularly those relating to the need for early decisive action on whether to cancel services; the supply of de-icing and anti-icing products or road salt; better liaison between airports and local highway authorities over the treatment of appropriate public road networks; and improved access to performance statistics on the management of disruption by airlines and airports.
The former Transport Secretary, the right hon. Member for Runnymede and Weybridge (Mr Hammond), stood in the snow at Heathrow just over a year ago and pledged to learn the lessons of the chaos passengers faced. I know that because I was standing in the snow freezing alongside him and, more importantly, alongside thousands of stranded passengers. At the time he blamed Heathrow for seriously underestimating the amount of de-icer required and raised the prospect of establishing a central reserve for emergencies, much as exists for road salt. The Government should provide an update on this—they have gone quiet lately—and on the other promises made at the time. As well as the powers that this Bill rightly gives the CAA, the current Secretary of State must ensure that the Government do not take the view that this is all the responsibility of the industry. There is a strategic and economic need, as well as a UK reputational requirement, for the Government to get a grip on winter preparedness. I recall the Minister responsible for aviation telling the media on Boxing day 2010 that the Bill would do just that, but it is not obvious to me that it does it sufficiently well, so we will explore that further.
The CAA should also be required to focus licences on the specific experience of passengers in airports. That means, as the Transport Committee has urged, specifically
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structuring licences to address key areas of passenger satisfaction, including immigration and baggage handling. We all know that the failures that most give rise to frustration and anger, not to mention ruining business trips and holidays, are delays caused by inadequate management of immigration and poor baggage handling. Of course, although airports should rightly have obligations in this respect, the Government must also recognise that their decisions have an impact that is out of the hands of airport operators, not least the way they resource and manage the UK Border Agency. The speed and scale of the Government’s cuts is putting pressure on the agency. People across the country fear that corners are being cut and border security is being put at risk by the scale of the Government’s border cuts. Some 6,500 staff are going from the agency, with 1,500 going from the UK border force, including more than 800 this year alone. In the past year, we have already had the situation whereby the Home Secretary did not know what changes to border controls she had agreed to, how they were being implemented or how great the security risks were, and relaxing controls was a direct consequence of those staffing reductions.
It is incredible that the Government have overseen a reduction in checks at border control. The public expect proper immigration controls, and passengers expect there to be sufficient staff to prevent massive delays at airports, which damage our image and can impact on investment and business competitiveness. We agree that the passenger must be placed at the heart of the regulatory regime, but the Government must do the same as they carry out their responsibilities.
The Government should also consider the airlines’ case that, in the context of airport regulation, they too are customers. Although we agree with the Government that the law should be absolutely clear that the CAA’s primary duty is to passengers, we agree also that there is a case for a secondary duty to airlines, so the Minister should look again at the decision not to include such a duty.
Although it is right that we set out a primary duty on passengers to send a clear signal to the CAA about how it should manage competing interests, it is right also that we set out further duties. In doing so, however, the Government have chosen to omit the reference to environmental obligations that we intended the Bill to include. That is a mistake, so I very much hope that the Minister will reflect on it and think again.
Back in March 2009, the consultation document on economic regulation that the then Secretary of State published proposed that
“the CAA should have an environmental duty with respect to its economic regulatory functions.”
The final report of the Cave review recommended
“a duty on the CAA to protect the environment, subject to guidance on specified environmental matters by the Secretary of State.”
In December 2009, the previous Government published their decision document on economic regulation and concluded that one of the supplementary statutory duties should be
“to have regard to the airport operator’s legal obligations to comply with applicable environmental and planning law.”
When one considers the secondary duties that have been set out, one finds the absence of any environmental
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obligation to be a clear omission—and a late one: it was included in the press release accompanying the publication of the Bill, just not in the Bill. The CAA will be obliged
“to ensure that licence holders can finance the activities which are subject to the relevant licence obligations; to secure that all reasonable demands for airport services are met; to promote economy and efficiency on the part of licence holders in its provisions of airport services at regulated airports; to have regard to guidance issued by the Secretary of State; to have regard to any international obligation of the UK; to have regard to principles of better regulation.”
All those obligations are of course right, and we support them, but there seems to be no justifiable reason for removing the proposed additional requirement on the CAA in terms of economic regulation: to have regard to airport operators’ compliance with environmental and planning law. Without that, airports may be reluctant to invest in improving environmental performance, be it noise, vibration, visual disturbance or emissions.
It is not good enough for the Government to say it is obvious that airports must comply with statutory obligations and it does not need re-stating in the Bill. The issue is whether airports feel that they can recover the cost in charges to airlines. The consequence, as the Transport Committee has warned, is:
“Without giving the CAA a supplementary duty on the environment in relation to its economic regulation role, there is some risk that airports may be reluctant to invest in improving environmental performance.”
Mark Lazarowicz: Is the situation not worse than that? Is there not a danger that specifically removing the reference to environmental planning concern might be taken by some airport operators as a coded message that the Government do not take such issues seriously now?
Maria Eagle: My hon. Friend makes a good point. There are plenty of people who seek to read coded messages in what the Government do, or do not do, and in how they change their proposals, so in that respect there is a concern that the Government need to address.
If the Government’s green credentials had not already worn so thin, no ulterior motive might have been seen in their decision, but there will be considerable suspicion that it is yet another example of giving in to vested interests, coming on top of the Government’s failure to reassert the aviation emissions targets that we set in government, let alone to listen to the calls to look seriously at the UK’s share of international emissions and to include both in the UK’s carbon budgets. When the obligation on other sectors is to reduce carbon emissions by at least 80% by 2050 compared with 1990 levels, the aviation industry has agreed to work towards achieving the lower target of the same reduction but compared with 2005 levels. However, the industry believes that it can achieve the same reduction compared with 2000 levels. On that basis, we believe that the Committee on Climate Change should advise on the case for a tougher target. It is clear that the Bill sends out completely the wrong signal to industry.
The CAA, airport operators, airlines and National Air Traffic Services have a shared responsibility to achieve those goals. In addition to the original proposed duty on environmental and planning law, which has been deleted, there is surely a case for considering the
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practicality of using this Bill to reaffirm the shared responsibility on meeting emissions targets that have been agreed. That should be explored during the passage of the Bill.
The public should certainly be better informed about the environmental effects, including through emissions and noise, of civil aviation in the UK and about the measures that are being taken to limit the adverse environmental effects. I want to take this opportunity to welcome the CAA’s decision to open a three-month consultation on its environmental role and performance. The chief executive, Andrew Haines, has said that he is determined to work with the sector to help it manage its environmental footprint and realise its potential growth. He is clear that
“unless the sector faces its environmental impact head-on, it will not be allowed to grow.”
He is right to have set the goals to
“contribute to a cleaner and quieter aviation industry, improve airspace design through new operational measures, influence the environment debate and enhance consumer understanding of the environmental impact of flying.”
Henry Smith (Crawley) (Con): Will the hon. Lady not concede that airport operators, such as the operator of Gatwick airport in my constituency, have for many years done an awful lot to ensure that there are environmental enhancements, such as through the Gatwick area conservation committee, which has made a positive difference locally?
Maria Eagle: I do concede that. I do not think that the aviation industry has anything to fear from closer scrutiny of the way in which it deals with these issues. I just want to ensure that this Bill does not send the wrong signals to industry and make it more difficult to do what many operators are starting to do in any event.
In addition to the revision of the statutory purpose of the CAA and its secondary duties, it is right that the Bill aligns the powers of the CAA with those of the Office of Fair Trading. That provides consistency with the approach taken for other regulated industries, including energy, water, telecoms and rail. The Secretary of State will be aware that there are concerns about the impact on competition of the sale of airlines and the slots that transfer ownership as a result. The recently agreed sale of British Midland International by Lufthansa to International Airlines Group has raised considerable worries, particularly in Scotland and Northern Ireland, about the impact on short-haul domestic routes and the price implications for passengers. The Government have to date refused to take those concerns seriously. My hon. Friend the Member for Glasgow East (Margaret Curran), the shadow Secretary of State for Scotland, and I have referred the sale of BMI to the OFT.
Dr Eilidh Whiteford (Banff and Buchan) (SNP): I am grateful to the hon. Lady for raising this issue again, because it is extremely serious. I have concerns not only about the flights into Heathrow but about the onward connectivity of those flights to the rest of the world. Aberdeenshire has a big energy sector and people are travelling onwards. She is right to highlight this issue.
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Maria Eagle: I thank the hon. Lady for her intervention.
There are precedents within the EU of a single company controlling a larger percentage of slots at one airport, but I am sure that the Secretary of State will appreciate that the situation at Heathrow is different because of the capacity issues that significantly restrict the potential for competition. I fully understand and respect BA’s wish to expand its operations, not least to pursue the new long-haul markets from Heathrow that are needed for our economic competitiveness. However, many years before a high-speed rail service becomes a reality between Scotland and London, and Heathrow in particular, we must balance that with the need to maintain the domestic air links on which the Scottish economy depends.
I have two final points on the economic regulatory aspects of the Bill. First, there are concerns that there is no requirement on the CAA to consult on how it intends to prioritise and balance its new duties and discretion. Secondly, the Government must clarify who does and does not have a right of appeal on a decision by the CAA in respect of licence conditions, and how they intend to prevent repeated and unfounded appeals.
On the second major purpose of the Bill, which is to modernise the CAA’s governance, we agree that reform is needed and we support most of the proposed changes. Of course, there are changes that have been made without the need for legislation, such as the creation of a separate chair and chief executive. We do, however, question the decision to remove the requirement for the Treasury to approve the levels of remuneration for non-executive members of the board. Are we not seeing right now the need for greater, not less oversight of remuneration? I suppose that the experience of the past few days has shown that it is doubtful whether the Government would exercise their powers over excessive bonuses even if they retained them, but it might be a good idea to hang on to them.
It is also wrong that the CAA remains outside the remit of the National Audit Office, unlike all other industry regulators. That should be addressed, and there should be an explicit efficiency duty as recommended by the Transport Committee. I hope the Government will agree that it should be relatively straightforward to reach agreement on those issues in Committee. We agree on the outcomes that we want to see achieved through the modernisation, and I look forward to working with Ministers to improve the Bill further in the areas that I have mentioned.
We have much greater concern about the third major area with which the Bill deals, which is the Government’s proposals for a major change in how aviation security in ensured. They have not made the case for the change. It was included in the draft Bill at the last minute and has not been subjected to adequate scrutiny, and enough people across the industry have concerns about the proposals to require the Government to look again at whether they have got them right. We are open to being persuaded, but Ministers have more to do if they wish us to support the proposed changes.
I appreciate that under the Government’s proposals, the Secretary of State will remain responsible for aviation security policy and for making aviation security directions under the Aviation Security Act 1982. That is well and good and correct, but by enabling the transfer of a potentially very wide range of security functions to the CAA, the Government risk fragmenting an approach
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that has served us well. Let us not forget that the current arrangements, including the now abolished specialist unit Transec, arose from the tragedy of Lockerbie. We should not move lightly away from an approach that had such a tragic loss of life as its reason for existing, particularly not when the clearly stated purpose of the proposals is, to quote the Department’s impact assessment, to
“Reduce the costs to the taxpayer in line with SR”—
“commitments by introducing the user pays principle.”
The changes that the Government propose are not minor. For example, they want to pass to the CAA the obligation to make arrangements for carrying out vetting, including those for renewing and withdrawing clearance. The CAA, rather than the Secretary of State, will maintain the list of persons approved for the provision of a particular aviation security service.
There are also concerns about the ability to retain staff. The Bill will allow for the transfer from the Department for Transport to the CAA of about 85 aviation security posts currently responsible for the review and upkeep of aviation security regulations, and for the monitoring and enforcement of the industry’s compliance with security requirements. The Transport Committee’s recommendations on that matter should be considered carefully, including the permitting of secondments rather than transfers to avoid the loss of experienced staff and expertise.
The Committee’s recommendation to delay the change, to bring it in line with the introduction of the outcomes-focused risk-based security regime, also makes sense. The airlines are concerned about the lack of transparency of the likely costs of the changes, and therefore about the impact on passengers, on to whom costs will be passed. There is real concern that although the costs of the transfer will materialise, the supposed reduction in obligations as a result of the move to the outcomes-focused regime will not.
Those concerns are particularly acute for smaller regional airports, which play a vital role in their local economies and will not easily sustain major additional cost burdens. The Government need to reassure the sector that they will retain an active engagement in operational matters, enabling airports to take the lead in the knowledge that they will have ministerial backing.
It is clear that there are growing tensions between the UK Government and the EU over security issues such as the permitting of full-body scanners without a right to select an alternative form of search. We have strongly supported the Government’s stance on that, although it is now important that Ministers work closely with their European partners to ensure a common, and preferably similarly robust, approach to security across the EU. The approach taken in the Bill risks leaving the industry without a clear lead or protection from Government on the decisions that it takes, be they on trials of new forms of security screening or other matters.
According to the explanatory notes, the Government’s Regulatory Policy Committee estimates that
“the impact on public expenditure gives expected savings in the order of £5.4m per annum.”
It is far from clear how the cost savings to the Department from the abolition of the security function can be
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secured without putting at risk high levels of aviation security or imposing a burden that will ultimately fall on passengers.
The Regulatory Policy Committee also identified transitional costs of transferring the security function of approximately £1.5 million, as well as ongoing costs beyond the transition, not least because
“the CAA will be responsible for upgrading systems in perpetuity”.
“likely that the CAA may borrow from the National Loans Fund to fund IT improvements.”
I appreciate that the Secretary of State inherited her predecessor’s plans to meet the 15% cut in the Department for Transport budget. She has shown a willingness to look again at some of his rasher decisions, and I hope that she does so in respect of that major change to aviation security, for which the case has not yet been made.
I urge the Government to think again about one other aspect of their aviation policy. An announcement is expected in the Budget—if not before—on the sale of their remaining stake in NATS. Recent media reports have suggested that DFS, Germany’s state-owned air traffic service, has been in talks with the Government. Yet again, just as with our rail industry, the Government’s ideological obsession turns out to be not so much opposition to a public stake in delivering transport services as an opposition to a British public stake in doing so. Just as the Dutch national railway will this week begin to operate the East Anglia franchise, with Deutsche Bahn and SNCF snapping at its heals on other parts of the network, our airspace might be controlled, in effect, by the German Government.
There are several very serious reasons why the Government would be wrong to withdraw completely from NATS. The current shared-ownership model between Government and airlines works well. The airline group has opposed an outright sale of the Government’s stake and raised the prospect of the industry walking away. The airlines are best placed to ensure the success that NATS has become, not least because of their healthy self-interest in safety and industrial relations. There are concerns about the impact of a foreign power taking a stake in NATS on the integration of civilian and military operations, which would put at risk the operational benefits of that integrated approach. There are also questions about the Government’s ability to play a leading role in air traffic policy at EU level if they become the only Government to have given up their stake in their air traffic service.
Justine Greening: It is probably wise for me to remind the hon. Lady that the Labour Government part-privatised NATS in the first place.
Maria Eagle: I am well aware that the Labour Government sold a stake in NATS. I am talking about the Secretary of State’s predecessor’s proposal to sell all of it. It is a question of the Government retaining a stake. If she is willing to confirm that the Government will retain a stake, I will be happy to give way to her. She shakes her head.
Mr Brian H. Donohoe (Central Ayrshire) (Lab): Ownership is currently entirely within British hands. It is possible that that will no longer be the case if privatisation goes ahead.
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Maria Eagle: That is indeed the worry. NATS does not cost the taxpayer a penny to run—in fact, it pays a dividend to the Government. In June last year, NATS paid a dividend of £42.5 million, and in November announced a further £8.2 million. The Government received a significant share of that as the majority shareholder. Their decision to sell all of NATS would therefore be a short-term, quick-buck decision. Like their approach to aviation security in the Bill, they are placing a narrow focus on deficit reduction ahead of the wider economic and security impact. I hope the Secretary of State ensures that she puts proper pressure on the Chancellor, whom she knows very well, to make a good decision and to retain a stake in NATS.
Finally, although the measures in the Bill are important —they are all concerns for the aviation industry—there is an elephant in the room, because the Bill does not and cannot address the capacity issues facing the industry, particularly in the south-east and the future of our hub status. The Government’s failure to set out a strategy for aviation and the lack of any plan to do so until late in this Parliament is putting jobs and growth at risk. Their call for airports to be “better not bigger” has always been a slogan, not a policy, but even they seem to be waking up to the fact that a blanket ban on growth and new capacity in the south-east makes no sense.
In government, Labour supported the industry’s proposal for a third runway at Heathrow—as the UK’s only hub airport—as the best way to add additional capacity. However, the Opposition have accepted the Government’s decision to cancel the third runway, and it is time to move on and seek an alternative way forward. Our decision can ensure that we do not waste another five years wrangling over that proposal while the industry risks falling behind our EU competitors, and while major airlines simply move more of their operations abroad, where there are no capacity constraints.
Dr Julian Huppert (Cambridge) (LD): I am delighted that the hon. Lady’s party has come to its senses and ruled out the third runway. I hope that she will tell us what her suggestion is, because she has a long track record—such as on high-speed rail—of suggesting things but never quite pinning down an actual idea.
Maria Eagle: If the hon. Gentleman would wait just a moment, he might hear my suggestion.
Two weeks ago, the Prime Minister was apparently persuaded of the case for a new airport in the Thames estuary, a position that lasted a full 24 hours before the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker) slapped him down. Then the papers were briefed that new runways at Gatwick or Stansted were back on the agenda, despite the coalition agreement seemingly ruling that out. British business cannot afford this chaos and confusion continuing until or even beyond the next election. That is why I have made a clear offer to the Secretary of State for us to work together and put aside our differences for the good of the country to see whether we can agree a joint position on how we can meet the capacity issues in light of the decision on Heathrow. We have been disappointed that, three months on, the Government have not responded to that offer.
I was, however, encouraged by the constructive response from the Conservative party chair, Baroness Warsi, on
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last week’s BBC “Question Time”, in response to my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg). She said:
“Some serious discussions—cross-party discussions—have to take place, because I don’t think anyone in this country wants us to be a republic which is left behind and really nobody wants to trade with.”
Leaving aside why the chair of the Conservative party believes that we are a republic, she is right to agree with us that we need a cross-party approach, and about the consequences of not agreeing a way forward. If the Transport Secretary would like to confirm that she does accept our offer and is willing to begin talks on how we can move forward on this issue together, then I am happy to give way.
Justine Greening: Part of the challenge is that the hon. Lady’s party has so many different policies on so many different days, it is difficult to know whom we would be talking with.
Maria Eagle: Coming from a party that last week had a different policy every day, none of which was in accordance with the majority party’s manifesto or the coalition agreement, it is a bit of a cheek for the Secretary of State to put that point to us.
A successful, thriving aviation sector is crucial for our economic competitiveness. It is vital that industry can plan for the future with certainty, not least to deliver the investment needed to provide the additional capacity required if we are not to fall further behind our EU competitors. I welcome the Government’s decision to bring forward this Bill and take forward the reforms that we began—
Dr Huppert: Will the hon. Lady give way?
Maria Eagle: I am coming to a conclusion now, so the hon. Gentleman should wait for his own speech—[Hon. Members: “Ah!”] I have given way to him once.
The regulatory regime governing the aviation sector is outdated and inflexible and this Bill will be an important modernisation, enabling the CAA to fulfil its functions in a way that better reflects the industry today, and in a way that can respond to the individual circumstances of our major airports. Putting the passenger at the heart of aviation economic regulation is overdue. I urge the Government to look again at those areas where there is considerable consensus that the Bill could be improved to provide even greater protection to passengers through clearer obligations on airports in respect of their welfare, not least during severe weather.
The Government should also live up to their increasingly hollow claim to be the “greenest Government ever” and place an environmental duty back on the face of the Bill, and give a much clearer steer to the industry by giving their firm backing to—at the very least—the emissions targets we set in government. In addition, Ministers should reflect very carefully on the concerns that have been raised over the proposed transfer of security functions from the Department and ministerial control.
It is one thing for us to agree on a credible regulatory regime for the aviation industry—and I believe that over the course of the passage of this Bill we will be able to agree these issues—but what the industry desperately
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needs is for us all to agree a credible long-term strategy for the sector, which will last across Parliaments and will not become a political football again at the next general election as it was at the last. So let us work together on the right way, consistent with the need to tackle emissions and the threat of climate change, to provide the capacity that the industry needs.
Mr Deputy Speaker (Mr Nigel Evans): Order. To accommodate as many Members as possible, a 10-minute limit on Back-Bench contributions has been introduced, but the usual rules apply to interventions, in that injury time will be added on. However, the usual rules will also apply to any maiden speeches that might be made during this Second Reading, which means that no interventions should be allowed.
5.19 pm
Henry Smith (Crawley) (Con): I am grateful for the opportunity to take part in this important Second Reading. I commend the Government for introducing this much needed Bill in the first Session of this Parliament. I waited with bated breath to find out Labour party policy on the future of aviation in this country. I thought that the hon. Member for Garston and Halewood (Maria Eagle) was about to announce an Eagle island airport, but it seems we will have to wait a little longer for that. As my right hon. Friend the Secretary of State said in her introductory remarks, it has been more than a quarter of a century since legislation in the area has been properly reviewed. During that quarter of a century, the airline and airport industries have changed massively.
In 1986, when the then British Airports Authority was privatised and became BAA plc, BAA nearly dominated the market in airports—certainly in London, the south-east and Scotland. At the time, the mix of airlines was different. At Gatwick, we now see the orange tailfins of easyJet, the largest operator from that airport and indeed the country’s largest airline. The new terminal 5 at Heathrow airport—I say “new”; it is some years old now—is a hub for British Airways. Virgin Atlantic, headquartered in my constituency, has developed significantly and is now a successful British brand representing the country abroad.
Our airport sector has developed considerably. In 2008, the competition authorities said—rightly, in my view—that BAA needed to divest itself of one of its airports. Gatwick was sold to Global Infrastructure Partners in December 2009. Already, in that short period, there has been significant development at Gatwick airport. I pay tribute to the chief executive of Gatwick airport, Stewart Wingate, and his management team, and to the many thousands of my constituents employed by Gatwick airport and the ancillary industries in the aviation sector locally, for the significant contribution that they have made to transforming the airport over those two short years.
More than £1 billion-worth of investment goes into Gatwick airport. I know that my right hon. Friend the Secretary of State went there recently to witness some of the works. They involve not only upgrades to the fabric of the north and south terminals but the introduction of state-of-the-art security facilities that make passenger travel through the airport more efficient and secure. The investment also includes more than £50 million to upgrade the station at Gatwick. Again, that involves not just the
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fabric but increased signalling and platform capacity, so that more direct trains can run from the airport to central London, and through London to Bedford and down to the south coast. A lot has happened in the aviation and airport sectors over the past quarter of a century. That has been the experience particularly at my local airport, Gatwick.
In the limited time that I have, I will refer to a few questions and clarifications on some of the Bill’s clauses. Clause 5 discusses competition between different parts of an airport. The Bill makes it possible for an airport terminal to be operated by a different company from the one that operates the runway and taxiway—something that we are more familiar with in countries such as the United States. I welcome the possibility of increased competition, which could improve the passenger experience, but I would be grateful if Ministers clarified whether the CAA will have a power to force the sale or lease of parts of an airport, or whether that will remain subject to the competition authorities under the Enterprise Act 2002.
As my right hon. Friend said, clause 6, on the so-called “market power test”, outlines a series of tests that must be met if an airport is to be regulated. To determine whether an airport should be regulated, the substantial market power test is to be applied. If an airport is to be so regulated, what would the dominance test be, and would it come under competition law or be decided by the CAA? I would be grateful for clarification.
Clause 12, on the regulation of possible future market power, gives the CAA the power to decide whether regulation is needed in the light of possible future developments at an airport. Again, that power is fine, but will there be any possibility of a review if those events do not take place? It would be strange to regulate for something that does not happen.
I welcome clause 25, on the scope of the right of appeal, because it is important for the airlines that use Gatwick airport and other airports around the country, but I would be interested to know whether there will be any way of preventing vexatious appeals. Furthermore, how rigorous, transparent and fair will the appeals process be?
Clauses 83 and 84, in chapter 2, part 2 of the Bill, deal with information on performance of services at airports. Again, the provision is welcome and will help to enhance the passenger experience as much as possible, but I wonder whether the power of that performance test should be extended to other organisations and agencies operating within an airport. Mention was made earlier of agencies such as the UK Border Agency and of the transparency and efficiency of the UKBA. That point could be applied to other agencies, such as Her Majesty’s Revenue and Customs.
In what little time I have left, I would like to highlight one concern. I broadly welcome the CAA being given these powers—it is the agency best suited to have them—but being an important public body it, too, should be subject to the rigour of the National Audit Office. We are asking the CAA to regulate the performance of others, and it is important that, as a regulator itself, it should face the rigour of scrutiny as well.
I warmly welcome the Bill. It is overdue, and I am grateful to the Government for introducing it so early on. Most importantly, it will improve the passenger
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experience, but it will also provide for a fair and transparent system for our airport operators and airlines. As was rightly said earlier, as a trading nation we rely on a strong aviation sector, and the Bill does a lot to enhance that.
5.29 pm
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): This is an important Bill. Civil aviation is a vital part of our economy. Regulation must support the industry to operate in the public interest. The call for a new look at regulation has been long standing. Indeed, the Select Committee on Transport in the last Parliament called for a review of the Civil Aviation Authority in November 2006. It has taken a long time to bring this Bill forward.
I am pleased that the Committee had the opportunity for pre-legislative scrutiny, but it was disappointing that the time for consultation was so severely curtailed. Indeed, our response to the draft Bill was published on the morning of the publication of the Bill itself. It is important that the Government should give an assurance that they will consider the points of concern that our report identifies. Our consideration was helped by the evidence of the Minister of State, the right hon. Member for Chipping Barnet (Mrs Villiers). I regret that she is not able to be here today and wish her a speedy recovery.
I should make it clear at the outset that there was general support for the regulatory aspects of the Bill, in particular the flexible licensing system and the focus on passengers. However, we have concerns, including in areas where there was little or no consultation before the Bill was published. First, there is a need for clarity on the definition of the key part of the Bill, the focus on the passenger’s interest. There needs to be a clearer definition of “users of air transport services”. We recommend that this be clarified to read: “passengers and shippers of cargo, both present and future”. We considered the representations made by airlines, and recommend that the position of airlines should be recognised as a secondary duty.
There was support for light-touch regulation. Licensing conditions and their associated costs must be proportionate to the benefits gained, which means that impact assessments are required. We were told in evidence from the aviation industry that the impact of the Bill on an airport handling 10 million passengers a year could be £200,000 a year, a significant amount in these difficult economic times. The emphasis in the Bill on the needs of passengers is welcome. This requirement must be reflected in the licences and the conditions imposed by the CAA. It is important that the requirement for information on the passenger experience, together with the environmental implications, should be clear, relevant and useable. Costs should relate to benefits.
There are two areas of concern and possible omission. First, passport control and immigration are identified by passengers as areas of key concern, yet they are handled by the UK Border Agency, not the Department for Transport. A way must be found to include those aspects when considering the passenger experience under the Bill. Baggage handling was another area of concern identified by passengers, yet it is often provided by private companies on behalf of airlines. A way must be found to include that, too. We were also concerned
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about an omission in relation to passenger welfare—in particular, in relation to plans to deal with disruption, such as when adverse weather caused major disruption at Heathrow. Although the CAA has spoken about the need to insist on plans to deal with passenger disruption and look after passengers when disruption occurs, there does not seem to be a requirement for that in the Bill. It is important that that, too, should be looked at. We also questioned witnesses about the aviation consumer advocacy panel, which is due to replace the Air Transport Users Council. It was unclear how that panel, representing the interests of passengers, would work or whether its interests would cover cargo as well as passengers. We need much more clarification on that.
There are two areas where powers were introduced after we were able to consider the Bill in draft form. We have questions about both. First, the ATOL––air travel organisers’ licence—scheme, first introduced in the 1970s, deals with financial protection for consumers who have purchased air package holidays in the event of a company going into insolvency. The Transport Committee has looked at the operation of ATOL, and at its inadequacies, and we have called for greater clarity in the information available to travellers, so that they can be sure whether they are covered by such insurance, and in the extent of the scheme, so that it is clear which passengers are covered. A power to address this is included in the Bill, but we have not yet looked in detail at the Government’s proposals. We hope to remedy that tomorrow, when the Committee will look specifically at the Government’s plans for ATOL and at the industry’s view of them.
Mr Donohoe: I commend the work of the Transport Committee on the Bill. One area of concern is the effect that the changes will have on the industry and on the economy. Will the Committee investigate that element of the proposals? It seems that only the Minister has shown any optimism about economic growth, and I hope that the Select Committee will look again at that subject when it revisits the Bill.
Mrs Ellman: Economic growth is indeed an important area and, while the Minister stated that it was an objective, it was not made clear how the changes would actually operate. So, yes, we would certainly like to look into that matter further.
Another area of concern relates to the proposed changes to responsibility for security in aviation. Transec was set up in 1991, following the Lockerbie disaster. Aviation security is a matter of prime importance, and aviation terrorism remains a magnet for terrorists who wish to inflict mass loss of life as well as economic disruption. It is a matter of concern that changes are being proposed in the area of responsibility for aviation security without a full consultation on how they will work.
It is proposed that the Secretary of State remain responsible for aviation security policy, with the CAA adopting new responsibilities that would include conducting a review of the aviation security directive, giving advice and assistance to the industry on security measures, monitoring and enforcing compliance with EU and domestic requirements, and carrying out national security vetting on individuals. The changes are linked with a change of approach from “direct and inspect” to an outcome-focused, risk-based approach.
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These are major, substantial issues. The changes will involve a £5 million a year transfer of payments from the taxpayer to the aviation industry and passengers. Of greater importance, however, is the fact that they will result in divided responsibilities for aviation security. That is a matter of prime concern, and we call on the Department to be more explicit about exactly how the new system will operate, and to reassure passengers that their safety will still be a matter of supreme importance.
Kelvin Hopkins (Luton North) (Lab): I am grateful to my hon. Friend for giving way, and I apologise for missing the first part of her speech. Airport security has suffered from an ongoing problem of a division of funding, with local authorities having to fund their security. Does she accept that airport security should be funded not only adequately but nationally, as it is a national concern? It should not place a burden on local police forces.
Mrs Ellman: As the bill for security mounts, it is important to give full consideration to how it is to be footed. Passenger security is a matter of prime importance, and it needs to be assessed in an international context as well as in national and regional contexts.
The Transport Committee gives its general support to the Bill, but the areas of concern that we have identified are important ones, and I seek an assurance that the Minister will consider them as the Bill proceeds, so that civil aviation can be promoted to benefit the economy and to enhance the passenger experience.
5.39 pm
Mike Freer (Finchley and Golders Green) (Con): I welcome the Bill, which puts the passenger at the heart of airport regulation and operations. Previously, the airlines were the customer, so the new responsibility to make consideration of the needs of passengers the primary duty is an important step, but it remains important, too, to look at how the Civil Aviation Authority will balance the competing demands of passengers. Indeed, which passengers carry the most clout? Leisure passengers are by far the biggest users of our airports, so are they the most important because of their volume? Business passengers are lucrative and economically vital to our airports, but they lack the clout of volume, so which passengers will have the most pull?
Business and leisure passengers have competing needs at the airport. One may want a quick and slick process; the other may want more services while waiting to depart. More retail and more seating means less space for security screening: one generates income, one incurs expenditure, so how will the regulator balance those competing demands?
What about the airlines? The passenger may be the end-user of the airport, but the airlines have the operational interface with the airport infrastructure, so a secondary duty to have regard to the airlines is important—indeed, crucial. It remains unclear how the regulator would balance those needs against those of the passenger. For instance, a budget airline might choose to use steps and buses because it is cheaper than using air bridges, but in terms of passenger experience air bridges are far more popular, so which wins out—the passenger or the airline? These competing demands will, I hope, become clearer as the Bill proceeds.
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Passenger experience is key, but one aspect of it that the Bill does not address is the experience of inbound passengers at immigration operated by the UK Border Agency. I do not believe that any Bill dealing with passenger experience can choose to ignore that part of the welcome to the UK—for British or external citizens. I appreciate that the UK Border Agency is a Home Office responsibility, while airport regulation is a Department for Transport function, but we need to ensure that customer experience during one section of the journey is not destroyed by poor service at the end of the journey. As the Bill proceeds, it should be possible to ensure that there is no departmental turf war. It is time for the UK Border Agency to become more transparent on behalf of customers and the airlines.
The current UKBA target is to clear 95% of non-European economic area passengers within 45 minutes. The measurement of this target is based on sampling, with queues sampled at various times of the day. The latest figures I saw for the first half of 2011 showed that 95% cleared in 45 minutes, but that is completely misleading for the customer experience. In fact, terminal 4 is by far the worst, with queues averaging more than 45 minutes 17 times a week—about three times a day. If we are to talk about civil aviation and UK passenger experience, it is important that UKBA immigration is brought into the picture.
Transparency must be dealt with as the Bill proceeds. It must be possible to force the UKBA and the unions to address rostering flexibility and the redeployment of staff across terminals to match the passenger volume information provided by the airlines. Airlines provide passenger loading information 48 or 24 hours—sometimes even two weeks—before a landing, yet the UKBA seems incapable of rostering and redeploying people across the terminals appropriately.
Let me move on to deal with the issue of regulated and unregulated airports. The decision rests with the CAA, but the danger is that Heathrow will end up as the only regulated airport, which could place it at a disadvantage, especially if there continue to be more flights to the BRIC economies—Brazil, Russia, India and China—from Frankfurt and Schiphol than from Heathrow. The list of regulated airports needs continuously to reflect competitive forces between airports—not just market influence and not just within the UK markets.
Let me deal with one particular example of customer experience that needs to be looked at as the Bill proceeds. I refer to the impact on security. I think it right for the proposed regime to involve risk-based outcomes, and if risk-based outcomes lead to different screening regimes, we must accept that. The risk profile of a pensioner from East Finchley returning from a package holiday on the Costa Brava is very different from that of someone returning from a terrorist hotspot elsewhere in the world, and that person will need to be screened differently.
We need to work with our European partners to establish a Europe-wide procedure that reflects risk. For example, a passenger leaving New York is heavily screened, and is virtually strip-searched before entering a plane departing from the United States. When that passenger lands at Heathrow, an equally strict security regime applies. We force him virtually to leave the airport and check in again, undergoing all the necessary security procedures. That not only worsens the customer experience of the transit passenger, but lengthens the queues of
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people seeking to undergo the normal security checks. I realise that there are Schengen rules that need to be dealt with, but I do not believe that it is beyond the wit of the Department for Transport to deal with them.
Kelvin Hopkins: I have travelled through Heathrow many times, and have often seen queues unstaffed. More staff could mean more queues and a more rapid experience for passengers. It would be helpful to spend a little more on the UK Border Agency, would it not?
Mike Freer: That is a good point. However, this is about not just staffing but the use of technology and the deployment of staff. Airline representatives tell me that there can be a quiet arrival hall in one terminal and a packed arrival hall in another, but that it is impossible to redeploy staff from one terminal to the other quickly. It is not merely a question of the number of people manning the desks; it is a question of how the UKBA and the unions choose to deploy them.
We must work with our European partners to dovetail changes to Schengen in at least the major European airports, so that those who have already passed through highly screened areas are not forced to be screened again, and we can improve customer service and relieve the pressure on domestic passengers. The customer must be an integral part of civil aviation, and penalties for poor performance are crucial.
The Bill takes a significant step to protect airline-based holidays for the customer, and I welcome it.
5.47 pm
Mr Tom Harris (Glasgow South) (Lab): Thank you for giving me an opportunity to contribute to the debate, Mr Deputy Speaker. Let me begin by offering my best wishes for the speedy recovery of the Minister of State, Department for Transport, the right hon. Member for Chipping Barnet (Mrs Villiers). I trust that when she returns to her duties after that speedy recovery, she will use her ministerial car rather more often and her push bike rather less often.
Fiona Mactaggart (Slough) (Lab): Why?
Mr Harris: I would never suggest that any Minister should do anything other than what I did when I was a Minister.
Too often in these environmentally conscious days, those in the airline industry are seen as the bad guys. I see a parallel with the car industry and car ownership. Although I do not consider myself to be a class warrior, I observe some class consciousness in the debate. Car ownership was initially seen as a good thing that improved the quality of the lives of those who could afford it, but as cars became cheaper and more ordinary working people could afford to own one, they suddenly became a threat to the environment. I see the same happening with air travel. It was a wonderful thing that made every corner of the globe accessible; but then ordinary people had the damned cheek to afford to use it regularly. Fares were reduced, and suddenly it too was a threat to the environment—what a surprise—rather than the opportunity that it used to be. My own view, which I hope is shared throughout the House, is that a healthy,
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expanding airline industry is essential to any successful nation, and if the Bill contributes to that end, I welcome it.
Mark Lazarowicz: Does my hon. Friend agree that it is also important for the aircraft industry to try to produce more environmentally friendly and environmentally efficient aeroplanes, and that the absence of measures to encourage that is regrettable?
Mr Harris: I entirely agree, and that is precisely what is happening in the airline industry. It is acutely aware of its responsibilities in this respect, which is why I do not see it as the enemy of the environment.
I note that my party’s Front-Bench team has accepted the Government’s decision not to go ahead with the third runway at Heathrow; indeed, the shadow Secretary of State said that in today’s debate. I trust that that acceptance is based on the parliamentary arithmetic—on the fact that the Members who support the third runway are outnumbered by those who do not—rather than on agreement with the Government’s arguments. The real reason the Conservative party opposed the third runway when in opposition was votes. It was concerned about seats to the west of London, not the health of the UK economy and the airline industry on which we depend. It was seats that were uppermost in the Conservative party’s mind when it chose to oppose the previous Government’s support for Heathrow.
Fiona Mactaggart: My hon. Friend refers to seats to the west of London. Does he accept that many of those seats depend hugely on Heathrow for local employment?
Mr Harris: I entirely agree. In 2009, I spoke twice in support of the Government’s plans to build a third runway, and I did so with jobs and the economy in mind, along with the conviction that the Conservative party’s stance at that time was based on cynical electoral calculation rather than any concern for the environment.
I look forward to hearing the contribution of the hon. Member for Spelthorne (Kwasi Kwarteng). I believe that, like me, he supports the third runway—although he might wish to correct that. His predecessor in this House also supported it; he courageously stood against his party’s line, and it is a pity that he chose to retire at the last election—although I am, of course, delighted that the current hon. Member for Spelthorne is now a Member of this House.
The hon. Member for Perth and North Perthshire (Pete Wishart) referred to the sale of British Midland International and the impact on Scottish air services. Those of us who supported—and still support—Heathrow’s third runway pointed out the blindingly obvious fact that a continued squeeze on capacity at Heathrow would inevitably lead to the withdrawal of domestic slots in favour of more profitable international slots. Earlier this month, BAA chief executive Colin Matthews warned:
“Capacity constraints are damaging the UK economy today when the country can least afford it.”
The Conservatives may have won the vote on the third runway, but they have certainly not won the argument.
Kelvin Hopkins:
May I point out both that our party has also accepted that there will be no third runway at Heathrow and that one way of relieving capacity at
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Heathrow would be by shifting some medium-haul and short-haul flights to Luton?
Mr Harris: My hon. Friend makes a perfectly understandable constituency point, which I am sure will not have gone unnoticed by the Luton Observer, or whatever his local paper is called.
The provision of security is of great concern to all our constituents. The Government’s policy paper that was published at the same time as the Bill in November claimed that the transfer of aviation security regulations functions would save the taxpayer £24.6 million over 10 years. However, it also stated that the CAA would incur costs of £5 million each year, more than double the level of savings to the Department for Transport. Will the Minister explain either in summing up or in Committee why this transfer of powers appears to result in a net annual cost increase of £2.5 million? If that is because we can expect a more secure airport experience, I welcome the move, but if there are to be higher costs but no improvement in security, I will be concerned, particularly if that extra cost is to be passed on to the travelling public, which I understand is the case.
I welcome this Bill, however, and, without wishing to second-guess the great wisdom of the Labour Whips Office, may I say that I look forward to scrutinising it in Committee in the weeks ahead?
5.54 pm
Kwasi Kwarteng (Spelthorne) (Con): I had prepared some introductory remarks, but in view of the kind comments of the hon. Member for Glasgow South (Mr Harris), I should perhaps clarify my view on the third runway. In the course of my brief parliamentary career, I have never explicitly come out in favour of the third runway, but those who know me know that I am very partial to it, even though I am not necessarily saying it is the only solution to the aviation capacity problem the country faces. It is, however, vital for the economic future of our country that we solve this problem, especially given the stagnant growth here and in the eurozone. Too often in our post-war history we have adopted short-term policies that have impeded our long-term growth. I hope that our future aviation policies will not impede our future growth, however. The question of aviation capacity in the south-east is very important. We have debated it in the House before, and I have written about it.
I turn now to the Bill itself, which is a slightly different subject. The Bill is to be welcomed for a number of reasons. Most notably, our current civil aviation rules were framed almost three decades ago in the 1980s, and the Bill makes laudable attempts to modernise the regulation of this important industry. The broad thrust of the Bill is to place the customer at the centre of any considerations, and that should be supported. Its measures will establish as the Civil Aviation Authority’s primary focus the promotion of the interests of the passenger, and the entire industry accepts that that should be the case.
There is, however, a wider question, which was raised by the Select Committee, of which I am privileged to be a member. We found in our pre-legislative scrutiny report that the CAA should have as a secondary duty the need to take account of the reasonable interests of
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the airlines. Some might say that the airlines are very good at looking after themselves as they are quite well financed and have good lobbyists. When addressing aviation issues, however, we must consider all the participants, including airports and airlines as well as passengers. It is a commonly held belief that in the field of competitive air transport the needs of the airlines are closely aligned with those of the passengers, and I agree. As their interests are generally aligned rather than in conflict, we must consider including this secondary duty in the Bill. As this is to a considerable extent a co-operative industry, with airlines, airports and passengers all part of the mix, I strongly support the Bill’s providing for symmetrical rights of appeal, allowing airlines as well as airports to appeal to the Competition Commission.
The Bill’s provisions granting publication duties to the CAA in respect of all airports is also welcome. These days, transparency is essential; customers rightly want it, and airlines should welcome it too. The CAA must promote better information on customer service and environmental effects. No one disputes that the airline industry stands on the front line in the war against carbon emissions, but we must recognise the achievements of the industry in our country: the airline industry in Britain is at the forefront of addressing climate change and environmental protection. In that regard, it is better than any airline industry in any other country. Before we burden our industry with yet more regulation, we must pause to acknowledge its achievements in this field. Naturally, the information about airlines should be comparable and fair, but the move to transparency is certainly a step in the right direction.
I think that the transfering of security regulation from the Department for Transport to the CAA is a good thing. Obviously, details will have to be refined and clarified and in many cases things will have to evolve, such as how the structure will work, but it is quite right that a Government who have made decentralisation one of their guiding principles should delegate responsibility in this regard. There is a view that such a move is simply a way of reducing Government costs, but in my view it is quite right so to empower the CAA, although more details will have to be supplied.
Clearly, this is only Second Reading, so I am happy to support the Bill at this stage, but there are wider issues of concern. The CAA is the only major economic regulator for which the National Audit Office has no real remit, as has been mentioned, so there should be an explicit duty for the CAA to act in an efficient manner. That, indeed, was what the Transport Committee found.
More broadly, we must be very careful as regulation in civil aviation throws up the important issue of regulatory costs. If Britain’s aviation industry is to thrive, it is clear that we should not impose too many or too onerous burdens on our businesses that operate in the field. Not only are financial burdens onerous, but a more complex regulatory environment can pose its own problems. The CAA already charges airports a small levy for every arriving passenger, from which source of finance it seeks to undertake its functions. Those charges are set to increase by a third in April 2012 and it is apparent that the provisions in the Bill might add to it costs for airports. Given the increase in air passenger duty, we are in danger of burdening the industry with ever more costs, impeding its ability to drive the economic growth we all keenly anticipate.
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This is Second Reading, however, and I am quite happy to support the Government at this stage. I only hope that more details can be thrashed out and considered in Committee and on Report.
6.2 pm
Phil Wilson (Sedgefield) (Lab): Aviation makes a major contribution to the UK economy: the industry makes up £19 billion to £20 billion a year of our gross domestic product and employs 600,000 to 700,000 people. My concern tonight, in the context of this Bill, is the future of regional airports and the connectivity they offer between the regions they serve and the rest of the world.
In 1995, Heathrow served 21 domestic destinations and today it serves only six, only two of which are in England. Durham Tees Valley airport in County Durham, which is in my constituency and has part of its runway in the Stockton North and Stockton South constituencies, was once connected to Heathrow, but in February 2009 British Midland International—bmi—withdrew its service. Durham Tees Valley still has a twice daily flight to Schiphol airport in Amsterdam, and Schiphol and Charles de Gaulle airport in Paris now serve more regional airports in the UK than does Heathrow. I understand that bmi withdrew its slots from Durham Tees Valley to Heathrow as it wanted to use them for more lucrative long-haul flights into the capital, but those slots have yet to be filled. Although it might make sense to have the long-haul flights, there is a problem for connectivity between the regions, economic development and the global economy.
BAA bills Heathrow as our global gateway, but that cannot be true if only two regional airports in England have access to the international links through that airport to the rest of the world. The route to Schiphol from Durham Tees Valley is excellent and serves the Tees valley well.
Let me tell hon. Members something about the Tees valley and why it is so important that we maintain the connectivity between the airport and the rest of the world. It has to do with the size of the industry in the area. The economy of the Tees valley is based on the largest integrated process industrial complex in the UK. It contains industries specialising in petrochemicals, energy, renewable energy, biofuel and steel making. It has the third largest port in the UK and there is also a world-class advanced engineering industry based on the design, construction and maintenance of petrochemical plants, power stations and major infrastructure such as bridges. In addition, the region has the Wilton centre, which is Europe’s largest non-military private sector research centre. The petrochemical industry alone contributes £3.5 billion to the UK economy and 70,000 UK jobs depend on it. On top of that, Hitachi Rail Europe is coming to Newton Aycliffe, which is in my constituency and about 12 miles to the west of the airport. Again, a worldwide industry has been attracted to the region.
Although we have the link to Schiphol, I understand that it does not provide a connection with Australia and that the number of flights that connect to the middle east and north America have reduced in recent years. That is why the routes into Heathrow are so important.
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As the bmi slots into Heathrow have yet to be filled, I want the Government to consider some kind of public service obligation so that the slots remain reserved for flights from Durham Tees Valley into Heathrow. I have been pressing for that for several years, even before 2010, when Labour was in power. I would like to have the opportunity to discuss the matter with the Minister, in a meeting if possible, to see whether we can make progress. At the moment, there are about three PSOs in the UK: two in Scotland and one in Wales. In Europe, however, there are about 250, and they keep regional airports connected to international hubs.
That proposal is important for Durham Tees Valley airport, especially today. As we know in the north-east, the airport is being put up for sale by Vancouver Airport Services and Peel Airports Ltd.
Alex Cunningham (Stockton North) (Lab): My hon. Friend and neighbour has proved to be a great champion for our local airport, which, as he said, is up for sale. Does he agree that when considering the future of Durham Tees Valley airport, as well as taking into account all the points he has made, the directors must seriously consider all offers to secure an expert company that is interested in providing the widest range of services at the airport rather than potential owners who are simply interested in serving the interests of shareholders and are not committed to a long-term viable future for the airport?
Phil Wilson: My hon. Friend makes a very important point. Transparency is very important when it comes to the sale and I know that the board is meeting every week at the moment to ensure that everything is out in the open. It is vital that whoever takes over the airport ensures it is there for the benefit of all the region, not just the shareholders.
Five or six years ago, approximately 900,000 passengers a year used the airport, but that figure is now down to 180,000 or 190,000. The largest part of those passenger numbers comes from the KLM flights between Durham Tees Valley and Schiphol. It is important that in the sale of the airport we ensure we get someone who will invest in the facility.
The airport has a proud history. It was originally known as Goosepool airport and then as RAF Middleton St George, and it was an RAF Bomber Command station during world war two. The airfield began its life as Royal Air Force Station Goosepool and in 1941 became RAF Middleton St George. The aerodrome opened as a Bomber Command station in that same year and, after the war, it served various squadrons. In 1964 it was sold and became Teesside International airport and, in 2004, it became Durham Tees Valley airport.
I understand that there are several prospective buyers for the facility at Durham Tees Valley, and I want to make sure that, whatever happens, it remains a commercial airport. If that is not to be the case, I want to make sure that it still has an aviation purpose for the north-east, whether as a general aviation facility, a cargo facility or a commercial operation. It is vital that there is a future for some kind of aviation in the Tees valley in whatever guise, because the business is needed—as I have said, it is a massive industrial complex—the tourism is needed, and investment in the facility by whoever buys it is needed.
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I want to see an aviation future for Durham Tees Valley because connectivity is very important to an area with such a huge and internationally important industrial base. It is important to keep a commercial airport, but there is also a great need for the wider aviation facility. There has been criticism of the airport in the local press, but now is not the time for criticising Durham Tees Valley—we should be supporting its sale. I want the airport to have a viable aviation future that will benefit the whole region, as it is an important economic asset. The time for criticism, celebration or both is after the sale period, which I understand will be in the next week or so. In the spirit of the cross-party consensus this Bill has secured, I hope that the cross-party consensus among Tees valley MPs will also continue.
Finally, I should like to ask a question about the Bill. I understand that some of the inspections that the CAA currently undertakes will continue but that their cost will be transferred to regional airports and ultimately, I should think, to the customer. To avoid placing unnecessary burdens on regional airports and customers, will the Minister look at this issue again and let us know in today’s debate whether that is case? In an age in which greater connectivity and globalisation are bringing the world closer together, regional airports and the regions they serve deserve to be part of that economic growth, connectivity and globalisation and the economic wealth they can bring.
6.12 pm
Dr Julian Huppert (Cambridge) (LD): I do not want to disappoint the House but I am not going to speak in great detail about Cambridge international airport and the wonderful services it provides. Hon. Members can come on some other occasion to hear about that.
Changes to the regulatory framework of civil aviation are long overdue and the changes in the Bill are broadly welcome. The Bill builds on the findings of the 2008 Pilling review, which noted in particular the need to bring the legislative framework up to date. Work on the proposals began under the previous Administration and is being carried forward by the coalition, so the measures clearly have cross-party support, which I welcome. We in the Liberal Democrats particularly welcome the Government’s aspiration to put passengers at the heart of airport operations and the sections of the Bill that help to accomplish that. For too long, transport policy has been based on the top-down, central control of large systems. An effective transport system, whether for airports, trains or anything else, should be passenger-focused and should be viewed from the bottom up, so the new duty on the CAA to focus on end users is extremely welcome. Having said that, I would like to see more in the Bill about environmental considerations and I would be interested to hear whether a duty to consider such issues could be put into clauses 1 and 2, because the environmental performance of the aviation industry matters.
I should also like to know a bit more from Ministers about the measure that puts a duty on the CAA regarding
“the need to secure that all reasonable demands for airport operation services are met”.
I should particularly like to know what is reasonable. Is it reasonable for me to expect there to be flights from Cambridge international airport to any destination I choose? I presume not, but what would be a reasonable expectation?
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I welcome the reforms to the air travel organisers’ licensing regime, which was put in place back in 1982. Since then, the way in which we buy holidays, and what those holidays involve, has changed dramatically. It is entirely appropriate for the Secretary of State to have the power to extend the scope of ATOL to give passengers the assurances they deserve, and it is clearly absurd that only a small proportion of holidays are covered currently and that many consumers are simply unaware whether they are protected or not. However, I am concerned that some organisations might still be excluded under the proposed changes, and I hope that it might be possible to consider going somewhat further. I believe that the Transport Committee is talking to ATOL tomorrow—
Iain Stewart (Milton Keynes South) (Con) indicated assent .
Dr Huppert: I am grateful to see the hon. Gentleman nodding, and I hope that some of the information the Committee produces can be taken into account in the Bill.
There are some welcome provisions in the Bill that will open up Government data concerning airports. Having open public data is a key aim of the Liberal Democrats and of the coalition’s programme for Government. The CAA will be given the power to enable airports to publish data to assist passengers or potential passengers in making informed choices. The best way in which the Government can drive up standards is by empowering individuals to make informed choices, and that is what these measures will achieve. The new power for the CAA to publish information about the environmental impact of aviation is also welcome. The real costs of airplane emissions are often hidden, and the Government have a duty to make them known as a first step towards making sure that something can be done to reduce them.
Most of the changes in the Bill have been subject to extensive consultation over the many years of its gestation. Papers from the previous Administration and the coalition Government have generally had positive feedback and the recent draft Bill was broadly welcomed by the industry. However, there are some aspects of the Bill that I hope will be considered in more detail in Committee. First, it seems slightly odd that there are new powers for information regarding the environmental impact of aviation to be published but that there is no commensurate duty for the CAA to do anything about the issue after publishing that information. The CAA will have a new power to publish information to benefit passengers and a duty to work in their interests. I therefore think that the power to publish information about the environment should be matched by a duty to act on that information.
Mark Lazarowicz: Is it not more serious than that? The Bill will allow licensed conditions to be imposed, based on certain criteria, but those conditions will not include environmental ones, so it seems that the CAA will not be able to include environmental considerations in the licences it grants.
Dr Huppert: The hon. Gentleman makes a fair point and I am sure that this issue will form a significant part of our discussions in Committee.
Clause 84(2) says that the CAA
“may publish guidance and advice with a view to reducing, controlling or mitigating the adverse environmental effects of civil aviation in the UK.”
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I think the wording could be stronger and say that it “must” do so and, hopefully, take that further. Aviation accounts for a significant and growing proportion of our carbon emissions and it also has a significant noise impact, which we must take into account. The body that regulates aviation must have regard to these facts and bear some responsibility.
Mr Donohoe (Central Ayrshire) (Lab): Will the hon. Gentleman at least concede that the airline business has improved its environmental impact greatly in the past 10 or 20 years?
Dr Huppert: Indeed, it has, and I have had discussions with Rolls-Royce, which makes a number of new engines that perform significantly better in that regard, but there is still a long way to go. It is certainly true that emissions per passenger have declined, but the number of passengers has gone up and there is a complex factor relating the two. We need to go further in making sure that planes are fully utilised. We have had discussions in the Chamber about trying to change from a per passenger duty to a per plane duty, and I hope we will be able to go further and resolve the anomalies regarding the Chicago convention that prevent that change.
The Bill provides the Secretary of State with the power to ensure that information is published but does not go as far as requiring the CAA and airports to do so. It could go slightly further in that direction to ensure that passengers are provided with the information to which they are entitled rather than leaving it to the whim of whichever Secretary of State happens to be in charge. I am not suggesting that any Secretary of State in the current Government would be so foolish as not to go the full way in that regard, but one can never know what a future Government or Secretary of State might do. Of course, environmental information should be provided as a matter of course, and I hope, for clarity, that clause 84(2) will explicitly include carbon dioxide emissions and other greenhouse gases.
I should also like to understand a little more about how the penalties in the Bill were arrived at. Obviously, we hope never to have to use any of the penalties for failure to comply or to provide information, but they are somewhat complex. Clauses 44 and 45 have a complex formula based on turnover, clause 51 has fixed amounts, clause 52 has unlimited ones, clause 86 has very low penalties and clause 87 goes back to unlimited ones. I hope that the Minister can give us some clarity as to exactly how those penalties were decided.
Clause 104 deals with the disclosure of medical information, which requires proper scrutiny and some clarification. The clause allows the CAA to disclose medical information relating to flight crew and air traffic controllers in an anonymised form for the purposes of medical research. I can absolutely see how that would be beneficial and why we should want to introduce it, but I am concerned that in a small airline it might be possible to identify an individual using a combination of the information provided and data that are publicly available on the internet. That could pose a serious threat to privacy. This clause requires close scrutiny to ensure that de-anonymisation of data is not possible. I am aware of academic work that has been done on data
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that were about to be released by the Ministry of Justice. A group was challenged with trying to de-anonymise information from anonymised data and it turned out to be worryingly easy to do in a number of cases. I hope that Ministers will look at that issue.
Mark Lazarowicz: Will the hon. Gentleman give way?
Dr Huppert: A number of people still wish to speak, so I shall not give way again.
The Select Committee on Transport made some sensible recommendations to the Government, which I am sure will be given due consideration. For example, it noted that the aviation industry has concerns about the way in which the CAA will implement the new provisions, given the difficult business conditions that many regional airports face. It also noted, as have many hon. Members today, that the CAA is the only economic regulator that does not fall under the remit of the National Audit Office, and it recommended that an explicit efficiency duty for the CAA be inserted in the Bill or, indeed, we could make the NAO responsible for supervising the operation of the CAA. The Government have not yet provided a full response to the Committee’s recommendations, but I hope that they will do so as soon as possible and look at those sensible ideas.
Overall, the Bill offers crucial modernisation for civil aviation regulation, and it will help to promote success and competition in aviation. The Liberal Democrats welcome the focus on passengers, the reform of ATOL, the sensible framework for economic regulation and the opening up of public data. I hope that in Committee we can ensure that the Bill properly delivers the Government’s aims and creates a sustainable future for civil aviation in this country based on open data, proper regulation, sustainable transport and passenger-led reforms.
6.20 pm
Gavin Shuker (Luton South) (Lab/Co-op): I am extremely grateful for the opportunity to speak in this important debate, and to follow the hon. Member for Cambridge (Dr Huppert). I am disappointed that he did not spend more time discussing his airport, of which I am a great fan, as I flew from there when I was in the Air Training Corps. However, there is an airport slightly closer to my heart now, given that I represent Luton South.
Many hon. Members have said that aviation is crucial if we are to achieve economic growth and change—a green economy—in future. I do not dissent from that view, as aviation has an important role to play. There are pressures on capacity in the south-east, for example, that I should like to discuss, but first I shall turn to the Bill. I was a member of the Select Committee on Transport when it examined the woeful performance of BAA in the winter weather of 2010. It was clear that there were major, extensive problems at Heathrow, and our report, which was quite authoritative, if I say so myself, underlined the way in which regulatory issues ended up affecting BAA’s performance.
I shall give an anecdote that stuck out for me when we took evidence on the inquiry. When Heathrow published its monthly performance figures in December 2010, it passed 56 of the 60-odd measures proposed at the time, because they did not measure what was important to passengers: the ability to leave the gate on time, and the
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conditions in which they were looked after. It is crazy, given the fact that there were delays of up to 72 hours for many passengers—we saw the scenes on our screens—that the performance measures that were taken into account did not show the problems at the airport.
It is not just Heathrow that is a problem, as the issue is on everyone’s mind. It is also about how the wider industry relates to the CAA, and how we hold the CAA to account. In that regard, the Bill is extremely welcome. The role of the CAA in taking on security is a welcome measure, as is the CAA having more flexibility and setting the licensing scheme for UK airports. However, airlines too are customers of airports; it is not just the end passenger who is buying a ticket. Indeed, as a user of airlines, I put my primary faith and expectation that everything will work in the airline’s hands: whether it is easyJet, BA, Virgin Atlantic or Ryanair, I would want to hold them to account. Sadly, when there are failings in airport operation, customers and passengers go to the airline in question, and the Bill could do more. I therefore support the introduction of a secondary duty for the CAA. The primary duty to the 210 million or so passengers is important, but there should be a secondary duty to ensure that airlines are served effectively by the CAA.
The CAA believes that its adoption of security functions will impose an additional £5 million charge on the industry, but there is little in the Bill about how scrutiny will be enhanced for the CAA. As my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) pointed out, we will seek to be helpful in Committee and amend the Bill. The NAO has a role to play in holding that major economic regulator to account.
On the wider issue of aviation, the Bill is extremely welcome, as it does many sensible things in a sensible way. However, it does not serve to fill the vacuum of aviation policy in this Parliament. We face a major capacity issue in the south-east, and there are broader environmental and economic concerns—we all accept that. However, the policy vacuum on capacity, particularly in the south-east, is not answered by the measures. In my own patch, London Luton airport can do much to assist with the solution to those problems.
Mr Donohoe: Given that it is rumoured that the Ministry of Defence is proposing to sell off RAF Northolt, does my hon. Friend believe that it is feasible that that could be part of the equation in overcoming the problem of congestion in the south-east?
Gavin Shuker: My hon. Friend makes an extremely strong case. I have looked at those proposals, and that airport is only a few miles from Heathrow.
Gavin Shuker: Indeed, but I am not qualified to make that assessment.
My hon. Friend does, however, make the point that no options should be off the table. We have said, despite the fact that we made a manifesto commitment to a third runway at Heathrow, that we are willing to take that off the table if it enables us to enter into cross-party talks. These are long-term decisions taken for the country’s future, and that is a statesmanlike approach by our Front-Bench transport team. Failure to do anything is
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not an option. The capacity challenge in the south-east can be tackled if Luton airport increases its capacity from 10 million passengers to 18 million over a period. That is part of the answer, but it does not answer the broader question of how we establish a serious hub airport that can compete with other airports, particularly in Europe, on level ground.
In Luton, we can achieve 18 million passengers without significant ground works, and without extending the runway or building a second runway, which is welcome. We are 25 minutes from St Pancras—practically zone 3 on the London underground. We are one of the big four airports that, I believe, we are seeking to expand. Luton ultimately can absorb only a small amount of the additional capacity that is required, and we have heard different suggestions from different people in recent weeks. The expansion of Heathrow is not on the table, and we understand why the Secretary of State holds her personal convictions. An additional runway at Stansted has been ruled out. We have heard about the plans for “Heathwick”, linking Heathrow and Gatwick, although I am not sure exactly what those proposals would achieve. In the past fortnight, we have heard about “Boris island”, but whatever option we choose, we must find a long-term solution to the problem of capacity. If the Government are unwilling to do so while they are in power, we will have to face up to those problems when we are in government.
Mark Lazarowicz: Does my hon. Friend not agree that one of the drawbacks of “Boris island” or, indeed, any other plan for the Thames estuary is that it would set at naught all the ideas about linking high-speed rail to Heathrow airport if, at the end of the day, that airport moved somewhere 30 miles east?
Gavin Shuker: My hon. Friend makes a good point about high-speed rail, which is not a substitute for additional air passenger transport movements. It may be excellent at linking, for example, Birmingham and Heathrow, and our Front-Bench team has suggested proposals about how better to do so. This is a real issue of capacity that affects our economy. We cannot leave it to future generations to solve the long-term problems that we must face up to ourselves.
Mr Deputy Speaker (Mr Nigel Evans): Order. Members have shown amazing self-discipline in the length of their speeches, so I am able to increase the time limit to 12 minutes.
6.29 pm
Fiona Bruce (Congleton) (Con): I welcome the Bill and propose to speak chiefly to clause 94, which amends section 71 of the Civil Aviation Act 1982 and improves ATOL protection for consumers, as I believe that these are the provisions that are of most interest to my constituents. To clarify why the proposals are so welcome, I will briefly outline the current ATOL scheme’s inadequacies that require remedying in order to meet the requirements of passengers in the 21st century.
The ATOL scheme, which was introduced in the ’70s, provides financial protection for consumers who purchase air package holidays in the event of a travel company
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going into insolvency. Affected passengers are entitled to a full refund if they are yet to travel or repatriation after completing their holiday if they have already reached their destination. However, the current ATOL scheme does not apply to airlines that are specifically excluded under legislation or to airline agents where airline tickets or a similar airline booking confirmation has been issued, which means that a booking made directly with an airline just for a flight on an aircraft they operate, for example by using their website, is not covered by ATOL. Airlines can sell flights and flight plus without providing financial protection, flight plus being a booking for a flight that is sold together with accommodation and/or car hire at the same time or within a day of each other. Many consumers are totally unaware that they have no financial protection for such bookings.
However, confusingly for consumers, under the 1990 EU package travel directive airlines are now required to provide financial protection for the sale of package holidays. In practice, some airlines sell package holidays with ATOL protection, but other airlines sell only flight plus without any statutory financial protection at all. Even more confusingly for the consumer, although the ATOL logo on websites and in brochures signifies that the business in question holds an ATOL licence and thus meets the CAA’s financial fitness criteria, that does not mean that every holiday the business sells is ATOL protected. The ATOL licence holder may sell holidays and travel arrangements that are not ATOL protected since they fall outside the legal scope of the current scheme. In effect, it is left to the consumer to check whether their holiday arrangements are covered by ATOL, but how many would know how to do that?
The last decade has seen important changes in the UK market for holidays and flights, particularly a move away from traditional package holidays in favour of independent travel. This has been facilitated by the emergence of low-cost, no-frills airlines and the use of the internet. Holidays are often created by consumers buying the various components from a range of flight, accommodation and other options. This might involve purchasing from a single provider or, in many instances, from linked websites. For instance, an airline website might contain a link to an accommodation provider’s site. Holidays created and sold in this way are often referred to as dynamic packaging, mix-and-match holidays, DIY packages or tailor-made holidays. This development could not have been foreseen when the ATOL scheme was introduced 40 years ago or when the package travel directive was agreed more than 20 years ago. Indeed, the proportion of ATOL protected holidays has dropped from 97% of all leisure flights in 1997 to less than 50% in 2010 and, if action is not taken, will undoubtedly decrease further.
There is therefore a strong case for reforming the ATOL scheme to reflect better today’s holiday market and so that consumers can be clear when their holiday is protected. The CAA agrees and has stated that
“ATOL needs reform… to remove the risk of increasing financial detriment to consumers.”
This is particularly so in the current economic climate, when significant sums from a household’s annual budget are spent on such transactions.
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In addition, holidays purchased on an “agent for the consumer” basis are also in many respects outside the current ATOL scheme. Traditionally, travel agents act as agents for the supplier and sell holidays to customers on behalf of travel trade suppliers, but they can also sometimes act as agents for the customer and technically buy the holiday on their behalf. This is an important distinction. Agents for the consumer are not legally making flight accommodation available and so are currently not required to have an ATOL licence or to provide any other form of financial protection for holidays.
However, it can be difficult, if not impossible, for consumers to know in what capacity a travel agent is acting, which can create considerable detriment and uncertainty. In practical terms, the distinction is completely irrelevant for a consumer until they need to claim for cover and might find cover non-existent. Then it becomes very relevant indeed. Even some travel companies are not fully aware of what acting as “agent for the consumer” entails or their obligations to explain to consumers the implications for ATOL protection. In short, the current ATOL scheme no longer fulfils its intended purpose.
Clause 94, by greatly broadening consumer protection and bringing airlines and “agent for the consumer” transactions into the scope of the ATOL scheme, effectively brings the scheme into the 21st century. Following appropriate consultation, the Bill will enable the Secretary of State to make regulations requiring airlines to hold and act in accordance with an ATOL licence when making available flight accommodation, except where they are doing so on a flight-only basis on aircraft that they operate. For the purposes of the clause, flight accommodation is taken to mean accommodation for the transport of persons on flights in any part of the world. In effect, all airline package holiday and flight-plus sales are to be ATOL protected. Having said that, some exceptions remain, and I welcome the discussions, which have been referred to, between ATOL and representatives from the Transport Committee on the possibility of ATOL cover being widened even further. I very much welcome the Bill and the effect it will have in providing additional consumer protection.
Before concluding my remarks, I want to touch on another point relating to passenger protection: pilot fatigue. Although perhaps peripheral to the Bill’s main aims, this issue is vital to the many pilots in my constituency who work out of Manchester airport and, in turn, to their passengers’ welfare. I have spoken with a number of pilots about the matter and attended briefings, in the House and elsewhere, where it has been raised with great concern. Pilots in my constituency are extremely concerned that any relaxation of this country’s current restrictions on permitted crew flight hours could push pilot fatigue to intolerable levels and seriously affect passenger safety. The issue was raised in the other place only last week by the noble Lord Monks, who is president of the British Airline Pilots Association.
Pressure on crew and aircraft for turnarounds is increasing as demand for air travel rises, and this is reflected in the requirements that airlines are putting on pilots. The European Aviation Safety Agency has made proposals that would reduce the current UK standards on flight time limitations. The Government spokesperson in the other place replied to the noble Lord Monks that the Government would support the proposed requirements only if the CAA determines that they
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provide an appropriate level of protection against crew fatigue. That was a welcome comment pointing in the right direction.
Mark Lazarowicz: I have been contacted by many of my constituents who work in the aviation industry, including pilots, and who are extremely concerned about the proposals. I am sure that the whole House is with the hon. Lady in wanting to see the Government and the European authorities ensure that no danger to safety is brought about by the proposed changes.
Fiona Bruce: I thank the hon. Gentleman for that intervention.
In responding to the debate, will the Minister clarify how in practice such an important determination will be made in light of the delegated powers that are going to be passed to the CAA under the revised regulatory regime and the fact that when introducing the debate the Secretary of State said that CAA decisions should be “guided by the needs of customers” and that the safety of customers was of “key importance”, and, finally, bearing in mind that the Secretary of State remains ultimately responsible for aviation safety and security?
6.40 pm
Julie Hilling (Bolton West) (Lab): First, I add my voice to those who have expressed concerns about the Bill having been rushed. As a member of the Transport Committee, I was part of the pre-legislative scrutiny process, but as has been said on several occasions, only tomorrow will we have our session on ATOL. The Government therefore have not had the chance to take on our concerns; even more than that, airports have expressed huge concern that they have not had time to consider the proposals and to make recommendations.
Secondly, the Government have missed an opportunity to include environmental measures in the Bill. People living near airports had been hoping for stronger regulation on noise and pollution controls, and I appreciate that the Bill’s purpose is primarily economic regulation, but it has already been widened to include ATOL and security. Aviation Bills do not arrive every day, so this one should have included environmental duties, and I really hope that it will be amended in Committee to include them.
The industry has generally welcomed the Bill, but some proposals have created much consternation. The cost of regulation is certainly a problem for airports such as Manchester. Currently, the regulation charge is 95p for every arriving passenger, but with no consultation the charge is going up in April to £1.26 per passenger. The airport expects that the additional charges for security and enforcement will be another 4p, and, although that does not sound a great deal, it estimates that it will have to find an additional £274,000.
Airports are not in a position to pass on those charges to airlines. The only way of doing so would be to increase landing charges, but because of competition between regional airports, airlines would simply go elsewhere. Airports cannot agree to fix landing charges, as they would fall foul of competition rules. I can understand why the Government believe that the user
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should pay, but why is the charge being levied only against the airport? Why cannot part of it be levied directly against airlines, and why can it not be phased in to give airports a chance to build it into their budgets?
The Bill also allows an airport to be compelled to hand over a terminal to another operator, but there is no industry demand for that, and it has been said that it is an “idea without merit”. I have been told that the measure has been included just in case in future someone, somewhere decides that it is a good idea, but it would only ever be a good idea if we wanted to increase the employment opportunities for accountants and solicitors.
Currently, the airport operator plans for the whole airport. It has to deal with its neighbours, take account of environmental concerns, work out how to get people to and from the airport, invest in transport infrastructure, invest in improvements to the terminal and so on. What will happen to all that if there is more than one operator? Manchester airport is investing £50 million to bring the Metrolink system to the airport, and it has recently made a large investment in the airport’s railway station. Would that have happened if there were two or more operators at the airport? What if one operator does not want to invest in infrastructure? We have only to look at what happened with rail privatisation: a huge increase in transactional costs and the use of accountants and solicitors, hours and money wasted on deciding who is to blame for any incident and who owes whom money, and a waste of taxpayers’ valuable money.
Transferring an airport terminal to another operator would hugely increase transactional costs, and a great deal of time and money would be wasted on commercial negotiations and agreements. The cost-benefits of one efficient operator would diminish, and one contract and, therefore, good deals with Smiths Group, SSP and the Compass Group and with brands such as Costa Coffee and Burger King would disappear. Bean counters would have to spend time working out how they split things such as car park fees, and each operator would have to have headroom, thereby diminishing overall capacity. The proposal makes no sense, it will not improve the passenger experience and it should be removed from the Bill—or, at the very least, apply only to regulated airports.
I have some concerns about security transferring to the CAA and regulations now being based on an outcome-focused security regime. I accept that it is unnecessary to insist on screening by a certain machine at every airport, but as we know, terrorists only have to be lucky once, and we must ensure that we have no weak links in our airport security. It was also worrying when the trade unions reported to the Transport Committee that many people would not want to transfer from the civil service to the CAA and, therefore, that expertise would be lost.
A major issue was pensions. The Minister of State told the Committee that the CAA and civil service pensions are under review, but will transferring staff be given an equivalent pension? Have Ministers also considered other employment models, such as staff remaining employed as civil servants but seconded to the CAA? Security is not an area where we can take risks, and we must not lose the expertise of current staff, so do the Government have any proposals for retaining them?
ATOL reforms are badly needed, as the hon. Member for Congleton (Fiona Bruce) said just a moment ago,
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but I am frustrated that the Transport Committee is going to look at the details of such reform only after Second Reading. Most people believe that they are already ATOL-protected when they book a holiday, and that if the operator goes bust someone will get them home or, if they have not yet travelled, refund the cost of their holiday. It is ludicrous that a holiday booked through an airline—a holiday that looks and feels like a package holiday—is not treated as one. I welcome the inclusion of such holidays in the ATOL scheme, and the removal of the distinction between travel agents acting as agents for suppliers and as agents for consumers—a definition so unclear that even travel companies are confused about the distinction. I welcome also the proposal that customers be issued with a certificate to inform them that they are ATOL-protected, but as the legislation will not protect everyone, customers should be issued with a certificate that makes it clear when they are not protected, just as they are issued with one when they are protected.
The time frame for buying components of a holiday in order to qualify for protection is too short, as customers will be protected only if they buy the components within 24 hours. There are situations in which people book flights immediately to ensure that they reserve a seat but agree the rest of the package only later, when the travel agent has sorted out their itinerary. A package is still a package, and therefore the time limit should be longer than 24 hours. In 1997, 97% of all leisure flights were ATOL-protected; now it is less than 50%. This new legislation is timely, but let us use the opportunity to ensure that it protects the maximum number of people.
I look forward to further discussion on the Bill and hope that this time the Government will be open to amendments to improve it.
6.47 pm
Christopher Pincher (Tamworth) (Con): I am pleased to speak after the hon. Member for Bolton West (Julie Hilling), some of whose points I agree with, but I am also intrigued and somewhat amused by her introductory remarks and by those of the hon. Member for Garston and Halewood (Maria Eagle), who said that there was an elephant in the room and that the Bill has been in gestation for six years. Such gestation would bring tears to the eyes of the biggest elephant, and if the Opposition believe that this Bill is being rushed they would do well to remember that they had six years in which to bring a Bill forward and to make it an Act. Clearly, however, they had other things on their mind at the time.
Gavin Shuker: Will the hon. Gentleman give way?
Christopher Pincher: I am prepared to give way to the doughty defender of Luton South.
Gavin Shuker: I am grateful to the hon. Gentleman, but I fear that he is being slightly disingenuous in mixing up what Opposition Members have said. The Bill was clearly designed to be introduced in the next Session, but it has been brought forward in this Session, because there is no legislation—because many Bills from this Session are at the other end of the corridor, in the other place.
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Christopher Pincher: I am grateful for that intervention. The hon. Gentleman clearly intends to carry on for Luton South where Lorraine Chase left off; we have brought forward this Bill, and we have heard what the Secretary of State had to say.
I welcome the Bill, which is timely, because we all know that aviation is an industry that is as important to Britain as it is maligned. It is important because it employs 1 million people throughout the country, sustains a tourist industry employing 2.6 million people and generates about £9 billion of Treasury receipts every year, plus all the Treasury receipts that it generates by making our economy work more effectively and better.
There is no doubt in the minds of operators that they want better regulation. We want regulation that puts passengers first. We want regulation that ensures that security in the age of the terrorist with trainers is sharpened and honed. We want to ensure that transparency at the Department for Transport, at the CAA, among operators and at airlines is the best that it can be. However, we do not want regulation that loads unnecessary bureaucracy on to airport operators or that drives up costs that are of no benefit to the travelling public or to operators that simply want to make a fair buck by doing better and more efficient business.
Birmingham is the airport in my neck of the woods. It has one runway and carries 8.6 million people a year. It could double its capacity without changing its infrastructure in any way. It has a plan to extend its runway so that it can carry bigger planes with more passengers, more fuel and more baggage for longer distances, as far as the far east. That could extend its carriage capacity by up to 27 million passengers a year. At that point, it would begin to compete with airports such as Gatwick.
Bob Stewart (Beckenham) (Con): Presumably, the high-speed link from London will work in reverse and people will be able to get up to Birmingham and increase the airport’s capacity, making it a south-east England airport.
Christopher Pincher: My hon. Friend is trying to draw me into the trap of discussing High Speed 2. Birmingham airport carries only 40% of the passengers in its catchment area, so it could extend capacity without picking up passengers from the south-east or elsewhere.
The operators are concerned—the hon. Member for Bolton West touched on this—about changes that might allow the CAA to increase costs by a third on undesignated airports such as Birmingham. In designated airports such as Heathrow and Gatwick, those costs can easily be passed on to airlines. In undesignated airports, they cannot. That places a burden on those airports as they develop their plans of expansion and as they try to build the regional economy, such as that of the west midlands.
It is striking that Britain, with a population of 60 million, has only one formal hub airport, whereas Germany, with a population of more than 80 million, has five hub airports and plans to expand that to six. It seems that the Germans recognise the importance of aviation in building their regional economies. I hope that we will do the same. As we take the Bill through Parliament, as the Secretary of State and Ministers consider it and as it goes through the Public Bill Committee, we must ensure
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that the clauses do not disadvantage regional airports, which can be so important in building our regional economies.
I will make two more points, thanks to the injury time that has been granted to me. The first relates to environmental protections and reports. We all agree about the importance of demonstrating the effects that aviation can have on carbon emissions and about ensuring that proper environmental reporting is built into the Bill. I ask those on the Treasury Bench to ensure that the information that they wish airports to develop and deliver is not already available through the Department of Energy and Climate Change or reports that are produced by the Department for Transport. We do not want to overburden airports or demand that they duplicate information that is produced already.
My final point relates to the levy, which has already been touched on. Operators are worried that demanding 10% in penalty clauses because of events that are outside their control can place a significant burden on the airport. They say, and I agree with them, that when there are extreme weather conditions or when planes are grounded, the decision on safety is also made by the airlines. Should the airlines not, therefore, also be responsible for carrying some of the penalty clause that is imposed? If that is not appropriate or possible because airlines can choose whether to take slots and can go elsewhere—it is much more difficult for airports to move—is it not possible to reduce or abolish the penalty, so that we do not place undue burdens on our airports?
My hon. Friend the Member for Crawley (Henry Smith) said that we are a trading nation. Of course, we are an island trading nation. Aviation is therefore all the more important to our competitiveness in Europe. It provides the quickest and best connections to markets for our goods and services. I hope that when the Government further consider the Bill and when it goes through the Public Bill Committee, we will place front and centre the importance of balancing and regionalising our economy, and ensure that aviation plays a part in that. We must protect and promote our regional airports. I look forward to the Minister, in winding up, saying that we will.
6.56 pm
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Those of us who emphasise the importance of ensuring that the environmental consequences of aviation are at the heart of our policy are in no sense anti-aviation. We recognise the importance of the industry to the UK and to our economy but simply want to emphasise the fact that unchecked and uncontrolled, the growth in aviation will lead to increasing CO2 emissions in the UK and internationally. It is therefore important to encourage the kind of measures that will ensure that that growth can be controlled. That means encouraging more environmentally friendly forms of travel where possible and encouraging the industry to be environmentally efficient in the development of new aircraft and in the way that airports operate.
The way to achieve that direction of policy is to put in place measures that will encourage it. It is right to say that there should be tough emissions controls at European and international level to encourage more efficient aircraft. A lot has happened in that area—I recognise and welcome
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that. Without those measures in place, we will not get the changes that we want. That is why, as the shadow Secretary of State said, we need to put environmental and planning considerations in the Bill.
I made the point in my intervention on the hon. Member for Cambridge (Dr Huppert) that the Bill allows the CAA to put conditions in licences on a number of grounds, but only if they come within the specifications in clause 1. Clause 1 does not allow environmental and planning considerations to be taken into account, so the CAA will not be able to put conditions on such matters in the licences of particular airports. I hope that the Bill is improved in Committee so that it takes account of environmental and planning concerns over airport developments and aviation more generally.
Bob Stewart: Environmental considerations include noise pollution. As more and more aeroplanes circulate around London, the noise gets greater, even in my leafy constituency in Kent. I hope that environmental considerations will be taken into account and that the noise made by Rolls-Royce engines, for example, will be reduced even more.
Mark Lazarowicz: The hon. Gentleman makes an important point. As I understand it, the Bill does not specifically encourage such measures, but it could be changed to allow them. I hope that he will support such a change.
My second point is about the consumer interest. It can certainly be promoted by encouraging competition, which I welcome, but the Secretary of State referred to the possibility of passengers choosing between Heathrow, Gatwick and other airports. People in the south-east of England can do that, as they have four, five or six airports to choose from, but in other parts of the UK there is not that option. That is why it is important that the Bill should put in place not just competition measures but other provisions to recognise the consumer interest. If people have a long wait at an airport and are queuing for a plane, they want something to be done pretty quickly rather than having to wait until a new franchise or licence is granted some years hence. The Bill needs to be strengthened to provide for the consumer interest in that way as well.
I want to say something about the proposed sale of British Midland International to International Airlines Group. Like every MP from Scotland, I am very concerned about the effect of that sale not just on competition on routes between Scotland and Heathrow but, as my hon. Friend the Member for Garston and Halewood (Maria Eagle) said, on people’s ability to change flights at Heathrow and access all parts of Scotland. That will affect Scotland’s ability to attract tourism and business. The sale of BMI would also have consequences for its other routes—for example those to Brussels, Copenhagen, Zurich and so on, which are important for business and tourism in Scotland. Although that matter does not specifically fall within the terms of the Bill’s competition provisions, it certainly concerns us now that the future of BMI and its routes is up for grabs.
Another point that concerns many people in Scotland, and which my hon. Friend mentioned, is the cuts to the UK Border Agency. They are concerned that delays in entry to the UK could be made worse. At Edinburgh airport there are fairly regular complaints about the
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difficulties of passengers arriving late at night, who have to queue to get through the border formalities and even to get into the terminal. They have to wait behind locked doors for the appropriate staff to arrive. That is not a criticism of the staff, who of course do an excellent job, but they are already under pressure and if there are cuts to the UKBA there will no doubt be still further pressures on them and delays for passengers. It would certainly not be a good advert for people coming to Scotland or elsewhere in the UK if we had unnecessary delays because of cuts to border authority staff.
At a time when some Members propose the idea of independence for Scotland and the separation of Scotland and England, today’s debate emphasises the fact that there are many areas in which co-operation between England, Scotland and the rest of the UK is by far the best way of arranging things. I certainly cannot see how having a separate Scottish CAA, presumably with extra costs and extra demands on its resources, would improve airports and airlines in Scotland.
Earlier we had the somewhat amusing spectacle of Scottish National party Members, who I am sorry are not in the Chamber at the moment, demanding that the UK Government intervene to ensure that there is proper competition between the different airlines and other modes of transport in England and Scotland. Surely it cannot escape most people’s notice that without a UK Government to operate in such a way, there would be no reason for such competition to be encouraged. In the absence of SNP Members, I will not pursue that point. Clearly we may be able to do so at a later stage.
My final point is that the airline industry is important to many of our constituents and requires people to be confident in its safety. That was why I was glad to be able to intervene on the hon. Member for Congleton (Fiona Bruce) to mention concerns about extra pressure on pilots due to the proposed changes to regulations. Once again, I hope that the Government will ensure that no such changes are made, as they would jeopardise both the perception and, I fear, the reality of passenger safety. I am glad that there has so far been unanimity throughout the House about that, and I hope that the Minister will say something about it in his closing remarks as it is concerning people who work in the industry and passengers.
7.5 pm
Iain Stewart (Milton Keynes South) (Con): I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
I welcome the chance to contribute to the debate. As a member of the Transport Committee, I was involved in the pre-legislative scrutiny of the Bill. I warmly welcome it and agree with the overall objective of overhauling and modernising the system of economic regulation, which is too rigid and in need of reform. Other Members have spoken about that in detail, and I will not repeat the points that have been made, but I particularly welcome the fact that the interests of passengers will be the top priority of the CAA. It is very important to stress that point.
I wish to focus my comments on part 2 of the Bill, and specifically the clauses that will give the CAA the
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power to require all airports to publish information for the benefit of passengers. I strongly support that and believe that it is vital, in the interests of competition, that the correct information is easily available to passengers. As well as weighing up the performance of airlines on the convenience of flight times and on price, they should be able to weigh up the performance of airports when they make their decision about which mode of transport to choose and which airport to use.
I fully appreciate that not all air passengers have freedom of choice about which airport to use, because their geographic location may restrict them to one particular airport or their destination may be served by only one realistically close airport. However, a large number of passengers have a choice of which airport they go to.
I offer the example of Milton Keynes to illustrate that point. It does not have a local airport as such, but if I choose to visit family in Scotland, I can either choose to drive up, get the train or fly from four or five airports that are within easy travelling distance. I can use Birmingham, Luton, Heathrow or East Midlands, and even London City is not a huge travelling time away. I have used all those airports to fly up to Scotland, and their performance has varied enormously. I have had some very good experiences and some fairly hellish ones, and I found out about the airports’ performance by trial and error.
I will not name and shame the airport that was poor —[Hon. Members: “Go on!”] I shall resist the temptation, but let us just say that there was a song about it a few years ago. I do not know whether the bad experience I had was just on an off-day for the airport or whether it was part of a longer-term performance issue. Proper information should be available about the performance of an airport over time—for instance the time it takes to get through security and the time it takes passengers flying in to get through passport control. Scottish National party Members are not in their place, but I very much hope that flights from Scotland will not require passport control, as they wish. There should also be information on other issues, such as airport charges that contribute to the cost of a ticket and charges affecting passengers using the airport. Some airports levy a charge on those simply dropping travellers off at the front gate, and some charge for the little plastic bag we must put our liquids in, whereas others give them out for free. Information on such things is valuable for passengers when they are evaluating which airport to use.
Other information that should be included are airports’ records on dealing with things going wrong, be that bad weather or strikes. Airports perform differently, and passengers booking some time in advance wish for some reassurance that their interests will be looked after if things go wrong.
The requirement to publish environmental information is important, and I am glad to see it in the Bill. I am open minded about whether there should be a specific duty on environmental performance, but it is important that information on environmental performance is published so that people can choose to weigh it up when deciding how they will travel and from which airport. Transparency is the best guarantor of the objectives we want, and it is incredibly healthy to promote competition.
I am aware that different organisations have responsibility for delivering the different aspects I have described.
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Some aspects are the responsibility of the airports and some are the responsibility of the airlines. Different Government Departments have different duties: immigration and passport control is the duty not of the Department for Transport but of the Home Office. Due weight should be given in the published information to which part of the airline industry is responsible for providing the different services. I support the Transport Committee recommendations on those points.
As valuable as that information is, it should not be over-bureaucratic and it should not impose too great a burden on airlines or airports. I would make one suggestion: the new aviation consumer advocate panel, the role and remit of which are a little unclear at the minute, could decide what information was relevant to the interests of the passenger and what imposed too much bureaucracy and cost on airlines and airports.
I shall share one further concern: the balance of needs between current and future passengers. For all the reasons I have explained, it is important that information is available to passengers. However, it is clearly in the interests of passengers in the long term for an airport to invest heavily in new infrastructure, even if there is a short-term cost in disruption. Any information that is published should be value added in some way to show performance over a long period, not just as a snapshot.
The Bill is a good one and I welcome it. I hope the Government reflect on my suggestions as the Bill progresses through the House, but I am happy today to give it my full support.
7.13 pm
Seema Malhotra (Feltham and Heston) (Lab/Co-op): I should like to begin by thanking right hon. and hon. Members on both sides of the House for their warm welcome since my election in December. Little can prepare people for stepping into the Chamber for the first time, and for the overwhelming sense of history that has unfolded on these green Benches.
I am proud to be able to represent the area where I grew up. Before moving to Bedfont, we lived above my parents’ shop in Osterley—a community shop that sold school uniforms along with imported crafts and jewellery from India. I attended Heston infants and junior school, where my mother was a teacher for nearly 20 years. The school has transformed now, being one of the 4,000 schools built or refurbished by Labour since 1997—investment that is still making a difference to the education of young people across the country.
I am the first member of my family to be active in politics. I remember taking part in my school elections at Heston junior school in 1983, when, as a 10-year-old, I pretended to be Michael Foot and argued for better pensions for the elderly. It would not surprise the House—with children often voting as their parents might—that in 1983, Labour came second in our school elections. However, we remained ambitious for our future.
My predecessor, Alan Keen, is a great loss to this House and to my constituency, where prior to becoming an MP he served as a councillor in Hounslow West. He was one of the first MPs I ever knew. The Guardian described him as “charming, amiable” and “kindly”. His passion and forte was sport, music, arts and leisure. The House will remember him as a long-standing member of the Select Committee on Culture, Media and Sport and chairman of the all-party parliamentary group on football.