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Lord Clinton-Davis: I support my noble friend Lord Brett. I speak as President of the British Air Line Pilots Association and as a former aviation Minister. Frankly, as aviation Minister, I would not have allowed--if I were overruled I would resign--a situation where safety was not mentioned as a primordial position. Our members--I speak here for the pilots of the association--feel that safety is a paramount consideration. This amendment would write it into the Bill and it is important that it should be written in. There should be no room for doubt about the issue. That is the point made by my noble friend Lord Brett.

Safety should not be a controversial matter. If a civilised discussion were to take place between the Minister and ourselves, I do not believe there would be room for doubt. Unfortunately, it is not that simple. We are judged by what is in the Bill; and what is in the Bill is inadequate. Therefore, we are trying to insert some wording into the legislation. It is possible that what we have suggested is not correct and the Minister may wish to change that wording in some way. But we could have a civilised debate about safety.

I do not believe that there is anything more important to the travelling public, to our members--the pilots--or for that matter to those who are involved in NATS than safety. Until the issue of safety became paramount at the Paddington inquiry, the outcome of which I do not wish to anticipate, it had not been mentioned. Why not? Safety is just as important in the air as it is on the railways.

I speak as a former holder of the office that the Minister now occupies. I do not believe that anything we have suggested in this amendment would in any way affect or prejudice the Government. Why should we be the only country that does not recognise safety in the way explained by the noble Lord? Why should we be making an exception internationally to our duties, which the Minister surely recognises as such?

I believe that it was the Minister's job to consult widely with the airline pilots on this issue, as was the case with NATS. I have no doubt that the Minister will say that he did talk to them; indeed, he did. But there was no meeting of minds. If there had been, the noble Lord who tabled this amendment would not have felt

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obliged to do so on behalf of those whom he once represented. Similarly, I would not feel obliged to do so on behalf of the pilots.

I suggest that we may perhaps have missed the point. In that case, the Minister will put us right in that respect. However, if we have not missed the point--I submit that we have not--then I and the other three noble Lords who have attached their names to this amendment will be happy to discuss the matter further with the Minister. It is possible that we have not explored all the possibilities. But if that is right, I believe it is incumbent upon the Minister to ensure that he tells us in emphatic terms that we are right to put safety first and that he has an alternative that he can put forward tonight. There is still room for compromise: compromise is important as far as we are concerned.

Finally, as Minister responsible for aviation I would not at any time have enabled discussion to be closed down on the issue of safety. I made it an important matter when I held office, and I believe that I was right to do so. It is also right for the noble Lord who currently holds this important office to do so.

4.45 p.m.

Lord Lea of Crondall: I, too, support this series of amendments. However, I acknowledge that there is a certain awkwardness in debating safety because some people do not perhaps give it as much priority as others. That is a very unsatisfactory way of approaching the matter. Nevertheless, there are some important areas where clarification is needed before such safety concerns are satisfied.

We are told that basically there is no change in the role of the CAA as safety regulator, but it seems to be a matter of "all change" as regards many other aspects of air traffic control. As my noble friend Lord Brett said, there should be no scintilla of suspicion or perception that there is any conflict of interest between the commercial interests of the PPP licensee and the CAA as the safety regulator. Here one may speculate about who the PPP licensee might be. We have received letters from the Airline Consortium, and that is food for thought. It is a consortium of British airlines. What would their interest be and their perception of it?

My main question for my noble friend the Minister is as follows. How is safety to be factored into the financial bench-marks? During the past few days we have seen a remarkable exchange of documents in the public arena between the CAA and the NATS about the next few years. As regards the CAA's twin responsibilities of safety regulator and economic regulator, it is interesting to note that "never the twain shall meet". There is a document that has posed some financial targets upon which NATS was asked to comment, such as, cost reductions of up to 36 per cent following the sell off. One may wonder about the standing of the CAA at the moment when it is consulting on a five-year plan, as it were. However, perhaps my noble friend the Minister will comment on the position.

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I do not wish to paraphrase the NATS reply, but the CAA document does not seem to be couched in terms that show a full understanding of the cost factors in the safety culture of NATS. There seems to be a lack of joined-up thinking in the CAA, so to speak. That prompts me to ask: is it all change or no change at all in the CAA in this regard? When this Bill becomes an Act it will certainly change the commercial context in which NATS operates; indeed, that will be the subject of some of our later discussions dealing with the role of the Crown directors, and so on. In the main, we should like clarification on whether there will be some reconciliation of the role of the safety regulator and commercial freedom and the new, tougher arm's-length relationship with the CAA as the economic regulator.

Lord Hoyle: I rise to express my support for my noble friends who have spoken in favour of Amendments Nos. 7 and 15. We say that safety is all important; indeed, it is paramount. The reason we want safety to be paramount is that once you bring in the private shareholders of a PPP there must be a return. There is a difference in the privatisation that is taking place in relation to NATS as against the privatisation of, say, the airlines or of the British Airports Authority. That difference is the fact that the only service being offered is one of safety. That is why we are concerned that the issue of safety is not on the face of the Bill. I hope that my noble friend the Minister will agree to consider the amendments that have been tabled in this respect to ascertain whether he can include the issue of safety in the legislation.

I turn to the point raised by my noble friend Lord Lea, who mentioned not just the press reports but the response of NATS to the second consultation paper. I hope that my noble friend the Minister will address those points. NATS sought savings of up to 17.5 per cent. However, the Economic Regulation Group seeks far greater savings of 21 to 35 per cent over a five-year period.

We have been told that under a PPP there will be greater investment. However, the ERG seeks investment that is 16 to 29 per cent lower than that of NATS. Where will the savings come from? Will they be achieved at the expense of safety? Everyone knows that in this computer age efficiencies can be achieved. However, air traffic is increasing. Will the savings be achieved by cutting the number of controllers? That question is central to the whole matter and to the doubts that some of us feel about the partial privatisation.

As my noble friend Lord Brett has said, we appreciate that safety is a priority, but are we talking now about minimum or maximum safety standards? The present high safety standards result from the actions of controllers, pilots and engineers in reporting incidents that have occurred. Will the staff of a partially privatised company feel as free to report those incidents, or will there be a tendency to cover them up as the company's reputation may be at stake? What guarantee is there that maximum safety standards will be maintained?

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NATS and ERG already have different opinions as regards what can be achieved in this regard. Will there be a conflict in this regard between the new company and the regulator or between it and the airlines? Where do the Government stand in relation to safety? I hope that my noble friend the Minister will give us some assurances on this matter. What we do not want to see is a situation developing similar to that at Railtrack. I hope that my noble friend will accept that not only should safety be paramount but that it should be included on the face of the Bill.

Lord Brabazon of Tara: I am grateful to the noble Baroness for explaining her amendment and to the noble Lord, Lord Brett, and his noble friends for explaining theirs. Safety is absolutely the most important thing that National Air Traffic Services provides. I agree with those who have said that up to now--I hope that this will be the case in the future--NATS has had an outstanding culture of safety in its operations. Nothing must be done which could adversely affect that. Its business is to provide safety.

Up to now I have not been concerned that the part privatisation of NATS would have an adverse effect on safety because, as I say, the business of NATS is to provide safety and it has a safety culture. At Second Reading I said that I welcomed the aspect of the Bill which separates NATS from the CAA. At present the CAA is the owner and the regulator of NATS. It must be desirable to separate the regulator and the owner.

I hear what has been said about the Safety Regulation Group in the CAA. However, like the noble Lords, Lord Lea of Crondall and Lord Hoyle, I was extremely concerned and surprised to note the comments of the Economic Regulation Group to National Air Traffic Services. I shall return to that matter on a later amendment. I thought that the whole point of the measure we are discussing is to have increased investment in NATS and not a proposed reduction in investment.

I also thought that, as aviation continues to grow by 6 or 7 per cent a year, we would need more controllers rather than fewer. Therefore, I was surprised at the document of the Economic Regulation Group. As I say, I shall return to that issue which gives me cause for concern.

I hope that the Minister can expand on a detail of the Bill. Clause 1(2) states:

    "These interests are the only ones to be considered under subsection (1)(a)--

    (a) interests regarding safety".

I hope that the Minister will explain where that measure fits into the debate. The same wording is repeated in Clause 2(2) with regard to the Civil Aviation Authority.

I shall listen with great interest to what the Minister has to say in response to the points made by so many of his noble friends.

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5 p.m.

Lord Macdonald of Tradeston: The amendments in this group are all related in some way to safety, a subject to which we have given a great deal of thought in drafting Part I of the Bill. In so doing we have listened to a wide range of views from interested parties--I have been involved in discussion with the relevant trade unions for over six months now--not least the views of noble Lords, as expressed at Second Reading and today.

I say straightaway that we are convinced that our proposals for a PPP will preserve and enhance safety. We have looked closely at these amendments. I believe that most of them are not necessary, for reasons which I shall explain. However, there are a number of amendments where I believe that at least the underlying principles are worthy of further thought. As I shall indicate in more detail in a moment, I shall be happy to take these amendments away and consider them.

I trust that it is clear that the intention underlying the proposed Amendment No. 35 is an admirable one. We all take safety extremely seriously. I make no apology for repeating that safety must be the first and foremost consideration. NATS has rightly made the point that its sole business is safety. There can be no question of allowing that to be compromised.

This amendment is not, however, necessary. Clause 8 already requires holders of licences to secure that they provide, develop and maintain a safe system for the provision of authorised air traffic services in their licensed areas. That duty is not qualified and there are no "ifs" or "buts". A safe system is defined, for purposes of clarity, as one which complies with the pre-existing safety regime; namely, the requirements of the Air Navigation Order. Those requirements include obtaining a range of safety approvals from the CAA covering the service provider's systems, practices and personnel. A safe system is, therefore, a licensed one.

Amendments Nos. 36, 48, 51, 54 and 55 all deal with what should happen in the event that a licence holder fails to comply with its statutory duty to provide a safe service. The Bill contains a comprehensive enforcement regime in respect of that statutory duty which the CAA can apply through a series of provisional and final orders. If necessary--that is, if the breach is serious enough to make it inappropriate for the company to continue to hold its licence--application may be made to the court for an air traffic administration order. Such an order will remove the licence holder's activities from the hands of those who have allowed the breach to occur.

These are important procedures and perhaps it would be helpful if at this point I explained their application in some detail.

If a licence condition or Clause 8 duty is contravened or is likely to be contravened, Clause 20 makes clear that the CAA must issue an enforcement order designed to secure compliance by the licence holder. If the CAA is not satisfied that a contravention has taken place, but it still appears to it that a licence holder is contravening, or likely to contravene a

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Clause 8 duty, the CAA must, if it thinks a provisional order is needed to prevent loss or damage to a third party, issue a provisional order containing the provision it believes is needed to secure compliance with the Clause 8 duty or licence condition. The only exceptions to this obligation on the CAA to take enforcement action are where its statutory duty precludes it from doing so; where it is more appropriate to use its powers under competition legislation; where the licence holder is already taking appropriate steps to remedy the situation; or where the contravention is trivial or will not affect anyone. None of these exceptions is likely to apply where there is a serious safety breach.

All breaches or possible breaches of licence conditions or Clause 8 duties are subject to enforcement, regardless of whether or not they are a result of the financial state of the licence company. I hope that the noble Baroness, Lady Thomas, will agree that this process of enforcement provides an appropriate mechanism by which to enforce less serious breaches, which should be promptly and effectively corrected by the licence company. These procedures also avoid the need to use a sledgehammer to crack a nut for what may only be a technical breach. However, it is clearly important that any breach requiring an enforcement order must be complied with promptly and effectively. The consequences, therefore, of a failure to comply with an enforcement order would be extremely serious for a licence company, as is made clear by Clause 28.

If the licence company fails to comply with an enforcement order, the Secretary of State and the CAA may petition for an air traffic administration order to be made under Clause 28 to transfer control of the licence company to an administrator nominated by the Secretary of State and the CAA. To the licence holder that would effectively mean loss of control of the company and its assets without any guarantee of reimbursement of its investment.

I have just explained the enforcement order process. However, I can understand that Members of the Committee will say that the enforcement process takes time, allows for representation and appeal by the licence holder, and therefore may not be suitable where the contravention or breach is of such significance that it is clearly inappropriate for the licence holder to continue to hold that licence. In such cases it is clear there would be a need for the CAA and the Secretary of State to be able to move swiftly to take control away from the licence company.

Such a fast-track provision for serious breaches is, as I have already mentioned, provided in the air traffic administration provisions, and particularly in Clause 28, which allows the Secretary of State and the CAA to petition for an air traffic administration order where it is clearly inappropriate for the company to continue to hold a licence because there has been, or is likely to be, a serious contravention by the licence company of a Clause 8 duty--it should be noted that there is not even a requirement for a breach to have occurred, just that it is likely--or the company is insolvent; or the

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licence company is in breach of an enforcement order. In most cases, the provisions of the licence would allow for revocation of the licence at the same time.

The consequences of an air traffic administration order being made are, as I have previously mentioned, to transfer control and management of the air traffic control assets and business to an air traffic administrator nominated by the CAA and the Secretary of State. In this way the Secretary of State and the CAA will be able to ensure that safe services may be maintained at all times.

I apologise for that somewhat lengthy explanation of the control and enforcement mechanisms relating to safety and the licence. Some Members of the Committees may already be familiar with them, but I felt that it was important to go through them in some detail again in order to explain why we consider these amendments would not add to the safety regime.

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