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Lord Brett: I thank my noble friend for giving way. Could I make the point that was made by NATS in its response to ERG--that is, that NATS is not like any other utility? Therefore, the fact that ERG is using formulae that produce very considerable economies in both operational and capital costs and, at the same time, the Government are giving this Committee and another place well-meaning assurances that safety is absolutely paramount and that there is no risk whatever, creates a problem given that the advice is public from an ERG which is part of the same Civil Aviation Authority that will regulate safety. At the end of the day, when the Minister makes his decision, can he assure the Committee that there will be no "RPI minus" formula which will put safety at risk?

Lord Bradshaw: Perhaps I may add to that point. I accept the Minister's assurances, but does the legislation ensure that when it is time to reset the formula a future Secretary of State will still be in a position to intervene if the view is that setting RPI minus X at a large figure may actually so prejudice the operation or the capital investment in air traffic control that safety may be prejudiced? In a number of other regulated utilities we have seen the screws now being turned very tightly in the interests of economy. One is concerned about quality in several other utilities.

Lord Macdonald of Tradeston: I can give the Committee a complete assurance that the value which the Secretary of State will set on the factor X will be such as to enable NATS to preserve existing safety standards in full. We shall not contemplate anything else. The final decision is not for the Economic Regulation Group; it is for the Secretary of State.

Lord Hoyle: I thank my noble friend for giving way. He made the point that, as NATS is still in the public sector, perhaps it might not take the management decisions that might be taken in the private sector. That alarms me greatly. In the public sector, safety is paramount and all decisions are taken in relation to safety. Will my noble friend comment on NATS' response to the ERG? In paragraph 1.4 of the response, NATS states:

But it goes on to say:

    "The cuts in cost and investment currently being proposed by ERG have little foundation in the reality of NATS' business and licence obligations, and so pose very serious risks to the delivery of services to NATS' customers. NATS could neither accept nor implement these proposals".

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I hope that my noble friend is not suggesting that once NATS becomes a PPP, the cuts will then be implemented.

Lord Macdonald of Tradeston: Not for a moment. I hope that I have been assuring Members of the Committee that the final decision on the value of the X factor and the cost equation will be taken by Ministers. I can assure Members of the Committee yet again that we shall do nothing to compromise or undermine NATS' ability to provide safe air traffic control services for all users. Existing standards will be entrenched in legislation and regulation.

What one is seeing here are exchanges inside a consultative process which is an exploratory one. We believe that Clause 8(4) in no way allows degradation of NATS' internal safety standards. NATS is currently only required to meet safety standards established by the Air Navigation Order. Internal safety standards are a matter for its management and, after the PPP, for its owners as well. One of the owners will be the Government. Although NATS' current standards are above mandatory levels, any change from those standards--I say this in reply to a number of Members of the Committee--would require approval from the CAA as the safety regulator.

I am conscious of the time that I have already taken up. Therefore, I shall not go into the eight safety locks with which I know some Members of the Committee are familiar; neither shall I go into the enhancements which the Government have proposed to include to try to give extra assurance to those concerned that safety remains paramount. Having said that, the strength of view on these matters is clear.

As I indicated earlier, there is a case for additional reassurance on the face of the Bill about a leading role for safety to reflect the genuine concerns of people in the industry, air travellers and Members of the Committee present today. Therefore, I am happy to offer to consider that question with a view to seeing whether suitable amendments can be made at a later stage. I should also be happy to have a meeting with the noble Baroness and indeed with other noble Lords to discuss these matters if that would be helpful. With that commitment, I respectfully ask the noble Baroness to withdraw the amendment.

Baroness Thomas of Walliswood: We have been fortunate to hear some splendid speeches from Members of the Committee opposite who have enormous experience in this field. I feel rather a tiro by comparison. The effect of our efforts has been to stimulate an interesting response from the Minister. Perhaps I may be "picky" for just a moment. We have tabled Amendment No. 108--the amendment to Schedule 9--which the noble Lord dismissed rather airily, because we consider that information regarding dangerous incidents, or whatever it may be--I refer to matters which affect safety--should be public. The public have a right to know what is going on in the field of safety. That was our motivation for tabling the amendment. However, with the final words of the

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Minister still ringing in my ears, with his offer to consider how the concerns expressed from all around the Committee can be satisfied, and with his very kind offer to meet those who have spoken today and no doubt other people who are interested in this matter, and bearing in mind that it was a very long answer which was not immediately understandable to my non-legal ear, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Lord Brett had given notice of his intention to move Amendment No. 7:

    Page 1, line 25, at end insert--

("( ) The effects on the safety of aircraft by the application of subsections (1)(b), (c) and (d) must at all times take precedence over all other considerations.").

The noble Lord said: I appreciate the length of the Minister's response and the commitment given by him. I, too, should like to read Hansard with some care. It was a long and somewhat interrupted response, but I am grateful to him for his offer of a further meeting.

[Amendment No. 7 not moved.]

The Deputy Chairman of Committees (Lord Strabolgi): I have to point out that if Amendment No. 8 is agreed to, I cannot call Amendment No. 9.

[Amendments Nos. 8 to 11 not moved.]

Clause 1 agreed to.

Clause 2 [CAA's general duty]:

[Amendments Nos. 12 to 16 not moved.]

Clause 2 agreed to.

Clause 3 [Restrictions on providing services]:

Lord Brabazon of Tara moved Amendment No. 17:

    Page 2, line 41, after ("provides") insert ("en route").

The noble Lord said: In moving Amendment No. 17, I should like to speak also to Amendment No. 18 and to the Question whether Clause 4 shall stand part of the Bill. I shall be extremely brief on this group of amendments. Clause 3 brings all air traffic services together, whether or not en route within the licensing system, Clause 4 allows the Secretary of State to grant exemptions. This set of amendments takes air traffic services that are not en route air traffic services outside the licensing system. The Explanatory Notes to the Bill indicate that the Government propose to grant exemptions to providers of services that are not en route air traffic services. If that is the case, and exemptions are given, it is difficult to see why they have been brought within the system in the first place. Who is to be subject to regulation is a fundamental issue and should be dealt with in appropriate detail in primary legislation. It is not a matter that should be left entirely to the discretion of the Secretary of State. I beg to move.

5.30 p.m.

Lord Macdonald of Tradeston: The Government yield to no one in their desire to keep bureaucracy to a minimum. I can assure noble Lords that it is our intention to license only those air traffic services which are provided on a monopoly basis. Where such

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services are provided by contestable commercial contract--as they are, for example, at airports--there should be no need for licensing. For that reason, we intend that only en route services should be licensed, but it is not, unfortunately, a simple matter of inserting the words "en route" into the provisions of the Bill, as might be suggested by Amendments Nos. 17 and 18. Perhaps I may explain why.

There are two reasons why the Bill does not confine itself to the provision of en route air traffic services. The first of them is driven by considerations of safety and operational necessity. Everyone in the aviation sector knows what "en route" means: it is the portion of a flight which lies between the end of the take off and initial climb phase to the beginning of the approach and landing phase. However, that is only a partial description rather than a definition. It does not tell us where the take off and initial climb end or where the approach begins, nor can it in any meaningful way because the point at which "initial climb" ends and "en route" begins, and the point at which "en route" ends and "approach" begins are not fixed. They vary from airport to airport and, at any one airport, they can vary on a daily or even on an aircraft to aircraft basis, depending on factors such as traffic mix and weather conditions.

For good reasons of safety, this flexibility is absolutely essential operationally, but it does lead us to the approach which is adopted in the Bill; namely, a wide power to issue licences with scope for an exemption to cover services which do not need the economic rigour of a licensing regime.

Amendment No. 18 would mean that only the provision of en route air traffic services could be licensed and, if I understand correctly the intentions of the noble Lord, Lord Brabazon of Tara, that no provision for exemption would be needed. That brings me to the second reason why we have settled for a wide definition of air traffic services in Clause 97, along with the power to make exemptions.

We appreciate the concern which may exist over the extent of licensing and, as I have said, it is our intention to license only those services which are provided on a monopoly basis. However, we must recognise that the nature of the air traffic services market may change. Over time, it is possible that the boundary we propose--the current one--could be rolled back somewhat if a further element of air traffic service provision became contestable. Equally, if a component emerged which called for economic regulation, then again the scope and nature of licensing and exemption could need to change in the long term.

Members of the Committee do not need to be reminded that air traffic services provision is a dynamic activity. The Government believe that the regulatory framework which this Bill seeks to establish must recognise that dynamism and be capable of responding to it. As the Bill is drafted it provides the

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necessary flexibility and I ask noble Lords to preserve it. I hope that the noble Lord will not pursue his amendment.

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