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Lord Williams of Elvel: I am sorry to intervene, but my noble friend earlier stated that security and safety was paramount. Later, in response to a challenge from the noble Lord, Lord Smith, he said that security was paramount subject to other issues. If the Minister can assure us that "paramount" means "paramount" as understood in the English language, I should be happier with the Government's proposal.

Lord Macdonald of Tradeston: I have tried on a number of occasions to make it clear that I do indeed mean that safety is paramount; that it comes before any other priorities which would face a commercial company of this kind.

I do not believe that the trust or NavCanada model would provide the platform to bring in a committed world-class strategic partner to inject the kind of expertise into NATS' operational skills that we require. The noble Lord, Lord Smith, stated that it had a fine record of management. It has an excellent record

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of management on the safety side and that is a tribute to the employees. Unfortunately, I do not believe that we have the same record of success as regards the control of major projects such as Swanwick and the new Scottish centre. I believe that we could have done much better with the kind of private sector expertise which would be introduced under our PPP proposal.

We do not believe that the NavCanada model would bring shareholder scrutiny to bear on NATS' operational efficiency or business development because it has no equity, only debt. Without shareholders who would have put their own money at risk, the incentive would be lacking and all costs, irrespective of the level of inefficiency that caused them to be incurred, would be passed on to users in the form of higher charges than would otherwise be the case.

A final area of doubt relates to the ability of the trust model to compete effectively in the liberalised world market for air traffic control which I believe will soon confront us. Therefore, I believe that the new clause and its associated amendments are unnecessary and I invite the noble Baroness to withdraw her amendment.

The purpose of new Clause 69 and its associated amendments would be to require Parliament to pass further secondary legislation before any transfer schemes could be put into effect. It would also require the Secretary of State to produce a progress report on the development of NATS facilities before any secondary legislation could be considered. The new clause and its associated amendments would result in a time-consuming and cumbersome mechanism. The proposed schemes would be subject to consultation with those concerned, and would be designed to achieve the complete separation of regulation from service provision. Parliamentary approval to each scheme is entirely unprecedented and could jeopardise the PPP timetable.

The requirement for the Secretary of State to produce a report on the development of facilities connected with National Air Traffic Services is also entirely unnecessary. I assume that that has been inserted in order to place on the face of the legislation some commitment to the Prestwick centre. That commitment will of course be contained in the strategic partnership agreement and it will also be a licence condition. In addition, the Government accepted an amendment in another place which will reinforce these commitments on the face of the legislation. That amendment is now Clause 51(3).

I have dealt at length with a number of proposals for new clauses and for other amendments to the Bill. For the reasons that I have given, I urge your Lordships to reject the amendments proposed.

Baroness Thomas of Walliswood: The noble has Lord made a spirited defence of his proposals, or, perhaps it is more correct to say, an attack on my proposals. As a result of listening to him, I am more and more convinced of the truth of what the noble Lord, Lord Brett, said. He made the point that the motivation for this whole scheme seems to have

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transmogrified from a simple effort to evade the limits of the public sector borrowing requirement to become a kind of banner-carrying imperialist company which will march around the air traffic control systems, not only of Europe but of the entire world, and bring in revenue for shareholders and the Government alike.

The Minister then challenged us to imagine what the process of air traffic control would be and how we would arrive at the smaller number of air traffic centres that are supposed to be forecast for the future. I am unable to do that. If the noble Lord can do so, he should have explained it to us. I believe that with the resources at his command he is in a better position to make a forecast on such a matter than are we on these Benches. However, I know that the first step in achieving any kind of rationalisation of air traffic control on the continent of Europe has hardly been taken. We have hardly begun to co-operate with the existing air traffic organisations. That surely is the first desirable step in enabling us to make a better fist of air traffic control in Europe.

After the ability to co-operate has been established, matters will be decided not only by this country but by air traffic control organisations and governments in every country. I invite Members of the Committee to consider the likelihood of, let us say, the French allowing a British company to take over air traffic control in la belle France. The French are very happy to come and buy our water, and our post-privatisation process allows them--one might say rightly or wrongly, according to one's point of view--to do that, but I doubt that such an arrangement will be reciprocal.

I shall not go through--

Lord Clinton-Davis: Before the noble Baroness sits down, we have heard from the Minister only that he has had discussions with the Dutch. That is all. It does not mean to say that the Dutch will do precisely what the Government propose--not at all. Therefore, apart from discussions which the Minister has had, what kind of evidence is there that any other system is available anywhere in the world?

Baroness Thomas of Walliswood: I am grateful for that interruption from the noble Lord, Lord Clinton-Davis, who speaks with all the experience of years in government and on your Lordships' Benches. In the context of what he says, it is perhaps worth pointing out once again that the United States, arguably the country most devoted to the private competitive system--capitalism--is the country in which every single air movement, made by no matter whom and by whatever size of aeroplane on whatever business, whether commercial or otherwise, is regulated by a federal organisation funded entirely from taxation--and not as is NATS, by the charges raised from the operators of airlines. Therefore, I believe that the noble Lord's point is well made and I thank him for interrupting me for that purpose.

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I believe that no useful purpose will be served by taking this discussion further. We shall retire this evening to consider our next best action. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Brabazon of Tara moved Amendment No. 20:

    Page 4, line 12, at end insert ("and the legal and beneficial ownership of a majority of shares carrying voting rights in such a company, and the control of such a company, is vested in a person who is a British citizen.

( ) For the purposes of this section references to "control" shall be interpreted in accordance with section 840 of the Income and Corporation Taxes Act 1988 and the expression "controlled" shall be construed accordingly.").

The noble Lord said: In moving Amendment No. 20, I should like to speak also to Amendments Nos. 21, 79 to 84, 91, and 105 to 107. The main amendment in this group, if I may express it that way, is Amendment No. 84. I did not want to disappoint the Committee, and Amendment No. 84 proposes a full-scale privatisation of National Air Traffic Services with an offer for sale and all that goes with it.

I was fascinated by the debate on the previous amendment. However, as I believe that the noble Lord, Lord Hoyle, said, our preferred option is a full-scale privatisation. As I said, I did not want to disappoint your Lordships by not moving the amendment or sticking to my guns. Also grouped with that main amendment are a number of other, perhaps more detailed, amendments to the Government's proposals, particularly with regard to the issues of national security, foreign ownership, the golden share and so on. I have grouped them together in order to save us a little time.

As I said at Second Reading, we believe that the partial privatisation, or public/private partnership, or however the Government like to describe it, proposed in the Bill is an under-valued and convoluted compromise. Instead of a simple flotation of the company with a golden share to provide for permanent UK control, the Government public/private partnership is, as I say, a somewhat convoluted compromise. They plan to sell a 46 per cent interest to a trade bidder--as has been said, possibly a foreign bidder--who will be given control of the business at what we believe to be a knock-down price. Foreign control could have serious national security implications.

We have heard mentioned a number of names as possibilities for the strategic partner, including the Airline Group and some companies which--again, this gives me something of a problem--appear to be large-scale suppliers of equipment to National Air Traffic Services. Therefore, one could end up with a situation where the strategic partner is one of the main suppliers to National Air Traffic Services. Presumably that would have competition implications for whomever NATS buys its equipment from in the future.

There is also the question of giving 5 per cent of the shares to the staff. I do not know how that will work. As the company will not be quoted, the staff will not

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be able to buy or sell their shares and they will not feel that they have any ownership of them. The artificial voting arrangements to protect the controlling minority stake are bound to be problematic, because the three-way split will inevitably lead to confusion over who is in day-to-day control.

The Government are underselling NATS. The explanatory notes say that they will sell it off for just £15 million, against a valuation of around £800 million. In Amendment No. 84 we propose a straightforward flotation, with a golden share to protect the Government's position. That will have the benefit of giving employees a market for their shares and therefore real value. We want the shares to be sold at the best price reasonably obtainable, not for the paltry sum that the Government envisage. We also want share ownership to be as wide as possible, not the exclusive partnership that the Government have opted for.

We also propose a delay in the sale, as we believe that it would be much better to wait until Swanwick is up and running. I think that 2002 is the latest estimate. The Government would then have a much better idea of the value of the company.

Above all, in the interests of national security, we want control of the company to remain firmly in British hands.

6.30 p.m.

Lord Clinton-Davis: Amendment No. 107 says:

    "Nothing arising from the European Communities Act 1972 shall limit the powers of the Secretary of State to give directions under this section".

Has the noble Lord consulted the European Union about that? Does he believe that he can advance that amendment?

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