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Lord Brabazon of Tara: My Lords, I am grateful to the noble Lord for the detailed explanation he has given for not wishing to accept the amendments. I am not entirely convinced that it would not be better to have parliamentary approval in some form or another, not necessarily perhaps by affirmative resolution procedure, as I proposed in one of the amendments. I am also grateful for his comments on consultation and on directions to individual licence holders. Having said that, I shall obviously need to read with care in Hansard what the noble Lord said. In the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Macdonald of Tradeston moved Amendments Nos. 3 to 6:

    Page 1, line 21, leave out from beginning to ("interests") in line 24 and insert ("The only interests to be considered under subsection (1)(a) are").

    Page 2, line 3, leave out from ("must") to ("as") in line 4 and insert ("apply them in the manner he thinks is reasonable having regard to them").

    Page 2, line 5, at end insert--

("(4A) The Secretary of State must exercise his functions under this Chapter so as to impose on licence holders the minimum restrictions which are consistent with the exercise of those functions.").

The noble Lord said: My Lords, I spoke to Amendments Nos. 3 to 11 with Amendment No. 1. I beg to move Amendments Nos. 3 to 6.

On Question, amendments agreed to.

Clause 2 [CAA's general duty]:

Lord Macdonald of Tradeston moved Amendments Nos. 7 to 11:

    Page 2, line 8, at beginning insert--

("(A1) The CAA must exercise its functions under this Chapter so as to maintain a high standard of safety in the provision of air traffic services; and that duty is to have priority over the application of subsections (1) to (4).").

    Page 2, leave out lines 22 to 24.

    Page 2, line 25, leave out from beginning to ("interests") in line 28 and insert ("The only interests to be considered under subsection (1)(a) are").

    Page 2, line 35, leave out from beginning to ("as") in line 36 and insert ("apply them in the manner it thinks is reasonable having regard to them").

    Page 2, line 36, at end insert--

("(4A) The CAA must exercise its functions under this Chapter so as to impose on licence holders the minimum restrictions which are consistent with the exercise of those functions.").

On Question, amendments agreed to.

Clause 3 [Restrictions on providing services]:

[Amendment No. 12 not moved.]

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Clause 4 [Exemptions]:

[Amendment No. 13 not moved.]

Clause 5 [Licences: general]:

[Amendment No. 14 not moved.]

Baroness Thomas of Walliswood moved Amendment No. 15:

    Page 4, line 8, leave out from beginning to second ("the") in line 11 and insert ("a not for profit company, formed and registered as a company limited by guarantee under the Companies Act 1985 or").

The noble Baroness said: My Lords, the purpose of the amendments in this group is the transfer of National Air Traffic Services to a not-for-profit trust in substitution for the Government's proposal of its transfer to a public/private partnership. The principal amendment in the group is Amendment No. 35. This clearly defines the company as one that issues no shares and pays no dividends to its members.

Amendment No. 35, together with Amendment No. 36, also requires that this transfer shall not take place until it has been approved by a resolution of both Houses.

Amendments Nos. 38 to 40, 44 and 45 are consequential. Amendments Nos. 41 and 42 provide for the Secretary of State to be able to modify a scheme before it is laid before Parliament. Amendments Nos. 47 and 48 omit certain sections of Clauses 47 and 48 which are incompatible with our amendments. Amendments Nos. 49, 50, 56 and 63 omit respectively Clauses 49, 50, 51 and 55. Amendment No. 64 adds to Clause 56. Amendments Nos. 68, 69, 71 and 72 amend later clauses accordingly. Finally, Amendments Nos. 58, 59 and 62 amend Clauses 52, 53 and 54 to enable the Secretary of State to make loans to, guarantee the discharge of the financial obligations of, and make grants to a not for profit company to which NATS has been transferred. I have spoken briefly because I dealt with the amendments at greater length in Committee.

During the long passage of the Bill through both Houses we have become, as it were, the standard bearers for an approach to the future character of our National Air Traffic Services which has support far beyond these Benches. Without looking too far backwards I remind the House that the trust model was the option favoured by the Select Committee and by many Members in another place. The advantages of the model are its relative immunity to takeover, the construction of a trust board which would reflect both public and stakeholder interests--airline companies and employees, which are so important--and the ability of the board to raise funds at lower rates of interest.

Today I want to look forward and discuss those arguments which have developed since Committee stage. First, the Minister was very dismissive of NavCanada's ability to satisfy the requirements for reducing operational costs, increasing investment and greater accountability. NavCanada is, of course, the model for what we are putting forward today.

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Since Committee stage we have had a report from the noble Lord, Lord Brett, on his visit to Canada which clearly refutes these doubts. NavCanada has substantially reduced its operating costs and increased its investment programme in the past two years, as the 1999 annual report shows. The Canadian Government are entirely satisfied that its economic and safety regulatory regime is adequate to maintain the public interest in safety as well as the financial energy of the trust. Moreover, the airlines seem satisfied with their powers to influence decisions which affect their costs. In other words, a satisfactory balance has been struck between public and private interests.

Secondly, in Committee the Minister made much of the opportunities that would be available to NATS as a PPP to play a part in the air traffic control market of other countries. Yet now we see that the bidders for this PPP include not only foreign-owned suppliers to the air traffic control industry, which must create a conflict of interest, but also several major, national publicly-owned air traffic control organisations. In other words, the PPP will create a market in our air traffic services while protecting those of other countries--Ireland, Germany and Iceland are all bidders--which are all publicly owned.

I am mindful that we are at Report stage and that there are other speakers well able to expand on the points on which I have deliberately touched in general terms. I urge the Government most sincerely and fervently to reconsider their proposals for a PPP even at this late stage. It would be of benefit to them and to the future conduct of air traffic services in this country. I beg to move.

Lord Brett: My Lords, I thank the noble Baroness, Lady Thomas of Walliswood, in moving this amendment, for drawing attention to my visit to Canada. I went there because I did not recognise the NavCanada model, which I thought I knew, from the Government's response to the Select Committee report in another place. What I sought to do through interviews with representatives of airlines, with NavCanada itself, with Transport Canada, the sponsoring ministry originating the trust, and with the controllers and engineers, was to understand their experience. I was reassured that my understanding was not awry and that investment had increased to 400 million Canadian dollars. Operating costs had been reduced by 24 million dollars per annum. There were also reduced charges to the airlines of about 225 million dollars per annum. There was also an increase in training of about 200 air traffic control staff.

I also asked how the decision was reached. Originally, there was wide consultation, looking at six models. That was short-listed to three, and finally they decided on the trust model. They had looked at the equivalent of a PPP--they called it a mixed company--but rejected it. The PPP that they sought would have delivered much the same results as those sought here. But they decided that they could do better via a trust model. That has been successful in achieving its ends. It is not as unaccountable as was suggested in

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another place. It seems to be a model which has enjoyed success and the confidence of the staff and pilots of the Canadian skies and the public at large.

I also discovered that the Canadians had been very concerned about conflicts of interest. We are looking at a new situation. We now know that the number of bidders for the NATS strategic partnership has been reduced from eight to four. As the noble Baroness said, they all have potential conflicts of interest. It is possible that the DTER will have responsibility for ensuring that those conflicts are removed. The list of four could be reduced to a lower number in a matter of weeks or days. Therefore, I echo what the noble Baroness said. Perhaps even at this late stage the Minister would consider a non-profit-making trust model.

I made my report available to all Members of your Lordships' House who had participated at Committee stage. I also made it available to the Minister. A number of noble Lords kindly commented on the report. I understand entirely why my noble friend the Minister has been unable to do so because of the many other pressures on his time, particularly at the present time. Whatever the outcome of this discussion, I hope that the Government will be prepared to look again at a model which I believe will give enhanced confidence to the four groups--I call them the four "P"s--that we have to satisfy. They are the public, the pilots, the practitioners and the various parliaments. During the 10 months of this ongoing debate none of the four "P"s has been entirely satisfied. It is not too late to look again at a model which will ensure that greater confidence is gained more quickly rather than continuing with the Government's present plan.

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