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Baroness O'Cathain: My Lords, I wish to declare an interest. I am a director of British Airways plc and a member of the British Airways Board Safety Committee. That close involvement with many aspects

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of the operation of air traffic control has resulted in my following a self-denying ordinance so far throughout the passage of the Bill. However, I have become increasingly concerned that a distinct pressure has been applied by those who do not wish the partial privatisation of NATS, and the various companies which have expressed an interest in being involved in the process have been barred from lobbying. That rule has not been imposed on the opponents. The opponents, orchestrated by the noble Lord, Lord Brett, the former general-secretary of IPMS, the union of air traffic controllers, if the report in the Guardian of 23rd November is correct, seem to have had it all their own way.

In the circumstances, I feel compelled to state some facts clearly to make sure that the arguments are fairly balanced. I must emphasise that I am not speaking as a supporter of any consortium interested in becoming the 49 per cent shareholder but solely from my experience of the sector, going back some 40 years from my first job as a very junior airline economist.

Like my noble friend Lady Hogg, it gives me no pleasure to be in a position of speaking against my party on this issue. It will be a most uncomfortable experience for me to vote against my party's amendment. But in my view the House of Lords must do what it thinks is best in the interests of the best quality of legislation for the country. I believe that the partial privatisation of NATS falls into that category. My sole aim in taking part in the debate is to do all I can to achieve the objective that the partial privatisation of NATS is not derailed by political shenanigans. It is far too important for that.

The noble Lord, Lord Stoddart, was very forceful in his comments about his party changing its mind. I agree. Although I shall vote in a different Lobby from him, I find it extremely difficult to accept that my party has changed its mind.

The current situation of NATS is that it must take its place in line for Treasury funding long behind, one suspects, education, education, education and the National Health Service. That really is not good enough. Although the air traffic control system has served us well and has caused no anxiety in the minds of the general public, there is a crying need for significant investment. It is imperative that access to capital is free from PSBR constraints. Investment is urgently needed.

I gently remind your Lordships of what happened on 17th June this year. There was a catastrophic failure of the air traffic control system which left thousands of passengers stranded and delayed and having to spend nights at hotels near the airports. Indeed, it cost British business many millions of pounds in total.

Are we convinced that even if the Government did give NATS the investment needed, such expenditure would be subject to effective programme management and robust corporate discipline? I do not intend to make a cheap point about the startling record of mismanagement of large systems-focused projects in the public sector, tempting though that may be. However, it is appropriate in this debate to mention

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just one word--Swanwick. That is a project which, if completed and up and running by the revised date of 2002, will be a full six years late. By now we should have had the latest in computer systems and a state-of-the-art control centre. Not only is it not yet on stream, but the revised system specification is less advanced than that promised when the project was first drawn up. Between now and the year 2002 shall we be in danger of yet another collapse like the 17th June collapse or indeed, heaven forbid, many more collapses like the 17th June collapse?

There has been an amount of irresponsible scaremongering about the threat to safety resulting from the proposed public-private partnership. That really is what one would call colloquially a "no brainer". One has only to look at the huge emphasis upon safety which is the number one objective of the airlines. Membership of the British Airways Safety Committee for the past seven years has left me in no doubt of that fact. NATS does not have the sole monopoly on safety, but because of the lack of investment and mismanagement of what investment there is, one wonders whether a continuation of NATS in its present form is the best way of ensuring that safety comes first, second and third.

Business people recognise another point as essential; namely, the separation of regulation from the service provision. Business people rail against regulation and are strident in their calls for the abolition of regulation, but in something as fundamental as the safety of millions--I do not exaggerate--I believe that it is imperative that there should be such separation. From an organisational position, I would much prefer to see those functions separated and run by totally different bodies.

I hope that my contribution will take some of the heat out of this stupid situation that we seem to be in. We need the safest, the most efficient air traffic control organisation possible and I firmly believe that the proposals put forward in the Bill are currently the best way of achieving that. Believing that, I can see absolutely no validity in the demand for delay in achieving the public-private partnership. I am sure that I am not alone in believing that, if we delay it, it will never happen. That would be in nobody's interest; it would not be in the interest of the country nor of the Government nor of all those involved in air transport, be they employees or travellers.

9.15 p.m.

Lord Trefgarne: My Lords, I am not opposed to privatisation, but the blatant fact is that this Bill is not privatisation; it is partial privatisation, as my noble friend Lady O'Cathain has acknowledged. I believe it is less than that. It is a public-private partnership and it is a scheme to enable the Chancellor of the Exchequer to balance his books.

I accept that moving the National Air Traffic Service into the private sector has no bearing on safety. I am certain that private sector operators will be equally capable of running a safe air traffic system.

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The problem is that this is a botched privatisation and a rushed privatisation. At earlier stages of this Bill I raised some of the admittedly minor difficulties about which I had been concerned relating to access to air space by non-public transport users. The noble Lord and I have been in correspondence on that matter.

The plain fact is that this is a botched proposal that ought to be delayed. I am not opposed to privatisation. I believe that in the fullness of time the National Air Traffic Service can be, will be and should be privatised. Indeed, at the moment, running as it does in the private sector, it is running short of money for investment, which is abundantly obvious.

My noble friend Lady O'Cathain referred to the problems at Swanwick. They are not caused by the fact that NATS is still in the public sector. The Swanwick programme is being run by a large American company that has not succeeded in fulfilling its contractual obligations. No doubt there are great difficulties, but they have not been caused by NATS being in the public sector; they are the result of the failure of the contractor to deliver.

Baroness O'Cathain: My Lords, I did say that project management and robust corporate structures were important in the management of such projects and that is why Swanwick has not been properly managed.

Lord Trefgarne: My Lords, Swanwick may or may not have been well managed as far as NATS is concerned, but the plain fact is that the contractor has failed to deliver the technology required in the timescale that was set. Sadly, my noble friend said that it was six years late. The failures of the Swanwick programme are as a result of the failures of the contractor and not the failures of NATS.

When I was a junior Minister at the Ministry of Defence I had some experience of managing large, highly technical programmes from a government point of view. In those days, as now, the problems were very much with the contractors, and with the relationship between the contractors and the National Air Traffic Service. Moving NATS into the private sector will not wave a magic wand over Swanwick or Prestwick when it comes to pass in a little while.

My noble friend Lord Brabazon is right to suggest that there should be a delay in this programme. I have nothing to say about the views of members of the Labour Party or what the Labour Party said before it came into office. For practical reasons we should agree to the amendment proposed by my noble friend. I am not opposed to privatisation. I am not opposed to the thrust of what is contained in the Bill and I support the separation of the regulation of NATS from the operation of the system itself. My noble friend's amendment will enable this programme to be moved forward in a more responsible and effective manner and I hope that the House will agree.

Lord Young of Dartington: My Lords, I support my two noble friends Lord Stoddart and my older noble friend Lady Jeger, who spoke against this amendment.

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The public sector borrowing requirement was mentioned. It is certainly a vital matter. Many of those who have studied the history of public ownership in the past 50 years believe that it is the way in which the public sector borrowing requirement was applied, giving the Government the iron hand over publicly-owned industries, which was partly responsible for their not living up to the hopes we had in them.

A vital service like air traffic control should not depend on those considerations if extra investment is necessary to enable the service to continue as efficiently as in the past and to guard against the dangers of the terrible accidents that could occur if that efficiency is put at risk. Safety is the prime case for public investment. The Treasury should not wield the tired old argument about the PSBR. It should not be the case that the efficiency of this vital service is held back and the need for private capital so strongly asserted when it is not necessary for that argument to be put forward.

When we consider this question, we must keep safety in our minds. There was always a strong argument for public ownership when a natural or created monopoly arose. Another argument was when safety was involved. I remember that when I had the privilege of inscribing the nationalisation of the coal industry into the 1945 manifesto, a good deal was made of the need for safety in the mines. It was argued that safety in the mines had been put at risk partly because profit was such an important consideration for the owners of the coalmines. Where has that tradition gone? Why have those arguments for the moment been scuppered?

Safety is the main reason why many of those who are of the same mind as myself want to go along this road. It has of course been brought to our attention by the sad disasters that have occurred recently.

If this Bill is passed in the form proposed by the Government and, shortly before the next general election, an air disaster occurred over this country, whether or not it had anything to do with air traffic controllers, it would be a tragedy for the people directly involved, about which the whole country would be extremely distressed. The Government may also find themselves particularly distressed, because it would yet again be pointed out, as in the case of Railtrack, that such a disaster--for example, over Heathrow--could be attributed in part to a decision to add to the woes of the air traffic control system, which is already in some degree of chaos, waiting for the new day to dawn. If responsibility for such a dreadful crash was attributed to the Government, they would feel very sad that they had taken part. Many other people would feel sad for personal reasons, but it would have a political impact.

I beg the Government to consider the tradition that lies behind the kind of opposition from three of us on this side of the House and agree, to the maximum possible extent, with the plea that has been made by those who on this occasion disagree with the proposal.

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