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Baroness Hogg: My Lords, I merely wish to say that if I have to cross-dress with the noble Lord I shall leave this House.

Lord Richard: My Lords, I can promise the noble Baroness that the skirt will be big enough for her.

The issue has been batted backwards and forwards between the two sides of the House with the Liberals panting behind the Conservatives, for some reason that I fail totally to appreciate. But that is not the issue. The issue now is the relationship of this House with the House of Commons.

We had a partial reform of this House last year. It was very partial and in the view of some of us who participated in those debates it did not go as far as we wished. It is no secret that I want a House which is predominantly, but not exclusively, elected. But that is not the issue. We have what we now have. I cannot forbear from observing, in view of what was said by the noble Lord who made the previous speech, that we still have 100 hereditary Peers. I do not suggest that they are any less legitimate than life Peers or that I am more credible than the noble Lord, Lord Strathclyde. But we now have a strange House; it is neither fish nor fowl. It is not democratic; it is not wholly appointed; it is certainly no longer wholly hereditary. It is a good old-fashioned British mish-mash. As part of that good old-fashioned British mish-mash I am concerned as to how this House now behaves.

Perhaps I may put some propositions to the House. First, it is right for this House to suggest but it is not right for this House to insist. The danger now is that we are insisting. We are not suggesting. We are saying to another place--the noble Lord said it today--"We will not give you this legislation unless you do certain things which we the Opposition say the Government should do". If that is not insisting, I do not know what is.

The relationship between this House and the other place depends on a series of understandings, some of which are choate, some of which are written down and some of which are almost miasmic understandings that nobody analyses but everybody knows how they work. One important understanding is that at the end of the day, the Government are entitled to get their business through. In these new circumstances after the reform of the House, we are in great danger of ignoring the previous set of understandings under which we all operated without thinking more clearly about what understandings we want in their place.

The fundamental point is that the Government are entitled to get their legislation if the House of Commons has been asked to look at something twice, as has happened in this case. In those circumstances, it would be frivolous of this House to insist that the issue be sent back down the corridor for a third time.

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That might be justified, but only if a major constitutional issue were at stake. Whatever else NATS is, it is not a major constitutional issue. I have nearly finished. I am about to subside, having erupted in my modest and moderate way. NATS may be quite an important issue, but it does not justify a major constitutional clash between the two Houses of Parliament. That is what we are in danger of getting into.

Earl Russell: My Lords, before the noble Lord sits down, does he agree that we are attempting to exercise the powers that another place gave us in the two Parliament Acts? If another place got it wrong, that is not our fault.

Lord Richard: My Lords, the noble Earl does not do himself justice. Of course we are entitled to do what we are doing. I am questioning the judgment, not the entitlement. The relationship between the two Houses cannot be viewed or made to work solely on the basis of the legal entitlement to do one thing in one House and something else in another House. Some flexibility and understanding between the two Houses is needed. We are in grave danger of tearing that up.

Baroness Thomas of Walliswood: My Lords, now that I have been reassured about our entitlement to continue in the course that we have set ourselves, I shall do just that. I support the amendment of the noble Lord, Lord Brabazon of Tara. I welcome his clear expose of some of the constitutional issues.

We clearly explained our position on Monday. We want the Government either to reconsider their commitment to the part-privatisation of NATS or to put the issue to the electorate at the next general election, since they certainly did not do so at the last one. I do not take very seriously the arguments suggesting that they did. I am willing to bet that the number of voters, or even Labour Party candidates, who thought that the party's references to improving public transport infrastructure via PPP deals should be interpreted as a determination to semi-privatise NATS was as near to zero as makes little difference. Dr Gavin Strang was certainly not among that number.

Given those clearly expressed views, it is not enough for the Government to offer to delay implementation of the NATS PPP for three months so that they can explain it more fully and even conduct the process properly. I share the astonishment of the noble Lord, Lord Brabazon, that they have not conducted the process properly before. The offer is a mere time delay, not a policy compromise.

We have explained often our support for a not-for-profit trust in place of a PPP. Until hearing the noble Lord, Lord Richard, I had thought it no longer necessary to explain our arguments further. However, as the noble Lord seems unaware--perhaps because he has not been in the Chamber during our discussions--that we have been leading a serious policy opposition to the Government's position, I shall briefly run through those policy points again.

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The option of a not-for-profit trust would relieve the burden otherwise accruing to the PSBR from the heavy investment required to keep NATS technology up to date. The option would involve a partnership between the Government, stakeholders and customers to ensure a safe, efficient operation. The airlines would be part of the directorship of the trust. The trust would be able to raise the required investment, but not subject to the demands of shareholders. Finally, it would be constructed in such a way as to exclude suppliers or foreign providers of air traffic control services from ownership, which seems at least doubtful in the case of a PPP. A trust might even be the most effective body to take part in a joint European air traffic control system.

Interestingly, I found that argument almost word for word in the top leader in today's Financial Times. It is not just we in our madness who are putting forward these arguments. They are shared by serious people across the press from the Financial Times to the Evening Standard--there could not be a much wider range than that--who are genuinely worried by or opposed to the Government's policy.

Last night, the Deputy Prime Minister claimed that on this issue the House of Commons was speaking for the people. Understandably, he refused the suggestion of a free vote. I would have done the same in his position. A majority of 87 in the main vote last night was hardly a ringing endorsement of his policy. I hope that that may encourage Labour Members in this House to join us in the Lobby once more today.

We are not convinced by the Government's argument, nor are we cowed by their threats. Our defiance may be what sometimes used to be called a forlorn hope, but defiance it remains.

Baroness Farrington of Ribbleton: My Lords, before any other noble Lord speaks, I remind the House that rehearsing arguments about options that are not included in the amendment before the House is not appropriate.

Lord Marshall of Knightsbridge: My Lords, it will come as no surprise that I have an interest to declare, as the chairman of British Airways. Further, despite the protocols of the process, it is no secret that British Airways is one of the eight United Kingdom airlines that make up the consortium bidding to become the private sector partner in NATS by operating the service on a not-for-commercial-return basis. Noble Lords will therefore understand my close interest in the issue. I have some salient points to make.

The debate on the future of NATS has been going on for more than five years. During that time, much-needed new capacity has failed to come on line as planned. The existing air traffic control systems are close to breaking point. The events of June this year served as a warning. The consequences of further, maybe more serious, collapses in the system may be too horrific to contemplate.

My first point is simply that enough is enough. The time has come to get firmly to grips with the situation before disruptive delays turn into disasters. The debate

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on NATS prompted by the Government's policy proposals has, for the most part, been reasoned, informed and constructive. Clearly, any fundamental change to a vital, safety-critical element in the national transport infrastructure warrants such consideration. There are obviously lessons to be learned from previous experience.

Important as the arguments are, your Lordships attention should not be diverted by arcane debate over corporate governance or financial structures. The main issue on today's agenda is whether we begin the process of repair and regeneration, or whether we allow the system to crack and crumble. Therefore, the second point that I want to make is: do not lose sight of the objective.

Some of the debate on the future of NATS has sought to illustrate the issue in the simplest of terms: profit versus safety. Those of us who have spent time running private sector airlines, for whom safety is unquestionably the paramount consideration, find these arguments difficult to understand, if not downright distasteful. I take issue particularly with the ill-judged comments made in your Lordships' House the other evening. It should be obvious that the airlines want more investment in more safety, not more profit from lack of it. To suggest otherwise is ludicrous and regrettable.

Nevertheless, we must recognise that where concerns exist, they have a right to be aired. This debate has provided that opportunity. The future of NATS does not have to be measured at a zero-sum calculation where profit is always the enemy of safety. Other models are available, and the Government's process, if allowed to proceed, will enable them to be explored.

In an attempt to place matters in perspective, I ask noble Lords to cast their minds back to the early 1980s when the privatisation of British Airways was proposed. The state-owned corporation of that day had become moribund and near bankrupt. Public-sector borrowing requirements constrained its ability to invest in sorely needed new equipment. A move to the private sector was the only sensible way forward; yet the policy faced opposition, some of it extremely fierce, from many groups in this House and in another place, from unions and from employees.

Objective argument and practical example overcame the aversion to change and fear of the unknown. By the time that British Airways was floated in February 1987, the airline's privatisation was universally judged to be a thoroughly good thing, especially for its customers, for its employees and for United Kingdom taxpayers. I venture to suggest that we have continued to fulfil our responsibilities in the airline to the highest possible standards, most notably in the area of safety and operational integrity.

When it comes to NATS, let us not forget that the force which drives the urgent need for substantial investment in the expansion of capacity is not only the airline industry; it is also the legitimate, increasing demand for airline service from the general public and

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from business and industry. Consumer demand is projected to grow at a rate of 4 per cent per annum compounded. That means that by the year 2015, which is not that far away in planning terms, the number of passengers who travel through United Kingdom airports will reach some 310 million per annum, if we have the professional wherewithal to serve them.

Finally, perhaps I may say that I have the highest regard for the outstanding performance of air traffic controllers, for pilots and for those who represent them, not all of whom oppose this piece of legislation because they want to see industry improvement based on world-class systems for this country. Therefore, I ask noble Lords to consider my points very carefully before condemning the United Kingdom to an increasingly obsolescent, unreliable air traffic control system for any longer than is absolutely necessary.

3.30 p.m.

Lord Phillips of Sudbury: My Lords, before the noble Lord sits down, given his vast experience in this area, will he tell the House whether he sees a serious flaw or drawback in the Canadian model?

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