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Lord Redesdale: My Lords, the Minister mentioned democratic accountability. Does she agree that democratic accountability relies on strong opposition? Will the Government provide further funding for organisations such as the Westminster Foundation which promote democratic opposition?

Baroness Amos: My Lords, I agree with the noble Lord, Lord Redesdale, that it is important to have strong, democratic processes in-country. The Westminster Foundation has made a strong commitment and carried out good work in countries by way of promoting democratic processes. I shall write to the noble Lord with respect to the specific question on funding.

Lord Renton: My Lords, bearing in mind that these poorest countries have received funds either from governments or from charities in more prosperous countries, can the noble Baroness say to what extent those funds have been fully used for the relief of poverty?

Baroness Amos: My Lords, I should tell the noble Lord that in 1997 we made it absolutely clear in our White Paper that our development programme would be totally focused on the international development targets and the relief of poverty. We have been working with the international financial institutions, with the European Union and with others to try to ensure that they adopt a similar attitude in the programmes that they develop. We have been somewhat successful, especially with the EU, and through the HIPC process with the World Bank and the IMF.

In addition, given what happened last year at the millennium assembly when the countries of the UN agreed not only five of the seven international development targets but also another five targets to create the millennium development goals, the whole world community is coming together in terms of saying very clearly that the international development targets and the achievement of poverty reduction across the world is a priority.

Climate Change Objectives

3.1 p.m.

Lord Ezra asked Her Majesty's Government:

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The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, the UK climate change programme that was published last November sets out in detail how we plan to deliver our climate change targets. We estimate that the policies in the programme could reduce our greenhouse gas emissions by 23 per cent below 1990 levels by 2010, and our carbon dioxide emissions by 19 per cent. We remain on course to meet these objectives, and we shall continue to evaluate our progress regularly.

Lord Ezra: My Lords, I thank the Minister for that reply. Is the noble Lord aware that in an independent survey published earlier this month it was estimated that a reduction of CO2 emissions compared with 1990 by the year 2010 would amount to only 6.5 per cent, compared with the 20 per cent targeted, unless further urgent action is taken? Will the noble Lord comment on that estimate? Can the noble Lord also tell the House when the suspended international talks in the Hague are likely to be resumed?

Lord Whitty: My Lords, I shall deal first with the noble Lord's latter point. At the request of the incoming United States Administration the resumption of these talks, which was scheduled for May, has now been postponed to some time between the middle of June and the end of July. Intensive negotiations are in train to establish that outcome.

Secondly, the estimate in the study to which the noble Lord referred, which, I believe, relates to Cambridge Econometrics, was based on policies already in train. We do not seriously disagree with that estimate. However, it did not include all of the policies to which this Government are committed. It included only the price effect of the climate change levy, not the effect of the establishment of the carbon trust or of the reaching of agreements with the high-energy user sectors. Moreover, it did not include emissions trading effects, the effects of new building regulations on energy requirements, or the effect of the voluntary agreement between the European car manufacturers on reducing CO2 emissions from transport. There are several other policies to which we are committed at national or European level that will contribute towards achieving the 20 per cent target.

Lord Palmer: My Lords, does the Minister agree that if Her Majesty's Government gave full support to a new British bio-diesel industry this would go a long way towards supporting their aims as regards climate change?

Lord Whitty: My Lords, as the noble Lord, Lord Palmer, will know, in response to his "green challenge" the Chancellor of the Exchequer is currently considering a number of proposals for favouring alternative fuels. However, the full benefit involved is likely to be felt to the back-end of this period and beyond 2010.

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Lord Roberts of Conwy: My Lords, are the Government satisfied with the availability of low sulphur petrol supplies and the current pricing at petrol pumps?

Lord Whitty: My Lords, as the Treasury indicated on Friday, the presumption is that there will not be full availability of ULSP at the time of the Budget and that, therefore, some transitional arrangements have to be engaged in as regards pricing. However, by the end of that transitional period we are confident that ULSP will be available throughout the United Kingdom.

Baroness Williams of Crosby: My Lords, in view of the positive relations that we understand have been created between the Prime Minister and the new President of the United States, can the Minister say whether Her Majesty's Government will use every possible opportunity between now and next June to persuade the US of the importance of coming on board with regard to the Kyoto protocol, as they are in many ways the key in reducing the dangers of global warming at the present time?

Lord Whitty: My Lords, it is important that we impress upon the new US Administration the importance that we in the United Kingdom--and, indeed, in Europe--place on reaching agreement on climate change. There was a lengthy and positive discussion between the Foreign Secretary and Secretary of State Powell a few days ago.

Lord Carver: My Lords, does the Minister agree that the most effective way of reducing our CO emissions would be to build some more nuclear power stations?

Lord Whitty: My Lords, the target takes into account a reduction in the contributions made by nuclear power for the period to 2010. Beyond that, some assessment of the various sources of energy will need to be made in order to sustain the reduction in CO2 emissions that we are confident of achieving by 2010.

Baroness Byford: My Lords, although I accept the Government's wish to achieve their objectives, can the noble Lord comment on the whole position of the climate change levy, especially on horticulture? I realise that the Government have already given a 50 per cent reduction, but this obviously places those concerned at a disadvantage as regards their overseas competitors.

Lord Whitty: My Lords, the position of the horticultural industry was addressed by the 50 per cent reduction in the effect. We believe that the kind of competitive anxieties expressed by the industry at that time have largely been met. We recognise that the climate change levy will impose some costs on several sectors in industry. The high-energy users are, of course, now subject to discussion and conclusion of sector agreements. We believe that the anxieties of the

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horticulture sector have largely been met. The contribution of industry as a whole to the climate change levy will be a very positive one to reduction of the industrial emissions of CO2.

Transport Act 2000 (Designation of Transferee) Order 2001

3.7 p.m.

The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston) rose to move, That the draft order laid before the House on 1st February be approved [6th Report from the Joint Committee].

The noble Lord said: My Lords, we are here today to consider a draft order that it is proposed to make under Section 51(2) of the Transport Act 2000. Under Section 103(6), a draft of the order must be laid before and approved by resolution of both Houses of Parliament. As your Lordships will no doubt be aware, the draft has already been approved in another place.

Those of your Lordships who took part in the many debates on Part I of the Transport Act 2000 will no doubt recall that Parliament took some time to persuade itself of the benefits of the provisions that it contains, which relate to air traffic services. However, Parliament did give its approval and in doing so gave government the authority in principle to proceed with the establishment of the public private partnership (PPP) for National Air Traffic Services Limited.

Noble Lords will also recall that the Government accepted amendments to defer the final stages of the preparations for the PPP for a period of three months after Royal Assent. We agreed to use that period for further discussion with stakeholders, not to re-open the principle of the PPP but to ensure that progress was as smooth as possible and addressed the many legitimate concerns that have been expressed. I undertook that at the end of that period I would come back to your Lordships' House and provide a further opportunity for debating the issues. I am happy to confirm that we shall honour that commitment in due course.

That debate will no doubt provide the opportunity for noble Lords to raise many aspects of this subject. Today's business is much narrower and more technical. In passing the Transport Act, Parliament was clear that it wanted the PPP to proceed hand in hand with a number of safeguards. The instrument that we are considering today is intended to give effect to those protections.

The draft order itself is a relatively simple document. It seeks to designate, for the purposes of Section 51 of the Act, a company named National Air Traffic Services (No 2) Ltd, which, for convenience, I shall call "NATS No 2". This company is a government-owned company that has been established for the purposes of holding the Secretary of State's shares in National Air Traffic Services Limited (NATS). It will be the vehicle for the NATS Public

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Private Partnership (PPP)--in other words, 46 per cent of the company's shareholding will be sold to the strategic partner; 5 per cent will be made available to employees and the Government will retain a 49 per cent stake.

For a company to be designated under this section, it must be in receipt of assets under a transfer scheme made under Section 43 of the Act. The shares in NATS, which are currently owned by the Civil Aviation Authority, are to be transferred to NATS No. 2 under a transfer scheme to be made on 31st March, the date on which it is proposed this order will come into effect.

A further requirement relates to public ownership of the transferee company. NATS No. 2 will meet this requirement, as at the time of the transfer it will continue to be wholly owned by the Government. I hope that that provides your Lordships with an explanation of the technical side of the order. I will now deal in a little more detail with its effects.

The designation of the company will apply the various protections in Section 51 to NATS No. 2, and I will look at each of these in turn. The first protection is one that was widely welcomed when it was first proposed. The Secretary of State must ensure that he does not dispose of any shares in NATS No. 2 unless he is satisfied that a scheme is in place to ensure the completion of major projects relating to the provision of air traffic services. The projects falling within this category are the New Scottish Centre at Prestwick and the New En Route Centre at Swanwick. Designation of the company will ensure that the Government's commitment to complete these projects will be honoured.

There are also further protections relating to the limits of the Government's shareholding in the PPP. They come in two forms--one relates to the Government's ability to sell shares and the other to what the Government may allow to happen to their shareholding in a situation where new shares are being issued, for example to fund a capital investment.

I will start with the Government's ability to sell shares. Any sale of shares in the designated company must not reduce the Crown's shareholding in that company below 49 per cent. As I have already explained, the Government do indeed intend to retain a 49 per cent stake. This level of government shareholding reflects the ongoing public interest in NATS, which we believe is essential for the future of the provision of air traffic services in this country. It will ensure that the taxpayer gets value for money, and the taxpayer will share in any dividends. Again, the introduction of these protections was widely welcomed in Parliament.

The second type of protection (enshrined in subsection (5) of Section 51) relates to a situation where, for whatever reason, the Government agreed with the chosen strategic partner that new shares should be issued, for example so as to allow a major capital investment or project to go ahead. In that case, there is a protection as to the minimum level of government shareholding; namely, that the Secretary

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of State is required to hold at least 25 per cent of the designated company's share capital at any given time. This limit has given rise to much discussion in previous debates. I am aware that concerns have been expressed that this limit gives the Government a free hand to reduce their shareholding, and consequently is a stepping stone to full privatisation. We dealt fully with those matters when the Bill was being considered, but I can again reassure your Lordships that this is not the case. The protections we have allow the Government only to sell 51 per cent of the shares in NATS--with the fall-back that if, at some time in the future, the Government were to agree to new shares being issued, they must not allow the effect of this to be that the Crown owns less than 25 per cent of the larger pool of shares. These are important protections and reassurances of the continuing role for the Government in this PPP.

The next protection contained in this order is that the Secretary of State must continue to hold a special share in the designated company. That requirement will be entrenched in the company's articles of association and will, along with the shareholders' agreement, be used to protect the Government's rights in certain key areas such as the issue of new shares and the company's dividend policy. In essence, it will enable the Government to maintain the public interest while allowing the private sector the freedom to run the business.

Noble Lords on the Benches opposite attached importance to the special share during our debates on the Bill for the protection it would afford for national security. They were quite right to do so. They also suggested that the European Commission might challenge the special share. However, the Government remain firmly of the view that our powers to hold such a share are robust in this case.

The final protection is that the company's articles of association must not be amended without the Secretary of State's consent. However, the Secretary of State cannot consent to any such alteration unless a statement of the proposed consent is approved by both Houses of Parliament. This is intended as a safeguard to ensure that the Secretary of State would not be able to consent, without parliamentary approval, to a reduction in the rights attaching to the special share.

I hope that I have explained to your Lordships with sufficient clarity the protections that this very short order will introduce. In passing the Transport Act, Parliament has given its approval to the Government's proposal to establish the PPP, subject to certain safeguards. I trust that your Lordships will now endorse this technical measure to give them effect. I beg to move.

Moved, That the draft order laid before the House on 1st February be approved [6th Report from the Joint Committee].--(Lord Macdonald of Tradeston.)

3.15 p.m.

Lord Brabazon of Tara: My Lords, I am grateful to the Minister for his explanation of the order, which, as he said, is not in itself controversial, dealing, as he

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explained, with the setting up of NATS No. 2 Ltd, as I suppose we must now get used to calling it. Indeed, I welcome the protections that the order gives to the special share and other measures. However, it also gives us the opportunity to question the Minister on the selection of the strategic partner for NATS No. 2.

Like no doubt other noble Lords, I have seen press reports of the progress, or rather lack of it, of choosing the preferred bidder for the PPP. Last week it was reported in the press that the Government had abandoned plans to select a preferred bidder. What does that mean? Originally the timetable was for the preferred bidder to be announced by the end of February; that is, tomorrow. What does it mean that there is now to be no preferred bidder? Further, press reports yesterday stated that one of the key partners of SERCO, one of the bidders, had pulled out under pressure from members of the airline group, another bidder. I hope that the Minister can clarify exactly what is going on and what now is the timetable for a decision and, indeed, how many runners are still in the frame.

I remind the Minister--the Minister has already referred to this--of the amendment that we made in this House that called for a three-month delay to any transfer and the undertaking from the Minister to make a report at the end of that time. Those three months were supposed to give the Government, among other things, time to select the strategic partner and announce it. That clearly will not now happen.

Whoever the bidder is, it is clear that safety must come first. I am sure that we are all agreed upon that. Can the Minister say what the views of the aviation safety group of the Civil Aviation Authority are? Is it true that it has serious doubts about at least one of the potential bidders? If that is so, will the Government not hesitate to take a lower bid for the sake of a safer bidder? Does the Minister want to take the opportunity now to revise downward the likely proceeds of the part sale from the figure of 350 million which was originally announced? Is it true that the Secretary of State only agreed to the PPP on the promise from the Chancellor that he could spend the proceeds on transport? Does the Minister now wonder whether that was in fact a worthwhile trade-off?

There are two other matters. First, when NATS No. 2 goes into the PPP will there be any mechanism for a clawback of any excess profits made by the strategic partner? In previous privatisations the Government were criticised for not having made such an arrangement. Secondly, I am puzzled as to the status of the employees' 5 per cent shareholding. When this order was discussed in another place the Minister stated that,

    "When people retire, they will have to put their shares back into the pot so as to maintain the availability of the 5 per cent pot for the employee share issue".--[Official Report, Commons, Standing Committee on Delegated Legislation, 12/2/01; col. 20.]

If the employees cannot trade their shares and have to return them when they retire, and if they do not receive any dividends, which I presume would be the case if the not-for-profit partner was chosen, then what

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value is there to the employees' shareholding at all? I hope that the Minister can answer some of these questions today and that he can tell us when the fuller statement and report will be made and the form that it will take. The Minister has already referred to this and he said "in due course". Can the Minister be a little more specific it than that?

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