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Baroness Scotland of Asthal: My Lords, I cannot give the noble Lord a specific answer. We are not able to dictate what the American courts should or should not enforce and, as a sovereign nation, they cannot dictate to us. I know that many noble Lords labour under the misapprehension that America and ourselves are the same; in fact, we are two sovereign states subject to our own rules.

Lord Tomlinson: My Lords, can my noble friend advise the House whether the Government have given any consideration to the role of juries in libel trials?

Baroness Scotland of Asthal: My Lords, we have considered the matter of juries, which I know concerns a number of noble Lords. In 1999 the Law Commission recommended that juries in libel trials retain both the task of determining liability and the task of setting damages. I can reassure your Lordships that Her Majesty's Government are not considering any change to that role.

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UK Airlines: Finance

3 p.m.

Lord Berkeley asked Her Majesty's Government:

    Whether government support offered to United Kingdom registered airlines following the hijacks in the United States on 11th September complies with European and United Kingdom competition policy.

The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton): My Lords, the Government have made no decisions about financial support for UK airlines, apart from underwriting on a temporary basis third party war risk insurance. Control of state aid falls to the European Commission, which would determine the compatibility with the treaty of any assistance offered. The Commission set out guidelines on emergency aid in its 16th October communication to the Transport Council on the repercussions of atrocities in the United States on the air transport industry.

Lord Berkeley: My Lords, I am grateful to my noble and learned friend for that full Answer. Does he agree that market forces caused British Airways to cancel its Belfast flights when it was charging £162 per person compared with the low cost airlines which charge about £27? Does he further agree that that should be replicated throughout Europe and that he should therefore encourage a rationalisation of the airlines in Europe and possibly the removal of ownership restrictions both in Europe and in the United States?

Lord Falconer of Thoroton: My Lords, I cannot comment on the reason for the cancellation of a particular flight. There is plainly scope for a rationalisation of airlines throughout Europe and that should be done on a sensible market basis. At the Transport Council meeting on 16th October, to which I referred in my Answer, my right honourable friend the Secretary of State put before it a paper about rationalisation. It is a proposal which we support, but on a sensible basis.

Lord Razzall: My Lords, will the noble and learned Lord accept that even if direct financial subsidy to our UK airlines proves not to be possible, other actions might be appropriate? Does he agree that it has long been a scandal that UK planes run by British Airways, Virgin and the other carriers cannot land in one American city and pick up passengers to take them to another? Does he accept that if we are making the SAS available to fly to Afghanistan via Pakistan, Uzbekistan or other places, now is the moment for the Government to press President Bush to allow British Airways to land at New York and take passengers on to Chicago?

Lord Falconer of Thoroton: My Lords, we are actively pursuing bilateral negotiations with the

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United States. A balanced liberal agreement with the US would be good for passengers in the UK and in the European Union more widely.

Lord Clinton-Davis: My Lords, I begin by declaring my interest as president of BALPA. Will the noble and learned Lord tell the House why a clear advantage is enjoyed by the United States' airlines which none of the European airlines can emulate? Is not the matter being taken before the European Commission and how are the British Government assisting in that?

Lord Falconer of Thoroton: My Lords, the British Government are engaged in bilateral discussions with the United States in relation to these airline issues. There are issues which also have a European dimension but at the present time the right course is for Britain to continue those discussions with the US.

Lord Skelmersdale: My Lords, is it true that as reported in the press the European Commission is breaking its own rules and is in the process of allowing national subsidies for other national airlines within Europe?

Lord Falconer of Thoroton: My Lords, I am not sure to what the question was directed. It is for the European Union, in particular the Commission, to state the provisions in relation to state aid in the current situation. That is what it has done. They apply to all EU countries and I understand that they are being applied in all EU countries.

Viscount Astor: My Lords, does the Minister agree that the UK airlines have not asked for any state handouts? Does he also agree that it is important to negotiate a bilateral air services agreement with the United States because next year the UK will lose its mandate for bilateral air service agreements to the European Commission?

Lord Falconer of Thoroton: My Lords, it is right that we continue the negotiations with the United States because we need to sort out many of the problems which have been mentioned. As regards the UK airlines' approach to handouts, there have been constructive and sensible discussions between them and the Government.

Lord Elton: My Lords, the noble and learned Lord did not answer the final part of my noble friend's question, which relates to the right to bilateral negotiations. Will he address that?

Lord Falconer of Thoroton: My Lords, they are presently with the UK and the US. At the end of the year a decision must be made about how they are proceeded with.

Lord Garel-Jones: My Lords, does the noble and learned Lord agree that the reason it has been so easy

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for the United States to pick off and cherry-pick European nation states is because we have not yet been able to negotiate on a European basis?

Lord Falconer of Thoroton: My Lords, in some respects, we have in our hand particular cards which make our position strong in those negotiations.

Energy Supplies: Security

3.5 p.m.

Lord Ezra asked Her Majesty's Government:

    What measures they are taking to provide security for energy supplies.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, this Government are taking both short and long-term measures to secure UK energy supplies. We and our energy companies are working with the security services to ensure that the risk of terrorist attack is properly assessed and that appropriate measures are in place to reduce the risk of disruption.

For the long term, the Department of Trade and Industry and Ofgem have established a joint working group to monitor security of supply and assess any risks, looking at least seven years ahead. In addition, the current Performance and Innovation Unit review of energy policy will identify longer-term strategic objectives of UK energy policy and will consider security issues.

Lord Ezra: My Lords, I thank the noble Lord for that informative Answer. As regards the short term, will he indicate the Government's policy on the level of stocks, particularly oil and gas? In the case of oil, there are IEA regulations and, in the case of gas, stocks are fairly low.

As regards the long term, will he assure us that the PIU energy review study will put increased emphasis on reducing import dependence and in particular pay regard to the contribution of the coal industry and the part which clean-coal technologies could play; to renewables, in respect of which there are still some obstacles; and to a greater drive for energy efficiency and new technologies?

Lord Sainsbury of Turville: My Lords, in accordance with the EC oil stocking directive and the International Energy Agency emergency plans, the UK holds strategic oil stocks to guard against the disruption of international oil flows. During the past 25 years, including during the Iran/Iraq war and the Gulf war, world oil supplies have not fallen by more than 6 per cent. The UK has sufficient stocks such that if the supply of crude oil should decline by, say, 10 per cent, we could cover that shortfall for almost two years. In that regard, therefore, we are well positioned.

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Furthermore, the new gas trading arrangements have provided market-related incentives to construct new storage. The issue of gas storage will be a matter for the PIU report and the DTI/Ofgem working group.

As regards the long-term future, we are taking a range of measures, including most of those mentioned by the noble Lord. In particular, we are promoting properly functioning and competitive energy markets, maximising existing energy resources, encouraging energy renewables and combined heat and power, also promoting and rewarding energy efficiency.

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