Examination of Witnesses (697-699)|
WEDNESDAY 11 JUNE 2003
BUSH CB, MISS
697. Good afternoon. Thank you very much for
being with us this afternoon. May I first of all invite you to
identify yourselves for the record and to make an opening statement
if you have one?
(Dr Bush) I am the Group Director, Economic
Regulation, CAA. I took up post on 1 April so I am a fairly new
boy in this area. On my left is Chris Jesnick, who is the group
director, finance and corporate services. On my right is Rupert
Britton, who is the legal adviser to the CAA and the secretary
to the board. If it would be okay, I have two or three points
to begin with. First, you will obviously have gathered from our
statement that the CAA is different from many regulators. It is
a multipurpose regulator. It has a large safety component. It
has responsibility for airspace policy and regulation; it has
economic regulation as well as an area which deals with consumer
protection, mainly in the form of the bonding scheme which effectively
insures holiday makers who travel using intermediaries. Of the
some 1,100 staff the economic regulation group has some 40. Of
those 40, perhaps only 20 deal with aviation economics and economic
regulation. Of those 20, perhaps only ten are really on economic
regulation. It is very different from some of the organisations
you have been seeing. Secondly, the CAA has been organised on
a board basis since its inception. We do not have, as other regulators
have, to manage the transition from the single person regulatory
system through to a board. Third, we are a public corporation
rather than a non-ministerial government department. There are
quite a few differences compared to a lot of other regulators.
698. On the nature of the organisation, you
are very different from all the other regulators that we have
been looking at by virtue of your status as a public corporation.
Therefore, you are not an independent regulator in the same way
as the others we have been considering. I am wondering if you
could expand a little more on how you do operate, because you
are in many respects sui generis in terms of your relationships
with government because you answer to Parliament through the minister;
whereas with the other regulators we have been seeing they answer
directly. It is just getting a feel for the relationships that
evolve, the type of contact that takes place and to what extent
you have a role as an independent decision maker.
(Dr Bush) Could I deal with this in the economic regulation
context? Mr Britton will deal with the CAA's legal status and
how it works more broadly. As far as economic regulation is concerned,
and so far as I can see it with the benefit of the few months
I have been there, we conduct ourselves independently of government.
That is pretty critical, as it is in all areas of economic regulation,
because that is the benefit of having regulators outside of government.
It is that independence, allied with other things, which then
is the foundation for effective regulation. The quinquennial review
of airports, and the review of NATS pricing, which are the two
main regulatory functions that we undertake, are undertaken as
any other regulator would undertake them, with consultation and
then decision making. There are differences in the airport context
in our relationship with the Competition Commission, which we
could go into, but in terms of independence from government we
are very much as other regulators are. In the last airports review,
the Department of Transport responded to one of our consultations
disagreeing with something that we were proposing and were told,
"Thank you very much but we will go ahead all the same."
We may, potentially, disagree with the Department. If we do, we
are the decision maker in this area.
(Mr Britton) Before the CAA was set up in 1972, its
functions were scattered amongst various government departments
and independent licensing boards. It never found a convenient
home in government. It was transferred between different ministries
from time to time. That was thought to be very unsatisfactory
so the CAA was formed, putting it all together into the one body
corporate. The statute has always made it clear that we are independent
of the Crown. Our members are appointed by the Secretary of State
but they are independent because they are appointed for three
or five year periods. They can be removed for conduct reasonsI
cannot ever recall that happeningand we are not at all
reliant on the taxpayer. Our funding comes from the industry.
Since 1972, we have effectively been independent. We clearly have
relations with the government and they have been codified in a
sponsorship statement which sets out our relations with our sponsoring
department, but that tends to be rather administrative stuff and
does not go to the decision making functions of the CAA.
699. You make the point in your submission that,
because you are sponsored by the Department, you are answerable
through the Secretary of State for the performance of your functions
but are you called before any parliamentary committees to answer
for your decision making?
(Dr Bush) Yes, fairly frequently. The Transport Committee
calls us before them to talk about various elements of the CAA's
functions, whether it be elements of economic regulation or the
role we play as a statutory adviser to the government where we
have views around liberalisation of aviation which have in the
past differed significantly from the way the government has wished
to take forward policy.