Select Committee on Constitution Minutes of Evidence

Examination of Witnesses (697-699)




  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 reasons—I cannot ever recall that happening—and 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.

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