HC Deb 28 April 1960 vol 622 cc513-28
Mr. Rippon

I beg to move, in page 3, line 24, at the end to insert: (b) the provision made or proposed to be made against any liability in respect of loss or damage to persons or property which may be incurred in connection with aircraft operated by the applicant; (c) any unfair advantage of the applicant over other operators by reason of the terms and conditions of employment of his servants. This Amendment meets two separate undertakings given by my right hon. Friend in Committee. Paragraph (b) requires the Board, in accordance with the undertaking given to the hon. Member for Feltham (Mr. Hunter), to have regard to provisions made or proposed to be made for insurance against any liability in respect of damage to persons or property. We feel that the words are wide enough to cover the insurance of passengers or cargo in an aircraft, as well as third party insurance of all kinds.

Paragraph (c) is inserted to give effect to an undertaking given to the hon. Member for Walthamstow, West (Mr. Redhead). The words he originally proposed in Committee were open to the objection that they appeared to give the Board functions akin to those of an industrial tribunal. The Amendment now proposed requires the Board to consider terms and conditions of employment of operators' staff so far as they are relevant to the operators' competitive position. It is proposed that the Board will be required, under subsection (1), to consult as necessary, from time to time, the National Joint Council for Civil Air Transport. The Council will say whether the terms and conditions of employment offered by the applicant conform to the agreements in force in the industry.

Mr. A. E. Hunter (Feltham)

I am very pleased that the Minister has moved this Amendment. I raised this matter in the Second Reading debate and in Committee. My constituency is near London Airport. It is a built-up area, consisting of houses and other property, including schools, very close to the runways of the airport. The question of third party insurance has been raised by local authorities and also by local residents' associations on many occasions, and I have repeatedly raised it.

It did not seem logical that the driver of a motor car should be compelled by law to insure against third party risks while an aircraft operator should not be compelled to do so. I know that B.E.A. and B.O.A.C. have the State behind them, and I know that most independent airline operators insure, but there is always a risk that an independent operator may not be insured. In the event of a disaster he might not be able to meet his liabilities, and this could be very tragic for the people involved in the accident. I therefore congratulate the Minister on moving the Amendment.

I know that accidents may occur away from London Airport, but most hon. Members will agree that the danger of accidents occurring is greater when aircraft are taking off or landing. We have had a number of emergency landings at London Airport. Fortunately there have been no tragic results, but it is clear that there is more risk near an airport.

I know that local authorities have been alarmed about this because there are schools and housing estates near runways, and if a company was not insured and there was an accident the results could be very serious. I am therefore pleased that the Minister has put this matter right tonight, and I congratulate him on doing so.

I am also pleased to support the alteration in paragraph (c). B.E.A. and B.O.A.C. are good employers. Industrial conditions are good, and I am pleased that industrial relations are now good. B.O.A.C. was generous with its redundancy terms when reductions, unfortunately, were made. The Corporations maintain good trading and working conditions, and I am pleased that the Minister has inserted this paragraph so that the Corporations will not be under a disadvantage if independent air operators attempt to employ labour under lower conditions than those laid down by the airline Corporations.

Safety is also included in this. If one has skilled men and a full staff it makes for better safety conditions, and I am, therefore, pleased to support the Amendment.

Mr. Arthur Skeffington (Hayes and Harlington)

I join my hon. Friend the Member for Feltham (Mr. Hunter) in thanking the Minister and the Government for readily accepting the suggestion, put forward by my hon. Friend in Committee, that paragraph (b) should be a condition of the grant of a licence. Hon. Members who represent constituencies bordering on airports, whether it be London Airport or any other airport, constantly have in mind the possibility of the kind of disaster which occurred at Southall. Until that disaster I used to think of such an accident as merely a theoretical possibility, and hoped that it would never happen. If, in future, a similar incident occurred, and in addition to the damage and unhappiness caused by such an accident there were complications about compensation, that would be asking too much of the residents who live near airports who already have to put up with a great deal of risk and inconvenience.

The provision will go a long way to meeting some of the fears and difficulties that local authorities and residents' associations have raised from time to time. A mere question of compensation cannot undo the damage that might be caused by an accident, but, if damage occurs, the fact that there is now an insurance scheme will go some way to minimising the effects of such an accident. Up till now it has been easier to get a four-engined aircraft into the sky than a moped in the streets.

I am also pleased about the second condition, paragraph (c), which, again, will ensure that, as far as possible, there is parity of conditions of employment between the independent operators and the Corporations.

The Clause has been considerably improved, and it would be churlish not to express our gratitude to the Minister for the ready way in which he has accepted both propositions.

10.15 p.m.

Mr. Rankin

I join, of course, with my two hon. Friends in thanking the Minister for his action. Nevertheless, I must return to the point that I have already made, as it is something that must be pressed. I have correctly pointed out that it is the present practice for the maintenance part of a project to be outside the Act, and for the operating end to be inside. That is something that the Minister must face. How can he prevent this practice by which his obvious and acceptable intention will be destroyed? It is a completely wrong practice, and it will produce the unfair competitive conditions to which he himself is avowedly opposed. He wants to create those basic conditions of equality that will make competition possible, and he must give us some idea of how he proposes to face up to this problem.

The Parliamentary Secretary said that the National Joint Council would deal with the matter, but the organisation whose letter I have quoted is not a member of that Council, and its members are employed by independent airlines on wages and salaries, and under conditions that are forbidden to the Corporations by the Act. How does the right hon. Gentleman propose to deal with the problem created for him by some of the independent airlines whose interests he is promoting in the Bill?

Mr. Strauss

I want to support the views of my hon. Friend the Member for Govan (Mr. Rankin), but before I do so I want to comment on paragraph (b), which deals with insurance against damage to persons and property. We all agree with the purpose of the Amendment, and are grateful to the Minister for putting it down at this stage. It should be borne in mind, however, that the condition that an operator must be insured against third party damage will apply only when he appeals to the Board for a licence. It may well be—I do not know-that many, or some, existing operators are not insured against damage to third parties as a result of an accident, and that they will not have to go before the Board for many years to come.

I do not suggest how that difficulty can be overcome, though there may be some way of doing so. Perhaps the Minister should exert some pressure on the operators and ask them all immediately to take out adequate third party insurance. It should be appreciated by all concerned that existing operators may not be covered in this way. I ask the Minister to consider that point—I cannot ask him to do more at the moment—and to see whether some steps can be taken to ensure that existing operators are properly covered by insurance against any damage they may do to third parties.

I wish to press the Minister to answer the question asked by my hon. Friend the Member for Govan in regard to paragraph (c). The principle is accepted that the Board must consider any unfair advantage that may accrue to one applicant over another as a result of the terms and conditions of the employment of his servants. That is all right as a principle, but how is it to work out? Who can tell the Board that in their view the servants of an applicant, employed on repair, maintenance or whatever it may be, do not enjoy as good wages and conditions as those enjoyed by the servants of another applicant?

Will any trade union or professional society of workers be entitled to say to the Board, "In order to carry out the provisions of the Measure, you should know that the servants of applicant A are getting much worse terms and conditions than the servants of applicant B"? If the unions or professional associations are not allowed to do that, who will be allowed? Can the information be given by other applicants about the payment made to the servants of an applicant? That would be an unfortunate situation. If this provision is to work, the representatives of the servants must be entitled to make those allegations to the Board.

Next, we have to ask: who is to consider these allegations? I gathered from what the Parliamentary Secretary said— and I was surprised to hear him say it —that it was for the Board to consider whether, in fact, the wages and conditions offered by applicant A were so much worse than those offered by applicant B as to give applicant A an unfair advantage. Is that to be the duty of the Board? If it is, well and good, but it is a duty that we certainly did not appreciate would be put on it.

In the past, such technical matters had been, by a directive of the Minister to the A.T.A.C., considered by the Ministry of Labour, who have then advised the A.T.A.C. of its conclusions. Is that system to continue, or is another body to consider individual allegations that the servants of one applicant are being worse paid than those of another?

This is an administrative problem, but when we are considering the principle contained in the Amendment we are entitled to ask the Minister how he proposes to carry it out. As long as it is done effectively, we do not mind very much how it is done. Nevertheless, we want to know how it is to be done. If he has not yet decided, he should tell us, as we are entitled to know.

The right hon. Gentleman has had ample warning about this. It was raised in Committee. There, I specifically asked how this was to be discussed. I asked who would make the complaint and by whom it was to be judged. It is all-important to many professional associations concerned, and perhaps to the trade unions. They feel keenly about this and have communicated with me on the subject. The Government may have a satisfactory answer. If so, we shall all be pleased, as we want a satisfactory solution to this important problem.

Mr. Diamond

I underline what has been said by my right hon. Friend the Member for Vauxhall (Mr. Strauss) and draw attention to the even greater and rather more subtle difficulty touched on by my hon. Friend the Member for Glasgow, Govan (Mr. Rankin). There is not only the problem of the Board being fully informed and satisfied that conditions as between two applicants are fair. There are areas outside the Bill which closely affect the operating costs of one company or another. For example, it is easy for one company entirely to hive off its maintenance, which is an enormous proportion of its costs and consists, when broken down, almost entirely of wages.

One company might carry out its maintenance under approved wages and under standards approved, agreed and satisfactory on all accounts. Another company might not be prepared to do this, but might hive off its maintenance work to a separate company, not covered by the Bill and not within its control, employing maintenance workers at considerably less and unfairly competitive rates. In these circumstances, how is the fair competition about which the Minister talks to be achieved?

Mr. Sandys

I am glad that this point has been raised, because I do not want there to be any misunderstanding. I intended faithfully to carry out the undertaking I gave. The Amendment deals with it adequately. I made it clear in Committee that I did not regard it as the function of the Board to act as a wages tribunal or in any way to duplicate or supersede the normal organisations which have been set up to deal with difficulties about conditions of employment in industry. It is clear that hon. Members opposite also felt that we should not interfere with the established machinery.

The purpose of the Amendment is to ensure that one operator shall not have an unfair advantage over another operator by reason of the fact that he provides unsatisfactory conditions of employment. As my hon. Friend the Parliamentary Secretary explained, it is our intention to use the power conferred in Clause 2 (1), which says: … the Board may …, after consulting with such persons, if any, as may be prescribed … grant the applicant an air service licence". It is my intention to prescribe in particular the National Joint Council for Civil Air Transport.

I want now to deal shortly with the point raised by the hon. Member for Glasgow, Govan (Mr. Rankin). Allegations of this kind would normally be made by the objector, in other words the rival operator, who felt that the applicant, if granted the licence, would be getting an unfair advantage by reason of the less favourable conditions of employment he offered. If the Board has an obligation to consult with the National Joint Council, it will get an opinion from the Council as to whether or not the operator comes within the arrangements which have been agreed by both sides of the industry.

The Board can also make inquiries as to whether the applicant is conforming with Section 15 of the Civil Aviation Act, 1949. That still holds good. Suggestions were made in Committee that we might repeal that Section, which deals with terms and conditions of employment. I did not feel that that would be a proper course, and it still stands firm. That is my answer to the hon. Member for Govan.

The Civil Aviation Act, 1949, was passed by the Labour Government. Section 15 provides that the conditions of work, amongst other things, must be … in accordance with an agreement for the time being in force between the undertaking"— that is, the airline operator— and organisations representative of the persons employed". It does not say just the National Joint Council for Civil Air Transport. It says: organisations representative of the persons employed". In other words, the operator is under an obligation to provide conditions of employment which conform to whatever arrangements have been agreed between the employers and the employees in whatever branch of industry may be concerned.

Mr. Speaker

Mr. Rankin.

Mr. Rankin

The Minister has—

Mr. Speaker

I understand that the hon. Member for Glasgow, Govan (Mr. Rankin) has spoken to this Amendment. I did not know that when I called him. If that is so, he cannot speak again.

Amendment agreed to.

10.30 p.m.

Mr. Rippon

I beg to move, in page 3, line 25, to leave out "need" and to insert "existing or potential need or demand."

This Amendment is designed to meet an undertaking which was given to my hon. Friend the Member for Cheadle (Mr. Shepherd), who originally proposed that this paragraph, Clause 2 (2, b) should be omitted altogether. Several other of my hon. Friends, notably the hon. Member for Watford (Mr. Farey-Jones), and also the hon. and gallant Member for Derby, North (Group Captain Wilcock) took the point that air services generally are built up on the basis of potentialities and not of need. Need is clearly one of the criteria which the Board will have to have in mind. It is not necessary to specify whose need, but we do feel it reasonable that it should also take demand into account, with reference not only to the present but also to the future.

Amendment agreed to.

Mr. Strauss

I beg to move, in page 4, line 13, to leave out subsection (5).

Mr. Speaker

It did occur to me that it might be convenient to the House that this Amendment should be discussed with the next three Amendments in the names of the right hon. Gentleman the Member for Vauxhall (Mr. Strauss) and of other hon. Members.

Mr. Strauss

I am glad you have suggested that, Mr. Speaker, because I think that it will indeed be for the convenience of the House if we discuss these four Amendments together.

These Amendments concern the responsibility for fare fixing, or rather the extent to which the Board and the Minister should take into account the fare aspect of any service licence which they grant. This is a difficult matter. I raised the problem on Second Reading, and the Minister or the Parliamentary Secretary indicated on that occasion that they were likely to give the matter more thought because it seemed this great problem of the fare aspect of the licence would have to be considered both by the Board and the Minister, and as these things are highly controversial it seemed to them that there might be many cases of double hearing.

We then discussed the matter further in Committee, and the Minister gave the matter consideration again, as a result of which we have a different proposal before us now in the Bill, compared with that which was originally brought forward. If the difference has been in any way brought about by my anxiety on the matter or by the questions which I asked, I am sorry I expressed that anxiety or asked those questions, the present state of the Bill is worse than the first.

I want to be brief and to come at once to the essential point, quite apart from the many difficulties which I see arising from this double hearing of the fare aspect by the Board and Minister. I think it dangerous and wrong—I am not talking about domestic services or, indeed, for the moment, cabotage services —that the fare aspect of licences for foreign services should be considered by the Board at all. It does not seem to me that it should have any standing or interest in the matter. I know the Parliamentary Secretary will tell us in a moment that there is no need for it to consider it. That is perfectly true, but it is able to consider it as the Bill now stands.

Let me put before the House the procedure, as I understand it, now existing for the settlement of fares for long distance overseas services. The Corporations go to I.A.T.A. to discuss there what the fare levels should be. They discuss general questions of policy and they can also consider matters of detail. This is in pursuance of their normal commercial policy, and it is a very important part of that policy. Before going, they quite rightly go to the Minister and say, "This is what we propose. We want your views and agreement." Agreement is finally reached on matters of broad principle and then the Corporations go to I.A.T.A., put forward their views and try to reach the best agreement they can. They may vary the broad policy agreed by the Minister in some detail here and there. That seems to me perfectly satisfactory.

What happens under the Bill, however, is that the Board when granting licences for foreign services can consider the fare aspect. I think that that is wrong. When we were considering the Bill as first drafted, it was clearly and deliberately stated that all foreign service fares should be settled by the Minister, but now that is not so; the question can go to the Minister on appeal, but the Board is now capable of considering it at an early stage.

The Parliamentary Secretary dealt with this point in Committee and made a statement as follows: What my right hon. Friend has in mind in using that form of words is that in the case of most international fares the Board may well find it not convenient to fix a precise fare but more convenient to specify simply that the fare should be in accord with current I.A.T.A. rates. Then later he said: There is, of course, nothing in the new Amendment to require any British operators, either corporations or independents, either to get the view of the Board before proceeding to the annual I.A.T.A. discussions or to obtain the Board's views on fares when I.A.T.A. has fixed them."—[OFFICIAL REPORT, Standing Committee B, 24th March, 1960, c. 120–124.] That is perfectly true.

But members of the Board tomorrow may think that they can carry out their duty in another way and can ignore the views of the Parliamentary Secretary. They may say "We are entitled under the Bill to consider the fare aspect. We think we ought to do so," and they may project themselves into the negotiations which the Corporations now carry out at I.A.T.A. and in a way which may interfere with the carrying out of commercial policy as they think fit. Therefore it seems to us that the right thing to do—and it does not damage the Board or have any harmful effect—is to make it absolutely clear that on all services, other than domestic services and cabotage services, the fares, should be fixed by the Minister.

The Minister's first thoughts on this matter were absolutely right, and when the fares are fixed by the Minister it has the advantage that he is responsible to the House. But as a result of alterations which he has made and which we seek to put right by our Amendments, the Board may, can and is in a position to interfere in the first place with fare-fixing arrangements, which can be dealt with by the Minister on appeal. Having regard to the fact that the present Minister and Parliamentary Secretary may no longer be in office, we feel rather strongly that this should be put right. The method we propose seems the proper way to do it. I hope that even at this late stage the Government will consider this proposition. We hope that they will either consider the Amendments or undertake to give further consideration to this matter before it goes to another place.

Mr. Rippon

We welcome the opportunity of having a further discussion on this important matter. The right hon. Member for Vauxhall (Mr. Strauss) is perfectly correct when he says that as a result of points raised on Second Reading and in Committee we have made a material alteration in the original provisions of the Bill. I think we all agree that no difficulty would arise in respect of the fixing of domestic fares. That has been agreed from the outset; the tariff will be fixed by the Board and specified in the licence and no confirmation by the Minister will be necessary, but the right of appeal will apply. In the case of all other services, both the cabotage and the international services, the Bill as originally drafted left the fares to be fixed by my right hon. Friend, but it was pointed out that this question of tariffs must to a considerable extent be relevant to applications which would come before the Board. It is, therefore, now provided that the Board will in the first instance specify these tariffs.

It can do this in two ways. It can either specify them in the licence as a precise figure or it can specify in the licence how the tariff is to be determined; and the point about "how the tariff is to be determined" is to enable the Board in appropriate cases to specify that the I.A.T.A. tariff for the time being in force shall apply. No difficulty will arise over that, and we are satisfied that it will not have any such serious effect as the right hon. Gentleman feared on I.A.T.A. negotiations. In these licences it will simply be specified that the tariff will be the I.A.T.A. tariff for the time being on force. If that is changed as a result of international negotiations, then automatically the tariff will be changed in accordance with the precise terms of the licence.

In other cases, especially on cabotage routes where there is no I.A.T.A. fare, the Board will be able to set the tariff out in the licence in the first instance, but I should emphasise that in every case in respect of external services the tariff specified by the Board, by whatever means, must be confirmed by my right hon. Friend, with or without modifications. He therefore retains the ultimate responsibility, but it is recognised that in fixing a tariff it is proper that there should be some original discussion in the proceedings before the Board. The normal right of appeal will apply in any case, but where my right hon. Friend makes a modification in a tariff proposed by the Board, if it is a case with no objection in the first instance he will consult the various parties who might be affected.

It will be important to keep these tariffs in line with international obligations. The House is aware that under Clause 2 (3) there is provision for consultation with the Board on these matters of external relations. I therefore hope that the right hon. Gentleman will feel that we have considered carefully the point he raised and that the difficulties which he envisaged will not arise.

Mr. Chetwynd

I thank the Parliamentary Secretary for his careful explanation, but it still leaves us unsatisfied whether this is the wise thing to do. We think that it would be better to revert to the original situation in which the Minister alone was responsible for arranging external fares and cabotage fares. We are fortified in that view by the Minister's decision of 5th April, in which he announced to the House that he had agreed to the fares arrived at after long negotiations by I.A.T.A. for external services and that he had also agreed to the cabotage fares, pending some minor negotiations with some of the colonial authorities. It seems to us that he should follow that path in the future and not insert another link in the command on fares, as it were, by including the Board.

I.A.T.A. fares are fixed by agreement of the companes concerned, subject to Government approval, but from time to time there is a breakdown in this arrangement, when it is left to individual Governments to arrange bilateral fares between one country and another. It is complicating matters far too much to bring in the Board as a third party, especially as the Parliamentary Secretary said that for external service all the Board will do will be to rubber-stamp whatever agreement is reached by the operators in I.A.T.A.

It seems that the Board will create a staff to enter the fare-fixing business. The Minister has a staff in his Department doing precisely the same thing, and the operating companies have staffs doing precisely the same thing, and the result will be to make the system far too complex, when we know from experience that the present arrangements, by which the Minister takes the decision and tells the House what he has done, are far and away the best.

10.45 p.m.

The need for the Minister's Amendment as against that of my right hon. Friend is even further lessened by the arrangements already made, which are due to operate on 1st October this year, whereby the cabotage routes, with the exception of the Far East, will be shared between the independent companies and the Corporations. I understand, for instance, that the Gibraltar route agreement is to last for ten years and that for the Malta route there is a three-year agreement. Already, it seems, much of the work which otherwise the Board would have had to do in allocating licences and fares has been done before the Board comes into operation. That is a further reason why, we feel, the interposition of the Board is unnecessary.

Is it necessary to wait until 1st October for the fares which have been arranged by the Minister to come into operation? I refer in particular to the cabotage routes, which are within the Minister's sole control. Could not these fares operate just as soon as the companies wish to operate them?

Must the Board go to I.A.T.A. and have a representative there to discuss matters, or will it leave it entirely to the Corporations—and now, I suppose, the independents—to go to I.A.T.A. to do this? On balance, we think that it would be wiser for the Minister to accept our proposal and to retain within his own hands the full powers of fare-fixing on the external routes.

Mr. Sandys

As my hon. Friend the Parliamentary Secretary has made clear, we have no desire in any way to interfere with the workings of I.A.T.A. The Board will not have any direct contacts with I.A.T.A. The British representatives there will be the Corporations and the independent companies, as now. The independent companies are already represented at I.A.T.A.

Concerning the Board's handling of fares, the main reason why I thought it right, after considering the views expressed in Committee as well as on Second Reading, to propose the alteration that was adopted in Committee, was that I considered it difficult for the Board and for the operators to perform their various rôles if external fares were excluded from consideration by the Board.

In the first place, an applicant for a licence for a service cannot put forward his application in a vacuum. He must do it in relation to a class of service and to a particular fare. He might not want the licence if he is allotted a quite different fare to the one he had in mind. This is extremely relevant. It is relevant also to the objector. When an application comes before the Board, another airline will want to know whether to object or to allow the application to go through without making an objection.

Whether it makes an objection will depend often on what the fare is to be. If it is to be higher than its own fare or a different class of fare which does not affect it, the airline will not wish to object. If, on the other hand, the applicant proposes to introduce a service that would undercut the fares of the airline, it is likely to want to object and to argue the case before the Board. It would be difficult for the Board properly to perform its functions unless, when an application comes before it, there is also an indication of the rate of fare and the class of service which an operator proposes to introduce.

With that explanation, I hope the hon. Gentleman will see that it is necessary for the Board to have regard to fares in this manner.

Amendment negatived.

Mr. Rippon

I beg to move, in page 5, line 18, after "force", to insert: and not later than the prescribed time before the expiry of the term for which it was granted". Perhaps at the same time we might discuss the related Amendment—page 5, line 24, to leave out "term for which it was granted" and insert "said term".

The effect of these Amendments is to permit the Minister by regulation to prescribe the date before which any application for the continuance of a licence must be made if the applicant is to benefit from the provisions of Clause 2 (8). The purpose of the subsection is to ensure the continuance of licences while the Board is considering applications or during an appeal. Clearly it is wrong that in order to obtain extra time the holder of a licence should delay his application until the last minute. These Amendments fulfil an undertaking which I gave to the hon. Member for Stockton-on-Tees (Mr. Chetwynd) in Committee when he proposed that the period should be at least six months before the expiry of the licence. That would be all right for long-term licences, but some are for a much shorter period and, therefore, my right hon. Friend thought that it would be right to have the greater flexibility which is provided by these Amendments.

Amendment agreed to.

Further Amendment made: In page 5, line 24, leave out "term for which it wa granted" and insert "said term".— [Mr. Sandys.]