HC Deb 14 February 1977 vol 926 cc28-32
The Secretary of State for Trade (Mr. Edmund Dell)

With permission, Mr. Speaker, I will now answer Question No. 10.

The Court of Appeal found against the Department in the case of Laker Airways versus the Department of Trade in respect of the vires of paragraphs 7 and 8 of the guidance issued to the Civil Aviation Authority in February 1976—Part II of Cmnd. 6400—and of the use of the Crown Prerogative in relation to the possible designation of the Laker Skytrain under the United Kingdom-United States Air Services Agreement, generally known as the Bermuda Agreement. After careful consideration I have decided not to appeal against the Court of Appeal's decision.

I shall now ask the United States authorities to act on the designation of Laker Airways under the present agreement. This agreement is, however, due to expire on 22nd June this year and the Government are engaged in negotiating a new agreement with the United States. Our policy remains one of single designation and capacity rationalisation on long-haul routes and we shall continue to press this on the United States Government. I am sure that the tailoring of capacity to demand on North Atlantic routes commands general support in the interests of the British economy, of airline passengers and of the conservation of fuel.

As regards the period after the expiry of the agreement, I am already in discussion with Mr. Laker. I envisage negotiating a special arrangement with the United States to cover the operation of Skytrain as licensed by the Civil Aviation Authority.

I must emphasise that the Government's general policy of spheres of interest between British Airways and British Caledonian remains unchanged. This policy has received the approval of both Houses of Parliament. The interpretation placed by the Court of Appeal on Section 3 of the Civil Aviation Act 1971 could cause difficulty in the field of licensing policy, and consequently I propose to introduce legislation when parliamentary time permits to clarify the situation. In the light of the foregoing, I do not think it would be helpful at this stage to issue new guidance to the Civil Aviation Authority.

Mr. Rost

I welcome the Minister's belated recognition that not even this Government can place itself above the law and get away with it. Why did it take him so long to accept that he had exceeded his powers? Will he give full-hearted, rather than half-hearted, support to the Laker Skytrain project and confirm that he intends to make compensation for the damage and financial loss that his unjustified vendetta against Laker Airways has caused?

Mr. Dell

There was a reasonable case that the policy that was approved by this House in respect of Laker Airways was within the law. It was right that the case should have been decided in the courts, because it was challenged by Laker Airways. The court of the first instance and the Court of Appeal have now decided that the policy was outside the law, and I have accepted that. I shall certainly try to get Skytrain into the United States and I am involved in discussions with the United States authorities. No question of compensation arises.

Mr. Tebbit

Is the Minister aware that neither I nor any of my colleagues thought, any more than did the former Secretary of State when he announced his policy, that it was ultra vires, although it has now been proved to be so? Does the Minister remember that in a letter of 27th August 1975 a senior official in his Department informed Mr. Laker that the United States CAB was ready to process his application speedily if the Secretary of State changed his mind about it? Is there not every reason, now that the Secretary of State has changed his mind, why a speedy affirmative response should be given by the United States of America? Would not the best token of the Minister's sincerity be an invitation to Laker Airways to join British Caledonian and British Airways, as a scheduled carrier, at the Bermuda renegotiation talks?

Mr. Dell

I am aware of the correspondence to which the hon. Gentleman has referred. It was certainly stated that the CAB would give prompt attention to issuing a permit if the British Government once more took up the question of the Skytrain licence with the United States authorities. But I should not conceal from the House that there may be considerable delay under United States procedure before Skytrain can operate. I shall try to get Skytrain into the United States.

As to Laker joining British Caledonian and British Airways as a scheduled carrier, I remind the House of what the CAA said about Skytrain—that it was an experiment. My own judgment is that we are more likely to have success in getting Skytrain into United States if we negotiate a separate memorandum of understanding. But this is a matter upon which Mr. Laker may wish to make representations to me. That is the present position and I believe that that would be the most effective way of dealing with the matter.

Mr. Higgins

How much money has been wasted by the Government and Laker Airways as a result of the Government's decision to vote against the amendment that was moved by the Tory Party when the guidelines were debated? Have the Government any legal basis for giving guidance under the assumptions that were made when the guidelines were debated and, if not, is it not imperative that there should be legislation immediately rather than a period in which the Government may be taking actions—for which they have no legal justification?

Mr. Dell

If the hon. Member for Worthing (Mr. Higgins) had listened to his hon. Friend the Member for Chingford (Mr. Tebbit) he would have heard him say that nobody thought that the guidance given by the former Secretary of State was ultra vires. It was a matter of doubt, and it is not for the hon. Gentleman, any more than anybody else, to claim a triumph in this matter. As for the legal basis for giving guidance, it is for the Secretary of State to give guidance under the legislation. Paragraphs 7 and 8 of the guidance now under consideration have been judged ultra vires, but guidance can still be given.

The policy of spheres of interests that the House approved remains Government policy and will continue to be implemented, but if legislation in respect of Section 3 of the Civil Aviation Act 1971 requires clarification, we shall provide that at an early date. I do not think that any serious difficulties will occur in implementing the policy of spheres of interest.

Mr. McCrindle

Does the Secretary of State anticipate that, in the light of his decision, Pan-American, TWA and British Airways may apply to run similar services across the Atlantic, and if British Airways did so, what would the Government's reaction be?

Mr. Dell

It has always been argued that if the Laker Skytrain were allowed to operate, other airlines might wish to run similar services. The initial decision would lie in the hands of the Civil Aviation Authority, but I have an appellate jurisdiction in the matter. We shall see the attitude of the United States airlines, but it has been argued in the House that if the Laker Skytrain operated, United States airlines might well have similar ideas. That is why I have said that it is inevitable that there will be a period of negotiation. I hope that it will be short, but there are many problems that will have to be sorted out.

Mr. Nott

Is the Secretary of State aware that we very much welcome his acceptance of the Court of Appeal's finding which, whatever he may say, involves some criticism of his predecessor for acting ultra vires the law? Is he also aware that we are glad that at least one Socialist Minister accepts that the rule of law applies to Labour Ministers as well as to every other citizen of this country? Is the right hon. Gentleman aware that we shall wish to reserve our position on legislation and that I can give no assurances in regard to that at the present time?

We are glad to hear that the Minister will give his unqualified support to Laker in getting a Skytrain service to the United States, but will he use all his powers to ensure that the United States Government issue the necessary permits to enable Laker's operations to go ahead until 1982, which is the date when the present licence is due to expire?

Mr. Dell

I do not think that any comment is necessary on the hon. Gentleman's remarks about the rule of law. I said in my statement that I envisaged negotiating special arrangements with the United States to cover the operation of Skytrain as licensed by the Civil Aviation Authority—and that means until 1982. That is what I shall try to do because that is what the licence says. The method which I decide upon to try to get Skytrain into the United States must be a matter for me, but I have said that I shall try to get Skytrain into the United States.