HC Deb 27 July 1999 vol 336 cc121-33 3.31 pm
Mr. Bernard Jenkin (North Essex) (by private notice)

To ask the Secretary of State for the Environment, Transport and the Regions if he will make a statement on the proposed sale of shares in National Air Traffic Services.

The Minister for Transport (Mrs. Helen Liddell)

In response to a written question from my hon. Friend the Member for Great Yarmouth (Mr. Wright), the Government have announced today their intention to proceed with a public-private partnership for National Air Traffic Services. A copy of the answer and the response to the consultation document are in the Vote Office and the Library.

This is a new and innovative enterprise, providing a genuine partnership between the public and private sectors and creating a new partnership company that will deliver a safe, modern and efficient air traffic control system for the future. For some time, considerable—[Interruption.]

Madam Speaker

Order. I want no running commentary from the Opposition Front Bench while the Minister is making a statement at my request.

Mrs. Liddell

Thank you, Madam Speaker.

For some time, considerable concern has been expressed by many official bodies and individuals about the problems arising from the growth in air traffic. Those concerns have centred on safety, on long-term investment and on management control. In response, the Government have produced radical plans for dealing with air traffic control. We have consulted widely and we are now in a position to announce our proposals.

The public-private partnership for NATS will create a proper separation between the operation of air traffic control and its safety regulation, so as to enhance safety. The operational strength and the safety record of NATS are among the best in the world, but it needs a wider range of management skills and access to capital to meet the challenges of the future, and in particular to cope with the ever increasing rise in traffic.

We want to build on the strengths of NATS, bringing in new management skills, in particular project management expertise; to improve aviation safety; to secure long-term investment of £1 billion over 10 years; and to retain public accountability in a strategic industry. Safety is paramount and always will be.

Last week's report from the Environment, Transport and Regional Affairs (Transport Sub-Committee) summed up the matter. The United Kingdom has an excellent safety record and we have to work very hard to maintain it. We must always guard against complacency, but we should also avoid scaremongering. The Civil Aviation Authority's safety regulation group will continue to regulate aviation safety to the highest standards. There will be no profits before safety in the NATS public-private partnership or anywhere else in United Kingdom aviation.

The aviation community, the Select Committee, the former Monopolies and Mergers Commission, the trade unions and others have been calling for years for safety regulation to be separated from service provision. This public-private partnership will create a proper separation between the operation of air traffic control services in the new partnership company and their safety regulation in the separate independent Civil Aviation Authority. It will provide NATS with more flexibility in investment and management decisions, give NATS the commercial opportunities that it lacks in the public sector, provide the right structure to maximise efficiency, and introduce the commercial, financial and project management expertise that NATS needs.

Our new partnership company can do all those things relatively quickly, and only it can provide all those benefits. It will be a real partnership. The Government are retaining a 49 per cent. stake in NATS, while NATS staff will have a 5 per cent. share. There will be an equal element of gifted shares to all employees, with an opportunity to buy more. A private-sector strategic partner will take the remaining 46 per cent. of the company.

The strategic partner will give NATS access to private capital, enable that capital to be utilised to best effect, and supplement NATS' operational strengths with investment and project management skills, and with commercial experience. That will enable the company better to meet the key investment needs that we face in the United Kingdom. Around £1 billion will have to be invested over the next decade. In time, that will provide the ability to grow the company internationally, extending NATS operational excellence worldwide.

The Government's involvement with the new partnership company will continue. We will appoint some of the company's non-executive directors, and there will be a specific requirement for board unanimity on the specific matters necessary for protecting the taxpayer's financial interests, such as the policy for dividends or reinvestment.

The Government will hold a golden share and will have statutory powers to direct NATS to act in a certain way in the event of crisis, war or national emergency, or to enable the Government to protect national security and the United Kingdom's bilateral and international obligations. The joint and integrated civil and military use of air traffic control systems can and will continue under the public-private partnership.

However, the Government and the strategic partner are not the only interested parties. A key innovative feature of the new partnership company will be a new stakeholder council. That will bring together Government representatives, the strategic partner, NATS management, customers and staff representatives in a forum for full and open consultation about the company's plans and strategies for tackling the challenges that we all face.

Operationally, NATS is one of the best air traffic services in the world. We will build on that, and the public-private partnership will guarantee the future of both Prestwick and Swanwick as part of a two-centre strategy. We want to maintain and enhance NATS' operational excellence. We want to build on its strengths by adding new access to private capital so as to ensure more robust investment. We want to access better management to ensure the completion of both the Swanwick and Prestwick air traffic control centres. We want to give the company an edge in the changing international world of air traffic management.

This is a whole new approach to the management of our air traffic control. It embodies a new safety framework, a new public-private partnership, a new form of management structure, a new form of public accountability and regulation, a new commercial freedom giving access to long-term investment, a new stakeholder council representing all the industry, and a new range of employee rights and security.

The Government are committed to establishing United Kingdom air traffic control as a world leader, securing enhanced safety not just in the skies above Britain, but throughout the world.

Mr. Jenkin

Let us be clear that the Minister for Transport did not volunteer her statement. Why must the Government be dragged kicking and screaming to the Dispatch Box to explain the detail of one of their most controversial policies? Why did the right hon. Lady deliberately withhold until this morning the answer to the written parliamentary question due yesterday? Why was it given only after she had briefed the press and after she had been given a free ride on the "Today" programme? What respect does that show for Parliament? When will the Government show some respect for their own Back-Bench Members and the rest of the House?

I have looked forward to today's statement, and I am grateful to you, Madam Speaker, for its occurrence. We would naturally welcome a straightforward privatisation of national air traffic control that gave clear ownership to the private sector and that was properly regulated for safety by the Civil Aviation Authority. We shall examine the small print of the new privatisation very carefully. It has all the hallmarks of another convoluted compromise, like the public-private partnership on the tube, when the Deputy Prime Minister was forced to accept a Treasury-driven deal in which he did not believe.

I have four key questions: what is the nature of the privatisation; who will be in control; what are the implications of possible foreign ownership; and what have been the costs of more than two years of Labour dither and delay?

First, what is the difference between this public-private partnership and privatisation? Does the Minister agree that if something walks like a duck and quacks like a duck, it is a duck? If the Government are transferring 51 per cent. of shares and day-to-day control to the private sector, why is that not privatisation? The trades unions think it is privatisation—so do we; so does the City; and even most of the right hon. Lady's party thinks that this is privatisation.

Is the Minister haunted by Labour's anti-privatisation scare stories from before the election? The Prime Minister then attacked the Conservatives, saying that the Government cast around for any hapless part of the public sector to privatise. Air traffic control is floated as a possibility".—[Official Report, 16 November 1994; Vol. 250, c. 15.] That notion was described as crazy by the then Labour transport spokesman, the right hon. Member for Oxford, East (Mr. Smith), who went on to declaim to an ecstatic Labour conference: Labour will do everything to block this sell-off. Our air is not for sale. Where is he today? Why has the Minister for Transport not had the courage to tell her own Back-Bench Members that this proposal is a privatisation?

Secondly, who will be in control? If the Government own 49 per cent., employees 5 per cent. and the private sector 46 per cent., who will actually control the business? Will the right hon. Lady confirm that she intends, as stated in the conclusions to her consultation which were published today, to allow the private sector clear operational control?

Thirdly, why have the Government spun the names of potential bidders in the media, but not—even now—come clean with the House? Will the Minister confirm that the Government are contemplating the sale of the controlling stake in Britain's air traffic control system to a foreign bidder? Will she confirm that the name in the frame is Thompson CSF of France? Has she discussed with the Secretary of State for Defence the crucial questions that that may raise about foreign intervention in matters of United Kingdom national security?

What is the relevant expertise and experience of a French-owned company—40 per cent. of which is, incidentally, French Government-owned? What can that company bring to the deal when France has one of the worst, most heavily unionised and chaotic air traffic control systems in Europe? Is it the third way to privatise over here so that a foreign Government can have a stake over there? Or is this another example of what Scots call the auld alliance?

Finally, why have the Government been dithering for more than two years? Does the Minister not realise that while the Government were searching for a way to spin this privatisation in the media and her Department was missing its slots in the legislative timetable, Britain's air traffic system has been starved of capital investment and has had its investment plans shelved, as is pointed out in today's devastating report from the Select Committee chaired by the hon. Member for Crewe and Nantwich (Mrs. Dunwoody)? That means that congestion and delays are being stored up for the future so that business men and holidaymakers will be kept waiting in airport lounges or sitting around on aircraft runways waiting longer for take-off because of Labour's years of indecision. Is this not another example of Labour's contribution to a standstill Britain?

Mrs. Liddell

The hon. Gentleman talked about me getting a free ride, but the only free ride I get is when he is at the Dispatch Box. He cannot make up his mind. First, he says that this is privatisation, then he asks who has control. One reason why we did not go down the route taken by the previous Government is the mess of privatisation that they introduced. We saw the mess that they made of Railtrack, which was recently exposed by the National Audit Office. The previous Government left us with a mess that had to be sorted out.

The hon. Gentleman asked why it has taken two years to get this far. It is because we first had to untangle the mess that we inherited and ensure that the Swanwick centre was put back on stream. My right hon. Friend the Member for Hamilton, North and Bellshill (Dr. Reid) had to sort out the mess over the centre at Prestwick because of the botched private finance initiative attempts of the previous Government. The decisions that we have announced today will underpin and safeguard Swanwick and Prestwick.

In his confused response to the statement, the hon. Gentleman raised several scare stories about the future of the national air traffic system. It is precisely because we will not put profit before safety that we have not gone for full-scale privatisation. The Government will retain strategic responsibility for NATS through the golden share. That will be entrenched in any legislation in a way that ensures that our stake cannot be changed in order to go to full-scale privatisation. We are determined to ensure that the safety of air travellers is protected.

The hon. Gentleman asked about foreign control. He seems more prepared to believe what he hears on the radio and reads in newspapers than to read the documentation before him. The Government have not approached any bidders—but yes, several people are interested in our proposals because they see their attractions. There will be not a flotation of NATS, but a trade sale to a strategic partner chosen through a rigorous competitive process that will take into account any questions of national security or of not being suited to the security and safety aspects. There will be stringent suitability tests and we will be able to filter out unsuitable investors of whatever nationality. The Government will maintain the right to veto the transfer of substantial shareholdings.

In addition, by ensuring that the employees of NATS have access to a shareholding, we are recognising their expertise and concern about the future of the service to which they contribute. In doing that, we are also ensuring that their pensions are protected and that they can look forward to the expansion of NATS rather than the haphazard, ill-thought-out proposals of the previous Government, announced by the right hon. Member for North-West Hampshire (Sir G. Young) and reaffirmed in the Conservative party manifesto.

The hon. Gentleman also made a point about why the announcement is being made today. We wanted to make the announcement earlier, but we required a response from EUROCONTROL on the European charging system. That became available last week and a parliamentary question was tabled on Friday. That question was quite clear on the Order Paper, and we answered it this morning. We also ensured that no information about the proposal was made public prior to the answering of that question, tabled by my hon. Friend the Member for Great Yarmouth. If the hon. Member for North Essex (Mr. Jenkin) had been awake at 7.10 am—he is plainly not awake at the moment—he would have heard me say to Mr. Naughtie that I could not provide details about the announcement that we would be making later today.

We have secured the future of National Air Traffic Services in a way that protects the safety of the travelling public and allows the expertise of NATS to be available internationally, which it could not be previously. We have witnessed the previous Government's mistakes and we have learned from them. We have been prepared to listen and we have acted.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

My right hon. Friend will be aware that it is precisely because safety and the control of our airspace has political and, above all, defence implications that many of us believe that this is a wholly unsuitable organisation to be offered up to the profit motive. If the arrangement goes ahead, what will happen to the independence of airspace planning? As Swanwick is not working and will not, apparently, work for some time, will the taxpayer be left with a heavy contingent responsibility? That would not be acceptable.

Will it be possible to maintain the independence of vested interests for airspace planning, which is tremendously important? Finally, why was the Government's response to my Committee sent to us in the form of a memorandum that cannot be placed in the public domain until it has gone through the Main Committee when, frankly, a Command Paper would have been suitable?

Mrs. Liddell

On my hon. Friend's last point, the Government chose a memorandum as a way of responding quickly and fully to the Select Committee. I make it absolutely clear to the Committee and the House that the Government have no objection to that memorandum being published, should the hon. Lady choose to do so. We chose that method as a means of speedily sending a response to the Committee because we were anxious that these very important issues should be placed fully in the public domain as quickly as possible. No disrespect to the Committee was intended, and we are more than happy for those details to be published.

My hon. Friend asked about the independence of airspace planning. That is preserved. She asked also about the danger of the taxpayer having to make contingency payments for Swanwick. One of the attractive reasons for adopting these proposals is our desire to ensure that the taxpayer will in future be relieved of the costs created by the absolute mess that the previous Government made of the contract for Swanwick. That is not dissimilar to the mess that they made of the channel tunnel rail link, when my right hon. Friend the Deputy Prime Minister had to intervene to ensure that there was a proper contract to protect the interests of the British taxpayer.

Mr. Tom Brake (Carshalton and Wallington)

Before the election, Labour said: Our air is not for sale. It is very obvious now that at least half of it is up for grabs.

I have a few simple questions that I hope the Minister will be able to answer. What guarantees can she give that a future Government will not sell the Government's share? What estimates have the Government made of the impact of their proposals on the implementation date for Swanwick? What re-evaluation of the public-private partnership proposals have the Government undertaken, as recommended by the Transport Sub-Committee to—as it said in its report: ensure that they are entirely compatible with the safe and expeditious movement of air traffic"?

What ceiling have the Government placed on any bonuses or options that senior NATS management might derive from this sale, so as to reduce the chances of creating any NATS fat cats? Finally, will the Minister comment on the relevant expertise in air traffic services of National Grid, which I understand may be the frontrunner for providing the service, or of any other possible bidders?

Mrs. Liddell

The hon. Gentleman asked several questions. He asked whether any guarantees could be given that no future Government would seek to privatise air traffic control. As he knows, no Government can bind their successor, but written into the Bill will be a provision to ensure that, should a future Government decide to take that route, further primary legislation would be needed. That is as much of a guarantee as any Government can give about their successor.

Swanwick is now on stream to come into full operation in about 2001–02. The technical handover has taken place and training and testing of the systems is under way. Those arrangements will lead to much better project management, which will help the second centre at Prestwick. A project manager has already been appointed for Prestwick and we are expecting a full analysis of the business case in the next couple of months. Therefore, this proposal will speed up the process of getting a proper two-centre policy under way as quickly as possible.

The hon. Gentleman asked about safety guarantees. As I pointed out in the statement, we intend to secure a separation of the safety responsibilities of the Civil Aviation Authority from the operational responsibilities of the new partnership company. That has been in demand for some time. The Government see the logic of that, which is why we have proceeded in this way.

The hon. Gentleman referred to fat cats. That is an extremely valid point, because the previous Government's privatisations showed that they were prepared to create fat cats at the taxpayer's expense. We shall protect the taxpayer through the Government's shareholding and through the Government's appointment to the new partnership company of directors whose concerns will include the remuneration of personnel of that company.

The hon. Gentleman mentioned the previous Government's privatisation proposals, which, when in opposition, we opposed. We did so because, under the previous Government's proposals, our air would have been for sale. By separating the safety requirements of the CAA from the operational responsibilities of the new partnership company; by ensuring the existence of the golden share and the establishment of the shareholder company; by requiring that the Government appoint non-executive directors to the board of the new partnership company; and by our involvement with EUROCONTROL and the announcement that it made last week on the European charging system, we are in a position to put in place safeguards that would not have been put in place by the previous Government. That is why we have gone for a unique approach in a new partnership company. We have learned the lessons of the mess made of privatisation by the previous Government.

Dr. Gavin Strang (Edinburgh, East and Musselburgh)

Does my right hon. Friend agree that the most important requirement facing air traffic control is to ensure that the new centres at Swanwick and Prestwick are successfully brought into operation without further delays? Would it not be better to allow the top management of air traffic control to concentrate on those major technical and managerial issues without being diverted by a major and complex privatisation? As air traffic control in this country runs at an operating profit, if it is the Government's main objective to allow air traffic control to raise money privately for investment, why do they not allow a public sector National Air Traffic Services to borrow in the market in the same way as is envisaged for the Post Office?

Mrs. Liddell

My right hon. Friend has raised a number of issues. He asked about the development of Swanwick and Prestwick—an issue in which he takes a special interest. Through the public-private partnership, we shall be able to ensure that there are no further delays in getting Swanwick and Prestwick on stream. As a result of the previous Government's incompetence, the delays at both Swanwick and Prestwick have been unacceptable. Faced with an increase in traffic of 6 per cent. per annum—8 per cent. last year—we need those two new centres on stream very quickly indeed.

My right hon. Friend asked about the pressures on top management. One reason why we have gone for a public-private partnership is that we want to be able to enhance and enlarge the management expertise within NATS. One considerable difficulty that we experienced when we came into government was the lack of project management at Swanwick. As a consequence of the lessons learned from that, an external project manager was appointed to allow the Prestwick development to go ahead. Rather than hampering top management, introducing a public-private partnership will assist top management to deal with the complex issues that will require £1 billion of investment over a 10-year period—an extremely complex matter.

The right hon. Gentleman—[HON. MEMBERS: "Friend."] Indeed, he is a right hon. Friend. When I was struggling for a way to emphasise how good the Government's proposal was, I looked to the words of my right hon. Friend, who stated on 11 June 1998: This package, taken together, will guarantee the highest safety standards as air transport increases in the future. It will retain a large public stake and golden share in NATS. And it will ensure that NATS can finance its future investment effectively within a secure framework of safety and economic regulation."—[Official Report, 11 June 1998; Vol. 313, c. 637.] I could not have expressed it better myself.

However, our proposal is not solely a revenue-raising exercise, although the previous Government put a price of £500 million on NATS. Our proposal will allow an opportunity to raise capital much more freely on the international markets, and it will allow it to be done without Treasury constraints. It will allow a degree of flexibility that could not be guaranteed within the public sector. It will also ensure that prudent use of the public finances will enable us to continue with the economic growth that has been secured by the Government through a sensible economic policy, which the Opposition seem now to have adopted.

Mr. John Wilkinson (Ruislip-Northwood)

May I tell the right hon. Lady that my constituents, a number of whom work at the West Drayton centre, will be profoundly unimpressed by her attempts to shuffle the announcement through in a written answer the day before the summer recess? On my constituents' behalf, I express my warm thanks to my hon. Friend the Member for North Essex (Mr. Jenkin) for ensuring that the matter is being properly and publicly debated.

The right hon. Lady has no comprehension of air transport safety matters. Is it not the case that countless airlines across the world are owned wholly by the private sector, are regulated by the appropriate regulatory authorities and perform entirely competently and safely to standards equivalent to those in the public sector? Is it not also a fact that air traffic delays are now running at 10 per cent. of civil air transport movements in United Kingdom airspace? In view of that and the inordinate delays both with the Prestwick centre, which is still in project definition, and with Swanwick, why has not the right hon. Lady come to the House much sooner to put that shambles to rights? Will she bear in mind that there are a number of private sector airports with private sector air traffic controllers that do a perfectly good job with regard to air safety?

Mrs. Liddell

That is the longest intervention that the hon. Gentleman has made without mentioning Europe. He will know, if he has contact with air traffic controllers at West Drayton, that there has long been uncertainty about the future of NATS, largely because of the mess that we inherited from the Government whom he supported. I judge it a matter of some importance to end that uncertainty, so that those who work in NATS can be taken fully into account as our proposal moves forward. Had we received a response from EUROCONTROL earlier than last week, we would have been able to publish the proposals earlier than last week.

The hon. Gentleman spoke about privatised airlines. NATS is not an airline. We seek to take the best of the public sector and the best of the private sector and work together in partnership, with safeguards and controls that guarantee the national interest, security and safety.

The hon. Gentleman mentioned air traffic delays. As he will know if he has visited West Drayton, over the past year NATS has gone to considerable lengths to try to limit the number of air traffic delays over United Kingdom airspace, and has made some improvement. However, the hon. Gentleman makes a valid point about the international impact of air traffic delays.

One of the great benefits of the proposal before the House this afternoon is that it will enable the considerable expertise of NATS to be marketed internationally, so that we can take our experience to other countries which seek to learn from Britain's experience and, in that way, seek to improve air traffic not just nationally but internationally in a way that benefits all passengers.

Several hon. Members


Madam Speaker

Order. As a number of hon. Members seek to ask a question on the statement, may we have brisk questions and answers so that I can call as many hon. Members as possible?

Ms Sandra Osborne (Ayr)

My right hon. Friend said that the speculation over the years about NATS has caused constant insecurity, and I agree—but does she agree that we are now faced with another two years of turmoil while the PPP is introduced? When will phase 2 of the new Scottish centre begin, and how will that be funded? Is my right hon. Friend aware of the early-day motion in my name, signed by 140 hon. Members, calling on the Government to consider in detail a public sector alternative with greater commercial freedom? What action have the Government taken on that? Can she confirm whether the receipts will be used for investment in NATS or for other transport matters? Finally, does she agree that, when hon. Members jet off for their summer holidays, they should ponder seriously the future safety of national air traffic control?

Mrs. Liddell

I have discussed these matters with my hon. Friend, who takes a considerable interest in matters at Prestwick. She mentions the uncertainty that has existed over Prestwick, but she will be well aware of the considerable difficulties in moving ahead with the Prestwick project because of the private finance initiative proposals that we inherited from the previous Government. Now that we have resolved those difficulties with today's announcement, we should be able to press ahead with the Prestwick proposal. It will also allow the management strengthening that is required to process that as quickly as possible.

My hon. Friend also referred to the independent publicly owned company proposal from the trade unions. We considered that in some detail—it contains some excellent ideas—but it would still have meant that NATS would not have had the commercial flexibility to raise internationally the capital required to secure its future in the long term.

With regard to the receipts from the public-private partnership, my right hon. Friend the Prime Minister has already pointed out that the arrangements mean that the Department of the Environment, Transport and the Regions has been able to secure an even better settlement in the comprehensive spending review so that we can ensure an integrated transport system that operates in the United Kingdom's interests. Phase 2 of the new centre at Prestwick will be funded under the partnership, and the Government will fund it until then.

Mr. Christopher Chope (Christchurch)

Many of my constituents who work for NATS will be confused and bewildered by this muddled statement. Can the Minister come clean with the House about what will happen to the £500 million that will be raised from the sale? Is not the reality that that money is needed to pay for the massive overspend on the Jubilee line, and that that is what is driving this weird Government announcement?

Mrs. Liddell

The massive overspend on the Jubilee line is much more than £1 billion, because of the ineffective contracts that we inherited which could have been designed only by someone who had no experience of drawing up contracts. The hon. Gentleman was a Transport Minister, so he should be hanging his head in shame. Were it not for the overspend on the Jubilee line, we would have been able to release even more expenditure for public transport in London and elsewhere, so we will take no lessons from the previous Government on how to draw up contracts.

Mr. Tony Senn (Chesterfield)

Is the Minister aware that her statement owes much more to Mrs. Thatcher than to Labour's manifesto, and that the way in which it was put confirms our fears that the Government distrust the public sector and want to see it mixed up with the third way? Is she also aware that today, Great Western Trains was fined £1.5 million for the accident at Southall two years ago, and that nothing that she says will remove people's doubts about safety when profit runs a service as important as this?

Is the Minister also aware that it is no comfort to know that the proposal was dictated by the Maastricht criteria, which require restrictions in public expenditure? The money will go towards paying for the Balkan war or keeping income tax down for the richest people, which is the one pledge that has been kept.

Mrs. Liddell

Mrs. Thatcher would never have taken into account the requirements of the employees of NATS. She would never have enshrined the golden share; ensured that there were Government-appointed directors and a requirement for unanimity among the board; put a stakeholders council and a stakeholders agreement in place; or retained statutory powers of direction for key Government interests. Similarly, she would never have ensured that safeguards were put in place to ensure that the taxpayer, as well as the travelling public, is protected. We have learned from the mistakes of Mrs. Thatcher and her supporters, which is why we are putting in place a public-private partnership that will add to the air traffic service, not detract from it.

Mr. David Wilshire (Spelthorne)

As one of Heathrow's Members of Parliament, may I congratulate the right hon. Lady on her party's U-turn? May I also congratulate her on adopting sound Conservative and capitalist approaches to providing public services? Will she keep in mind the fact that my constituents who live near Heathrow are far more concerned about aircraft safety than about who owns air traffic control? Will she assure the House that, as a born-again capitalist, she will ignore the socialist dinosaurs on the Benches behind her?

Mrs. Liddell

I do not respond to soundbites. The hon. Gentleman's constituents who live near Heathrow will be able to testify to the safety approach taken by NATS. We seek to build on that and scaremongering from either side of the House will not be appreciated.

Mr. John McDonnell (Hayes and Harlington)

Hon. Members will be aware that Heathrow is in my constituency. My constituents have more aircraft above their heads than anyone else in this country—and if the proposal is seen to contribute in any way to a reduction in safety, they and the people of this country will never forgive this Government. What has happened to change Government policy in the two years and eight months since a Labour spokesman said, "We will not sell the air traffic control service."? We demand an explanation. In my view, the proposal, which will raise £500 million, is Treasury driven, but we should not be selling the safety of our skies.

Mrs. Liddell

If this Government thought that the proposal would do other than enhance the safety of the travelling public and those who live around airports, we would not have proceeded with it. We see a need for enhanced and strengthened management and more finance in NATS, which will ensure that it has the investment to allow it to deal with the growth in traffic that is taking place. That is precisely why we have proceeded with this private-public partnership. We inherited a situation in which the previous Government had been determined to proceed with a wholesale privatisation that would not have taken safety into account. We have learned the lessons of Railtrack, which they sold for a knock-down price with no concern for safety. We are determined to enshrine partnership in the proposal, taking the best of the public and private sectors so that we can enhance not only safety, but future opportunities for air traffic controllers.

Mr. Eric Forth (Bromley and Chislehurst)

I congratulate the Minister on taking this significant first step towards an exciting new future for the air traffic control system. I hope that the Government will continue to move towards an objective that we would support. Will she explain her rationale for the trade sale? Is it a result of her unique experience in the private sector and the lessons that she learned there? As a result of the thrust of her policy, will she consider naming this new service the Ronald Reagan memorial air traffic control service?

Mrs. Liddell

One of the lessons that this Government have learned is never to look to the previous Government when it comes to contracts. The contracts that we inherited—on the Jubilee line, the channel tunnel rail link, Swanwick and Prestwick—were bizarre. The right hon. Gentleman does himself no service in trying to undermine what this Government seek to do in relation to air traffic control. Private sector advisers warned previous Governments about the folly of their privatisation proposals, and his Government were not prepared to listen to them.

Laura Moffatt (Crawley)

Does my right hon. Friend accept that, given the rise in traffic around Gatwick airport from 27 million to 40 million, there is understandable nervousness about today's decision? Does she agree that, as the air industry is one of our premier industries, it is important to maintain public confidence? Are the air traffic control systems of any other country under private sector control?

Mrs. Liddell

Countries such as Canada and Switzerland have equity involvement in their air traffic services. We have looked closely at international examples. My hon. Friend says that people are anxious about air safety. I do not underestimate that, particularly given that people saw the mess that the previous Government made of privatisation. That is precisely why we have put, and will continue to put, safety at the centre of our proposals, and why we have put in place strong Government safeguards to ensure that the national interest is given priority.

Mrs. Jacqui Lait (Beckenham)

Is the right hon. Lady content that the present air traffic control systems are safe from computer attack? What safeguards does she expect to put in the Bill to ensure that the new owners will retain the integrity of the computer systems?

Mrs. Liddell

The air traffic control systems currently in operation are well tested and tried. The new systems that are being put in place at Swanwick are being subjected to a rigorous process of testing. Technical handover has already taken place, and testing and training are being carried out. The Government will retain a veto over any measures planned by a prospective stakeholder partner in this enterprise which we feel might jeopardise the integrity of the systems. We believe that the safety of the travelling public is paramount, which is why we pay tribute to those who work in NATS and to the systems that they operate with enormous safety. That should be recognised on both sides of the House.

Mr. Martin Salter (Reading, West)

May I put on record my thanks to the Minister for meeting Members of Parliament who represent constituencies under the major flight paths, or who have serious reservations about the proposed public-private partnership?

I have three specific questions for my right hon. Friend. First, given the failure of the Rail Regulator to improve safety standards on our railways following the disastrous decision by the previous Government to privatise our railways, what confidence does she have that the new regulatory framework will be any better? Secondly, why are the air traffic controllers implacably opposed to the public-private partnership? Who knows best about aircraft safety: the people who have given us the safest and most reliable system in the world, or some politicians and a bunch of City investors? Thirdly, what should I tell my constituents who are concerned about overcrowding in the skies above the Thames valley and who were greatly encouraged by the statements by my right hon. Friend the Member for Oxford, East (Mr. Smith) just seven months before the general election?

Mrs. Liddell

I thank my hon. Friend for taking the opportunity to bring a delegation of Members of Parliament, from constituencies that surround airports, to meet me last week. A number of important points were raised at that meeting. Since last October, there has been a lengthy consultation process on these proposals and we have listened closely to the responses, which have been published and are available in the Vote Office and the Library.

My hon. Friend referred to the Rail Regulator's previous record. I remind him that we introduced the Railways Bill precisely so that we could strengthen the Rail Regulator's powers. The Civil Aviation Authority will now have sole responsibility for the safety aspects of air traffic control operations. That is what all the industry experts, including the Transport Sub-Committee, have asked for.

My hon. Friend mentioned the concerns of air traffic controllers about the Government's proposals, but they became aware of them only this morning. Our proposals take into account a number of points that they made in their own proposals. He should bear in mind the fact that they, too, advocated an equity-based solution. We are determined to ensure that the partnership that we are putting in place includes the best from the public sector and the best from the private sector.

My hon. Friend also talked about overcrowding in our skies. That is precisely why we need a public-private partnership that can proceed. quickly and get on stream the two new centres at Swanwick and Prestwick, so that as air traffic increases the structures and facilities available for managing our skies is up-to-date and forward looking.

Madam Speaker

Order. We must now move to the statement.

Hon. Members

More, more!

Madam Speaker

Order. I call Mr. Secretary Straw.