§ 12.7 p.m.
§ THE SECRETARY OF STATE FOR DEFENCE (LORD CARRINGTON)
My Lords, I hope that by moving the Second Reading of this Bill I shall do nothing to upset the atmosphere of the love feast which I have just witnessed. I do not think I need dwell at any great length on the background. Two years ago the Edwards Committee made three main recommendations for the future of British 1226 civil aviation. It recommended, first, the creation of a "Second Force" airline to strengthen and develop the independent sector of the industry. Secondly, it recommended the establishment of a Civil Aviation Authority, so as to bring together as far as possible in a single body all aspects of the regulation of the industry. And thirdly, it recommended the setting up of another new body, the British Airways Board, to exercise strategic control over the two Air Corporations and their subsidaries on the lines of a holding company in the private sector. All three of these recommendations were welcomed in the last Administration's White Paper of November, 1969. The first has now been realised by the formation of Caledonian/British United Airways, and the purpose of this Bill is to give effect to the second and third.
Although certain differences of view have been expressed on some aspects of these matters, I believe that there is a broad underlying consensus as to the purposes of the present Bill. Indeed, I am encouraged in this belief by some observations that were made by the noble Lord, Lord Beswick, in this House some months ago. That is not to say, however, that there are not important issues to be discussed, some of them going to the heart of the Bill. I thought that in what I have to say it would perhaps be more helpful if I concentrated on these, rather than on trying to summarise or embellish the Explanatory Memorandum or financial provisions.
Perhaps the most important and difficult of these central issues, which runs as a theme throughout this Bill, is the question of achieving the right balance between independence and control. Here we are, setting up two important new bodies. How far can they be left to get on with the jobs which we are giving them? Taking the Authority first, there are some who think it should be totally independent, but I really do not think that could be accepted. One has to be realistic: only the Government in Parliament can decide policy and determine national priorities. This, indeed, is the concept put forward by the Edwards Committee, which I believe we all accept, of an Authority which has the widest possible discretion in reaching its particular decisions for the regulation of the industry, but which acts within the framework 1227 of policies laid down by the Government and approved by Parliament.
The Bill gives effect to this concept by establishing the Authority as an independent corporation which is neither the servant nor the agent of the Crown, and by providing in Clause 3 for the Authority to act in the manner which it considers is best calculated to achieve the objectives set out in subsection (1) and to accord with the guidance to be given from time to time, with the approval of both Houses of Parliament by Affirmative Resolution, under subsections (2) and (3). Inevitably, however, as the Edwards Committee itself recognised, the purity of this proposition has to be qualified in practice. There are the difficult questions of directions, appeals and regulations, for which provision must be made. The Bill provides for two sorts of directions to be given by the Secretary of State to the Authority: those which may affect its regulatory decisions and those concerned with matters of housekeeping. It is especially the first kind of direction which we must be careful not to overdo, if the Authority is to be truly free to reach its own decisions, other than in the exceptional case. Indeed I believe we have kept this kind of direction to the barest possible minimum, not least by agreeing in another place to the deletion of the power to give general directions in the national interest.
What remain are essentially reserve powers, to give directions in time of war or national emergency, or in the interests of national security, or in consequence of the Secretary of State's continuing responsibility for international relations in the field of civil aviation, or to deal with such environmental matters as the control of aircraft noise. There is also the power to direct the Authority to suspend action in a case or class of cases pending modification of the policy guidance—a power whose scope was narrowed in another place—and finally the power which is needed in order to set out by direction the terms of reference of the National Air Traffic Service. As I have said, these powers except the last are all by way of being reserve powers, for exceptional use only, and to demonstrate the Government's good faith in this regard we have provided in Clause 20 for the Authority to publish in its annual report details of all the directions that they are given under any of these powers I have mentioned, 1228 save to the extent it would conflict with the national interest for any particular details to be made public.
I turn now to appeals. Neither the last Government nor this one could accept the proposal in the Edwards Report that appeals in matters of air transport licensing should lie to the courts; nor could this Government accept the proposal that the grounds of appeal in such matters should be confined to the issue of the consistency of the Authority's decision with the objectives and policy guidance laid down. The essential reason for this lies in the fact—as I have mentioned earlier—that we are placing upon the Authority a duty to exercise its own discretion in reaching, decisions within the framework of the policy guidance. That guidance will set out and reflect a number of seperate strands of policy, amplifying and building upon the different elements that are already present in the objectives set out in Clause 3(1), and these various strands may quite often pull in different directions.
It will be for the Authority to strike a balance between the different elements of the policy guidance and to resolve any conflicts that may arise. Otherwise, if these matters were all to be resolved in advance, there would be no point in setting up the Authority. What this means, however, is that a court could not determine, from the policy guidance, whether the Authority had acted consistently with it or not. Nor is a court, in my view, well fitted to determine issues of economic policy. Therefore appeals on air transport licensing questions must lie to the Secretary of State. For the same essential reason, an appellant could not tell with any confidence whether the Authority's decision was consistent with the guidance or not; the question of consistency with the guidance would be altogether too subjective a matter for the grounds of appeal to be confined to that one issue.
Therefore, as a consequence of ensuring the reality of the Authority's discretion to resolve possible conflicts between different elements of the policy guidance, the right of appeal must be unrestricted. My Lords, I acknowledge that there is a danger in this—the danger that the Secretary of State will be tempted to vary or reverse the 1229 Authority's decision in such a way as to undermine its standing, much as the standing of the Air Transport Licensing Board was undermined at an early stage. It is for this reason that my right honourable friend the Minister for Trade declared in another place that it was the intention of the Secretary of State to uphold the Authority's decision unless there was a powerful reason to the contrary. Nor is that the only safeguard. The Air Transport Licensing Board was left, in effect, to work in a policy vacuum, but the Authority will have policy guidance laid down for it, which will be the Secretary of State's policy and which he will certainly have well in mind in considering any appeal that may come before him. In other words, because the Authority and the Secretary of State will both be working within the same policy framework, the likelihood that they will reach contrary conclusions is much reduced.
Finally, there are the regulations, and I refer particularly to those which are to be made under Clause 5, which will to some extent determine the way in which the Authority is to carry out its task. The purpose here is not to provide another channel for governmental intervention in the Authority's decisions but to safeguard the rights of parties in two main ways. First, under subsection (1), the regulations may prescribe what matters the Authority must decide itself, bearing in mind that without such provision paragraph 15 of Schedule 1 would enable the Authority to delegate its licensing decisions to anybody at all, without regard to who they were. Then, under subsection (2), regulations may prescribe rules of procedure, so as to ensure that parties are heard fairly, while subsection (3) places the Authority under the supervision of the Council on Tribunals, so far as the Authority will be acting as a tribunal.
I turn to the Airways Board. The balance between independence and control was much easier to strike. Its function is to take strategic control of and financial responsibility for the public sector airlines. It must therefore have the powers it needs to carry out these responsibilities and the freedom to exercise its commercial judgment as would, in broadly the same way, a private sector holding company. But as in other 1230 Statutes governing nationalised industries, certain powers must be reserved to the Government. There is the control of appointments to the Airways Board, coupled with the control of the remuneration and pensions of board members. The counterpart of this control is the security of tenure enjoyed by board members during the currency of their appointments which enables them, as we have all witnessed, to take on occasion a robust independent line where the interests of their undertakings seem to them to be unreasonably threatened. There is the control given by the Bill of borrowing and investment, of reserves and of accounts, controls all of which are far-reaching in character bit which Governments have learnt to apply in a pragmatic fashion which gives the industries reasonable independence in their day-to-day activities.
Finally there are powers given by the Bill to the Secretary of State over interests in and the activities of subsidiaries which are certainly more controversial but which once more will need to be applied if at all—with care and sensitivity. The powers I am referring to have already been modified during the passage of the Bill in another place, and I would not regard them as carrying any sinister political overtones, in case anybody should think that they do.
There is however one set of powers provided in this part of the Bill which do perhaps deserve special mention in a survey of the kind I am making, since they arise from the nature of the particular job that is being undertaken in relation to the public sector airlines. I am referring here to the control given to the Secretary of State over the direct provision of air transport services by the Airways Board; the provisions, in Clause 39, for periodic reviews and reports on organisation, together with an associated power of direction and a power to give or withhold consent; and the Secretary of State's power, if certain conditions are satisfied, to make an Order, subject to Affirmative Resolution, dissolving either of the two Corporations.
It would have been open to us in this Bill to have taken the doctrine of independence for the Airways Board to the length of omitting the first two provisions, and enabling the Airways Board to dissolve the Corporations at will; 1231 equally we could have provided for far more rigorous Government or Parliamentary control of steps the Airways Board might wish to take to reduce the independence of the two Corporations.
Between these two extremes the Bill seems to me to adopt a fair balance, although it is inevitably one which leaves a good deal on trust to the Airways Board on the one hand and the Government on the other. We have concluded that any attempt to insert greater Parliamentary control over the oversight of the activities of the Airways Board which the Bill gives the Secretary of State would go some way to defeating what I described earlier as the cardinal objective, with which I hope we all would agree, that the Airways Board should be set up to get on with the important job which it has to perform.
My Lords, in pursuing this theme of the balance between independence and control, I have in fact touched upon most of the important issues which this House will wish to consider at Committee stage in dealing with the Bill. But before I conclude, there are a few other points that I should mention. First the setting up of the Airworthiness Requirements Board, which will carry over into the new arrangements that fund of experience and wisdom that has been characteristic of the work of the Air Registration Board under the Chairmanship of the noble Lord, Lord Kings Norton. I would, if I may—and I think that everyone in your Lordships' House who knows anything about civil aviation would agree—like to take this opportunity of paying tribute to him and to his Board for what they have done over many years. The noble Lord will know that it is nothing to do with him that this change has been made; he had better look to Edwards rather than to the Government.
This provision in the Bill received a most searching scrutiny in another place. I think one can say that it now embodies, or reflects, nearly every suggestion that the noble Lord and his colleagues and staff have made during the extensive consultations that have taken place. I trust we can now look forward to the carrying over into the future machinery of everything that made the Air Registration 1232 Board what it was in terms of standing and authority in the world of aviation.
I ought to mention Clause 29, which was added in another place, and which refurbishes in a small, but important, respect the existing powers for controlling noise at British Airports Authority aerodromes, and extends them to cover other aerodromes where aircraft noise is, or may become, a nuisance. As my right honourable friend has pointed out, these powers will not, and cannot work miracles, but they should at least allow the problem of aircraft noise to be contained, despite the continuing expansion of civil aviation, until such time as quieter engines, or any other device that anybody can think of, are in general use.
This is a large and complex Bill, and I hope your Lordships will not think I have dealt with it cavalierly. It would take a long time to go through its 70 clauses and 11 Schedules, and I have not attempted to cover all its aspects. I personally am anxious to consider what other noble Lords have to say, and in particular the noble Lord, Lord Beswick, who knows a great deal more about civil aviation than I do, or shall ever hope to do.
Let me conclude by saying that, in my view, this is an important measure; in many ways it is a landmark not only for civil aviation but also in the evolution of the machinery of Government. It is a measure which has been widely welcomed, perhaps unusually so—and I hope that record will not be broken this morning—and for which many people have been waiting after a long period of uncertainty. I therefore commend this Bill with some confidence, and beg to move that it be read a second time.
§ Moved, That the Bill be now read 2a.—(Lord Carrington.)
§ 12.26 p.m.
§ LORD BESWICK
My Lords, we are grateful to the noble Lord for the way he has introduced this Bill, and especially for the fact that he has concentrated upon certain sensitive areas in the Bill instead of going through it in the normal, rather tedious, clause by clause fashion. I am grateful to him for the kind words he said about me, little as I think they reflect the actual truth. I hope that my gratitude will not be considered diminished by the fact that I shall go on to ask certain 1233 other questions, despite the fact that we have been given so much interesting additional interpretation of what is in the Bill.
Something was said about the antecedents; in fact, they go back further than the noble Lord indicated. The Bill itself has been on the stocks for a very long time. It is my view that the sooner it is launched, the better. There have been two particular consequential disadvantages of the delay in getting the Bill on to the Statute Book—apart from the degree of uncertainty. First, it has been necessary to appoint new chairmen for the two new Corporations, and clearly this would have been advantageous had it been done in accordance with the provisions of Clause 30 of the Bill. Secondly, we have had this controversial issue of additional opportunities for independent operators, and it is my view that this could have been dealt with with benefit through the machinery of the Licensing Authority, but I shall return to that later.
As the noble Lord has said, the time in the other place was used most constructively, and in certain ways the Bill has emerged greatly improved. However, in my view there remain weaknesses, and I am hoping that those who are interested, on all sides of the House, will contrive to make further improvements. I shall indicate this afternoon some of the principle areas where, with good will and the cooperation of the noble Lord who has given his attention to this matter, we might make further improvements. May I first ask the Minister to give us even a little more benefit of his thinking about the constitution of the proposed Civil Aviation Authority. His right honourable friend has said that the Authority should be strong and as independent as possible. That is fine. As the noble Lord himself said, there is a delicate balancing act here as between independence and control. But how is this body of 12 to 20 men or women to operate? They have to cover a wide variety of functions—in my view too wide a variety. What we need, and some of us have argued this for years, is a forward-looking, authoritative body, planning our air transport resources to the very best possible advantage, and using a slide-rule and professional judgment rather than political theory, in determining where advantage lay from the national, including the consumer, point of view. We wanted the emphasis 1234 on planning and licensing, rather than on administration of practically everything connected with civil air transport. I never thought, for example, that the A.R.B. should be placed directly under the responsibility of the Authority and I really cannot accept what the noble Lord said, that the Edwards Committee should be blamed, not the Government—
§ LORD BESWICK
Surely, my Lords, if they so wished the Government could have overruled a recommendation in this case as in others.
§ LORD CARRINGTON
My Lords, I did not mean to suggest that the Edwards Committee should be blamed. I meant to suggest that nobody was casting any aspersions upon the noble Lord, Lord Kings Norton, or the Air Registration Board which he presided over with such distinction. The original idea came from the Edwards Committee, with which the Government agree.
§ LORD BESWICK
My Lords, the noble Lord said two things: first, that we all, on both sides of the House, admire the way in which the noble Lord, Lord Kings Norton, has presided over the affairs of the A.R.B., and I associate myself absolutely completely with that. But I take my admiration further. Because he has presided over the A.R.B. so remarkably well, because that body has the complete admiration and, indeed, affection of the entire industry, it is my view that in this case the Government might well have stood up against the recommendation of the Edwards Committee. Secondly, the noble Lord went on to say, as I think Hansard will show, that the grievance of the noble Lord, Lord Kings Norton, is really with the Edwards Committee rather than with the Government, and in that I disagree.
But I was really laying the ground for a question. If we are to have the A.R.B. as a sort of separate division, as the Minister in another place has indicated, with the Chairman or chief executive of the A.R.B. on the parent authority, what interest then does the rest of the Authority have in the day-to-day workings of the A.R.B.? Very little, one would hope. But is the same structure to be applied to, say, airports and air traffic control? Is it envisaged 1235 that something like the present A.T.L.B. should continue to deal with licensing matters? If so, how many of the 12 to 20 members of the Authority are going to listen to licensing applications? Are we to have a mini authority within the parent Authority whose responsibility it will be to carry out the regulatory functions?
Then if we come to functions in Clause 2, the clause starts off by stating that:The functions of the Authority shall be—It then goes into a good deal of detail in paragraphs (b) and (c), and in paragraph (d) states:
- (a) the functions conferred on it by the following provisions of this Part of this Act ".such other functions as are for the time being conferred on it by virtue of this Act or any other enactment.Could it not all have been put in that one paragraph (d); that the functions are the functions conferred upon it by this Act? Why do we want so much detail? And if we are to have so much detail, cannot some reference be made to the function of the Authority as custodian of the consumer interest? I know it has been said that of course it will consider complaints, but ought there not to be a reference in the Bill? I shall invite the Committee to consider an Amendment along those lines and I hope very much that the noble Lord opposite will find that he is able to give some sympathy to it.
Then, my Lords, there is the proposed duty of the Authority to pay its way, as the lawyers are fond of saying, one year with another. I was greatly impressed with what the noble Lord's right honourable friend had to say about this highly questionable provision. Are we sure that it will not be counter-productive? I can see that the A.R.B., which was financially self-supporting, should continue to be so and no doubt accountancy techniques will ensure that their up-turn is shown separately. Also I can see that it is right to expect a return for navigational services rendered, though as charges there are of international application and involve international agreement I should have thought there would be problems. In any case, we could look to that section for showing a return. But will the collection 1236 of airports also be expected to pay their way? If so, what happens to those maintained for social purposes? And if the Authority is to pay its way as a whole, will one division be expected to subsidise the activities of another? If that is the case then I can foresee a good deal of trouble.
Then what about the general principle of making a regulatory body with policing and enforcement responsibilities pay its way? Would it not be equally logical to say that the police force has to stand financially speaking on its own two feet? Does the D.T.I. charge for its supervision of companies? Moreover, are we not now in danger of placing our operators under a severe disadvantage as against foreign competitors? The noble Lord is no doubt aware of the calculations made by B.O.A.C. as to estimated additional financial obligations which will be placed upon it by the Bill as it now stands. As the Corporation has said, no airline in other countries has to meet the cost of the general administration of civil aviation. May I ask the noble Lord what is the Government's answer to that? I am all in favour of financial discipline. If the net result of all these changes meant an economy in real resources then I am open to be convinced about these charges, but so far as I can see there will be an increase and not a decrease in manpower needed.
This problem is greatly increased by the proposal to place upon the Authority a debt of between £35 million and £50 million as the notional capital value of the organisations to be taken over. What an extraordinary conception! I have no doubt that we shall all want to go into this much more closely at the Committee stage and I am sure that the noble Lord will wish to help. I content myself to saying this for the moment. If a capital sum of this magnitude has to be serviced at present interest rates, then we can say good-bye to any hope of the C.A.A. being self-supporting. I know that the Minister has said that there will be an extension of the transition period, but by the time money has been borrowed to pay for the short-fall and interest has been paid on those additional borrowings, and then we have interest payable on money borrowed to pay the original interest, the whole financial discipline will go. It is never more difficult—and I am sure that there are noble Lords in this House who 1237 know more about this than I, although my experience is reasonable—than to secure small economies when there are disproportionate debt charges. I recall the chairman of one organisation saying, "How can I expect the lights to be turned out when we leave the boardroom when we have such a burden of debt hanging over us anyhow? "I am sure that the noble Lord will expect us to go into this again much more closely at Committee stage.
The noble Lord gave us a good deal of information on appeals, but he will not be surprised—for I told him that I would say something—if I go into this a little further. Of all the experience we have had about the licensing of air transport, no single matter has given rise to more criticism and more frustration than the appeals procedure. I am sure that the noble Lord, Lord Thomas, who is sitting opposite will agree with me about that. Arising from the 1946 Act, licensing responsibility was placed upon the A.T.A.C., a body concerned with consumer protection—and appeals went to the Minister. There were difficulties then, and on at least one occasion angry exchanges between Department and Committee. But that position was at least logical. Subsequently we had a properly constituted licensing organisation established and appeals multiplied to match the opportunities provided, and frustration increased and has persisted. I see that in the eleventh Report of the A.T.L.B., an informative report of outstanding clarity, it is stated—and possibly the noble Lord got his words from there—with a commendable candour in paragraph 8 that:The history of appeals against the Board's decisions has gone far to undermine the Board's authority.My Lords, that is absolutely and completely true, and we simply must not allow history, in this context, to be repeated. There must be some restriction upon appeals. As the noble Lord himself has said, his right honourable friend has considerable sympathy with the proposition that I am putting forward and has said that he proposes to allow only a minimum number of appeals. But, frankly, I did not follow the argument of the noble Lord when he said that that undertaking will reduce the number of 1238 appeals. If the Secretary of State has a duty to hear appeals, then he must listen to all appeals and give all an equal hearing before he can decide that there is substance in the one and not in the other. If he is to differentiate, then I respectfully suggest that the grounds of his differentiation should be set out in the Bill. I hope that we can get together, all of us, on this to see whether something can be worked out. This problem of appeals crops up again in Clause 26. This clause deals with the regulation of what some people might call travel agents, though the Bill describes them (and those who know anything about the matter will know that it must have been difficult to get a suitable description) as "providers of accommodation in aircraft". That regulation is necessary in this field, I wholeheartedly agree. But here appeals will lie in the county court or, in Scotland, in the sheriff's court. The noble Lord, Lord Carrington, was at some pains to tell us that courts were not a suitable place for hearing matters of economic and commercial complexity, and I must say that at first sight, or even second sight, this provision in Clause 26 does seem a bizarre affair. With all respect to the county court judge and the sheriff, can they possibly be better qualified than the body set up expressly to deal with this quite specialised commercial activity? How do Her Majesty's Government think that this is going to work out? What kind of procedure will be followed in the court? Will the judge have a technical assessor? 'Will the Authority be a defendant, or how will the Authority make their case when the matter is considered?
My Lords, before I leave the regulatory provisions of the Bill I must return to this controversial issue of the so-called "Second Force". I disagree with the terminology. It assumes, not necessarily correctly, that the two present front-line forces, B.O.A.C. and B.E.A., will be merged. But let me make this clear—and I think I have made it clear before. I accept all the implications of paragraph 39 of the White Paper issued by the Government of which I was a member. Where I think a mistake has been made is in the implementation of that paragraph by the present Government. I am not here seeking to stir up controversy; 1239 I want to be helpful. I do not believe that the reference in Clause 3(1)(b) toone major British airline which is not controlled by the British Airways Boardis calculated to serve the best interests of those concerned. Judgments in the future should be taken by the Authority in the interests of the country and our air transport effort alone, and irrespective of the type of ownership of the applicant.
If it is decided by Her Majesty's Government, and indeed by their predecessor Government, that our effort should not be confined to those organisations controlled by the B.A.B., then that principle might well be enshrined in the Bill. But this wording refers to one airline. Would it not be wiser to have a less provocative form of words? Could we not have something which said that, in fulfilling the functions set out in subsection (1)(a), due regard should be paid to the contribution of airlines not controlled by the British Airways Board, or something along those lines? I am not trying here to get an exact form of words. I know Mr. Adam Thompson, and have great regard for his ability, and it certainly looks as if his organisation now fits into the kind of pattern which the Edwards Committee envisaged. But things change in the aviation world. It may be that, as someone once said, a new Messiah may arise—a man of genius, a man of great ability, who brings along another organisation. Why should not the claims of that body be considered? So I suggest to the noble Lord with all earnestness that we might, in Committee, try to get a new form of words there.
I make a passing reference to noise. The noble Lord referred to Clause 29 and said it will not work miracles. I would suggest to him that it is much more likely to come nearer to a miracle if there were some sanctions behind the powers in that clause. This was discussed at some length, and I know, again, that his right honourable friend had some sympathy with the arguments which were advanced. I hope that, on reflection, in Committee, the noble Lord will be able to say that it would be useful to back up those powers with some penalties. My noble friend Lord Burntwood will be making reference, I believe, to certain staff matters. Clearly there must be assurances to those staff affected by these changes.
1240 I have two other matters with which I want to deal. One concerns the status and the role of the British Airways Board. The noble Lord gave us certain information about that, but I would invite him to look again at what is actually in the Bill. If one turns to Clause 38 and looks at the functions of the Board, one sees that we are told quite straightforwardly and clearly what functions they have. Clause 38(1)(a) says:to provide air transport services ",et cetera. Then it goes on, in paragraph (c):to control all the activities of the British Overseas Airways Corporation and the British European Airways Corporation…and for that purpose to give to the corporations or either of them such directions as the Board thinks fit.Then, paragraph (d) reads:to appoint such persons as the Board thinks fit as the chairmen, deputy chairmen and other members of the corporations ",and so on. That is fair enough. That is giving a real status and a real role to the Board. But if we turn over to subsection (2) paragraph (a) says:the Board shall not exercise its powers under paragraph (a) or (b) of that subsection except with and in accordance with a general or special authorisation given by the Secretary of State.Then, again, in connection with the appointment of a person as the chairman, it says that the appointment shall not be made unless the Secretary of State gives his approval.
My Lords, I know there has to be control as well as delegation of responsibility, and the noble Lord has said that only under certain special conditions will these qualifications in subsection (2) be applied. Nevertheless, what is important in these matters is not the undertakings given by his right honourable friend but what is actually in the Bill. I hope that, there again, we can see whether we cannot get into the Bill something along the lines of what the noble Lord said was intended to go into the Bill.
My Lords, I make this final point. I ask the noble Lord: Does this Bill purport to be an exercise of Fulton in hiving-off technical or commercial activities from the Civil Service with a view to getting more efficient, more economic and more productive results? If that is the case, then I ask him: What is the net effect 1241 in manpower? In some cases, of course, it is just a straight transfer from Department or the A.R.D. to the C.A.A. But leaving aside those transferred, this ought to mean some saving in Civil Service manpower. If the Authority and the Airways Board are to be allowed to get on with the work in the way the noble Lord suggests, then there ought to be fewer persons needed in the Department to look over them. I see in the Financial Memorandum that, in fact, rather than a saving of manpower there are to be 25 additional civil servants required, because, it says, of additional functions of the Minister. This is in relation to C.A.A. alone. There are no savings under the part dealing with the B.A.B. This does not seem to me to be a good augury. It casts some doubt on the hiving-off, Fultonian philosophy. It does not indicate, it certainly gives no conclusive proof, that the right balance between independence and control has been reached.
My Lords, I put forward these questions in a constructive spirit. I thank the noble Lord for what he has said and I look forward to having a useful time when we get together on the Select Committee.
§ 12.50 p.m.
LORD BEAUMONT or WHITLEY
My Lords, some of your Lordships may be surprised to see me appearing as an expert on civil aviation. I should like to reassure you; I have no such pretentions. My noble friend Lord Amherst hoped to be able to speak on this Second Reading, but unfortunately is not able to be present, for reasons outside his control. In consultations with him we decided that there were one or two things that we wished to say from these Benches and one or two questions that we wished to ask. Therefore I hope that noble Lords, and particularly the noble Lord, Lord Carrington, will make allowances for this. I should like to start by thanking the noble Lord, Lord Carrington, for his explanation of and brief introduction to the Bill and to assure him that my comments will be equally brief.
Clause 2 of the Bill sets out in broad terms the functions of the new Authority. It looks really as if the Authority can do almost anything to everything in the realms of civil aviation. In equally 1242 broad terms, it seems that the C.A.A. is to take over the functions previously performed by A.L.T.B., the A.R.B. and all aspects of civil aviation that the Board of Trade are presently performing. It is to be under the guidance arid direction eventually of the Secretary of State. I think that the first thing that we must query is whether the putting together of all these functions under one hat is going to be the best possible thing for the operators, and even more so, for the travelling public. That is something to which I want to return. It may be that in the long run the operators will be glad to have only one door to knock on, and that the travelling public also will be glad to have but one door at which to knock when they have, or fancy they have, grievances—if they are allowed to knock on it. But it seems also that the Authority, or the Board, have functions connected with the management and direction of B.O.A.C. and B.E.A. which overlap to a certain extent and which may cause a certain amount of muddle or dispute. Is there not a risk of considerable duplication, or even the whittling away of the Corporations' authority over their own destinies? If there is this overlapping of functions, this area where it is not quite certain who has the authority, is that not likely to lead to an increase in clerical and administrative staffs? I would here associate myself with the query of the noble Lord, Lord Beswick, on the administrative staffs.
As an example of the kind of overlapping which I am talking about, I should like to mention some of the powers of the Secretary of State. The noble Lord, Lord Carrington, mentioned some of them. Here is the list that I have collected. The Secretary of State can prevent the B.A.B. from operating air services themselves; he can require recurrent organisation reviews and order the implementation of them; he can withhold consent and so prevent a substantial reorganisation of the group; he can direct the disposal of the Board s interest in any undertaking; he can require the Board to secure restriction of its activities or disposal of a subsidiary's assets; he has control of equipment hire in addition to control of expenditure on capital account; he has a duty to prescribe the financial duty of the Board in terms of a return on net assets and has power to 1243 change the financial duty; he has extended powers of control over the maintenance and disposal of reserves; he can direct the form of particulars to be contained in the accounts of subsidiaries above and beyond the necessary legal requirement for private trading companies; and he can, with the approval of Parliament, dissolve either or both Corporations.
My Lords, it is argued that these powers are permissive and that the Ministers will very likely never use them; but I wonder whether it is in the interests of the State Corporations that there should he such a large area for the Secretary of State? Is it really in conformity with the Government's main policy of disengagement from industrial ventures? I should like also to draw attention to Clause 38(1)(d) which gives the Board the right to terminate the appointment of members of the Corporation at any tame, regardless of their original terms of appointment—a stipulation which seems hardly to make for confidence. On the subject of personnel, I should like to ask one or two questions. I understand that the present staff of A.L.T.B. and A.R.B. and those of the section of the Board of Trade concerned with civil aviation are to be transferred to the new C.A.A. I have been told (I do not know that this is correct) that they will be ordered to do so and that there will not be individual options. Most of the staff have full Civil Service status at the moment. Are they to retain this after transfer or not? If not, will there not be some disgruntlement? To start with a disgruntled staff hardly augurs well for the new Authority.
Finally, my Lords, touching on how the consumers come off in the Bill, in another place the Minister said that the C.A.A. must consider the consumer. I think the failing in this Bill is that there is virtually no mention of the duties to the consumer. Looking at it dispassionately, it is true to say that consumers' wants and requirements are very much the concern of the business and sales promotion people in the industry. But sometimes, for strictly commercial reasons and even political ones, the wants of the consumer may be set aside. Somewhere in this C.A.A. there should be a central 1244 point to which the consumer has access which would deal with consumer needs and complaints—a mini-Ombudsman, if you like. I make no particular suggestion. But there should be someone to whom the consumer can air his grievances and make suggestions or complain. The complaints can then be given attention and passed to the proper quarters for action. All this should be over and above what obviously goes on happening in the individual Corporations themselves. I suppose that this point could be met by an Amendment to the Bill in Committee.
My Lords, the noble Lord, Lord Carrington, said something to the effect that this was a very interesting experiment in the machinery of government. We are not too happy about this experiment, or about the not-too-clear lines drawn between the Secretary of State on the one hand and the Authority on the other, and between the Authority on the one hand and the Corporations on the other. We are not all that happy about the place given to the consumer in the whole of this concept.
§ 1.0 p.m.
§ LORD KINGS NORTON
My Lords, I must thank the noble Lord, Lord Carrington, for what he has said about the Air Registration Board and about me. I was very touched by his tribute and I know that my colleagues will deeply appreciate what he has said, as they will appreciate what the noble Lord, Lord Beswick, said afterwards. The noble Lord, Lord Carrington, by his remarks, has almost persuaded me to delete from my notes certain comments which may yet appear to be fairly critical; but I think that, in his usual generous spirit, he will probably accept them. The noble Lord has done for me what I had in mind to do at the outset: namely, to declare my interest in the matters being discussed, because I am Chairman of the Air Registration Board which, if this Bill becomes law, will disappear and be replaced by the Airworthiness Requirements Board. This new A.R.B. will be part of the Civil Aviation Authority. The only additional matter that I might mention is that in this interest that I am declaring there is no financial component, because the Chairman of the Air Registration Board is unpaid.
1245 If the noble Lords will bear with me for a few minutes I should like to approach the things we are talking about from a rather different angle from that of noble Lords who have already spoken. Before coming to the Bill itself, I should like to remark briefly on the shape of the aeronautical industry with which the new Authority will have to work; because I believe that the shape of the Authority, its structure and people, will be dependent on the shape of the industry. The purpose of the Bill is to establish a public body to regulate the British civil aviation industry, and to establish another to manage the publicly owned British airways. We have recently discussed in your Lordships' House the Governmental organisation for British civil aerospace. What we need now is to produce some British civil aircraft, and I hope that, with the revision of the administrative machinery completed, this will be the next phase.
My Lords, I find it more and more difficult to see a coherent policy develop for our aviation industry, or indeed any major aviation industry, other than a policy in which civil and military aviation dovetail and are inter-dependent. Although arrangements have been made to keep military aviation policy and civil aviation policy in different departments, the procurement is now in both cases in the Department of Defence; and I believe that this, under the leadership of the noble Lord, the Secretary of State for Defence, provides a great opportunity to co-ordinate the needs of our physical defence with our economic attack on the markets of the future, including our own. To-day, and for some years past, the British aircraft industry has been exporting at the rate of about £300 million a year—half its turnover. It can go on making this impressive contribution to the balance of trade only on the basis of the prototypes, military and civil, of a decade or more ago. A decade hence it will be depending on the prototypes of to-day. In the civil field, what are they? Half the Concorde; one-quarter of the A.300B and, to the eternal credit of Britten Norman, the Trislander. In the engine area, there is the RB.211, with a cloud over it, and a share in the M.45. This is the situation which I hope, with our new machinery, we shall, as a matter of urgency, seek to correct; and this 1246 is a matter in which the new Authority will have a vital part to play.
I believe, my Lords, that, in or out of the European Economic Community, the British aircraft industry is a vitally important component of our economic future. I think it must have a binary pattern, a pattern of national endeavour and international collaboration. And I think, equally, for maximum success this binary character will have to extend to the Civil Aviation Authority. Without international collaboration we could not participate in the great projects which the developments in STOL and VTOL and supersonic flight have brought to our doorstep. Without a strong national design and construction ability we could not offer participation anyway, and without strong connections with the regulatory authorities elsewhere we should not be able to project our great experience of safety administration into areas of the world where expertise and influence in these matters are rapidly increasing. So the binary pattern, I think, is a sine qua non.
We have in the latter years of the Air Registration Board, been developing our work on this basis: conducting a reciprocal policy of rationalisation of regulations with the United States; taking the leading part in collaboration with the French in creating airworthiness requirements for supersonic aircraft; associating with other European countries in a concerted move towards a European airworthiness code and, in our own bailiwick, shaping the requirements for aircraft of the STOL and VTOL kinds. This is the recent A.R.B. contribution and I hope it will continue, under the régime of the proposed C.A.A., towards aviation's exciting future. I have on previous occasions in your Lordship's House urged the vital importance to us in this future of STOL and VTOL projects, and I have urged the need for achieving the major projects by international companies. I have not however suggested how the national effort in the civil field should be planned. I hope, my Lords, that you will not consider it irrelevant if I should mention this because I believe that it is part and parcel of the future in which the Civil Aviation Authority has to take its place. It seems to me that a great deal of most valuable work, which would shape the activities of the new Authority, 1247 could immediately be put in hand. Government support would, of course, be needed, but I believe that it could be on an acceptable scale.
I feel sure that by the modification—a major modification, it may be—of existing aircraft designs, we can take most valuable steps forward to STOL while more ambitious STOL and VTOL designs are being advanced internationally. I feel sure that an aeroplane like the HS. 748 can be modified in such a way as to produce an STOL, vehicle. It would, I expect, incorporate high-lift devices and jet engines. I feel sure that the BAC 1–11 could be modified by changes in wing design and power plant development to achieve very short take-off and landing. Design work on these lines would show the way to later marks—stretched versions, fattened versions; perhaps both stretched and fattened versions. We could proceed step by step, and the regulation and control of a new kind of aircraft and a new kind of aircraft operation could develop in parallel.
My Lords, I have tried to give a picture of what I believe the manufacturing part of the industry should look like because I believe it would define the outlook and the policy of the Authority which is to regulate and control it. I admit that if our airlines operated nothing but foreign aircraft, there would still be the need for regulation and control, But for us here, with our history of aeronautical pioneering, invention, and out-standing design, such a situation must be unthinkable. I hope, therefore, that the C.A.A. will quickly develop a spirit and a philosophy consistent with a revitalising policy for the civil aviation aircraft industry. In taking over from the existing agencies it must be careful not to introduce impedances; there must be no diminution in flexibility; the controller and the controlled must continue to exhibit the harmony which it has been my privilege for so long to experience in my work with the Air Registration Board.
That Board, my Lords, has another characteristic of great importance. Its independence, in reality, was complete. The Minister concerned with civil aviation delegated certain powers to the A.R.B. and they stayed delegated. This autonomy was sustained by financial 1248 independence; and financial independence is a very great help towards independence of judgment. The A.R.B. balanced its books; and it still does. So one cannot help being disturbed by what was said by the noble Lord, Lord Beswick, about the financial position of the new Authority. One must ask whether the new Airworthiness Requirements Board will be allowed, as he suggested it might, to develop independence of the kind enjoyed by its "father", the Air Registration Board. I do not understand how the new Authority can become self-supporting, and this surely is a weakness. So, in what I feel are going to be difficult financial circumstances, I believe that every effort must be made to give the C.A.A. the maximum autonomy. Consequently, I have been apprehensive about those clauses in the Bill which seem—and I say no more than seem—to cause some of the apprehension produced by what the Secretary of State has said today, and to give the Secretary of State for Trade and Industry unnecessary powers.
For example, it seems from Clauses 22, 23 and 24 that he can overrule decisions of the Authority on the granting of air transport licences. This subject has been referred to already. I think it is a rather serious matter, but perhaps not quite so serious as I thought at first. I felt, too, that there were opportunities in the clauses dealing with the Airways Board for the sort of paternalism which could impede its operations as the board of a major industrial organisation. As I say, to some extent these apprehensions have been diluted, but the fact remains that if a Government delegate duties in any field, they must trust the body they have created for the purpose. The process of delegation is one intended to relieve central Government of all but the ultimate responsibilities, and the success of the method depends upon the selection of the right people and letting them get on with it. In fact, the success or failure of this new machine, the C.A.A., will depend on giving the maximum responsibility to the right people and upon their operating their control in a flexible and sympathetic way. Membership of the new body will, of course, change with time, but the first members, with a new, delicate and difficult task, will, I think, produce an administrative pattern which their successors will find it difficult to 1249 change. Further, the task confronting the selection committee is of peculiar importance, and in its performance, on the assumption that the C.A.A. will be created, I am sure the House will hope that the Government will be inspired.
But however quickly Her Majesty's Government move, it must be many months before the new Authority is at work, and I hope that any temptation to postpone subordinate legislation, which could now be possible, will be resisted. I have in mind, as examples, delegation orders in respect of noise measurement and of hovercraft and the creation of a register of aircraft mortgages, which I am told would contribute to the wellbeing of the aircraft manufacturing industry. My Lords, the Bill as originally drafted has been improved in many parts in its passage through another place. It has been improved in Clause 27, in which my A.R.B. colleagues and I are most interested, and we were gratified by the generous acknowledgement the Minister for Trade made on June 29 of the advice he had had from us. The history of this matter is a long one, as the noble Lord, Lord Carrington, indicated, going back to the Edwards Committee, which reported over two years ago. Since then my colleagues and I have consistently argued for the maximum autonomy for the A.R.B. and, if possible, for a continuation of its present degree of independence. The Government and their predecessors have not found this last possible, but they have moved a long way towards us, and for this we are grateful. There are still changes in detail directed towards minimum direction from above, flexibility in operation and the securing of the positions of staff transferred to the Authority, which I hope to see made in the Bill during its passage through your Lordships' House. But I certainly now intend to give it my general support.
§ 1.14 p.m.
§ LORD HARVEY OF PRESTBURY
My Lords, I am sure that of all of us listened with great interest to the noble Lord, Lords Kings Norton, in view of his great experience. I personally should like to thank him for what he has done over many years for the industry. I can say, having piloted British aircraft in China forty years ago, that when they arrived with the A.R.B. ticket, I felt reassured and I still feel the same, whatever the make of aircraft.
1250 This Bill is long overdue. It should have been produced a considerable time ago. The Edwards Report was in another place for nearly 18 months and I always regret that it was not debated. If we had had a good debate on the Edwards Report, it might have ventilated many of the feelings in different parts of the country and brought out the views of the country on this Report. Like the noble Lord who has just spoken, I should like to expand my remarks to deal a little with the industry because, unless we have a healthy aircraft and aero-engine industry in this country, the authorities are going to control foreign aircraft and that is not a good sign for the country's economy. The trouble really started when the Labour Government cancelled the TSR 2. I do not want to be controversial about this, but that was the beginning of the end. The troubles that followed throughout the whole of the industry in the last six or seven years have disheartened designers and those on the shop floor. Apart from Concorde, there are no supported civil aircraft projects on the stocks. I have never known the industry to be so rundown as it is at the present time.
This Government have been in being for only a year. They have had to deal with many problems which they inherited, but I hope that now they are going to give their attention to the problems of the aircraft industry and make amends for what has gone wrong in previous years. The industry at this moment is in a vacuum. One firm, Hawker-Siddeley is building the wing of the A.300B European Airbus as a private venture, with their own money. Brittain-Norman may well sell the Tri-Lander rights to Israel, to raise cash. It is a small successful firm. For the rest, apart from the continued production of BAC 1–11 and HS 748 and some Westland Helicopters, mostly military, there is nothing coming along. It is difficult to have a successful aero-engine business—Rolls-Royce are handicapped in this respect with the RB 211—unless we have a healthly airframe business, because the two must go together. If we depend entirely on Rolls-Royce for the future technology of aero-engines and try to sell them to America or Europe, they are going always to be driven to a very hard sell, unless we have our own airframes 1251 to prove them and get home based orders. I agree with the noble Lord, Lord Kings Norton, that work could be given on the STOL aircraft, the 1–11 and 747, which could give enormous encouragement to the design offices and on the shop floor.
If I may, I should like to refer to B.O.A.C., an airline for which I have the greatest admiration. I shall be flying over the North Atlantic on Monday in a B.O.A.C. aircraft, and whenever I can I go B.O.A.C. and find a great many Americans are queueing to fly in the VC 10. I should like to say that the biggest mistake that ever was made was when Sir Giles Guthrie was appointed Chairman of B.O.A.C. and after spending half a million pounds in advertising the VC 10, he then said they did not want to use them, because the operating costs were higher than the costs of the 707. Of course, they were slightly higher but, as the VC 10 has an improved performance in take-off and landing and is a much safer airplane, it has a sales value which was never appreciated by the marketing people in B.O.A.C. It has been a winner. Now it has been suggested—I hope it is not too late—that the VC 10 can be stretched to carry 200 passengers. It will have two Rolls Royce RB 211 engines. If things go wrong in the proceedings in Congress about the RB 211, this could be the beginning of something quite successful. With two highly developed engines, a low fuel consumption and low noise level, this might be the ideal airplane. The impression at the moment in both North America and Europe is that the Jumbos are far too big for the job. They are ahead of their time. Many of them are flying practically empty, and of course they will have to bring prices down to fill them up. I hope that the Government will give urgent attention to this VC 10 project, which could sell, I am told, for something like £4 million, instead of £10 million or £12 million for the larger Jumbo.
B.O.A.C. and B.E.A. are the two main carriers of the British flag. It is worth while looking back to the time when B.O.A.C. operated the South American route, and lost about £1 million a year doing so. They gave it up, and this important route for trade for Britain was 1252 left without a British operator. B.U.A. stepped in and operated, again with VC 10s, and in the matter of a year or two made a profit of about £500,000. When we criticise the independent operators, we have to give them credit for doing what they did there. But is it not too much, when an independent carrier has stepped into the breach and filled the gap, to say: "No. You have made a success of that airline, and you must stay with it"? To be viable an operator must have more than one route. Here there is perhaps justification for B.U.A. being allowed to expand its routes to make it a worthwhile airline.
The Air Transport Licensing Board came to its conclusions without, I think, pressure from the Minister of Trade: it was an independent decision. Any airline is perfectly entitled to go to the Board, seek permission to operate, and ask for routes where it believes it can give a better service than either B.O.A.C. or B.E.A. The Board was instituted by Parliament, and it is now to be superseded by the Authority. But over the years I think the Air Transport Licensing Board has acted correctly and fairly. One has not, of course, always agreed with their conclusions, but I think they have done a very fine job of work. The new Authority must resist outside pressures, from whatever quarter they may arise: again, it must be absolutely independent. Why, may I ask, are the Opposition so against a Second Force airline? This was supported by the Edwards Committee set up by the Labour Government and, as I said previously, not debated. But the United States have Pan-American, T.W.A. and many other charter companies flying across the Atlantic every hour of the day. Surely it is right for Britain to strengthen itself and have another carrier to get the yardstick of competition. But the air crew and ground staff must have comparable conditions of pay and pensions to those of the nationalised airlines.
I should like to refer briefly to the problem of noise. I am sure this is something that will be an increasing problem as the years go by, and the public are paying much more attention to it than they did a few years ago. Everything must be done—and I do not think sufficient is being done—to alleviate this problem. I have said already, and I 1253 think it is known, that the Rolls-Royce RB 211 goes a long way on any previous engine to bring about a lower level of noise. But, having said that, I believe that if Concorde is a successful aeroplane—and I have every reason to think that it will be—when it comes to operate across the North Atlantic we shall have tremendous resistance from the United States. There will be lobbying going on in all directions, based on noise, side noise or whatever it may be, to keep it out, for the simple reason that they have not got one themselves. I have been told this by Americans, and I referred the then Prime Minister to it in another place a few years ago. The British Government must watch this carefully. If we can proceed with it; if the French can get it certified as airworthy and the airlines order it, but it is not bought on the other side of the Atlantic, when it goes into service there will be resistance. If they had had their own supersonic aircraft, of course, there would have been no problem: they would have backed it, because they would have wanted to send their supersonic into Europe. But this is something that must be clarified before we go on spending a lot of money. I hope we can prove that the noise level will be lower than many people think.
On the question of noise generally, I think that airport managers have to take the law into their own hands rather more than they have done previously and make full use of their measuring equipment. Could it not be that the glide path in some cases could be 3 per cent.? Could it be steepened? I am told—I have a small apartment just round the corner, and I hear them—that many aircraft approaching the glide path to Heathrow fly below the glide path, and sometimes intersect it. I am convinced that at night many aircraft come over Westminster at a lower height than they should do. I hope that we can be told a little more about noise, and that, where necessary, airport managers will be encouraged to take action.
The British Airways Board was, I think, the right decision. I think it will bring together the two national carriers, bring about economies—aviation medicine, catering, air crew, joint pension schemes and so on. There are many things that the Board can achieve, and I think they are long overdue. It is a modern way of running any industry 1254 to have a holdings board to think out the problems in addition to the day-to-day operation problems.
This Bill has had the broad support of the Opposition in another place. The Authority will cover all aviation services, will plan the industry's growth and control licensing and airworthiness. I have said this before, but I should like again to pay my respects to the Air Registration Board. But, as I see it, the Air Registration Board is not adequately defined in the new Bill. Where the Air Registration Board is placed under the Authority, why not make the A.R.B. a wholly owned subsidiary, operating as before, but responsible to the Board of the Authority, with its chairman on the C.A.A. Board. I believe that if the Air Registration Board operated as a subsidiary under the Authority, but completely answerable to them, this would give it a distinct authority of its own. May I say to the Secretary of State—I do not mean it in any derogatory way—that he may get a better result in the long run.
What we need in this country is a really co-ordinated plan for the airports of the United Kingdom. Apart from the five airports under the British Airports Authority—namely, Heathrow, Gatwick, Stansted, Prestwick and Turnhouse—we need a thought-out system to serve the population of the whole of the United Kingdom. I can give one instance, that of Manchester, which is an airport very well run by the Manchester City Council. But we have Liverpool, 40 miles away, trying hard to achieve the same thing and become an international airport. Surely we need some sense brought to this whole situation. There is even talk about having a River Severn-side airport, and probably Filton is the best place. What progress is being made there, in the West country? I hope we can be told that we shall have a thought-out plan for the airports covering the whole of our country and that the Government will give guidance and encouragement, wherever possible, to ensure that the population of this island get all the benefits and the advancements of aviation which they deserve.
§ 1.28 p.m.
§ LORD BURNTWOOD
My Lords, I had not wanted to introduce the subject of procurement, but I feel, in view of the 1255 remarks made by the noble Lord, Lord Harvey, and more especially, the particular viewpoint expressed by the noble Lord, Lord Kings Norton, it is only fair to say that in the matter of the procurement of aircraft for this country we cannot economically produce aircraft for our sole use. The uncertainties of the potential exports are so serious, and we have been let down so badly in the past, that the greatest caution must be exercised in advocating new aircraft to be designed for civil aviation. But, like the noble Lord, Lord Harvey, I am appalled at the idea that we have nothing on the stocks. I do not apportion blame. The idea of the British Corporations flying foreign aircraft, I should have thought, gives nobody any pleasure.
Looking back a little in history, one must remember that the cancellation of the TSR 2, mentioned by the noble Lord, Lord Harvey, and the subsequent difficulties of other new aircraft, were occasioned by the refusal of people whom we should call our friends to join with us on reciprocal terms to encourage the production of such aircraft in this country. Had it not been for the regrettable tendency for Australia and New Zealand to buy American, I feel that the TSR 2 project as well as the interests of B.O.A.C. could have been advanced considerably. When I was at the Ministry of Aviation. I was told to watch the position about the negotiations over New Zealand, and their decision to buy American after the most urgent representations both at personal and Government level makes me view with some cynicism their attitude towards the Common Market negotiations.
Now there seems to be a general con-census of opinion that in the matter of licensing under this proposed Bill there are three major considerations and three matters on which we should be satisfied: first, that the applicant for a licence should have the skill and resources to make the route and the service viable; secondly, that if routes are already being served by either of the Corporations then this new service should not unduly impair their services; and thirdly—and this is a point on which I should like clarification from the Minister—that the joint income which it is estimated will be made by the dual services will more than offset any "diseconomies".
1256 I should like to know whether that third proposition is still acceptable to the Government. I make the point because already we have evidence that the Government have transferred routes to Caledonian/B.U.A. which will mean a drop in profits on those routes of £1½ million per annum. I should have thought that the Government have viewed with complacency the applications for new licences which go beyond what had been agreed and indicated to Parliament would be the limit of the transferring of routes. I take the view, and here I may be at variance with most noble Lords, that the institution of the Second Force is highly undesirable. That is water under the bridge now, I suppose; but I should have thought that the Edwards Committee having reported over two years ago and in the light of subsequent world events a great deal more caution should have been exercised before putting into operation the proposals for Caledonian/B.U.A. now embodied in the Bill. All over the world there are indications of a drop in air traffic. In the U.S.A. the New York to San Francisco services have been cut by 40 per cent. and services on the New York to Los Angeles route by 30 per cent. So far as B.O.A.C. is concerned, the Tokyo route from San Francisco has had to be abandoned because of the estimated loss of £3½ million in an operating year.
I do not think that the air transport industry is one which should necessarily be backward-looking the whole time—on the contrary, I think the potential is very large—but the slump which was felt last year in America is now being felt here and there is the added great uncertainty of the role to be played by the charter companies. Already in America a lobby is being stimulated to remove the prohibition on the sale of accommodational charter flights other than to members of accepted clubs. As I say, this has already started in America, and as I read the situation you will get a similar tendency here, if only for the reason that the scheduled services are flying with substantial accommodation unsold. You have only to see the activities of certain gentlemen in Chelsea to realise that there is a big business building up for getting round the regulations and ensuring that charter flights go off nearly 100 per cent. full. These are tendencies 1257 which we ought to watch. I take the view that competition domestically should not receive the high consideration that the Government are giving to it. It is competition from the foreign airlines which is our main problem.
I should like to discuss the question of the terms under which people work and the machinery for confronting employees and employers in the industry. I have read very carefully the report of discussions in another place on this subject, and for the life of me I cannot understand the resistance which is being shown by the Government to enforcing affiliation of all airlines to the N.J.C. for Civil Aviation. It is true that Caledonian/B.UA. are affiliated, but I do not think that noble Lords may appreciate the extent to which other subordinate airlines are not affiliated and where, as I have said, there is no acceptable machinery for confronting staff and employers. Among the airlines in this country which I am advised are not affiliated are British Midland, Court, Monarch, Britannia, Lloyd International, Skyways International and Laker.
I would be very adverse to implying any criticism of the services provided by these airlines; but in my mind and, I suspect, in the public's mind there is some association between working conditions which do not come up to the standards laid down by the Corporations and the conditions of work and pay operating in the type of company I have mentioned, and the whole question of safety. I read the exchange in another place on the subject of safety records so far as the Corporations and these small airlines are concerned. I do not want to enter into that very delicate matter because things can be distorted quite seriously either way; but at the same time, staff who are aggrieved and working conditions which are not so very good militate against the impression in the public's mind of the efficiency of these smaller airlines. The responsibilities of the new licensing authority will not in any way improve this situation, and it would assist very much if there were an obligation for all air travellers to become members of the Employers' Side of the National Joint Council.
Nothing in the Bill gives any machinery to deal with recalcitrant employers. I would say that constant vigilance must 1258 be employed to weed out the undesirable elements—and some do exist—in this sector of the industry. We should not denigrate the progress which I personally believe this Bill will achieve in making the industry more efficient, and, in our minds, we must not be critical of some of its provisions. I believe the greatest good that can come of it, as the noble Earl said in his interrupted speech, is the endeavour which I am prepared to believe is absolutely necessary on the part of the Government to reduce to a minimum ministerial interference. But the fact of the matter is that so long as there is ministerial, and therefore, political, interference there will be this dichotomy concerning fragmentation. There has been too much of that in our civil aviation history. Fragmentation will be continued and we shall therefore not be able to compete fully with those other countries which have secured a unified service.
The noble Lord, Lord Harvey of Prestbury, mentioned the service which could be achieved more efficiently by co-ordinating the efforts of the various corporations or companies. He mentioned a few of them, and I can think of catering, publicity, planning operations, affiliated transport requirements, and the like. Already this tendency is towards co-ordination and cooperation, and this is being achieved by the K.S.S.U. which, broadly speaking, looks after the Northern European airlines on a unified basis, while the Atlas consortium looks after the middle and Southern European companies.
We are lagging behind if we encourage fragmentation in our ability to compete with other countries. However, having said that, I must add that, on balance, the Bill is desirable, and I hope that as more wisdom comes to the Government they will introduce certain changes. I hope that first and foremost they will consider the position of staff, and the need to confront employers with proper machinery; and I should like the Minister, when he replies, to make some mention of the position of many hundreds of civil servants who have been, as it were, transferred out of the Civil Service and whose interests, about which too little has so far been said, must be safeguarded.
§ 1.41 p.m.
§ LORD BALFOUR OF INCHRYE
My Lords, this is a good Bill, and one for which civil aviation has waited for a long time—many of us think too long—but nevertheless it is welcome now that it is here. I hope that one of its results will be to give a holiday from politics for civil aviation. Civil aviation has been knocked about for far too long by all political Parties. Having said that the Bill is a good one, I should add that, as the noble Lord, Lord Beswick, has said, it is still capable of improvement. There are one or two points that I should like to ask the Minister and Her Majesty's Government to consider.
First, I share the regret expressed by the noble Lord, Lord Kings Norton, that the Air Registration Board has not kept its previous absolutely independent position; and is to be subordinate to the executive, the C.A.A., with certain improved safeguards which give it semi-independence. This has been introduced by the Government into the Bill. I have been connected with aviation for a good many years—more years than I care to remember—and safety in aviation is all. Safety must be sought and must be seen to be sought. It is for this reason that I ask Her Majesty's Government to consider one further improvement in this matter of the Air Registration Board. In Clause 27, subsection (2)(c), of the Bill, the Government have gone some way, but not far enough. The paragraph lays down that the Civil Aviation Authority must notify the A.R.B. if their views and advice are rejected. Clause 20 says that any such objection must be recorded in the C.A.A.'s annual report. Let us assume for a moment that there is an unfortunate conflict between the executive and the A.R.B. on some matters affecting safety, and that it occurs in the first month of the C.A.A.'s year. The year goes by and there is probably another three months before the C.A.A. report comes out. Therefore the C.A.A. notification to the public that there has been a difference on some matter with which the A.R.B. deals may not be known to the public for fifteen months. So important is safety that I should like to see the Government consider an Amend-men which would make it imperative for the C.A.A. to report forthwith to the Secretary of State if a difference existed, 1260 such difference being incorporated in due course in the annual report. This would eliminate the possibility of a gap of anything up to fifteen months between an incident of difference and its publication. I trust that I have made myself clear to the Minister and that he will consider the matter.
I now turn to Clause 29, subsections (1) and (5), dealing with the powers of the Secretary of State for direction over matters of noise. I am against any unnecessary noise, but I believe the checking of noise is going to come from engineering and technical development, and it is in that direction we should go, rather than control of the form of operation. These subsections give the Secretary of State power to direct operators of aircraft, on take-off and landing, to conform to his requirements aimed at noise reduction. Subsection (5) gives the same powers to airport chiefs to be directed by the Secretary of State. The Secretary of State, and his staff, are not pilots; they do not fly aircraft themselves. They doubtless seek advice from their technical experts. Let me assure the Minister that pilots already have misgivings on flight limitations that are at present imposed in the interests of reducing noise. It is just when maximum power is required, on take-off, and therefore when maximum safety is achieved, that they are required to reduce power.
Some two years ago I was in the cockpit of a B.O.A.C. 707 as it was taking off from Montreal at night. I remember the captain telling me that if one engine had cut just after his initial take-off, when he was operating under flight noise limitation orders from Montreal airport, it would not have been a very pleasant moment. I do not say that it would have meant disaster, but it would have minimised the factor of safety. These flight noise limitations are not agreeable to pilots. I suggest to the Government that in any directions issued by the Secretary of State affecting operational take-off and landing the Secretary of State should have an obligation to consult with representative pilots' organisations. There are only two of them: the British Airline Pilots' Association and the Guild of Air Pilots. If the requirement for such consultation were written into the Bill it would help to eradicate any threat to safety, indirectly, or inadvertently, 1261 from the Secretary of State's using his powers of direction. I hope I have made myself clear to the Minister. My suggestion is that a requirement for consultations with representative pilots where matters affecting flight operations are concerned, should be written into the Bill.
I come for a moment to Clause 3, which says:It shall be the duty of the Authority…to secure that British airlines provide air transport services which satisfy all substantial categories of public demand (so far as British airlines may reasonably be expected to provide such services) "—this is the important provision—at the lowest charges consistent with a high standard of safety in operating the services and an economic return to efficient operators ".That seems to me to burst wide open the IATA unanimity rule. The noble Lord is probably aware of what that rule is, but in case he is not I will tell him in a sentence. It is a rule that means that the fare levels settled by IATA must be levels unanimously agreed; and of course that rule protects the least efficient operator and the uneconomic operator. It gives him a chance of continuing his business life.
Our airline operators, our two Corporations, send senior representatives to the IATA Conference, and if those representatives report back to the C.A.A. that they feel that the levels of fares proposed by IATA are not the lowest possible for efficiency and safe operation, as I see it they must, under the Bill, hold out firmly against the IATA unanimity rule. I hope the Minister will clear that particular point, and if it bursts open the IATA unanimity rule nobody will be more pleased than myself.
The final point I want to touch on is Clause 39 which opens a way for a B.O.A.C. and B.E.A. possible merger in the future. There have in the past been failures in co-operation between the two Corporations. There has been co-operation to some degree—common medical services and various other common services—but there could have been more co-operation in the past. The creation of the Airways Board gets rid of those weaknesses of the past, and as regards amalgamation I would ask the Government to go very easy, having regard to the fact that those weaknesses are now 1262 eradicated. Go very easy. There is no heaven sent merit in size for the sake of size. B.E.A. and B.O.A.C. are so different in many ways. The B.E.A. market for passengers and sales is a different one from that of B.O.A.C. One is short range; B.O.A.C. is long range. The equipment for the two Corporations is different. B.E.A. must have equipment suitable for short and medium range and B.O.A.C. for long range. Pilot training is different. Engineering and maintenance are very different. A B.E.A. aircraft comes in from Stockholm at 3 o'clock in the morning and has to be made ready to travel to, say, Edinburgh at 5 or 6 o'clock that morning. A B.O.A.C. aircraft comes in from the other end of the world and has a clear time ahead for its engineering maintenance.
The Corporation's functions, equipment and personnel are very different. Above all, the risk I see in an amalgamation is a loss of morale and pride by the personnel of the respective Corporations. The day before yesterday I flew back to this country in a B.E.A. Trident and I was speaking to the captain on this very point. He said he hoped that those in authority would be very careful before they promoted a complete amalgamation, because B.E.A. (and I can speak only for B.E.A., having been in the past a member of the Board for some ten years) has built up a tremendous morale—and I expect B.O.A.C. has done the same—within its ranks, flying and ground. One would hate to see that morale cracked or wasted by an amalgamation which really would seem to bring little practical benefit. The noble Lords, Lord Harvey of Prestbury and Lord Kings Norton, and the noble Lord who last spoke dealt with aircraft procurement. It seemed to me a subject rather wide of the Bill. I should dearly love to be able to discuss it, but I confine myself to the main provisions of the Bill, which I repeat is a good one but capable of improvement; and I trust that three points I have put forward to the Minister and to your Lordships will be given consideration at a later stage.
§ 1.55 p.m.
§ BARONESS BURTON OF COVENTRY
My Lords, I hope I shall not be regarded 1263 as giving a hostage to fortune if I preface my remarks by saying that I have a considerable regard for the noble Lord, Lord Carrington, because I believe that he always gives a straight answer to questions that he is asked, and I have not so far been able to obtain an answer to certain questions that I have asked. I hope that to-day, when he comes to reply—and I am quite sure he will—he will include the three that I intend putting to him among the list of those answered; and of course if they are satisfactory answers, that will be splendid. The three matters I wish to raise to-day are, first, the structure of international air fares; second, charter flights; and third, the Civil Aviation Authority, which, so far as I am concerned, are the three aspects of civil aviation with which I have been able to deal.
In this House five months ago, on February 18, I raised the matter of air transport fares. There seems hardly any need to repeat that there is considerable consumer dissatisfaction with the structure of international air fares, and in particular the effect that this has had in discriminating arbitrarily between different classes of travellers and between travellers from different countries, and in restricting the choice of fares and services available. All sorts of inducements have been, are being, and I imagine will be, offered to all travellers, with one exception, the exception being the traveller who uses normal scheduled services.
I asked five months ago why there should be this discrimination, and I have gone on asking ever since. Nobody would deny the increasing consumer dissatisfaction. Equally, I think, people would agree that the IATA unanimity rule is calculated to suit the convenience of the smaller and weaker airlines, and I am sure that the noble Lord, Lord Balfour of Inchrye, will not mind my adding my humble (and I use that word in the right sense) support to his great experience in condemnation of this unanimity rule. I believe that under the official protection of Governments the airlines have been building up a deliberate system of discrimination between classes of passenger. On January 7 last The Times stated:There is no reason why airlines should not sell wholesale at a different price from retail or give significant discounts to those who book 1264 early, or fly when no-one else wants to fly, or are prepared to stand by. But what the airlines have been trying to do is to create artificial classes which will generate new traffic at lower fares without allowing regular travellers to enjoy these fares.From the ordinary consumer's point of view, the first major gap in the range of services is the lack of cheaper fares available direct to the public without strings on the main routes served by scheduled airlines. I am asking, not that benefits shall be curtailed but that all air travellers shall have at least a small share.
My Lords, in this House on March 10 the noble Lord, Lord Drumalbyn, told me:…the Secretary of State cannot make recommendations to the International Air Transport Association, but he can and does make recommendations to the British air lines which are members of it."—[OFFICIAL REPORT, 10/3/71; col. 58.]On June 17, as reported at column 696 of the OFFICIAL REPORT, he said:…there is a growing awareness of the need for scheduled services to be able to cater for the more popular demand, if I may so describe it, as well as for the normal scheduled travellers.I assume that that remark means catering for all travellers. As the House knows, at the present IATA Conference in Montreal, B.O.A.C. is raising the question of cheaper fares on the North Atlantic route. On July 1, as reported at column 449, of the OFFICIAL REPORT, the noble Lord, Lord Drumalbyn, told us:the meeting has been arranged to discuss the introduction of lower fares on the North Atlantic routes, and B.O.A.C. have the Government's full support in seeking such fares.I say to the noble Lord, Lord Carrington, that we all hope that such support will be extended to other routes. Gradually and at last it is being admitted publicly that the IATA unanimity rule is calculated to suit the convenience of the weaker and smaller airlines. Perhaps—who knows?—we are now within reasonable distance of the abolition of the unanimity.
My Lords, may I now come to the question of charter flights? The Explanatory Memorandum attached to the Bill we are discussing to-day says that the Civil Aviation Authority:will take over functions now exercised by the Air Transport Licensing Board and the Air Registration Board together with a range of 1265 functions at present performed by the Secretary of State. It will undertake the licensing of air transport services and will regulate the safety of civil aviation operations and the airworthiness of the aircraft employed.On July 1, I asked the Government whether they were aware that the charter rules were being flouted so that cheap regular fares to all countries throughout the world were available to everyone. In the London Evening Standard on Monday, July 5, there appeared a short article which I should like to quote.
The heading was:' Shop ' cuts air fares by halfand the article was written by Jill Palmer, whom I do not know. The article said:Cut-price airline tickets went on sale to the public today offering flights all over the world at just over half the standard rates. In defiance of the rules laid down by the scheduled airlines a shop opened in Chelsea, King's Road, today offering airline tickets to everywhere at only three clays' notice. Discount Air Travel Centre buy scats in bulk from the scheduled airlines and chartered firms. They resell them to members of the public for just over half the price and even then are making a profit themselves. Customers do not have to join any club or pay a membership fee. They just sign a form that they are not employed by British travel agents or any scheduled airline. The company claims this is to safeguard airlines and charter firms and that they, themselves, have found a way round the cut-price rules and cannot be prosecuted.Fares range from £35 return to Malaga to a round trip to Sydney. Australia, for £395 as against the scheduled fare of £629. The firm can also arrange hotel accommodation but wants to concentrate on the air tickets.' By buying in bulk we can get the tickets cheaply, we are doing everyone a favour. We buy up the unsold tickets from the airlines and sell them to people cheaply,' said Mr. Smith. The chairman said: ' I certainly would not be a part of this if it was breaking any regulation. It is not breaking the law in any sense.' My involvement is to promote cheaper travel for people who would not otherwise be able to see the world.' There is a demand for cheap air tickets and our plan to commercialise this has been under discussion for about a month. I see this shop as the start of something much bigger and eventually we hope to have agencies overseas as well.'Some of your Lordships may have seen on Wednesday, July 7, the story of an Evening Standard reporter who took advantage of one of these tickets. What I want to bring to the attention of the House is something which was in The 1266 Guardian newspaper yesterday,. Thursday, July 8. This stated:The Government regulations allow charter operators to offer the complete package, transport and hotel for the same rate as the ordinary scheduled air fare. Mr. Smith's firm takes the money for the charter fare, but gives passengers an invoice for the hotel voucher that goes with the air ticket. And this is one bill they never have to pay.The hotel voucher, he insists, is perfectly genuine. ' It'll be for some pension in the back of beyond, riddled with lice; they won't be comfortable, but they could stay there.' He is not concerned about the standard of accommodation because his customers have no intention of staying there. The voucher is provided as a ' perfectly legal ' device for charging less than the scheduled airline fare.' Everybody's done it for years; our only crime is to open a shop and bring it out into the open.'But Mr. Smith is only too ready to admit that other dodges may not be strictly legal and he considers their existence as further justification for his own operation. ' I don't believe there's a single charter flight leaving this country—or very few—that's absolutely legal.'My Lords, my quarrel is not, with the Discount Air Travel Centre nor with charter flights but with the system which brings them about and indeed makes them inevitable. I am sure that the noble Lord, Lord Carrington, is probably aware that in the Guardian today there is a statement to the effect thatA London discount air travel firm which advertises ' 50 per cent. off ' some fares is being investigated, the Department of Trade and Industry said yesterday. The firm is Discount Air Travel Centre in King's Road, Chelsea.My Lords, this has become a nonsense and brought both the Government and the charter rules into contempt. Yet all that the Government have to say on the matter, according to the Financial Times of July 6, is that the Department of Trade and Industry is reviewing the "whole complex field" of air charters and no changes in policy can be announced at this stage. Well, my Lords, we can all only hope that the new Civil Aviation Authority will look at this whole aspect and sort it out quickly. I hope that something will be done by the noble Lord, Lord Carrington, in advance.
My Lords, it is always difficult if one complains about cheap fare facilities being available because then it is assumed that one is a spoil-sport who 1267 wishes to deprive people of such things. I am not a spoil-sport and I do not wish to deprive anyone of anything. The success of the charter companies and of charter flights has proved that if the fares are right the traffic will be there. The ordinary scheduled airline traveller has suffered unfairly financially because of the over-capacity of the airlines. This is now admitted on the North Atlantic routes. It has been admitted in America for several years. I see no reason for, and certainly no justice in, the constant and reiterated refusal of airlines and Government to allow one class of traveller, the one travelling as an ordinary scheduled airline passenger, to participate in cheaper fares for all. I am hoping that the noble Lord, Lord Carrington, will agree that if the cheaper charter fares have produced the charter traffic it is equally obvious that if there are cheaper scheduled fares the scheduled traffic will emerge. I think that some consideration should be given to this, and I trust that the Civil Aviation Authority will take the same view.
Mr. John Carter, the air correspondent of The Times, writing about cheap air travel on July 3, said:Such travel should be available to anyone prepared to plan ahead, and the Government has a double duty in this regard. First, to ensure that it is available and, second, to protect the public from abuse by profiteers. The solution is perfectly simple. There should be adoption, and enforcement in due time, of the terms set cut in Clause 26 of the Civil Aviation Bill, now in the Committee stage at Westminster.My Lords, as to how long ahead it is essential for travellers to plan is obviously a matter for prolonged negotiation and discussion. I believe the B.O.A.C. Early Bird system demands ninety days; the Discount Air Travel Centre can do it within three days or less, while I seem to remember that Mr. Freddie Laker was talking of daily flights to the U.S.A. in the high season and four flights weekly in the off season with no waiting at all—you just went to the airport and bought your ticket. I think my recollection is right on this last point, but I have no notes on it. But it is increasingly clear that there ought now to be a major reappraisal by all Governments of the whole balance of air transport effort. This is what I asked for on February 18 last.
1268 I come now to my third and last section—a brief one. When the Civil Aviation Authority is set up, will the Government designate one member of the Board as a member for consumer affairs? I think it is a frequent enough practice for members of boards to be given specific responsibilities, and if the Government would agree to this suggestion much good will would accrue both to them and to the Authority. I know, of course, that Clause 3(2) provides for the Secretary of State to give guidance to the Civil Aviation Authority with which the Authority will have a statutory duty to comply. I appreciate also that such guidance, among other things, is intended to make it clear that the Authority will consult as widely as possible with all those who are interested. But even though the consumer bodies are included in this range of interest, it is not enough. Anyone who sits, or has sat, on public boards knows that the expertise in dealing with consumer affairs is on one side—that of the civil servants or the secretariat. I would hasten to say that I do not believe, and I am not for one moment stating, that the expertise is unfair. But we would all agree that the general traveller or consumer has not got it. I hope the House will have noted that I have deliberately avoided saying "consumer complaints". There are many consumer matters affecting travellers that are not complaints, and the sooner we get away from this old-fashioned concept—on both sides of the discussion—the better.
I think there must be what I would call a skilled or professional advocate for the travelling public; someone with the expertise necessary to present such matters to the Authority: in short, a member with that specific and designated function. Here, with a new Authority, is the chance to do it. The noble Lord, Lord Carrington, in his opening remarks said that powers had been given to the Government to appoint members to the Board, so there would seem to be no obstacle there. I was glad to receive in advance the powerful support of my noble friend Lord Beswick about some mention of consumer interests in the Bill, which I asked about before on June 23, and of the noble Lord, Lord Beaumont of Whitley.
So, my Lords, I have asked for three things to be done when this Bill becomes 1269 an Act: first, for the structure of international air fares to be reorganised and for the disappearance of the IATA unanimity rule; second, for the regulation (if that is the right word) of charter flights, so that neither Government nor regulations are brought into contempt; third, for the designation of one member of the Authority as being specifically for consumer affairs. And I wish the Bill a speedy progress through the remaining stages.
§ 2.15 p.m.
§ LORD O'NEILL OF THE MAINE
My Lords, I should like to make a few observations about this important measure which we are considering today. I, for one, am glad that this Bill visualises the possibility of a merger between B.E.A. and B.O.A.C. It would seem to me that this would bring about complete economies, because there would need to be fewer spares, and that type of thing, and costs tend to rise with the increased number of types of aircraft in operation. If this amalgamation were carried out then more routes could be put into Caledonian/B.U.A., because it is possible to argue that the number of routes they have been given at the present time may not be sufficient to enable them to be viable. Therefore that would be one advantage of a possible merger.
I believe it is estimated that B.O.A.C. and B.E.A. combined would be about the size of T.W.A., which operates approximately five aircraft types. Therefore, they would be operating about half the number of types that B.O.A.C. and B.E.A. operate at the present moment. It is also estimated that T.W.A. gets about twice as much work out of its fleet as the two British Corporations put together. If I might give an example of—as I see it—an advantage to the traveller, there need be no reason why he should not fly from London to Frankfurt in a VC 10. The other day I had a speaking engagement in Dublin and I flew back in a Boeing from Dublin to London Airport. I am a great supporter of the Trident; I think it is a wonderful machine. I spend most of my life in it. But if in fact there were to be this amalgamation there would be no reason why aircraft at present used for flying the Atlantic should not be used for long hauls in Europe.
1270 The noble Lord, Lord Beswick—and I tended to agree with what he said—made some remarks about the powers of the British Airways Board. I agree with the noble Lord, Lord Kings Norton, that the Minister has put some of our fears at rest in the remarks that he made at the beginning of this debate. Nevertheless, I think it is true if we read the Bill that it could be argued that the power of decision—I am speaking now about the British Airways Board in particular—rests too much with the Department, and that therefore either the chairman of the Board may be frustrated or (and I think this is even more important) it may be difficult to attract a first class man as chairman if he feels that the Department will be breathing down his neck too much. However, as I have said, some of our fears have been put at rest by the remarks made by the Minister. Nevertheless, these provisions are still in the Bill, and I think this is something we should bear in mind.
So far as I can see, there is no provision for the airlines to raise money I from the public. At a time when there is a major restructuring of the industry this might perhaps have been desirable. In this way we might achieve what I would describe as a "B.P." situation, which would, I think, at least be popular on this side of the House. As I understand it, the airlines cannot even go to the market, like local authorities, for their money, and therefore this will continue to be a major burden on the Treasury. As I see it, if times get easier and the airlines do better—I think at the moment they are going through a very difficult period indeed—and there was an amalgamated corporation called British Airways, the British public might be very glad to invest their money in it, in the same way as they do in B.P. I think it is a matter for consideration that they cannot even go on the market, as local authorities can.
Finally—and I am sure the noble Lord, Lord Aberdare, who is making his notes will be glad to know that I have almost finished—at the risk of being slightly out of order, but I did speak of this in the Third London Airport debate, I hope that the Government will go slowly with Foulness. I was thankful that Cublington was ruled out, but do go slowly with Foulness. I have read a figure of £500 1271 million; I am sure it will escalate to £1,000 million, and we might at the end of that time be left with a ghastly white elephant. Far better to put that money into research and development on the aircraft that the noble Lord, Lord Kings Norton, was talking about, than to sink this vast fortune into something which might turn into a white elephant; and while it may be slightly out of order to talk about Foulness, it is very relevant to the future of the British aircraft industry and civil aviation in general.
§ 2.22 p.m.
§ THE EARL OF KINNOULL
My Lords, it is not often that one has the privilege of speaking on a major Bill on a Friday afternoon, and I think it is a tribute to those interested in aviation that it has attracted 12 speakers to-day. Those who have followed this Bill through its long and exhaustive examination in another place would, I think, agree that despite certain doctrinal arguments that tended to creep in from time to time the Bill received a general welcome from all quarters, and I think it would be true to say that that welcome has been repeated to-day. Its presence was I believe particularly welcome, first, because it removes that uncertainty that had hung over the industry since the Edwards Commitee was first set up in 1967, and, secondly, because within its general framework the Bill appears to offer the chance of an effective and positive instrument to guide the future administration and direction of the British aviation industry.
The need for the Bill now and the good one hopes will flow from it I believe is more pronounced if one looks at the present state of health of civil air transport. After many years of consistent growth of passenger traffic, suddenly we see that the industry to-day is faced with a recession, one hopes a temporary recession, affecting both sides of the Atlantic. Under such conditions, and with Her Majesty's Government having set up the Second Force last August, as recommended by the Edwards Committee, I find it personally a little disturbing to find the official Opposition in another place—and I am glad the noble Lord, Lord Beswick, in fact did not repeat it to-day—threatening to dismantle the Second Force should the present Opposition return 1272 to power. That, in practice, is what they are saying when they make a threat to withdraw the wholesale routes that have been recently granted to the Second Force. It would be difficult, I believe, to find a more destructive line of opposition than this, or one more foreign to the spirit of the White Paper on the Edwards Committee which supported the birth of a strong independent carrier. The argument over the Second Force and the threat that hangs over their now, we hope, viable network is one which one hopes, with the coming of the new and strong C.A.A., will be buried in its political grave for ever.
For these directly concerned with the industry, the setting up of the new C.A.A. under this Bill is obviously a matter of crucial importance. From the start of the Bill's passage in another place, one detected a whiff of criticism that the framework of the C.A.A. under the Bill would be too close to the direct influence of ministerial or Whitehall interference. I know my noble friend has already mentioned this in introducing the Bill. It is not beyond people's memories that the then Minister of Aviation in February, 1965, stood up and announced that the independent sector would be granted no more scheduled services but would be allowed to expand by itself in the field of the inclusive tour market, and within a year of the pronouncement of that clear and positive policy the policy turned a somersault. One hopes that such a situation, with the presence of a strong C.A.A., will be avoided in the future. It is, I believe a considerable credit mark to the Government that when the Bill was in Committee in another place a series of Amendments were made to meet that criticism and to try to create a more independent and thus strong C.A.A. This simple objective is, I am sure, one which few would disagree with, and one which no doubt the House will wish to examine carefully in detail at the Committee stage.
Of all the changes that will be made with the setting up of the new C.A.A., one which, I am sure, will be viewed with a general feeling of regret, a regret which has already been expressed to-day, will be the absorption of the long respected and proven old Air Registration Board. The noble Lord, Lord Kings Norton, as the unpaid Chairman of the Air Registration Board, and his colleagues, were of 1273 course deeply concerned at any change both in the working and the reputation of the Board. I am glad that although the Government have felt unable to keep the Air Registration Board as a separate entity they are anxious to disturb the old Board as little as possible, even to the extent of retaining its old initials and substituting a name which I believe many of us will find both cumbersome and difficult to remember. I hope very much that the old Air Registration Board will remain as effective under its new colours as it has been in the past.
Concern has already been expressed to-day and by certain British airline carriers about the running costs of the new C.A.A., which one understands are intended to be passed on in their entirety to the industry. I do not think it has been mentioned before that it is estimated that this cost may run at £34 million a year and that the cost to B.O.A.C. could be up to £l½ million. The concern centres not only on the extra cost to the carriers, coming at a time when the state of the industry is experiencing a particularly lean time, but also the effect it would have on the foreign airline operators that one assumes will be charged as well. Perhaps my noble friend could comment and deal with this point of the likely cost of the C.A.A. and the cost the industry will probably have to absorb. The powers of the C.A.A. and its working relationship with the Government will, I am sure, be probed in detail in Committee. I hope we shall also have a chance to probe the Government on the future of a national airports policy, on the setting up of a consumer bureau, on the aspects of safety, and also, I hope, on the system of appeals by air travel operators to the county court which the noble Lord, Lord Beswick, has already mentioned.
If I may turn briefly to the second major objective of the Bill, the setting up of the new British Airways Board, similar concern to that expressed of the independence of the C.A.A. has been voiced about the British Airways Board. I am advised, as I am sure other noble Lords have been advised, that under the Bill the Minister will be increasing his reserve powers over the new Board, that is, increasing the powers that at present exist over the two air Corporations. 1274 Some adjustment to this was in fact made by the Government on Third Reading of the Bill in another place, and perhaps again it is a matter that the Committee could explore later.
The setting up of the C.A.A. will have an important bearing, not only on the air transport industry but also on the aero space industry. This industry, as my noble friend well knows, despite excellent export results in this last year, seems now to be facing the reality of shrinking from its former prestige position as a leading aero space industry; and as has been emphasised today, one has only to look at what is in the pipeline to see this. This has come as no overnight surprise. Both industry and the Government I think saw perhaps a decade ago that the cost of the research and development project had began to go beyond normal resources. Efforts were made then to overcome this difficulty by collaborative efforts with our European partners. It is one of the tragedies of the industry that, as yet, the short history of the collaborative project has shown only a minority of successes and a majority of expensive failures. One hopes that results will improve and that not only can we collaborate with a partner in a European industry but also collaborate with friends across the Atlantic both in the aeroplane industry and in the aero engine industry.
Turning briefly to Concorde, it would I believe be of interest to know, if my noble friend had time this afternoon to tell us, how soon the evaluation by the two national carriers will be complete and how the present trials are progressing. The industry to-day needs support for investigation, I believe desperately, of future projects, and I would certainly go along with what the noble Lord, Lord Kings Norton, has said as to the future potential of the project known as STOL or in other quarters as "Cutol", and in some irreverent quarters as "Dettol". This project offers the advantages of a greater capacity at airports and the possibility of lower noise factors, both of which seem to meet the future needs of aviation. I hope that the Government will consider seriously backing an investigation and study on STOL, perhaps as a joint enterprise between B.A.C. and Hawker-Siddeley.
1275 My Lords, I should like to end by recalling the words of wisdom of the Edwards Committee. It was stated as one of the principal recommendations that the long term objective should be to satisfy the individual customer at the lowest price consistent with an economic return on investment, and at a level of safety equal to the best in the world. I hope very much that this Bill will help those involved to strive to achieve this splendid objective.
§ 2.33 p.m.
§ LORD TREFGARNE
My Lords, the last speaker in a longish debate in your Lordships House on a Friday afternoon ought to be brief, and I will do my best. There are only one or two points that I want to make, and I will go through them as quickly as I can because I am looking forward to the reply of the noble Lord, Lord Carrington. The criticisms, or remarks, which I have of this Bill are best kept for a Committee stage, and I shall therefore confine myself to two or three points of a general nature. The first is that this is I think the first piece of legislation in any important aeronautical country to make specific provision for the control of aircraft noise. A similar Bill came before your Lordships originally when the former Government were in power; and all credit to them for that!
The other point I have to make, reverting to points made by the noble Lord, Lord Beswick, concerns the question of whether or not this new body, the Civil Aviation Authority, will be financially self-sufficient. I, too, see difficulties in making the National Air Traffic Control Service self-supporting financially. Navigation service charges are already levied at some airports, but I do not think they go any way to covering the cost of the exercise, and I shall be glad to hear the Government's views on that point. My final point, again a general one, is merely to say that the success of the new Board will, in my opinion, be governed to some extent by the calibre of people called upon to lead it. If those people are of the same calibre as have hitherto led the Air Registration Board I believe that we have nothing to fear.
§ 2.35 p.m.
§ LORD CARRINGTON
My Lords, we have had an interesting debate, and I 1276 do not think my forecast that the Bill would get a general welcome from the House has been falsified, though there have been some hesitations. Perhaps the most notable hesitation was from the noble Lord who I think is as ignorant as I am about civil aviation, the noble Lord, Lord Beaumont of Whitley, and who felt perhaps that we had tried to put too many different functions into the one Authority. But I think that that was the recommendation of the Edwards Committee, and the purpose of the Bill generally is to put these functions under one Authority, in the belief—and in my view the correct belief—that they will be more efficiently carried out.
I have been asked a large number of questions, and I do not believe, even with the flattery that the noble Baroness, Lady Burton of Coventry, applied to me, that I can answer them all. But I will do my best to answer some. I must ask to be excused from answering any points made by noble Lords on both sides of the House about procurement, because I think that procurement is outside the terms of the Second Reading of the Bill. I will only say this if I may to the noble Lord, Lord Kings Norton. The Rayner Report and the consequent putting of defence procurement under my own Department, the Ministry of Defence, have put on the Department a great responsibility for the aircraft industry and the actual production of aircraft. Nevertheless, there will be a very great need on the part of my Department to liaise with the Department of Trade and Industry, and it is my intention, as I know it is the intention of my right honourable friend the Secretary for Trade and Industry, that we should work closely together. I am quite sure that this is the right thing to do with defence procurement.
The noble Lord, Lord Beswick, asked a number of questions, of which he was good enough to give me notice, so I have no excuse for not answering them. He asked me first of all how far the members of the Authority will involve themselves in detail. My Lords, the Authority will have between six and twelve members—probably nearer six. I think perhaps the noble Lord was confused with the Airworthiness Requirements Board, which will probably have between twelve and twenty members. Clearly, the 1277 members of the Authority will have to specialise to some extent, and it may be that such matters as air transport licensing will be dealt with by a small quorum of the Board with officials and with pre-hearings as proposed in the 1969 White Paper. On this basis, only major matters would come before the full Board, but all this will be spelt out in the regulations under Clause 5.
The second point which he raised was why was there so much detail in Clause 2 and no mention of consumers. This point was raised also by the noble Baroness and the noble Lord, Lord Beaumont. Clause 2 spells out the functions of the Authority in some detail, because otherwise it would not be clear that the Authority will have not only the functions conferred upon it by this Act but also other functions in the field of air safety which will be conferred upon it by amendments to the Air Navigation Orders and the regulations made under the 1949 Act. But for this, the very important safety functions would not be mentioned, as such, in the Bill at all. The consumer function, on the other hand, is not mentioned specifically because all the functions mentioned are, in one way or another, consumer functions. The Authority's duty to have regard to consumer interests will be amplified in the guidance which is to be given under Clause 3(2). I am perfectly prepared to discuss this point further in Committee, and I have no doubt that the noble Baroness will raise it, and others.
On the whole question of consumer interest, the noble Baroness said that when I was asked a question I gave a direct answer. I would certainly give her a direct answer, and, if possible, I would satisfy her at once, because I know that she is extremely persistent and it is much wiser to satisfy her, if at all possible, before she gets into her stride. In this case, I wonder whether it is always the right way of tackling things to appoint somebody to a Board with a specific responsibility. I have never felt that, in your Lordships' House, it was right to have people here representing some particular interest. I think that, in a sense, if they are representatives what they say is less highly regarded because it is known that they have this particular 1278 interest and are representing it. So I am a little doubtful whether it necessarily serves the purpose of the noble Baroness to press for having on the Authority somebody who represents purely the consumers' interests.
§ BARONESS BURTON OF COVENTRY
My Lords, I should like to clear up this point. I agree entirely with what the noble Lord says, but usually on boards there are members who are responsible for financial affairs, or whatever it may be. I am not seeking a known consumer on this Board, but somebody with a responsibility in respect of consumers.
§ LORD CARRINGTON
My Lords, that is something which the Authority itself should very properly look after. I do not think that anybody in your Lordships' House would ever dissent from the noble Baroness in her view that the consumers' interests are of the highest importance in the Authority and in all the work that it does. If that is the view of the noble Baroness, I do not think we shall have to quarrel about anything, and I am very glad about that.
The noble Lord, Lord Beswick and my noble friend Lord Trefgarne asked whether it made sense for the Authority to be given the objective of becoming self-supporting, and Lord Beswick had some doubts as to some of the arrangements which were being made. I should have thought, that generally speaking, your Lordships would agree that it is right in principle that those who use the Authority's services should be prepared to pay for them, and that this should apply to all its customers, including my right honourable friend the Secretary of State for Trade and Industry. Of course, the bulk of the Authority's expenditure will arise through the provision of air navigational services and through its comprehensive responsibilities for regulating the air transport industry. Successive Governments have endorsed a policy of full cost recovery in air navigation services, so we start from there. We think it is possible, and right, that services should be paid for.
About the £50 million, I would only say that this, of course, is very much the upper limit, which is only likely to be relevant if it is decided to value the assets to be transferred to the Authority on a basis other than written down historical costs. As my right honourable 1279 friend said in another place, there are important arguments for departing from this traditional method and adopting a formula which takes account of subsequent inflation. Of course, we accept that any significant increase in the initial debt will defer the time by which the Authority can be expected to break even. I think that goes without saying. Certainly I shall draw my right honourable friend's attention to the arguments—and I think powerful arguments—which the noble Lord and others have produced this afternoon on that point.
I spoke at some length in my opening speech about appeals. If the noble Lord will allow me, perhaps we may leave that until the Committee stage if he has any Amendments he would like to suggest on that issue. There was some criticism, from him and, I think, from the noble Lord, Lord Burntwood, about the phrasing in Clause 3(1)(b) of the Second Force airline, and the conclusions that one might draw from that. I think that perhaps the noble Lord, Lord Beswick, omitted to read the words as carefully as I have been advised to read them. I hope he will notice that the words are, "At least one major British airline". The words at least "are of considerable consequence in this context. At present there is only one major independent airline, but there could be more than one, and this paragraph does not say which particular airline, or airlines, are to be given opportunities. This will be a matter for the Authority to judge. Certainly it does not mean that there is only one and should only be one, and that one should always get everything.
§ LORD BESWICK
My Lords, I agree that we ought to discuss this at Committee stage, but I hope between now and then the noble Lord will have a look at this again, because, as I said, I was only trying to be helpful.
§ LORD CARRINGTON
That was the last thing I wanted to do. Of course we will look at it. I think perhaps the situation is riot quite so black as the 1280 noble Lord paints it. He also asked whether or not there should be more powerful sanctions in Clause 29 with regard to the noise provisions. The sort of airfields which we are concerned with are really all owned by public bodies—the British Airports Authority, local authorities and so on. I should have thought they were the sort of people who would be expected to comply with the law, and it really would not be either necessary or realistic to consider imposing fines upon those sort of authorities. Again, we can discuss this on Committee stage.
The other question that the noble Lord gave me notice of, and also asked in his speech, was the question of whether this was an exercise in the Fulton philosophy, and whether there really was going to be a cash and manpower saving. Of course this streamlines the machinery of Government by distinguishing between the making of policy, for which Parliament and the Government are responsible, and the implementation of that policy, for which the Authority will be responsible. Therefore, Ministers of the day will, under this legislation, be relieved of the responsibility for day-to-day decisions, and they will be able to concentrate on the longer term policy implications. Secondly, the Authority will have both comprehensive responsibilities and a highly skilled and professional staff—which I will come to again in a moment—who also, through their continuity of experience, will enable the best decisions to be taken. I do not think that we would purport to say that this idea would reduce the demand on the resources required to regulate civil aviation. I do not think that is the object of the exercise.
The noble Lord, Lord Kings Norton, and my noble friend Lord Balfour of Inchrye, have pointed out how important safety is in all this. It would be misleading and wrong to say that we could cut back in an area in which public safety plays a very great part. The noble Lord, Lord Beaumont of Whitley, asked me about the staff, and so did the noble Lord, Lord Burntwood. The staff will be transferred to the Authority and will cease to be civil servants, but my right honourable friend is very anxious that the staff concerned should not be disgruntled, and he has 1281 given undertakings that their terms and conditions of employment should not, in any circumstances, be worsened.
The third point he made was the consumer point, which I have answered, even if rather inadequately. My noble friend Lord Balfour of Inchrye made a plea for caution on the question of amalgamation of B.E.A. and B.O.A.C., and my noble friend Lord O'Neill of the Maine rather went in the other direction and said that this might be rather a good idea. I think I can assure both noble Lords—and I am sure it will satisfy neither of them—that we are going to be very cautious about this. In any event, such a change would have to be recommended by the Airways Board and would have to be in the interests of efficiency. Indeed, my right honourable friend the Secretary of State for Trade and Industry has no power to make an order dissolving the Corporation unless the Airways Board has so recommended in its last report under Clause 39. My noble friend also asked about consultations with BALPA. So far as the Authority is concerned, Clause 27 provides for the appointment of pilots' representatives to the Airworthiness Requirements Board, whom the Authority will of course consult. As regards noise, the Secretary of State will consult BALPA, as he does now, about the matters for which he retains responsibility.
§ LORD BALFOUR OF INCHRYE
My Lords, can the Secretary of State deal with the point about reporting to the Secretary of State any difference between the Authority and the A.R.B.?
§ LORD CARRINGTON
My Lords, I thought my noble friend made an interesting point there, and I should like to take it back and discuss it with my right honourable friend. Perhaps we can discuss it at the Committee stage. Although I do not know the ins and outs of it, it seemed to me to be an entirely valid point. The noble Baroness, Lady Burton of Coventry, spoke about the charter rules in some detail, and I was very interested because I learned a great deal from what she had to say. This matter has been very much in the news lately, highlighted by the opening this week of the shop for the sale of cheap air travel. Under the provisions of the Civil Aviation Licensing Act 1960, the 1282 sale of a ticket at a cut price or to an ineligible passenger may not constitute an offence unless and until a flight is operated in contravention of the Act, and those who by selling tickets provide facilities for carriage on such a flight can then be prosecuted.
It is our intention to continue to take action whenever appropriate, and I hope that notice will be taken in the appropriate quarters of the recent court cases in which significant fines have been imposed. It is not of course an offence for a person to buy an inclusive tour and not to occupy the hotel accommodation that is provided in the package, so long as the price he pays is above the minimum laid down. The Department of Trade and Industry ate looking into whether the person concerned in Chelsea is charging the right prices or is otherwise procuring breaches of the airline licences. I do not know whether that will satisfy the noble Baroness either, but certainly I will look into what she said, and I say again that it may be necessary to discuss this at the Committee stage. So also with the question of air fares.
In pursuing the principal objective in Clause 3(1)(a), the Authority will clearly have to take account of the international implications and will have to work very closely with the Secretary of State. The Authority will have the expertise on air fares, and will clearly have an important role to play in advising British airlines of the line they should follow in IATA. But the Secretary of State remains responsible for approving IATA tariffs and for any international negotiations which might follow in this context and if necessary, the Secretary of State could give a direction to the Authority under Clause 4(3)(b). The policy of the Government is to control fares only to the extent necessary to ensure that all sections of consumers, who sometimes have conflicting interests, can go on enjoying the air services they want at the lowest price consistent with safety and with the reasonable profitability of the airlines.
I think that probably deals with most of the direct questions that were put to me. I suspect that we shall have a number of Amendments at the next stage and, having heard the Second Reading debate and having greatly profited from hearing the speeches of noble Lords who 1283 know a great deal about these matters, I look forward to having an interesting and equally profitable Committee stage.
§ On Question, Bill read 2a.