§ 7.4 p.m.
§ Lord Lyell
My Lords, I beg to move that the Aviation Security Fund (Amendment) Regulations 816 1982, a draft of which was laid before your Lordships on 29th June of this year, be approved. They have been considered by the Joint Committee on Statutory Instruments which has not drawn the attention of your Lordships' House to any particular and special points.
Your Lordships may recall that the Government reimburse out of the Aviation Security Fund the costs incurred at airports in searching passengers and their baggage. The fund is financed by a levy which was temporarily reduced, from 1st March this year, from £1.50 per passenger to £1.10. The levy was set to revert to £1.50 on 1st September this year, but these amendment regulations will extend the reduction for a further seven months up to the end of March 1983.
We are able to make these regulations because the fund continues to have a surplus, despite the initial reduction in the levy from March until August of this year. The extension of the reduction will be very welcome to airlines, which of course recover the levy from their passengers, through fares. They would much rather, we believe, have the surplus run down quickly than see it held in the fund and used as a means of moderating any increases in the levy in the years ahead. We anticipate that the extension of the reduction will run the surplus down to the level of about £½ million by the end of the year.
I must say at this point that we did expect that the surplus would be substantially reduced by the initial reduction in the levy. The reasons why we have adjusted our previous forecasts are described in the background paper which has been placed in the Library of your Lordships' House. The paper sets out our current forecasts and gives some details of relevant wage awards, manning levels and so forth. I do not propose to summarise these details in my remarks this evening, but I would wish to comment on the general improvement in the finances of the fund since March 1980.
Two principal factors have been responsible for this. The first factor is the Government's success in bringing down the rate of inflation. The falling level of wage settlements has been of great benefit to the fund because staff costs account for the greater part of its budget. The second factor is that airports and airlines, with the encouragement and assistance of the Department of Trade, have been able to achieve economies and make improvements in the way security measures are implemented. The centralisation of searching at Terminal 3 at Heathrow and in the international lounge at Gatwick has brought considerable savings to the fund. Less dramatic improvements have been made at a number of other airports, and attention is currently being given to several smaller airports where the cost of security per passenger at present works out rather high.
All of us might argue that the levy rate should have been calculated more accurately in the past and that the surplus should not have arisen. But the fact, unfortunately, is that that surplus has arisen. I hope your Lordships will agree that the important thing is that it should now be run down quickly and that extending the present reduction of 40p in the levy rate up to March 1983 is a sensible and at the same time a convenient way of so doing.
Finally, I should mention that apart from extending 817 the reduction, the draft regulations also bring up to date the definition of an aerodrome. They also reduce the rate of interest payable on late levy contributions by 2 per cent., in line with the general fall in interest rates. That is all I wish to say this evening. My Lords, I beg to move.
§ Moved, That the draft regulations laid before the House on 29th June be approved.—(Lord Lyell.)
§ Lord Ponsonby of Shulbrede
My Lords, may I thank the noble Lord, Lord Lyell, for explaining this order. May I also thank him for his courtesy in placing a copy of the memorandum of explanation in the Library. I am sure that all airline passengers will welcome the fact that the reduced levy is to be extended for a further seven months, but one must ask why in fact this has occurred.
The noble Lord himself indicated that the Government might have been more accurate in making their calculations about what the future rate of levy needed to be to keep the fund with a reasonable surplus. It certainly seems that it is not really because the rate of inflation has come down that the fund surplus has increased, but because the Government did not anticipate that the various measures which they have taken would succeed in bringing down the rate of inflation. It would appear that the Government had lack of faith in themselves, in that they anticipated that inflation would go on at a much higher rate than in fact it has done over the past few months.
One would hope that the major reason for the extension of the reduced charge is because there is increased efficiency at the various airports. It is the duty of your Lordships' House to keep the Government continually on their toes to ensure that the security operation is carried out effectively and efficiently. Indeed, from the paper placed in the Library we learn with some pleasure that the number of security staff at Gatwick has been reduced by 32 and at Heathrow by 91, with smaller reductions in the number of staff at other airports. I know it is always a matter of concern to all air passengers when they see a great number of security staff hanging around the security search area with apparently very little to do at a particular point in time. One feels very much that this may be because it is not as efficiently organised as it should be. Therefore one is continually concerned that there is more efficient operation of the service. The noble Lord mentioned the centralised search area in Terminal 3 and it is plain that this is one of the reasons for the reduction in the number of staff at Heathrow.
Another area of concern must be the question of the allocation of costs. There are many items in the costs which one would freely accept should be allocated to the costs of the administration of the security arrangements. The costs include such items as searching, detection equipment, security training, administration and so on. Item 4 covers police, and one questions to what extent the cost of employment of the police in these matters should be a charge on the fund and to what extent it should be a charge on the taxpayer in general.
It must be a matter of judgment as to how much of that cost should fall on the one head and how much of it should fall on the other head. In this particular case, one is concerned to see that an over-large amount of that particular cost is not allocated to the costs of 818 this particular fund. I hope that the noble Lord will be able to assure your Lordships that he is satisfied about the allocation of costs in that area. As I said at the beginning, in general one must welcome the fact that the reduced charge will continue for a further period of seven months.
§ Baroness Burton of Coventry
My Lords, I was grateful to have a copy of the background paper and to have had an opportunity of studying it before tonight. We have been here before on various occasions and, as the noble Lord, Lord Lyell, said, these amendment regulations extend up to the end of March next year the 40p reduction in the levy, from £1.50 to £1.10. The existing regulations would have ended the reduction in 1982.
The noble Lord, Lord Ponsonby of Shulbrede, mentioned the changes in what had been left in the fund, if I can put it that way. Obviously, any reduction in the levy is to be supported, but looking at this background paper I trust that the revised estimates will prove to be more accurate than the past ones were. I would like to ask the noble Lord the Minister whether he is aware that the United Kingdom is the only country in the world which has a Government levy to finance security charges? No other country has an aviation security fund, and I do not think we should forget these things.
In the EEC, Australia, the United States of America and Canada, standards are set by the Government through the national security agencies of their countries and the airlines are expected to adhere to those standards. Ever since April 1978, I have been trying to have the system changed, the airlines have been trying to have the system changed and IATA has been trying to have the system changed. Apart from thinking that it is the wrong system, none of us who has complained about it believes that the allocation of costs is satisfactory. We feel that this should be more closely scrutinised. In being glad that the levy is being reduced, I can only hope that we may soon see it disappear altogether. I hope that one day those of us who believe, with the great majority, that the system should be changed, will succeed.
§ The Earl of Kinnoull
My Lords, I would like to welcome this regulation and to congratulate the Government and my noble friend for bringing forward such welcome news and for the action they have taken. I have not had the privilege of seeing this explanatory document, nor have others who will read this debate later, but I should like to ask two questions. First, may we have an assurance that this welcome news will be put into practice and that the price of tickets to the general public will not have been anticipated and therefore be charged? Perhaps my noble friend can explain how this arises. Secondly, on reaching the next stage next April, can my noble friend say whether the Government anticipate that the sum of £1.50 per capita will be necessary, or whether further discussion will be going on with the industry?
§ 7.17 p.m.
§ Lord Lyell
My Lords, certainly I am full of gratitude for the welcome which has been given to this amendment order tonight from all sides of the House. The 819 noble Lord, Lord Ponsonby of Shulbrede, kindly took the trouble to consult me and other colleagues on the order and on the measures before your Lordships this evening. I just wondered whether it was not the voice of his noble friend Lord Bruce of Donington speaking, so expertly did the noble Lord, Lord Ponsonby of Shulbrede, go through the accountancy, the details and the allocation of costs. I salute him and admire him for his mastery of the little schedule in the annexe.
The noble Lord, Lord Ponsonby of Shulbrede, asked me one or two questions. First, he asked me about forecasting. In respect to the Government's forecasting, of what the level of the fund should be and of the costs which are likely to be incurred in carrying out security duties for passengers at airports, the department is in no way infallible but does try to prepare estimates which are as accurate as possible. No one will know that better than the noble Lord, Lord Ponsonby of Shulbrede, and he will be strongly advised in that direction by his noble friend Lord Bruce of Donington. On the basis of these estimates, to set the levy rate so that the fund breaks even—and I say it roughly—at the end of the year ahead, in not, I am sure your Lordships will be aware, an easy task, particularly when they have to incorporate assumptions about the likely level of wage settlements and other figures which have to be taken into account in working out these estimates. I believe the important thing is that we are now taking prompt steps—and we have done so in the past—to adjust the levy rate in line with our revised forecasts.
The main reason for the changes in these latest forecasts is described in Annexe 2 of the background paper which your Lordships should have. I will certainly endeavour to see that my noble friend Lord Kinnoull obtains a copy and as much information as I can give him. As your Lorsdhips will be aware, the background paper has been placed in the library.
The noble Lord, Lord Ponsonby, also raised the question of the police. I would stress to the noble Lord, and indeed to your Lordships' House that security especially in the light of the tragic events of today, is in all our minds, and expecially when we have tens of thousands and sometimes hundreds of thousands passing through our major airports in the course of a year. We believe our security is still effective. We believe it is certainly efficient. Indeed, I congratulate and I salute the noble Lord, Lord Ponsonby, if he has passed through the security checks at any of the major airports of London swiftly. I think I shall have to consult him as to how he does it, because I find security vetting is very thorough. It is also effective; I hope that it is certainly efficient.
The noble Lord asked me a very detailed point on the policing of the airports, particularly in relation to the figures that are found in the schedule, in the annex. The fund only pays that element of police costs which arises from police duties spent on anti-terrorist measures. These are, I think, fairly easily identifiable by your Lordships. The allocation of costs has been reviewed recently, and we are satisfied that it is entirely fair to all concerned and expecially to the travellers.
The noble Baroness, Lady Burton, said we have been here before. Indeed, my noble friend Lord Trefgarne 820 and the noble Baroness have clearly been through this particular route. I think it was in February this year that my noble friend had a very interesting and lively debate with the noble Baroness. I am grateful to her for her welcome to the regulations and the steps we are trying to take this evening. The noble Baroness asked me for confirmation on two points. First of all, she showed a little concern about how the United Kingdom system is indeed unique in the world. We admit freely that it is entirely true that few other countries levy a security charge of any description, but I am sure the noble Baroness is aware that there are one or two which do so. For example there, is a small charge levied at Canadian airports to recover the costs of the Royal Canadian Mounted Police. I am not aware of any country that has specifically copied the system prevalent in this country, but certainly the United Kingdom is by no means unique in not paying for aviation security through general taxation. I am sure the noble Baroness and your Lordships are aware that in North America and Australia the cost of passenger searching is borne directly by the Airlines.
If I could just amplify this reply to the noble Baroness, the option of reimbursing security costs from taxpayers' general funds, as was done until 1978, certainly is not on the agenda for the present review. The Government take the view that those who benefit from the service which is provided, namely those who travel by air, should pay for the identifiable cost of their own protection. Lastly, it does not need me to remind your Lordships of the present tight constraint upon public expenditure.
My noble friend Lord Kinnoull asked me two questions. Certainly I can give confirmation on one of them: that the levy is one of many costs which are taken into account by airlines when they calculate the total revenue they need to raise from fares on their scheduled services. These various costs, and indeed the balance of the costs that go to make up their total costs, are constantly changing. Your Lordships will not need reminding, after the lengthy debates we have had in the past, especially with the noble Baroness, Lady Burton, that the fares structures are very complicated in themselves, and the cost factors in those fares change and they are also complicated. I think that is one major reason why it is not entirely possible to identify the element of the security levy in any particular fare or indeed in any particular series or types of fares. I am afraid that I missed the second point which was put by my noble friend Lord Kinnoull. I will pick it up and, if I may, write to him if I can obtain the answer to his detailed point, as I think I might be able to do.
I hope I have covered the points that have been raised by your Lordships. I would stress that the Aviation Security Fund is in surplus. The surplus reflects both the falling rate of inflation and the improvements in the way that the security measures are implemented in our airports, both in effectiveness and in efficiency. The extension of the 40p reduction in the levy will run down the surplus in what we think is a sensible and convenient way to about half a million pounds at the end of the financial year, at the end of March 1983. The amendment regulations are sup- 821 ported by the airlines and indeed by the rest of the air transport industry. After this brief intervention, I hope that they meet with your Lordships' approval.
§ On Question, Motion agreed to.