§ 7.18 p.m.
§ The Earl of KinnoullMy Lords, I beg to move that this Bill be now read a second time. After the excitement of the previous business I shall try to be brief and sharp in introducing the Second Reading of this Bill so as not to cause any undue indigestion during the dinner hour. This small Bill has one purpose: it is to repeal Section 15 of the Civil Aviation Act 1949, which, 32 years ago, set out to ensure that those working in the independent sector of the air traffic services should, for comparable work, have terms and conditions of employment comparable with those working for the state airlines, then BEA and BOAC. That was, and is, a statutory obligation which may be overlooked only if both employer and employee agree.
If they were here, some noble Lords might have said that it is surely a little heavy to promote a special Civil Aviation (Amendment) (No. 2) Bill to clog up the limited parliamentary time, all for a single purpose, when only a few months ago another Civil Aviation (Amendment) Bill passed through this House. I would agree. It would have been far better to have tacked this on to that Bill; but parliamentary procedure has many mystical ways, and the matter was judged not to be relevant to the subject matter of the last Bill and was not acceptable as an amendment.
The justification for seeking the repeal of Section 15 458 now is not just that this is an archaic statutory obligation which has lost its original purpose and objective—and that was to protect BEA and BOAC against unfair competition. It is principally because it now has the seeds of a potentially harmful and unbalancing effect on the sensible harmony of management and staffs of the independent airlines, who battle to survive in a fiercely competitive climate on often a wafer-thin operating margin plus the undoubted goodwill and loyalty of their staffs.
The ever-alert noble Lord, Lord Ponsonby, may say, "But we have had all this argument before, as under the Civil Aviation Act 1980, Section 15 will automatically be repealed when British Airways is privatised". That, of course, is true, and it makes me just as concerned now to persuade my noble friend, whose support I need in time allocation if this Bill is to succeed, as the noble Lord, Lord Ponsonby. My noble friend will know better than I that this is no frivolous power which needs repealing at some time; it has the potential seeds of an unnecessary conflict, and really should be repealed now.
I cast no doubt on the good intention of my noble friend or his right honourable friend to privatise British Airways as soon as practical. But the fortunes, or the misfortunes, of British Airways lead me to feel that it may take painfully longer to get itself into shape before a sensible prospectus can be written. I do not doubt that will happen, but the danger in the meantime is that this archaic statutory obligation could be misused, and disruptively misused, at a most sensitive time; and I believe that this is a very compelling argument.
The repeal of Section 15 does no harm to British Airways; nor, I submit, does it safeguard or ensure any jobs in the independent sector. Nor can it offer any blank cheque to employees, for if the airlines cannot afford it, as we saw sadly with Laker, then the employees lose their jobs. It is a curious statutory obligation laid down on the independent sector over which they have no say, no consultation, no discussion with British Airways, as to the terms and conditions that British Airways negotiate with their staff. Indeed, why should they? It is as unique, I suggest, as the sight today of a carthorse pulling a London bus up Regent Street.
There have been cases of contention under this Section 15. In fairness to the House, I should report this. In the 1950s there was in fact a spate of cases; and in the early 1970s there was, of course, the case of Balfour and British United. They got into a conflict which lasted some ten months. I hope this will not be repeated. It was a most unfortunate problem. The independent airlines are uneasy. I believe that this section could again trigger off such a dispute by some less responsible party at a time when the airlines can least afford it.
None of these arguments takes away, of course, the right to discussion between management and staffs negotiating with each other year by year, and I do not think that whoever discusses this would claim that it does that. The difficulty must be, if you try to take a comparable case between British Airways and any other British airline, how do you judge or value the question of seniority, of monthly flying hours or of the fringe benefits? They are all totally different.
459 I do not need to remind the House that British airlines, along with their foreign competitors, face very exacting commercial conditions today. From reports one reads from across the Atlantic, the tragic collapse of Laker may not prove to be the only North Atlantic carrier to fail. Desperate measures are being sought by the US carriers to survive. Even the grand old lady Pan Am is seeking cuts in staff salaries all round the world, notably in Britain, to reduce their huge losses. That is the climate facing airlines—a climate of rising costs, of deregulation and of recession in passengers.
The Government have acted, I believe, with commendable firmness and speed in the temporary allocation of the Laker Los Angeles route to BCAL. It was clearly an important decision to take if the two remaining British carriers across the Atlantic were to continue to hold their 50 per cent. of the traffic against the nine US carriers. Perhaps my noble friend could comment later on how soon BCAL intend to start operating this route.
That is the support that British airlines require from the Government in these difficult times, and I hope my noble friend will add to the Government's good record tonight by supporting this small Bill to repeal Section 15—an action which the many letters I have received would indicate the airlines would widely welcome. I commend this Bill to your Lordships and beg to move that it be read a second time.
§ Moved, That the Bill be now read a second time.—(The Earl of Kinnoull.)
§ 7.27 p.m.
§ Lord Ponsonby of ShulbredeMy Lords, we have already agreed, as the noble Earl has said, that Section 15 of the 1949 Act be repealed. It was, of course, a part of the Civil Aviation Act 1980 which repealed this Section of the 1949 Act, but, of course, this cannot come into effect until some portion of British Airways is privatised. Since this privatisation may not take place for quite some time, if ever, this new amending Bill has been brought forward this evening by the noble Earl in order to ensure the repeal of Section 15 immediately.
Our belief at the time the 1980 Act was passed—and I would reiterate it again this evening—was that it would be some considerable time before British Airways was in a marketable condition; and I think that reports which have been referred to in the press recently indicate that it will be some considerable time before the Government are able to realise their desire to privatise British Airways.
As the noble Earl has said, the effect of the Bill is to abolish the regulation, as set down by the Civil Aviation Act 1949, which provides that the terms and conditions of service of those employed by independent air transport undertakings
shall not be less favourable than the terms and conditions observed by the Airways Corporations in the case of persons engaged in comparable work, or, where the Airways Corporations do not observe the same terms and conditions for persons engaged in comparable work, are not less favourable than the terms and conditions observed for such persons by at least one of those Corporations".Of course, it may be difficult, as indeed the noble 460 Earl has pointed out, to make exact comparisons in particular grades. However, Section 15 has served as a minimum employment standard by which employers have had to abide. Indeed, it can be said that several employers have in fact paid their staff more than the particular rate that the 1949 Act suggests. If this minimum standard is eliminated, it could cause further chaos in the air transport industry as there will be nothing to which the trade unions can work in their negotiations. Section 15 has acted as a stabilising factor within the industry. The fact that the arbitration procedure is there, time-consuming as it is, has enabled those involved in negotiations to threaten the use of the procedure. However, as the noble Earl has indicated, basically this procedure has not been used because nobody wants to indulge in it. The fact that it is there has enabled agreements to be reached by management and unions to work towards the particular targets in rates of pay and conditions of service which Section 15 indicates.It would not be true—and the noble Earl made this point—to say that the section has not been used. The noble Earl quoted the case in 1970 of the British Airline Pilots' Association and British United Airways where the pilots claimed that their wages were £8 to £10 less per week than those doing comparable work for BOAC and BEA. In fact, they were successful in this particular reference under this section. More recently, there has been the case of Fields Aircraft Services, but in this case the ruling went in favour of the employers and not of the employees. It can be said basically that the trade unions believe that the regulations of conditions is necessary in order to keep to a minimum conflict in negotiations. With Section 15, there are some regulations on which they can rely. If this section is repealed, the unions will have to rely solely upon industrial muscle, which inevitably will lead to militant action.
So far as both privately-owned and publicly-owned airlines are concerned, they appear at the present time to be only mildly interested in the repeal. They believe that Section 15 is outdated and therefore should he repealed; they claim, as the noble Earl pointed out, that contracts with their employees are now becoming very complicated; and I think the noble Earl stressed those particular points. It seems to me that nothing will be gained by removing this section from the statute book. However, if the noble Earl, Lord Kinnoull, could have shown that the passage of this Bill would have benefited the industry as a whole, then I would have felt inclined to advise my noble friends to let the Bill have an unopposed Second Reading.
However, in his speech, the noble Earl pointed to the main reason, as he put it, that he felt that the continued existence of this section was a potential seed of conflict. The potential seed of conflict could arise, I believe, if this section is removed from the statute book. However, I should say I have been informed by the trade unions involved in the industry that the Secretary of State for Trade, accompanied by his Parliamentary Secretary, Mr. Sproat, recently met with trade unions officials in the industry and at this meeting the trade unions were assured that the Government would not repeal Section 15 until British Airways was privatised. This meeting was held on Tuesday, 3rd November last at the Department of Trade and 461 Industry at 2.45 p.m. and was arranged under the auspices of the TUC's Transport Industries Committee. In view of this undertaking, I believe the Government cannot support this Bill and I hope in the circumstances that the noble Earl will withdraw it. It would be wrong in these circumstances to waste the time of the House by letting this Bill go to a further stage. If the noble Earl will not in those circumstances withdraw the Bill, I shall have to advise my noble friends to vote against it.
§ 7.35 p.m.
§ Lord TrefgarneMy Lords, I would like to begin by congratulating my noble friend Lord Kinnoull for his enterprise in bringing this Bill before your Lordships' House. We have been much reminded recently of the difficulties faced in the present economic climate by the airline industry, not least by the independent airlines; and this Bill is most welcome as a measure to ease pressure on this sector. I am glad to be able to say, therefore, that the Government strongly support this Bill.
Section 15 of the 1949 Act runs directly counter to the commonsense approach that we have adopted towards pay and free collective bargaining. It does not make sense, my Lords, to provide for an automatic link between the terms and conditions of employment of two orgsnisations without having regard to the individual circumstances of each. But Section 15 does just that in laying town that the employees of independent airlines are entitled to terms and conditions of employment no less favourable than those of British Airways. This mistaken concept is compounded by the provision in the section for unilateral access to compulsory and binding arbitration in cases of dispute. The Government recognise that arbitration can have a positive role to play in exceptional cases as a means of resolving disputes. However, we also believe that issues should normally be put to arbitration only with the consent of the parties concerned. Certainly we do not accept that it is constructive for a statutory framework like Section 15 to provide for unilateral access to binding arbitration. This can remove the obligation on parties to work together; and, as I shall go on to explain, it completely overturns in this case the normal balance of employer-employee relationships.
In fact, I am told that a number of major independent airlines have not yet reached British Airways' pay rates. On the face of it, one could make the welcome deduction from this that their employees have agreed not to press for their full entitlement under Sections in the light of those airlines' economic circumstances. To take that reasoning further, it could be argued as a consequence that Section 15 has no effect and is redundant because both sides are properly taking as their benchmark what an airline can afford to pay. Those who would argue in this way would not, I assume, oppose the repeal of the section. But that argument over-simplifies the effect of Section 15. It would indeed be unwise for airlines' employees to drive themselves out of work by insisting on full comparability. What we are talking about rather is a question of balance. And the very existence of Section 15 on the statute book, with its provisions for enforcement, 462 upsets that balance. It gives the employees of those independent airlines an extreme bargaining power which can be used to push their pay settlements beyond the level that would have been arrived at through normal, balanced pay negotiations.
That brings me to the main reason why we support the Bill. As I indicated earlier, the independent airlines—and, indeed, all airlines—have been hard hit by the sharp fall in demand accompanying the recession. They have also been squeezed by foreign competitors—by which I mean mainly the US carriers, who are not, in their home base, subject to any constraint like Section 15, and foreign state-owned airlines, for whom control of costs may not be so crucial to survival. Without doubt, 1981 was the most difficult year that the United Kingdom independent airline sector has experienced in the last decade. Companies which had a good record of profitability were forced into making losses. Some parts of the industry were harder hit than others, but the scheduled operators were faced with particularly difficult conditions. And we have only too recently an unwelcome example of this in the collapse of Laker. In these conditions, the independent airlines need the maximum flexibility on costs; their managements have to be allowed to take the initiative; and they should not be asked to go on operating under the constraints of Section 15. Consequently, the sooner the section is repealed the better.
As my noble friend has said, one of the effects of this Bill will be to speed up the repeal of the section (for the Civil Aviation Act 1980 already provides for repeal on the privatisation of British Airways). From what I have said it will be apparent that the Government do not believe that independent airlines should be asked to wait any longer for the repeal. But it should not be construed that Government support means that the privatisation of British Airways has been postponed indefinitely. On the contrary, we are still aiming to achieve privatisation as soon as possible; and recent press reports are evidence that this is also very much in the mind of the airline's chairman.
I should finally add that Government support for this Bill carries no emotive element of union-bashing. In fact, industrial relations in the sector, despite some lapses, have been generally good. It is not a sector that has been renowned for the exploitation of its employees. Neither is it reasonable to assume that exploitation would follow on from the repeal of this section.
What we are talking about instead is allowing employees and employers to negotiate the terms and conditions of employment in this business in a balanced and sensible way. This has, my Lords, worked well enough in other sectors which have been without statutory provisions and I see no reason why it should not work here.
May I now turn to the final point made by the noble Lord, Lord Ponsonby, about what he calls an undertaking that was apparently given by my right honourable friend the Secretary of State for Trade. There is, I am sorry to say, some misunderstanding in the mind of the noble Lord over this matter. At the meeting in question, which took place on 3rd November last year, as the noble Lord rightly pointed out, my right honourable friend merely stated the statutory position, which was that the repeal of Section 15, enacted in the Civil 463 Aviation Act 1980, would take effect under that Act only when British Airways was ready for privatisation. No legislation to alter that position was then in prospect —my noble friend Lord Kinnoull had not yet introduced his Bill, and the Government certainly had no intention of introducing another Bill of their own on the subject—but my right honourable friend said nothing at all that precluded Government support for legislation to accelerate the repeal should the opportunity occur.
§ Lord Ponsonby of ShulbredeMy Lords, I am under no misapprehension about this point. I have been informed by the trade unions involved that this was the undertaking that was given at that meeting.
§ Lord TrefgarneMy Lords, I am sorry to say that I think that the noble Lord is misinformed. I have taken great care over this matter and have consulted my honourable friend Mr. Sproat about this. This is clearly the position as he recalls it, and he was certainly present at the meeting.
My Lords, if your Lordships pass the Bill, it must then go, of course, to another place. Noble Lords would not expect me to speculate on the progress there of a Private Member's Bill. None the less, as I made clear at the start, the Government do support the Bill's objectives. We are willing to assist my noble friend Lord Kinnoull in improving the drafting of the Bill so far as is necessary. On this basis, I have no hesitation in commending the Bill strongly to your Lordships' House, and I hope that you will pass it.
§ The Earl of KinnoullMy Lords, I should like to thank both noble Lords for taking part in this debate. I should particularly like to thank my noble friend for his vigorous support and for his common-sense speech. He likened the repeal of this section to a common-sense approach. The noble Lord, Lord Ponsonby, made two points: first, he would support the Bill if he really thought that there would be a benefit to the industry. He went on to say that he felt that Section 15 made certain that there was a minimum employment standard. I think that my noble friend demolished that argument when he said that British Airways' standards were, in certain cases, above those of the independent airlines. I do not wish to get into a dispute about the unions and the Government and what undertakings were given. This of course is a Private Bill and I should like to see it go forward, hopefully with the support of the House.
§ 7.45 p.m.
§ On Question, whether the said Bill shall be read a second time?
§ Their Lordships divided: Contents, 65; Not-Contents, 23.
| DIVISION NO. 3 | |
| CONTENTS | |
| Avon, E. | Bolton, L. |
| Beaumont of Whitley, L. | Boyd-Carpenter, L. |
| Bellwin, L. | Bridgeman, V. |
| Beloff, L. | Campbell of Alloway, L. |
| Belstead, L. | Cathcart, E. |
| Boardman, L. | Coleraine, L. |
| Colville of Culross, V. | Lindsey and Abingdon, E. |
| Cork and Orrery, E. | Long, V. |
| Cottesloe, L. | Lyell, L. |
| Craigavon, V. | Mansfield, E. |
| Crathorne, L. | Marley, L. |
| Croft, L. | Mersey, V. |
| Cullen of Ashbourne, L. | Monson, L. |
| Denham, L. | Mongtomery of Alamein, V. |
| Drumalbyn, L. | Mottistone, L. |
| Dundee, E. | Murton of Lindisfarne, L. |
| Elles, B. | O'Neill of the Maine, L. |
| Elliot of Harwood, B. | Platt of Writtle, B. |
| Elton, L. | Ridley, V. [Teller] |
| Evans of Claughton, L. | Romney, E. |
| Fortescue, E. | St. Just, L. |
| Gibson-Watt, L. | Saltoun, Ly. |
| Glanusk, L. | Sandford, L. |
| Glenarthur, L. | Sandys, L. |
| Greenway, L. | Stedman, B. |
| Harvington, L. | Stradbroke, E. |
| Hatherton, L. | Tordoff, L. |
| Inglewood, L. | Trefgarne, L. |
| Kilmany, L. | Trumpington, B. |
| Kinnaird, L. | Vaux of Harrowden, L. |
| Kinnoull, E. [Teller] | Wigoder, L. |
| Lane-Fox, B. | Wynford, L. |
| Lauderdale, E. | |
| NOT-CONTENTS | |
| Birk, B. | John-Mackie, L. |
| Bishopston, L. [Teller] | Listowel, E. |
| Brockway, L. | Llewelyn-Davies of Hastoe, B. |
| Cledwyn of Penrhos, L. | [Teller] |
| Collison, L. | McCarthy, L. |
| David, B. | Northfield, L. |
| Davies of Leek, L. | Peart, L. |
| Elwyn-Jones, L. | Ponsonby of Shulbrede, L. |
| Fisher of Rednal, B. | Strabolgi, L. |
| Howie of Troon, L. | Underhill, L. |
| Jacques, L. | Wells-Pestell, L. |
| Jeger, B. | Willis, L. |
§ Resolved in the affirmative, and Motion for Second Reading agreed to: Bill read a second time, and committed to a Committee of the Whole House.
§ Lord SandysMy Lords, I beg to move that the House do now adjourn during pleasure until 8 o'clock.
§ Moved accordingly and, on Question, Motion agreed to.
§ [The sitting was suspended from 7.53 p.m. to 8 p.m.]