§ 8.2 p.m.
§ The Earl of Kinnoullrose to ask Her Majesty's Government whether they will clarify their civil aviation competition policy in the light of the recommendations of the report of the Civil Aviation Authority.
§ The noble Earl said: My Lords, I think that the insolvency law is a bad omen for the subject of airline policy, to which I should like to draw the attention of the House at this relatively early hour. As we fast approach the Summer Recess this week it may seem a trifle odd to be urgently seeking a debate on a very important subject affecting the future of our civil aviation. It might seem more appropriate to allow the ink to dry and to let time improve our reflective thoughts, particularly as my noble friend Lord Peyton of Yeovil initiated a very comprehensive general debate on civil aviation only a month ago.
§ A time for cool reflection would have been my preferred choice, but the circumstances are exceptional. The report makes certain fundamental recommendations which are highly controversial and my honourable friend has already announced in another place, in the briefest of debates at an unsocial hour of the morning last Thursday, that decisions would need to be taken by the Government during the recess. So this debate tonight appears—I hope I am wrong—to be the only opportunity that this House will have to add its collective wisdom to the vital issue of whether British Airways should be denationalised as it stands, as an overwhelming giant, or whether it should be surgically pruned with measured care partially to correct an obvious imbalance among other independents.601
§ I am grateful to my noble friend the Chief Whip for allowing us time tonight to debate this issue. I am also grateful to all those who have indicated that they will be taking part in this debate; I shall not have a chance of thanking them later on. I am sure that their contributions will make the debate much more valuable. It is ironic that my noble friend Lord Trefgarne, who is perhaps better versed in this subject than most of us, will have to play the strong silent role for the second time within a month, though I hope he will go away satisfied that this thorny dilemma has been looked at by this House and that there have been some constructive thoughts given to it.
§ My first impression on reading the Civil Aviation Authority's report was not, as one read in the report of the proceedings of another place, one of slightly unflattering adjectives. It was, in fact, that the report is a very clear, practical and intellectual analysis of British airline policy. It has the advantage of being prepared from a thorough background of consultation with industry, including the unions, and a comprehensive list of statistics to support it. It is a valuable document and I congratulate the chairman and his colleagues on the clarity and searching comments of the report.
§ Whether or not it is what the Government wanted to hear is another matter, but it is a positive reply to the Secretary of State's request last December to advise on the implications of denationalising British Airways and its effects on the sound development of the airline industry. It took six months for the report to be prepared and, in short, its conclusion is that letting British Airways loose in the private sector, with all its existing dominance and imbalance of monopoly power, could in the long-term severely upset the national objectives set for the industry in the existing policy.
§ The report proposed that British Airways' wings should be marginally clipped by 7 per cent. of its scheduled service revenue—or, if one looks at another side of the coin, one year's growth—by the transfer of certain international routes of Harare and Saudi Arabia to British Caledonian and by the transfer of its Gatwick services and, indeed, its regional airport routes as well. The report added that, in the authority's view, the transfer of 7 per cent. of British Airways' routes would not weaken British Airways materially against its international competitors, because it would be keeping that vital, valuable Heathrow hub, which would be left intact. This recommendation, not unexpectedly, unleashed a fierce barrage of protest from my noble friend Lord King, and I understand that I must thank, or not thank, the Addison rules for his silence tonight. Certainly, he would bring to this debate much rich language and would no doubt increase the temperature of our discussion.
§ I have read that British Airways have apparently quantified the effects of the suggested route transfers in this report: job losses of 3,600, although I would add that British Caledonian are on record about re-employing any necessary staff on any routes that they are awarded; lost revenue of £275 million; lost profits of £76 million; and a flotation delay of four to five years. I am not competent to say whether it looks as though my noble friend has thrown a very large kitchen sink into his figures, but no doubt my noble 602 friend Lord Trefgarne will seek clarification about these penal claims made by British Airways. The flotation timing is already a key factor. Certainly it must be a pessimistic estimate to suggest four or five years when the market apparently is prepared to accept British Airways on only one year's profits.
§ Of course one understands the frustration of my noble friend Lord King. Surely the British Airways' story in the past few years is one of unequalled achievement—of financial recovery from bankruptcy and despondency to a healthy, profitable and proud carrier. It takes great leadership to slim down staff dramatically over two years by 35 per cent., particularly the staff of a nationalised body, without a single disruption. It takes equally great leadership to change the mood and spirit so effectively that when it came to a baggage handling strike a year ago at Heathrow, all the staff were prepared to rally round, including some of the captains. I doubt whether that spirit existed 10 years ago. It is a success story with a capital "S". So, if I may say so, is the British Caledonian story, and that of some of the other independents.
§ British Caledonian was chosen 15 years ago as the second British international carrier. It has been awarded route transfers on two occasions and one route exchange. That was in 1964, 1971 and 1976. Its network now represents, I believe, 16 per cent. of our scheduled services. It plays a vital part in our overall airline policy. It offers direct competitiveness to some of the British Airways' routes—Hong Kong in particular and Los Angeles—all of which routes have taken time—and indeed money—to build up. It is our insurance backstop, as the report has suggested, should British Airways ever fail to perform.
§ British Caledonian has also gone through some major depressions of the market. I recall that in 1974 it had to dispose of 30 per cent. of its staff right across the board. It survived, without the comfort of the Government's overdraft facility. Today Sir Adam Thomson, his colleagues and staff—and I am glad to see in the Gallery a few "Tartan lasses" to cheer us up—have a unique reputation for efficiency, warm service and pride in the company. To those of us who are privileged to come from North of the Border, they are of very special pride.
§ I say all this to remind the House—if it needs to be reminded—that we have two splendid international airlines. It is no stroke of luck that we are not like Germany, which has only the single airline, Lufthansa. That is not our direct policy. Our policy is to create an environment which will allow a number of airlines to prosper—in particular, our two international airlines. The policy is deliberate, it is successful and I have heard nobody speak against it. So what does Sir Adam Thomson of British Caledonian think of the Civil Aviation Authority Report? How does he see his company thriving in the new era of British Airways joining the private sector?
§ Most of your Lordships will, I am sure, know that British Caledonian put up a plan—in fact, two plans—to the Civil Aviation Authority which went much further than the Civil Aviation Authority's report. As to his reaction to the report, I understand that Sir Adam Thomson regards the Civil Aviation Authority's plan as a workable plan for the industry, but he has stressed that without it there is a very real 603 danger of British Airways picking off their opposition with ease—such is the imbalance. One has to remember that we are now looking into the future, not in the presence of the noble Lord, Lord King, or in the presence of Sir Adam Thomson, or in the presence of the present chairman of the Civil Aviation Authority.
§ I understand my noble friend Lord King's fierce attitude to the proposed transfer of routes: his loyalty to his staff, his efforts to discount the seriousness of the Civil Aviation Authority judgment and his dire threats to the Government on the consequences of a flotation delay. I understand it but I do not agree with it, for these reasons. First, to do nothing would be wrong, against the pretty convincing background of the evidence of the Government's experts in this report. To do nothing now with a view to doing something in the future—I have heard this suggested—would be fudging the issue and unfair to future investors. To do nothing on the ground that flotation must not be delayed at all costs would, I suggest, be an irresponsible decision to suit a short-term problem, to the detriment of the long-term policy.
§ Route transfers, as I have said, against British Airways is not a new proposal. Such a proposal has been made previously. The argument then was that this would create a viable, independent sector. The argument now is that one would correct, not by a great deal of paring away—only by 7 per cent.—the huge imbalance of British Airways descending on to the private sector. Would an unpruned, British Airways stifle the smaller independents and put them out of business? The Civil Aviation Authority's report suggests that there is a very real danger of that happening. So do British Caledonian. Would a pruned British Airways be weakened so much against its international competitors? This is a vital consideration. The report was carefully drafted. I understand, and 7 per cent. is considered to be not a harmful or weakening percentage.
§ Clearly the Government face a dilemma. One way out of it would be for the parties to reach agreement. I suspect that this is unlikely, particularly as British Airways have never acknowledged the problem that is being faced today. A second option would be for the Government to take temporary powers to transfer routes. I suspect that such a delay would be unacceptable. A third option would be for the Government, as the sole shareholder of what is now British Airways public limited company, to call a meeting and announce that a floatation would be based on the following routes. It would be a heavy-handed solution and I suspect that it would prove to be unconstructive. Could the Government ignore, or should the Government ignore, the Civil Aviation Authority's recommendations completely, or should they agree to cosmetic surgery? Both of these options are I believe unacceptable, and they would be irresponsible in terms of the future of the industry.
§ There are other points in the report to which I should have liked to refer—for example, the strengthening of the powers of the authority, the control of British Airways against any predatory action in the charter market and the muddle the Government have apparently got themselves into over the Heathrow limitation of air traffic movements. I shall leave those 604 matters for the capable hands of others and will finish with an appeal to my noble friend and his right honourable friend on the main issue of the transfer of routes. There is a great, pent-up atmosphere of excitement surrounding Westminster at the moment. Issues can be blurred very easily. It would be very wrong for the Government to be stampeded into a rushed decision on the grounds of settling immediately uncertainty for the operators. It would be very wrong in my view not to take very seriously the dangers which the authority fears if nothing is done to prune British Airways' routes. It is not an easy decision. There is a dilemma. But in the cool atmosphere of reason, the only decision that must be taken is what is best for the long-term future of the industry.
§ 8.18 p.m.
§ Lord Underhill
My Lords, the House will be grateful to the noble Earl, Lord Kinnoull, for initiating this debate. Noble Lords who take part in it will want to avoid so far as possible repeating the statements which many of us made during our debate on civil aviation on 27th June—only a month ago. It would have been preferable if we could have debated the Government's proposals on the authority's recommendations. One wonders also whether it is desirable for the Civil Aviation Authority's report to be considered in isolation from all the other consultative processes which are still under way and upon which we are awaiting comments and reports.
I recognise that uncertainty could be a problem for the whole of the civil aviation industry, including those who are employed in it. It is therefore desirable that there should be no delay in the Government's announcement. At the same time I recognise the problem created by all these other reports which we are still awaiting and which could eventually affect the decision which will have to be taken. What would be intolerable would be for the Government to defer a statement on the report during the Recess without the opportunity for parliamentary consideration until after the recess. That, I believe, would be intolerable, I must emphasise that Parliament is not in the business of looking after the vested interests of any persons involved in any airline. Nor is it the job of Parliament to let any other airline take the place of one particular airline at the expense of that airline. Our concern must be only, first, the consumers (that is, the air passengers) and, secondly, what is best in the national interests. Those are the most important factors, having due regard to the interests of those employed in the various undertakings and to environmental considerations.
Speaking for my party (the Labour Party) I say that our position is clear. We still stand by having a strong public sector airline as the national flag carrier. We regard that as essential if Britain is to maintain its prominent position in world aviation. We also accept the desirability of a viable second force airline. In the previous debate, on behalf of these Benches I voiced tributes to the efforts that British Airways have made in the last 12 or 18 months and also the efforts carried through by BCal.
Paragraph 5 of the CAA report points out that the Edwards Committee report of 1969, which was the last major aviation review, came down in favour of a multi-airline policy. But the authority fails to mention 605 that the Edwards Committee recommended that civil aviation policy must include a public sector. Edwards said that there was no case for the denationalisation of BOAC or BEA, but that was before their separate identities were merged into what is now British Airways. Edwards recommended positively that these state corporations should be confirmed as the major operators. That point is not mentioned at all in the CAA report.
In paragraph 86 the authority recognises that the recommendations that certain British Airways routes should be made available to other airlines must imply that the Exchequer should forgo part of its return from the sale of British Airways. On this point, my Lords, you will be aware that there has been some controversy over statements on behalf of the CAA that British Airways' resistance to the authority's recommendations could delay, or even endanger, the privatisation of Briitsh Airways. I am certain I shall not be misunderstood if I say that this is a matter for Government; it is not the business of the authority.
That leads on to what is to be the future role of the Civil Aviation Authority. The report makes it absolutely clear that the authority has no power to transfer routes from one airline to another, except under its statutory duties. The authority is asking for greater statutory powers in the future. From these Benches we say that the future role should not go beyond that of a regulatory body.
The authority also seeks legislation to give effect to the reallocation of routes, as recommended, and then that legislation should lapse. Of course, the second force airline, which is BCal, should be viable, but does that justify the proposals made by the Civil Aviation Authority? We say quite clearly that the position of British Airways must not he weakened, but it will be weakened by these proposals. As your Lordships have heard from the noble Earl, it is argued that through these proposals their revenue will be reduced by only 7 per cent., though the report makes clear that there could be further changes, bringing a further reduction of some 4½ per cent.
We do not want to go into all the statements and arguments put forward in our debate on 27th June, but we must not overlook the position that is presented by a strong British Airways in arriving at agreements which other governments will undoubtedly insist upon. In fact, we see in paragraph 34 that it is pointed out that consideration was given to the idea that British Airways should no longer be the sole British operator of international services at Heathrow. But it stresses that only the reversal of policy on those lines could be frustrated by bilateral constraints. So the authority made no such recommendation.
Is taking routes from British Airways and sharing them out to others good for British civil aviation'? That is what we are concerned with—not the interests of any particular airline or airlines. Is it good for British civil aviation? Is it in the national interest? Who gains from compelling British Airways to surrender its scheduled services from Gatwick and to give them to other British airlines? What is the gain in the national interest?
The authority completely rejects arguments for having a sole major airline, but I would ask, who has 606 argued that there should be only one major airline? The existence of a viable second force airline was, I thought, generally accepted.
One matter is definitely confirmed by the authority's reports—that is, if confirmation were needed. Market forces and direct competition do not apply in civil aviation. Paragraph 18 makes it absolutely clear that BA's market power is a national asset in relation to foreign competition. Admittedly, it adds that this cramps the development of other British airlines, some of which also face foreign competition.
I must ask: where does Britain's national interest lie? That is the matter which surely concerns us. The report stresses, as was made quite clear in our previous debate, that there is little head-to-head competition between BA and BCal and only very limited opportunities for there to be two British airlines in head-to-head competition on the same route. As the report makes quite clear, that would require the agreement of other governments. So the authority's report is not suggesting merely competition; it is also suggesting substitution. I note that the Under-Secretary in the debate in the other place, which occurred last Wednesday night or early on Thursday morning, said, at column 1154 of the Official Report:To substitute another British airline for British Airways adds nothing to competition".It cannot be said to be even regulated competition.
There are quite a number of references in the authority's report—I believe that the noble Earl referred to them in his introductory speech—to the danger of a privatised British Airways being in unfair competition with other airlines. Apprehensions are repeated time and time again that it may act as a predator. In our previous debate it was stressed—and I emphasised it myself—that this point was being made by a number of other airlines in relation to the denationalisation of British Airways. It is said that as a private sector airline British Airways will dominate the market; so cut it down. There is one obvious answer—and I was going to use a colloquialism, but I had better be careful not to use it in your Lordships' House. Why the devil interfere with what British Airways is at the moment? Everybody admits that it has made great progress, everybody admits that it is doing a good job.
Why then go through all the privatisation process, bringing all these problems which would not otherwise be there? It is only the fear of a privatised British Airways with what is called unfair competition—I should like somebody to tell me what is "unfair competition"—that is bringing these problems which the authority has had to deal with. I recognise that one Government cannot bind its successors, but I must ask what is the Government's reply to reminders which were made in the debate in the other place last week on the points put by a previous Tory Government with regard to the future of British Airways. It was made quite clear that the then Secretary of State, now Sir John Nott, gave assurances that there would be no arbitrary re-allocation of routes. On another occasion, he made it absolutely clear when he said,I do not propose that any part of British Airways should be broken up or sold off'.There was no reply from the Government at the end of that debate last week. But I would ask the Minister to 607 give the Government's reply to that question tonight. There should be a reply. Those assurances were given by a previous Conservative Government. What is the Government's reply to these comments, which are now being brought forward again?
There is criticism in the report of the possibility of British Airways using profits from some routes to deploy its resources on others. I must ask this simple question: is that wrong if it enables British Airways to open up new markets? This might be the only way to encourage new developments. It is a cross-subsidisation of the type we have in bus transport and about which I am keenly enthusiastic. Cross-subsidisation is one way of assisting the opening up of new ventures and new markets. It may be that in the private sector such use of profits will be discouraged because shareholders will want to get returns from the most profitable routes.
In its submission, the authority stressed that any method of allocating scarce capacity to foreign airlines which did not involve a substantial measure of agreement would inevitably result in repercussions from their governments. That is an important matter and one that I hope will not be overlooked.
The authority proposes also that British Airways should surrender all its European scheduled services outside London; that they be made available to other British airlines. Here, I must ask a number of questions. Will this be in Britain's best interests? That is what must concern us—not the interests of any particular airline. Is it in the interests of passengers? Will it assist provincial airports? Will it assist development in regions other than the South-East in their economic life and so on? Again, we are not talking about competition. Let nobody talk about competition. We are talking again about substitution, not competition.
The authorities for Birmingham and Manchester airports have both expressed their serious concern and believe that this move could divorce both of them from the Heathrow hub. The Birmingham Airports Authority believe that it will have a detrimental effect on Birmingham airport. They point out that BA carry more than 25 per cent. of all passengers using Birmingham and 51, per cent. of all scheduled passengers. They argue that British Airways are the only major base airline and that BA have just turned their operation into a profitable one, with a real possibility of developing new services. The Birmingham Airports Authority argue that the CAA proposal must threaten BA's remaining services at Birmingham, including their domestic services to places such as Aberdeen, Belfast, Edinburgh, Glasgow and Manchester.
Manchester International Airport Authority have expressed similar strong concern and opposition to the proposals. They argue that BA operate the bulk of all international scheduled services by British airlines from Manchester. The Manchester authority are particularly emphatic in asking: where will this recommendation leave the North-West in terms of its economic development? They are emphatic that everything should not be channelled to the South-East. Also, the CAA is urging the Government to consider lifting the permitted maxima of flight movements at 608 both Heathrow and Gatwick. That will of course depend on certain other reports which we are still awaiting.
It is argued by the authority—quite rightly—that it would not be consistent with encouragement to greater competition if there was any suggestion of preventing British Airways from engaging in charter services—but the authority recommends that its own regulatory powers could be used in setting quantitative limits to British Airways' share of British airlines' penetration of the European charter market, should an abuse of market power be demonstrated. What is an abuse? Apparently an abuse occurs if we want competition but somebody is too competitive; then, we will stop it. That is our argument for a publicly-owned, national, public sector airline.
There appears to be criticism that British Airways have an opportunity to deploy in one market aircraft not required in another, and that whole plane charter airlines are concerned that a privatised BA would use their surpluses to buy a market share. Is it wrong that any undertaking—whatever it is—that has resources not being used in one sector should use them in another market? Surely that is what competition is all about. Surely that is in the interests of passengers. It is in the interests of consumers that spare aircraft should be used in another direction, if that can provide good services to the public.
In the main report of the authority, there is no reference to the fact that the other four main British charter airlines are not independent airlines at all hut are owned by travel operators. One has to read paragraph 13 in Appendix III to find this stated, because it is not in the main part of the report.
There may be people who think that I am defending the position of British Airways. What I hope I am doing is reflecting what is in the interest of passengers and what is in our national interests. Surely that is the only consideration that comes before us. We should like to see British Airways left as they are now; as a public sector airline serving the people of this country.
§ 8.36 p.m.
§ Baroness Burton of Coventry
My Lords, I should like first to thank the noble Earl, Lord Kinnoull, very much indeed not only for his speech but for giving us the chance tonight of having what I would call a half bite at the cherry. I feel—and I am quite sure from what he said that the noble Earl felt this, too—that neither a debate on the Consolidated Fund Bill nor an Unstarred Question can replace a full-scale debate. I hope that the Government, recognising the importance of this subject, will give both Houses the opportunity of a full debate in the autumn; I think that they must do so. I noted what the noble Earl said. He said he hoped that this half bite tonight would not be the only chance we should have of discussing the many vital matters arising from this report. I imagine that every speaker tonight will echo that thought.
On the question of a Government Statement, are we to have one before Parliament rises on Wednesday? If so, will it be a non-Statement to the effect that the Government need more time to reach a decision, or will it be in the nature of a fait accompli on which neither House can have the slightest effect? I 609 personally would not object to a holding statement. After all, we are looking at proposed changes to the airline industry which will affect it for the remaining part of this century. I realise that the airlines are anxious to get on with business, but, against this very natural desire, Parliament should have an active voice on so major a matter—and an effective voice. Presumably we can only wait to see what happens in the next two days.
Moving on to tonight's debate, I am sure that every speaker is conscious of the same problem; that is, the impracticability of making lengthy speeches on major policy reports in debates starting late. After all, the debate in another place commenced at 2 o'clock in the morning. If I were not bound by that thought—which probably comes as a great relief to this House—I should want to cross swords with the noble Lord, Lord Underhill, over many of the comments he made tonight. But I am going to bide my chance in the hope that we shall have a full debate, and I will stick to what I think is anyway the best course for me to pursue.
In view of the fact that we are speaking late at night. I propose to make a general comment and then deal with one detailed point; namely, airport capacity. The House will probably have noted that the British Airports Authority, in its annual report just published, declares that, whatever the outcome of this current review of airline competition policy, airport capacity will remain a key issue. We on these Benches believe that the Civil Aviation Authority has produced a balanced and considered report for which Parliament should thank it. As the authority states early on:Although the review was occasioned by the proposed privatisation of British Airways, it has in fact concerned itself with a range of underlying problems rather than with privatisation as such".I believe, and my colleagues agree, that the report has done just that. Everyone, I think, must accept that this review had to deal with the obvious imbalance in the United Kingdom aviation market. We all, wherever we sit in this House, want to see a prosperous and well-balanced aviation industry. Neither British Airways nor the independent airlines have got all that they wanted or hoped for and I suggest that this fact alone speaks well for the report that Parliament has to consider tonight.
Coming to the specific point of airport capacity—and I have stated the opinion of the British Airports Authority on the importance of this vital issue—I must read paragraph 26 of the Civil Aviation Authority report that we are discussing tonight. It states:Capacity constraints at Heathrow and Gatwick impose major limitations on the scope for increasing competition between British airlines. Airports policy, reflecting environmental and political considerations as well as physical and operational capacity limitations, has tended to reinforce the main competitive imbalance in the airline industry resulting from post-war civil aviation policies. Present airports policy, which has changed little over the years, has not yet been wholly successful either in developing Gatwick's full potential or in providing the infrastrucure for a fully competitive British airline industry.The House will not be surprised that I underline the words "environmental and political considerations", nor that I come to the problem of Gatwick and, again, underline in this paragraph 26 the words "Gatwick's full potential".
610 Obviously I cannot inflict on the House quotations from all the paragraphs dealing with Gatwick and its potential, but perhaps if I give some actual paragraph numbers noble Lords may be interested to look for themselves. As well as paragraph 26, from which I have quoted, we have numbers 27, 31, 51, 52, 53, 54, 55, 56 and 57. I think I may be forgiven for returning to paragraph 31, which states:While transfers of one sort or another from Heathrow to Gatwick would, if carefully selected, contribute to the development of the Gatwick hub and of the scheduled airlines based there, they would also accelerate the time at which the single Gatwick runway reached its capacity. An increase of 28,000 movements over the 1983 level would take the overall movement level up to the runway capacity.In this House in debate on 27th June, to which the noble Lord, Lord Underhill, has already referred, and frequently at Question Time, I have raised this matter of a second runway at Gatwick and I have made it quite clear that I consider it nothing short of disgraceful that the British Airports Authority and the Government unite in a refusal to lay down a second runway. The House would be weary were I to repeat, once more, all the arguments. These are set out in our Hansard for 27th June. But there are certain points which I feel must be stressed even again.
In the debate on 27th June I asked the Minister to state whether he accepted the truth of what I was saying; namely, that Gatwick cannot be developed to its full potential or its full strength without a second runway. I obtained no reply. So tonight I repeat the same question to the same Minister and I hope that he will not insult the intelligence of this House by seeking to imply that the taxi-way has any implication for developing Gatwick to the maximum we all desire and believe to be necessary.
The Government have admitted to the House that they do not consider themselves bound by the 1978 agreement reached by the British Airports Authority and the West Sussex County Council. Presumably, then, we must return to the words "environmental and political considerations" contained in paragraph 26. Certainly this is a most blatant example of these considerations—to the detriment of Gatwick, its full potential and the future of the airline industry, not least financially.
Why do we have this refusal to recognise the obvious? First of all, we have those residents around the airport and I do understand their attitude. However, we are going to have those same fears wherever there is development. Why should these fears decide the issue at Gatwick if they cannot do so elsewhere? Secondly, there is the British Airports Authority. Apart from the agreement made in 1978, it is a known factor that it considers any such development at Gatwick might well militate against what the British Airports Authority itself wants at Stansted. I do not believe that any of this should stand in the way of developing Gatwick to its full potential detailed in the Civil Aviation Authority report in the numbered paragraphs that I have mentioned.
I hope that the House will agree that the case I have tried to make tonight does merit a full and considered reply from the Government. Hence, I ask the noble Lord, Lord Trefgarne, to refer this particular aspect to the Secretary of State for consideration.
611 There is one further, and allied, point that I make. I feel that tribute should be paid to European Charters—a highly efficient sector of British air transport. It is competitive, with a record of profitability and low costs. The report at paragraph 32 mentions the substantial demand for charter seats which is being satisfied from Gatwick. Furthermore, it goes on to say that to rule that charters should increasingly be operated from some other airport is thus,to substitute the planner's judgment for the proper working of the marketplace".Indeed, strengthening this point, at paragraph 38, the report stresses once more that:The aim at Gatwick must be the development of a strong and sustainable network of scheduled services such as the Government and this Authority has striven to build and sustain over many years. If the price of developing the scheduled service network at Gatwick was progressively to squeeze charters out, this would be to render a major disservice to a substantial category of public demand.We really do need that second runway.
There is also the salutary comment in paragraph 31 that the basic truth is that airports exist first and foremost to accommodate air services which, in their turn, exist in order to cater for the needs of the travelling public—something to which everyone can say, "Hear, hear!"
The noble Earl, Lord Amherst, had hoped and expected to be here tonight, but in sending his regrets he has asked me to make it clear that he wishes to be associated with what I have said. Thanks to the noble Earl, Lord Kinnoull, we have done our best tonight. Both Houses now await a Government Statement and full debate. Tonight, quite deliberately, I have analysed one aspect only. There is a great deal in the report that I want to look at thoroughly following a Government Statement. I hope that when the Minister comes to reply he can give us some information on this point.
§ 8.50 p.m.
The Earl of Bessborough
My Lords, I, too, am most grateful to my noble friend Lord Kinnoull for asking his Question this evening. I have always thought that he is very well informed in aviation matters, as indeed is the noble Baroness, Lady Burton. This is not the first time that I have heard her speak on these subjects. Perhaps she is better informed than any other Member of the House. I believe that my noble friend Lord Kinnoull has very good judgment, even if in this case I cannot altogether go along with him.
I shall be very brief indeed. I merely tell your Lordships that I have studied the Civil Aviation Authority's report on airline competition policy, as well as the briefs sent to me by both British Airways and British Caledonian. While I consider all three to be very well set out and argued, and indeed convincing in their own ways, and while I have the greatest possible respect for Sir Adam Thomson and his team, including his general manager, Mr. Bellers, I have, after very careful reflection, come to the conclusion that it would not be wise at this moment in time for British Airways, which is competing well world-wide with other international airlines, to be obliged to give 612 up some of its routes to independent carriers, competent as indeed they are to take them over.
I agree with a great deal of what the noble Lord, Lord Underhill, said this evening. That may be unusual, but certainly this evening I agreed with a good deal of what he said. But in my view British Airways should be privatised, and, if so, it seems to me all the more important that it should not at this time relinquish any routes. If it did, I am sure that other international carriers would be laughing up their sleeves and would be delighted at the prospect of BA having to give up some parts of its network. It would seem to me that the Government should try to get the highest price that they can for BA. I am glad to read in the Daily Telegraph today that the Department of Industry's gut instinct may well be to defend the flag carrier. I hope that it will.
British Airways has stated quite categorically that it does not fear competition, but whether British Caledonian should be permitted to use Terminal 4 at Heathrow I have not yet made up my mind. On the face of it, I would have thought that it should be permitted to do so.
When, in the 1970s, I was travelling regularly almost every week in Europe as vice president of the European Parliament I had then a very special admiration, and indeed preference, for British Caledonian. It seemed to me then that in many ways it provided a better service than BA, even if its flights from Gatwick were less frequent than those of BA and other carriers from Heathrow. That, of course, was before my noble friend Lord King took over and made such a remarkable success of BA. He is to be warmly congratulated on what he has done. I do not think that any measures should be taken at this time to limit his operations.
That is my preliminary conclusion. As has already been said, this is a half bite at the cherry and is not a major debate; but that is my preliminary view. The arguments on both sides are very finely balanced. As I say, I hope that British Caledonian and the other independents will in their own way thrive, as BA is now doing.
I am all for second force airlines. I have a French first cousin who is a director of UTA, the French second force line. In my view it is as able and effective an airline as British Caledonian, and UTA's relations with Air France appear to be good. Even if Air France does not have as many routes worldwide as British Airways, I do not think that that is any reason for cutting back on our own British Airways operations by the transfer of routes.
I have often thought—and I am coming to the end of my remarks—that the airways situation is, or has been, somewhat similar to that of broadcasting in the 1950s, when the BBC both in radio and television had a national and indeed world-wide monopoly, which its overseas radio service still has. In those days I fought hard to break the BBC monopoly, but in doing so I never advocated any reduction in BBC programmes; and, indeed, there was no reduction. When independent television came on the air, the BBC very soon increased its services on BBC 1 and also soon followed with BBC 2—and very good they both are. That was long before ITV had a second service. The analogy 613 may not be perfect, but I think that there is some basic good sense in the principle which the analogy reflects; do not cut down on things which are doing well.
I am all for British Caledonian and other independent operators competing with British Airways, but I see no reason why that should lead to a reduction in BA's operations at this time. The BBC is doing a magnificent job world-wide and nationally, just as British Airways now is in another form of air communications. Let us hope that the independents will compete effectively with it on certain routes. But I would ask the Government through my noble friend Lord Trefgarne—and I think I may say that he is an old friend—not to reduce BA's effectiveness.
§ 8.57 p.m.
§ Lord Beswick
My Lords, it is a good thing when occasionally the arguments in this House do not fall entirely along party lines, and this would seem to be another example of that. I hope that the debate will be considered all the better for it. I should like to add my congratulations to those already offered to the noble Earl, Lord Kinnoull, on his initiative in giving us the opportunity to discuss to some extent the CAA's proposals. I looked forward greatly to hearing what he had to say. I have to tell him that I was not at all disappointed.
I think that few of us will claim the knowledge of all the relevant data or the facilities for processing them when it comes to deciding which airline should fly which route, but there are general issues involved, and it is right that Parliament should be given the chance to discuss them. As has already been said in speeches so far, I only hope that the Government will give themselves adequate time for consideration of all the issues involved before they reach final decisions.
Some criticisms have been made of the CAA's standing in these matters. I would record my view that the authority is as experienced and well informed as any, and is less financially prejudiced than most, of the current protagonists in this controversy. If we are looking for informed professional authority, I do not think that we can do better than listen carefully to what it has to say.
I precede my own proffered views by stating that there are, or should be, two overriding considerations in the decision making process. One is the advantage of the fare paying air passenger. The second—and it is bound up with the first—is the securing of the optimum share for Britain of what is essentially an international business. In this I am glad to think that I am in line with what my noble friend Lord Underhill has said because I am not going to agree with everything that he has said this evening.
In setting down the first consideration (the advantage of the passenger) I should like to make it clear that I am not talking about a short-term advantage. It is possible—and I have seen it happen before—for an apparent short-term advantage to lead to reversals and to upsets that have not helped the industry or the passengers it serves. I am not one who sees salvation for all air transport ills by means of some extreme exercise in deregulation.
Much of the propaganda for cut-price fares is overdone. After all the initial euphoria for 614 deregulation in the United States of America there were some sobre second thoughts after six months or so. I cannot think that Air Florida or Braniff are now especially pleased over their initial assessment. There are many smaller communities in the States which had previously enjoyed a good service from carriers who had been licensed to fly profitable routes on condition that they also gave service to the small communities. Now we are seeing things rather differently. Deregulation meant that those conditions were relaxed. Moreover, it remains a fact that with cut-price competition there is an extra incentive to cut costs, which can impair maintenance and safety standards.
There is another aspect of this business. I read somewhere that the Virgin company, with their cut-price Atlantic operation, said that their fare was possible because, as they boasted, they had never bought a new aircraft. I cannot see a future for the industry, nor believe that future air passengers will benefit, if all airlines made the same boast.
I have said before, and I think it is worth saying again, that the biggest gains to the customer in postwar civil aviation have been made not by extra clever airline management, but by the progressive development of the aircraft and of the aero engine. Some old stagers may well hark back to the good old days of the Empire flying boats and the night stop on the Nile en route to Singapore; and certainly, looking back less far, there was much to be said for the comfortable beds that we enjoyed on the British Commonwealth Airline when crossing the Pacific.
But, basically, I am claiming that competition of a cut price kind can be carried too far and that the need is for a trading environment in which one can make reasonable profits that will provide for progressive re-equipment and proper maintenance standards. However, having argued this way against facile deregulation I also say that I am in favour of competition in performance, which is not necessarily the same as dual designation on a given route. I believe the CAA was right to call attention to the quotation from the Edwards Committee report about competition in styles of management. I would suggest to my noble friend Lord Underhill that he considers this point. There is a good deal of useful benefit to be derived from competition between two styles of management.
I always thought it was a mistake when BOAC and BEA were merged. I listened to the financial people spell out all the economies that would be made, but they never materialised. Of course I know that there were different route structures involved, but there was also a subtle and a very useful comparison to be made in management and operating techniques.
We cannot go back to the days of two corporations, but we can provide opportunities for two major British operators. If that is our objective, then the British airline operating from Gatwick must be given a broader base—or, to use the fashionable jargon, it must have a hub with more spokes to it. The allocation of some additional routes to British Caledonian appears to me to be justified on this basis. But it also seems to be justified as part of a sensible policy for our airports. Understandably, from its own selfish viewpoint, British Airways wants to keep all the routes that it acquired under a different guise and to cram as 615 much as possible into Heathrow with yet another terminal. I do not think that that would be good in the national interest.
We do not know what the latest airport inquiry will produce. One reason for taking more time to consider some of these matters is that we do not yet know the future pattern of London's airports. Whatever is decided, however, surely we must develop at Gatwick and the CAA's proposals would seem to make good sense in that context.
The counter-argument to all this—and we have heard it stated in different ways tonight and it has been expensively canvassed—is that British Airways has suddenly become such an oustandingly successful airline that everything should be done to protect the position it was granted as a publicly—owned national flag carrier, with obligations which it then accepted and which will not be relevant as a privately owned company.
I have no cause to be prejudiced against British Airways. I spoke up for them often enough in the past. I was proud to wear a BOAC uniform in earlier days. I was the Minister responsible in the Commons for their affairs some 30-odd years ago. However, I am bound to say that I react against the Saatchi and Saatchi presentation of recent results. There was another noble colleague of ours in this House, Lord McFadzean, together with his chief executive, who also made a contribution. I am sure, that the noble Lord, Lord King, would pay a trubute to the efforts that were made by that team.
Much has been made about the reductions in staff numbers, but I think it is fair to say that it was Roy Watts, as chief executive, who went through the agony of negotiating redundancy for 20,000 people, and he was then asked to move out. Admittedly there was a leap forward in the profit figure for 1983–84, but it cannot be claimed to result from a leap forward in traffic. So far as I can see, there was actually a reduction—not a large reduction. but there was no increase. If, in a preceding year, there is a brave and prudent provision for special costs and then £33 million of that provision is brought forward in a subsequent year, that will, of course, help the profit figure. And if aircraft are written off one year and then the book value of those same aircraft is increased by some £100 million in a subsequent year, that will make a big difference in the apparent—
§ Lord King of Wartnaby
My Lords, on a point of order. Your Lordships will know that I have no intention of speaking in this debate because of the privileged and honoured position that I enjoy in your House. I wonder whether the noble Lord will explain how the depreciation of aircraft affects the bottom line of the balance sheet. I understand that the noble Lord feels that the accounts have been manipulated. I think that if the noble Lord explains that in greater detail, it will be of some interest to your Lordships' House.
§ Lord Beswick
My Lords, if the noble Lord is saying that what I have said so far is incorrect, I certainly withdraw. I am quoting the figures published by the noble Lord himself in his own report. I have been looking at the management brief—
§ Lord King of Wartnably
My Lords, with respect, it is not the published figures, but the noble Lord's interpretation and translation of them that is the problem.
§ Lord Beswick
My Lords, the noble Lord is entitled to his interpretation, and I am entitled to mine. I do not believe that the interpretation that has been put upon them by much of the publicity helps in the current controversy. That is all I am saying. The noble Lord is perfectly entitled to get up and contradict what I have said, and I shall respect the explanations that he gives. I shall not quote much more, but the management brief does in fact say that the comparative results are on the basis of the same accountancy techniques with the exception of the treatment of assets. That is all that I am saying—that the treatment of assets can be very important, indeed.
It is, as I say, a matter for everyone to read, and they will draw their own conclusions. What interests me particularly is whether potential investors will wonder if these accountancy procedures can be repeated in subsequent years. Let me say this to the noble Lord—and I am not saying it because he is here. I am sure that the new leadership in British Airways has brought new ideas and a new zest to that company. I have seen genuine tributes paid to the new sense of purpose. But even if the CAA proposals are fully implemented, there is no reason to believe that there will not be full scope for that leadership in the years ahead. I add to that immediately that I recognise that these CAA proposals cover more than route allocations between British Airways and British Caledonian. As my noble friend Lord Underhill has said, there are matters of airport policy, regional policy, the many independents and the charter operators. All are affected, and all are important matters to those concerned.
I only wish that this Government's impatient rush to collect money by the sale of public assets does not mean, in this case of Britain's future airline effort, that the timetable of privatisation will preclude proper consideration of all the factors involved. I hope that, after mature consideration, the Government will see fit to accept the general approach of the Civil Aviation Authority.
§ 9.12 p.m.
§ Lord Peyton of Yeovil
My Lords, I should like to start by echoing the thanks tendered to my noble friend Lord Kinnoull for having initiated this debate. I hope that he will not think me ungenerous in saying that I rather admired his Olympian detachment. I found it a little difficult to share with him the description of the atmosphere at Westminster at this time as being one of pent-up excitement. I should myself tend to describe it in other words.
§ Lord Peyton of Yeovil
My Lords, I appreciate what my noble friend says. But even then I think that the pent-up excitement is at least tinged with something else.
617 There is concern on both sides of your Lordships' House, first, that to delay so important a decision would be wrong; and, on the other hand, that to announce a decision when Parliament is not sitting and would therefore be deprived of the opportunity of comment would equally be wrong. I am bound to say that the remarks made the other day by the Parliamentary Secretary to the Ministry of Transport awoke some suspicions in my mind. He said that if the Government were ready they would announce their decision before Parliament rose; on the other hand, if they were not ready they could not do so; but in so important a matter they would not be able to wait until October.
Over the years, one develops a rather crusty cynicism about such things, and one could drift into the conclusion that perhaps what was meant was that the Government were waiting for a nice quiet moment, undisturbed by unreasonable people in Parliament, to announce a decision which might cause them a little embarrassment. But I put that behind me, as I am sure your Lordships will do.
I am also oppressed by the fact, which lurks behind our debate tonight, that decisions made in July, usually or often against a background of weariness and anxiety to avoid log-jams in the future, are often—I choose my word with care—strange. I believe that it would be strange to the point of being perverse if the Government were not to follow the Civil Aviation Authority's report; and I say that for four reasons. First, it is not usual for would-be sellers to act in such a way as to reduce the value of that which they intend to sell, let alone to frustrate the sale altogether. I believe that British Airways have been advised by their merchant banks that any significant alteration to the existing route network carried on by British Airways would rule out the possibility of privatisation in 1985. They point out that the profits now being made by British Airways stem from their existing route structure, and it is their opinion that if this is changed no shares could be sold to the public until such time as the effect of the alterations was reflected in published and audited figures over a period of years.
Potential investors would be left in a state of uncertainty as to the effects of the new allocation of routes, and fearful lest there might be more of the same medicine to come. In paragraph 99 of its report the authority makes this very clear:It may also need from time to time to substitute one airline for another, even where the incumbent has not been serving the route badly".Those are hardly encouraging words for those who are thinking of entering the airline business.
Your Lordships may well think that the taxpayers' interest has not been particularly carefully thought of—even that it has been lightly put aside—since we are told by the authority that no airline would be interested or had shown interest in purchasing a specially-created subsidiary company. It goes on to say:The recommendations that certain British Airways' routes be made available to other airlines must therefore imply that the Exchequer should forgo that part of its return reflecting the expectation of profit on the route, regarding this as a modest contribution to the sounder development of the industry".Your Lordships may think that the sacrifice of the 618 taxpayers' interest would be a great deal more real than the supposed reward.
My second reason for believing that the recommendations of the report should not be followed is that it seems to me that it would be unwise in the face of heavy international competition to weaken the country's principal carrier. The authority, having declared in its report for competition, then goes on very clearly to opt for substitution. As between United Kingdom airlines, one will be replaced by another—the customer will receive neither a greater choice nor the assurance of a better service.
Paragraph 12 of the report adverts to the need,to consider, as required by Section 68(1) of the Act, whether the sort of reduction in British Airway's operations envisaged by some of the independent carriers would not in reality reduce the industry's effectiveness against foreign competition to an extent which outweighed any consequential benefits to users or to other United Kingdom airlines".Having said that, the report seems to me to have taken very little note of the weight of foreign competition, and the authority's own figures show the various shares of international passengers in 1983 to have been as follows: British Airways, 26 per cent.; other United Kingdom airlines, 31 per cent.; and foreign airlines, 43 per cent. There is a danger that just looking through the report as it stands we might all overlook those rather important figures.
The report estimates at paragraph 79 that the direct effect of the reallocation of routes suggested:will be to reduce British Airways in scale by something in the order of 7 per cent. of its scheduled service revenue".I believe I am right in saying that British Airways themselves estimate it to be something in excess of 8 per cent. Referring again to the report, it says:In addition, increased competition from other British airlines over and above that which has already been licensed could further reduce British Airways' total scheduled service revenue by up to 4.5 per cent.".The report concludes by implication, without I think offering reasons, that such a loss of routes and revenue would not be harmful. I wonder just how many businesses could endure the sudden lopping off of 10, 11 or 12 per cent. of their revenue? One wonders whether the kind of surgery which is suggested is at all realistic, although there can be no doubt about the joy that would be occasioned in the minds of foreign competitors.
I referred just now to surgery. Surgery normally causes pain and that brings me to my third reason for saying that I believe that the recommendations of this report should not be adopted: there is the impact upon those who, believing that increased efficiency and better customer service were keys to job security, made those things their objectives and they did so under the very skilled and courageous leadership of my noble friend Lord King. At paragraph 87 the authority uses some classic words. It majestically declares that it:has not been indifferent to the human dimension … the Authority would urge all airlines that stand to acquire routes from British Airways to give consideration to the offer of continuing employment to those who seek it and whose jobs will be at risk".I wonder what kind of comfort those whose jobs are at risk will derive from such words and the description of themselves as being "the human dimension".
619 My fourth reason for wishing to see these recommendations rejected is a very simple one indeed. It is that of the Government's own undertakings. I need not repeat them in detail here because they are well known. They were given by Sir John Nott (as he is now), and by other Ministers in 1979 when the decision to privatise—and I hate that word—British Airways was first announced. The words having been used in Parliament were repeated to trade union leaders and to the then chairman of British Airways. There is no need to pick out a mass of sentences because they all mean the same thing. The one I choose it this:There will be no arbitrary reallocation of routes".Let us look through the report and look at the recommendations; one cannot believe that they are not matched by the description of "arbitrary reallocation of routes". Therefore, I believe that Ministers are bound by that undertaking given to Parliament and repeated to others.
I must say that I am somewhat puzzled that those plain, unqualified words of a Minister, which must have been known to the authority in putting together its report, were so disregarded by it. I find it very difficult to understand how it came about that an authority should have disregarded the words which it must have looked upon as a barrier in the way of the recommendations which it intended to make. I hope that some time the Government will advert to that point and explain.
The report of the authority, which, in the performance of those of its duties relating to traffic control and to safety, has perhaps no equal in the world, suggests that it itself should be vested with wider powers. I very much hope that my noble friend on the Front Bench will convey to my right honourable friend the Secretary of State for Transport that there are some of us who would look upon the creation of so powerful a body with very great disfavour and suspicion.
I do not wish to detain your Lordships any further. May 1 conclude by saying that I hope very much that the Secretary of State will pause before he adopts the recommendations of this report, for the reasons that I have given. First, the effect that they would have upon the intended sale of British Airways; secondly, the fact that arbitrary substitution of one carrier for another is not the same as competition; thirdly, the dangerous and very much undeserved impact that these things would have upon the staff of British Airways; and, lastly, the Government's own undertaking, which even in these days ought to be treated with respect, certainly by themselves.
§ 9.31 p.m.
§ Lord Graham of Edmonton
My Lords, I rise to join every Member of this House who has so far spoken in acknowledging the indebtedness we owe to the noble Earl, Lord Kinnoull. Not for the first time has he perceived a good opportunity for a debate—even though I believe that the gloves must still remain on at this stage until one sees the air clear. I believe that in every debate there is room for at least one who is not an expert, and I claim that place in this debate this evening.
620 We have listened for the past hour and a half—and there is more time to go—to noble Lords on both sides of your Lordships' House who were Ministers in another place. We have listened to people who have followed the aviation situation for many years. Those who have spoken have indicated and declared their interests in these matters, and your Lordships' House is indebted to them for the breadth of experience they have brought to this particular debate.
I shall declare two small interests from the heart and not from the head as the debate goes on. We all have the benefit in this debate of having looked at what took place in another place in the small hours. From that and from what has been said tonight it is well established that there are many questions which need to be answered. I take the point made by the noble Baroness, Lady Burton, who said, not for the first time that she will be asking the same questions, and she hopes very much that we shall have some answers.
I recognise that the Minister in another place was under some difficulty having a time bar on the debate and being left with eight minutes, and being interrupted more than once during his eight minutes. He could not possibly have done justice to the subject. But this Minister has been well served by having had four days' notice of the questions asked in another place, and will have anticipated that some of them would be raised this evening. I hope that we shall not be frustrated and dissatisfied, while recognising that when all the answers come forward of course some hearts are going to be broken because some firm decisions have to be made.
I echo the words of my noble friend Lord Underhill, who pointed out that this is but one part of the pattern which exists and where there needs to be a resolution. If it takes a little time, so be it, but there is an interrelationship between not merely the need for airline competition policy but the need for a United Kingdom airports policy to be clarified and clear. The privatisation of British Airways is very much a current topic. There is the future capacity of Heathrow and the question touched upon by the noble Baroness, Lady Burton, of the interrelationship between Heathrow, Gatwick and Stansted. There is also the question of the Scottish airports.
It may not have been the purpose of this short debate but it has emerged that there seems to be a lack of coherent strategy by the Government in what one would have called their policy for the airways. I do not expect the Minister will tell us that that policy will emerge tonight, or any aspect of it, but there is an urgent need in a matter of months rather than years for the Government to be telling Parliament and the people of this country what those policies are. The point has been made more than once that substitution is no substitute for well thought out national and international policy; and directing BA off and BCal on will not guarantee success or even a continuation of the success which we can see here at the moment. What it could mean is the making of more aviation civil servants; but there is no guarantee that it will make one more additional passenger carried on British aircraft. I believe that the policy which is recommended to us is at least misguided and could very well prove grievously damaging.
621 Let me quote in aid the remarks that were made in another place by the Member of Parliament for Hayes and Harlington, Mr. Terry Dicks. He said:There will be rejoicing in the boardrooms of Lufthansa and Airfrance if this misguided review is accepted by the Government, especially as the alternative airline, British Caledonian, is overmanned and inefficient. Germany and France will benefit and Britain will lose, because the powerful, Government-backed airlines of Germany and France and many other countries will scoop up the business which this review, for doctrinaire reasons, carelessly offers them on a plate".—[official Report, Commons, 25/6/84; col. 1140.]My Lords, they are not my words. Every statement that is made on all sides of the argument is capable of being challenged, and undoubtedly will be challenged, by advocates on the other sides. But when one hears words of that kind, spoken seriously, as they must be, at 3.18 in the morning in the other place, then we have to take notice of them. I take very much the point that was made by the noble Lord, Lord Peyton, about a sense bordering on betrayal by, among other people, the employees of BA—and not only the employees of BA but many others who are affected by it. Let me again quote in aid the words spoken in another place by Mr. Alan Haselhurst, the Member of Parliament—
Lord Campbell of Croy
My Lords, I wonder whether I may interrupt the noble Lord. There is a rule. of which he is probably unaware, that it is not correct in this House to quote from a Member in another place in the current Session unless he is a Minister. The previous quotation was not of a Minister, and I think that the noble Lord is about to embark upon another quotation of somebody who is also not a Minister.
§ Lord Graham of Edmonton
My Lords, I am much obliged. I know both gentlemen and I believe that they are prospective Ministers. I take the point that there are conventions, and certainly I accept at once that I was confused as to the precise nature of what it was that I could say—except, of course, that Members more than once spoke in another place of the difficulty of reconciling the remit that was given to the noble Lord, Lord King, and to British Airways, and was accepted by their employees; and, in fact, they have produced the goods. One does not want to knock anyone else, and that is the last of my intentions, but they say, "We have been given a remit but Ministers have said, 'You have done a fine job and now we are going to reward you in a certain way'.".
Speaking in this place, with this Minister present, employees of, for instance, ordnance factories would certainly recognise the syndrome of having been given a job to produce the goods, to produce the profits, and, at the end of the day, to be rewarded by the kind of slap in the face that they would say that they have received. It is a great puzzle to a great many people. What does one do in order to keep one's job? If one is successful, one is rewarded with this kind of treatment. If one is unsuccessful, what is the reward then? What we have had emerge from the debate in another place, and certainly here this evening, is a dichotomy.
I am not able to offer any solutions as to the precise way in which Government policy in this respect ought to emerge, but we ought to have some evidence from the Minister tonight that he understands the need to 622 reconcile. The noble Lord, Lord Peyton, and others have referred to statements made by Sir John Nott in 1978 which were undoubtedly made in good faith and which were accepted in good faith. When one looks at what is recommended, which the Government may or may not accept, it would certainly amount to something bordering upon a betrayal by the current Government and a rejection of what their colleagues said in other places.
I wish to make particular reference to the effect on the regional airports of the changes in policy which may emerge. My noble friend Lord Underhill referred in particular to Manchester and Birmingham, but of course there are others too. I believe that it is not possible for the Government simply to say that what they are going to do needs to be seen as in the best national interest without taking together all other things that are affected.
I come from Newcastle-upon-Tyne. That is my home town. Therefore I have a passionate interest in ensuring that what could very well be called deprived or depressed areas, regional centres, are not disadvantaged by something which some Ministers and Parliament might say is in the best interests of airport policy. It might well turn out that the policy which the Government accept looks good and in fact is right but, as my honourable friend Mr. Alf Morris said last week, the Manchester authority and the people of Mancheter would look upon it as a major disaster and a major blow to their attempts to keep their part of Britain alive and successful, as in fact it has every prospect of being. Birmingham, which is a more profitable part of Britain than Manchester, can see problems and certainly that is the position so far as Newscastle is concerned; if one of the spin-offs and if one of the consequences of accepting these recommendations is that the burdens which are placed upon the councillors, on the residents, on the businesses, on the ratepayers and on the taxpayers of Manchester, Birmingham and Newcastle are worsened. I am saying to the Government that this should be taken on board as well as other matters.
If the Government accept the recommendations to take the routes away from developing and successful airports—again I stress Manchester and Birmingham, although they are not alone—they will not only threaten the viability of those airports and the many jobs connected with them but they will maintain the agony which is already building up. We are here this evening to invite the Minister, if it is possible—to recognise the constraints—to be as straight with this House as I know his honourable friend would have wished to be in another place had time been on his side.
In this debate tonight time is on the side of the Minister and I think that he should take as much time as he needs. I should be appalled if we had what the noble Baroness, Lady Burton, called a "non-answer", although she said that she would accept a holding reply. I think it would be an outrage if the major decisions arising from this emerged and saw the light of day and public controversy at a time when they could not be challenged by the kind of expertise which has been revealed in this House tonight and which I know exists in another place.
623 I am concerned about the aspect of regional policy, but, living in Enfield in North London, I am also concerned about the possibilities of the future of Stansted airport. I happen to have represented the people of Enfield and Edmonton for a number of years. It is not possible to say what the people of Enfield and Edmonton want except that I know they are very sensitive to the possibility that, as a result of a major review of airport policy, the extra London airport might turn out to be Stansted and not the fifth terminal and runway at Heathrow or somewhere else.
Everyone is selfish. The noble Baroness, Lady Burton, was frank enough to indicate the 624 consequences that could arise if certain developments were to take place at Gatwick. I say, for the people among whom I live, that there would be great apprehension and, I believe, environmental disaster in that part of North London if in fact Stansted was seen—and I know it has been advocated—as being the solution. So I very much hope that the Minister will take on board that what we need is the maintenance of successful regional airports such as Manchester, Birmingham, Newcastle and the like, and a very clear understanding that it is not possible to solve one of the major issues without taking what one could see as an integrated view of the whole of our airports policy as it affects all the issues.
§ 9.46 p.m.
§ Lord Polwarth
My Lords, flying down from Scotland this morning, I reflected on the enormous benefit that has accrued from competition to us who are obliged by our residence to commute regularly, weekly, from the North by this means of travel. I thought back to the early days of the first service of British Airways—and full credit to them for pioneering it—with a DC3 and a 2½-hour flight. I then thought of the difference that emerged when British Caledonian came on the route—albeit out of Gatwick and not Heathrow—with more amenities and with a great service. This stirred British Airways ultimately into the concept of the shuttle, with its hourly flights and two-hourly flights and with no need to book, though admittedly with a bare minimum of leg-room and other creature comforts.
It was only in the past year, with the advent of British Midland to the route, bringing lower fares and more service and amenities—for example, the famous hot breakfast—and a very cheerful service that launched British Airways into coming back with their super shuttle. There we have a splendid service too: they also have a hot breakfast, and their attendants smile, which they did not always do in the past. So there is a real example of what competition can do.
Aviation is a subject that stirs deep passions in those of us who use it frequently. We have individual loyalties, and that is understandable. I have no vested interest in this matter, and, whatever I may be going to say in this speech, I should like to start by saying that I think we are extraordinarily fortunate in our two flag-carriers in this country in their different ways. British Airways, especially since their re-vamping (if I may call it so) in the past couple of years. have produced a magnificent service. I use their long-haul flights very regularly. Their timing is much better than it used to be and their cabin service is vastly improved. I know that these flights, and Concorde in particular, are the envy of our friends across the Atlantic. British Caledonian, in their way and in their different style—and I am glad the noble Lord, Lord Beswick, mentioned this very important matter of style—are also doing a splendid job from a smaller base, and serving us well.
I am convinced that the traveller benefits from competition and I believe it is the traveller we should be thinking of tonight in relation to this report rather than generalities about the airline industry, the national interest or simply the Exchequer. That is why, after much reflection and study of this report, I am bound to come down more on the side of my noble friend, Lord Kinnoull, to whom we are so grateful for this debate, and to the noble Lord, Lord Beswick, rather than my noble friend Lord Peyton, with his powerful advocacy for the status quo.
I am sorry about that, particularly because he and I, as he will recollect, enjoyed some interesting aviation experiences when we were both in Government some time back. I can think of a notable landing with an independent airline on the airfield at Lerwick in the Shetlands, consisting of a waterlogged field liberally spread with cow-pats. When we came to a halt, a bearded figure emerged from the bushes with a bucket of water and a brush and proceeded to scrub down the pilot's windscreen. That is by the way. I believe, 626 though. that it is in the travellers' interest that there should be more opportunity for the independents to compete on fairer terms with this soon-to-be denationalised giant. That is why I support strongly the main arguments—not necessarily all of them—put forward in this report and I urge the Government to consider them very seriously.
As others have pointed out, the mere transfer of a few routes from British Airways to the independents will not increase direct competition, even if it may bring a new style into the operation. But what it will do is to give them—and I think particularly of Caledonian as the second carrier—a broad and strong enough base to compete fairly with an organisation which grew to its present size under the umbrella of state protection and subsidy in the earlier days, and indeed at one time it could have been said to have enjoyed something of the status of the cuckoo in the nest. Of course, those days are well behind us.
But what the No. 2 carrier needs is the opportunity to develop a proper, integrated network—as the noble Lord, Lord Beswick, said, a hub and spoke system—which has been the secret of the success of a number of major American airlines, such as Delta, out of Atlanta and American Airlines, out of Dallas. The airline business is a tough and uncertain one, especially for a smaller company; and size. if not everything, is nonetheless important.
It takes a great deal to compete with a business which has 80 per cent. of the whole British scheduled service business and a monopoly of British international services out of Heathrow, with all the interlining opportunities that go with that and which, with its size, carries enormous clout in the market in dealings with travel agents, hotels and in many other ways. The independents need a broader base to enable them to weather the storms to which the aviation industry is so liable and this is what is recognised in the report.
I should like to quote a parallel from Canada where I travel a lot. The aviation market there is dominated by the state carrier, Air Canada, though I believe there is talk now of spreading some of the capital more widely. The competition is mainly from the regional carriers but they, like we with Caledonian, have a second flag carrier in CP Air which is privately owned. I am a director of its parent company, but I am not directly involved in any way with the airline itself.
Until a few years ago, CP Air was restricted to 25 per cent. of the domestic route miles flown. Although that restriction has now been removed, I know what an enormous uphill battle it is for a smaller concern to increase its share of the market against a large state-owned concern, however efficient it may be. Though it has an international network, CP Air has never been able to get landing rights into Britain, because those rights were shared out originally between the two governments and the two state-owned airlines who have effectively carved up the Canada-United Kingdom routes between them. There is no alternative now in flying to Canada, the schedules are more or less integrated and the fare structures are pretty well identical.
For their part, British Airways have pulled out all their services from Prestwick, to the considerable 627 inconvenience of the Scottish business community in particular. When British Midland applied recently to open a service from Glasgow to New York, along came British Airways and promptly announced—I believe the day before the inquiry—that they were proposing to revive their lapsed service—
§ Lord King of Wartnaby
My Lords, forgive me for interrupting. I was going to say that that is totally untrue, but I am sure that I should not say that here. Your Lordships will forgive me for my newness. But that is quite wrong. A licence exists for British Airways to fly to America from there and an application to renew the service was filed some time before that. I cannot give the date to the noble Lord, but it was not, as he described, the next day.
§ Lord Polwarth
My Lords, of course I apologise to the noble Lord if the information given to me was incorrect. However, the fact remains that they then made public that they were to restart a lapsed service from Manchester, which effectively scuppered British Midland, which depended upon Manchester traffic in order to make a Prestwick service viable. I hope that we shall hear in due course that British Airways is to revive a call in Scotland, in addition to the one at Manchester.
Perhaps British Airways has somewhat over-reacted to the proposed transfer of its routes. From some of the statements which have been made one would think that British Airways is about to be totally dismembered. All that is suggested is that British Airways should lose certain specific routes. The report suggests that they should lose only the routes to Harare, Dhahran and Jeddah, as well as the present routes out of Gatwick. I can hardly believe that the latter is an unreasonable quid pro quo for their present monopoly of British international services out of Heathrow.
I am not sure that I would go along with the further recommendation in the report of removing from British Airways the Birmingham and Manchester services. That is less well advised. However, I do not believe that the loss of 7 per cent., or even 8 per cent., of their route revenue is a disaster. I can hardly believe that they are the most profitable routes and that they would have an adverse effect on the forthcoming flotation.
I admit freely and readily that British Airways are doing an excellent job on their routes, and, as a regular user, I wish them very well. But however much one respects and admires them one must inevitably fear, from past evidence, that they will use their sheer size and weight to frustrate the efforts of competition, especially in view of the greater freedom which they will enjoy in private hands.
My good friend the late Sir Ronnie Edwards, in his epoch-making report of 1969, set the scene for the entry of competition into the airline industry. Since then we have moved forward, to the great benefit of the traveller—albeit not fast enough. Now, with this very thorough review before them, the Government have two alternatives and a great opportunity: either to 628 set the pattern for a further blooming of competition and choice for the passenger or to leave things as they are in order to squeeze the last penny out of the sale of British Airways to the public.
Surely there can be no doubt that it is the first of these alternatives which is the best for the British travelling public, with whom I am concerned. It accords, too, with the Government's own principles of free enterprise and competition. Therefore, I urge the Government to look at this report very seriously and to implement the principal recommendations leading to greater competition.
§ 9.59 p.m.
Lord Campbell of Croy
My Lords, I should like to thank my noble friend Lord Kinnoull, as have other speakers, for initiating this debate. The Civil Aviation Authority report raises a very important issue for the future of the British airline industry over perhaps the next 20 years. I agree in principle with their general argument. However, I regard their particular recommendations for routes and services as useful suggestions rather than as a precise formula for application.
At this stage of the debate my aim is to be brief. I should like to say straight away that in the three years since my noble friend Lord King became chairman he has had a resounding success with British Airways. I know that he will be the first to say that others have contributed to this success, too, but he himself must. I believe, take most of the credit. He, with others, has made British Airways efficient and commercially competitive, from earlier being what I would describe as a flabby, overmanned organisation. That has involved, I understand, the departure of about 23,000 employees, but I think this has been done with good will and my noble friend deserves congratulations on this feat.
The first point I should like to make is that this achievement would have raised questions of competition policy for the future, whether or not British Airways were to be privatised. While British Airways dominated in size but was not otherwise a greatly effective competitor— the matter of competition arose from time to time: certainly, for example, in relation to the privilege enjoyed at Heathrow by British Airways—it did not arise as acutely as it now does. Let us consider first the question of size. After the successful transformation of British Airways, the British Airways scheduled air service output is calculated still at just over 80 per cent. of the British airline scheduled services. Against that, and in comparison, the next is British Caledonian, which is only 15 per cent., and the other independent airlines account for about 2 per cent. I shall in a minute come to the charter business. This is the scheduled side of the passenger traffic.
British Caledonian is the only independent that comes near, and there is a great difference between 80 per cent. and 15 per cent. There is a school of thought that an airline must be big in order to compete on international routes. That does not mean, I suggest, that there should be only one British operator outside the United Kingdom. British Caledonian has shown 629 that it is possible to survive and to thrive in the highly competitive world markets. I recall in the early 1970s when the second force British airline, as it was called, was being established after the Edwards Committee report. I was concerned as a member of the Cabinet at the time and much of the work was carried out by my noble kinsman, the late Lord Glenkinglas, who was the last President of the Board of Trade and who then became a Minister at the Department of Trade. I am sure the whole House misses him. He died only two-and-a-half months ago and was not able to speak himself in the debates just prior to his death. The Government possessed the powers at that time to enable routes to be transferred. They do not possess them now because the powers have lapsed. It was recognised then that there ought to be at least two British airlines able to fly abroad on more or less equal terms.
I should like to turn, if I may, to domestic scheduled operations. Here competition from independent lines has brought about great improvements. My noble friend Lord Polwarth has referred to some with which I am familiar; that is to say the improvements which resulted from British Caledonian flying between London, Glasgow and Edinburgh, when those flights were introduced. Then, more recently, with the introduction of British Midland on those routes, there were improvements in service, reliability and punctuality.
I am in a good position to comment on this because for over 20 years I have been a frequent traveller between Northern Scotland, Central Scotland—I fly between those two—and London and other European capitals. I am therefore familiar with the change which has more recently taken place, which I should like to mention to the House because I think it illustrates another point, not just on competition. Nearly two years ago British Airways decided to give up some routes, including the Inverness to London route, with which I am very familiar. My noble friend Lord King was good enough to be in touch with me at the time about that route. It was then awarded to an independent, Dan-Air, who started a service just over one year ago. There is no doubt about what has happened; the results have been published and are there for everyone to see. The service has been greatly improved. In the equivalent six-month period of the year, the new airline has carried about three times more passengers than British Airways did before. The fare was reduced immediately and has not been raised since. In various other ways, it is completely accepted that it is now a much better service.
That improvement arose by chance. It was an opportunity that came to an independent airline because British Airways gave up the route. Again I detect the hand of my noble friend Lord King, who realised that it was too small to interest British Airways—and certainly they did not appear to take any kind of trouble to attract members of the public in northern Scotland. Quite clearly, the independent airline was able to devote resources to marketing and to the service, with the result that passengers are getting a much better deal and are travelling more cheaply.
630 Before I leave that point, I would say that I do not consider that that example falls within the definition of an arbitrary reallocation of routes. It was something that just happened by chance. It happened in 1982, well after the assurances given in 1979.
I turn to the charter business conducted by airlines and tour operators. Because British Airways are the only British Airline permitted to fly on international routes from Heathrow, they could operate part charters from that airport to destinations abroad—especially at weekends. The Airport Users' Study Group think that British Airways are already, to use their words, "dumping" excess capacity on the charter market. I am in no position to comment on that, but I think that the Government must consider this sector of the passenger-carrying traffic as well.
I am fully aware of the Government's difficulties. There are two in particular. First there is the assurance—which my noble friend Lord Peyton mentioned—about no arbitrary reallocation of routes and other statements made by the Government at the same time. I ask this question: was it necessary to make that statement at the time? For how long does it inhibit the Government, if it does so at all? Does it freeze the situation for many years? I understand the difficulty if an assurance has been given: if the question of reducing the staffs of British Airways and other matters revolves around this kind of assurance, then it is a difficult situation. The Government have to face up to that and decide what it means.
The second difficulty is the delicate operation of launching British Airways as a private company. As has been experienced with recent launches, with all the merchant banking expertise available in this country, it is still exceedingly difficult to assess beforehand all the factors bearing upon a proposed launch. I am sure that—as, again, my noble friend Lord Peyton said—the Government do not wish to have any further complicating factors. However, it would be ironic and a sad paradox if privatisation of British Airways were to cause serious damage to the existing private sector.
As the CAA report states, British Caledonian is the only airline immediately capable of tilling the role of a second British international carrier. I hope that the Government will not allow the results of the efforts made in the early 1970s to which I have referred, and in the years since then, to evaporate because of the lack of an effective competition policy.
§ 10.10 p.m.
§ The Parliamentary Under-Secretary of State for the Armed Forces (Lord Trefgarne)
My Lords, anyone with half an eye for the newspapers or, for that matter, Hansard cannot have failed to notice that a most vigorous debate has ensued in the two weeks since the Civil Aviation Authority published its final report on airline competition policy. Perhaps there has sometimes been more hot air than light. But at least this evening we have heard some thoughtful contributions on what should be the Government's response to the report.
The main conclusion in the report is that British Airways should be reduced in size relative to Britain's other independent airlines. The authority argues that 631 such a reduction in size will provide opportunities for the independent airlines to develop and prosper and that it is important that at least one other British airline exists which could replace British Airways on any major inter-continental route should the need arise. Underlying this conclusion is the CAA's support for the principal finding of the Edwards Committee in 1969—that the interests of the British civil air transport industry and its users would be best served by a multi-airline industry, thus ensuring a competitive environment.
There are three broad themes to the recommendations which the authority makes in its report. First, there is a set of recommendations designed to bring about some immediate restructuring of the industry. As we have already heard, the authority has recommended that routes to Zimbabwe and Saudi Arabia be transferred from British Airways to British Caledonian: that British Airways' scheduled services from Gatwick be taken over by other airlines; and that its European routes from regional airports—principally Birmingham and Manchester—should also go to other airlines.
The second kind of recommendation made by the CAA is concerned largely with the operation of the licensing system. In this context the report proposed the introduction, on a two-year experimental basis, of an area facility allowing airlines to serve any two domestic points they wish. Such a facility would exclude lifeline routes and those involving Heathrow and Gatwick and also, perhaps, routes to the Isle of Man and the Channel Islands. There is, too, a proposal to deregulate domestic air fares, although the authority would retain controls over predatory pricing. Internationally, the CAA proposed to try to increase the range and market penetration of scheduled services from Gatwick into Europe. The authority proposes to reflect these changes in a revised statement of policies.
The third set of recommendations are those dealing with access to London's airports and here the CAA has two suggestions to make. It recommends that the Government look again at the question of increasing the available capacity at Heathrow and Gatwick; and that room be found at Heathrow for competing services on those of British Airways' domestic trunk routes where direct competition does not already exist.
There is one final recommendation which concerns the authority's powers. Irrespective of whether routes are transferred from British Airways to other airlines, the authority suggests that there will be a continuing need for decisions to be taken designed to secure the sound development of the industry. Currently, the Civil Aviation Act 1982 requires the CAA's decisions to have regard to the interests of users and to be consistent with securing the industry's sound development; and the authority proposed a change to the Act in order to make the latter consideration a more direct duty. Although the report makes no firm recommendation about the exact change to the legislation, the authority believes that with such an extension to its powers it will be able to take licensing decisions intended to alter the balance of the industry's structure and to act against anti-competitive practices.
632 Perhaps at this point it might be helpful if I said a word or two on how the existing competition legislation bites on civil aviation. There is, I know, a feeling in parts of the industry that the legislation does not apply to airlines. This is not so. On monopolies, the Fair Trading Act 1973 applies to the industry in that questions concerning the carriage of passengers and goods by air may be referred to the Monopolies and Mergers Commission by the Secretary of State for Trade and Industry acting jointly with the Secretary of State for Transport. The normal definition of monopoly applies. The mergers provisions of the Act also apply to air transport undertakings, as they apply to other concerns. In addition, under the Competition Act 1980 the Director General of Fair Trading may investigate, and if necessary initiate action against practices which restrict, distort or prevent competition. The Act applies to air transport undertakings, except where the anti-competitive course of conduct is pursued solely in respect of international carriage by air.
The authority's report deals with complex matters affecting the future of Britain's airlines and airports. That is why I welcome the views put forward this evening. Your Lordships have a wealth of experience in civil aviation which has been reflected in the contributions to this debate. My noble friend Lord Peyton, for example, was a former Transport Minister of course. and brought to his remarks the invaluable expertise to be expected from one with so close an association with the world of aviation. From the other side of the House the noble Lord, Lord Beswick, spoke with equal authority; as did the noble Baroness, Lady Burton, who for many years has championed the views of the travelling public.
I too am grateful to my noble friend Lord Kinnoull not only for his remarks but also for initiating this evening's debate. The debate has underlined the very real differences of opinion on the merits of the Civil Aviation Authority's report. On the one hand, it has been suggested that a revitalised and privatised British Airways will be a threat to the existence of some of our independent airlines. Less dramatically, there is a feeling among the independents that they will be unable to prosper in the shadow of BA because, it is claimed, of its dominant position in the market-place. On the other hand, it is argued that British Airways' size is a red herring and that in reality it is constrained by competition on many of the routes it operates. Taking routes away from BA, so it is said, would be a poor reward for the sacrifices the airline and its staff have made in recent years and would only serve to delay privatisation.
My noble friend Lord Peyton, the noble Lord, Lord Underhill, and one or two other noble Lords referred to the assurances that the Government are said to have given that British Airways will not be broken up before flotation. It is true that, for example, during the Second Reading debate on the Civil Aviation Bill in November 1979 the then Secretary of State for Trade, my right honourable friend, who is now Sir John Nott, said that he did not propose that any part of British Airways should be broken up or sold off. In considering what action to take therefore on this recent report, I can assure your Lordships that the 633 Government will take fully into account the relevant assurances given by previous Ministers.
During the course of her remarks the noble Baroness, Lady Burton, referred to the question of a second runway at Gatwick. I do not think that it would be right for me to deploy now the various points that I have made on that matter to your Lordships at Question Time and on other occasions in the past. But I hope that the noble Baroness will not mind if I say this. She has from time to time accused me of not answering the questions that she puts to me. She might like to reflect on some of the points that I have made in response to the points that she has put to me about the problems of a second runway at Gatwick to see whether she too is satisfied that those problems can or cannot be overcome.
As the noble Baroness knows, the Government have said that they do not propose that a second runway should be built at Gatwick. I have on a number of occasions deployed to your Lordships the reasons why we arrived at that conclusion. I hope that she will consider very carefully the reasons that I have given and see whether she can or cannot agree with them.
The CAA's report and recommendations deal with a most complicated problem. The essential task for the Government is to assess the arguments for and against the restructuring of the industry. To do that we must come to conclusions about whether or not the balance of the industry is a correct one, and, if not, whether action of some kind should be taken. I do not pretend that I can give an answer to these questions tonight. It is because of the complexity of the problem that I welcome the differing views put forward during the course of this debate. We shall give them the closest attention. In their various ways, they will help to guide us in formulating the Government's response to the authority's report.
My right honourable friend the Secretary of State for Transport hopes to give that response as soon as he can. I know that your Lordships would obviously wish it to be before we rise to take a well-earned rest from our labours, but I fear that this will not be possible. It is vitally important that the Government have time to consider the report properly. The response must not be rushed, and as a result I fear it will be impossible to give the Government's reactions to the authority's proposals before the House rises.
At the same time, as I am sure your Lordships appreciate, since the CAA began its review last December Britain's airlines have lived through what for some has been an unsettling period. It would not be right to prolong the uncertainty any more than we have to. For that reason, we plan to respond to the report just as soon as we can during the Recess. I realise that your Lordships will regret that this will give no opportunity to offer immediate comment on what we may decide. However, I hope your Lordships will appreciate that to do otherwise and to delay a statement until October would leave British Airways, British Caledonian and the other airlines in a position in which it was impossible to plan with any certainty for the future.
I want to end by assuring your Lordships that this debate has been of the greatest value to the Government. I will see to it that your Lordships' views 634 are brought directly to the notice of my right honourable friend and fully taken into account. Indeed, in the nature of things, had an announcement been imminent that might have been less easy to achieve, but as it is your Lordships' views will now form a most relevant and important part of the advice available to my right honourable friend.
§ Lord Underhill
My Lords, before the noble Lord sits down, may I ask him one question? Even if the Government find it necessary to make a statement before the House resumes after the Recess, can we have an assurance that nothing will be put into effect before the House resumes?
§ Lord Trefgarne
My Lords, I must stop short of giving the noble Lord the sort of assurance for which he asks, because that will depend upon what is decided. However, I can assure the noble Lord that the views that he has expressed will be fully taken into account.